-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UQDotqdlx8bIJQ+pGjcK56nik/G/OX9qF4Y+Bqr9jeYHDQ3DM9irnq0UJMYOSLhg bmDmcvLEDp+NwWBEovnblA== 0001068800-99-000035.txt : 19990215 0001068800-99-000035.hdr.sgml : 19990215 ACCESSION NUMBER: 0001068800-99-000035 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 15 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990212 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ROSEWOOD CARE CENTERS CAPITAL FUNDING CORP CENTRAL INDEX KEY: 0000909110 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-SKILLED NURSING CARE FACILITIES [8051] IRS NUMBER: 431623171 STATE OF INCORPORATION: MO FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 033-65948 FILM NUMBER: 99534648 BUSINESS ADDRESS: STREET 1: 11701 BORMAN DRIVE, SUITE 315 STREET 2: STE 113 CITY: ST LOUIS STATE: MO ZIP: 63146 BUSINESS PHONE: 3145760050 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ROSEWOOD CARE CENTER INC OF SWANSEA CENTRAL INDEX KEY: 0000909113 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-SKILLED NURSING CARE FACILITIES [8051] IRS NUMBER: 431375489 STATE OF INCORPORATION: IL FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 033-65948-01 FILM NUMBER: 99534649 BUSINESS ADDRESS: STREET 1: 11701 BORMAN DRIVE STREET 2: STE 315 CITY: ST LOUIS STATE: MO ZIP: 63146 BUSINESS PHONE: 3149949070 MAIL ADDRESS: STREET 1: 11701 BORMAN DRIVE STREET 2: SUITE 315 CITY: ST LOUIS STATE: MO ZIP: 63146 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ROSEWOOD CARE CENTER INC OF GALESBURG CENTRAL INDEX KEY: 0000909114 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-SKILLED NURSING CARE FACILITIES [8051] IRS NUMBER: 431375391 STATE OF INCORPORATION: IL FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 033-65948-02 FILM NUMBER: 99534650 BUSINESS ADDRESS: STREET 1: 11701 BORMAN DRIVE STREET 2: STE 315 CITY: ST LOUIS STATE: MO ZIP: 63146 BUSINESS PHONE: 3149949070 MAIL ADDRESS: STREET 1: 11701 BORMAN DRIVE STREET 2: SUITE 315 CITY: ST LOUIS STATE: MO ZIP: 63146 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ROSEWOOD CARE CENTER INC OF EAST PEORIA CENTRAL INDEX KEY: 0000909115 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-SKILLED NURSING CARE FACILITIES [8051] IRS NUMBER: 431446788 STATE OF INCORPORATION: IL FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 033-65948-03 FILM NUMBER: 99534651 BUSINESS ADDRESS: STREET 1: 11701 BORMAN DRIVE STREET 2: STE 315 CITY: ST LOUIS STATE: MO ZIP: 63146 BUSINESS PHONE: 3149949070 MAIL ADDRESS: STREET 1: 11701 BORMAN DR STREET 2: SUITE 315 CITY: ST LOUIS STATE: MO ZIP: 63146 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ROSEWOOD CARE CENTER INC OF PEORIA CENTRAL INDEX KEY: 0000909116 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-SKILLED NURSING CARE FACILITIES [8051] IRS NUMBER: 431446786 STATE OF INCORPORATION: IL FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 033-65948-04 FILM NUMBER: 99534652 BUSINESS ADDRESS: STREET 1: 11701 BOWMAN DRIVE STREET 2: STE 315 CITY: ST LOUIS STATE: MO ZIP: 63146 BUSINESS PHONE: 3149949070 MAIL ADDRESS: STREET 1: 11701 BOWMAN DRIVE STREET 2: SUITE 315 CITY: ST LOUIS STATE: MO ZIP: 63146 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ROSEWOOD CARE CENTER INC OF ALTON CENTRAL INDEX KEY: 0000909117 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-SKILLED NURSING CARE FACILITIES [8051] IRS NUMBER: 431446787 STATE OF INCORPORATION: IL FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 033-65948-05 FILM NUMBER: 99534653 BUSINESS ADDRESS: STREET 1: 11701 BOWMAN DRIVE STREET 2: STE 315 CITY: ST LOUIS STATE: MO ZIP: 63146 BUSINESS PHONE: 3149949070 MAIL ADDRESS: STREET 1: 11701 BORMAN DR CITY: ST LOUIS STATE: MO ZIP: 63146 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ROSEWOOD CARE CENTER INC OF MOLINE CENTRAL INDEX KEY: 0000909118 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-SKILLED NURSING CARE FACILITIES [8051] IRS NUMBER: 431453169 STATE OF INCORPORATION: IL FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 033-65948-06 FILM NUMBER: 99534654 BUSINESS ADDRESS: STREET 1: 11701 BORMAN DRIVE STREET 2: STE 315 CITY: ST LOUIS STATE: MO ZIP: 63146 BUSINESS PHONE: 3149949070 MAIL ADDRESS: STREET 1: 11701 BORMAN DRIVE STREET 2: SUITE 315 CITY: ST LOUIS STATE: MO ZIP: 63146 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SWANSEA REAL ESTATE INC CENTRAL INDEX KEY: 0000909120 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-SKILLED NURSING CARE FACILITIES [8051] IRS NUMBER: 431446792 STATE OF INCORPORATION: IL FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 033-65948-07 FILM NUMBER: 99534655 BUSINESS ADDRESS: STREET 1: 11701 BORMAN DRIVE STREET 2: STE 315 CITY: ST LOUIS STATE: MO ZIP: 63146 BUSINESS PHONE: 3149949070 MAIL ADDRESS: STREET 1: 11701 BORMAN DRIVE STREET 2: SUITE 315 CITY: ST LOUIS STATE: MO ZIP: 63146 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GALESBURG REAL ESTATE INC CENTRAL INDEX KEY: 0000909121 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-SKILLED NURSING CARE FACILITIES [8051] IRS NUMBER: 431453172 STATE OF INCORPORATION: IL FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 033-65948-08 FILM NUMBER: 99534656 BUSINESS ADDRESS: STREET 1: 11701 BORMAN DRIVE STREET 2: STE 315 CITY: ST LOUIS STATE: MO ZIP: 63146 BUSINESS PHONE: 3149949070 MAIL ADDRESS: STREET 1: 11701 BORMAN DRIVE STREET 2: SUITE 315 CITY: ST LOUIS STATE: MO ZIP: 63146 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EAST PEORIA REAL ESTATE INC CENTRAL INDEX KEY: 0000909122 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-SKILLED NURSING CARE FACILITIES [8051] IRS NUMBER: 431453171 STATE OF INCORPORATION: IL FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 033-65948-09 FILM NUMBER: 99534657 BUSINESS ADDRESS: STREET 1: 11701 BORMAN DRIVE STREET 2: STE 315 CITY: ST LOUIS STATE: MO ZIP: 63146 BUSINESS PHONE: 3149949070 MAIL ADDRESS: STREET 1: 11701 BORMAN DRIVE CITY: ST LOUIS STATE: MO ZIP: 63146 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PEORIA REAL ESTATE INC CENTRAL INDEX KEY: 0000909123 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-SKILLED NURSING CARE FACILITIES [8051] IRS NUMBER: 431446790 STATE OF INCORPORATION: IL FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 033-65948-10 FILM NUMBER: 99534658 BUSINESS ADDRESS: STREET 1: 11701 BORMAN DRIVE STREET 2: STE 315 CITY: ST LOUIS STATE: MO ZIP: 63146 BUSINESS PHONE: 3149949070 MAIL ADDRESS: STREET 1: 11701 BORMAN DRIVE STREET 2: SUITE 315 CITY: ST LOUIS STATE: MO ZIP: 63146 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALTON REAL ESTATE INC CENTRAL INDEX KEY: 0000909124 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-SKILLED NURSING CARE FACILITIES [8051] IRS NUMBER: 431476931 STATE OF INCORPORATION: IL FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 033-65948-11 FILM NUMBER: 99534659 BUSINESS ADDRESS: STREET 1: 11701 BORMAN DRIVE STREET 2: STE 315 CITY: ST LOUIS STATE: MO ZIP: 63146 BUSINESS PHONE: 3149949070 MAIL ADDRESS: STREET 1: 11701 BORMAN DRIVE STREET 2: SUITE 315 CITY: ST LOUIS STATE: MO ZIP: 63146 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MOLINE REAL ESTATE INC CENTRAL INDEX KEY: 0000909125 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-SKILLED NURSING CARE FACILITIES [8051] IRS NUMBER: 431453170 STATE OF INCORPORATION: IL FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 033-65948-12 FILM NUMBER: 99534660 BUSINESS ADDRESS: STREET 1: 11701 BORMAN DRIVE STREET 2: STE 315 CITY: ST LOUIS STATE: MO ZIP: 63146 BUSINESS PHONE: 3149949070 MAIL ADDRESS: STREET 1: 11701 BORMAN DRIVE STREET 2: SUTIE 315 CITY: ST LOUIS STATE: MO ZIP: 63146 10-Q 1 ROSEWOOD CARE CENTERS CAPITAL FUNDING CORP. FORM 10-Q 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 December 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, Registrants' Form 10-Q filed February 11, 1998 and Registrants' Form 10- Q filed November 12, 1998. Index to Exhibits is on Page 39. 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 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 23 Item 2. Changes in Securities 23 Item 3. Defaults Upon Senior Securities 24 Item 4. Submission of Matters to a Vote of Security Holders 24 Item 5. Other Information 24 Item 6. Exhibits and Reports on Form 8-K 25 Index to Exhibits 39 - ----------------- Signatures 26 - ---------- 3 PART I. Financial Information --------------------- Item 1. Financial Statements ROSEWOOD CARE CENTERS CAPITAL FUNDING CORPORATION BALANCE SHEET (Dollars in Thousands) (Unaudited)
June 30, December 31, Assets 1998 1998 ------ -------- ------------ Cash $ 262 $ 263 Mortgage notes receivable, Rosewood Companies 25,561 24,188 ------- ------- $25,823 $24,451 ======= ======= Liabilities and Stockholders' Equity ------------------------------------ First mortgage redeemable bonds $25,666 $24,302 Accrued interest 156 148 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 $24,451 ======= ======= The accompanying notes are an integral part of this financial statement.
4 ROSEWOOD CARE CENTERS CAPITAL FUNDING CORPORATION STATEMENT OF OPERATIONS (Dollars in Thousands) (Unaudited)
Three Months Six Months Ended Ended December 31, December 31, ---------------- ---------------- 1997 1998 1997 1998 ---- ---- ---- ---- Interest Income $487 $451 $983 $912 Interest expense 487 451 $983 $912 ---- ---- ---- ---- Net Income $ 0 $ 0 $ 0 $ 0 ==== ==== ==== ==== The accompanying notes are an integral part of this financial statement.
5 ROSEWOOD CARE CENTERS CAPITAL FUNDING CORPORATION STATEMENT OF CASH FLOWS (Dollars in Thousands) (Unaudited)
Three Months Six Months Ended Ended December 31, December 31, ---------------- ---------------- 1997 1998 1997 1998 ---- ---- ---- ---- Cash flow from operating activities: Net income $ 0 $ 0 $ 0 $ 0 Decrease in accrued interest receivable - - 167 0 Increase (decrease) in accrued interest (6) (6) (8) (8) ------- ------- ------- ------- Net cash provided by operating activities (6) (6) 159 (8) ------- ------- ------- ------- Cash flow from investing activities: Collections on notes receivable 1,015 1,052 1,395 1,373 ------- ------- ------- ------- Net cash used by investing activities 1,015 1,052 1,395 1,373 ------- ------- ------- ------- Cash flow from financing operations: Reduction of redeemable bonds (1,009) (1,045) (1,293) (1,364) ------- ------- ------- ------- Net cash provided by financing (1,009) (1,045) (1,293) (1,364) ------- ------- ------- ------- Net increase (decrease) in cash 0 1 261 1 Cash, beginning 262 262 1 262 ------- ------- ------- ------- Cash, ending 262 263 262 263 ======= ======= ======= ======= Cash paid for interest $ 487 $ 451 $ 983 $ 912 ======= ======= ======= ======= The accompanying notes are an integral part of this financial statement.
6 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 December 31, 1998, and the results of its operations and its cash flows for the three month and the six month periods ended December 31, 1997 and 1998. Such adjustments were of a normal recurring nature. The results of operations for the six months ended December 31, 1997, and 1998 are not necessarily indicative of the results for the full year. It is suggested that these financial statements be read in conjunction with the financial statements, accounting policies and financial notes thereto included in the Form 10K Annual Report (No. 33-65948), which has previously been filed with the Commission. 2. Issuance of Bonds ----------------- On October 21, 1993, the Company issued $33,000,000 of its 7-1/4% First Mortgage Redeemable Bonds due November 1, 2013. Of the ending cash balance, $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 ROSEWOOD CARE CENTER FACILITY COMPANIES AND REAL ESTATE COMPANIES COMBINED BALANCE SHEETS (Dollars in Thousands) (Unaudited)
June 30, December 31, Assets 1998 1998 ------ -------- ------------ Current assets: Cash $ 2,866 $ 2,082 Accounts receivable - residents, net of allowance for doubtful accounts of $168 and $169, respectively 1,352 1,586 Accounts receivable - third party payor 2,766 2,411 Due from affiliates 327 -0- Interest receivable 282 243 Prepaid insurance and other prepaids 44 91 Deferred income tax benefits 52 52 ------- ------- Total current assets 7,689 6,465 ------- ------- Property, plant and equipment: Land 943 943 Site improvements 2,140 2,143 Building 17,830 17,830 Equipment 3,962 4,060 Leasehold improvements 389 456 ------- ------- 25,264 25,432 Less accumulated depreciation 8,282 8,726 ------- ------- 16,982 16,706 ------- ------- Other assets: Notes receivable from Rosewood Care Center Holding Company 6,910 5,830 Amortizable Costs, Net 840 778 ------- ------- 7,750 6,608 ------- ------- $32,421 $29,779 ======= ======= The accompanying notes are an integral part of these financial statements.
8 ROSEWOOD CARE CENTER FACILITY COMPANIES AND REAL ESTATE COMPANIES COMBINED BALANCE SHEETS (Dollars in Thousands) (Unaudited)
June 30, December 31, Liabilities and Stockholders' Equity 1998 1998 ------------------------------------ -------- ------------ Current liabilities: Current portion of long-term debt $ 2,071 $ 2,147 Accounts payable - trade 2,144 988 Accrued expenses: Salaries and payroll taxes 576 627 Vacation and employee fringes 257 201 Real estate taxes 471 433 Accrued interest -0- -0- Accrued Rent 43 45 Management fees - affiliate 599 585 Income taxes 4 10 Dividends payable 801 936 ------- ------- Total current liabilities 6,966 5,972 ------- ------- Long-term debt: Notes payable - Rosewood Care Center Capital Funding Corporation 25,561 24,188 ------- ------- 25,561 24,188 Less current maturities 2,071 2,147 ------- ------- 23,490 22,041 ------- ------- Stockholders' equity: Common stock 65 65 Paid-in capital 481 481 Retained earnings 1,419 1,220 ------- ------- 1,965 1,766 ------- ------- $32,421 $29,779 ======= ======= The accompanying notes are in integral part of these financial statements.
9 ROSEWOOD CARE CENTER FACILITY COMPANIES AND REAL ESTATE COMPANIES COMBINED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (Dollars in Thousands) (Unaudited)
Three Months Six Months Ended Ended December 31, December 31, ---------------- ------------------ 1997 1998 1997 1998 ---- ---- ---- ---- Patient service revenue: Private $4,824 $4,958 $ 9,654 $ 9,872 Medicare 2,444 2.924 4,695 5,452 Medicaid 376 388 750 812 Other patient revenues, net of expenses 78 43 144 88 ------ ------ ------- ------- 7,722 8,313 15,243 16,224 ------ ------ ------- ------- Operating expenses: Facility expenses: Administrative expense 270 342 523 618 Employee fringe benefits 510 551 983 1,103 Dietary 506 543 979 1,070 Nursing 1,890 2,271 3,712 4,490 Ancillary services 1,443 1,180 2,854 2,221 Plant utilities and maintenance 284 291 597 645 Housekeeping and laundry 254 298 491 600 Social services and activities 188 143 358 330 ------ ------ ------- ------- 5,345 5,619 10,497 11,077 ------ ------ ------- ------- Income after facility expenses 2,377 2,694 4,746 5,147 ------ ------ ------- ------- Nonfacility expenses: Real estate taxes 139 157 278 297 Rent -0- 209 -0- 320 Base management fees 198 231 396 445 Illinois Medicaid assessments 98 115 197 222 Depreciation and amortization 266 251 532 506 ------ ------ ------- ------- 701 963 1,403 1,790 ------ ------ ------- ------- Income before incentives 1,676 1,731 3,343 3,357 ------ ------ ------- ------- Incentive management fees (471) (479) (897) (838) Officers' bonuses - - - - Income from operations 1,205 1,252 2,446 2,519 Other income (expense): Interest income 168 148 337 295 Interest expense (487) (452) (983) (913) ------ ------ ------- ------- (319) (304) (646) (618) ------ ------ ------- ------- Income before income taxes 886 948 1,800 1,901 Income tax expense (71) (84) (154) (155) ------ ------ ------- ------- Net income 815 864 1,646 1,746 Retained earnings, beginning 1,430 1,293 1,388 1,419 Dividends declared (823) (937) (1,612) (1,945) ------ ------ ------- ------- Retained earnings, ending $1,422 $1,220 $ 1,422 $ 1,220 ====== ====== ======= ======= The accompanying notes are an integral part of these financial statements.
10 ROSEWOOD CARE CENTER FACILITY COMPANIES AND REAL ESTATE COMPANIES COMBINED STATEMENTS OF CASH FLOWS (Dollars in Thousands) (Unaudited)
Three Months Six Months Ended Ended December 31, December 31, ----------------- ------------------- 1997 1998 1997 1998 ---- ---- ---- ---- Cash flow from operating activities: Net income $ 815 $ 865 $ 1,646 $ 1,747 Adjustments: Depreciation 234 220 468 444 Amortization 32 30 64 61 Decrease (increase) in: Accounts receivable - residents (26) (160) (288) (234) Accounts receivable - third party payors (92) 1,094 878 355 Other receivables and prepaids (303) 217 (443) 319 Increase (decrease) in: Accounts payable - trade (176) (1,188) (107) (1,156) Accrued salaries, taxes and fringes 189 222 71 (5) Accrued real estate taxes 90 91 (59) (38) Accrued management fees 45 221 206 (14) Other payables and accruals (85) (63) (122) 7 ------- ------- ------- ------- Net cash provided by operating activities 723 1,549 2,314 1,486 ------- ------- ------- ------- Cash flow from investing activities: Purchase of property and equipment (36) (68) (62) (168) Loans and deposits with affiliate 475 1,910 817 1,080 ------- ------- ------- ------- Net cash (provided) by investing activities 439 1,842 755 912 ------- ------- ------- ------- Cash flow from financing activities: Reduction of long-term debt (1,015) (1,052) (1,395) (1,373) Dividends paid (789) (1,008) (1,332) (1,809) ------- ------- ------- ------- Net cash (used) by financing activities (1,804) (2,060) (2,727) (3,182) ------- ------- ------- ------- Net increase (decrease) in cash (642) (1,331) 342 (784) Cash, beginning 3,304 751 2,320 2,866 ------- ------- ------- ------- Cash, ending $ 2,662 $ 2,082 $ 2,662 $ 2,082 ======= ======= ======= ======= Cash paid for: Interest $ 564 $ 451 $ 1,150 $ 912 ======= ======= ======= ======= Income taxes $ 104 $ 127 $ 154 $ 107 ======= ======= ======= ======= The accompanying notes are an integral part of these financial statements.
11 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 December 31, 1998, and the results of their operations and their cash flows for the three and six month periods ended December 31, 1997 and 1998. Such adjustments were of a normal recurring nature. The results of operations for the six month periods ended December 31, 1997 and 1998 are not necessarily indicative of the results for the full years. It is suggested that these financial statements be read in conjunction with the financial statements, accounting policies and financial notes thereto included in the Form 10K Annual Report (No. 33-65948), which has previously been filed with the Commission. 2. Litigation ---------- The Companies, from time to time, are involved in litigation in the ordinary course of business including disputes involving management contracts, patient services, employment services, 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 ROSEWOOD CARE CENTER FACILITY COMPANIES AND REAL ESTATE COMPANIES NOTES TO COMBINED FINANCIAL STATEMENTS 3. Refinancing of Long-Term Debt (Continued) ----------------------------------------- Loan costs of $609,000 and underwriter's discount of $841,500 are being amortized over the term of the long-term debt, on the interest method. 4. Dividends --------- Dividends in the amount of $1,945,100 were declared during the six months ended December 31, 1998. 13 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 December 31, 1998 Compared With Three Months Ended December 31, 1997 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 1998. However, the underperformance of the facility in East Peoria, where occupancy has decreased appreciably due to administrative turnover and operational difficulties, will continue into the next fiscal year. Marketing --------- The Companies' attempt to increase admissions through marketing programs. The Companies' marketing programs are executed under the direction of a full time marketing staff member employed by HSM Management. Marketing is done through direct mail, community programs and television. Although the Companies provide 14 long-term nursing home care, their marketing strategy emphasizes short- term nursing home care for rehabilitative purposes. The Companies believe this emphasis has an appeal to a much larger private payor market than exists for strictly long-term care oriented nursing homes. Governmental Regulation and Reimbursement ----------------------------------------- The Companies' nursing facilities are required to comply with various federal and state health care regulations and statutes. The Illinois Department of Public Health ("IDPH") and other agencies with whom the IDPH contracts to assist it in its reviews and investigations, continually assess 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 Medicare programs. 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. At this time, the Companies have not completed their assessment of the full impact of the changes due to the uncertainty of the interpretation of the legislation by HCFA and, therefore, no assurances can be made as to the impact of this legislation or any future health care legislation on the Companies' financial position, results of operations or cash flows. However, future and current federal legislative changes may have a negative impact on the operations of the Companies. PPS was effective for all of the Companies on July 1, 1998. This has changed the manner in which the facilities are paid for inpatient services provided to Medicare beneficiaries. 15 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. 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. Should the Companies be unable to execute the changes to reduce costs, PPS could have a material negative effect on the Companies' financial position and results of operations. Under reimbursement regulations effective through June 30, 1998, funds received under Medicare programs are subject to audit by the third party payor responsible for administering the facility account. This results either in amounts due to or from the facilities based on the actual costs of participating in the Medicare program during the year. Past audits of the Companies' reimbursements through the fiscal year ending June 30, 1996, have not resulted in any material adjustments for any of the Companies that were not otherwise indemnified for by private vendors to the Companies. Year 2000 - --------- Many computers currently in use in business and government use only two digits, rather than four, to identify the year where information about the date is entered into or automatically added to computer files. These computers automatically add the "19" prefix to the last two digits the computer reads for the year when date information becomes part of a computer file. Thus, when "2000" is entered, the computer will only read the "00" and interpret the date as "1900", rather than "2000". This is becoming known as the Year 2000 ("Y2K") problem. This issue is more of a problem for systems employing large mainframe computers and other similar or older systems. Additional problems come from microprocessors embedded in machinery. The Companies do not utilize mainframes and have updated their computer systems recently, including accounting and clinical software and hardware. The Companies are in the process of upgrading all of the Companies computers to insure microprocessor compatibility. Investigation of readiness of all mechanical systems and other equipment in the Companies' facilities has begun and equipment upgrades and readiness are scheduled to continue over the course of the next year. The Companies believe their internal accounting and patient management systems will not be materially disrupted or adversely affected by the Y2K problem because of software upgrades. Internal software and hardware systems have undergone extensive upgrading in the last two years, in part to address the Y2K issues. The Companies will not be making any significant expenditures for computer equipment or software upgrades, since the cost is being paid for by the affiliated management company. 16 The Companies have had communications with their principal suppliers to determine the extent to which the Companies' systems and operations are vulnerable to third party failure to remedy their own year 2000 issues. There can be no assurance that the systems of other companies or those of the State and Federal governments, on which the Companies' operations rely, will be timely converted and will not have an adverse effect on the Companies' operations. The Companies receive substantial payments from insurance companies and Federal and State agencies. The Y2K readiness of individual insurance companies is not uniform. The Federal government has reported that it is struggling with the Y2K problem. Accordingly, the Companies can not make any assurances that these third party payors will be in compliance by January 1, 2000, and if they are not, there would be a significant impact on the Companies' cash flow. Since under the terms of the bond documents, the Companies are not allowed additional borrowings, they have not established any lines of credit and currently have no other contingency plans in place to normalize cash flow in the event of a significant disruption of payments from third party payors. The Companies will continue to use internal and external sources to insure that the operations of the Companies are not disrupted. However, there can be no assurance that the goals will be achieved and actual results could be materially different from those anticipated. Factors that may cause problems include, but are not limited to, availability and cost of personnel trained in this area, the ability to locate and correct all computer codes, third party readiness and other uncertainties. Operating Results ----------------- Net revenues increased to $8,313,000 for the three months ended December 31, 1998 from $7,722,000 for the three months ended December 31 1997, an increase of $591,000 or 7.6%. Private pay revenues increased $134,000 from $4,824,000 for the three months ended December 31, 1997 to $4,958,000 for the three months ended December 31, 1998. Revenue generated from ancillary services increased $72,000 while revenue from room charges increased $62,000 when compared to the same three month period last year. The average room rate has increased from $114 per day for the three month period ended December 31, 1997 to $117 per day for the current three month period. Private census has decreased from 40,576 patient days for 1997 to 39,838 patient days for the current three month period ended December 31, 1998. Net revenues for Medicare increased from $2,444,000 for the three months ended December 31, 1997 to $2,924,000 for the three months ended December 31, 1998, an increase of $480,000 or 19.6%. The Medicare census has increased to 11,458 patient days from 9,230 patient days for the same period last year. The average Medicare reimbursement rate has decreased approximately $10 per patient day when compared to the same three month period last year. The decrease in the reimbursement rate is the direct result of the implementation of the new PPS reimbursement program previously discussed. The Companies are closely monitoring the cost associated with providing service to Medicare qualified residents in an effort to offset any decrease in the Medicare reimbursement program. The Companies have reduced the cost of drugs provided to the Medicare residents from an average of $40 per patient day for the three month period ended December 31, 17 1997 to an average of $11 per patient day for the three month period ended December 31, 1998. In addition to the decrease in drug costs, the Companies were able to decrease the average cost of therapy by $11 per patient day. Medicaid revenue has increased from $376,000 to $388,000 when compared to the same three month 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 decreased from 5,536 patient days for the three months ended December 31, 1997 to 5,410 patient days for the three months ended December 31, 1998. The facilities have an average occupancy rate of 76.1% for the three months ended December 31, 1998, compared to 86.8% 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 December 31, 1998 and 1997 are as follows: DECEMBER 31 1998 1997 Swansea 98.8 98.7 Galesburg 55.3 83.6 Moline 92.3 94.2 Alton 79.9 98.8 Peoria 81.2 92.3 East Peoria 62.7 62.3 AVERAGE 76.1 88.2 Facility operating expenses increased to $5,619,000 (or $99.09 per patient day) for the current three month period ended December 31, 1998, from $5,345,000 (or $96.58 per patient day) for the three months ended December 31, 1997. Administrative expenses have increased $72,000 when compared to the same three month period last year. The majority of the increase can be accounted for by the increase in wages, telephone and new employee training. The cost of employee benefits has increased $41,000 from $510,000 for the three months ended December 31, 1997, to $551,000 for the three months ended December 31, 1998. The majority of the increase can be accounted for by an increase in vacation and holiday pay of $8,500, a $24,000 increase in payroll taxes and an $8,500 increase in the cost of health insurance and workers' compensation insurance. 18 Dietary expenses increased approximately $37,000 when compared to the same three month period last year which can be accounted for by increased labor costs. Nursing costs increased from $1,890,000 for the three months ended December 31, 1997 to $2,271,000 for the three months ended December 31, 1998, an increase of $381,000 or 20.1%. Wages have increased $338,000, while the cost of supplies has increased $43,000. Included in the increase in wages is approximately $110,000 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 $263,000 when compared to the same three month period last year. The decrease in costs is the direct result of the reduction in therapy and drug costs brought about by reduction in ancillary services provided to the Medicare qualified residents under the new PPS guidelines. Plant utilities and maintenance have increased $7,000 when compared to the same three month period last year. Wages have decreased approximately $5,200, while the cost of utilities has increased $16,000 with the remainder of the decrease accounted for by the decrease in repairs. The utility increase is the direct result of the 60 bed additions to the Alton and Galesburg facilities previously discussed. Housekeeping and laundry costs have increased $44,000 when compared to the same three month period last year. All of the increase can be accounted for by the increase in the cost of labor for both departments. Social Services and Activities costs have decreased $45,000 when compared to the same three month period last year and can be accounted for by the decrease in labor for these departments. 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 $8,000 when compared to the same period last year. Interest income has decreased from $168,000 for in the three months ended December 31, 1997 to $148,000 for the three months ended December 31, 1998 as a result of the decrease in the notes receivable from the related party Rosewood Care Center Holding Co. 19 Interest expense decreased $35,000 when compared to the same three month period last year. The decrease is the result of the decrease in the long term debt from $26,186,000 on December 31, 1997 to $24,188,000 as of December 31, 1998. Six Months Ended December 31, 1998 Compared With Six Months Ended December 31, 1997 Operating Results ----------------- Net revenues have increased to $16,224,000 for the six months ended December 31, 1998 from $15,243,000 for the six months ended December 31, 1997, an increase of $981,000 or 6.4%. Private revenues have increased $218,000 from $9,654,000 for the six months ended December 31, 1997, to $9,872,000 for the six months ended December 31, 1998. Revenue generated from ancillary services increased $97,000, while revenue from room charges increased $121,000 when compared to the same period last year. The average private room rates for the current period aggregated $116 per patient day compared to $114 per patient day for the same period last year. Private census has decreased from 80,598 patient days for the six months ended December 31, 1997, to 79,809 patient days for the period ended December 31, 1998. Net revenues for Medicare have increased from $4,695,000 for the six months ended December 31, 1997 to $5,452,000 for the six months ended December 31, 1998, an increase of $757,000 or 16.1%. The Medicare census has increased from 17,846 patient days for the six months ended December 31, 1997 to 21,703 patient days for the six months ended December 31, 1998. The average Medicare reimbursement rate has decreased approximately $19 per patient day when compared to the same six month period last year. The decrease in the reimbursement rate is the direct result of the implementation of the new PPS reimbursement program previously discussed. The Companies are closely monitoring the cost associated with providing service to Medicare qualified residents in an effort to offset any decrease in the Medicare reimbursement program. The Companies have reduced the cost of drugs provided to the Medicare residents from an average of $37 per patient day for the six month period ended December 31, 1997 to an average of $12 per patient day for the six month period ended December 31, 1998. In addition to the decrease in drug costs, the Companies were able to decrease the average cost of therapy by $22 per patient day. Medicaid revenue has increased from $750,000 to $812,000 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 11,027 patient days for the six months ended December 31, 1997 to 11,337 patient days for the six months ended December 31, 1998. The facilities have an average occupancy rate of 78.7% for the current six month period, compared to 87.2% 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 20 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 six months ended December 31, 1998 and 1997 are as follows: DECEMBER 31 1998 1997 Swansea 97.2 98.7 Galesburg 65.1 80.9 Moline 93.2 94.3 Alton 80.2 97.5 Peoria 81.4 91.0 East Peoria 59.6 62.2 AVERAGE 78.7 87.2 Facility operating expenses increased to $11,077,000 (or $98.16 per patient day) for the current six month period ended December 31, 1998, from $10,497,000 (or $95.89 per patient day) for the six months ended December 31, 1997. Administrative expenses have increased $95,000 when compared to the same period last year. The majority of the increase can be accounted for by the increase in wages, telephone and advertising for new employees. The cost of employee benefits has increased $120,000 when compared to the same six month period last year. The majority of the increase can be accounted for by a $27,000 increase in sick, holiday and vacation pay and a $61,000 increase in payroll taxes. The balance of the increase was the result of an increase in the cost of workers' compensation insurance. Dietary expenses have increased approximately $91,000 when compared to the same period last year. The increase in labor costs aggregated $58,000, with the balance of the increase caused by the increase in food costs. Nursing costs increased from $3,712,000 for the six months ended December 31, 1997 to $4,490,000 for the six months ended December 31, 1998, an increase of $778,000 or 20.9%. All of the increase can be accounted for by the increase in wages. Included in the increase in wages is approximately $200,000 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. 21 Ancillary service costs have decreased approximately $633,000 when compared to the same six month period last year. The decrease in costs is the direct result of the reduction in therapy and drug costs brought about by reduction in ancillary services provided to the Medicare qualified residents under the new PPS guidelines. Plant utilities and maintenance have increased $48,000 when compared to the same six month period last year. The cost of utilities has increased $42,000, with the remainder of the increase a result of the increase in the cost of disposing of medical waste. The utility increase is the direct result of the 60 bed additions to the Alton and Galesburg facilities previously discussed. Housekeeping and laundry costs increased $109,000, compared to the same six month period last year. Labor costs increased $99,000, while the cost of supplies increased $10,000 when compared to the same period last year. Social Services and Activities costs have decreased $28,000 when compared to the same period last year. The decrease is the result of the decrease in labor costs for these departments. 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 decreased when compared to the same period last year because of losses generated by the low occupancy at the East Peoria facility which was previously discussed. Interest income has decreased $42,000 when compared to the same period last year as a result of the decrease in the notes receivable outstanding during the six month period from the affiliated company, Rosewood Care Center Holding Co. Interest expense decreased $70,000 when compared to the same period last year. The decrease is the result of the decrease in the long term debt from $26,186,000 on December 31, 1997 to $24,188,000 as of December 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 six months ended December 31, 1998 and 1997, on an annualized basis. Liquidity and Capital Resources ------------------------------- As of December 31, 1998, the Companies had approximately $2,082,000 in cash and cash equivalents and net working capital of approximately $493,000. There was a net decrease in cash of $784,000 since June 30, 1998. For the six 22 months ended December 31, 1998, net cash provided by operations was $1,486,000. Net cash from investing activities was $912,000 of which $1,080,000 was received from Rosewood Care Center Holding Co. as payment on notes due from the affiliated company and $168,000 was used by the Companies for the purchase of personal property and equipment used in the operations of the facilities. The maturity date of the notes due from Rosewood Care Center Holding Co. was extended from December 31, 1999 to December 31, 2000. Net cash used in financing activities aggregated $3,182,000 of which $1,373,000 was used to retire debt and $1,809,000 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 $1,586,000 as of December 31, 1998, compared to $1,352,000 as of June 30, 1998. Accounts receivable from third party payers decreased to $2,411,000 as of December 31, 1998, compared to $2,766,000 as of June 30, 1998. $118,000 of this amount is due from Medicare for unsettled cost reports through December 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 PPS is intended to help the Medicare program achieve targeted reductions in spending growth of approximately $9.2 billion for skilled nursing facilities over the next five years. Effective July 1, 1998 all of the facilities are subject to the new PPS payment system previously discussed. The Companies are analyzing their 1995 facility rates and the acuity level of the Medicare patients in the facilities. Based on this analysis, the Companies hope to implement changes to lower the cost of providing services to their Medicare residents. Should the Companies be 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 December 31, 1998. The Companies continue to monitor legislative and other health care developments and will attempt to structure contractual arrangements to minimize the impact of reductions in government payment programs. However, changes in the policies of Medicare and Medicaid as a result of budget cuts by federal and state governments or other legislative actions could have a significant adverse effect on the results of operations and cash flow of the Companies. Part II Other Information - -------------------------- Item 1. Legal Proceedings. There were no material developments with respect to legal proceedings during the quarter ended December 31, 1998. Item 2. Changes in Securities. Not applicable. 23 Item 3. Defaults Upon Senior Securities. None. Item 4. Submission of Matters to a Vote of Security Holders. None. Item 5. Other Information. The Sun Bank Letter of Credit funding the Debt Service Reserve Fund expired December 6, 1998 and was renewed for another one year term, expiring December 6, 1999. The Companies contract with a related company, Rosewood Therapy Services, Inc. to provide speech, physical and occupational therapy services to the residents of the facilities. Therapy services are provided to the facilities at competitive market rates, on terms and conditions as would be entered into with unrelated therapy companies. Amounts paid by the Companies to Rosewood Therapy Services during the first quarter of the 1999 fiscal year, aggregated $658,000. The 60 bed expansion wing at the Alton Rosewood Care Center opened January 22, 1998. The 60 bed expansion wing at the Galesburg Rosewood Care Center was licensed by the State of Illinois and was opened on October 9, 1998. 24 Item 6. Exhibits and Reports on Form 8-K. (a) See Index to Exhibits on Page 39. (b) Reports on Form 8-K. None. 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 CENTERS CAPITAL FUNDING CORPORATION, Registrant Dated: February 11, 1999 By: /s/ Larry Vander Maten ---------------------------------- Larry Vander Maten President and Director (Principal Executive Officer and Principal Financial and Accounting Officer) 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 SWANSEA, Registrant Dated: February 11, 1999 By: /s/ Larry Vander Maten ---------------------------- Larry Vander Maten President and Director (Principal Executive Officer and Principal Financial and Accounting Officer) 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 GALESBURG, Registrant Dated: February 11, 1999 By: /s/ Larry Vander Maten ---------------------------- Larry Vander Maten President and Director (Principal Executive Officer and Principal Financial and Accounting Officer 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 PEORIA, Registrant Dated: February 11, 1999 By: /s/ Larry Vander Maten ---------------------------- Larry Vander Maten President and Director (Principal Executive Officer and Principal Financial and Accounting Officer) 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 EAST PEORIA, Registrant Dated: February 11, 1999 By: /s/ Larry Vander Maten ---------------------------- Larry Vander Maten President and Director (Principal Executive Officer and Principal Financial and Accounting Officer) 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 ALTON, Registrant Dated: February 11, 1999 By: /s/ Larry Vander Maten ---------------------------- Larry Vander Maten President and Director (Principal Executive Officer and Principal Financial and Accounting Officer) 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. ROSEWOOD CARE CENTER, INC. OF MOLINE, Registrant Dated: February 11, 1999 By: /s/ Larry Vander Maten ---------------------------- Larry Vander Maten President and Director (Principal Executive Officer and Principal Financial and Accounting Officer) 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. SWANSEA REAL ESTATE, INC., Registrant Dated: February 11, 1999 By: /s/ Larry Vander Maten -------------------------------- Larry Vander Maten President and Director (Principal and Executive Officer and Principal Financial and Accounting Officer 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. GALESBURG REAL ESTATE, INC., Registrant Dated: February 11, 1999 By: /s/ Larry Vander Maten ---------------------------- Larry Vander Maten President and Director (Principal Executive Officer and Principal Financial and Accounting Officer) 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. PEORIA REAL ESTATE, INC., Registrant Dated: February 11, 1999 By: /s/ Larry Vander Maten ---------------------------- Larry Vander Maten President and Director (Principal Executive Officer and Principal Financial and Accounting Officer) 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. EAST PEORIA REAL ESTATE, INC., Registrant Dated: February 11, 1999 By: /s/ Larry Vander Maten ---------------------------- Larry Vander Maten President and Director (Principal Executive Officer and Principal Financial and Accounting Officer) 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. ALTON REAL ESTATE, INC., Registrant Dated: February 11, 1999 By: /s/ Larry Vander Maten --------------------------- Larry Vander Maten President and Director (Principal Executive Officer and Principal Financial and Accounting Officer) 37 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: February 11, 1999 By: /s/ Larry Vander Maten --------------------------- Larry Vander Maten President and Director (Principal Executive Officer and Principal Financial and Accounting Officer) 38 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 the additional Assignments of Rents and Leases listed on the Schedule 39 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 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. 40 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 the 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 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. 41 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. 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. 42 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. 43 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 44 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. 45 10.8 Administrative Services Agreement between Hovan Enterprises, Inc. and Swansea Real Estate, Inc. Administrative Services Agreement between Hovan Enterprises, Inc. and Peoria Real Estate, Inc. Administrative Services Agreement between Hovan Enterprises, Inc. and East Peoria Real Estate, Inc. Administrative Services Agreement between Hovan Enterprises, Inc. and Moline Real Estate, Inc. Administrative Services Agreement between Hovan Enterprises, Inc. and Galesburg Real Estate, Inc. 10.9 Revised and Restated Management Agreement between Rosewood Care Center, Inc. of Swansea and Hovan Enterprises, Inc. Revised and Restated Management Agreement between Rosewood Care Center, Inc. of Peoria and Hovan Enterprises, Inc. Revised and Restated Management Agreement between Rosewood Care Center, Inc. of East Peoria and Hovan Enterprises, Inc. Revised and Restated Management Agreement between Rosewood Care Center, Inc. of Moline and Hovan Enterprises, Inc. Revised and Restated Management Agreement between Rosewood Care Center, Inc. of Galesburg and Hovan Enterprises, Inc. 10.10 Lease between Swansea Real Estate, Inc. and Rosewood Care Center, Inc. of Swansea Lease between Swansea Real Estate, Inc. and Rosewood Care Center, Inc. of Peoria Lease between Swansea Real Estate, Inc. and Rosewood Care Center, Inc. of East Peoria Lease between Swansea Real Estate, Inc. and Rosewood Care Center, Inc. of Moline Lease between Swansea Real Estate, Inc. and Rosewood Care Center, Inc. of Galesburg 10.11 Assignment of Management Agreement between Rosewood Care Center, Inc. of Swansea and Mercantile Bank Assignment of Management Agreement between Rosewood Care Center, Inc. of Peoria and Mercantile Bank Assignment of Management Agreement between Rosewood Care Center, Inc. of East Peoria and Mercantile Bank 46 Assignment of Management Agreement between Rosewood Care Center, Inc. of Moline and Mercantile Bank Assignment of Management Agreement between Rosewood Care Center, Inc. of Galesburg and Mercantile Bank 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) 47 EX-10.22 2 RENEWAL OF LETTER OF CREDIT EXHIBIT 10.22 November 25, 1998 Ms. Devera A. Buckley, Assistant Vice President State Street Bank and Trust Company of Missouri, N.A. Corporate Trust Department P.O. Box 321 St. Louis, Missouri 63166-0321 Re: Rosewood Care Center Holding Co. Letter of Credit No. F700564 in the amount of $3,129,889.00 Expiring December 6, 1998 Dear Ms. Buckley: This is to advise you that SunTrust Bank, Central Florida, N.A., will renew the above-referenced Letter of Credit in favor of State Street Bank and Trust Company of Missouri, N.A., for a period of one year. If you should have any questions, please call me at (407) 237-5303. Sincerely, /s/Glenys Blenden Glenys Blenden Vice President Copies: Ms. Susan Gamble - Summers, Compton, Wells & Hamburg EX-27.1 3 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the Financial Statements at December 31, 1998 for the period ended December 31, 1998 and is qualified in its entirety by reference to such financial statements. 0000909110 ROSEWOOD CARE CENTER CAPITAL FUNDING CORPORATION 1000 6-MOS JUN-30-1999 JUL-01-1998 DEC-31-1998 263 0 24,188 0 0 262 0 0 24,451 148 24,302 1 0 0 0 24,451 0 912 0 0 0 0 912 0 0 0 0 0 0 0 0 0
EX-27.2 4 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the Combined Financial Statements at December 31, 1998 for the period ended December 31, 1998 and is qualified in its entirety by reference to such financial statements. 0000909114 ROSEWOOD CARE CENTER OF GALESBURG 1000 6-MOS JUN-30-1999 JUL-01-1998 DEC-31-1998 2,082 0 4,166 169 0 6,465 25,432 8,726 29,779 5,972 0 65 0 0 1,701 29,779 16,224 16,519 0 13,705 0 0 913 1,901 155 0 0 0 0 1,746 27 0
EX-27.3 5 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the Combined Financial Statements at December 31, 1998 for the period ended December 31, 1998 and is qualified in its entirety by reference to such financial statements. 0000909113 ROSEWOOD CARE CENTER OF SWANSEA 1000 6-MOS JUN-30-1999 JUL-01-1998 DEC-31-1998 2,082 0 4,166 169 0 6,465 25,432 8,726 29,779 5,972 0 65 0 0 1,701 29,779 16,224 16,519 0 13,705 0 0 913 1,901 155 0 0 0 0 1,746 27 0
EX-27.4 6 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the Combined Financial Statements at December 31, 1998 for the period ended December 31, 1998 and is qualified in its entirety by reference to such financial statements. 0000909115 ROSEWOOD CARE CENTER OF EAST PEORIA 1000 6-MOS JUN-30-1999 JUL-01-1998 DEC-31-1998 2,082 0 4,166 169 0 6,465 25,432 8,726 29,779 5,972 0 65 0 0 1,701 29,779 16,224 16,519 0 13,705 0 0 913 1,901 155 0 0 0 0 1,746 27 0
EX-27.5 7 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the Combined Financial Statements at December 31, 1998 for the period ended December 31, 1998 and is qualified in its entirety by reference to such financial statements. 0000909116 ROSEWOOD CARE CENTER OF PEORIA 1000 6-MOS JUN-30-1999 JUL-01-1998 DEC-31-1998 2,082 0 4,166 169 0 6,465 25,432 8,726 29,779 5,972 0 65 0 0 1,701 29,779 16,224 16,519 0 13,705 0 0 913 1,901 155 0 0 0 0 1,746 27 0
EX-27.6 8 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the Combined Financial Statements at December 31, 1998 for the period ended December 31, 1998 and is qualified in its entirety by reference to such financial statements. 0000909117 ROSEWOOD CARE CENTER OF ALTON 1000 6-MOS JUN-30-1999 JUL-01-1998 DEC-31-1998 2,082 0 4,166 169 0 6,465 25,432 8,726 29,779 5,972 0 65 0 0 1,701 29,779 16,224 16,519 0 13,705 0 0 913 1,901 155 0 0 0 0 1,746 27 0
EX-27.7 9 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the Combined Financial Statements at December 31, 1998 for the period ended December 31, 1998 and is qualified in its entirety by reference to such financial statements. 0000909118 ROSEWOOD CARE CENTER OF MOLINE 1000 6-MOS JUN-30-1999 JUL-01-1998 DEC-31-1998 2,082 0 4,166 169 0 6,465 25,432 8,726 29,779 5,972 0 65 0 0 1,701 29,779 16,224 16,519 0 13,705 0 0 913 1,901 155 0 0 0 0 1,746 27 0
EX-27.8 10 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the Combined Financial Statements at December 31, 1998 for the period ended December 31, 1998 and is qualified in its entirety by reference to such financial statements. 0000909120 SWANSEA REAL ESTATE 1000 6-MOS JUN-30-1999 JUL-01-1998 DEC-31-1998 2,082 0 4,166 169 0 6,465 25,432 8,726 29,779 5,972 0 65 0 0 1,701 29,779 16,224 16,519 0 13,705 0 0 913 1,901 155 0 0 0 0 1,746 27 0
EX-27.9 11 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the Combined Financial Statements at December 31, 1998 for the period ended December 31, 1998 and is qualified in its entirety by reference to such financial statements. 0000909121 GALESBURG REAL ESTATE 1000 6-MOS JUN-30-1999 JUL-01-1998 DEC-31-1998 2,082 0 4,166 169 0 6,465 25,432 8,726 29,779 5,972 0 65 0 0 1,701 29,779 16,224 16,519 0 13,705 0 0 913 1,901 155 0 0 0 0 1,746 27 0
EX-27.10 12 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the Combined Financial Statements at December 31, 1998 for the period ended December 31, 1998 and is qualified in its entirety by reference to such financial statements. 0000909122 EAST PEORIA REAL ESTATE 1000 6-MOS JUN-30-1999 JUL-01-1998 DEC-31-1998 2,082 0 4,166 169 0 6,465 25,432 8,726 29,779 5,972 0 65 0 0 1,701 29,779 16,224 16,519 0 13,705 0 0 913 1,901 155 0 0 0 0 1,746 27 0
EX-27.11 13 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the Combined Financial Statements at December 31, 1998 for the period ended December 31, 1998 and is qualified in its entirety by reference to such financial statements. 0000909123 PEORIA REAL ESTATE 1000 6-MOS JUN-30-1999 JUL-01-1998 DEC-31-1998 2,082 0 4,166 169 0 6,465 25,432 8,726 29,779 5,972 0 65 0 0 1,701 29,779 16,224 16,519 0 13,705 0 0 913 1,901 155 0 0 0 0 1,746 27 0
EX-27.12 14 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the Combined Financial Statements at December 31, 1998 for the period ended December 31, 1998 and is qualified in its entirety by reference to such financial statements. 0000909124 ALTON REAL ESTATE 1000 6-MOS JUN-30-1999 JUL-01-1998 DEC-31-1998 2,082 0 4,166 169 0 6,465 25,432 8,726 29,779 5,972 0 65 0 0 1,701 29,779 16,224 16,519 0 13,705 0 0 913 1,901 155 0 0 0 0 1,746 27 0
EX-27.13 15 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from the Combined Financial Statements at December 31, 1998 for the period ended December 31, 1998 and is qualified in its entirety by reference to such financial statements. 0000909125 MOLINE REAL ESTATE 1000 6-MOS JUN-30-1999 JUL-01-1998 DEC-31-1998 2,082 0 4,166 169 0 6,465 25,432 8,726 29,779 5,972 0 65 0 0 1,701 29,779 16,224 16,519 0 13,705 0 0 913 1,901 155 0 0 0 0 1,746 27 0
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