<PAGE>
<PAGE>
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 March 31, 1999
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,
Registrants' Form 10-Q filed February 11, 1998, Registrants' Form 10-Q
filed November 12, 1998 and Registrants' Form 10-Q filed February 12,
1999.
Index to Exhibits is on Page 41.
<PAGE>
<PAGE>
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
<PAGE>
<PAGE>
ROSEWOOD CARE CENTERS CAPITAL FUNDING CORPORATION
Index
Part I Financial Information Page
- ----------------------------- ----
Item 1. Financial Statements 4
Rosewood Care Centers Capital Funding Corporation:
Balance Sheet 4
Statement of Operations 5
Statement of Cash Flows 6
Notes to Financial Statement 7
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 8
Combined Statement of Operations 10
Combined Statement of Cash Flows 11
Notes to Combined Financial Statements 12
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 14
Part II Other Information
- --------------------------
Item 1. Legal Proceedings 26
Item 2. Changes in Securities 26
Item 3. Defaults Upon Senior Securities 26
Item 4. Submission of Matters to a Vote of Security Holders 26
Item 5. Other Information 26
Item 6. Exhibits and Reports on Form 8-K 26
Index to Exhibits 41
- -----------------
Signatures 28
- ----------
3
<PAGE>
<PAGE>
Part I Financial Information
---------------------
Item 1. Financial Statements
<TABLE>
ROSEWOOD CARE CENTERS CAPITAL FUNDING CORPORATION
BALANCE SHEET
(Dollars in Thousands)
(Unaudited)
<CAPTION>
June 30, March 31,
1998 1999
-------- ---------
<S> <C> <C>
Assets
------
Cash $ 262 $ 262
Mortgage notes receivable, Rosewood Companies 25,561 23,842
------- -------
$25,823 $24,104
======= =======
Liabilities and Stockholders' Equity
------------------------------------
First mortgage redeemable bonds $25,666 $23,958
Accrued interest 156 145
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 $24,104
======= =======
The accompanying notes are an integral part of this financial statement.
</TABLE>
4
<PAGE>
<PAGE>
<TABLE>
ROSEWOOD CARE CENTERS CAPITAL FUNDING CORPORATION
STATEMENT OF OPERATIONS
(Dollars in Thousands)
(Unaudited)
<CAPTION>
Three Months Nine Months
Ended Ended
March 31, March 31,
------------- ----------------
1998 1999 1998 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest Income $473 $436 $1,456 $1,348
Interest expense 473 436 $1,456 $1,348
---- ---- ------ ------
Net Income $ 0 $ 0 $ 0 $ 0
==== ==== ====== ======
The accompanying notes are an integral part of this financial statement.
</TABLE>
5
<PAGE>
<PAGE>
<TABLE>
ROSEWOOD CARE CENTERS CAPITAL FUNDING CORPORATION
STATEMENT OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
<CAPTION>
Three Months Nine Months
Ended Ended
March 31, March 31,
-------------- ------------------
1998 1999 1998 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Cash flow from operating activities:
Net income $ 0 $ 0 $ 0 $ 0
Decrease in accrued interest receivable 0 0 167 0
Increase (decrease) in accrued interest (2) (3) (10) (11)
----- ----- ------- -------
Net cash provided by operating activities (2) (3) 157 (11)
----- ----- ------- -------
Cash flow from investing activities:
Collections on notes receivable 310 346 1,705 1,719
----- ----- ------- -------
Net cash used by investing activities 310 346 1,705 1,719
----- ----- ------- -------
Cash flow from financing operations:
Reduction of redeemable bonds (308) (344) (1,601) (1,708)
----- ----- ------- -------
Net cash provided by financing (308) (344) (1,601) (1,708)
----- ----- ------- -------
Net increase (decrease) in cash 0 1 261 0
Cash, beginning 262 263 1 262
----- ----- ------- -------
Cash, ending 262 262 262 262
===== ===== ======= =======
Cash paid for interest $ 473 $ 447 $ 1,456 $ 1,359
===== ===== ======= =======
The accompanying notes are an integral part of this financial statement.
</TABLE>
6
<PAGE>
<PAGE>
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 March 31, 1999, and the
results of its operations and its cash flows for the three month and the
nine month periods ended March 31, 1999 and 1998. Such adjustments were
of a normal recurring nature.
The results of operations for the nine months ended March 31,
1999, 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, $260,000 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.
7
<PAGE>
<PAGE>
<TABLE>
ROSEWOOD CARE CENTER
FACILITY COMPANIES AND REAL ESTATE COMPANIES
COMBINED BALANCE SHEETS
(Dollars in Thousands)
(Unaudited)
<CAPTION>
June 30, March 31,
1998 1999
-------- ---------
<S> <C> <C>
Assets
------
Current assets:
Cash $ 2,866 $ 1,478
Accounts receivable - residents, net of allowance
for doubtful accounts of $168 and $171,
respectively 1,352 1,422
Accounts receivable - third party payor 2,766 2,540
Due from affiliates 327 -0-
Interest receivable 282 346
Prepaid insurance and other prepaids 44 115
Deferred income tax benefits 52 52
------- -------
Total current assets 7,689 5,953
------- -------
Property, plant and equipment:
Land 943 943
Site improvements 2,140 2,143
Building 17,830 17,830
Equipment 3,962 4,061
Leasehold improvements 389 482
------- -------
25,264 25,459
Less accumulated depreciation 8,282 8,924
------- -------
16,982 16,535
------- -------
Other assets:
Notes receivable from Rosewood Care Center
Holding Company 6,910 6,028
Amortizable Costs, Net 840 749
------- -------
7,750 6,777
------- -------
$32,421 $29,265
======= =======
<CAPTION>
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
<PAGE>
ROSEWOOD CARE CENTER
FACILITY COMPANIES AND REAL ESTATE COMPANIES
COMBINED BALANCE SHEETS
(Dollars in Thousands)
(Unaudited)
June 30, March 31,
1998 1999
-------- ---------
<S> <C> <C>
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Current portion of long-term debt $ 2,071 $ 2,186
Accounts payable - trade 2,144 1,133
Accrued expenses:
Salaries and payroll taxes 576 493
Vacation and employee fringes 257 250
Real estate taxes 471 544
Accrued interest -0- -0-
Accrued Rent 43 32
Management fees - affiliate 599 417
Income taxes 4 -0-
Dividends payable 801 778
------- -------
Total current liabilities 6,966 5,833
------- -------
Long-term debt:
Notes payable - Rosewood Care Center
Capital Funding Corporation 25,561 23,842
------- -------
25,561 23,842
Less current maturities 2,071 2,186
------- -------
23,490 21,656
------- -------
Stockholders' equity:
Common stock 65 65
Paid-in capital 481 481
Retained earnings 1,419 1,230
------- -------
1,965 1,776
------- -------
$32,421 $29,265
======= =======
The accompanying notes are an integral part of these financial statements.
</TABLE>
9
<PAGE>
<PAGE>
<TABLE>
ROSEWOOD CARE CENTER
FACILITY COMPANIES AND REAL ESTATE COMPANIES
COMBINED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(Dollars in Thousands)
(Unaudited)
<CAPTION>
Three Months Nine Months
Ended Ended
March 31, March 31,
------------ -----------
1998 1999 1998 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Patient service revenue:
Private $4,792 $4,957 $14,446 $14,829
Medicare 2,564 2,881 7,259 8,333
Medicaid 380 384 1,130 1,196
Other patient revenues, net of expenses 89 34 233 122
------ ------ ------- -------
7,825 8,256 23,068 24,480
------ ------ ------- -------
Operating expenses:
Facility expenses:
Administrative expense 270 502 793 1,120
Employee fringe benefits 522 616 1,505 1,719
Dietary 504 541 1,483 1,611
Nursing 1,964 2,349 5,676 6,839
Ancillary services 1,663 1,068 4,517 3,289
Plant utilities and maintenance 282 304 879 949
Housekeeping and laundry 257 292 748 892
Social services and activities 192 63 550 393
------ ------ ------- -------
5,654 5,735 16,151 16,812
------ ------ ------- -------
Income after facility expenses 2,171 2,521 6,917 7,668
------ ------ ------- -------
Nonfacility expenses:
Real estate taxes 143 165 421 462
Rent 43 217 43 537
Base management fees 209 232 605 677
Illinois Medicaid assessments 105 114 302 336
Depreciation and amortization 247 227 779 733
------ ------ ------- -------
747 955 2,150 2,745
------ ------ ------- -------
Income before incentives 1,424 1,566 4,767 4,923
------ ------ ------- -------
Incentive management fees (308) (402) (1,205) (1,240)
Officers' bonuses - - - -
------ ------ ------- -------
Income from operations 1,116 1,164 3,562 3,683
------ ------ ------- -------
Other income (expense):
Interest income 157 123 494 418
Interest expense (474) (436) (1,457) (1,349)
------ ------ ------- -------
(317) (313) (963) (931)
------ ------ ------- -------
Income before income taxes 799 851 2,599 2,752
Income tax expense (52) (63) (206) (218)
------ ------ ------- -------
Net income 747 788 2,393 2,534
Retained earnings, beginning 1,422 1,220 1,388 1,419
Dividends declared (747) (778) (2,359) (2,723)
------ ------ ------- -------
Retained earnings, ending $1,422 $1,230 $ 1,422 $ 1,230
====== ====== ======= =======
The accompanying notes are an integral part of these financial statements.
</TABLE>
10
<PAGE>
<PAGE>
<TABLE>
ROSEWOOD CARE CENTER
FACILITY COMPANIES AND REAL ESTATE COMPANIES
COMBINED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
<CAPTION>
Three Months Nine Months
Ended Ended
March 31, March 31,
------------ -----------
1998 1999 1998 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Cash flow from operating activities:
Net income $ 748 $ 787 $ 2,394 $ 2,534
Adjustments:
Depreciation 217 198 685 642
Amortization 31 30 95 91
Decrease (increase) in:
Accounts receivable - residents 10 164 (278) (70)
Accounts receivable - third party payors 476 (129) 1,354 226
Other receivables and prepaids 252 (127) (191) 192
Increase (decrease) in:
Accounts payable - trade 120 145 13 (1,011)
Accrued salaries, taxes and fringes (54) (85) 17 (90)
Accrued real estate taxes 113 111 54 73
Accrued management fees (152) (168) 54 (182)
Other payables and accruals (7) (22) (129) (15)
------- ------- ------- -------
Net cash provided by operating activities 1,754 904 4,068 2,390
------- ------- ------- -------
Cash flow from investing activities:
Purchase of property and equipment (73) (27) (135) (195)
Loans and deposits with affiliate 81 (198) 898 82
------- ------- ------- -------
Net cash (provided) by investing activities 8 (225) 763 687
------- ------- ------- -------
Cash flow from financing activities:
Reduction of long-term debt (311) (346) (1,706) (1,719)
Dividends paid (823) (937) (2,155) (2,746)
------- ------- ------- -------
Net cash (used) by financing activities (1,134) (1,283) (3,861) (4,465)
------- ------- ------- -------
Net increase (decrease) in cash 628 (604) 970 (1,388)
Cash, beginning 2,662 2,082 2,320 2,866
------- ------- ------- -------
Cash, ending $ 3,290 $ 1,478 $ 3,290 $ 1,478
======= ======= ======= =======
Cash paid for:
Interest $ 473 $ 437 $ 1,623 $ 1,349
======= ======= ======= =======
Income taxes $ 95 $ 58 $ 249 $ 165
======= ======= ======= =======
The accompanying notes are an integral part of these financial statements.
</TABLE>
11
<PAGE>
<PAGE>
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 March 31, 1999, and the
results of their operations and their cash flows for the three and nine
month periods ended March 31, 1999 and 1998. Such adjustments were of a
normal recurring nature.
The results of operations for the nine month periods ended March 31,
1999 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, and employment claims.
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 from October to December 2000.
12
<PAGE>
<PAGE>
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 $2,723,000 were declared during the nine
months ended March 31, 1999.
13
<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
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
THREE MONTHS ENDED MARCH 31, 1999 COMPARED WITH
THREE MONTHS ENDED MARCH 31, 1998
Forward Looking Statements
- --------------------------
This quarterly report contains certain "forward looking"
statements, as that term is defined by the Private Securities Litigation
Reform Act of 1995. All statements regarding expected future financial
performance of the Companies, including ability to service debt
obligations, response to changes in government regulations, and similar
statements including without limitation, those containing words such as
"believes," "anticipates," "expects," and other similar expressions are
forward looking statements. Forward looking statements involve risks
and uncertainties, both known and unknown, that may cause the Companies'
actual performance in future periods to differ materially from those
projected or contemplated in the forward looking statements. Actual
results could differ materially from those in the forward looking
statements as a result of, but not limited to, the following factors:
national and local economic conditions and occupancy levels, especially
with respect to newly added beds; changes in Medicare and Medicaid
reimbursement policies and other government regulation affecting
healthcare; the ability to attract and retain qualified employees; Year
2000 problems, both within the Companies and at the operations of
suppliers and third party payors, especially the United States
government.
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
1999. The facility in East Peoria, where occupancy has stagnated due to
administrative turnover and operational difficulties, has
underperformed. This result may 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.
14
<PAGE>
<PAGE>
Governmental Regulation and Reimbursement
-----------------------------------------
The Companies' nursing facilities are required to comply with
various federal and state health care regulations and statutes.
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;
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. 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 four 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 patients.
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.
PPS requires significant additional documentation and reporting
regarding patient care in accordance with resource utilization group
(RUGs) categories. The Companies do not expect to expend material
amounts on systems software and personnel to handle this additional
compliance since these costs are being paid for by the affiliated
management company. However, the Companies have hired additional
administrative and nursing personnel at the
15
<PAGE>
<PAGE>
facilities as necessary for the additional patient care record keeping
requirements mandated by PPS.
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 are attempting to implement changes to lower the
cost of providing services to their Medicare residents. To date,
although the per diem under PPS has decreased, the Companies have
experienced increased Medicare revenues under PPS. The Companies'
ability to reduce costs and still provide quality patient care in the
PPS environment is due primarily to management's decision during fiscal
1997 and 1998 to bring therapy services in-house and to negotiate
significant cost-savings with the company that provides prescription
drugs to the patients at the facilities.
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.
The cost reports for the fiscal years ended June 30, 1997 and 1998
have not been audited by the intermediary and are still subject to audit
at some time in the future.
In general, the long term skilled nursing care industry is
struggling with the new regulatory environment. Skilled nursing
facilities are paid a single per diem, "all inclusive" rate per patient
which must cover most of the care needed by each patient, regardless of
any patient's individual acuity or need for ancillary therapies and
other services. This new payment system is forcing all long term care
providers to alter operations in order to reduce costs and still provide
appropriate patient care. The projected reduction over five years in
payments made by Medicare under PPS for long term care has been revised
by the Congressional Budget Office from $9.5 billion to $16 billion.
This is evidence that the method of determining the PPS rates is cutting
much deeper into the long term care industry's revenues than previously
anticipated.
Although President Clinton's fiscal 2000 budget proposal, released
in February 1999, included additional Medicare reductions of
approximately $10 billion over the next five years, the recently
completed House and Senate Budget committee proposals did not include
any additional reductions, but instead proposed certain increases in
Medicare spending. It is anticipated that these differing positions
will be the subject of negotiations. A final budget agreement is not
anticipated until September 1999. Several proposals are under
discussion that would provide some relief from the negative impact to
long term care providers of PPS, particularly those with a high acuity
mix of patients. The most significant proposal appears to be one which
would allow payments for drugs, respiratory therapy and lab tests, in
addition to the PPS per diem. HCFA is currently reevaluating the issue
of potential refinements to the resource utilization group (RUGs)
categories to appropriately compensate long term care providers for many
of the non-therapy ancillary services at the high acuity end of the
patient care spectrum. HCFA has indicated that this review will
probably last until the end of 1999.
16
<PAGE>
<PAGE>
The Illinois Department of Public Health ("IDPH") and other
agencies with whom the IDPH contracts to assist it in its reviews and
investigations, conduct annual licensure surveys and other periodic
inspections and investigations, continually assessing the facilities for
compliance. 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. Any of these on-going investigations, if determined adversely
to the Companies, could have an impact on the continued participation of
one or more of the facilities in the Medicare and Medicaid programs.
As part of the new regulatory environment, Congress has increased
allocations for enforcement budgets, resulting in stepped up
investigations for fraud and abuse. Both the Office of the Inspector
General (OIG) and the Department of Justice are devoting significant
resources to investigations of long term care providers. Announced
priorities of the OIG for fiscal 1999 include: oversight and
certification processes for long term care facilities; resident abuse at
long term care facilities; therapy and ancillary services utilization at
skilled nursing facilities; and physician practices with excessive
nursing home visits and billings. Fraudulent billing and patient rights
issues are priority areas announced by the Department of Justice. The
Department of Justice contemplates a special litigation section to
enforce the Civil Rights of Institutionalized Persons and the creation
of a special criminal section to enforce violations of patients' civil
rights by nursing home operators. In addition, the Department of
Justice has announced the creation of a nursing home work group to
address abuse and civil rights issues for nursing home residents.
Federal and state regulators have also intensified their quality of care
reviews of skilled nursing facilities. A finding of poor quality of
care in nursing homes may result in a nursing home's being charged with
fraud under the False Claims Act. Differences in interpretation of
billing practices or allocations have also recently resulted in long
term care providers being charged with fraud and abuse. In 1998, two
major long term care providers announced they are targets of fraud and
abuse investigations relating to alleged billing abuses. In the first
calendar quarter of 1999, a third major long term care provider
announced that it is also the target of a similar investigation.
New initiatives announced by President Clinton increase licensure
surveys of nursing homes, as well as sanctions and fines for deficient
facilities. There is also a push in Congress to legislate increased
standards for long term care facilities. HCFA recently announced the
publication of a "quality report card" of all nursing homes in the
United States.
A new federal law, The Nursing Home Resident Protection Amendments
of 1999, was recently enacted which provides certain rights for persons
who are residents of a long term care facility which participates in the
Medicaid program but subsequently decides to withdraw voluntarily from
the Medicaid program. If a facility withdraws from Medicaid, a person
who was a resident of that facility, at the date the new law went into
effect, must be allowed to stay in the facility as a Medicaid recipient.
This applies even to a resident who was not receiving services paid for
by Medicaid at the effective date of the new law. Residents admitted to
the facility after the effective date of the new law must be provided
certain information advising them of the risk that the facility could
decide to withdraw from the Medicaid program and transfer the resident
if the resident is receiving services paid by Medicaid at that time.
Failure to provide this information obligates the facility to
17
<PAGE>
<PAGE>
continue to provide care to the resident. The application of this law
to facilities with "distinct part" Medicaid participation is unclear.
All of the Companies participate in the Medicaid program under the
"distinct part" certification for only a limited number of beds at each
facility. Under Illinois law regarding "distinct part" certification,
Medicaid will only pay for services to a resident in a specific bed
which has been identified by the provider to Medicaid. The effect of
the new federal law may be to increase the number of Medicaid residents
at a facility, leaving fewer beds for private paying and Medicare
patients. The Companies are assessing whether there is a material risk
that the facilities could be required to accommodate significantly
increased numbers of Medicaid residents at the facilities as a result of
the new law and, if so, whether to reevaluate their continued
participation in the Medicaid program.
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 progressed and equipment
upgrades and readiness are continuing over the course of the 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 United States
Government General Accounting Office (GAO) has reported that both HCFA
and certain fiscal intermediaries, the entities that make Medicare
payments on behalf of the government, may be significantly behind
schedule in making systems Year 2000 compliant.
18
<PAGE>
<PAGE>
According to the Office of Management and Budget (OMB), as of November
1998, HCFA had tested less than 10% of its external systems. The Senate
Special Committee on Y2K has noted that none of the HCFA Medicare
systems were Y2K compliant as of February 24, 1999. However, HCFA
reported that 91% of its systems were Y2K compliant as of March 15, 1999
and HCFA has previously stated that its internal goal was to have all
systems Y2K compliant as of March 31, 1999. 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.
The Companies also face the possibility of litigation arising from
errors to patient records or interruptions to patient care caused by
equipment failure, power failure or other Y2K problems.
Operating Results
-----------------
Net revenues have increased to $8,256,000 for the three months
ended March 31, 1999 from $7,825,000 for the three months ended March
31, 1998, an increase of $431,000 or 5.5%. Private revenues have
increased $165,000 from $4,792,000 for the three months ended March 31,
1998 to $4,957,000 for the three months ended March 31, 1999. Revenue
generated from ancillary services for private paying patients decreased
$53,000, while revenue from room charges increased $218,000 when
compared to the same three month period last year. Effective March 1,
1999, the Companies discontinued billing the private paying residents
for drugs. The drugs are billed directly to the residents by a non-
related third party vendor, which accounts for the $53,000 decrease in
ancillary revenue when compared to the same three month period last
year. It should be noted that there was a corresponding decrease in
ancillary expense for the cost of the drugs for private residents since
the drugs were billed to the residents at the Companies' cost. Private
census has increased from 39,636 patient days for 1998 to 39,650 patient
days for the current three month period ended March 31, 1999.
Net revenues for Medicare increased from $2,564,000 for the three
months ended March 31, 1998 to $2,881,000 for the three months ended
March 31, 1999, an increase of $317,000 or 12.4%. The Medicare census
has increased to 11,503 patient days from 9,384 patient days for the
same period last year. 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 the decrease in the Medicare reimbursement
19
<PAGE>
<PAGE>
program. The Companies have reduced the cost of therapy and drugs
provided to Medicare residents.
Medicaid revenue has increased from $380,000 to $384,000 when
compared to the same three month period last year. The Medicaid census
has increased from 5,505 patient days for the three months ended March
31, 1998 to 5,511 patient days for the three months ended March 31,
1999.
The facilities have an average occupancy rate of 77.6% for the
three months ended March 31, 1999, compared to 84.1% 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. The
Galesburg facility reflects a decline in occupancy level as a result of
a 60 bed addition that was opened October 9, 1998. Due to uncertainties
presented by the effects of PPS on occupancy and current market
conditions, management is unable to forecast when occupancy at the Alton
and Galesburg facilities will return to pre-expansion levels. The
occupancy level of the facilities for the three months ended March 31,
1999 and 1998 are as follows:
MARCH 31
1999 1998
Swansea 97.2 98.1
Galesburg 56.4 84.5
Moline 90.5 90.6
Alton 83.1 78.4
Peoria 85.5 90.8
East Peoria 62.9 65.0
AVERAGE 77.6 84.1
The decrease in the other patient revenue net of expenses can be
accounted for by the change in the contract the Companies have with an
unrelated third party vendor providing pharmacy services to the
residents. As previously discussed, effective March 1, 1999, the
Companies no longer bill private paying residents for drugs. In prior
years the Companies retained a portion of the drug charges as
compensation for performing the billing and collecting for pharmacy
charges. Due to the discontinuance of billings for private drugs,
effective March 1, 1999, and the negotiated fixed rate for drugs
supplied to Medicare residents, effective July 1, 1998, the Companies
have realized a reduction in other patient revenue of $55,000 when
compared to the same three month period last year.
Facility operating expenses were $5,735,000 (or $101.21 per
patient day) for the current three month period ended March 31, 1999,
compared to $5,654,000 (or $103.70 per patient day) for the three months
ended March 31, 1998, a decrease of $2.49 per patient day.
The Company has reclassified certain expenses from the social
service and activities designation to the administrative expenses cost
center. Total expenses for administrative, social service and
activities increased from
20
<PAGE>
<PAGE>
$462,000 for the three months ended March 31, 1998 to $565,000 for the
three months ended March 31, 1999, an increase of $103,000 or 22%. The
increase is due to an $8,000 increase in employee want ads, a $16,000
increase in new employee orientation and training, a $17,000 increase in
professional fees and a $47,000 increase in wages. The increase in
wages is a direct result of the increase in expense associated with
admissions activities and the implementation of the PPS Medicare
reimbursement system. The $15,000 balance of the increase is
inflationary increases in the other expenses comprising the
administrative, social services and activities category.
The cost of employee fringe benefits has increased from $522,000
for the three months ended March 31, 1998 to $616,000 for the three
months ended March 31, 1999. The increase aggregating $94,000 can be
accounted for by a $43,000 increase in payroll taxes and a $48,000
increase in holiday and vacation pay. The addition of 60 beds at each of
the Alton and Galesburg facilities has increased the total payroll, and
the resulting payroll taxes, for those facilities. The remainder of the
increase of $3,000 can be accounted for by inflationary factors.
Dietary expenses have increased approximately $37,000 when
compared to the same three month period last year. Wages have increased
approximately $16,000 while the cost of food and supplies has increased
$21,000 when compared to the same three month period last year.
Nursing costs increased from $1,964,000 for the three months ended
March 31, 1998 to $2,349,000 for the three months ended March 31, 1999,
an increase of $385,000 or 19.6%. Wages have increased $474,000, while
the cost of supplies has decreased $89,000. Included in the increase in
wages is approximately $100,000 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 service costs have decreased approximately $595,000 when
compared to the same three month period last year. Private drug expense
has decreased approximately $53,000 when compared to the same period
last year as a result of the change previously discussed concerning
drugs for private paying residents. The remainder of the decrease in
costs is the direct result of the reduction in therapy and drug costs
brought about by utilizing an affiliated therapy company and a reduction
in ancillary services provided to the Medicare residents under the PPS
guidelines.
Plant utilities and maintenance for the quarter ended March 31,
1999 aggregated $304,000, compared to the $282,000 expended for the
three month period ended March 31, 1998. The majority of the increase
can be accounted for by the increase in utility costs associated with
the 60 bed addition at Galesburg which opened during October of 1998.
Housekeeping and laundry costs have increased $35,000 when
compared to the same three month period last year. Labor costs have
increased $18,000 while the cost of supplies has increased $17,000.
21
<PAGE>
<PAGE>
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 additions to the Alton and Galesburg
facilities. In each case rent is paid to an affiliated company, Alton
Real Estate II, L.L.C. and Galesburg Real Estate II, L.L.C.,
respectively, which companies are not parties to the bond documents.
Incentive management fees have increased $94,000 when compared to
the same period last year as a result of the increase in income before
incentives.
Interest income has decreased from $157,000 for the three months
ended March 31, 1998 to $123,000 for the three months ended March 31,
1999 as a result of the decrease in the notes receivable from the
related party Rosewood Care Center Holding Co.
Interest expense decreased $38,000 when compared to the same three
month period last year. The decrease is the result of the decrease in
the long term debt of the facility.
NINE MONTHS ENDED MARCH 31, 1999 COMPARED WITH
NINE MONTHS ENDED MARCH 31, 1998
Operating Results
-----------------
Net revenues have increased to $24,480,000 for the nine months
ended March 31, 1999 from $23,068,000 for the nine months ended March
31, 1998, an increase of $1,412,000 or 6.1%. Private revenues have
increased $383,000 from $14,446,000 for the nine months ended March 31,
1998, to $14,829,000 for the nine months ended March 31, 1999. Revenue
generated from ancillary services for private paying patients increased
$69,000, while revenue from room charges increased $314,000 when
compared to the same period last year. The average private room rate
for the current period aggregated $117 per patient day compared to $114
per patient day for the same period last year. As previously discussed,
the Companies have discontinued billing private residents for drugs
effective March 1, 1999. Even with this change in billing policy, drug
charges for the nine months ended March 31, 1999, aggregated $618,000,
compared to $588,000 for the nine months ended March 31, 1998, an
increase of $30,000 over the same nine month period last year. The
$39,000 balance of the increase in ancillary revenue is the result of an
increase in therapy services provided to the private paying residents.
Private census has decreased from 120,234 patient days for the first
nine months of 1998 to 119,459 patient days for the current period ended
March 31, 1999.
Net revenues for Medicare have increased from $7,259,000 for the
nine months ended March 31, 1998 to $8,333,000 for the nine months ended
March 31, 1999, an increase of $1,074,000 or 14.8%. The Medicare census
has increased from 27,230 patient days for the nine months ended March
31, 1998 to 33,206 patient days for the nine months ended March 31,
1999. The average Medicare reimbursement rate has decreased
approximately $16 per patient day when compared to the same nine 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 the decrease in the Medicare reimbursement
22
<PAGE>
<PAGE>
program. The Companies have reduced the cost of therapy and drugs
provided to the Medicare residents by more than the corresponding
decrease in the Medicare reimbursement rate for the period.
Medicaid revenue has increased from $1,130,000 to $1,196,000 when
compared to the same period last year. The facilities have received an
increase in the Medicaid reimbursement rate of approximately 3%,
effective July 1, 1998. The Medicaid census has increased from 16,532
patient days for the nine months ended March 31, 1998 to 16,848 patient
days for the nine months ended March 31, 1999.
The facilities have an average occupancy rate of 78.2% for the
current nine month period, compared to 86.0% 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. The Galesburg
facility reflects a decline in occupancy level as a result of a 60 bed
addition that was opened October 9, 1998. Due to uncertainties presented
by the effects of PPS on occupancy and current market conditions,
management is unable to forecast when occupancy at the Alton and
Galesburg facilities will return to pre-expansion levels. The occupancy
level of the facilities for the nine months ended March 31, 1999 and
1998 are as follows:
DECEMBER 31
1999 1998
Swansea 96.9 98.5
Galesburg 61.8 81.6
Moline 92.5 93.1
Alton 81.0 89.7
Peoria 82.3 90.6
East Peoria 60.4 62.9
AVERAGE 78.2 86.0
As previously discussed, effective March 1, 1999, the Companies do
not bill private paying residents for drugs and have negotiated a fixed
rate for drugs prescribed to the Medicare residents, effective July 1,
1998. As a result of this change, the other patient revenues net of
expenses has decreased from $233,000 for the nine months ended March 31,
1998, to $122,000 for the nine months ended March 31, 1999.
Facility operating expenses increased to $16,812,000 (or $99.18
per patient day) for the current nine month period ended March 31, 1999,
from $16,151,000 (or $98.48 per patient day) for the nine months ended
March 31, 1998.
As previously discussed, the Company has reclassified certain
expenses from the social service and activities designation to the
administrative expense cost center. Total expenses for administrative,
social service and activities increased from $1,343,000 for the nine
months ended March 31, 1998 to $1,513,000 for the nine months ended
March 31, 1999, an increase of
23
<PAGE>
<PAGE>
$170,000 or 12.7%. The majority of the increase can be accounted for by
a $104,000 increase in wages, an $8,000 increase in admissions costs, a
$7,000 increase in professional fees and a $35,000 increase in telephone
costs. The increase in marketing and telephone costs is the direct
result of an increase in admissions efforts as a result of the Medicare
PPS reimbursement system previously discussed. The remainder of the
increase of $16,000 can be accounted for by inflationary increases since
March 31, 1998.
The cost of employee fringe benefits increased approximately
$214,000 when compared to the same nine month period last year which is
the result of a $72,000 increase in holiday and vacation pay and a
$103,000 increase in payroll taxes, with the balance of the increase
accounted for by the increase in workers' compensation insurance costs.
Dietary expenses have increased approximately $128,000 when
compared to the same period last year. Wages have increased
approximately $74,000, with the balance of the increase accounted for by
the increase in raw food costs which increase is a combination of the
increased census and inflation.
Nursing costs increased from $5,676,000 for the nine months ended
March 31, 1998 to $6,839,000 for the nine months ended March 31, 1999,
an increase of $1,163,000 or 20.4%. All of the increase can be accounted
for by the increase in wages. Approximately $300,000 of the increase in
labor costs can be accounted for by the increase in staffing at the
Alton facility as a result of the opening of the new 60 bed addition in
January of 1998. Also included in the increase in wages is
approximately $360,000 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 service costs have decreased approximately $1,228,000
when compared to the same nine month period last year. The decrease in
costs is the direct result of the reduction in therapy and drug costs
brought about by utilizing an affiliated therapy company and a reduction
in ancillary services provided to the Medicare qualified residents under
the new PPS guidelines.
Plant utilities and maintenance costs have increased $70,000 from
$879,000 for the nine months ended March 31, 1998 to $949,000 for the
nine month period ended March 31, 1999. The increase is the direct
result of the 60 bed addition at Alton and Galesburg.
Housekeeping and laundry costs have increased $144,000 when
compared to the same nine month period last year. Labor costs have
increased $109,000, while the cost of supplies has increased $35,000
when compared to the same period last year.
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 additions to the Alton and Galesburg
facilities. In each case rent is paid to an affiliated company, Alton
Real Estate II, L.L.C. and
24
<PAGE>
<PAGE>
Galesburg Real Estate II, L.L.C., respectively, which companies are not
parties to the bond documents.
Incentive management fees have increased slightly when compared
to the same period last year because of the increase in income before
incentives.
Interest income has decreased $76,000 when compared to the same
period last year as a result of the decrease in the notes receivable
outstanding during the nine month period from the affiliated company,
Rosewood Care Center Holding Co.
Interest expense decreased $108,000 when compared to the same
period last year. The decrease is the result of the decrease in the
long term debt of the facility from $25,876,000 on March 31, 1998 to
$23,842,000 as of March 31, 1999.
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 an S corporation. The amount reflected
as income taxes is the facility companies' portion of federal and state
taxes calculated for the nine months ended March 31, 1999 and 1998, on
an annualized basis.
Liquidity and Capital Resources
-------------------------------
As of March 31, 1999, the Companies had approximately $1,478,000
in cash and cash equivalents and net working capital of approximately
$120,000. There was a net decrease in cash of $1,388,000 since June 30,
1998. For the nine months ended March 31, 1999, net cash provided by
operations was $2,390,000 after reductions of approximately $1,300,000
to pay trade creditors and reduce accrued expenses since June 30, 1998.
Net cash from investing activities was $687,000 of which $82,000 was
received from Rosewood Care Center Holding Co. as payment on notes due
from the affiliated company and $195,000 was used by the Companies for
the purchase of personal property and equipment used in the operations
of the facilities. Net cash used in financing activities aggregated
$4,465,000, of which $1,719,000 was used to retire debt and $2,746,000
was used for the payment of dividends. The Companies believe they have
adequate capital for operations and replacements for the coming year and
the foreseeable future.
Accounts receivable from private paying patients increased to
$1,422,000 as of March 31, 1999, compared to $1,352,000 as of June 30,
1998. Accounts receivable from third party payers decreased to
$2,540,000 as of March 31, 1999, compared to $2,766,000 as of June 30,
1998. $395,882 of this amount is due from Medicare for unsettled cost
reports through June 30, 1998, which are subject to audit. Of this
amount, $359,000 was received from the intermediary during May 1999.
The Medicare program continues to face intense scrutiny and
significant cutbacks. As previously noted, effective July 1, 1998 all
of the facilities are subject to the new Medicare PPS payment system
previously discussed. Based on the Companies' analysis of their 1995
facility rates and the acuity level of the Medicare patients in the
facilities, the Companies hope to implement changes to lower the cost of
providing services to their Medicare residents.
25
<PAGE>
<PAGE>
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.
The Companies had no open lines of credit with any financial
institution as of March 31, 1999.
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.
PART II OTHER INFORMATION
- --------------------------
ITEM 1. LEGAL PROCEEDINGS.
There were no material developments with respect to legal
proceedings during the quarter ended March 31, 1999.
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.
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 nine months of the 1999 fiscal year, aggregated $2,091,000.
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 41.
26
<PAGE>
<PAGE>
(b) Reports on Form 8-K.
None.
27
<PAGE>
<PAGE>
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: May 13, 1999 By: /s/ Larry Vander Maten
---------------------------------------
Larry Vander Maten
President and Director
(Principal Executive Officer
and Principal
Financial and Accounting Officer)
28
<PAGE>
<PAGE>
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: May 13, 1999 By: /s/ Larry Vander Maten
------------------------------------
Larry Vander Maten
President and Director
(Principal Executive Officer
and Principal Financial
and Accounting Officer)
29
<PAGE>
<PAGE>
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: May 13, 1999 By: /s/ Larry Vander Maten
-----------------------------------
Larry Vander Maten
President and Director
(Principal Executive Officer
and Principal Financial
and Accounting Officer
30
<PAGE>
<PAGE>
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: May 13, 1999 By: /s/ Larry Vander Maten
------------------------------------
Larry Vander Maten
President and Director
(Principal Executive Officer
and Principal Financial
and Accounting Officer)
31
<PAGE>
<PAGE>
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: May 13, 1999 By: /s/ Larry Vander Maten
-----------------------------------
Larry Vander Maten
President and Director
(Principal Executive Officer
and Principal Financial
and Accounting Officer)
32
<PAGE>
<PAGE>
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: May 13, 1999 By: /s/ Larry Vander Maten
------------------------------------
Larry Vander Maten
President and Director
(Principal Executive Officer
and Principal Financial
and Accounting Officer)
33
<PAGE>
<PAGE>
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: May 13, 1999 By: /s/ Larry Vander Maten
------------------------------------
Larry Vander Maten
President and Director
(Principal Executive Officer
and Principal Financial
and Accounting Officer)
34
<PAGE>
<PAGE>
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: May 13, 1999 By: /s/ Larry Vander Maten
--------------------------------------
Larry Vander Maten
President and Director
(Principal and Executive Officer
and Principal Financial
and Accounting Officer
35
<PAGE>
<PAGE>
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: May 13, 1999 By: /s/ Larry Vander Maten
------------------------------------
Larry Vander Maten
President and Director
(Principal Executive Officer
and Principal Financial
and Accounting Officer)
36
<PAGE>
<PAGE>
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: May 13, 1999 By: /s/ Larry Vander Maten
------------------------------------
Larry Vander Maten
President and Director
(Principal Executive Officer
and Principal Financial
and Accounting Officer)
37
<PAGE>
<PAGE>
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: May 13, 1999 By: /s/ Larry Vander Maten
------------------------------------
Larry Vander Maten
President and Director
(Principal Executive Officer
and Principal Financial
and Accounting Officer)
38
<PAGE>
<PAGE>
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: May 13, 1999 By: /s/ Larry Vander Maten
------------------------------------
Larry Vander Maten
President and Director
(Principal Executive Officer
and Principal Financial
and Accounting Officer)
39
<PAGE>
<PAGE>
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: May 13, 1999 By: /s/ Larry Vander Maten
------------------------------------
Larry Vander Maten
President and Director
(Principal Executive Officer
and Principal Financial
and Accounting Officer)
40
<PAGE>
<PAGE>
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
Exhibit
Number Description
- ------ -----------
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
41
<PAGE>
<PAGE>
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.
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
42
<PAGE>
<PAGE>
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.
10.19 Reference is made to the Consultant Services Agreement between
Rosewood Therapy Services, Inc. and Rosewood Care Center, Inc. of
Alton (Additional Consultant Services Agreements listed on the
Schedule), which was filed on November 12, 1997 as Exhibit 10.19
of the Form 10-Q of the Registrants.
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 Reference is made to Consultant Services Agreement between
Rosewood Therapy Services, Inc. and Rosewood Care Center, Inc. of
Alton (Revised) filed on November 12, 1998 as Exhibit 10.21 of the
Form 10-Q of the Registrants (Additional Consultant Services
Agreements listed on the Schedule).
10.22 Reference is made to Renewal of 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, 1999 as Exhibit 10.22 of
the Form 10-Q of the Registrants.
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.
43
<PAGE>
<PAGE>
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 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.
44
<PAGE>
<PAGE>
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.
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 September 26, 1996 as Exhibit 99.17 of the Form
10-K of the Registrants.
45
<PAGE>
<PAGE>
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.
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
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
46
<PAGE>
<PAGE>
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.
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.
47
<PAGE>
<PAGE>
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
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
48
<PAGE>
<PAGE>
Assignment of Management Agreement between Rosewood Care Center,
Inc. of Galesburg and Mercantile Bank
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
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
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
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)
49
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Financial Statements at March 31, 1999 for the period ended March
31, 1999 and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<CIK> 0000909110
<NAME> ROSEWOOD CARE CENTER CAPITAL FUNDING CORPORATION
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> MAR-31-1999
<CASH> 262
<SECURITIES> 0
<RECEIVABLES> 23,842
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 262
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 24,104
<CURRENT-LIABILITIES> 145
<BONDS> 23,958
<COMMON> 1
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 24,104
<SALES> 0
<TOTAL-REVENUES> 1,348
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,348
<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 March 31, 1999 for the period ended
March 31, 1999 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> 9-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> MAR-31-1999
<CASH> 1,478
<SECURITIES> 0
<RECEIVABLES> 4,133
<ALLOWANCES> 171
<INVENTORY> 0
<CURRENT-ASSETS> 5,953
<PP&E> 25,459
<DEPRECIATION> 8,924
<TOTAL-ASSETS> 29,265
<CURRENT-LIABILITIES> 5,833
<BONDS> 0
<COMMON> 65
0
0
<OTHER-SE> 1,711
<TOTAL-LIABILITY-AND-EQUITY> 29,265
<SALES> 24,480
<TOTAL-REVENUES> 24,898
<CGS> 0
<TOTAL-COSTS> 20,797
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,349
<INCOME-PRETAX> 2,752
<INCOME-TAX> 218
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,534
<EPS-PRIMARY> 39
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Combined Financial Statements at March 31, 1999 for the period ended
March 31, 1999 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> 9-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> MAR-31-1999
<CASH> 1,478
<SECURITIES> 0
<RECEIVABLES> 4,133
<ALLOWANCES> 171
<INVENTORY> 0
<CURRENT-ASSETS> 5,953
<PP&E> 25,459
<DEPRECIATION> 8,924
<TOTAL-ASSETS> 29,265
<CURRENT-LIABILITIES> 5,833
<BONDS> 0
<COMMON> 65
0
0
<OTHER-SE> 1,711
<TOTAL-LIABILITY-AND-EQUITY> 29,265
<SALES> 24,480
<TOTAL-REVENUES> 24,898
<CGS> 0
<TOTAL-COSTS> 20,797
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,349
<INCOME-PRETAX> 2,752
<INCOME-TAX> 218
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,534
<EPS-PRIMARY> 39
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Combined Financial Statements at March 31, 1999 for the period ended
March 31, 1999 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> 9-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> MAR-31-1999
<CASH> 1,478
<SECURITIES> 0
<RECEIVABLES> 4,133
<ALLOWANCES> 171
<INVENTORY> 0
<CURRENT-ASSETS> 5,953
<PP&E> 25,459
<DEPRECIATION> 8,924
<TOTAL-ASSETS> 29,265
<CURRENT-LIABILITIES> 5,833
<BONDS> 0
<COMMON> 65
0
0
<OTHER-SE> 1,711
<TOTAL-LIABILITY-AND-EQUITY> 29,265
<SALES> 24,480
<TOTAL-REVENUES> 24,898
<CGS> 0
<TOTAL-COSTS> 20,797
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,349
<INCOME-PRETAX> 2,752
<INCOME-TAX> 218
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,534
<EPS-PRIMARY> 39
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Combined Financial Statements at March 31, 1999 for the period ended
March 31, 1999 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> 9-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> MAR-31-1999
<CASH> 1,478
<SECURITIES> 0
<RECEIVABLES> 4,133
<ALLOWANCES> 171
<INVENTORY> 0
<CURRENT-ASSETS> 5,953
<PP&E> 25,459
<DEPRECIATION> 8,924
<TOTAL-ASSETS> 29,265
<CURRENT-LIABILITIES> 5,833
<BONDS> 0
<COMMON> 65
0
0
<OTHER-SE> 1,711
<TOTAL-LIABILITY-AND-EQUITY> 29,265
<SALES> 24,480
<TOTAL-REVENUES> 24,898
<CGS> 0
<TOTAL-COSTS> 20,797
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,349
<INCOME-PRETAX> 2,752
<INCOME-TAX> 218
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,534
<EPS-PRIMARY> 39
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Combined Financial Statements at March 31, 1999 for the period ended
March 31, 1999 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> 9-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> MAR-31-1999
<CASH> 1,478
<SECURITIES> 0
<RECEIVABLES> 4,133
<ALLOWANCES> 171
<INVENTORY> 0
<CURRENT-ASSETS> 5,953
<PP&E> 25,459
<DEPRECIATION> 8,924
<TOTAL-ASSETS> 29,265
<CURRENT-LIABILITIES> 5,833
<BONDS> 0
<COMMON> 65
0
0
<OTHER-SE> 1,711
<TOTAL-LIABILITY-AND-EQUITY> 29,265
<SALES> 24,480
<TOTAL-REVENUES> 24,898
<CGS> 0
<TOTAL-COSTS> 20,797
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,349
<INCOME-PRETAX> 2,752
<INCOME-TAX> 218
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,534
<EPS-PRIMARY> 39
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Combined Financial Statements at March 31, 1999 for the period ended
March 31, 1999 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> 9-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> MAR-31-1999
<CASH> 1,478
<SECURITIES> 0
<RECEIVABLES> 4,133
<ALLOWANCES> 171
<INVENTORY> 0
<CURRENT-ASSETS> 5,953
<PP&E> 25,459
<DEPRECIATION> 8,924
<TOTAL-ASSETS> 29,265
<CURRENT-LIABILITIES> 5,833
<BONDS> 0
<COMMON> 65
0
0
<OTHER-SE> 1,711
<TOTAL-LIABILITY-AND-EQUITY> 29,265
<SALES> 24,480
<TOTAL-REVENUES> 24,898
<CGS> 0
<TOTAL-COSTS> 20,797
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,349
<INCOME-PRETAX> 2,752
<INCOME-TAX> 218
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,534
<EPS-PRIMARY> 39
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Combined Financial Statements at March 31, 1999 for the period ended
March 31, 1999 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> 9-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> MAR-31-1999
<CASH> 1,478
<SECURITIES> 0
<RECEIVABLES> 4,133
<ALLOWANCES> 171
<INVENTORY> 0
<CURRENT-ASSETS> 5,953
<PP&E> 25,459
<DEPRECIATION> 8,924
<TOTAL-ASSETS> 29,265
<CURRENT-LIABILITIES> 5,833
<BONDS> 0
<COMMON> 65
0
0
<OTHER-SE> 1,711
<TOTAL-LIABILITY-AND-EQUITY> 29,265
<SALES> 24,480
<TOTAL-REVENUES> 24,898
<CGS> 0
<TOTAL-COSTS> 20,797
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,349
<INCOME-PRETAX> 2,752
<INCOME-TAX> 218
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,534
<EPS-PRIMARY> 39
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Combined Financial Statements at March 31, 1999 for the period ended
March 31, 1999 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> 9-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> MAR-31-1999
<CASH> 1,478
<SECURITIES> 0
<RECEIVABLES> 4,133
<ALLOWANCES> 171
<INVENTORY> 0
<CURRENT-ASSETS> 5,953
<PP&E> 25,459
<DEPRECIATION> 8,924
<TOTAL-ASSETS> 29,265
<CURRENT-LIABILITIES> 5,833
<BONDS> 0
<COMMON> 65
0
0
<OTHER-SE> 1,711
<TOTAL-LIABILITY-AND-EQUITY> 29,265
<SALES> 24,480
<TOTAL-REVENUES> 24,898
<CGS> 0
<TOTAL-COSTS> 20,797
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,349
<INCOME-PRETAX> 2,752
<INCOME-TAX> 218
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,534
<EPS-PRIMARY> 39
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Combined Financial Statements at March 31, 1999 for the period ended
March 31, 1999 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> 9-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> MAR-31-1999
<CASH> 1,478
<SECURITIES> 0
<RECEIVABLES> 4,133
<ALLOWANCES> 171
<INVENTORY> 0
<CURRENT-ASSETS> 5,953
<PP&E> 25,459
<DEPRECIATION> 8,924
<TOTAL-ASSETS> 29,265
<CURRENT-LIABILITIES> 5,833
<BONDS> 0
<COMMON> 65
0
0
<OTHER-SE> 1,711
<TOTAL-LIABILITY-AND-EQUITY> 29,265
<SALES> 24,480
<TOTAL-REVENUES> 24,898
<CGS> 0
<TOTAL-COSTS> 20,797
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,349
<INCOME-PRETAX> 2,752
<INCOME-TAX> 218
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,534
<EPS-PRIMARY> 39
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Combined Financial Statements at March 31, 1999 for the period ended
March 31, 1999 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000909123
<NAME> PEORIA REAL ESTATE
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> MAR-31-1999
<CASH> 1,478
<SECURITIES> 0
<RECEIVABLES> 4,133
<ALLOWANCES> 171
<INVENTORY> 0
<CURRENT-ASSETS> 5,953
<PP&E> 25,459
<DEPRECIATION> 8,924
<TOTAL-ASSETS> 29,265
<CURRENT-LIABILITIES> 5,833
<BONDS> 0
<COMMON> 65
0
0
<OTHER-SE> 1,711
<TOTAL-LIABILITY-AND-EQUITY> 29,265
<SALES> 24,480
<TOTAL-REVENUES> 24,898
<CGS> 0
<TOTAL-COSTS> 20,797
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,349
<INCOME-PRETAX> 2,752
<INCOME-TAX> 218
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,534
<EPS-PRIMARY> 39
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Combined Financial Statements at March 31, 1999 for the period ended
March 31, 1999 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> 9-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> MAR-31-1999
<CASH> 1,478
<SECURITIES> 0
<RECEIVABLES> 4,133
<ALLOWANCES> 171
<INVENTORY> 0
<CURRENT-ASSETS> 5,953
<PP&E> 25,459
<DEPRECIATION> 8,924
<TOTAL-ASSETS> 29,265
<CURRENT-LIABILITIES> 5,833
<BONDS> 0
<COMMON> 65
0
0
<OTHER-SE> 1,711
<TOTAL-LIABILITY-AND-EQUITY> 29,265
<SALES> 24,480
<TOTAL-REVENUES> 24,898
<CGS> 0
<TOTAL-COSTS> 20,797
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,349
<INCOME-PRETAX> 2,752
<INCOME-TAX> 218
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,534
<EPS-PRIMARY> 39
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Combined Financial Statements at March 31, 1999 for the period ended
March 31, 1999 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> 9-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> MAR-31-1999
<CASH> 1,478
<SECURITIES> 0
<RECEIVABLES> 4,133
<ALLOWANCES> 171
<INVENTORY> 0
<CURRENT-ASSETS> 5,953
<PP&E> 25,459
<DEPRECIATION> 8,924
<TOTAL-ASSETS> 29,265
<CURRENT-LIABILITIES> 5,833
<BONDS> 0
<COMMON> 65
0
0
<OTHER-SE> 1,711
<TOTAL-LIABILITY-AND-EQUITY> 29,265
<SALES> 24,480
<TOTAL-REVENUES> 24,898
<CGS> 0
<TOTAL-COSTS> 20,797
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,349
<INCOME-PRETAX> 2,752
<INCOME-TAX> 218
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,534
<EPS-PRIMARY> 39
<EPS-DILUTED> 0
</TABLE>
