<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 33-65948
ROSEWOOD CARE CENTERS CAPITAL FUNDING CORPORATION
(Exact name of Registrant as specified in its charter)
(See table of Co-Registrants)
MISSOURI 43-1623171
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11701 BORMAN DRIVE, SUITE 315
ST. LOUIS, MISSOURI 63146
(Address of principal executive offices) (Zip Code)
Indicate by check mark whether Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that
Registrant was required to file such reports), (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
INDICATE THE NUMBER OF SHARES OF STOCK OF EACH OF THE ISSUER'S CLASSES
OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE: N/A
Certain information called for on Item 6 of Part II of this Form 10-Q
is incorporated by reference to Registrants' Registration Statement
(No. 33-65948) dated July 13, 1993 which was declared effective October 14,
1993, Registrants' Form 10-Q filed November 29, 1993, Registrants' Form 10-Q
filed February 11, 1994, Registrants' Form 10-K filed September 28, 1994,
Registrants' Form 10-Q filed February 14, 1995, Registrants' Form 10-Q filed
May 15, 1995, Registrants' Form 10-Q filed February 13, 1996, Registrants'
Form 10-Q filed May 14, 1996, Registrants' Form 10-K filed September 26,
1996, Registrants' Form 10-Q filed November 13, 1996, Registrants' Form 10-Q
filed November 12, 1997, and Registrants' Form 10-Q filed February 11, 1998.
Index to Exhibits is on Page 37.
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CO-REGISTRANTS
Rosewood Care Center, Inc. of Swansea
Rosewood Care Center, Inc. of Galesburg
Rosewood Care Center, Inc. of East Peoria
Rosewood Care Center, Inc. of Peoria
Rosewood Care Center, Inc. of Alton
Rosewood Care Center, Inc. of Moline
Swansea Real Estate, Inc.
Galesburg Real Estate, Inc.
East Peoria Real Estate, Inc.
Peoria Real Estate, Inc.
Alton Real Estate, Inc.
Moline Real Estate, Inc.
(Exact names of Co-Registrants as specified in their charters)
No separate periodic or annual reports are filed for each of the co-
registrants and no separate financial statements are included for each of the
co-registrants because the co-registrants are effectively jointly and
severally liable with respect to the Notes and because such separate periodic
or annual reports and such separate financial statements are not deemed
material to investors.
2
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ROSEWOOD CARE CENTERS CAPITAL FUNDING CORPORATION
<TABLE>
INDEX
<CAPTION>
PART I FINANCIAL INFORMATION Page
- ----------------------------- ----
<S> <C>
Item 1. Financial Statements 4
Rosewood Care Centers Capital Funding Corporation:
Balance Sheet 5
Statement of Operations 6
Statement of Cash Flows 7
Notes to Financial Statement 8
Rosewood Care Center Obligated Companies:
Rosewood Care Center, Inc. of Swansea
Rosewood Care Center, Inc. of Galesburg
Rosewood Care Center, Inc. of East Peoria
Rosewood Care Center, Inc. of Peoria
Rosewood Care Center, Inc. of Alton
Rosewood Care Center, Inc. of Moline
Swansea Real Estate, Inc.
Galesburg Real Estate, Inc.
East Peoria Real Estate, Inc.
Peoria Real Estate, Inc.
Alton Real Estate, Inc.
Moline Real Estate, Inc.
Combined Balance Sheet 9
Combined Statement of Operations 11
Combined Statement of Cash Flows 12
Notes to Combined Financial Statements 13
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 15
<CAPTION>
PART II OTHER INFORMATION
- --------------------------
<S> <C>
Item 1. Legal Proceedings 22
Item 2. Changes in Securities 22
Item 3. Defaults Upon Senior Securities 22
Item 4. Submission of Matters to a Vote of Security Holders 22
Item 5. Other Information 22
Item 6. Exhibits and Reports on Form 8-K 22
SIGNATURES 23
- ----------
INDEX TO EXHIBITS 37
- -----------------
</TABLE>
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PART I FINANCIAL INFORMATION
- -----------------------------
ITEM 1. FINANCIAL STATEMENTS
4
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<TABLE>
ROSEWOOD CARE CENTERS CAPITAL FUNDING CORPORATION
BALANCE SHEET
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<CAPTION>
June 30, Sept. 30,
ASSETS 1998 1998
------ -------- ---------
<S> <C> <C>
Cash $ 262 $ 262
Mortgage notes receivable, Rosewood Companies 25,561 25,240
Accrued interest receivable - -
------- -------
$25,823 $25,502
------- -------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
First mortgage redeemable bonds $25,666 $25,347
Accrued interest 156 154
Stockholders' equity:
Common stock, $1 par value
Authorized - 30,000 shares
Issued and outstanding - 500 shares,
at issue price 1 1
Retained earnings - -
------- -------
$25,823 $25,502
------- -------
The accompanying notes are an integral part of this financial statement.
</TABLE>
5
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<TABLE>
ROSEWOOD CARE CENTER CAPITAL FUNDING CORPORATION
STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<CAPTION>
Three Months
Ended
September 30,
-----------------------
1997 1998
---- ----
<S> <C> <C>
Interest income $496 $461
Interest expense $496 $461
---- ----
Net Income $ 0 $ 0
---- ----
The accompanying notes are an integral part of this financial statement.
</TABLE>
6
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<TABLE>
ROSEWOOD CARE CENTER CAPITAL FUNDING CORPORATION
STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<CAPTION>
Three Months
Ended
September 30,
--------------------
1997 1998
----- -----
<S> <C> <C>
Cash flow from operating activities:
Net income $ 0 $ 0
Decrease in accrued interest receivable 167 -
Increase (decrease) in accrued interest payable (2) (2)
----- -----
Net cash provided by operating activities 165 (2)
----- -----
Cash flow from investing activities:
Collections on notes receivable 380 321
----- -----
Net cash used by investing activities 380 321
----- -----
Cash flow from financing operations:
Reduction of redeemable bonds (284) (319)
----- -----
Net cash provided by financing (284) (319)
----- -----
Net increase (decrease) in cash 261 -0-
Cash, beginning 1 262
----- -----
Cash, ending 262 262
----- -----
Cash paid for interest $ 496 $ 461
----- -----
The accompanying notes are an integral part of this financial statement.
</TABLE>
7
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ROSEWOOD CARE CENTERS CAPITAL FUNDING CORPORATION
NOTES TO FINANCIAL STATEMENTS
1. Interim Financial Statements
----------------------------
In the opinion of the Company, these unaudited financial statements
include all adjustments necessary for a fair presentation of its
financial position as of June 30, 1998, and September 30, 1998, and the
results of its operations and its cash flows for the three month period
ended September 30, 1997 and 1998. Such adjustments were of a normal
recurring nature.
The results of operations for the three months ended September 30, 1997
and 1998 are not necessarily indicative of the results for the full
year.
It is suggested that these financial statements be read in conjunction
with the financial statements, accounting policies and financial notes
thereto included in the Form 10K Annual Report (No. 33-65948), which
has previously been filed with the Commission.
2. Issuance of Bonds
-----------------
On October 21, 1993, the Company issued $33,000,000 of its 7-1/4% First
Mortgage Redeemable Bonds due November 1, 2013.
Of the ending cash balance, $ 261,000 represents the note receivable
payment on the 25th of the month which is held in the Bond Payment Fund
- Principal and Interest accounts until it is disbursed to the Bond
Holders on the 1st of the following month.
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<TABLE>
ROSEWOOD CARE CENTER
FACILITY COMPANIES AND REAL ESTATE COMPANIES
COMBINED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<CAPTION>
June 30, Sept 30,
ASSETS 1998 1998
------ -------- --------
<S> <C> <C>
Current assets:
Cash $ 2,866 $ 751
Accounts receivable - residents, net of
allowance for doubtful accounts of $168 and
$168 respectively 1,352 1,426
Accounts receivable - third party payor 2,766 3,505
Interest receivable 282 128
Due from affiliates 327 239
Prepaid insurance and other prepaids 44 184
Deferred income tax benefits 52 52
------- -------
Total current assets 7,689 6,285
------- -------
Property, plant and equipment:
Land 943 943
Site improvements 2,140 2,140
Building 17,830 17,830
Equipment 3,962 4,024
Leasehold improvements 389 427
------- -------
25,264 25,364
Less accumulated depreciation 8,282 8,506
------- -------
16,982 16,858
------- -------
Other assets:
Notes receivable from Rosewood Care Center
Holding Company 6,910 7,740
Amortizable Costs, Net 840 809
------- -------
7,750 8,549
------- -------
$32,421 $31,692
------- -------
The accompanying notes are an integral part of these financial statements.
</TABLE>
9
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<TABLE>
ROSEWOOD CARE CENTER
FACILITY COMPANIES AND REAL ESTATE COMPANIES
COMBINED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<CAPTION>
June 30, Sept 30,
LIABILITIES AND STOCKHOLDERS' EQUITY 1998 1998
------------------------------------ -------- --------
<S> <C> <C>
Current liabilities:
Current portion of long-term debt $ 2,071 $ 2,109
Accounts payable - trade 2,144 2,176
Accrued expenses:
Salaries and payroll taxes 576 367
Vacation and employee fringes 257 239
Accrued Rent 43 25
Real estate taxes 471 342
Management fees - affiliate 599 364
Income taxes 4 92
Dividends payable 801 1,008
------- -------
Total current liabilities 6,966 6,722
------- -------
Long-term debt:
Notes payable - Rosewood Care Center
Capital Funding Corporation 25,561 25,240
------- -------
25,561 25,240
Less current maturities 2,071 2,109
------- -------
23,490 23,131
------- -------
Stockholders' equity:
Common stock 65 65
Paid-in capital 481 481
Retained earnings 1,419 1,293
------- -------
1,965 1,839
------- -------
$32,421 $31,692
------- -------
The accompanying notes are in integral part of these financial statements.
</TABLE>
10
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<TABLE>
ROSEWOOD CARE CENTER
FACILITY COMPANIES AND REAL ESTATE COMPANIES
COMBINED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<CAPTION>
Three Months
Ended
Sept. 30,
---------------------
1997 1998
------ ------
<S> <C> <C>
Patient service revenue:
Private $4,830 $4,914
Medicare 2,251 2,528
Medicaid 374 424
Other patient revenues, net of expenses 66 45
------ ------
7,521 7,911
------ ------
Operating expenses:
Facility expenses:
Administrative expense 253 276
Employee fringe benefits 473 552
Dietary 473 527
Nursing 1,822 2,219
Ancillary services 1,411 1,041
Plant utilities and maintenance 313 354
Housekeeping and laundry 237 302
Social services and activities 170 187
------ ------
5,152 5,458
------ ------
Income after facility expenses 2,369 2,453
------ ------
Nonfacility expenses:
Rent -0- 111
Real estate taxes and insurance 139 140
Base management fees 198 214
Illinois Medicaid assessments 99 107
Depreciation and amortization 266 255
------ ------
702 827
------ ------
Income before incentives 1,667 1,626
Incentive management fees (426) (359)
Officers' bonuses - -
------ ------
Income from operations 1,241 1,267
------ ------
Other income (expense):
Interest income 169 147
Interest expense (496) (461)
------ ------
(327) (314)
------ ------
Income before income taxes 914 953
Income tax expense (83) (71)
------ ------
Net income 831 882
Retained earnings, beginning 1,388 1,419
Dividends declared (789) (1,008)
------ ------
Retained earnings, ending $1,430 $1,293
------ ------
The accompanying notes are an integral part of these financial statements.
</TABLE>
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<TABLE>
ROSEWOOD CARE CENTER
FACILITY COMPANIES AND REAL ESTATE COMPANIES
COMBINED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<CAPTION>
Three Months
Ended
September 30,
---------------------
1997 1998
------ -------
<S> <C> <C>
Cash flow from operating activities:
Net income $ 831 $ 882
Adjustments:
Depreciation 234 224
Amortization 32 31
Decrease (increase) in:
Accounts receivable - residents (262) (74)
Accounts receivable - third party payors 970 (739)
Other receivables and prepaids (140) 102
Increase (decrease) in:
Accounts payable - trade 69 32
Accrued salaries, taxes and fringes (118) (227)
Accrued real estate taxes (149) (129)
Accrued management fees 161 (235)
Other payables and accruals (37) 70
------ -------
Net cash provided by operating activities 1,591 (63)
------ -------
Cash flow from investing activities:
Purchase of property and equipment (26) (100)
Loans and deposits with affiliate 342 (830)
------ -------
Net cash (used) by investing activities 316 (930)
------ -------
Cash flow from financing activities:
Reduction of long-term debt (380) (321)
Dividends paid (543) (801)
------ -------
Net cash (used) by financing activities (923) (1,122)
------ -------
Net increase (decrease) in cash 984 (2,115)
Cash, beginning 2,320 2,866
------ -------
Cash, ending $3,304 $ 751
------ -------
Cash paid for:
Interest $ 586 $ 461
------ -------
Income taxes paid (refunded) $ 50 $ (20)
------ -------
The accompanying notes are an integral part of these financial statements.
</TABLE>
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ROSEWOOD CARE CENTER
FACILITY COMPANIES AND REAL ESTATE COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS
1. Interim Financial Statements
----------------------------
In the opinion of the Companies, these unaudited combined financial
statements include all adjustments necessary for a fair presentation of
their financial position as of June 30, 1998 and September 30, 1998 and
the results of their operations and their cash flows for the three
month periods ended September 30, 1997 and 1998. Such adjustments were
of a normal recurring nature.
The results of operations for the three month period ended September
30, 1997 and 1998, are not necessarily indicative of the results for
the full years.
It is suggested that these financial statements be read in conjunction
with the financial statements, accounting policies and financial notes
thereto included in the Form 10K Annual Report (No. 33-65948), which
has previously been filed with the Commission.
2. Litigation
----------
The Companies, from time to time, are involved in litigation in the
ordinary course of business including disputes involving management
contracts, patient services, employment services, employment claims and
construction matters. The Companies are also involved in routine
administrative and judicial proceedings regarding permits and expenses.
The Companies are not a party to any lawsuit or proceeding which, in
the opinion of management, is individually or in the aggregate, likely
to have a material adverse effect on the combined financial position or
results of operations of the Companies.
3. Refinancing of Long-Term Debt
-----------------------------
On October 21, 1993, the Companies refinanced their long-term debt with
Rosewood Care Centers Capital Funding Corporation, which issued
$33,000,000 of its 7-1/4% First Mortgage Redeemable Bonds due November
1, 2013.
Remaining loan proceeds were loaned to Rosewood Care Center Holding
Company under unsecured promissory notes bearing interest at 7-1/4% per
annum and having maturities of December 1999.
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ROSEWOOD CARE CENTER
FACILITY COMPANIES AND REAL ESTATE COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS
3. Refinancing of Long-Term Debt (Continued)
-----------------------------------------
Loan costs of $609,000 and underwriter's discount of $841,500 are being
amortized over the term of the long-term debt, on the interest method.
4. Dividends
---------
Dividends in the amount of $1,008,000 were declared during the three
months ended September 30, 1998.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED WITH
THREE MONTHS ENDED SEPTEMBER 30, 1997
ROSEWOOD CARE CENTERS CAPITAL FUNDING CORPORATION
The Corporation is a pass through entity. Interest income and expenses
offset, resulting in no income or loss.
THE COMBINED FACILITY COMPANIES AND REAL ESTATE COMPANIES
Overview
--------
The Companies' operating strategy focuses on the average daily rate as
well as on occupancy levels in order to maximize revenues from the
facilities. The Companies principally market their services to private
paying patients. Revenues from this market continued to grow in 1998.
However, the underperformance of the facility in East Peoria, where occupancy
has decreased appreciably due to administrative turnover and operational
difficulties, will continue into the next fiscal year.
Marketing
---------
The Companies' attempt to increase admissions through marketing
programs. The Companies' marketing programs are executed under the direction
of a full time marketing staff member employed by HSM Management. Marketing
is done through direct mail, community programs and television. Although the
Companies provide long-term nursing home care, their marketing strategy
emphasizes short-term nursing home care for rehabilitative purposes. The
Companies believe this emphasis has an appeal to a much larger private payor
market than exists for strictly long-term care oriented nursing homes.
Governmental Regulation and Reimbursement
-----------------------------------------
The Companies' nursing facilities are required to comply with various
federal and state health care regulations and statutes. Compliance with the
state licensing regulations is a prerequisite for the operation of the
facilities and for participation in government sponsored health care programs
such as Medicaid and Medicare.
All six facilities participate in the federally administered Medicare
and Medicaid programs. Medicare is a health insurance program for the aged
and certain other disabled individuals, operated by the federal government
and administered by an insurance intermediary. As a result of the Companies'
emphasis on short-term rehabilitative nursing care, which is covered by
Medicare, the percentage of patient service revenue attributable to Medicare
continues to be a significant sector of the Companies' total revenue.
Health care reform continues to be a high priority concern at both the
Federal and State government levels. In August 1997, the Balanced Budget Act
of 1997 was signed into law. Included in the law are program changes
directed at balancing the federal budget. The legislation changes Medicare
and Medicaid policy in a number of ways as follows:
a) Development of new Medicare and Medicaid health plan options;
b) Creation of additional safeguards designed to prevent fraud and
abuse;
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c) A 10% reduction in Part B therapy costs for the period January 1,
1998 through July 1, 1998. As of July 1, 1998, reimbursement for services is
based on fee schedules established by the United States Department of Health
and Human Services Health Care Financing Administration ("HCFA");
d) Phase-in of a Medicare Prospective Payment System ("PPS") for
skilled nursing facilities effective July 1, 1998; and
e) Limitations in Part B therapy charges per beneficiary per year.
The new legislation will force skilled nursing facilities to contain
costs as well as place further focus on patient outcomes. At this time, the
Companies have not been able to assess the full impact of the changes due to
the uncertainty of the interpretation of the legislation by HCFA and,
therefore, no assurances can be made as to the impact of this legislation or
any future health care legislation on the Companies' financial position,
results of operations or cash flows. However, future and current federal
legislative changes may have a negative impact on the operations of the
Companies.
PPS was effective for all of the Companies on July 1, 1998. This has
changed the manner in which the facilities are paid for inpatient services
provided to Medicare beneficiaries.
PPS will have a three year phase-in period. For the fiscal year ending
June 30, 1999, the Medicare reimbursement rate will be based 75% on the June
30, 1995 facility-specific Medicare costs, as adjusted for inflation, and 25%
will be federally determined based on the acuity level of the Medicare
esetents. For the fiscal year ending June 30, 2000, the rate will be based
50% on the 1995 facility-specific costs and 50% on the federally determined
acuity rate. For the fiscal year ending June 30, 2001, the Medicare
reimbursement will be based 25% on the 1995 facility-specific costs and 75%
on the federally determined acuity rate. For the fiscal year ending June 30,
2002, the Medicare reimbursement rate will be based entirely on the federally
determined rate based on the acuity level of the patients.
The Companies are analyzing their 1995 facility rates and the acuity
level of the Medicare patients in the facilities. Based on this analysis,
the Companies hope to implement changes to lower the cost of providing
services to their Medicare residents. Should the Companies be unable to
execute the changes to reduce costs, PPS could have a material negative
effect on the Companies' financial position and results of operations.
Under reimbursement regulations effective through June 30, 1998, funds
received under Medicare programs are subject to audit by the third party
payor responsible for administering the facility account. This results
either in amounts due to or from the facilities based on the actual costs of
participating in the Medicare program during the year. Past audits of the
Companies' reimbursements through the fiscal year ending June 30, 1996, have
not resulted in any material adjustments for any of the Companies that were
not otherwise indemnified for by private vendors to the Companies.
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Year 2000
---------
Many computers currently in use in business and government use only two
digits, rather than four, to identify the year where information about the
date is entered into or automatically added to computer files. These
computers automatically add the "19" prefix to the last two digits the
computer reads for the year when date information becomes part of a computer
file. Thus, when "2000" is entered, the computer will only read the "00" and
interpret the date as "1900", rather than "2000". This is becoming known as
the Year 2000 ("Y2K") problem. This issue is more of a problem for systems
employing large mainframe computers and other similar or older systems.
Additional problems come from microprocessors embedded in machinery. The
Companies do not utilize mainframes and have updated their computer systems
recently, including accounting and clinical software and hardware. The
Companies are in the process of upgrading all of the Companies computers to
insure microprocessor compatibility.
Investigation of readiness of all mechanical systems and other
equipment in the Companies' facilities has begun and equipment upgrades and
readiness are scheduled to continue over the course of the next year. The
Companies believe their internal accounting and patient management systems
will not be materially disrupted or adversely affected by the Y2K problem
because of software upgrades. Internal software and hardware systems have
undergone extensive upgrading in the last two years, in part to address the
Y2K issues. The Companies will not be making any significant expenditures
for computer equipment or software upgrades, since the cost is being paid for
by the affiliated management company.
The Companies have had communications with their principal suppliers to
determine the extent to which the Companies' systems and operations are
vulnerable to third party failure to remedy their own year 2000 issues.
There can be no assurance that the systems of other companies or those of the
State and Federal governments, on which the Companies' operations rely, will
be timely converted and will not have an adverse effect on the Companies'
operations.
The Companies receive substantial payments from insurance companies and
Federal and State agencies. The Y2K readiness of individual insurance
companies is not uniform. The Federal government has reported that it is
struggling with the Y2K problem. Accordingly, the Companies can not make any
assurances that these third party payors will be in compliance by January 1,
2000, and if they are not, there would be a significant impact on the
Companies' cash flow. Since under the terms of the bond documents, the
Companies are not allowed additional borrowings, they have not established
any lines of credit and currently have no other contingency plans in place to
normalize cash flow in the event of a significant disruption of payments from
third party payors.
The Companies will continue to use internal and external sources to
insure that the operations of the Companies are not disrupted. However,
there can be no assurance that the goals will be achieved and actual results
could be materially different from those anticipated. Factors that may cause
problems include, but are not limited to, availability and cost of personnel
trained in this area, the ability to locate and correct all computer codes,
third party readiness and other uncertainties.
Operating Results
-----------------
NET REVENUES. Net revenues increased to $7,911,000 for the three
months ended September 30, 1998, from $7,521,000 for the three months ended
September 30, 1997, an increase of $390,000 or 5.2%. Private pay revenue
increased $84,000 from $4,830,000 for the three months ended September 30,
1997, to $4,914,000 for the three months ended September 30, 1998. Revenue
generated from ancillary services increased $24,000, while
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revenue from room charges increased $60,000 when compared to the same three
month period last year. The average private room rate aggregated $116 per
patient day compared to $114 per patient day for the same period last year.
Private census has decreased from 40,022 patient days for 1997 compared to
39,971 patient days for the current period ended September 30, 1998.
Net revenues for Medicare have increased from $2,251,000 for the three
months ended September 30, 1997, to $2,528,000 for the three months ended
September 30, 1998, an increase of $277,000 or 12.3%. The Medicare census
has increased from 8,616 patient days for the same three month period last
year to 10,245 patient days for the three months ended September 30, 1998.
The average Medicare reimbursement rate has decreased approximately $25 per
patient day when compared to the same three month period last year. The
decrease in the reimbursement rate is the direct result of the implementation
of the new PPS reimbursement program previously discussed. The Companies are
closely monitoring the cost associated with providing service to Medicare
qualified residents in an effort to offset any decrease in the Medicare
reimbursement program. The Companies have reduced the cost of drugs provided
to the Medicare residents from an average of $34 per patient day for the
three month period ended September 30, 1997 to an average of $14 per patient
day for the three month period ended September 30, 1998. In addition to the
decrease in drug costs, the Companies were able to decrease the average cost
of therapy by $33 per patient day.
Medicaid revenue has increased from $374,000 for the same period last
year to $424,000 for the three months ended September 30, 1998. The
facilities have received an increase in the Medicaid reimbursement rate of
approximately 3%, effective July 1, 1998. The Medicaid census has increased
from 5,491 patient days for the first quarter of fiscal 1997 to 5,927 patient
days for the three months ended September 30, 1998.
The facilities have an average occupancy rate of 82% for the three
months ended September 30, 1998, compared to 86% for the same period last
year. The East Peoria facility is the only facility which continues to have
an occupancy level significantly lower than the other five locations.
Management is of the opinion that this trend will continue. The Alton
facility reflects a decline in occupancy level as a result of a 60 bed
addition which was opened during January 1998. Management is of the opinion
that it could take as long as two years to achieve occupancy levels in excess
of 95% for the expanded Alton facility. The occupancy level of the
facilities for the three months ended September 30, 1998 and 1997 are as
follows:
<TABLE>
<CAPTION>
SEPTEMBER
1998 1997
<S> <C> <C>
Swansea 96.4 98.7
Galesburg 79.8 78.1
Moline 95.8 93.5
Alton 80.5 96.9
Peoria 82.9 88.9
East Peoria 57.5 62.8
AVERAGE 81.8 86.3
</TABLE>
FACILITY OPERATING EXPENSES. Facility operating expenses have
increased approximately $306,000 from $5,152,000 (or $95.18 per patient day)
for the three months
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ended September 30, 1997, to $5,458,000 (or $97.22 per patient day) for the
three months ended September 30, 1998.
Administrative expenses have increased approximately $23,000 or when
compared to the same three month period last year. The majority of the
increase can be accounted for by the increase in payroll and telephone
expense.
The cost of employee fringe benefits increased $79,000 when compared to
the same three month period last year. The major portion of the increase can
be accounted for by the increase in the cost of workers' compensation
insurance, payroll taxes and vacation pay.
Dietary expense increased $54,000 when compared to the same period last
year. Wages have increased $27,000 with the balance of the increase due to
the increase in raw food costs.
Nursing costs have increased $397,000 from $1,822,000 for three month
period ended September 30, 1997 to $2,219,000 for the three months ended
September 30, 1998. Wages have increased $403,000, while the cost of
supplies has decreased $6,000. Included in the increase in wages is
approximately $91,000 resulting from additional staff hired to monitor
effectively the reporting requirements under the new PPS reimbursement
program for Medicare residents previously discussed. Labor costs continue to
increase due to the increased pressure on the availability of qualified
personnel. Management is of the opinion that this employment trend will
continue as long as the economy remains strong. The Companies continue to
monitor labor cost closely since it accounts for the major portion of the
operating cost of the facilities. The Companies will attempt to adjust daily
room rates to offset the increase in costs, while at the same time remaining
competitive in the market place.
Ancillary services have decreased approximately $370,000 when compared
to the same three month period last year. The decrease in costs is the
direct result of the reduction in therapy and drug costs brought about by
reduction in ancillary services provided to the Medicare qualified residents
under the new PPS guidelines.
Plant utilities and maintenance have increased $41,000 when compared to
the same three month period last year. Wages have increased approximately
$3,600, while the cost of utilities has increased $26,000 with the remainder
of the increase a result of inflation. The utility increase is the direct
result of the 60 bed addition to the Alton facility previously discussed.
Housekeeping and laundry costs have increased $65,000 when compared to
the same period last year. Wages increased $52,000 while the cost of
supplies increased $13,000 compared to the same three month period last year.
Social Services and activities costs increased approximately $17,000
when compared to the same three month period last year as a result of
increased labor costs.
Rent, base management fees, and the Illinois Medicaid Assessments have
increased when compared to the same period last year as a result of the
opening of the 60 bed addition to the Alton facility. Rent is paid to an
affiliated company, Alton Real Estate II, L.L.C., which is not a party to the
bond documents.
INCENTIVE FEES. Incentive management fees have decreased when
compared to the same period last year because of losses generated by the low
occupancy at the East Peoria facility which was previously discussed.
19
<PAGE> 20
OTHER INCOME AND EXPENSE. Interest Income has decreased $22,000 when
compared to the same period last year. The reduction is the result of a
decrease in the notes receivable outstanding during most of the period from
the affiliated company, Rosewood Care Center Holding Co. The balance of
notes due from the affiliate has increased from $6,910,000 on June 30, 1998
to $7,740,000 on September 30, 1998. All of the increase in the notes
occurred in the last month of the current three month period ended September
30, 1998.
Interest Expense decreased $35,000 when compared to the same three
month period last year. The decrease is the result of the decrease in long
term debt from $25,561,000 as of June 30, 1998, to $25,240,000 as of
September 30, 1998.
The Facility Companies file a consolidated income tax return with their
parent company, Rosewood Care Center Holding Co. The income of the Real
Estate Companies is taxed at the individual shareholder level, as each real
estate company is a Subchapter S Corporation. The amount reflected as income
taxes is the facilities' portion of federal and state taxes, calculated for
the three months ended September 30, 1998, on an annualized basis.
Liquidity and Capital Resources
-------------------------------
As of September 30, 1998, the Companies had approximately $751,000 in
cash and cash equivalents and a net working capital deficit of $437,000.
Subsequent to September 30, 1998, the facilities received loan repayments
aggregating $2,000,000 from the affiliated company Rosewood Care Center
Holding Co., reducing the outstanding notes receivable due from affiliate.
These loan repayment proceeds result in increasing the working capital from a
deficit to a reserve of $1,563,000 subsequent to September 30, 1998.
For the three months ended September 30, 1998, net cash of $63,000 was
used in operations. Net cash of $930,000 was used in investing activities,
of which $830,000 was loaned to the affiliate Rosewood Care Center Holding
Co. and $100,000 was used by the companies for the purchase of equipment used
in the operation of the facilities. Net cash used in financing activities
aggregated $1,122,000, of which $801,000 was used for the payment of
dividends and $321,000 was used to retire debt.
Based on the receipt of the payment on the notes from the affiliate and
the subsequent settlement received as cost report settlements from Medicare,
discussed below, the Companies believe they have adequate capital for
operations and replacements for the coming year and foreseeable future.
Accounts receivable from private paying residents increased to
$1,426,000 as of September 30, 1998, compared to $1,352,000 as of June 30,
1998. Accounts receivable from third party payors increased from $2,766,000
as of June 30, 1998, to $3,505,000 as of September 30, 1998. Subsequent to
September 30, 1998, the facilities received $1,007,600 as an interim
settlement on the June 30, 1998 cost reports.
The Medicare program continues to face intense scrutiny and significant
cutbacks. As previously noted, budget legislation passed by Congress in
1997, enacted a new Medicare prospective payment system. This new PPS is
intended to help the Medicare program achieve targeted reductions in spending
growth of approximately $9.2 billion for skilled nursing facilities over the
next five years. Effective July 1, 1998 all of the facilities are subject to
the new PPS payment system previously discussed. The Companies are analyzing
their 1995 facility rates and the acuity level of the Medicare patients in
the facilities. Based on this analysis, the Companies hope to implement
changes to lower the cost of providing services to their Medicare residents.
Should the Companies be
20
<PAGE> 21
unable to execute the changes to reduce costs, PPS could have a material
negative effect on the Companies' financial position and results of
operations.
The Companies had no open lines of credit with any financial
institution as of September 30, 1998.
The Companies continue to monitor legislative and other health care
developments and will attempt to structure contractual arrangements to
minimize the impact of reductions in government payment programs. However,
changes in the policies of Medicare and Medicaid as a result of budget cuts
by federal and state governments or other legislative actions could have a
significant adverse effect on the results of operations and cash flow of the
Companies.
21
<PAGE> 22
PART II OTHER INFORMATION
- --------------------------
ITEM 1. LEGAL PROCEEDINGS.
There were no material developments with respect to legal proceedings
during the quarter ended September 30, 1998.
ITEM 2. CHANGES IN SECURITIES.
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
Section 3.17 of the Loan Agreement requires that unless the Companies
maintain at least $1,000,000 in shareholders' equity and at least $1,000,000
in cash or cash equivalents, no distributions or dividends or other payments
may be made to shareholders or affiliates except for certain limited
payments. The financial statements of the Companies for the quarter ending
September 30, 1998 reflect that the Companies failed to meet this requirement
on September 30, 1998. The temporary cash deficiency was caused by the new
Medicare PPS in that, in implementing the new PPS, the intermediary shifted
the payment cycle to later in the month. In addition, the intermediary
experienced delays in implementing its administration of PPS, which caused
further delays in receipt by the Companies of Medicare payments. Medicare
payments which would normally have been received by the middle of September,
were not received by the Companies until the first week of October, after the
end of the quarter.
The Companies contract with a related company, Rosewood Therapy
Services, Inc. to provide speech, physical and occupational therapy services
to the residents of the facilities. Therapy services are provided to the
facilities at competitive market rates, on terms and conditions as would be
entered into with unrelated therapy companies. Amounts paid by the Companies
to Rosewood Therapy Services during the first quarter of the 1999 fiscal
year, aggregated $658,000.
The 60 bed expansion wing at the Alton Rosewood Care Center opened
January 22, 1998.
The 60 bed expansion wing at the Galesburg Rosewood Care Center was
licensed by the State of Illinois and was opened on October 9, 1998.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) See Index to Exhibits on Page 37.
(b) Reports on Form 8-K.
None.
22
<PAGE> 23
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
ROSEWOOD CARE CENTERS CAPITAL
FUNDING CORPORATION, Registrant
Dated: November 12, 1998 By: /s/ Larry D. Vander Maten
--------------------------------------------
Larry D. Vander Maten
President and Director
(Principal Executive Officer and Principal
Financial and Accounting Officer)
23
<PAGE> 24
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
ROSEWOOD CARE CENTER, INC. OF
SWANSEA, Registrant
Dated: November 12, 1998 By: /s/ Larry D. Vander Maten
--------------------------------------------
Larry D. Vander Maten
President and Director
(Principal Executive Officer and Principal
Financial and Accounting Officer)
24
<PAGE> 25
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
ROSEWOOD CARE CENTER, INC. OF
GALESBURG, Registrant
Dated: November 12, 1998 By: /s/ Larry D. Vander Maten
------------------------------------------
Larry D. Vander Maten
President and Director
(Principal Executive Officer and Principal
Financial and Accounting Officer
25
<PAGE> 26
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
ROSEWOOD CARE CENTER, INC. OF
PEORIA, Registrant
Dated: November 12, 1998 By: /s/ Larry D. Vander Maten
--------------------------------------------
Larry D. Vander Maten
President and Director
(Principal Executive Officer and Principal
Financial and Accounting Officer)
26
<PAGE> 27
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
ROSEWOOD CARE CENTER, INC. OF
EAST PEORIA, Registrant
Dated: November 12, 1998 By: /s/ Larry D. Vander Maten
--------------------------------------------
Larry D. Vander Maten
President and Director
(Principal Executive Officer and Principal
Financial and Accounting Officer)
27
<PAGE> 28
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
ROSEWOOD CARE CENTER, INC. OF
ALTON, Registrant
Dated: November 12, 1998 By: /s/ Larry D. Vander Maten
--------------------------------------------
Larry D. Vander Maten
President and Director
(Principal Executive Officer and Principal
Financial and Accounting Officer)
28
<PAGE> 29
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
ROSEWOOD CARE CENTER, INC. OF
MOLINE, Registrant
Dated: November 12, 1998 By: /s/ Larry D. Vander Maten
--------------------------------------------
Larry D. Vander Maten
President and Director
(Principal Executive Officer and Principal
Financial and Accounting Officer)
29
<PAGE> 30
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
SWANSEA REAL ESTATE, INC., Registrant
Dated: November 12, 1998 By: /s/ Larry D. Vander Maten
--------------------------------------------
Larry D. Vander Maten
President and Director
(Principal Executive Officer and Principal
Financial and Accounting Officer)
30
<PAGE> 31
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
GALESBURG REAL ESTATE, INC., Registrant
Dated: November 12, 1998 By: /s/ Larry D. Vander Maten
--------------------------------------------
Larry D. Vander Maten
President and Director
(Principal Executive Officer and Principal
Financial and Accounting Officer)
31
<PAGE> 32
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
PEORIA REAL ESTATE, INC., Registrant
Dated: November 12, 1998 By: /s/ Larry D. Vander Maten
--------------------------------------------
Larry D. Vander Maten
President and Director
(Principal Executive Officer and Principal
Financial and Accounting Officer)
32
<PAGE> 33
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
EAST PEORIA REAL ESTATE, INC., Registrant
Dated: November 12, 1998 By: /s/ Larry D. Vander Maten
--------------------------------------------
Larry D. Vander Maten
President and Director
(Principal Executive Officer and Principal
Financial and Accounting Officer)
33
<PAGE> 34
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
ALTON REAL ESTATE, INC., Registrant
Dated: November 12, 1998 By: /s/ Larry D. Vander Maten
--------------------------------------------
Larry D. Vander Maten
President and Director
(Principal Executive Officer and Principal
Financial and Accounting Officer)
34
<PAGE> 35
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
MOLINE REAL ESTATE, INC., Registrant
Dated: November 12, 1998 By: /s/ Larry D. Vander Maten
--------------------------------------------
Larry D. Vander Maten
President and Director
(Principal Executive Officer and Principal
Financial and Accounting Officer)
35
<PAGE> 36
ROSEWOOD CARE CENTERS CAPITAL FUNDING CORPORATION
EXHIBIT INDEX
These Exhibits are numbered in accordance with the Exhibit Table of Item 601
of Regulation S-K
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
4.1 Reference is made to Article III of the Articles of Incorporation of
Rosewood Care Centers Capital Funding Corporation filed on September
28, 1994 as Exhibit 3.1 (and referenced in Exhibit 4.1) of the
Form 10-K.
4.2 Reference is made to the Trust Indenture filed on November 29, 1993
as Exhibit 4.2 of the Form 10-Q of Registrants.
4.3 Reference is made to the Bond filed on November 29, 1993 as Exhibit
4.3 of the Form 10-Q of Registrants.
4.4 Reference is made to the Loan Guaranty Agreement between Rosewood
Care Centers Capital Funding Corporation and Rosewood Care Center,
Inc. of Alton and the additional Loan Guaranty Agreements listed on
the Schedule filed on November 29, 1993 as Exhibit 4.4 of the Form
10-Q of Registrants.
4.5 Reference is made to the Note executed by Alton Real Estate, Inc. and
the additional Notes listed on the Schedule filed on November 29,
1993 as Exhibit 4.5 of the Form 10-Q of Registrants.
10.1 Reference is made to the Trust Indenture filed on November 29, 1993
as Exhibit 4.2 of the Form 10-Q of Registrants.
10.2 Reference is made to the Collateral Pledge and Security Agreement
between Rosewood Care Centers Capital Funding Corporation and Alton
Real Estate, Inc. and the additional Collateral Pledge and Security
Agreements listed on the Schedule filed on November 29, 1993 as
Exhibit 10.2 of the Form 10-Q of Registrants.
10.3 Reference is made to the Mortgage Between Alton Real Estate, Inc. and
Rosewood Care Centers Capital Funding Corporation and the additional
Mortgages listed on the Schedule filed on November 29, 1993 as
Exhibit 10.3 of the Form 10-Q of Registrants.
10.4 Reference is made to the Security Agreement between Rosewood Care
Centers Capital Funding Corporation and Rosewood Care Center, Inc. of
Alton and the additional Security Agreements listed on the Schedule
filed on November 29, 1993 as Exhibit 10.4 of the Form 10-Q of
Registrants.
10.5 Reference is made to the Assignment of Rents and Leases between
Rosewood Care Centers Capital Funding Corporation and Alton Real
Estate, Inc. and the additional Assignments of Rents and Leases
listed on the Schedule filed on November 29, 1993 as Exhibit 10.5 of
the Form 10-Q of Registrants.
10.6 Reference is made to the Subordination and Attornment Agreement
between Rosewood Care Centers Capital Funding Corporation and Alton
Real Estate, Inc. and the additional Subordination and Attornment
Agreements listed on the Schedule filed on November 29, 1993 as
Exhibit 10.6 of the Form 10-Q of Registrants.
36
<PAGE> 37
10.7 Reference is made to the Acknowledgment and Consent between Rosewood
Care Centers Capital Funding Corporation and Hovan Enterprises, Inc.
filed on November 29, 1993 as Exhibit 10.7 of the Form 10-Q of
Registrants.
10.8 Reference is made to the Administrative Services Agreement between
Hovan Enterprises, Inc. and Alton Real Estate, Inc. and the
additional Administrative Services Agreements listed on the Schedule
filed on November 29, 1993 as Exhibit 10.8 of the Form 10-Q of
Registrants.
10.9 Reference is made to the Revised and Restated Management Agreement
between Rosewood Care Center, Inc. of Alton and Hovan Enterprises,
Inc. and the additional Revised and Restated Management Agreements
listed on the Schedule filed on November 29, 1993 as Exhibit 10.9 of
the Form 10-Q of Registrants.
10.10 Reference is made to the Lease between Alton Real Estate, Inc. and
Rosewood Care Center, Inc. of Alton and the additional Leases listed
on the Schedule filed on November 29, 1993 as Exhibit 10.10 of the
Form 10-Q of Registrants.
10.11 Reference is made to the Assignment of Management Agreement between
Rosewood Care Center, Inc. of Alton and Mercantile Bank and the
additional Assignments of Management Agreement listed on the Schedule
filed on November 29, 1993 as Exhibit 10.11 of the Form 10-Q of
Registrants.
10.12 Reference is made to the Contract between Resident and Facility filed
on July 13, 1993 as Exhibit 10.12 of the Registration Statement of
Registrants (No. 33-65948) declared effective October 14, 1993.
10.13 Reference is made to the Loan Agreement among Rosewood Care Centers
Capital Funding Corporation and Alton Real Estate, Inc., Swansea Real
Estate, Inc., Peoria Real Estate, Inc., East Peoria Real Estate,
Inc., Moline Real Estate, Inc., and Galesburg Real Estate, Inc. filed
on November 29, 1993 as Exhibit 10.13 of the Form 10-Q of
Registrants.
10.14 Reference is made to the Loan Guaranty Agreement filed on November
29, 1993 as Exhibit 4.4 of the Form 10-Q of Registrants.
10.15 Reference is made to the Letter of Credit issued by Sun Bank,
National Association to Mercantile Bank of St. Louis N.A. as Trustee
under the Trust Indenture on December 6, 1993 and substituted for the
cash in the Debt Service Reserve Fund on December 9, 1993, filed on
February 11, 1994 as Exhibit 10.15 on the Form 10-Q of the
Registrants.
10.16 Reference is made to the renewal of the Letter of Credit filed on
February 11, 1994 as Exhibit 10.15 on the Form 10-Q of the
Registrants, which renewal was filed on February 14, 1995 as Exhibit
10.16 of the Form 10-Q of the Registrants.
10.17 Reference is made to the renewal of the Letter of Credit filed on
February 11, 1994 as Exhibit 10.15 on the Form 10-Q of the
Registrants, which renewal was filed on February 13, 1996 as Exhibit
10.17 of the Form 10-Q of the Registrants.
10.18 Reference is made to the renewal of the Letter of Credit filed on
February 11, 1994 as Exhibit 10.15 on the Form 10-Q of the
Registrants, which renewal was filed on November 13, 1996 as Exhibit
10.18 of the Form 10-Q of the Registrants.
37
<PAGE> 38
10.19 Reference is made to the Consultant Services Agreement between
Rosewood Therapy Services, Inc. and Rosewood Care Center, Inc. of
Alton filed on November 12, 1997 as Exhibit 10.19 to the Form 10-Q of
the Registrants.(Additional Consultant Services Agreements listed on
the Schedule).
10.20 Reference is made to Renewal of the Letter of Credit filed on
February 11, 1994 as Exhibit 10.15 on the Form 10-Q of the
Registrants, which renewal was filed on February 11, 1998 as
Exhibit 10.20 of the Form 10-Q of the Registrants.
10.21 Consultant Services Agreement between Rosewood Therapy Services, Inc.
and Rosewood Care Center, Inc. of Alton (Revised) (Additional
Consultant Services Agreements listed on the Schedule).
27.1 Financial Data Schedule of Rosewood Care Center Capital Funding
Corporation.
27.2 Financial Data Schedule of Rosewood Care Center of Galesburg.
27.3 Financial Data Schedule of Rosewood Care Center of Swansea.
27.4 Financial Data Schedule of Rosewood Care Center of East Peoria.
27.5 Financial Data Schedule of Rosewood Care Center of Peoria.
27.6 Financial Data Schedule of Rosewood Care Center of Alton.
27.7 Financial Data Schedule of Rosewood Care Center of Moline.
27.8 Financial Data Schedule of Swansea Real Estate.
27.9 Financial Data Schedule of Galesburg Real Estate.
27.10 Financial Data Schedule of East Peoria Real Estate.
27.11 Financial Data Schedule of Peoria Real Estate.
27.12 Financial Data Schedule of Alton Real Estate.
27.13 Financial Data Schedule of Moline Real Estate.
99.1 Reference is made to the Amended and Restated License Agreement filed
September 28, 1994 as Exhibit 99.1 of Form 10-K of Registrants.
99.2 Reference is made to the Medicare Provider Agreement between The
Secretary of Health and Human Services and Rosewood Care Center, Inc.
of Swansea filed on July 13, 1993 as Exhibit 99.2 of the Registration
Statement of Registrants (No. 33-65948) declared effective October
14, 1993.
99.3 Reference is made to the Medicare Provider Agreement between The
Secretary of Health and Human Services and Rosewood Care Center, Inc.
of Alton filed on July 13, 1993 as Exhibit 99.3 of the Registration
Statement of Registrants (No. 33-65948) declared effective October
14, 1993.
99.4 Reference is made to the Medicare Provider Agreement between The
Secretary of Health and Human Services and Rosewood Care Center, Inc.
of East Peoria filed on
38
<PAGE> 39
July 13, 1993 as Exhibit 99.4 of the Registration Statement of
Registrants (No. 33-65948) declared effective October 14, 1993.
99.5 Reference is made to the Medicare Provider Agreement between The
Secretary of Health and Human Services and Rosewood Care Center, Inc.
of Peoria filed on July 13, 1993 as Exhibit 99.5 of the Registration
Statement of Registrants (No. 33-65948) declared effective October
14, 1993.
99.6 Reference is made to the Medicare Provider Agreement between The
Secretary of Health and Human Services and Rosewood Care Center, Inc.
of Galesburg filed on July 13, 1993 as Exhibit 99.6 of the
Registration Statement of Registrants (No. 33-65948) declared
effective October 14, 1993.
99.7 Reference is made to the Medicare Provider Agreement between The
Secretary of Health and Human Services and Rosewood Care Center, Inc.
of Moline filed on July 13, 1993 as Exhibit 99.7 of the Registration
Statement of Registrants (No. 33-65948) declared effective October
14, 1993.
99.8 Reference is made to the Medicaid Provider Agreement between The
Illinois Department of Public Aid and Rosewood Care Center, Inc. of
Swansea filed on July 13, 1993 as Exhibit 99.8 of the Registration
Statement of Registrants (No. 33-65948) declared effective October
14, 1993.
99.9 Reference is made to the Medicaid Provider Agreement between The
Illinois Department of Public Aid and Rosewood Care Center, Inc. of
Alton filed on July 13, 1993 as Exhibit 99.9 of the Registration
Statement of Registrants (No. 33-65948) declared effective October
14, 1993.
99.10 Reference is made to the Medicaid Provider Agreement between The
Illinois Department of Public Aid and Rosewood Care Center, Inc. of
East Peoria filed on July 13, 1993 as Exhibit 99.10 of the
Registration Statement of Registrants (No. 33-65948) declared
effective October 14, 1993.
99.11 Reference is made to the Medicaid Provider Agreement between The
Illinois Department of Public Aid and Rosewood Care Center, Inc. of
Peoria filed on July 13, 1993 as Exhibit 99.11 of the Registration
Statement of Registrants (No. 33-65948) declared effective October
14, 1993.
99.12 Reference is made to the Medicaid Provider Agreement between The
Illinois Department of Public Aid and Rosewood Care Center, Inc. of
Galesburg filed on July 13, 1993 as Exhibit 99.12 of the Registration
Statement of Registrants (No. 33-65948) declared effective October
14, 1993.
99.13 Reference is made to the Medicaid Provider Agreement between The
Illinois Department of Public Aid and Rosewood Care Center, Inc. of
Moline filed on July 13, 1993 as Exhibit 99.13 of the Registration
Statement of Registrants (No. 33-65948) declared effective October
14, 1993.
99.14 Reference is made to the Lease Agreement filed on September 28, 1994
as Exhibit 99.14 of the Form 10-K of Registrants.
99.15 Reference is made to the Revised and Restated Grant and Declaration
of Easements filed on September 28, 1994 as Exhibit 99.15 of the Form
10-K of Registrants.
39
<PAGE> 40
99.16 Reference is made to the Managed Care Agreement between Rosewood Care
Center, Inc. of Moline, Heritage National Health Plan, Inc., John
Deere Family Health Plan and Deere and Company filed on May 15, 1995
as Exhibit 99.16 of the Form 10-Q of Registrants.
99.17 Reference is made to the Skilled Nursing Facility Agreement between
Health Care Service Corporation and Rosewood Care Center, et al filed
on June 30, 1996 as Exhibit 99.17 of the Form 10-K of Registrants.
<CAPTION>
SCHEDULE
THE FOLLOWING DOCUMENTS ARE SUBSTANTIALLY IDENTICAL TO THE DOCUMENT FILED AS
THE CORRESPONDING EXHIBIT IN THE 10-Q OF THE REGISTRANTS FILED ON NOVEMBER
23, 1993 10-Q.
<S> <C>
4.4 Loan Guaranty Agreement between Rosewood Care Centers Capital Funding
Corporation and Rosewood Care Center, Inc. of Swansea
Loan Guaranty Agreement between Rosewood Care Centers Capital Funding
Corporation and Rosewood Care Center, Inc. of Peoria
Loan Guaranty Agreement between Rosewood Care Centers Capital Funding
Corporation and Rosewood Care Center, Inc. of East Peoria
Loan Guaranty Agreement between Rosewood Care Centers Capital Funding
Corporation and Rosewood Care Center, Inc. of Moline
Loan Guaranty Agreement between Rosewood Care Centers Capital Funding
Corporation and Rosewood Care Center, Inc. of Galesburg
4.5 Note executed by Swansea Real Estate, Inc.
Note executed by Peoria Real Estate, Inc.
Note executed by East Peoria Real Estate, Inc.
Note executed by Moline Real Estate, Inc.
Note executed by Galesburg Real Estate, Inc.
10.2 Collateral Pledge and Security Agreement between Rosewood Care
Centers Capital Funding Corporation and Swansea Real Estate, Inc.
Collateral Pledge and Security Agreement between Rosewood Care
Centers Capital Funding Corporation and Peoria Real Estate, Inc.
Collateral Pledge and Security Agreement between Rosewood Care
Centers Capital Funding Corporation and East Peoria Real Estate, Inc.
Collateral Pledge and Security Agreement between Rosewood Care
Centers Capital Funding Corporation and Moline Real Estate, Inc.
Collateral Pledge and Security Agreement between Rosewood Care
Centers Capital Funding Corporation and Galesburg Real Estate, Inc.
10.3 Mortgage Between Swansea Real Estate, Inc. and Rosewood Care Centers
Capital Funding Corporation
40
<PAGE> 41
Mortgage Between Peoria Real Estate, Inc. and Rosewood Care Centers
Capital Funding Corporation
Mortgage Between East Peoria Real Estate, Inc. and Rosewood Care
Centers Capital Funding Corporation
Mortgage Between Moline Real Estate, Inc. and Rosewood Care Centers
Capital Funding Corporation
Mortgage Between Galesburg Real Estate, Inc. and Rosewood Care
Centers Capital Funding Corporation
10.4 Security Agreement between Rosewood Care Centers Capital Funding
Corporation and Rosewood Care Center, Inc. of Swansea
Security Agreement between Rosewood Care Centers Capital Funding
Corporation and Rosewood Care Center, Inc. of Peoria
Security Agreement between Rosewood Care Centers Capital Funding
Corporation and Rosewood Care Center, Inc. of East Peoria
Security Agreement between Rosewood Care Centers Capital Funding
Corporation and Rosewood Care Center, Inc. of Moline
Security Agreement between Rosewood Care Centers Capital Funding
Corporation and Rosewood Care Center, Inc. of Galesburg
10.5 Assignment of Rents and Leases between Rosewood Care Centers Capital
Funding Corporation and Swansea Real Estate, Inc.
Assignment of Rents and Leases between Rosewood Care Centers Capital
Funding Corporation and Peoria Real Estate, Inc.
Assignment of Rents and Leases between Rosewood Care Centers Capital
Funding Corporation and East Peoria Real Estate, Inc.
Assignment of Rents and Leases between Rosewood Care Centers Capital
Funding Corporation and Moline Real Estate, Inc.
Assignment of Rents and Leases between Rosewood Care Centers Capital
Funding Corporation and Galesburg Real Estate, Inc.
10.6 Subordination and Attornment Agreement between Rosewood Care Centers
Capital Funding Corporation and Swansea Real Estate, Inc.
Subordination and Attornment Agreement between Rosewood Care Centers
Capital Funding Corporation and Peoria Real Estate, Inc.
Subordination and Attornment Agreement between Rosewood Care Centers
Capital Funding Corporation and East Peoria Real Estate, Inc.
Subordination and Attornment Agreement between Rosewood Care Centers
Capital Funding Corporation and Moline Real Estate, Inc.
41
<PAGE> 42
Subordination and Attornment Agreement between Rosewood Care Centers
Capital Funding Corporation and Galesburg Real Estate, Inc.
10.8 Administrative Services Agreement between Hovan Enterprises, Inc. and
Swansea Real Estate, Inc.
Administrative Services Agreement between Hovan Enterprises, Inc. and
Peoria Real Estate, Inc.
Administrative Services Agreement between Hovan Enterprises, Inc. and
East Peoria Real Estate, Inc.
Administrative Services Agreement between Hovan Enterprises, Inc. and
Moline Real Estate, Inc.
Administrative Services Agreement between Hovan Enterprises, Inc. and
Galesburg Real Estate, Inc.
10.9 Revised and Restated Management Agreement between Rosewood Care
Center, Inc. of Swansea and Hovan Enterprises, Inc.
Revised and Restated Management Agreement between Rosewood Care
Center, Inc. of Peoria and Hovan Enterprises, Inc.
Revised and Restated Management Agreement between Rosewood Care
Center, Inc. of East Peoria and Hovan Enterprises, Inc.
Revised and Restated Management Agreement between Rosewood Care
Center, Inc. of Moline and Hovan Enterprises, Inc.
Revised and Restated Management Agreement between Rosewood Care
Center, Inc. of Galesburg and Hovan Enterprises, Inc.
10.10 Lease between Swansea Real Estate, Inc. and Rosewood Care Center,
Inc. of Swansea
Lease between Swansea Real Estate, Inc. and Rosewood Care Center,
Inc. of Peoria
Lease between Swansea Real Estate, Inc. and Rosewood Care Center,
Inc. of East Peoria
Lease between Swansea Real Estate, Inc. and Rosewood Care Center,
Inc. of Moline
Lease between Swansea Real Estate, Inc. and Rosewood Care Center,
Inc. of Galesburg
10.11 Assignment of Management Agreement between Rosewood Care Center, Inc.
of Swansea and Mercantile Bank
Assignment of Management Agreement between Rosewood Care Center, Inc.
of Peoria and Mercantile Bank
42
<PAGE> 43
Assignment of Management Agreement between Rosewood Care Center, Inc.
of East Peoria and Mercantile Bank
Assignment of Management Agreement between Rosewood Care Center, Inc.
of Moline and Mercantile Bank
Assignment of Management Agreement between Rosewood Care Center, Inc.
of Galesburg and Mercantile Bank
<CAPTION>
THE FOLLOWING DOCUMENTS ARE SUBSTANTIALLY IDENTICAL TO THE DOCUMENT FILED AS
THE CORRESPONDING EXHIBIT IN THE 10-Q OF THE REGISTRANTS FILED ON NOVEMBER
12, 1997
<S> <C>
10.19 Consultant Services Agreement between Rosewood Therapy Services, Inc.
and Rosewood Care Center, Inc. of Swansea
Consultant Services Agreement between Rosewood Therapy Services, Inc.
and Rosewood Care Center, Inc. of Moline
Consultant Services Agreement between Rosewood Therapy Services, Inc.
and Rosewood Care Center, Inc. of Galesburg
Consultant Services Agreement between Rosewood Therapy Services, Inc.
and Rosewood Care Center, Inc. of Peoria
Consultant Services Agreement between Rosewood Therapy Services, Inc.
and Rosewood Care Center, Inc. of East Peoria
<CAPTION>
THE FOLLOWING DOCUMENTS ARE SUBSTANTIALLY IDENTICAL TO THE DOCUMENT FILED AS
THE CORRESPONDING EXHIBIT IN THE 10-Q OF THE REGISTRANTS FILED ON NOVEMBER
12, 1998
<S> <C>
10.21 Consultant Services Agreement between Rosewood Therapy Services, Inc.
and Rosewood Care Center, Inc. of Swansea (Revised)
Consultant Services Agreement between Rosewood Therapy Services, Inc.
and Rosewood Care Center, Inc. of Moline (Revised)
Consultant Services Agreement between Rosewood Therapy Services, Inc.
and Rosewood Care Center, Inc. of Galesburg (Revised)
Consultant Services Agreement between Rosewood Therapy Services, Inc.
and Rosewood Care Center, Inc. of Peoria (Revised)
Consultant Services Agreement between Rosewood Therapy Services, Inc.
and Rosewood Care Center, Inc. of East Peoria (Revised)
</TABLE>
43
<PAGE> 1
EXHIBIT 10.21
44
<PAGE> 2
CONSULTANT SERVICES AGREEMENT
BETWEEN
ROSEWOOD THERAPY SERVICES, INC.
AND
ROSEWOOD CARE CENTER, INC. OF ALTON
THIS CONSULTANT SERVICES AGREEMENT (Agreement) is made and entered into
this 1st day of July, 1998, by and between ROSEWOOD THERAPY SERVICES, INC.
("RTS") and ROSEWOOD CARE CENTER, INC. OF ALTON ("Rosewood").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, Rosewood is a skilled nursing facility that provides
comprehensive rehabilitation and long term care services to persons needing
such services, including where medically indicated, physical, occupational and
speech therapy services (collectively "the Services");
WHEREAS, RTS employs and/or contracts with persons possessing the
requisite licenses, education and training to provide the Services to patients
of Rosewood, and
WHEREAS, Rosewood and RTS desire to enter into this Agreement for RTS to
provide the Services to patients of Rosewood according to the terms and
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and conditions
herein set forth, and other good and valuable consideration, the receipt and
sufficiency of which is hereby expressly acknowledged, the parties covenant
and agree as follows:
1. SERVICES OF RTS. RTS shall provide the Services at the fee set
---------------
forth in Exhibit A, copies of which is attached hereto and incorporated
herein by reference, with the same care and attention that is customarily
provided by RTS to all RTS patients. RTS shall provide the Services in
accordance with all applicable clinical, legal and ethical standards and
within the standards of practice for quality care generally recognized within
the community in which the Services are provided.
2. NO DISCRIMINATION. RTS shall provide the Services without
-----------------
differentiation or discrimination because of race, color, sex, national
origin, religion, political affiliation, age, disability or method of
payment.
3. REIMBURSEMENT FOR SERVICES. Rosewood shall compensate RTS for the
--------------------------
Services provided under this Agreement as set forth on Exhibit A.
4. RECORDS RETENTION. RTS shall keep and maintain at the Rosewood
-----------------
facility such records of the Services rendered by RTS under this Agreement as
may be required by federal, state or local governmental agencies or by
Rosewood or its auditors. Pursuant to Section 1395x(V)(1)(1) of Title 42 of
the United States Code, with respect to any Services furnished under the
terms of the Agreement, the value or cost of which is ten thousand dollars
($10,000.00) or more over a twelve (12) month period, until the expiration of
four (4) Year(s) after the termination of this Agreement, RTS shall make
available, upon written request of the Secretary of the United Sates
Department of Health and Human Services, or upon request of the Comptroller
General of the United States General Accounting Office, or any of their duly
authorized representatives, a
45
<PAGE> 3
copy of this Agreement and such books, documents and records as are
necessary to certify the nature and extent of the costs of the Services
provided by RTS under this Agreement.
5. RELATIONSHIP OF PARTIES. The relationship between Rosewood and RTS
-----------------------
is solely that of two independent parties contracting with each other at
arm's length for the purpose of effectuating the provisions of this
Agreement. None of the provisions of this Agreement are intended to create,
nor shall be deemed or construed to create, any other relationship; neither
party, nor their respective agents, employees or representative shall be
deemed the agent, employee or representative of the other (except as
expressly provided herein), and no joint venture or partnership shall result
from this Agreement. Each party shall be solely responsible for and shall
comply with all state and federal laws pertaining to employment taxes, income
withholding, unemployment compensation contributions and other employment-
related statutes applicable to that party.
6. INSURANCE. Each party shall, at such party's sole cost and
---------
expense, maintain general and professional liability insurance in such
amounts as are necessary to insure the other party and such other party's
agents, servants and employees, against any claim for damages arising from or
as a result of the performance by the insuring party or the failure of the
insuring party to perform any of its obligations under this Agreement.
7. TERM OF AGREEMENT. This Agreement shall become effective on July
-----------------
1, 1998, and terminate on June 30, 1999, unless earlier terminated as set
forth in Section 8. This Agreement is automatically renewed annually unless
Notice of Termination is given by either party at least ninety (90) days'
prior to the anniversary date.
8. TERMINATION. Either party may terminate this Agreement if they are
-----------
unable to agree to changes in the Fee Schedule set forth on Exhibit A to this
Agreement during the applicable time period. Upon such termination, no party
shall have any further obligations hereunder, except for obligations accruing
prior to the date of termination.
9. GOVERNING LAW. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of Illinois.
46
<PAGE> 4
10. AMENDMENTS. This Agreement may be amended or modified only by a
----------
writing signed by both parties.
11. SEVERABILITY. This Agreement shall be construed to be in
------------
accordance with federal and state statutes and Medicare, Medicaid and
intermediary carrier rules, regulations, principles and interpretations
regarding reimbursement and rates charged to patients. If any provision of
this Agreement, or any portion thereof, is found to be invalid, illegal or
unenforceable, under any applicable statute or rule of law, then such
provision or portion thereof shall be deemed omitted, and the validity,
legality and enforceability of the remaining provisions shall not in any way
be affected or impaired thereby.
12. NO OBLIGATION TO THIRD PARTIES. None of the obligations and
------------------------------
duties of Rosewood or RTS under this Agreement shall in any manner be deemed
to create any obligation of Rosewood or RTS to, or any rights in, any person
or entity not a party to this Agreement.
13. TERMINATION FOR LOAN DEFAULT. RTS and Rosewood agree that the
----------------------------
holder of any mortgage on the real estate which constitutes the skilled
nursing facility premises operated by Rosewood may terminate this Agreement
upon thirty (30) days' prior written notice of such termination if there is a
default under the loan documents.
IN WITNESS WHEREOF, the undersigned have executed or caused this
Agreement to be executed on the day and year first written above.
ROSEWOOD THERAPY ROSEWOOD CARE CENTER, INC. OF
SERVICES, INC. ALTON
By:/s/ Larry Vander Maten By:/s/ Larry Vander Maten
-------------------------------- ---------------------------------
Larry Vander Maten Larry Vander Maten
President President
47
<PAGE> 5
EXHIBIT A
---------
FEE SCHEDULE
------------
Rosewood agrees to pay for billable direct patient services performed on one
or more of the following basis, as determined by agreement of the parties.
Charges will be based on rates as set forth below:
PLEASE NOTE THAT THIS SCHEDULE COVERS PATIENTS WITH MEDICARE, PRIVATE PAY,
MANAGED CARE AND ALL OTHER COVERAGES.
1. Physical Therapy Services
Compensation: Rate of $45.00 per hour
2. Occupational Therapy Services
Compensation: Rate of $45.00 per hour
3. Speech Therapy Services
Compensation: Rate of $45.00 per hour
All charges set forth above may be changed by RTS at any time upon not less
that sixty (60) days notice to Rosewood. If Rosewood objects to such
increase and RTS and Rosewood cannot otherwise reach an agreement,
notification of such increase shall constitute "cause" for purposes of
termination under Paragraph 8 of the Agreement.
Rosewood Care Center, Inc. of Alton Rosewood Therapy Services, Inc.
/s/ Larry Vander Maten /s/ Larry Vander Maten
- --------------------------------- --------------------------------------
President President
July 1, 1998 July 1, 1998
- --------------------------------- --------------------------------------
Date Date
48
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
the Financial Statements at September 30, 1998 for the period ended
September 30, 1998 and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<CIK> 0000909110
<NAME> ROSEWOOD CARE CENTERS CAPITAL FUNDING CORPORATION
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 262
<SECURITIES> 0
<RECEIVABLES> 25,240
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 262
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 25,502
<CURRENT-LIABILITIES> 152
<BONDS> 25,347
<COMMON> 1
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 25,502
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 461
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Combined Financial Statements at September 30, 1998 for the period ended
September 30, 1998 and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<CIK> 0000909114
<NAME> ROSEWOOD CARE CENTER OF GALESBURG
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 751
<SECURITIES> 0
<RECEIVABLES> 5,099
<ALLOWANCES> 168
<INVENTORY> 0
<CURRENT-ASSETS> 6,285
<PP&E> 25,364
<DEPRECIATION> 8,506
<TOTAL-ASSETS> 31,692
<CURRENT-LIABILITIES> 6,722
<BONDS> 0
<COMMON> 65
0
0
<OTHER-SE> 1,839
<TOTAL-LIABILITY-AND-EQUITY> 31,692
<SALES> 7,911
<TOTAL-REVENUES> 8,058
<CGS> 0
<TOTAL-COSTS> 6,644
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 461
<INCOME-PRETAX> 953
<INCOME-TAX> 71
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 882
<EPS-PRIMARY> 14
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Combined Financial Statements at September 30, 1998 for the period ended
September 30, 1998 and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<CIK> 0000909113
<NAME> ROSEWOOD CARE CENTER OF SWANSEA
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 751
<SECURITIES> 0
<RECEIVABLES> 5,099
<ALLOWANCES> 168
<INVENTORY> 0
<CURRENT-ASSETS> 6,285
<PP&E> 25,364
<DEPRECIATION> 8,506
<TOTAL-ASSETS> 31,692
<CURRENT-LIABILITIES> 6,722
<BONDS> 0
<COMMON> 65
0
0
<OTHER-SE> 1,839
<TOTAL-LIABILITY-AND-EQUITY> 31,692
<SALES> 7,911
<TOTAL-REVENUES> 8,058
<CGS> 0
<TOTAL-COSTS> 6,644
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 461
<INCOME-PRETAX> 953
<INCOME-TAX> 71
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 882
<EPS-PRIMARY> 14
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Combined Financial Statements at September 30, 1998 for the period ended
September 30, 1998 and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<CIK> 0000909115
<NAME> ROSEWOOD CARE CENTER OF EAST PEORIA
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 751
<SECURITIES> 0
<RECEIVABLES> 5,099
<ALLOWANCES> 168
<INVENTORY> 0
<CURRENT-ASSETS> 6,285
<PP&E> 25,364
<DEPRECIATION> 8,506
<TOTAL-ASSETS> 31,692
<CURRENT-LIABILITIES> 6,722
<BONDS> 0
<COMMON> 65
0
0
<OTHER-SE> 1,839
<TOTAL-LIABILITY-AND-EQUITY> 31,692
<SALES> 7,911
<TOTAL-REVENUES> 8,058
<CGS> 0
<TOTAL-COSTS> 6,644
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 461
<INCOME-PRETAX> 953
<INCOME-TAX> 71
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 882
<EPS-PRIMARY> 14
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Combined Financial Statements at September 30, 1998 for the period ended
September 30, 1998 and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<CIK> 0000909116
<NAME> ROSEWOOD CARE CENTER OF PEORIA
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 751
<SECURITIES> 0
<RECEIVABLES> 5,099
<ALLOWANCES> 168
<INVENTORY> 0
<CURRENT-ASSETS> 6,285
<PP&E> 25,364
<DEPRECIATION> 8,506
<TOTAL-ASSETS> 31,692
<CURRENT-LIABILITIES> 6,722
<BONDS> 0
<COMMON> 65
0
0
<OTHER-SE> 1,839
<TOTAL-LIABILITY-AND-EQUITY> 31,692
<SALES> 7,911
<TOTAL-REVENUES> 8,058
<CGS> 0
<TOTAL-COSTS> 6,644
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 461
<INCOME-PRETAX> 953
<INCOME-TAX> 71
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 882
<EPS-PRIMARY> 14
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Combined Financial Statements at September 30, 1998 for the period ended
September 30, 1998 and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<CIK> 0000909117
<NAME> ROSEWOOD CARE CENTER OF ALTON
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 751
<SECURITIES> 0
<RECEIVABLES> 5,099
<ALLOWANCES> 168
<INVENTORY> 0
<CURRENT-ASSETS> 6,285
<PP&E> 25,364
<DEPRECIATION> 8,506
<TOTAL-ASSETS> 31,692
<CURRENT-LIABILITIES> 6,722
<BONDS> 0
<COMMON> 65
0
0
<OTHER-SE> 1,839
<TOTAL-LIABILITY-AND-EQUITY> 31,692
<SALES> 7,911
<TOTAL-REVENUES> 8,058
<CGS> 0
<TOTAL-COSTS> 6,644
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 461
<INCOME-PRETAX> 953
<INCOME-TAX> 71
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 882
<EPS-PRIMARY> 14
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Combined Financial Statements at September 30, 1998 for the period ended
September 30, 1998 and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<CIK> 0000909118
<NAME> ROSEWOOD CARE CENTER OF MOLINE
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 751
<SECURITIES> 0
<RECEIVABLES> 5,099
<ALLOWANCES> 168
<INVENTORY> 0
<CURRENT-ASSETS> 6,285
<PP&E> 25,364
<DEPRECIATION> 8,506
<TOTAL-ASSETS> 31,692
<CURRENT-LIABILITIES> 6,722
<BONDS> 0
<COMMON> 65
0
0
<OTHER-SE> 1,839
<TOTAL-LIABILITY-AND-EQUITY> 31,692
<SALES> 7,911
<TOTAL-REVENUES> 8,058
<CGS> 0
<TOTAL-COSTS> 6,644
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 461
<INCOME-PRETAX> 953
<INCOME-TAX> 71
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 882
<EPS-PRIMARY> 14
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Combined Financial Statements at September 30, 1998 for the period ended
September 30, 1998 and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<CIK> 0000909120
<NAME> SWANSEA REAL ESTATE
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 751
<SECURITIES> 0
<RECEIVABLES> 5,099
<ALLOWANCES> 168
<INVENTORY> 0
<CURRENT-ASSETS> 6,285
<PP&E> 25,364
<DEPRECIATION> 8,506
<TOTAL-ASSETS> 31,692
<CURRENT-LIABILITIES> 6,722
<BONDS> 0
<COMMON> 65
0
0
<OTHER-SE> 1,839
<TOTAL-LIABILITY-AND-EQUITY> 31,692
<SALES> 7,911
<TOTAL-REVENUES> 8,058
<CGS> 0
<TOTAL-COSTS> 6,644
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 461
<INCOME-PRETAX> 953
<INCOME-TAX> 71
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 882
<EPS-PRIMARY> 14
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Combined Financial Statements at September 30, 1998 for the period ended
September 30, 1998 and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<CIK> 0000909121
<NAME> GALESBURG REAL ESTATE
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 751
<SECURITIES> 0
<RECEIVABLES> 5,099
<ALLOWANCES> 168
<INVENTORY> 0
<CURRENT-ASSETS> 6,285
<PP&E> 25,364
<DEPRECIATION> 8,506
<TOTAL-ASSETS> 31,692
<CURRENT-LIABILITIES> 6,722
<BONDS> 0
<COMMON> 65
0
0
<OTHER-SE> 1,839
<TOTAL-LIABILITY-AND-EQUITY> 31,692
<SALES> 7,911
<TOTAL-REVENUES> 8,058
<CGS> 0
<TOTAL-COSTS> 6,644
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 461
<INCOME-PRETAX> 953
<INCOME-TAX> 71
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 882
<EPS-PRIMARY> 14
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Combined Financial Statements at September 30, 1998 for the period ended
September 30, 1998 and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<CIK> 0000909122
<NAME> EAST PEORIA REAL ESTATE
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 751
<SECURITIES> 0
<RECEIVABLES> 5,099
<ALLOWANCES> 168
<INVENTORY> 0
<CURRENT-ASSETS> 6,285
<PP&E> 25,364
<DEPRECIATION> 8,506
<TOTAL-ASSETS> 31,692
<CURRENT-LIABILITIES> 6,722
<BONDS> 0
<COMMON> 65
0
0
<OTHER-SE> 1,839
<TOTAL-LIABILITY-AND-EQUITY> 31,692
<SALES> 7,911
<TOTAL-REVENUES> 8,058
<CGS> 0
<TOTAL-COSTS> 6,644
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 461
<INCOME-PRETAX> 953
<INCOME-TAX> 71
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 882
<EPS-PRIMARY> 14
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Combined Financial Statements at September 30, 1998 for the period ended
September 30, 1998 and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<CIK> 0000909123
<NAME> EAST PEORIA REAL ESTATE
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 751
<SECURITIES> 0
<RECEIVABLES> 5,099
<ALLOWANCES> 168
<INVENTORY> 0
<CURRENT-ASSETS> 6,285
<PP&E> 25,364
<DEPRECIATION> 8,506
<TOTAL-ASSETS> 31,692
<CURRENT-LIABILITIES> 6,722
<BONDS> 0
<COMMON> 65
0
0
<OTHER-SE> 1,839
<TOTAL-LIABILITY-AND-EQUITY> 31,692
<SALES> 7,911
<TOTAL-REVENUES> 8,058
<CGS> 0
<TOTAL-COSTS> 6,644
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 461
<INCOME-PRETAX> 953
<INCOME-TAX> 71
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 882
<EPS-PRIMARY> 14
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Combined Financial Statements at September 30, 1998 for the period ended
September 30, 1998 and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<CIK> 0000909124
<NAME> ALTON REAL ESTATE
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 751
<SECURITIES> 0
<RECEIVABLES> 5,099
<ALLOWANCES> 168
<INVENTORY> 0
<CURRENT-ASSETS> 6,285
<PP&E> 25,364
<DEPRECIATION> 8,506
<TOTAL-ASSETS> 31,692
<CURRENT-LIABILITIES> 6,722
<BONDS> 0
<COMMON> 65
0
0
<OTHER-SE> 1,839
<TOTAL-LIABILITY-AND-EQUITY> 31,692
<SALES> 7,911
<TOTAL-REVENUES> 8,058
<CGS> 0
<TOTAL-COSTS> 6,644
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 461
<INCOME-PRETAX> 953
<INCOME-TAX> 71
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 882
<EPS-PRIMARY> 14
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Combined Financial Statements at September 30, 1998 for the period ended
September 30, 1998 and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<CIK> 0000909125
<NAME> MOLINE REAL ESTATE
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 751
<SECURITIES> 0
<RECEIVABLES> 5,099
<ALLOWANCES> 168
<INVENTORY> 0
<CURRENT-ASSETS> 6,285
<PP&E> 25,364
<DEPRECIATION> 8,506
<TOTAL-ASSETS> 31,692
<CURRENT-LIABILITIES> 6,722
<BONDS> 0
<COMMON> 65
0
0
<OTHER-SE> 1,839
<TOTAL-LIABILITY-AND-EQUITY> 31,692
<SALES> 7,911
<TOTAL-REVENUES> 8,058
<CGS> 0
<TOTAL-COSTS> 6,644
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 461
<INCOME-PRETAX> 953
<INCOME-TAX> 71
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 882
<EPS-PRIMARY> 14
<EPS-DILUTED> 0
</TABLE>
