##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
 For the quarterly period ended June 30, 2007
 OR
 o
    
    Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
 Commission file number: 1-10858
 Manor Care, Inc.
  Delaware
    
    34-1687107(State or other jurisdiction of
    
    (IRS Employerincorporation or organization)
    
    Identification No.)333 N. Summit Street, Toledo, Ohio
    
    43604-2617(Address of principal executive offices)
    
    (Zip Code)
 Registrants telephone number, including area code: (419) 252-5500
 þ o
 þ o  o
 o þ




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##### 



Manor Care, Inc.
Form 10-Q
Table of Contents
 PageNumberPart I. Financial InformationItem 1. Financial Statements (Unaudited)Consolidated Balance Sheets -
June 30, 2007 and December 31, 2006
    
    
    3Consolidated Statements of Income -
Three and six months ended June 30, 2007 and 2006
    
    
    4Consolidated Statements of Cash Flows -
Six months ended June 30, 2007 and 2006
    
    
    5Notes to Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    15Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    21Item 4. Controls and Procedures
    
    
    22Part II. Other InformationItem 1. Legal Proceedings
    
    
    22Item 1A. Risk Factors
    
    
    22Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    23Item 3. Defaults Upon Senior Securities
    
    
    23Item 4. Submission of Matters to a Vote of Security Holders
    
    
    23Item 5. Other Information
    
    
    23Item 6. Exhibits
    
    
    24Signatures
    
    
    25Exhibit Index
    
    
    26EX-4.1EX-10.1EX-10.2EX-10.3EX-10.4EX-10.5EX-31.1EX-31.2EX-32.1EX-32.2
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##### Table of Contents



Part I. Financial Information
 
 Financial Statements.
 Manor Care, Inc.
 
  June 30,
    
    
    December 31,2007
    
    
    2006(Unaudited)
    
    
    (Note 1)(In thousands, except share and per share data)AssetsCurrent assets:Cash and cash equivalents
    
    $
    87,436
    
    
    $
    17,658Receivables, less allowances for doubtful
accounts of $84,131 and $74,644, respectively
    
    
    550,004
    
    
    
    565,831Prepaid expenses and other assets
    
    
    35,419
    
    
    
    34,924Deferred income taxes
    
    
    3,289
    
    
    
    781Total current assets
    
    
    676,148
    
    
    
    619,194Property and equipment, net of accumulated
depreciation of $917,381 and $844,471, respectively
    
    
    1,478,898
    
    
    
    1,493,576Goodwill
    
    
    134,621
    
    
    
    132,997Intangible assets, net of amortization of $2,236 and $1,862,
respectively
    
    
    5,408
    
    
    
    5,782Other assets
    
    
    132,797
    
    
    
    146,928Total assets
    
    $
    2,427,872
    
    
    $
    2,398,477Liabilities And Shareholders EquityCurrent liabilities:Accounts payable
    
    $
    109,602
    
    
    $
    120,621Employee compensation and benefits
    
    
    169,549
    
    
    
    165,001Accrued insurance liabilities
    
    
    109,066
    
    
    
    109,538Income tax payable
    
    
    29,465
    
    
    
    10,118Other accrued liabilities
    
    
    59,015
    
    
    
    79,904Long-term debt due within one year
    
    
    383,762
    
    
    
    38,447Total current liabilities
    
    
    860,459
    
    
    
    523,629Long-term debt
    
    
    567,813
    
    
    
    955,211Deferred income taxes
    
    
    65,358
    
    
    
    78,741Other liabilities
    
    
    284,578
    
    
    
    267,703Shareholders equity:Preferred stock, $.01 par value, 5 million shares authorizedCommon stock, $.01 par value, 300 million shares authorized,
111.0 million shares issued
    
    
    1,110
    
    
    
    1,110Capital in excess of par value
    
    
    419,766
    
    
    
    407,506Retained earnings
    
    
    1,485,352
    
    
    
    1,437,145Accumulated other comprehensive loss
    
    
    (12,757
    )
    
    
    (29,217
    )1,893,471
    
    
    
    1,816,544Less treasury stock, at cost (37.8 and 38.3 million shares,
respectively)
    
    
    (1,243,807
    )
    
    
    (1,243,351
    )Total shareholders equity
    
    
    649,664
    
    
    
    573,193Total liabilities and shareholders equity
    
    $
    2,427,872
    
    
    $
    2,398,477
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Manor Care, Inc.
 
 
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006(In thousands, except per share amounts)Revenues
    
    $
    957,780
    
    
    $
    894,214
    
    
    $
    1,916,846
    
    
    $
    1,763,509Expenses:Operating
    
    
    790,310
    
    
    
    736,106
    
    
    
    1,580,434
    
    
    
    1,459,016General and administrative
    
    
    53,372
    
    
    
    43,792
    
    
    
    126,875
    
    
    
    95,897Depreciation and amortization
    
    
    37,852
    
    
    
    36,146
    
    
    
    74,839
    
    
    
    72,088Asset impairment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,082881,534
    
    
    
    816,044
    
    
    
    1,782,148
    
    
    
    1,638,083Income before other income (expenses) and
income taxes
    
    
    76,246
    
    
    
    78,170
    
    
    
    134,698
    
    
    
    125,426Other income (expenses):Interest expense
    
    
    (8,550
    )
    
    
    (7,779
    )
    
    
    (17,220
    )
    
    
    (14,919
    )Loss on sale of assets
    
    
    (361
    )
    
    
    (217
    )
    
    
    (5,132
    )
    
    
    (159
    )Equity in earnings of affiliated companies
    
    
    525
    
    
    
    2,001
    
    
    
    984
    
    
    
    3,587Interest income and other
    
    
    1,272
    
    
    
    393
    
    
    
    1,138
    
    
    
    1,228Total other expenses, net
    
    
    (7,114
    )
    
    
    (5,602
    )
    
    
    (20,230
    )
    
    
    (10,263
    )Income before income taxes
    
    
    69,132
    
    
    
    72,568
    
    
    
    114,468
    
    
    
    115,163Income taxes
    
    
    25,488
    
    
    
    27,017
    
    
    
    40,965
    
    
    
    42,607Income before cumulative effect
    
    
    43,644
    
    
    
    45,551
    
    
    
    73,503
    
    
    
    72,556Cumulative effect of change in accounting
principle, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,476
    )Net income
    
    $
    43,644
    
    
    $
    45,551
    
    
    $
    73,503
    
    
    $
    70,080Earnings per share  basic:Income before cumulative effect
    
    $
    .60
    
    
    $
    .60
    
    
    $
    1.00
    
    
    $
    .94Cumulative effect
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (.03
    )Net income
    
    $
    .60
    
    
    $
    .60
    
    
    $
    1.00
    
    
    $
    .90
    (a)Earnings per share  diluted:Income before cumulative effect
    
    $
    .54
    
    
    $
    .58
    
    
    $
    .93
    
    
    $
    .91Cumulative effect
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (.03
    )Net income
    
    $
    .54
    
    
    $
    .58
    
    
    $
    .93
    
    
    $
    .88Weighted-average shares:Basic
    
    
    73,231
    
    
    
    76,277
    
    
    
    73,138
    
    
    
    77,593Diluted
    
    
    80,595
    
    
    
    78,489
    
    
    
    78,748
    
    
    
    79,658Cash dividends declared per common share
    
    $
    .17
    
    
    $
    .16
    
    
    $
    .34
    
    
    $
    .32
 
 (a)
    
    Doesnt add due to rounding  4




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Manor Care, Inc.
 
 
 Six Months Ended June 30,2007
    
    
    2006(In thousands)Operating ActivitiesNet income
    
    $
    73,503
    
    
    $
    70,080Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation and amortization
    
    
    74,839
    
    
    
    72,088Asset impairment and other non-cash charges
    
    
    24,936
    
    
    
    15,050Stock option and restricted stock compensation
    
    
    9,576
    
    
    
    11,338Provision for bad debts
    
    
    28,335
    
    
    
    27,658Deferred income taxes
    
    
    (15,891
    )
    
    
    (16,949
    )Net loss on sale of assets
    
    
    5,132
    
    
    
    159Equity in earnings of affiliated companies
    
    
    (984
    )
    
    
    (3,587
    )Changes in assets and liabilities, excluding sold facilities and acquisitions:Receivables
    
    
    (40,103
    )
    
    
    (51,868
    )Prepaid expenses and other assets
    
    
    9,543
    
    
    
    2,686Liabilities
    
    
    (7,122
    )
    
    
    21,866Total adjustments
    
    
    88,261
    
    
    
    78,441Net cash provided by operating activities
    
    
    161,764
    
    
    
    148,521Investing ActivitiesInvestment in property and equipment
    
    
    (53,408
    )
    
    
    (69,287
    )Investment in systems development
    
    
    (4,709
    )
    
    
    (1,424
    )Investment in partnership
    
    
    
    
    
    
    (6,185
    )Acquisitions
    
    
    (2,695
    )
    
    
    (19,298
    )Net change in restricted cash and cash equivalents
    
    
    (7,428
    )Proceeds from sale of assets
    
    
    33,952
    
    
    
    40Net cash used in investing activities
    
    
    (34,288
    )
    
    
    (96,154
    )Financing ActivitiesNet repayments under revolving credit facility
    
    
    (36,000
    )
    
    
    (16,800
    )Proceeds from issuance of senior notes
    
    
    
    
    
    
    250,000Principal payments of long-term debt
    
    
    (8,534
    )
    
    
    (1,032
    )Payment of financing costs
    
    
    
    
    
    
    (5,547
    )Purchase of common stock for treasury
    
    
    
    
    
    
    (270,634
    )Dividends paid
    
    
    (24,871
    )
    
    
    (25,268
    )Proceeds from exercise of stock options
    
    
    5,049
    
    
    
    7,651Excess tax benefits from share-based payment arrangements
    
    
    6,658
    
    
    
    9,227Net cash used in financing activities
    
    
    (57,698
    )
    
    
    (52,403
    )Net increase (decrease) in cash and cash equivalents
    
    
    69,778
    
    
    
    (36
    )Cash and cash equivalents at beginning of period
    
    
    17,658
    
    
    
    12,293Cash and cash equivalents at end of period
    
    $
    87,436
    
    
    $
    12,257
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Manor Care, Inc.
 
 
 Note 1  Accounting Policies
 Basis of Presentation
    Comprehensive Income
  Goodwill
  6




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Long-TermCare and
    
    
    Hospice andRehabilitation
    
    
    Home Health
    
    
    Other
    
    
    Total(In thousands)Balance at January 1, 2006
    
    $
    66,522
    
    
    $
    36,384
    
    
    $
    451
    
    
    $
    103,357Goodwill from acquisitions
    
    
    10,290
    
    
    
    19,350
    
    
    
    
    
    
    
    29,640Balance at December 31, 2006
    
    
    76,812
    
    
    
    55,734
    
    
    
    451
    
    
    
    132,997Goodwill from acquisitions
    
    
    1,624
    
    
    
    
    
    
    
    
    
    
    
    1,624Balance at June 30, 2007
    
    $
    78,436
    
    
    $
    55,734
    
    
    $
    451
    
    
    $
    134,621
 Insurance Liabilities
  New Accounting Standards
   7




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Note 2  Divestitures
  Note 3  Debt
   Note 4  Income Taxes
  8




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Note 5  Contingencies
  9




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Note 6  Stock-Based Compensation
    10




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Note 7  Earnings Per Share
  Three Months Ended
    
    
    Six Months EndedJune 30
    
    
    June 302007
    
    
    2006
    
    
    2007
    
    
    2006(In thousands, except earnings per share)Numerator:Numerator for basic EPS  income before
cumulative effect
    
    $
    43,644
    
    
    $
    45,551
    
    
    $
    73,503
    
    
    $
    72,556After-tax amount of interest expense on
Convertible Senior Notes (Old Notes)
    
    
    27
    
    
    
    27
    
    
    
    55
    
    
    
    54Numerator for diluted EPS
    
    $
    43,671
    
    
    $
    45,578
    
    
    $
    73,558
    
    
    $
    72,610Denominator:Denominator for basic EPS  weighted-average shares
    
    
    73,231
    
    
    
    76,277
    
    
    
    73,138
    
    
    
    77,593Effect of dilutive securities:Stock options
    
    
    914
    
    
    
    968
    
    
    
    846
    
    
    
    959Restricted stock or units
    
    
    148
    
    
    
    53
    
    
    
    122
    
    
    
    36Convertible Senior Notes
    
    
    6,302
    
    
    
    1,191
    
    
    
    4,642
    
    
    
    1,070Denominator for diluted EPS 
adjusted for weighted-average
shares and assumed conversions
    
    
    80,595
    
    
    
    78,489
    
    
    
    78,748
    
    
    
    79,658EPS  Income before cumulative effect:Basic
    
    $
    .60
    
    
    $
    .60
    
    
    $
    1.00
    
    
    $
    .94Diluted
    
    $
    .54
    
    
    $
    .58
    
    
    $
    .93
    
    
    $
    .91
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Note 8  Employee Benefit Plans
   Three Months Ended
    
    
    Six Months EndedJune 30
    
    
    June 302007
    
    
    2006
    
    
    2007
    
    
    2006(In thousands)Service cost
    
    $
    679
    
    
    $
    484
    
    
    $
    1,357
    
    
    $
    1,592Interest cost
    
    
    452
    
    
    
    1,170
    
    
    
    1,174
    
    
    
    2,205Expected return on plan assets
    
    
    (47
    )
    
    
    (1,180
    )
    
    
    (441
    )
    
    
    (2,225
    )Amortization of unrecognized transition asset
    
    
    (12
    )
    
    
    (12
    )
    
    
    (24
    )
    
    
    (24
    )Amortization of prior service cost
    
    
    482
    
    
    
    679
    
    
    
    970
    
    
    
    1,169Amortization of net loss
    
    
    22
    
    
    
    356
    
    
    
    242
    
    
    
    605Settlement loss (adjustment)
    
    
    (103
    )
    
    
    
    
    
    
    24,701Net pension cost
    
    $
    1,473
    
    
    $
    1,497
    
    
    $
    27,979
    
    
    $
    3,322
 Note 9  Segment Information
  12




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Long-TermCare and
    
    Hospice andRehabilitation
    
    Home Health
    
    Other
    
    Total(In thousands)Three months ended June 30, 2007Revenues from external customers
    
    $
    817,166
    
    
    $
    135,421
    
    
    $
    5,193
    
    
    $
    957,780Depreciation and amortization
    
    
    36,481
    
    
    
    1,122
    
    
    
    249
    
    
    
    37,852Operating margin
    
    
    149,842
    
    
    
    18,778
    
    
    
    (1,150
    )
    
    
    167,470Three months ended June 30, 2006Revenues from external customers
    
    $
    771,073
    
    
    $
    115,345
    
    
    $
    7,796
    
    
    $
    894,214Intersegment revenues
    
    
    
    
    
    
    
    
    
    
    1,057
    
    
    
    1,057Depreciation and amortization
    
    
    34,959
    
    
    
    791
    
    
    
    396
    
    
    
    36,146Operating margin
    
    
    139,224
    
    
    
    18,517
    
    
    
    367
    
    
    
    158,108Six months ended June 30, 2007Revenues from external customers
    
    $
    1,638,835
    
    
    $
    268,038
    
    
    $
    9,973
    
    
    $
    1,916,846Depreciation and amortization
    
    
    72,196
    
    
    
    2,077
    
    
    
    566
    
    
    
    74,839Operating margin
    
    
    305,572
    
    
    
    32,924
    
    
    
    (2,084
    )
    
    
    336,412Six months ended June 30, 2006Revenues from external customers
    
    $
    1,527,863
    
    
    $
    220,145
    
    
    $
    15,501
    
    
    $
    1,763,509Intersegment revenues
    
    
    
    
    
    
    
    
    
    
    2,032
    
    
    
    2,032Depreciation and amortization
    
    
    69,365
    
    
    
    1,500
    
    
    
    1,223
    
    
    
    72,088Operating margin
    
    
    269,348
    
    
    
    34,881
    
    
    
    264
    
    
    
    304,493
 Note 10  Subsequent Event
    13




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14




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Managements Discussion and Analysis of Financial Condition and Results of
Operations
 Critical Accounting Policies
 General and Professional Liability.
 Workers Compensation Liability.
 Results of Operations 
 Quarter and Year-To-Date June 30, 2007 Compared with June 30, 2006
 Overview.
  ̈
    
    Our stock-based compensation expense of $11.6 million and deferred compensation expense
of $4.5 million were higher than expected. The expense for the quarter was higher than
expected by $10.3 million, or $.08 per share, primarily because of our stock price increase
of over 20 percent for the quarter. Of the stock-based compensation and deferred
compensation expense, we recorded approximately 15 percent in operating expenses and the
remaining amount in general and administrative expenses.
 15




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 ̈
    
    We recorded expenses of $2.8 million, or $.02 per share, for transaction costs related
to our evaluation of strategic alternatives. See Note 10 to our consolidated financial
statements for a discussion of the sale of the Company. ̈
    
    We recorded expenses of $1.1 million, or about $.01 per share, related to separation and
other expenses for former officers.
   ̈
    
    We recorded a non-cash charge of $24.8 million, or $.20 per share, as a result of the
termination and full settlement of an overfunded defined benefit pension plan, as discussed
in Note 8 to our consolidated financial statements. ̈
    
    Our stock-based compensation expense of $21.7 million and deferred compensation expense
of $7.9 million were higher than expected. The expense for the first half was higher than
expected by $18.0 million, or $.14 per share, primarily because of our stock price increase
of over 39 percent for the first half of 2007. Of the stock-based compensation and
deferred compensation expense, we recorded approximately 20 percent in operating expenses
and the remaining amount in general and administrative expenses. ̈
    
    We recorded a loss of $4.7 million, $.04 per share, related to the sale of our
investment in two hospitals, as discussed in Note 2 to our consolidated financial
statements. ̈
    
    We recorded expenses of $2.8 million, or $.02 per share, for transaction costs as
discussed above. ̈
    
    We recorded expenses of $1.1 million, or about $.01 per share, related to separation and
other expenses for former officers. ̈
    
    The items above were partially offset by a tax benefit of $1.4 million, or $.02 per
share, related primarily to tax credits from prior periods.
   ̈
    
    Our stock-based compensation expense of $19.1 million and deferred compensation expense
of $4.0 million were higher than expected. The expense for the first half was higher than
expected by $11.3 million, or $.09 per share, primarily because of our stock price increase
of 18 percent for the first half, stock option grants that vested immediately as a result
of an option reload feature, and executive retirements that accelerated the amortization of
restricted stock expense. Of the stock-based compensation and deferred compensation
expense, we recorded approximately 20 percent in operating expenses and the remaining
amount in general and administrative expenses. ̈
    
    The cumulative effect of the change in accounting for SARs of $4.0 million ($2.5 million
after tax, or $.03 per share) was a result of the adoption of Statement 123R, as reported
on a separate line item in our income statement. We were required to change the
measurement method for our SARs liability from intrinsic value to fair value on January 1,
2006. ̈
    
    We recorded a charge of $11.1 million, or $.09 per share, related to the write-down of
our transcription business, which we sold in the fourth quarter of 2006. We reported the
charge on a separate line item in our income statement.
 16




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Revenues  Quarter.
 Revenues  First Half.
 Revenue Factors  Quarter and First Half.
 Second Quarter
    
    
    
    
    
    First Half2007
    
    2006
    
    Increase
    
    2007
    
    2006
    
    IncreaseMedicare
    
    $
    412.46
    
    
    $
    382.31
    
    
    
    8
    %
    
    $
    409.46
    
    
    $
    378.95
    
    
    
    8
    %Medicaid
    
    $
    158.84
    
    
    $
    151.52
    
    
    
    5
    %
    
    $
    158.78
    
    
    $
    151.15
    
    
    
    5
    %Private and other (skilled only)
    
    $
    240.25
    
    
    $
    228.00
    
    
    
    5
    %
    
    $
    239.35
    
    
    $
    225.89
    
    
    
    6
    %
   Second Quarter
    
    First Half2007
    
    2006
    
    2007
    
    2006Total
    
    
    89
    %
    
    
    89
    %
    
    
    89
    %
    
    
    90
    %Skilled nursing facilities
    
    
    89
    %
    
    
    90
    %
    
    
    89
    %
    
    
    90
    %
  17




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Operating Expenses  Quarter.
   Operating Expenses  First Half.
   General and Administrative Expenses.
 18




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Interest Expense.
 Equity in Earnings of Affiliated Companies.
 Income Taxes.
 Financial Condition  June 30, 2007 and December 31, 2006
  Liquidity and Capital Resources
 Cash Flows.
 Investing Activities.
 19




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##### Table of Contents



Debt Agreements.
    Stock Purchase.
 Cash Dividends.
  20




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##### Table of Contents



Cautionary Statement Concerning Forward-Looking Statements
    
 Quantitative and Qualitative Disclosures About Market Risk
  21




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##### Table of Contents



Controls and Procedures
  
 Part II. Other Information
 
 Legal Proceedings.
   
 Risk Factors.
  22




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##### Table of Contents



Unregistered Sales of Equity Securities and Use of Proceeds.
  
 Defaults Upon Senior Securities.
  
 Submission of Matters to a Vote of Security Holders.
  Item
    
    For
    
    Against
    
    Abstaina
    
    
    67,712,743
    
    
    
    419,547
    
    
    
    447,333b
    
    
    65,685,506
    
    
    
    2,445,088
    
    
    
    449,028c
    
    
    68,054,729
    
    
    
    74,897
    
    
    
    449,995d
    
    
    66,451,587
    
    
    
    1,658,383
    
    
    
    469,652e
    
    
    67,422,935
    
    
    
    690,659
    
    
    
    466,029f
    
    
    66,376,793
    
    
    
    1,721,975
    
    
    
    480,855g
    
    
    66,705,870
    
    
    
    1,393,893
    
    
    
    479,859h
    
    
    67,623,160
    
    
    
    475,747
    
    
    
    480,718i
    
    
    63,863,319
    
    
    
    4,206,990
    
    
    
    509,311
 
 Other Information.
  23




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##### Table of Contents



Exhibits.
 S-K Item601 No.2.1
    
    Agreement and Plan of Merger, dated as of July 2, 2007, between MCHCR-CP Merger Sub Inc. and
Manor Care, Inc. (filed as Exhibit 2.1 to Manor Care, Inc.s Form 8-K filed on July 2, 2007
and incorporated herein by reference)4.1*
    
    Supplemental Indenture for 2.125% Convertible Senior Notes due 2035, dated as of May 17,
2006, among Manor Care, Inc., the subsidiary guarantors as named therein and U.S. Bank
National Association (as successor to Wachovia Bank, National Association), as Trustee10.1*
    
    Employment Agreement dated as of June 13, 2007, between Manor Care, Inc. and Paul A. Ormond10.2*
    
    Employment Agreement dated as of June 13, 2007, between Manor Care, Inc. and Stephen L.
Guillard10.3*
    
    Employment Agreement dated as of June 13, 2007, between Manor Care, Inc. and Steven M.
Cavanaugh10.4*
    
    Employment Agreement dated as of June 13, 2007, between Manor Care, Inc. and Richard A. Parr
II10.5*
    
    Amendment to the HCR Manor Care Senior Executive Retirement Plan, dated as of June 18, 200731.1*
    
    Chief Executive Officer Certification31.2*
    
    Chief Financial Officer Certification32.1*
    
    Chief Executive Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2*
    
    Chief Financial Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
 *
    
    Filed herewith. 24




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##### Table of Contents



Signatures
  Manor Care, Inc.
(Registrant)Date  August 3, 2007
    By
    /s/ Steven M. CavanaughSteven M. Cavanaugh, Vice President andChief Financial Officer 25




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##### Table of Contents



Exhibit Index
 Exhibit4.1
    
    Supplemental Indenture for 2.125% Convertible Senior Notes due 2035, dated as of May 17,
2006, among Manor Care, Inc., the subsidiary guarantors as named therein and U.S. Bank
National Association (as successor to Wachovia Bank, National Association), as Trustee10.1
    
    Employment Agreement dated as of June 13, 2007, between Manor Care, Inc. and Paul A. Ormond10.2
    
    Employment Agreement dated as of June 13, 2007, between Manor Care, Inc. and Stephen L.
Guillard10.3
    
    Employment Agreement dated as of June 13, 2007, between Manor Care, Inc. and Steven M.
Cavanaugh10.4
    
    Employment Agreement dated as of June 13, 2007, between Manor Care, Inc. and Richard A. Parr
II10.5
    
    Amendment to the HCR Manor Care Senior Executive Retirement Plan, dated as of June 18, 200731.1
    
    Chief Executive Officer Certification31.2
    
    Chief Financial Officer Certification32.1
    
    Chief Executive Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 200232.2
    
    Chief Financial Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
 26