UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
{ X } ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2002
OR
{ } TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 000-17596
Meridian Healthcare Growth and Income Fund Limited Partnership
(Exact Name of Registrant as Specified in its Charter)
Delaware 52-1549486
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
225 East Redwood Street, Baltimore, Maryland 21202
(Address of Principal Executive Offices) (Zip Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None
Securities registered pursuant to section 12(g) of the Act:
Assignee Units of Limited Partnership Interests
(Title of class)
Indicate by check mark whether the 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 the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K(ss. 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.[X]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act).
Yes No X
As of December 31, 2002, there were 1,539,000 Units of Assignee Limited
Partnership Interests held by non-affiliates of the Registrant. Because there is
not an established public trading market for the Units, the aggregate market
value of the Units held by non-affiliates of the Registrant cannot be
calculated.
Documents Incorporated by Reference
The Annual Report for 2002 is incorporated by reference.
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
INDEX
Page (s)
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS 3
Part I.
Item 1. Business 4
Item 2. Properties 5-6
Item 3. Legal Proceedings 7
Item 4. Submission of Matters to a Vote of Security Holders 7
Part II.
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters 7
Item 6. Selected Financial Data 8
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-17
Item 7a. Quantitative and Qualitative Disclosures About Market Risk 18
Item 8. Financial Statements and Supplementary Data 18
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 18
Part III.
Item 10. Directors and Executive Officers of Registrant 19-20
Item 11. Executive Compensation 20
Item 12. Security Ownership of Certain Beneficial Owners
and Management 21
Item 13. Certain Relationships and Related Transactions 21
Item 14. Controls and Procedures 21
Part IV.
Item 15. Exhibits, Financial Statement Schedules and
Reports on Form 8-K 21-32
Signatures 33-34
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MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
Cautionary Statement Regarding Forward-Looking Statements
Certain statements contained herein, including certain statements in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" concerning the Fund's business outlook or future economic
performances, anticipated profitability, revenues, expenses or other financial
items together with other statements that are not historical facts are
"forward-looking statements" as that term is defined under the Federal
Securities Law. Forward-looking statements are necessarily estimates reflecting
the best judgment of the party making such statements based upon correct
information and involve a number of risks, uncertainties and other factors which
could cause actual results to differ materially from those stated in such
statements. Risks, uncertainties and factors which could affect the accuracy of
such forward-looking statements are identified in the Fund's Prospectus and the
Fund's Registration Statement filed by the Fund with the Securities and Exchange
Commission, and forward-looking statements contained herein or in other public
statements of the Fund should be considered in light of those factors. There can
be no assurance that factors will not affect the accuracy of such
forward-looking statements.
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MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
PART I
Item 1. Business
Meridian Healthcare Growth and Income Fund Limited Partnership (the
"Fund") was organized under the laws of the State of Delaware on December 8,
1987. The Fund will continue until December 31, 2037, unless sooner terminated
under the provisions of the Partnership Agreement. The Fund was formed to
acquire 98.99% of the limited partnership interests in seven limited
partnerships, each of which owns and operates a single nursing center (the
"Facilities").
The Fund's objectives are to (i) preserve Investors' capital; (ii)
obtain capital appreciation through increases in the value of the Facilities;
and (iii) provide quarterly cash distributions to Investors from income
generated by the Facilities' operating income, the income taxation of a portion
of which is anticipated to be deferred.
The General Partners of the Fund are Brown Healthcare, Inc., a
Maryland corporation (the "Administrative General Partner")and Meridian
Healthcare Investments, Inc., a Maryland corporation (the "Development General
Partner").
A maximum of 1,540,000 assignee units of limited partnership interests
("Units") were registered under the Securities and Exchange Act of 1933, as
amended. During 1988 all 1,540,000 Units were sold, and the Fund's net proceeds
available for investment aggregated $31,878,000 (gross proceeds of $38,500,000
less public offering expenses and acquisition fees of $6,622,000). The Assignor
Limited Partner (Brown Healthcare Holding Co., Inc., an affiliate of the General
Partner) also acquired 40 units of limited partnership interests in 1988.
The Fund acquired 98.99% limited partnership interests (the "Operating
Partnership Interests") in the operating limited partnerships which own and
operate seven nursing center facilities. The Facilities include four nursing
centers located in Maryland; two nursing centers located in North Carolina and
one facility in New Jersey. Each operating partnership owns the real and
personal property of its nursing center facility. (See Note 1, "Organization and
Operations", in Item 8, Financial Statements and Supplementary Data, and Item 2.
Properties, herein.)
The Fund acquired the Operating Partnership Interests with offering
proceeds and certain indebtedness.
The nursing centers owned by the operating partnerships are managed by
and purchase drugs, medical supplies and agency nursing and rehabilitation
services from affiliates of the Development General Partner. (See Note 3,
"Related Party Transactions" in Item 8. Financial Statements and Supplementary
Data, herein.)
On November 30, 1993, Genesis Health Ventures, Inc. ("Genesis")
acquired substantially all of the assets of Meridian Inc.,Meridian Healthcare,
Inc. and their affiliated entities, including all of the stock of the
Development General Partner. See Item 10.Directors and Executive Officers of
Registrant, herein.
The Fund's sole business is its investment in partnerships which own
and operate nursing centers that are healthcare facilities licensed by
individual states to provide long-term healthcare within guidelines established
by the appropriate state health agencies and as directed by each patient's
physician. Healthcare and related services from private pay and other patients
and Medicaid and Medicare patients accounted for approximately 99% of revenues
during each of the years in the three-year period ended December 31, 2002.
Healthcare facilities, including those owned by the operating
partnerships, are subject to extensive federal, state and in some cases, local
regulatory licensing and inspection requirements. In addition, government
revenue sources, particularly Medicaid and Medicare programs, are subject to
statutory and regulatory changes due to administrative rulings, interpretations
of policy and determination by fiscal intermediaries, and to government funding
restrictions, all of which may materially affect the rate of program payments to
nursing facilities.
The nursing center Facilities face competition with similar facilities
in their general locations as well as the development of other nursing centers
that are able to obtain Certificates of Need and to meet certain other
requirements.
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MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
Item 2. Properties
The Fund owns Operating Partnership Interests in operating partnerships
that own four nursing facilities in the State of Maryland, two nursing
facilities in the State of North Carolina, and one nursing facility in New
Jersey. The Facilities are described below:
Property & Equipment Patient
(before depreciation) Revenues
at December 31, 2002 2002
Name and Location Description (Dollars in Thousands)
Facility 1. Hamilton A 104-bed nursing facility located on $ 5,062 $ 6,209
6040 Harford Road 1.06 acres, constructed in 1972
Baltimore City, consisting of a "T" shaped two-story
Maryland plus partial basement masonry structure
containing 22,082 square feet. The
facility contains 104 comprehensive care
beds of which all are
Medicare-certified. There are two
private rooms, 15 semi-private rooms, 4
three-person rooms and 15 four-person
rooms.
Facility 2. A 215-bed nursing facility located on 11,837 12,716
Randallstown 2.83 acres, constructed in 1971
9109 Liberty Road consisting of a rectangular-shaped
Randallstown, Maryland two-story plus partial basement masonry
structure containing a total of 72,780
square feet. The facility contains 215
comprehensive care beds of which all are
Medicare-certified. There are 96
semi-private rooms and 23 private rooms.
Facility 3. Caton A 168-bed nursing facility located on 8,459 10,081
Manor 0.92 acres, constructed in 1972
3330 Wilkens Avenue consisting of an "L" shaped four-story
Baltimore City, plus basement masonry structure
Maryland containing a total of 48,660 square
feet. All 168 beds are comprehensive
care beds and are all
Medicare-certified. All rooms are
semi-private.
7,900 7,992
Facility 4. Frederick A 137-bed nursing facility located on
(Collegeview) 1.13 acres, originally constructed in
400 North Avenue 1966 consisting of a two-story plus
Frederick, Maryland partial basement masonry structure, the
second floor added in 1968, containing a
total of 52,661 square feet. The
facility contains 137 comprehensive care
beds of which all are
Medicare-certified.
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MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
Item 2. Properties (continued)
Property & Equipment Patient
(before depreciation) Revenues
at December 31, 2002 2002
Name and Location Description (Dollars in Thousands)
Facility 5. Mooresville A 160-bed nursing facility located on 6,564 7,365
550 Glenwood Road 11.38 acres, originally constructed with
Mooresville, 100 beds in 1988 with a 60-bed addition
North Carolina completed in 1992 consisting of a one-story slab
on grade building containing a total of 47,657
square feet. The facility contains 130 beds for
skilled care and intermediate care residents, of
which all are Medicare certified. There are 30
beds in the Home for the Aged (HA) wing. There
are 8 private rooms and 76 semi-private rooms.
Facility 6. Salisbury A 180 bed nursing facility located on 6.02 acres,
710 Julian Road originally constructed with 120 beds in 1988 6,350 8,667
Salisbury, with a 60-bed addition completed in 1991
North Carolina consisting of a one-story slab on grade
building containing a total of 50,500 square
feet. The facility contains 160 beds for
skilled care and intermediate care residents,
of which all are Medicare certified. There
are 20 beds in the Home for the Aged (HA)
wing. There are 16 private rooms and
82 semi-private rooms.
Facility 7. Woodlands A 140-bed nursing facility located on 6.52 acres,
1400 Woodland Avenue constructed in 1989 consisting of a two-story 8,633 8,767
Plainfield, New Jersey slab on grade building containing a total of
54,000 square feet. The facility contains
120 comprehensive nursing home beds, of which
all are Medicare certified, and 20 residential
care beds. There are 12 private rooms, 46 semi-
private rooms and 9 four-bed rooms.
$ 54,805 $ 61,797
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MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
Item 3. Legal Proceedings
The Fund is a party to litigation arising in the ordinary course of
business. The Fund does not believe the results of such litigation, even if the
outcome is unfavorable to the Fund, would have a material adverse effect on its
consolidated financial position or results of operations.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to the security holders for a vote during the
last quarter of the fiscal year covered by this report.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
An established public trading market for the Units does not exist and the Fund
does not anticipate that a public market will develop. Transfer of Units by an
investor and purchase of Units by the Fund may be accommodated under certain
terms and conditions. The Partnership Agreement imposes certain limitations on
the transfer of Units and may restrict, delay or prohibit a transfer primarily
if:
o the transfer of Units would result in 50% or more of all Units having been
transferred by assignment or otherwise within a 12-month period;
o such a transfer would be a violation of any federal or state securities
laws that may cause the Fund to be classified other than as a partnership
for federal income tax purposes;
o such transfers would cause the Fund to be treated as a "publicly traded
partnership" under Sections 7704 and 469(k) of the Internal Revenue Code;
and
o the transfer of Units would cause a technical termination of the
Partnership within meaning of Section 708(b)(1)(A) of the Internal
Revenue Code.
As of December 31, 2002, there were 1,694 holders of Units of the
registrant, owning an aggregate of 1,540,040 Units, including 40 Units held by
the Assignor Limited Partner. The Fund made four quarterly distributions
totaling approximately $3,306,000 in each of the years in the three-year period
ended December 31, 2002. See Note 5, "Distributions to Partners and Allocation
of Net Earnings", in Item 8. Financial Statements and Supplementary Data,
herein.
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MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
Item 6. Selected Financial Data
Years Ended December 31,
2002 2001 2000 1999 1998
----------------------------------------------------------
(Dollars in thousands - except per
Unit amounts)
Statement of Earnings Data
Net revenue $61,920 $59,933 $55,764 $51,278 $54,108
Operating earnings before capital costs** 6,817 6,892 6,710 6,612 9,594
Net earnings 2,384 2,191 2,282 2,865 5,768
Net earnings per assignee Unit-basic $ 1.53 $ 1.41 $ 1.47 $ 1.84 $ 3.71
Operating Data
Payor mix (as a percent of revenue):
Medicaid and Medicare 84% 83% 80% 84% 80%
Private 16% 17% 20% 16% 20%
Occupancy percentage 89.9% 90.0% 86.2% 87.9% 91.7%
Patient Days Available 403,000 406,000 430,000 429,000 429,000
Balance Sheet Data
Total assets $45,839 $48,777 $49,398 $48,646 $50,305
Property and equipment, net of
accumulated depreciation 31,231 31,927 32,934 33,346 33,653
Debt, including loan payable to
Development General Partner 24,169 24,588 24,964 23,742 24,422
Partners' capital 15,311 16,233 17,348 18,372 18,813
Cash distributions paid per Unit:
from operations $ 2.13 $ 2.13 $ 1.70 $ 2.13 $ 2.13
from return of capital - - .43 - -
$ 2.13 $ 2.13 $ 2.13 $ 2.13 $ 2.13
**Capital costs include depreciation, amortization and interest expense.
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources
The Fund closed its mortgage loan refinancing with a new bank for loans totaling
$24,000,000 on June 12, 2000. The renewal terms became effective on June 12,
2000 and provided for a term of five years at an interest rate of 9.75%. Monthly
payments were based on a 20-year amortization schedule with a balloon payment
due at the end of the 5-year term. Effective February 1, 2003, the Fund amended
the existing mortgage. The amendment provides for a term of
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MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
Liquidity and Capital Resources (continued)
five years at an interest rate of 6.5%. Monthly payments of $180,242 are based
on a 20-year amortization schedule with a mandatory prepayment option at the
Bank's discretion during the period between November 1, 2007 through May 1,
2008.
The Fund also has a $4,000,000 line of credit with the same lender
under terms similar to the mortgage loan terms described above, except that the
line of credit facility requires annual reaffirmation.
The Fund's working capital (excluding the current portion of long-term
debt) decreased $520,000 to $4,817,000 at December 31, 2002 as compared to
$5,337,000 at December 31, 2001. The Fund has sufficient liquid assets and other
available credit resources to satisfy its operating expenditures and anticipated
routine capital improvements at each of the seven nursing home facilities.
Cash flow from operating activities was $3,733,000 for the year ended
December 31, 2002 as compared to $5,703,000 during 2001. The decrease in cash
flow was due primarily to the payment of related party payables.
Cash used in investing activities during 2002 was $1,245,000 and
included improvements to the Fund's seven operating facilities. Similar
improvements of $902,000 and $1,421,000 were made during 2001 and 2000,
respectively.
Cash flows used in financing activities during 2002 included repayment
of long term debt of $471,000 and distributions to partners and minority
interests totaling $3,343,000.
The Fund believes that the short-term liquidity needs will be met
through expected cash flow from operations, available working capital and from
the existing line of credit.
Between 1988 and 1999 the Development General Partner loaned the Fund
$597,000 to support operating deficits generated by the Mooresville, Salisbury
and Woodlands nursing centers during each centers' first two years of operation.
Loans outstanding under this arrangement, including interest at 9% per annum,
were $1,292,000 at December 31, 2002.
On February 18, 2003 the Fund made its fourth quarter 2002 distribution
to partners of $437,512. This distribution was funded by fourth quarter 2002
operations. During 2002 distributions to partners were funded by operations and
working capital of approximately $126,000. Based on the 2003 budget, the Fund
anticipates a slight decrease in the distribution rate (7% in 2003 vs. 7.5% in
2002) as operations will be affected by reduced Medicare revenues resulting from
the expiration of Benefits Improvement and Protection Act and Balanced Budget
Refinement Act legislation on September 30, 2002. The Fund will perform
approximately $1 million of non-routine capital improvements to enhance the
functionality and marketability of its Maryland centers. The Fund expects to
draw on its line of credit facility to fund these improvements, as necessary.
The major challenge to the Fund in the foreseeable future is to control
operating expenses, to maintain a quality mix of patients and to increase the
overall census at each of the facilities.
Results of Operations
December 31, 2002 versus December 31, 2001
Overall 2002 revenues of $61,920,000 increased $1,987,000 or 3.3% from
the same period in 2001.
Revenues of $51,803,000 from Medicaid and Medicare patients for the
twelve months ended December 31, 2002 increased $2,781,000 or 5.7% from the same
period in the prior year. This increase is primarily the result of Medicaid rate
increases and an increase in the number of Medicaid days. Medicaid revenue
increased $3,378,000
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MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
Results of Operations (continued)
primarily due to an overall rate increase of approximately 6.3% driven primarily
by the four Maryland centers, which received their annual Medicaid rate
adjustment in July 2002. Medicare revenue decreased $597,000 relating to a
decline in the Medicare census. In fiscal year 2002, Medicare census made up
13.3% of the overall census as compared to 13.9% in fiscal year 2001.
Revenues from private and other patients decreased $766,000 to
$9,994,000 in fiscal year 2002 as compared to $10,760,000 in fiscal year 2001.
This decrease is a result of lower private and insurance census. Private census
made up 9.3 % of the overall census in fiscal year 2002 compared to 9.9% in
fiscal year 2001. In fiscal year 2002, insurance census made up 2.3% of the
overall census as compared to 2.6% in fiscal year 2001.
Operating expenses increased $1,572,000 or 3.2 % from the same period
in the prior year. This increase is primarily due to the increased cost of
nursing services which is partially offset by a decrease in ancillary costs.
Nursing costs increased $1,743,000 for the twelve months ended December 31, 2002
as compared to the same period in 2001. This increase is primarily due to
increases in salary and wages and the increased utilization of temporary nurse
staffing. Salary and wage expense for nurses increased $780,000, and temporary
nurse staffing expense increased $963,000 for the twelve months ended December
31, 2002 compared to the same period in the prior year. The increase in nursing
salary and wages and utilization of temporary nurse staffing is a result of an
overall shortage of nurses within the healthcare industry. Ancillary expenses
decreased $359,000 or 4.7% for the twelve months ended December 31, 2002 as
compared to the same period in 2001. This decrease is primarily due to the
decrease in the Medicare census. The remaining increase in operating costs is
due to increased health insurance costs, and general inflationary cost
increases.
Management and administrative fees increased $71,000 or approximately
2.2% in 2002 as compared to 2001. This increase is due to an increase in the
management fee expense, which is calculated at 5% of the Fund's net revenues.
General and administrative expenses increased $419,000 or 43% from the
same period in the prior year. This increase is primarily due to a New Jersey
filing fee and increased legal expenses. New Jersey implemented a filing fee in
fiscal year 2002 which resulted in additional expense of $250,000. Legal fees
increased $63,000 primarily due to fees associated with the collection of
accounts receivable. The remaining increase is due to general inflationary cost
increases.
Depreciation and amortization expense decreased $221,000 to $2,023,000
for the twelve months ended December 31,2002 compared to the same period in the
prior year. This decrease is due to the adoption of SFAS 142, under which
goodwill is no longer amortized.
December 31, 2001 versus December 31, 2000
Overall 2001 revenues of $59,933,000 increased $4,169,000 or 7.5% from
the same period in 2000.
Revenues of $49,022,000 from Medicaid and Medicare patients for the
twelve months ended December 31, 2001 increased $4,508,000 or 10.1% from the
same period in the prior year. This increase is primarily the result of Medicaid
rate increases and an increase in the number of Medicare days. Medicaid revenue
increased $2,365,000 primarily due to an overall rate increase of approximately
8.7% driven primarily by the four Maryland centers, which received their annual
Medicaid rate adjustment in July 2001. Medicare revenue increased $2,143,000
relating to growth in Medicare census. In fiscal year 2001, Medicare census made
up 13.9% of the overall census as compared to 12.8% in fiscal year 2000.
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MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
Results of Operations (continued)
Revenues from private and other patients decreased $200,000 to
$10,760,000 in fiscal year 2001 as compared to $10,960,000 in fiscal year 2000.
This decrease is a result of lower private and insurance census. Private census
made up 9.9 % of the overall census in fiscal year 2001 compared to 10.3% in
fiscal year 2000. In fiscal year 2001, insurance census made up 2.6% of the
overall census as compared to 3.1% in fiscal year 2000. Investment and other
income decreased $139,000 due primarily to a decrease in interest income.
Operating expenses increased $4,269,000 or 9.6 % from the same period
in the prior year. This increase is primarily due to the increased cost of
nursing services and ancillary costs. Nursing costs increased $2,194,000 for the
year ended December 31, 2001 as compared to the same period in 2000. This
increase is primarily due to increases in salary and wages and the increased
utilization of temporary nurse staffing. Salary and wage expense for nurses
increased $1,180,000, and temporary nurse staffing expense increased $825,000
for the year ended December 31, 2001 compared to the same period in the prior
year. The increase in nursing salary and wages and utilization of temporary
nurse staffing is a result of an overall shortage of nurses within the
healthcare industry. Ancillary expenses increased $663,000 or 9.5% for the year
ended December 31, 2001 as compared to the same period in 2000. This increase is
primarily due to the increase in the Medicare census and the increased
utilization of Part B ancillary services. The remaining increase in operating
costs is due to increased health insurance costs of $241,000 to $1,677,000 and
general inflationary cost increases.
Management and administrative fees decreased $334,000 or approximately
9.2% in 2001 as compared to 2000. This decrease is due to an amendment to the
management agreement effective January 1, 2001, which reduced the management fee
from 6% to 5% of net patient service revenue.
Interest expense increased $250,000 in fiscal year 2001 as compared to
fiscal year 2000. This increase is the result of the first full year with the
new mortgage, which increased the beginning principal balance to $24,000,000 at
a higher interest rate. The refinancing was effective June 12, 2000.
Contractual Obligations
The Fund is committed to making cash payments in the future on two
types of contracts: a loan payable to the Development General Partner and
indebtedness on mortgage loans. The Fund has no off-balance sheet debt or other
such unrecorded obligations and has not guaranteed the debt of any other party.
The Fund is obligated to repay the loan payable to the Development
General Partner when certain specified financial criteria are met, the most
significant of which is the payment of a preferred return to the assignee
limited partners as defined in the Fund's partnership agreement. The loan
payable balance is $1,292,000 as of December 31, 2002. See the discussion in
Note 3 of the Notes to the Consolidated Financial Statements for additional
information on this loan payable.
Principal payments on the new mortgage loan during the next five years
and in the aggregate are as follows: $606,000 in 2003, $712,000 in 2004,
$765,000 in 2005, $817,000 in 2006 and $19,977,000 in 2007 at the bank's option.
See the discussion in Note 4 to the Consolidated Financial Statements for
additional information on the Fund's mortgage loans.
The Fund believes it has, or has access to, sufficient resources to
meet these contractual obligations and its operating requirements for the
foreseeable future. The Fund currently has in place an agreement to borrow up to
$4 million on a revolving credit facility, of which no amount is outstanding at
December 31, 2002. The Fund's ability to meet its capital requirements will
depend on a number of factors, including the ability to meet the loan covenant
requirements necessary under its current debt agreements, the success of its
nursing center operations, competitive advances, future relationships with
corporate partners, government regulation, and the Fund's marketing strategy.
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MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
Critical Accounting Policies
An accounting policy is considered to be critical if it is important to
the registrant's financial condition and results of operations, and requires
significant judgment and estimates on the part of management in its application.
The Fund's critical accounting estimates and the related assumptions are
evaluated periodically as conditions warrant, and changes to such estimates are
recorded as new information or changed conditions require revision. Application
of the critical accounting policies requires management's significant judgments,
often as the result of the need to make estimates of matters that are inherently
uncertain. If actual results were to differ materially from the estimates made,
the reported results could be materially affected. The Fund believes that the
following represents our critical accounting policies. For a summary of all of
our significant accounting policies, including critical accounting policies
discussed below, see Note 1 -"Summary of Significant Accounting Policies" to our
consolidated financial statements.
Allowance for Doubtful Accounts- The Fund utilizes the "Aging Method"
to evaluate the adequacy of the allowance for doubtful accounts. This method is
based upon applying estimated standard allowance requirement percentages to each
accounts receivable aging category for each type of payor. The Fund has
developed estimated standard allowance requirement percentages by utilizing
historical collection trends and an understanding of the nature and
collectibility of receivables in the various aging categories and the various
segments of our business. The standard allowance percentages are developed by
payor type as the accounts receivable from each payor type have unique
characteristics. The allowance for doubtful accounts is determined utilizing the
aging method described above while also considering accounts specifically
identified as uncollectible. Accounts receivable that we specifically estimate
to be uncollectible, based upon the age of the receivables, the results of
collection efforts or other circumstances, are fully reserved for in the
allowance for doubtful accounts until they are written-off.
The Fund believes the assumptions used in aging method employed in
fiscal 2002, coupled with continued improvements in its collection patterns,
suggest that the allowance for doubtful accounts is adequately provided for at
December 31, 2002. However, because the assumptions underlying the aging method
are based upon historical collection data, there is a risk that these current
assumptions are not reflective of more recent collection patterns. Changes in
overall collection patterns can be caused by market conditions and/or budgetary
constraints of government funded programs such as Medicare and Medicaid. Such
changes can adversely impact the collectibility of receivables, but not be
addressed in a timely fashion when using the aging method, until updates to
these periodic historical collection studies are completed and implemented.
At least annually, the Fund updates its historical collection studies
in order to evaluate the propriety of the assumptions underlying the aging
method. Any changes to the underlying assumptions are implemented immediately.
Changes to these assumptions can have a material impact on our bad debt expense,
which is reported in the consolidated statements of earnings as a component of
operating expenses.
Revenue Recognition- Revenue is recognized in the period the related
services are rendered. The Fund derives a substantial portion of our inpatient
services revenue under Medicaid and Medicare reimbursement systems.
Under certain prospective Medicaid systems and Medicare the Fund is
reimbursed at a predetermined rate based upon the historical cost to provide the
service, demographics of the site of service and the acuity of the customer. The
differences between the established billing rates and the predetermined rates
are recorded as contractual adjustments and deducted from revenues. Under a
prospective reimbursement system, there is no adjustment or settlement of the
difference between the actual cost to provide the service and the predetermined
rate.
-12-
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
Critical Accounting Policies (continued)
Under certain retrospective Medicaid systems, revenues are generally
based on reimbursement of the reasonable direct and indirect costs of providing
services to program participants. The Fund separately estimates revenues due
from each third party with which it has a contractual arrangement and records
anticipated settlements with these parties in the contractual period during
which services were rendered. The amounts actually reimbursable under the cost
based reimbursement programs are determined by filing cost reports which are
then subject to audit and retroactive adjustment by the payor. The Fund provides
an allowance for potential audit adjustments to the interim reimbursement
amounts received under these cost reimbursement programs. Revisions to this
allowance, if any, are recorded as an adjustment to revenues in the year such
amounts are determined. Factors that management considers when establishing or
adjusting an allowance for potential audit adjustments include, but are not
limited to, changes in estimates resulting from improved cost information and
preliminary results of third-party audits and reviews. Adjustments and final
settlements with third-party payors are reflected in operations at the time of
the adjustment or settlement as an increase or decrease to the balance of
estimated third-party payor settlements and revenue.
There can be no assurances that any future healthcare legislation will
not adversely affect the business of the Fund. There can be no assurance that
payments under government and private third-party payor programs will be timely,
will remain at levels comparable to present levels or will, in the future, be
sufficient to cover the costs allocable to patients eligible for reimbursement
pursuant to such programs. The Fund's financial condition and results of
operations may be affected by the revenue reimbursement process, which in the
Fund's industry is complex and can involve lengthy delays between the time that
revenue is recognized and the time that reimbursement amounts are settled.
Revenue Sources
The Fund receives revenues from Medicare, Medicaid, private insurance,
self-pay residents, and other third party payors. The healthcare industry is
experiencing the effects of the federal and state governments' trend toward cost
containment, as government and other third party payors seek to impose lower
reimbursement and utilization rates and negotiate reduced payment schedules with
providers. These cost containment measures, combined with the increasing
influence of managed care payors and competition for patients, have resulted in
constrained rates of reimbursement for services provided by the Fund.
The Medicaid and Medicare programs are highly regulated. The failure of
the Fund to comply with applicable reimbursement regulations could adversely
affect its business. The Fund monitors its receivables from third party payor
programs and reports such revenues at the net realizable value expected to be
received.
On December 15, 2000, Congress passed the Benefits Improvement
Protection Act that increased the nursing component of federal prospective
payment system's rates by approximately 16.7% for the period from April 1, 2001
through September 30, 2002. The legislation also changed the 20% add-on to 3 of
the 14 rehabilitation resource utilization group categories to a 6.7% add-on to
all 14 rehabilitation resource utilization group categories beginning April 1,
2001. The Medicare Part B consolidated billing provision of the Balance Budget
Refinement Act was repealed except for Medicare Part B therapy services and the
moratorium on the $1,500 therapy caps was extended through calendar year 2002.
These changes had a positive impact on operating results.
A number of provisions of the Balanced Budget Refinement Act and the
Benefits Improvement and Protection Act enactments, providing additional funding
for Medicare participating skilled nursing facilities, expired on September 30,
2002. The expiration of these provisions has reduced the Partnership's Medicare
per diems per beneficiary, on average, by $34 (the Medicare Cliff). For Federal
fiscal year 2003, the Centers for Medicare and Medicaid Services used their
discretionary authority to continue the payment add-ons. The recently released
proposed Federal Budget for fiscal year 2004 indicates that the Centers for
Medicare and Medicaid Services will extend the add-ons described in the previous
paragraph for the coming year. It is uncertain as to whether as part of
-13-
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
Revenue Sources (continued)
the rule-making process the agency will propose changes in how the add-ons are
applied. Proposed rules are normally released in late April with a 60-day public
comment period. By law, final rules for coming fiscal year must be issued by
August 1. Effective October 1, 2002, Medicare rates adjusted for the Medicare
Cliff were increased by a 2.6% annual market basket adjustment. For the Fund,
the net impact of these provisions is estimated to adversely impact annual
revenue and operating income beginning October 1, 2002 by approximately $1.2
million.
The recent economic downturn is having a detrimental affect on state
revenues in most jurisdictions. Budget shortfalls range from 4-5% of outlays to
upwards of 20% of outlays in a handful of states. Historically these budget
pressures have translated into reductions in state spending. Given that Medicaid
outlays are a significant component of state budgets, the Fund expects
continuing cost containment pressures on Medicaid outlays for nursing homes in
the states in which it operates. State-specific details are just emerging as
state legislatures begin the tasks of approving state budgets.
The plight of state governments has helped to elevate issues related to
Medicaid onto the national agenda. During the 107th Congress, the U.S. Senate
passed legislation providing states with a temporary increase in the Federal
Matching Assistance Percentage. This legislation was not passed, however, it has
been reintroduced in both the U.S. Senate and the U.S. House of Representatives.
In his proposed federal budget for fiscal year 2004, the President offered
modest additional fiscal support and advanced several ideas for revising the
program. The 108th Congress is expected to consider an array of Medicaid reform
proposals.
It is not possible to quantify fully the effect of potential
legislative or regulatory changes, the administration of such legislation or any
other governmental initiatives on the Fund's business. Accordingly, there can be
no assurance that the impact of these changes or any future healthcare
legislation will not further adversely affect the Fund's business. There can be
no assurance that payments under governmental and private third party payor
programs will be timely, will remain at levels comparable to present levels or
will, in the future, be sufficient to cover the costs allocable to patients
eligible for reimbursement pursuant to such programs. The Fund's financial
condition and results of operations may be affected by the reimbursement
process, which in the healthcare industry is complex and can involve lengthy
delays between the time that revenue is recognized and the time that
reimbursement amounts are settled.
Government Regulations
The Fund's business is subject to extensive federal, state and, in some
cases, local regulation with respect to, among other things, licensure,
certification and health planning. This regulation relates, among other things,
to the adequacy of physical plant and equipment, qualifications of personnel,
standards of care and operational requirements. Compliance with such regulatory
requirements, as interpreted and amended from time to time, can increase
operating costs and thereby adversely affect the financial viability of our
business. Failure to comply with current or future regulatory requirements could
also result in the imposition of various remedies including fines, restrictions
on admission, the revocation of licensure, decertification, imposition of
temporary management or the closure of the facility.
All of the Fund's centers, to the extent required, are licensed under
applicable law. All skilled nursing centers or practitioners providing the
services therein, are certified or approved as providers under one or more of
the Medicaid and Medicare programs. Licensing, certification and other
applicable standards vary from jurisdiction to jurisdiction and are revised
periodically. State and local agencies survey all skilled nursing centers on a
regular basis to determine whether such centers are in compliance with
governmental operating and health standards and conditions for participation in
government sponsored third party payor programs. The Fund believes that its
eldercare centers and other sites of service are in substantial compliance with
the various Medicare, Medicaid and state regulatory requirements applicable to
them. However, in the ordinary course of our business, the Fund receives
-14-
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
Legislative and Regulatory Issues (continued)
notices of deficiencies for failure to comply with various regulatory
requirements. The Fund reviews such notices and takes appropriate corrective
action. In most cases, the Fund and the reviewing agency will agree upon the
measures to be taken to bring the center into compliance with regulatory
requirements. In some cases, the reviewing agency may take various adverse
actions against a provider, including but not limited to the imposition of
fines; suspension of payments for all or new admissions to the center, and in
extreme circumstances, decertification from participation in the Medicare or
Medicaid programs and revocation of a center's or site of service's license.
These actions may adversely affect a center's ability to continue to operate,
ability to provide certain services, and/or eligibility to participate in the
Medicare or Medicaid programs or to receive payments from other payors.
The Fund's centers are currently certified to receive benefits provided
under Medicare. Additionally, all of the Fund's skilled nursing centers are
currently certified to receive benefits under Medicaid. Both initial and
continuing qualifications of a skilled nursing center to participate in such
programs depend upon many factors including accommodations, equipment, services,
patient care, safety, personnel, physical environment, and adequate policies,
procedures and controls.
The Fund is also subject to federal and state laws that govern
financial and other arrangements between healthcare providers. These laws often
prohibit certain direct and indirect payments or fee-splitting arrangements
between healthcare providers that are designed to induce or encourage the
referral of patients to, or the recommendation of, a particular provider for
medical products and services. These laws include:
o the "anti-kickback" provisions of the federal Medicare and Medicaid
programs, which prohibit, among other things, knowingly and willfully
soliciting, receiving, offering or paying any remuneration (including any
kickback, bribe or rebate) directly or indirectly in return for or to
induce the referral of an individual to a person for the furnishing or
arranging for the furnishing of any item or service for which payment may
be made in whole or in part under Medicare or Medicaid; and
o the "Stark laws" which prohibit, with limited exceptions, the referral of
patients by physicians for certain services, including home health
services, physical therapy and occupational therapy, to an entity in
which the physician has a financial interest.
The Fund faces additional federal requirements that mandate major
changes in the transmission and retention of health information. The Health
Insurance Portability and Accountability Act of 1996 was enacted to ensure,
first, that employees can retain and at times transfer their health insurance
when they change jobs, and secondly, to simplify health care administrative
processes. This simplification includes expanded protection of the privacy and
security of personal medical data and requires the adoption of standards for the
exchange of electronic health information. Among the standards that the
Department of Health and Human Services may adopt pursuant to the Health
Insurance Portability and Accountability Act are standards for the following:
electronic transactions and code sets; unique identifiers for providers,
employers, health plans and individuals; security and electronic signatures;
privacy; and enforcement.
Although the Health Insurance Portability and Accountability Act was
intended to ultimately reduce administrative expenses and burdens faced within
the healthcare industry, the Fund believes that implementation of this law will
result in additional costs. Genesis, the Fund's manager, has established a
Health Insurance Portability and Accountability Act task force consisting of
clinical, financial and information services professionals focused on the Health
Insurance Portability and Accountability Act compliance.
-15-
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
Legislative and Regulatory Issues (continued)
The Department of Health and Human Services has released two rules to
date mandating the use of new standards with respect to certain health care
transactions and health information. The first rule establishes uniform
standards for common health care transactions, including:
o Health care claims information;
o plan eligibility, referral certification and authorization;
o claims status;
o plan enrollment and disenrollment;
o payment and remittance advice;
o plan premium payments; and
o coordination of benefits.
Second, the Department of Health and Human Services has released
standards relating to the privacy of individually identifiable health
information. These standards not only require the Fund's compliance with rules
governing the use and disclosure of protected health information, but they also
require us to impose those rules, by contract, on any business associate to whom
it discloses information. The Department of Health and Human Services has
proposed rules governing the security of health information, but has not yet
issued these rules in final form.
The Department of Health and Human Services finalized the transaction
standards on August 17, 2000. While the Fund initially was required to comply
with them by October 16, 2002, Congress passed legislation in December 2001 that
delays for one year (until October 16, 2003) the compliance date, but only for
entities that submit a compliance plan to the Department of Health and Human
Services by the original implementation deadline. The Department of Health and
Human Services issued the privacy standards on December 28, 2000, and, after
certain delays, they became effective on April 14, 2001, with a compliance date
of April 14, 2003. Once the Department of Health and Human Services has issued
the security regulations in final form, affected parties will have approximately
two years to be fully compliant. Sanctions for failing to comply with the Health
Insurance Portability and Accountability Act health information practices
provisions include criminal penalties and civil sanctions.
Management is in the process of evaluating the effect of Health
Insurance Portability and Accountability Act on the Fund. At this time,
management anticipates that the Fund will be able to fully comply with those
Health Insurance Portability and Accountability Act requirements that have been
adopted. However, management cannot at this time estimate the cost of
compliance, nor can management estimate the cost of compliance with standards
that have not yet been finalized by the Department of Health and Human Services.
It is not possible to fully quantify the effect of recent legislation,
the interpretation or administration of such legislation or any other
governmental initiatives on the Fund's business. Accordingly, there can be no
assurance that the impact of these changes or any future healthcare legislation
will not adversely affect the Fund's business. There can be no assurance that
payments under governmental and private third party payor programs will be
timely, will remain at levels comparable to present levels or will, in the
future, be sufficient to cover the costs allocable to patients eligible for
reimbursement pursuant to such programs. The Fund's financial condition and
results of operations may be affected by the reimbursement process, which in our
industry is complex and can involve lengthy delays between the time that revenue
is recognized and the time that reimbursement amounts are settled.
-16-
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
Recently Issued Accounting Pronouncements
In July 2001, the Financial Accounting Standards Board (FASB) issued
Statement No. 142, Goodwill and Other Intangible Assets. Statement 142 requires
that goodwill and intangible assets with indefinite useful lives no longer be
amortized, but instead be tested for impairment at least annually in accordance
with the provisions of Statement 142. Statement 142 requires that intangible
assets with definite useful lives be amortized over their respective estimated
useful lives to their estimated residual values, and reviewed for impairment.
The Fund adopted the provisions of Statement 142 effective January 1, 2002.
In connection with Statement 142's transitional goodwill impairment
evaluation, the Statement requires the Fund to perform an assessment of whether
there is an indication that goodwill is impaired as of the date of adoption. To
accomplish this, the Fund was required to identify its reporting units and
determine the carrying value of each reporting unit by assigning the assets and
liabilities, including the existing goodwill and intangible assets, to those
reporting units as of the date of adoption. The Fund is considered to have one
reporting unit. The Fund had up to six months from the date of adoption to
determine the fair value of each reporting unit and compare it to the carrying
amount of the reporting unit. To the extent the carrying amount of a reporting
unit exceeds the fair value of the reporting unit, an indication exists that the
reporting unit goodwill may be impaired and the Fund must perform the second
step of the transitional impairment test. In the second step, the Fund must
compare the implied fair value of the reporting unit goodwill with the carrying
amount of the reporting unit goodwill, both of which would be measured as of the
date of adoption. The implied fair value of goodwill is determined by allocating
the fair value of the reporting unit to all of the assets (recognized and
unrecognized) and liabilities of the reporting unit in a manner similar to a
purchase price allocation. The residual fair value after this allocation is the
implied fair value of the reporting unit goodwill. This second step is required
to be completed as soon as possible, but no later than the end of the year of
adoption. Any transitional impairment loss will be recognized as the cumulative
effect of a change in accounting principle in the Fund's statement of earnings.
The Fund performed the steps of the goodwill impairment evaluation
during 2002 in accordance with the statement and no impairment was indicated.
The following table reconciles the prior year's reported net earnings
to its respective pro forma balances adjusted to exclude goodwill amortization
expense which is no longer amortized under the provisions of Statement 142.
2002 2001 2000
---------- ---------- -----------
Reported net earnings $ 2,384 $ 2,191 $ 2,282
Add back: goodwill amortization - 254 254
---------- ---------- -----------
Adjusted net earnings $ 2,384 $ 2,445 $ 2,536
========== ========== ===========
Outlook
The major challenge to the Fund in the foreseeable future is to control
operating expenses to maintain a quality mix of patients and to increase the
overall census at each of the facilities.
-17-
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
Item 7a. Quantitative and Qualitative Disclosures About Market Risks
The Fund has exposure to changing interest rates and is currently not
engaged in hedging activities. Interest on the Fund's $22.9 million mortgage is
at a fixed rate of 9.75% through February 28, 2003. Effective March 1, 2003 the
Fund's mortgage is at a fixed rate of 6.5%.
Item 8. Financial Statements and Supplementary Data
Index to Financial Statements:
Annual Report Page(s)
Independent Auditors' Report 5
Consolidated Balance Sheets 6
Consolidated Statements of Earnings 7
Consolidated Statements of Partners' Capital 8
Consolidated Statements of Cash Flows 9
Notes to Consolidated Financial Statements 10-19
Supplementary Data
Quarterly Financial Data (Unaudited)
The Fund's unaudited quarterly financial information is as follows (in
thousands):
Total Net Income from
Revenues Operations
Quarter ended:
March 31, 2002 $15,070 $834
June 30, 2002 15,426 483
September 30, 2002 15,613 551
December 31, 2002 15,811 516
March 31, 2001 14,251 351
June 30, 2001 14,291 383
September 30, 2001 15,288 963
December 31, 2001 16,103 494
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
None.
-18-
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
PART III
Item 10. Directors and Executive Officers of Registrant
The General Partners of the Fund are Meridian Healthcare Investments,
Inc., the Development General Partner, and Brown Healthcare, Inc., the
Administrative General Partner. The Fund's principal executive offices are
located at 225 East Redwood Street, Baltimore, Maryland 21202. The General
Partners had primary responsibility for the selection and negotiation of terms
concerning the acquisition of the Operating Partnership Interests, selecting a
manager for the interim investments and the structure of the Offering and the
Fund. The General Partners have primary responsibility for overseeing the
performance of those who contract with the Fund as well as making decisions with
respect to the financing, sale and liquidation of the Fund's or the operating
partnerships' assets. The General Partners are responsible for all reports to
and communications with investors and others, all distributions and allocations
to investors, the administration of the Fund's business and all filings with the
Securities and Exchange Commission and other Federal or State regulatory
authorities. The Fund's Partnership Agreement provides certain rights for
investors, which are incorporated herein by reference.
Development General Partner
Meridian Healthcare Investments, Inc., the Development General Partner,
is a Maryland corporation. On November 30, 1993, Genesis acquired substantially
all the assets of Meridian, Inc., Meridian Healthcare (" MHC") and their
affiliated entities, including all the stock of the Fund's Development General
Partner. As part of the acquisition, MHC, the manager of the Fund's seven
nursing centers, continues to operate the facilities pursuant to management
agreements. Genesis operates primarily in five regional markets. The networks
include 254 eldercare centers with approximately 31,000 beds; approximately 68
physicians, physician assistants and nurse practitioners; 22 medical supply
distribution centers; an integrated NeighborCareSM pharmacy operation with over
$1,120,000,000 in annualized revenues, including 59 long-term care pharmacies
serving approximately 248,000 institutional beds; community-based pharmacies;
infusion therapy services; and certified rehabilitation agencies providing
services by approximately 3500 licensed rehabilitation therapists and
assistants. Genesis also provides diagnostic and hospitality services in
selected markets and operates a group purchasing organization. Genesis has
concentrated its eldercare networks in five geographic regions in order to
achieve operating efficiencies, economies of scale and significant market share.
The five geographic markets that Genesis principally serves are: New England
Region (Massachusetts/Connecticut/New Hampshire/Vermont/Rhode Island);
Midatlantic Region (Greater Philadelphia/Delaware Valley/New Jersey); Chesapeake
Region (Southern Delaware/Eastern Shore of Maryland/Baltimore,
Maryland/Washington D.C./Virginia); Southern Region (Central Florida);and
Allegheny Region (West Virginia/Western Pennsylvania/Illinois/Wisconsin).
The following individuals are the directors and principal officers of
Meridian Healthcare Investments, Inc.:
Robert H. Fish, age 52, serves as our director since October 2001,
chief executive officer and chairman since November 2002. He is a managing
partner of Sonoma-Seacrest, LLC, a California-based healthcare practice
specializing in strategic planning, performance improvement, and merger and
acquisition issues. Prior to joining Sonoma, Mr. Fish served as president and
chief executive officer of St. Joseph Health System and president and chief
executive officer of ValleyCare Health System. Mr. Fish holds a Bachelor of Arts
degree in Sociology and Anthropology from Whittier College and a Masters in
Hospital Administration from the University of California at Berkeley.
George V. Hager, Jr., age 46, serves as our executive vice president
and chief financial officer and is responsible for corporate finance, treasury,
investor relations, information services, third party reimbursement, risk
management, real estate and property management. Mr. Hager joined us in 1992 as
vice president and chief financial officer and was named senior vice president
and chief financial officer in 1994. He holds a Bachelor of Arts degree in
Economics from Dickinson College and a Master of Business Administration degree
from Rutgers Graduate School of Management.
-19-
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
Item 10. Directors and Executive Officers of Registrant (continued)
Administrative General Partner
Brown Healthcare, Inc., the Administrative General Partner, is a Maryland
corporation, and is wholly-owned by Alex. Brown Realty, Inc. The Administrative
General Partner is responsible for administering the business of the Fund,
including providing clerical services, communications, services and reports to
investors, and making all reports and filings to securities regulatory
authorities.
The following individuals are the directors and principal officers of
the Administrative General Partner:
John M. Prugh, age 54, has been a Director and President of the
Administrative General Partner since 1988, and of Alex. Brown Realty, Inc. and
Armata Financial Corp. since 1984. Mr. Prugh graduated from Gettysburg College
in 1970, and was designated a Certified Property Manager by the Institute of
Real Estate Management in 1979. He has worked in property management for H. G.
Smithy Co., in Washington, D.C., and Dreyfus Bros., Inc. in Bethesda, Maryland.
Since 1977, Mr. Prugh has been involved in managing, administering, developing
and selling real estate investment projects sponsored by Alex. Brown Realty,
Inc. and its subsidiaries.
Peter E. Bancroft, age 50, has been a Director and Vice President of the
Administrative General Partner since 1988 and a Senior Vice President of Alex.
Brown Realty, Inc. and Armata Financial Corp. since 1983. Mr. Bancroft graduated
from Amherst College in 1974, attended the University of Edinburgh, and received
a J.D. degree from the University of Virginia School of Law in 1979. Prior to
joining Alex. Brown Realty, Inc. in 1983, Mr. Bancroft held legal positions with
Venable, Baetjer and Howard and T. Rowe Price Associates, Inc.
Terry F. Hall, age 56, has been the Secretary of the Administrative General
Partner and a Vice President and Secretary of, and Legal Counsel for, Alex.
Brown Realty, Inc. since 1989. Mr. Hall graduated from the University of
Nebraska-Lincoln in 1968, and received a J.D. degree from the University of
Pennsylvania Law School in 1973. Prior to joining Alex. Brown Realty, Inc. in
1986, Mr. Hall was a Partner at the law firm of Venable, Baetjer and Howard from
1981 to 1986 and an associate at the same firm from 1973 to 1981.
Timothy M. Gisriel, age 46, has been the Treasurer of the Administrative
General Partner and of Alex. Brown Realty, Inc. and Armata Financial Corp. since
1990. He was Controller of Alex. Brown Realty, Inc. and Armata Financial Corp.
from 1984 through 1990. Mr. Gisriel graduated from Loyola College in 1978 and
received his Masters of Business Administration degree from the Robert G.
Merrick School of Business, University of Baltimore in 1993. Prior to joining
Alex. Brown Realty, Inc. in 1984, Mr. Gisriel was an audit supervisor in the
Baltimore office of Coopers & Lybrand. He is a Maryland Certified Public
Accountant.
There is no family relationship among the officers and directors of the
General Partner.
Item 11. Executive Compensation
The officers and directors of the Administrative General Partner and
Development General Partner received no compensation from the Fund.
The General Partners are entitled to receive a share of cash distributions
and a share of profits and losses as described in the Agreement of Limited
Partnership. (See Note 5, "Distributions to Partners and Allocation of Net
Income" in Item 8. Financial Statements, herein.)
For a discussion of compensation and fees to which the General Partners
are entitled, see Item 13. Certain Relationships and Related Transactions,
herein.
-20-
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
Item 12. Security Ownership of Certain Beneficial Owners and Management
No person is known to the Fund to own beneficially more than 5% of the
outstanding Units of the Fund.
The General Partners each have a .5% interest in the Fund as General
Partners, but do not hold any Units.
The Assignor Limited Partner, Brown Healthcare Holding Co., Inc., an
affiliate of the Administrative General Partner, owns for its benefit 40 Units.
The Units held by the Assignor Limited Partner have all rights attributable to
such Units under the Limited Partnership Agreement except that these Units are
non-voting.
Item 13. Certain Relationships and Related Transactions
The General Partners and their affiliates have and are permitted to
engage in transactions with the Fund. For a summarization of fees paid during
2001, 2000, and 1999, and to be paid to the General Partners and their
affiliates at December 31, 2001, see Note 3, "Related Party Transactions" in
Item 8. Financial Statements, herein.
Item 14. Controls and Procedures
Within the 90-day period prior to the filing of this report, an
evaluation was carried out under the supervision and with the participation of
the Fund's management, including the Chief Executive Officer (or CEO) and Chief
Financial Officer (or CFO), of the effectiveness of our disclosure controls and
procedures. Based on that evaluation, the CEO and CFO have concluded that the
Fund's disclosure controls and procedures are effective to ensure that
information required to be disclosed by the Fund in reports that it files or
submits under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported within the time periods specified in Securities and
Exchange Commission rules and forms. Subsequent to the date of their evaluation,
there were no significant changes in the Fund's internal controls or in other
factors that could significantly affect the disclosure controls, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
PART IV
Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. Financial Statements: see Index to Financial Statements and
Supplementary Data in Item 8 on Page 18.
2. Financial Statement Schedules: Schedule II - Valuation and
Qualifying Accounts for the years ended December 31, 2002, 2001 and
2000. All other schedules are omitted because they are not
applicable or the required information is shown in the financial
statements or notes thereto.
3. Exhibits:
(3,4) Limited Partnership Agreement on pages 1 through 41 of
Exhibit A to the Fund's Prospectus, and the Fund's
Registration Statement on Form S-1 (File No. 33-19277)
included herein by reference.
(13) Annual Report for 2002.
-21-
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
Item 15. Exhibits, Financial Statement Schedules and Reports on
Form 8-K (continued)
(99.1) Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(99.2) Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(99.3) Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(99.4) Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(99.5) Certification of Principal Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
(99.6) Certification of Principal Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
(99.7) Certification of Principal Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
(99.8) Certification of Principal Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K: None.
-22-
INDEPENDENT AUDITORS REPORT
To the Partners of
Meridian Healthcare Growth and
Income Fund Limited Partnership
Under date of February 14, 2003, we reported on the consolidated balance sheets
of Meridian Healthcare Growth and Income Fund Limited Partnership (the Fund) as
of December 31, 2002 and 2001, and the related consolidated statements of
earnings, partners' capital and cash flows for each of the years in the
three-year period ended December 31, 2002, as contained in the annual report on
Form 10-K for the year 2002. In connection with our audits of the aforementioned
consolidated financial statements, we also audited the related consolidated
financial statement schedule in the Form 10-K. This consolidated financial
statement schedule is the responsibility of the Fund's management. Our
responsibility is to express an opinion on this consolidated financial statement
schedule based on our audits. In our opinion, such schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.
KPMG LLP
Philadelphia, Pennsylvania
February 14, 2003
-23-
Meridian Healthcare Growth and Income Fund Limited Partnership
Valuation and Qualifying Accounts
Years Ended December 31, 2002, 2001 and 2000
(Dollars in Thousands)
Schedule II
Balance at Beginning Charged to Balance at End
Description of Period Operations Deductions(1) of Period
- ------------------------------------------------------------------------------------------------------------
Year Ended December 31, 2002 $1,656 1,062 (1,365) $1,353
Allowance for Doubtful Accounts
Year Ended December 31, 2001 $1,245 1,678 (1,267) $1,656
Allowance for Doubtful Accounts
Year Ended December 31, 2000 $1,048 904 (707) $1,245
Allowance for Doubtful Accounts
(1) - Represents amounts written off as uncollectible.
-24-
Exhibit 99.1
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND
LIMITED PARTNERSHIP
CERTIFICATION PURSUANT TO
18 U.S.C. ss. 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the filing of Meridian Healthcare Growth and Income Fund
Limited Partnership's (the "Fund") Report on Form 10-K for the period ending
Decembeer 31, 2002 with the Securities and Exchange Commission on the date
hereof (the "Report"), I, Robert H. Fish, the Chief Executive Officer of
Meridian Healthcare Investments, Inc., Development General Partner of the Fund,
certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section
13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in
all material respects, the financial condition and result of
operations of the Fund.
Date: 3/27/03 By: /s/ Robert H. Fish
Robert H. Fish
Chief Executive Officer
Meridian Healthcare Investments, Inc.
Development General Partner
-25-
Exhibit 99.2
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND
LIMITED PARTNERSHIP
CERTIFICATION PURSUANT TO
18 U.S.C. ss. 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the filing of Meridian Healthcare Growth and Income Fund
Limited Partnership's (the "Fund") Report on Form 10-K for the period ending
December 31, 2002 with the Securities and Exchange Commission on the date hereof
(the "Report"), I, George V. Hager, Jr., the Chief Financial Officer of Meridian
Healthcare Investments, Inc., Development General Partner of the Fund, certify,
pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section
13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in
all material respects, the financial condition and result of
operations of the Fund.
Date: 3/27/03 By: /s/ George V. Hager, Jr.
George V. Hager, Jr.
Chief Financial Officer
Meridian Healthcare Investments, Inc.
Development General Partner
-26-
Exhibit 99.3
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND
LIMITED PARTNERSHIP
CERTIFICATION PURSUANT TO
18 U.S.C. ss. 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the filing of Meridian Healthcare Growth and Income Fund
Limited Partnership's (the "Fund") Report on Form 10-K for the period ending
December 31, 2002 with the Securities and Exchange Commission on the date hereof
(the "Report"), I, John M. Prugh, the Chief Executive Officer of Brown
Healthcare, Inc., Administrative General Partner of the Fund, certify, pursuant
to 18 U.S.C. ss. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:
(1) The Report fully complies with the requirements of section
13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in
all material respects, the financial condition and result of
operations of the Fund.
Date: 3/24/03 By: /s/ John M. Prugh
John M. Prugh
Chief Executive Officer
Brown Healthcare, Inc.
Administrative General Partner
-27-
Exhibit 99.4
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND
LIMITED PARTNERSHIP
CERTIFICATION PURSUANT TO
18 U.S.C. ss. 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the filing of Meridian Healthcare Growth and Income Fund
Limited Partnership's (the "Fund") Report on Form 10-K for the period ending
December 31, 2002 with the Securities and Exchange Commission on the date hereof
(the "Report"), I, Timothy M. Gisriel, the Chief Financial Officer of Brown
Healthcare, Inc., Administrative General Partner of the Fund, certify, pursuant
to 18 U.S.C. ss. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:
(1) The Report fully complies with the requirements of section
13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in
all material respects, the financial condition and result of
operations of the Fund.
Date: 3/24/03 By: /s/ Timothy M. Gisriel
Timothy M. Gisriel
Chief Financial Officer
Brown Healthcare, Inc.
Administrative General Partner
-28-
Exhibit 99.5
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND
LIMITED PARTNERSHIP
Certification of Principal Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Robert H. Fish, certify that:
1. I have reviewed this report of Meridian Healthcare Growth and Income Fund
Limited Partnership;
2. Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the issuer as of, and for, the periods presented in this report;
4. The issuer's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the issuer and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the issuer, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
b) evaluated the effectiveness of the issuer's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
report (the "Evaluation Date"); and
c) presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The issuer's other certifying officers and I have disclosed, based on our
most recent evaluation, to the issuer's auditors and the audit committee of
issuer's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the issuer's ability to record,
process, summarize and report financial data and have identified for
the issuer's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the issuer's internal
controls; and
6. The issuer's other certifying officers and I have indicated in this report
whether there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the
date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: 3/27/03 By: /s/ Robert H. Fish
Robert H. Fish
Chief Executive Officer
Meridian Healthcare Investments, Inc.
Development General Partner
-29-
Exhibit 99.6
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND
LIMITED PARTNERSHIP
Certification of Principal Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, George V. Hager, Jr., certify that:
1. I have reviewed this report of Meridian Healthcare Growth and Income Fund
Limited Partnership;
2. Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the issuer as of, and for, the periods presented in this report;
4. The issuer's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the issuer and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the issuer, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
b) evaluated the effectiveness of the issuer's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
report (the "Evaluation Date"); and
c) presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The issuer's other certifying officers and I have disclosed, based on our
most recent evaluation, to the issuer's auditors and the audit committee of
issuer's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the issuer's ability to record,
process, summarize and report financial data and have identified for
the issuer's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the issuer's internal
controls; and
6. The issuer's other certifying officers and I have indicated in this report
whether there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the
date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: 3/27/03 By: /s/ George V. Hager, Jr.
George V. Hager, Jr.
Chief Financial Officer
Meridian Healthcare Investments, Inc.
Development General Partner
-30-
Exhibit 99.7
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND
LIMITED PARTNERSHIP
Certification of Principal Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, John M. Prugh, certify that:
1. I have reviewed this report of Meridian Healthcare Growth and Income Fund
Limited Partnership;
2. Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the issuer as of, and for, the periods presented in this report;
4. The issuer's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the issuer and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the issuer, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
b) evaluated the effectiveness of the issuer's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
report (the "Evaluation Date"); and
c) presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The issuer's other certifying officers and I have disclosed, based on our
most recent evaluation, to the issuer's auditors and the audit committee of
issuer's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the issuer's ability to record,
process, summarize and report financial data and have identified for
the issuer's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the issuer's internal
controls; and
6. The issuer's other certifying officers and I have indicated in this report
whether there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the
date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: 3/24/03 By: /s/ John M. Prugh
John M. Prugh
Chief Executive Officer
Brown Healthcare, Inc.
Administrative General Partner
-31-
Exhibit 99.8
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND
LIMITED PARTNERSHIP
Certification of Principal Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Timothy M. Gisriel, certify that:
1. I have reviewed this report of Meridian Healthcare Growth and Income Fund
Limited Partnership;
2. Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the issuer as of, and for, the periods presented in this report;
4. The issuer's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the issuer and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the issuer, including its consolidated
subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
b) evaluated the effectiveness of the issuer's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
report (the "Evaluation Date"); and
c) presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The issuer's other certifying officers and I have disclosed, based on our
most recent evaluation, to the issuer's auditors and the audit committee of
issuer's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the issuer's ability to record,
process, summarize and report financial data and have identified for
the issuer's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the issuer's internal
controls; and
6. The issuer's other certifying officers and I have indicated in this report
whether there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the
date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
Date: 3/24/03 By: /s/ Timothy M. Gisriel
Timothy M. Gisriel
Chief Financial Officer
Brown Healthcare, Inc.
Administrative General Partner
-32-
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, as amended, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND
LIMITED PARTNERSHIP
DATE: 3/24/03 By: /s/ John M. Prugh
John M. Prugh
President and Director
Brown-Healthcare, Inc.
Administrative General Partner
Pursuant to the requirements of the Securities Exchange Act of 1934 as amended,
this report has been signed by the following in the capacities and on the dates
indicated.
DATE: 3/24/03 By: /s/ John M. Prugh
John M. Prugh
President and Director
Brown-Healthcare, Inc.
Administrative General Partner
DATE: 3/25/03 By: /s/ Peter E. Bancroft
Peter E. Bancroft
Vice President and Director
Brown-Healthcare, Inc.
Administrative General Partner
DATE: 3/25/03 By: /s/ Terry F. Hall
Terry F. Hall
Secretary
Brown-Healthcare, Inc.
Administrative General Partner
DATE: 3/24/03 By: /s/ Timothy M. Gisriel
Timothy M. Gisriel
Treasurer
Brown-Healthcare, Inc.
Administrative General Partner
-33-
MERIDIAN HEALTHCARE GROWTH AND INCOME FUND LIMITED PARTNERSHIP
SIGNATURES (continued)
DATE: 3/27/03 By: /s/ Robert H. Fish
Robert H. Fish
Chief Executive Officer
Meridian Healthcare Investments, Inc.
Development General Partner
DATE: 3/27/03 By: /s/ George V. Hager, Jr.
George V. Hager, Jr.
Vice President and Treasurer
Meridian Healthcare Investments, Inc.
Development General Partner
-34-