1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 33-65948
ROSEWOOD CARE CENTERS CAPITAL FUNDING CORPORATION
(Exact name of Registrant as specified in its charter)
(See table of Co-Registrants)
Missouri 43-1623171
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11701 Borman Drive, Suite 315
St. Louis, Missouri 63146
(Address of principal executive offices) (Zip Code)
Indicate by check mark whether Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that
Registrant was required to file such reports), (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares of stock of each of the issuer's classes
of common stock, as of the latest practicable date: N/A
Certain information called for on Item 6 of Part II of this Form 10-Q
is incorporated by reference to Registrants' Registration Statement (No.
33-65948) dated July 13, 1993 which was declared effective October 14, 1993,
Registrants' Form 10-Q filed November 29, 1993, Registrants' Form 10-Q filed
February 11, 1994, Registrants' Form 10-K filed September 28, 1994,
Registrants' Form 10-Q filed February 14, 1995, Registrants' Form 10-Q filed
May 15, 1995, Registrants' Form 10-Q filed February 13, 1996, Registrants'
Form 10-Q filed May 14, 1996, Registrants' Form 10-K filed September 26,
1996, Registrants' Form 10-Q filed November 13, 1996, Registrants' Form 10-Q
filed November 12, 1997, and Registrants' Form 10-Q filed February 11, 1998.
Index to Exhibits is on Page 37.
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CO-REGISTRANTS
Rosewood Care Center, Inc. of Swansea
Rosewood Care Center, Inc. of Galesburg
Rosewood Care Center, Inc. of East Peoria
Rosewood Care Center, Inc. of Peoria
Rosewood Care Center, Inc. of Alton
Rosewood Care Center, Inc. of Moline
Swansea Real Estate, Inc.
Galesburg Real Estate, Inc.
East Peoria Real Estate, Inc.
Peoria Real Estate, Inc.
Alton Real Estate, Inc.
Moline Real Estate, Inc.
(Exact names of Co-Registrants as specified in their charters)
No separate periodic or annual reports are filed for each of the co-registrants
and no separate financial statements are included for each of the co-registrants
because the co-registrants are effectively jointly and severally liable with
respect to the Notes and because such separate periodic or annual reports and
such separate financial statements are not deemed material to investors.
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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 22
Item 2. Changes in Securities 22
Item 3. Defaults Upon Senior Securities 22
Item 4. Submission of Matters to a Vote of Security Holders 22
Item 5. Other Information 22
Item 6. Exhibits and Reports on Form 8-K 23
Index to Exhibits 37
- -----------------
Signatures 24
- ----------
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Part I Financial Information
---------------------
Item 1. Financial Statements
ROSEWOOD CARE CENTERS CAPITAL FUNDING CORPORATION
BALANCE SHEET
(Dollars in Thousands)
(Unaudited)
June 30, March 31,
Assets 1997 1998
------ -------- ---------
Cash $ 1 $ 262
Mortgage notes receivable, Rosewood Companies 27,581 25,876
Accrued interest receivable 167 -
------- -------
$27,749 $26,138
======= =======
Liabilities and Stockholders' Equity
------------------------------------
First mortgage redeemable bonds $27,581 $25,980
Accrued interest 167 157
Stockholders' equity:
Common stock, $1 par value
Authorized - 30,000 shares
Issued and outstanding - 500 shares,
at issue price 1 1
Retained earnings - -
------- -------
$27,749 $26,138
======= =======
The accompanying notes are an integral part of this financial statement.
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5
ROSEWOOD CARE CENTERS CAPITAL FUNDING CORPORATION
STATEMENT OF OPERATIONS
(Dollars in Thousands)
(Unaudited)
Three Months Nine Months
Ended Ended
March 31, March 31,
------------------------ ------------------------
1997 1998 1997 1998
------ ------ ------ ------
Interest Income $505 $473 $1,576 $1,456
Interest expense 505 473 $1,576 $1,456
---- ---- ------ ------
Net Income $ 0 $ 0 $ 0 $ 0
==== ==== ====== ======
The accompanying notes are an integral part of this financial statement.
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ROSEWOOD CARE CENTERS CAPITAL FUNDING CORPORATION
STATEMENT OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
Three Months Nine Months
Ended Ended
March 31, March 31,
------------------------ ------------------------
1997 1998 1997 1998
------ ------ ------ ------
Cash flow from operating activities:
Net income $ 0 $ 0 $ 0 $ 0
Decrease in accrued interest receivable (2) 0 (10) 167
Increase (decrease) in accrued interest - (2) 0 (10)
----- ----- ------- -------
Net cash provided by operating activities (2) (2) (10) 157
----- ----- ------- -------
Cash flow from investing activities:
Collections on notes receivable 276 310 1,512 1,705
----- ----- ------- -------
Net cash used by investing activities 276 310 1,512 1,705
----- ----- ------- -------
Cash flow from financing operations:
Reduction of redeemable bonds (274) (308) (1,502) (1,601)
----- ----- ------- -------
Net cash provided by financing (274) (308) (1,502) (1,601)
----- ----- ------- -------
Net increase (decrease) in cash 0 0 0 261
Cash, beginning 262 262 262 1
----- ----- ------- -------
Cash, ending 262 262 262 262
===== ===== ======= =======
Cash paid for interest $ 505 $ 473 $ 1,576 $ 1,456
===== ===== ======= =======
The accompanying notes are an integral part of this financial statement.
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ROSEWOOD CARE CENTERS CAPITAL FUNDING CORPORATION
NOTES TO FINANCIAL STATEMENTS
1. Interim Financial Statements
----------------------------
In the opinion of the Company, these unaudited financial statements
include all adjustments necessary for a fair presentation of its
financial position as of June 30, 1997, and March 31, 1998, and the
results of its operations and its cash flows for the three month and
the nine month periods ended March 31, 1998 and 1997. Such adjustments
were of a normal recurring nature.
The results of operations for the nine months ended March 31, 1998, and
1997 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.
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ROSEWOOD CARE CENTER
FACILITY COMPANIES AND REAL ESTATE COMPANIES
COMBINED BALANCE SHEETS
(Dollars in Thousands)
(Unaudited)
June 30, March 31,
Assets 1997 1998
------ -------- ---------
Current assets:
Cash $ 2,320 $ 3,290
Accounts receivable - residents, net of allowance
for doubtful accounts of $224 and $117,
respectively 1,178 1,456
Accounts receivable - third party payor 3,409 2,055
Due from affiliates -0- 272
Interest receivable 256 152
Prepaid insurance and other prepaids 43 66
Deferred income tax benefits 75 75
------- -------
Total current assets 7,281 7,366
------- -------
Property, plant and equipment:
Land 943 943
Site improvements 2,140 2,140
Building 17,830 17,830
Equipment 3,702 3,801
Leasehold improvements 322 358
------- -------
24,937 25,072
Less accumulated depreciation 7,370 8,055
------- -------
17,567 17,017
------- -------
Other assets:
Notes receivable from Rosewood Care Center
Holding Company 7,034 6,136
Amortizable Costs, Net 965 871
------- -------
7,999 7,007
------- -------
$32,847 $31,390
======= =======
The accompanying notes are an integral part of these financial statements.
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ROSEWOOD CARE CENTER
FACILITY COMPANIES AND REAL ESTATE COMPANIES
COMBINED BALANCE SHEETS
(Dollars in Thousands)
(Unaudited)
June 30, March 31,
Liabilities and Stockholders' Equity 1997 1998
------------------------------------ -------- ---------
Current liabilities:
Current portion of long-term debt $ 2,021 $ 2,034
Accounts payable - trade 1,083 1,096
Accrued expenses:
Salaries and payroll taxes 470 454
Vacation and employee fringes 244 278
Rent - Affiliate -0- 43
Real estate taxes 510 564
Accrued interest 167 -0-
Management fees - affiliate 265 319
Income taxes 50 45
Dividends payable 543 747
------- -------
Total current liabilities 5,353 5,580
------- -------
Long-term debt:
Notes payable - Rosewood Care Center
Capital Funding Corporation 27,581 25,876
------- -------
27,581 25,876
Less current maturities 2,021 2,034
------- -------
25,560 23,842
------- -------
Stockholders' equity:
Common stock 65 65
Paid-in capital 481 481
Retained earnings 1,388 1,422
------- -------
1,934 1,968
------- -------
$32,847 $31,390
======= =======
The accompanying notes are in integral part of these financial statements.
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ROSEWOOD CARE CENTER
FACILITY COMPANIES AND REAL ESTATE COMPANIES
COMBINED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(Dollars in Thousands)
(Unaudited)
Three Months Nine Months
Ended Ended
March 31, March 31,
--------------------- ---------------------
1997 1998 1997 1998
------ ------ ------ ------
Patient service revenue:
Private $4,382 $4,792 $13,470 $14,446
Medicare 2,646 2,564 7,623 7,259
Medicaid 418 380 1,104 1,130
Other patient revenues, net of expenses 16 89 62 233
------ ------ ------- -------
7,462 7,825 22,259 23,068
------ ------ ------- -------
Operating expenses:
Facility expenses:
Administrative expense 240 270 705 793
Employee fringe benefits 456 522 1,376 1,505
Dietary 470 504 1,427 1,483
Nursing 1,780 1,964 5,316 5,676
Ancillary services 1,268 1,663 3,797 4,517
Plant utilities and maintenance 283 282 887 879
Housekeeping and laundry 226 257 690 748
Social services and activities 160 192 483 550
------ ------ ------- -------
4,883 5,654 14,681 16,151
------ ------ ------- -------
Income after facility expenses 2,579 2,171 7,578 6,917
------ ------ ------- -------
Nonfacility expenses:
Real estate taxes 138 143 422 421
Rent -0- 43 -0- 43
Base management fees 198 209 594 605
Illinois Medicaid assessments 99 105 296 302
Depreciation and amortization 264 247 798 779
------ ------ ------- -------
699 747 2,110 2,150
------ ------ ------- -------
Income before incentives 1,880 1,424 5,468 4,767
Incentive management fees (566) (308) (1,583) (1,205)
Officers' bonuses - - - -
------ ------ ------- -------
Income from operations 1,314 1,116 3,885 3,562
------ ------ ------- -------
Other income (expense):
Interest income 157 157 515 494
Interest expense (504) (474) (1,553) (1,457)
------ ------ ------- -------
(347) (317) 1,038 (963)
------ ------ ------- -------
Income before income taxes 967 799 2,847 2,599
Income tax expense (84) (52) (245) (206)
------ ------ ------- -------
Net income 883 747 2,602 2,393
Retained earnings, beginning 1,348 1,422 1,288 1,388
Dividends declared (823) (747) (2,482) (2,359)
------ ------ ------- -------
Retained earnings, ending $1,408 $1,422 $ 1,408 $ 1,422
====== ====== ======= =======
The accompanying notes are an integral part of these financial statements.
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ROSEWOOD CARE CENTER
FACILITY COMPANIES AND REAL ESTATE COMPANIES
COMBINED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
Three Months Nine Months
Ended Ended
March 31, March 31,
--------------------- ---------------------
1997 1998 1997 1998
------ ------ ------ ------
Cash flow from operating activities:
Net income $ 882 $ 748 $ 2,602 $ 2,394
Adjustments:
Depreciation 232 217 701 685
Amortization 32 31 97 95
Decrease (increase) in:
Accounts receivable - residents (90) 10 (264) (278)
Accounts receivable - third party payors 297 476 (152) 1,354
Other receivables and prepaids 178 252 177 (191)
Increase (decrease) in:
Accounts payable - trade (44) 120 (412) 13
Accrued salaries, taxes and fringes 202 (54) 236 17
Accrued real estate taxes 111 113 88 54
Accrued rent - affiliates -0- 43 -0- 43
Accrued management fees 74 (152) 102 54
Other payables and accruals (7) (50) (1) (172)
------- ------- ------- -------
Net cash provided by operating activities 1,867 1,754 3,174 4,068
------- ------- ------- -------
Cash flow from investing activities:
Purchase of property and equipment (39) (73) (117) (135)
Loans and deposits with affiliate (115) 81 904 898
------- ------- ------- -------
Net cash (used) by investing activities (154) 8 787 763
------- ------- ------- -------
Cash flow from financing activities:
Reduction of long-term debt (276) (311) (1,511) (1,706)
Dividends paid (819) (823) (2,273) (2,155)
------- ------- ------- -------
Net cash (used) by financing activities (1,095) (1,134) (3,784) (3,861)
------- ------- ------- -------
Net increase (decrease) in cash 618 628 177 970
Cash, beginning 1,796 2,662 2,237 2,320
------- ------- ------- -------
Cash, ending $ 2,414 $ 3,290 $ 2,414 $ 3,290
======= ======= ======= =======
Cash paid for:
Interest $ 504 $ 473 $ 1,553 $ 1,623
======= ======= ======= =======
Income taxes $ 40 $ 95 $ 246 $ 249
======= ======= ======= =======
The accompanying notes are an integral part of these financial statements.
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ROSEWOOD CARE CENTER
FACILITY COMPANIES AND REAL ESTATE COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS
1. Interim Financial Statements
----------------------------
In the opinion of the Companies, these unaudited combined financial
statements include all adjustments necessary for a fair presentation of
their financial position as of June 30, 1997 and March 31, 1998, and
the results of their operations and their cash flows for the three and
nine month periods ended March 31, 1998 and 1997. Such adjustments
were of a normal recurring nature.
The results of operations for the nine month periods ended March 31,
1998 and 1997 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 the companies have not
provided for, 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 1999.
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ROSEWOOD CARE CENTER
FACILITY COMPANIES AND REAL ESTATE COMPANIES
NOTES TO COMBINED FINANCIAL STATEMENTS
3. Refinancing of Long-Term Debt (Continued)
-----------------------------------------
Loan costs of $609,000 and underwriter's discount of $841,500 are being
amortized over the term of the long-term debt, on the interest method.
4. Dividends
---------
Dividends in the amount of $2,359,800 were declared during the nine
months ended March 31, 1998.
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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, 1998 COMPARED WITH
THREE MONTHS ENDED MARCH 31, 1997
Overview
--------
The Companies have continued their marketing emphasis on short-term
convalescent care while continuing to provide long-term care. The number of
short-term care patients and demand for ancillary rehabilitative and therapy
services has continued to increase. Revenues and expenses associated with
rehabilitative and therapy services have continued to increase through March
31, 1998.
The Medicare program and various forms of private payment are principal
payors for short-term nursing home care and rehabilitative services. All six
of the facilities participate in the federally administered Medicare program.
All six of the facilities also participate in the Medicaid program for a
distinct number of beds in each facility.
The Companies will continue to be affected by the government's attempts
to control Medicare costs and by market issues facing the nursing home
industry as a whole. The Balanced Budget Act of 1997 has put into effect the
managed care model for most health care services reimbursed under the
Medicare program. All long term care companies will need to increase
efficiencies in management and lower costs in order to remain profitable and
continue to increase growth under the Medicare prospective payment system
("MPPS").
Labor costs continue to increase while staffing levels have not changed
significantly for any of the facilities. The Companies have found it
necessary to raise wage rates to attract qualified personnel. The ability of
the Companies to control the cost of labor, which represents one of the
largest components of the Companies' operating expenses, will significantly
impact the future operating results.
On January 23, 1998 the facility located in Alton, Illinois opened its
sixty bed addition, which results in the facility now being licensed for 180
beds. The financial statements and other disclosures for the nine months
ended March 31, 1998 reflect this additional capacity. The following table
sets forth the effect on the occupancy and patient day disclosures specific
to the addition of the sixty licensed beds at the Alton facility:
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February March
-------- -----
1997 1998 1997 1998
---- ---- ---- ----
Residents 114 124 113 131
=== === === ===
Increase in Patient Days 838
===
Operating Results
-----------------
Net revenues have increased to $7,825,000 for the three months ended
March 31, 1998 from $7,462,000 for the three months ended March 31, 1997, an
increase of $363,000 or 4.6%. Private revenues have increased $410,000 from
$4,382,000 for the three months ended March 31, 1997 to $4,792,000 for the
three months ended March 31, 1998. Revenue generated from ancillary services
for private paying patients increased $270,000, while revenue from room
charges increased $140,000 when compared to the same three month period last
year. Private census has decreased from 39,818 patient days for 1997 to
39,636 patient days for the current three month period ended March 31, 1998.
The majority of the increase in ancillary revenue can be accounted for
by the change in the method of billing and collecting for drugs sold to
private paying residents. Prior to July 1, 1997, drugs supplied to private
paying residents were billed by an unrelated third party pharmacy company
directly to the private paying residents and not reflected as revenues or
expenses of the Companies. Effective July 1, 1997, the Companies began
directly billing residents for drugs. The drugs, which continue to be
supplied to the private paying residents by the unrelated pharmacy company,
are billed to the residents by the Companies at the same cost as previously
charged to the residents by the unrelated pharmacy company in prior periods.
As compensation for performing the billing and collecting for the drugs, the
Companies retain a portion of the drug billings. For the three months ended
March 31, 1998, this aggregated $63,000, which is reflected in Other Patient
Revenues for the current period.
Net revenues for Medicare have decreased from $2,646,000 for the three
months ended March 31, 1997 to $2,564,000 for the three months ended March
31, 1998, a decrease of $82,000 or 3.1%. The Medicare census has decreased
to 9,384 from 9,476 compared to the same period last year.
Medicaid revenue has decreased from $418,000 to $380,000 when compared
to the same three month period last year. The decrease is the result of a
decrease in census from 6,223 patient days for the three months ended March
31, 1997 to 5,505 patient days for the three months ended March 31, 1998.
The occupancy of the facilities was 84.1% for the current three month
period, compared to 89.5% for the same three month period last year.
Facility operating expenses increased to $5,654,000 (or $103.70 per
patient day) for the current three month period ended March 31, 1998, from
$4,883,000 (or $87.96 per patient day) for the three months ended March 31,
1997, an increase of $15.74 per patient day.
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Administrative expenses have increased $30,000 when compared to the
same three month period last year. The majority of the increase can be
accounted for by the increase in professional fees, advertising for new
employees, education, seminars and mileage reimbursement.
The cost of employee fringe benefits has increased from $456,000 for
the three months ended March 31, 1997 to $522,000 for the three months ended
March 31, 1998. The majority of the increase can be accounted for by the
increase in workers' compensation insurance premiums and payroll taxes.
Dietary expenses have increased approximately $34,000 when compared to
the same three month period last year. Wages have increased approximately
$24,000 while the cost of food and supplies has increased $10,000 when
compared to the same three month period last year.
Nursing costs have increased from $1,780,000 for the three months ended
March 31, 1997 to $1,964,000 for the three months ended March 31, 1998, an
increase of $184,000 or 10.3%. Labor costs have increased $154,000, while
the cost of medical supplies has increased $30,000 when compared to the same
period last year.
Ancillary services costs have increased from $1,268,000 for the three
months ended March 31, 1997 to $1,663,000 for the three months ended March
31, 1998, an increase of $395,000 or 31.1%. The increase in costs
aggregating $171,000 is the result of the increase in ancillary revenue and
services provided to both the private pay and Medicare residents of the
facilities. The cost of drugs has increased $224,000 when compared to the
same period last year. This increase was the result of the change in
billings for drugs to private residents previously discussed.
In the fiscal quarter ending March 31, 1998, the last two facilities
which had contracts with unrelated third party therapy providers terminated
those contracts. Therapy services for speech, occupational and physical
therapy are now provided at all of the facilities by a related company,
Rosewood Therapy Services, Inc., and are billed to the Companies at cost,
which has resulted in substantial savings to the Companies over contracting
with unrelated third party therapy providers. The cost savings associated
with this arrangement aggregated $223,000 for the three month period ended
March 31, 1998 when compared to the three month period ended March 31, 1997.
Plant utilities and maintenance for the quarter ended March 31, 1998
aggregated $282,000 which is virtually unchanged when compared to the
$283,000 expended for the three month period ended March 31, 1997.
Housekeeping and laundry costs have increased $31,000 when compared to
the same three month period last year. Labor costs have increased $35,000
while the cost of supplies has decreased $4,000.
Social Services and Activities costs have increased $32,000 when
compared to the same three month period last year. The increase can be
accounted for by the increase in staffing for these departments.
Interest income is unchanged and aggregated $157,000 for each of the
three month periods ended March 31, 1998 and 1997.
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Interest expense decreased $30,000 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, 1998 COMPARED WITH
NINE MONTHS ENDED MARCH 31, 1997
Operating Results
-----------------
Net revenues have increased to $23,068,000 for the nine months ended
March 31, 1998 from $22,259,000 for the nine months ended March 31, 1997, an
increase of $809,000 or 3.6%. Private revenues have increased $976,000 from
$13,470,000 for the nine months ended March 31, 1997, to $14,446,000 for the
nine months ended March 31, 1998. Revenue generated from ancillary services
for private paying patients increased $514,000, while revenue from room
charges increased $462,000 when compared to the same period last year. The
average private room rate for the current period aggregated $114 per patient
day compared to $106 per patient day for the same period last year. Private
census has decreased from 123,989 patient days for 1997 to 120,234 patient
days for the current period ended March 31, 1998.
As previously discussed, effective July 1, 1997, the Companies began
billing the private paying residents for drugs previously billed directly to
the residents by an unrelated third party pharmacy company. This change has
resulted in an increase in ancillary revenue aggregating $364,000 for the
current nine month period. Other ancillary revenues, comprised of
occupational, physical and speech therapy, increased $150,000 when compared
to the same period last year. The portion of the drug billings retained by
the Companies as compensation for the billing and collecting for drugs
aggregated $167,000 for the nine months ended March 31, 1998, compared to $0
for the nine months ended March 31, 1997 and is reflected in other Patient
Revenues for the current nine month period.
Net revenues for Medicare have decreased from $7,623,000 for the nine
months ended March 31, 1997 to $7,259,000 for the nine months ended March 31,
1998, a decrease of $364,000 or 4.8%. The Medicare census has decreased to
27,230 patient days for 1998 from 30,176 patient days for the same period
last year. The Medicare reimbursement rate has increased approximately $13
per day which is the result of an increase in ancillary services provided to
Medicare qualified residents.
Medicaid revenue has increased from $1,104,000 to $1,130,000 when
compared to the same period last year. The facilities have received a minor
increase of approximately $2 per day in the reimbursement rate paid to the
facilities for residents covered under the Medicaid program. The Medicaid
census has decreased from 16,701 patient days for the nine months ended March
31, 1997 to 16,532 patient days for the nine months ended March 31, 1998.
The facilities have an average occupancy rate of 86% for the current
nine month period, compared to 90% for the same period last year. The East
Peoria facility is the only facility with an average occupancy significantly
below levels achieved by the majority of the Companies' facilities. The East
Peoria facility continues to have a low occupancy and management is of the
opinion that this trend may continue. The occupancy for the six facilities
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for the current nine month period compared to the same period last year is as
follows:
March 31
1997 1998
Swansea 96.3 98.5
Galesburg 87.0 81.6
Moline 91.5 93.1
Alton 98.6 89.7
Peoria 90.0 90.6
East Peoria 76.9 62.9
Average 90.0 86.0
The Alton facility had an occupancy of 98.6% for the nine months ended
March 31, 1997 compared to 89.7% for the nine months ended March 31, 1998.
The decline in occupancy is the result of a 60 bed addition to the facility
which was opened and licensed on January 23, 1998. As of May 5, 1998, the
facility has 136 of the 180 beds occupied. Management is of the opinion that
it could take as long as eighteen months to two years to achieve an occupancy
in excess of 95% at the Alton location.
Facility operating expenses increased to $16,151,000 (or $98.48 per
patient day) for the current nine month period ended March 31, 1998, from
$14,681,000 (or $85.92 per patient day) for the nine months ended March 31,
1997.
Administrative expenses have increased $88,000 when compared to the
same period last year. The majority of the increase can be accounted for by
the increase in advertising, telephone, advertising for and training new
employees, professional fees, and the increase in the cost of continuing
education of employees reimbursed by the Companies.
The cost of employee fringe benefits increased approximately $129,000
when compared to the same nine month period last year. The majority of the
increase can be accounted for by the increase in workmen's compensation
insurance premiums, payroll taxes, vacation pay and the cost of health
insurance premiums.
Dietary expenses have increased approximately $56,000 when compared to
the same period last year. Wages have increased approximately $48,000, with
the balance of the increase accounted for by the increase in raw food costs.
Nursing costs have increased from $5,316,000 for the nine months ended
March 31, 1997 to $5,676,000 for the nine months ended March 31, 1998, an
increase of $360,000 or 6.8%. Labor costs have increased $261,000 when
compared to the same period last year, with the balance of the increase
accounted for by the increase in the cost of medical supplies.
Even though the patient census has declined, labor hours have remained
constant when compared to the same period last year. As previously discussed,
labor costs continue to increase due to increased pressure on the
availability of qualified personnel. Management is of the opinion that this
trend will continue as long as unemployment remains at record low levels.
The Companies
18
19
will attempt to adjust daily rates to account for the increase in the cost of
labor, while at the same time remaining competitive within the nursing home
industry.
Ancillary services costs have increased from $3,797,000 for the nine
months ended March 31, 1997 to $4,517,000 for the nine months ended March 31,
1998, an increase of $720,000 or 19.0%. This increase in costs is the direct
result of the increase in ancillary revenue and services provided to the
Medicare and private paying residents of the facilities. The cost of drugs
has increased $584,000 when compared to the same period last year. This
increase was the result of the change in billings for drugs to private
residents previously discussed.
The remainder of the increase, or $138,000, is the result of the
increase in the cost of speech, physical and occupational therapy provided to
both private paying and Medicare residents because of the increased
utilization of these services.
In the fiscal quarter ending March 31, 1998, the last two facilities
which had contracts with unrelated third party therapy providers terminated
those contracts. Therapy services for speech, occupational physical therapy
are now provided at all of the facilities by a related company, Rosewood
Therapy Services, Inc., and are billed to the Companies at cost, which has
resulted in substantial savings to the Companies over contracting with
unrelated third party therapy providers, aggregating $487,000 over the nine
month period ending March 31, 1997.
Even though the company was able to realize substantial savings by
contracting with the related company, the overall cost of therapy has
increased as a result of the increase in ancillary services utilization by
the private paying and Medicare residents of the facilities.
Plant utilities and maintenance costs have decreased $8,000 from
$887,000 for the nine months ended March 31, 1997 to $879,000 for the nine
month period ended March 31, 1998.
Housekeeping and laundry costs have increased $58,000 when compared to
the same nine month period last year. Labor costs have increased $69,000,
while the cost of supplies has decreased $11,000 when compared to the same
period last year.
Social Services and Activities costs have increased from $483,000 for
the nine months ended March 31, 1997 to $550,000 for the nine months ended
March 31, 1998. The increased cost is the result of the increase in staffing
at all six of the facilities for these departments.
Rent, base management fees and the Illinois Medicaid Assessments have
increased when compared to the same nine month period in 1997 as a result of
opening the sixty bed addition in Alton. The rent on the sixty bed addition
was paid to an affiliated company which is not one of the reporting
Companies.
Interest income has decreased $21,000 when compared to the same period
last year as a result of the decrease in the notes receivable outstanding
19
20
during the nine month period from the affiliated company, Rosewood Care
Center Holding Co.
Interest expense decreased $96,000 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 $27,581,000 on March 31, 1997 to $25,876,000 as of March
31, 1998.
The Facility Companies file a consolidated income tax return with their
parent company, Rosewood Care Center Holding Co. The income of the Real
Estate Companies is taxed at the individual shareholder level, as each real
estate company is 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, 1998 and 1997, on an annualized basis.
Liquidity and Capital Resources
-------------------------------
As of March 31, 1998, the companies had approximately $3,290,000 in
cash and cash equivalents and net working capital of approximately
$1,786,000. There was a net increase in cash of $970,000 since June 30, 1997.
For the nine months ended March 31, 1998, net cash provided by operations was
$4,068,000. Net cash from investing activities was $763,000 of which
$898,000 was received from Rosewood Care Center Holding Co. as payment on
notes due from the affiliated company and $135,000 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 $3,861,000,
of which $1,706,000 was used to retire debt and $2,155,000 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
$1,456,000 as of March 31, 1998, compared to $1,178,000 as of June 30, 1997.
Accounts receivable from third party payers decreased to $2,055,000 as of
March 31, 1998, compared to $3,409,000 as of June 30, 1997. $793,040 of this
amount is due from Medicare for unsettled cost reports through March 31, 1998
which are subject to audit.
The Medicare program continues to face intense scrutiny and significant
cutbacks. As previously, noted, budget legislation passed by Congress in
1997, enacted a new Medicare prospective payment system. This new MPPS is
intended to help the Medicare program achieve targeted reductions in spending
growth of approximately $9.2 billion for skilled nursing facilities over the
next five years. The new MPPS reimburses the provider for routine, ancillary
and capital costs. The new MPPS rate will initially be a blended rate, based
on previous facility costs adjusted by an inflation factor and a national
rate. The first year the rate will be based on 75% facility costs and 25%
national rate. The second year rate is 50% facility costs and 50% national
rate. In the fourth year, 100% of the new MPPS will be based on the national
rate. The national rate is subject to adjustment for the acuity of the
patient mix and variation in geographic labor costs.
The current system of Medicare payment is a cost reimbursement system
which requires, among other things, a projection of care to be provided at
the time the resident is admitted and a report of care actually given when the
20
21
resident is discharged. In addition to the changes described above, the new
MPPS is to be based on units of service defined for the purpose of calculating
prospective payment. This payment system requires more frequent assessment and
reporting than under the current system.
The Balanced Budget Act of 1997, which proposed the Medicare billing
changes, required a sixty day period between the date the adjustment factors
were published and the implementation of the MPPS program. Although the
government failed to meet the May 1, 1998 deadline for setting the regional
adjustment factors, it has notified health care providers that the MPPS will
still be implemented July 1, 1998. When the MPPS program starts, the
Companies will incur additional clerical and other staffing costs as a result
of the additional reporting required. Until the Companies have some
experience with reimbursement under the new MPPS, it is unknown whether there
will be an increase in revenues sufficient to offset the additional costs
associated with the new MPPS. Therefore, the effect of the new MPPS on the
results of operations, financial condition and cash flow of the Companies is
not yet known.
Litigation Climate
------------------
Significant adverse awards and investigations involving high profile
health care providers have recently been reported. Management believes these
reports evidence an increasingly hostile regulatory and litigation climate in
the nursing home industry. A continuation of this trend could significantly
affect the Companies' future operating results.
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 have also begun investigation of machinery to determine the
existence and extent of any microprocessor problems.
Investigation of readiness of mechanical systems and other equipment in
the Companies' facilities has begun and equipment upgrades and readiness are
scheduled to continue over the course of the next year. The Companies
believe their internal accounting and patient management systems will not be
materially disrupted or adversely affected by the Y2K problem. Internal
software and hardware systems have undergone extensive upgrading in the last
two years, in part to address the Y2K issues. However, the Companies receive
substantial payments from insurance companies and state and federal
government entities. In the United States Office of Management and Budget's
report on the government's Y2K readiness issued on March 15, the Health Care
Financing Administration ("HCFA"), which handles Medicare and Medicaid funds,
was found
21
22
to be struggling with Y2K readiness. At this time, the Companies do not know
whether the government and other third party payors will have implemented
updates and contingency plans necessary for problem-free transition to 2000.
If those payors experience disruption from the Y2K, the Companies could
experience software compatibility problems, delays in payment and other
difficulties which could have a material adverse impact on the future operating
results or financial condition of the Companies. During the next fiscal year,
the Companies plan to review and analyze whether there is a significant
likelihood that the Companies' major payors or vendors will experience Y2K
problems, the extent of repercussions to the Companies from such problems and
what steps the Companies should be taking to eliminate, minimize or otherwise
address potential costs and other problems.
PART II OTHER INFORMATION
- --------------------------
ITEM 1. LEGAL PROCEEDINGS.
There were no material developments with respect to legal proceedings
during the quarter ended March 31, 1998.
ITEM 2. CHANGES IN SECURITIES.
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
During the period ending March 31, 1998, the construction of the 60 bed
expansion wing at Rosewood Care Center of Galesburg neared completion.
Opening of the expansion wing is still projected for the last quarter of
fiscal 1998. There are certain restrictions on the expansion which are
contained in the Loan Agreement and the Trust Indenture. In accordance with
those restrictions, ownership of the expansion wing is maintained in the name
of the Galesburg Real Estate II, L.L.C., a separate entity from Galesburg
Real Estate, Inc. which owns the existing nursing home. Rosewood Care Center,
Inc. of Galesburg, the company which leases and operates the Galesburg
skilled nursing facility, will also be the lessee and operator of the
expansion wing. In accordance with the terms of the Loan Agreement, and the
Loan Guarantee Agreement, under certain conditions, Rosewood Care Center,
Inc. of Galesburg can terminate the lease and take other actions which could
be adverse to Galesburg Real Estate II, L.L.C. without penalty while the
bonds are outstanding.
In the 1997 fiscal year, a related company, Rosewood Therapy Services,
Inc. began providing therapy services to the facilities owned and operated by
the Companies. In 1997, therapy services were provided to the facilities at
prevailing market rates, on the same terms and conditions as would be entered
into with unrelated therapy companies. During the 1997 fiscal year, the
22
23
Companies' paid $3,016,000 to unrelated companies for physical and
occupational therapy services and an additional $236,000 for speech therapy
services. Amounts paid by the Companies to Rosewood Therapy Services during
the 1997 fiscal year were negligible. Beginning with the 1998 fiscal year,
therapy services are provided to the facilities at Rosewood Therapy Services'
cost, rather than at prevailing market rates. During the first nine months of
the 1998 fiscal year, the Companies' paid $1,159,178 to unrelated companies
for physical, occupational and speech therapy services. Amounts paid by the
Companies to Rosewood Therapy Services during the first nine months of the
1998 fiscal year, aggregated $1,323,578. The Companies intend to obtain
substantially all therapy services from Rosewood Therapy Services for the
1998 fiscal year. Effective March 1998, the Companies terminated contracts
with the remaining unrelated third party therapy providers. Substantially
all speech, occupational and physical therapy is now provided by Rosewood
Therapy Services. The Companies anticipate that only nominal amounts will be
paid to outside companies to provide specialized therapies or to cover short
term staffing needs.
During the second fiscal quarter of 1998, the Companies became
participants in the 401 (k) Plan maintained by an affiliate, HSM Management
Services, Inc. The Plan allows but does not require a matching contribution
from the Companies. The Companies do not expect participation in the 401 (k)
plan to have a material impact on financial performance.
The Companies continue to have discussions with large providers
relating to managed care options. At March 31, 1998, no new contracts had
been finalized.
Item 6. Exhibits and Reports on Form 8-K.
(a) See Index to Exhibits on Page 37.
(b) Reports on Form 8-K.
None.
23
24
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
ROSEWOOD CARE CENTERS CAPITAL
FUNDING CORPORATION, Registrant
Dated: May 14, 1998 By: /s/ Larry Vander Maten
--------------------------------------------
Larry Vander Maten
President and Director
(Principal Executive Officer
and Principal
Financial and Accounting Officer)
24
25
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
ROSEWOOD CARE CENTER, INC. OF
SWANSEA, Registrant
Dated: May 14, 1998 By: /s/ Larry Vander Maten
--------------------------------------------
Larry Vander Maten
President and Director
(Principal Executive Officer
and Principal Financial
and Accounting Officer)
25
26
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
ROSEWOOD CARE CENTER, INC. OF
GALESBURG, Registrant
Dated: May 14, 1998 By: /s/ Larry Vander Maten
--------------------------------------------
Larry Vander Maten
President and Director
(Principal Executive Officer
and Principal Financial
and Accounting Officer
26
27
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
ROSEWOOD CARE CENTER, INC. OF
PEORIA, Registrant
Dated: May 14, 1998 By: /s/ Larry Vander Maten
--------------------------------------------
Larry Vander Maten
President and Director
(Principal Executive Officer
and Principal Financial
and Accounting Officer)
27
28
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
ROSEWOOD CARE CENTER, INC. OF
EAST PEORIA, Registrant
Dated: May 14, 1998 By: /s/ Larry Vander Maten
--------------------------------------------
Larry Vander Maten
President and Director
(Principal Executive Officer
and Principal Financial
and Accounting Officer)
28
29
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
ROSEWOOD CARE CENTER, INC. OF
ALTON, Registrant
Dated: May 14, 1998 By: /s/ Larry Vander Maten
--------------------------------------------
Larry Vander Maten
President and Director
(Principal Executive Officer
and Principal Financial
and Accounting Officer)
29
30
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
ROSEWOOD CARE CENTER, INC. OF
MOLINE, Registrant
Dated: May 14, 1998 By: /s/ Larry Vander Maten
--------------------------------------------
Larry Vander Maten
President and Director
(Principal Executive Officer
and Principal Financial
and Accounting Officer)
30
31
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
SWANSEA REAL ESTATE, INC., Registrant
Dated: May 14, 1998 By: /s/ Larry Vander Maten
--------------------------------------------
Larry Vander Maten
President and Director
(Principal and Executive Officer
and Principal Financial
and Accounting Officer
31
32
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
GALESBURG REAL ESTATE, INC., Registrant
Dated: May 14, 1998 By: /s/ Larry Vander Maten
--------------------------------------------
Larry Vander Maten
President and Director
(Principal Executive Officer
and Principal Financial
and Accounting Officer)
32
33
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
PEORIA REAL ESTATE, INC., Registrant
Dated: May 14, 1998 By: /s/ Larry Vander Maten
--------------------------------------------
Larry Vander Maten
President and Director
(Principal Executive Officer
and Principal Financial
and Accounting Officer)
33
34
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
EAST PEORIA REAL ESTATE, INC., Registrant
Dated: May 14, 1998 By: /s/ Larry Vander Maten
--------------------------------------------
Larry Vander Maten
President and Director
(Principal Executive Officer
and Principal Financial
and Accounting Officer)
34
35
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
ALTON REAL ESTATE, INC., Registrant
Dated: May 14, 1998 By: /s/ Larry Vander Maten
--------------------------------------------
Larry Vander Maten
President and Director
(Principal Executive Officer
and Principal Financial
and Accounting Officer)
35
36
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 14, 1998 By: /s/ Larry Vander Maten
--------------------------------------------
Larry Vander Maten
President and Director
(Principal Executive Officer
and Principal Financial
and Accounting Officer)
36
37
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
37
38
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
38
39
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.
27.1 Financial Data Schedule of Rosewood Care Center Capital Funding
Corporation.
27.2 Financial Data Schedule of Rosewood Care Center of Galesburg.
27.3 Financial Data Schedule of Rosewood Care Center of Swansea.
27.4 Financial Data Schedule of Rosewood Care Center of East Peoria.
27.5 Financial Data Schedule of Rosewood Care Center of Peoria.
27.6 Financial Data Schedule of Rosewood Care Center of Alton.
27.7 Financial Data Schedule of Rosewood Care Center of Moline.
27.8 Financial Data Schedule of Swansea Real Estate.
27.9 Financial Data Schedule of Galesburg Real Estate.
27.10 Financial Data Schedule of East Peoria Real Estate.
27.11 Financial Data Schedule of Peoria Real Estate.
27.12 Financial Data Schedule of Alton Real Estate.
39
40
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.
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.
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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.
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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
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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.
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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
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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
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