EXHIBIT 99.1

                      CUSHMAN MANAGEMENT ASSOCIATES, INC.
                                 AND AFFILIATES

                           COMBINED FINANCIAL REPORTS

                               FOR THE YEAR ENDED
                               DECEMBER 31, 1996

                                                                               1
<PAGE>

                      [LETTERHEAD OF LANDA & ALTSHER, P.C.]



                          INDEPENDENT AUDITORS' REPORT


To the Board of Directors
Cushman Management Associates, Inc.
  and Affiliates
Topsfield, Massachusetts


         We have audited the accompanying combined balance sheet of Cushman
Management Associates, Inc. and Affiliates as of December 31, 1996, and the
related combined statements of income and owners' equity, and cash flows for the
year then ended. These financial statements are the responsibility of the
Companies' management. Our responsibility is to express an opinion on these
financial statements based on our audit.

         We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

         In our opinion, the combined financial statements referred to above
present fairly, in all material respects, the combined financial position of
Cushman Management Associates, Inc. and Affiliates as of December 31, 1996, and
the combined results of its operations and its cash flows for the year then
ended in conformity with generally accepted accounting principles.




                                /s/Landa & Altsher
                                ------------------
                                October 22, 1997

<PAGE>

               CUSHMAN MANAGEMENT ASSOCIATES, INC. AND AFFILIATES

                 COMBINED BALANCE SHEET AS OF DECEMBER 31, 1996
                             (DOLLARS IN THOUSANDS)


                                  ASSETS
<TABLE>
<S>                                                                               <C>    
CURRENT ASSETS:
 Cash ..................................................................          $ 1,607
 Accounts receivable - net of allowance for doubtful
   accounts of $ 75 ....................................................            2,004
 Prepaid expenses and other ............................................              159
   Total current assets ................................................            3,770
PROPERTY, PLANT AND EQUIPMENT, net .....................................            3,490
INTANGIBLE ASSETS, net .................................................                6
                                                                                  =======
TOTAL ASSETS ...........................................................          $ 7,266
                                                                                  =======

                         LIABILITIES AND OWNERS' EQUITY
CURRENT LIABILITIES:
  Current maturities on long-term debt .................................          $    61
  Accounts payable .....................................................              443
  Employee compensation and benefits ...................................              755
  Other accrued liabilities ............................................              136
  Accrued interest .....................................................               72
  Due to related parties ...............................................               35
  Income taxes payable .................................................              244
    Total current liabilities ..........................................            1,746

LONG-TERM DEBT, net of current maturities ..............................            1,320

TOTAL LIABILITIES ......................................................            3,066
                                                                                  -------
                                                                                  
OWNERS' EQUITY:
                                                                                  
    Common stock, 17,500 shares authorized without par value,
       2,000 shares issued and 1,970 outstanding with 30 held in treasury             310
      Additional paid-in capital ........................................             172
     Retained earnings and partners' capital ............................           3,738
                                                                                    4,220
     Less - treasury stock, at cost .....................................             (20)
     Total owners' equity ...............................................           4,200
                                                                                  =======
TOTAL LIABILITIES AND OWNERS' EQUITY ....................................         $ 7,266
                                                                                  =======
</TABLE>
                 See accompanying notes to financial statements

                                                                               2
<PAGE>

               CUSHMAN MANAGEMENT ASSOCIATES, INC. AND AFFILIATES

               COMBINED STATEMENT OF OPERATIONS AND OWNERS' EQUITY
                      FOR THE YEAR ENDED DECEMBER 31, 1996
                             (DOLLARS IN THOUSANDS)
<TABLE>

<S>                                              <C>                             
TOTAL NET REVENUE ......................         $19,368
                                                 -------
EXPENSES:
   Facility operating ..................          14,313
   General and administrative ..........           2,250
   Depreciation and amortization .......             322
                                                 -------
     Total expenses ....................          16,885
                                                 -------
INCOME FROM OPERATIONS .................           2,483
OTHER:
   Interest expense, net ...............              92
                                                 -------
INCOME BEFORE INCOME TAXES .............           2,391
INCOME TAXES ...........................             241
                                                 -------
NET INCOME .............................           2,150
OWNERS' EQUITY - BEGINNING OF YEAR .....           4,200
LESS - DISTRIBUTIONS TO OWNERS .........          (2,150
                                                 -------
OWNERS' EQUITY - END OF YEAR ...........         $ 4,200
                                                 =======
</TABLE>
                 See accompanying notes to financial statements

                                                                               3

<PAGE>

               CUSHMAN MANAGEMENT ASSOCIATES, INC. AND AFFILIATES

                        COMBINED STATEMENT OF CASH FLOWS
                      FOR THE YEAR ENDED DECEMBER 31, 1996
                             (DOLLARS IN THOUSANDS)
<TABLE>

<S>                                                         <C>    
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income ........................................     $ 2,150
    Adjustments to reconcile net income to
    net cash provided by operations:
      Depreciation and amortization ...................         322
      Provisions for losses on accounts receivable ....         116
    Changes in assets and liabilities:
      Accounts receivable .............................          69
      Prepaid expenses and other ......................         (52)
      Accounts payable and accrued liabilities ........         185
      Income taxes payable ............................         241

NET CASH PROVIDED BY OPERATING ACTIVITIES .............       3,031

CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchases of property and equipment ...............         (68)

NET CASH USED BY INVESTING ACTIVITIES .................         (68)

CASH FLOWS FROM FINANCING ACTIVITIES
    Repayment of debt .................................         (59)
    Distributions to owners ...........................      (2,150)
    Repayment of related party debt ...................        (173)

NET CASH USED BY FINANCING ACTIVITIES .................      (2,382)

NET INCREASE IN CASH ..................................         581

CASH AT BEGINNING OF YEAR .............................       1,026
                                                            -------
CASH AT END OF YEAR ...................................     $ 1,607
                                                            =======

SUPPLEMENTARY DISCLOSURE:
    Interest paid .....................................     $   118
                                                            =======
</TABLE>

                 See accompanying notes to financial statements

                                                                               4

<PAGE>

               CUSHMAN MANAGEMENT ASSOCIATES, INC. AND AFFILIATES

                     NOTES TO COMBINED FINANCIAL STATEMENTS

                                DECEMBER 31, 1996
                             (DOLLARS IN THOUSANDS)


         The financial statements presented are the combined financial
         statements of Cushman Management Associates, Inc. (the management
         company), Cedar Glen Nursing Home, Danvers Twin Oaks Nursing Home,
         Inc., Saugus Nursing Home, Inc., d/b/a Louise Caroline Rehabilitation
         and Nursing Center, and Evtan Nursing Home, Inc., d/b/a Maplewood Manor
         Nursing Home, (collectively, the "Companies"). The majority
         stockholders of Cushman Management Associates, Inc. own a majority
         interest in the above nursing homes. Cushman Management Associates,
         Inc. is a Subchapter S Corporation and operates a management company in
         Topsfield, Massachusetts. Cushman Management Associates, Inc. provides
         various services to nursing homes including administration,
         bookkeeping, and other patient related services. Danvers Twin Oaks
         Nursing Home, Inc.; Saugus Nursing Home, Inc., and Evtan Nursing Home,
         Inc. are Subchapter S Corporations and operate nursing homes of 101, 80
         and 120 beds, respectively. Cedar Glen Nursing Home is a limited
         partnership and operates a 100-bed nursing home.

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         A summary of the Companies' significant accounting policies follows:

         a) BASIS ON COMBINATION: The combined financial statements include all
         the accounts of the above-named entities. All significant intercompany
         balances and transactions have been eliminated.

         b) PATIENT SERVICE REVENUE: Private patient service revenue is reported
         at the estimated net realizable amounts. Third-party payor revenues are
         recorded as indicated in Note 2.

         C) PROPERTY AND EQUIPMENT: Property and equipment are recorded at cost.
         Depreciation of building and improvements is calculated using the
         straight-line and accelerated methods over the estimated useful lives
         that range from five to forty years. Depreciation of equipment and
         motor vehicles is calculated using the straight-line and accelerated
         methods over the estimated useful lives that range from three to ten
         years. Depreciation charged to operations amounted to $310 for 1996.

         d) CASH AND CASH EQUIVALENTS: The Companies consider all short-term
         debt securities purchased with an original maturity of three months or
         less to be cash equivalents.

                                                                               5

               
<PAGE>


                                                                           Cont.
               CUSHMAN MANAGEMENT ASSOCIATES, INC. AND AFFILIATES

                     NOTES TO COMBINED FINANCIAL STATEMENTS

                                DECEMBER 31, 1996
                             (DOLLARS IN THOUSANDS)


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         e) INCOME TAXES: Cushman Management Associates, Inc.; Danvers Twin Oaks
         Nursing Home, Inc.; Saugus Nursing Home, Inc.; and Evtan Nursing Home,
         Inc.; have elected to be taxed under the provisions of Subchapter S of
         the Internal Revenue Code. Under those provisions, the Companies do not
         pay federal income taxes on their taxable income. Instead, the
         stockholders are liable for individual income taxes on their respective
         share of the Companies' taxable income.

         The Companies are considered to be engaged in a unitary business and as
         a result have exceeded certain gross income limitations for state
         income tax purposes. Consequently, the Companies are liable for state
         corporate income taxes on its taxable income.

         No income taxes are payable by or provided for Cedar Glen Nursing Home,
         a Limited Partnership. Partners are liable for individual federal and
         state income taxes on their respective share of the Partnership's
         taxable income.

         f) INTANGIBLE ASSETS: Intangible assets are stated on the basis of cost
         and are amortized on a straight-line basis, over the estimated future
         periods to be benefited. Amortization charged to operations amounted to
         $12 for 1996.

         g) ESTIMATES: The preparation of financial statements in conformity
         with generally accepted accounting principles requires management to
         make estimates and assumptions that affect the reported amounts of
         assets and liabilities and disclosure of contingent assets and
         liabilities at the date of the reporting period. Actual costs could
         differ from those estimates.

         h) PROMOTIONAL ADVERTISING: Promotional advertising costs are expensed
         as incurred. Promotional advertising costs charged to operations
         amounted to $72 for 1996.


                                                                               6

<PAGE>

                                                                           Cont.
               CUSHMAN MANAGEMENT ASSOCIATES, INC. AND AFFILIATES

                     NOTES TO COMBINED FINANCIAL STATEMENTS

                                DECEMBER 31, 1996
                             (DOLLARS IN THOUSANDS)


NOTE 2 - PATIENT SERVICE REVENUES FROM THIRD PARTY PAYORS

         SUMMARY OF THE PAYMENT ARRANGEMENTS WITH THIRD PARTY PAYORS

         MEDICAID - PROSPECTIVE RATE SYSTEM - The Companies receive
         reimbursement from the Commonwealth of Massachusetts under the
         prospective rate of payment system for the care and services rendered
         to publicly-aided patients in long-term care facilities pursuant to
         regulations promulgated by the Division of Health Care Finance and
         Policy (the Division). Under the regulations, the current year rates
         are calculated utilizing base year costs adjusted for inflation. The
         base year costs are subject to audit which could result in a
         retroactive rate adjustment for the current year.

         As a result of the audit of prior years' cost reports by the Division,
         the Companies have received amended prospective rates for the years
         1992 and 1991. The amended rates resulted in a retroactive adjustment
         due the Companies of $150 and $133 for 1992 and 1991, respectively.
         These settlements have been received in 1996 and such settlements have
         been reflected under the caption "Total Net Revenue" on Exhibit B to
         the extent not previously reflected.

         Management estimates that the Companies have underspent the OBRA
         component of the prospective rate during 1993, 1992 and 1991, resulting
         in a retroactive adjustment due the Commonwealth of $14, $11 and $15
         for 1993, 1992 and 1991, respectively. These retroactive adjustments
         have been settled in 1996 and such settlements have been reflected
         under the caption "Total Net Revenue" on Exhibit B to the extent not
         previously recorded.

         MEDICARE - The Companies receive reimbursement for patient care under
         the federally sponsored Medicare program through an insurance
         intermediary. During the year, an interim rate is assigned based upon
         the cost experience of a prior year modified by its current
         regulations, and the facilities are paid at this rate during the year.
         A cost report is filed with, and audited by, the insurance
         intermediary. A final rate which may be subject to cost limitations is
         then established and final settlement of the difference is called for
         under the regulations.

         Final settlements have been received through 1994 and such settlements
         have been included in the caption "Total Net Revenue" on Exhibit B, to
         the extent that they had not been reflected in prior years.

                                                                               7


<PAGE>
                                                                           Cont.
               CUSHMAN MANAGEMENT ASSOCIATES, INC. AND AFFILIATES

                     NOTES TO COMBINED FINANCIAL STATEMENTS

                                DECEMBER 31, 1996
                             (DOLLARS IN THOUSANDS)



NOTE 2 - PATIENT SERVICE REVENUES FROM THIRD PARTY PAYORS (Continued)

         Inasmuch as the final settlement rates for 1996 and 1995 cannot be
         determined with sufficient accuracy for proper recording in these
         financial statements, the income for these years has been recorded at
         the interim rate of payment. The actual amounts will be accrued in the
         year of settlement.

NOTE 3 - ACCOUNTS RECEIVABLE
<TABLE>
<CAPTION>
                                                     BALANCE AT        
                                                    DECEMBER 31,
                                                        1996
                                                  ----------------
                <S>                                   <C>                   
                Private patients ..................   $   103
                Prepaid room and board ............       (11)
                Medicare patients .................       334
                Publicly aided patients ...........     1,648
                Managed facilities ................         5
                Allowance for uncollectibles ......       (75)
                                                      -------
                
                Accounts receivable, net ..........   $ 2,004
                                                      =======
</TABLE>


         Bad debts expense charged to operations amounted to $116 for 1996.

NOTE 4 - RELATED PARTY TRANSACTIONS

         The Companies have entered into the following transactions with related
         parties:

         a)       MANAGEMENT FEES - Danvers Twin Oaks Nursing Home, Inc.  
                  recorded  management fees of $47 to an officer and stockholder
                  of Cushman Management Associates, Inc. for 1996.

                                                                               8

<PAGE>


                                                                           Cont.
               CUSHMAN MANAGEMENT ASSOCIATES, INC. AND AFFILIATES

                     NOTES TO COMBINED FINANCIAL STATEMENTS

                                DECEMBER 31, 1996
                             (DOLLARS IN THOUSANDS)


NOTE 4 - RELATED PARTY TRANSACTIONS (Continued)

         b) Related party loans which have no fixed repayment terms, are as
            follows:
<TABLE>
<CAPTION>
                                                          Balance at
                                            Interest     December 31,
                                              Rate          1996
                                              ------------------
<S>                                       <C>               <C>    
Due from related parties:
                                          Federal Funds
Officers and stockholders .........            Rate         $124
                                                            ----
Due to related parties:
  Officers and stockholders .......             9%            88
  Partners ........................             9%            27
  Other related parties ...........             9%            44
                                                            ----
   Total due to related parties ...                          159
                                                            ----
Net due to related parties ........                         $ 35
                                                            ====
</TABLE>

         Net interest expense incurred on the above related party loans amounted
         to $21 for 1996.


NOTE 5 - PROPERTY, PLANT AND EQUIPMENT

         Property, plant and equipment are comprised of the following at
         December 31, 1996:
<TABLE>

<S>                                         <C>        
Land .............................          $  195     
Building and improvements ........           5,528
Equipment ........................           2,688
Motor vehicles ...................              39
Construction in process ..........               5
                                            ------
                                             8,455
Less:  Accumulated Depreciation ..          (4,965)
                                            ======
Property, plant and equipment, net          $3,490
                                            ======
</TABLE>

         At December 31, 1996, the Companies have incurred and capitalized $5 of
         engineering costs related to the replacement of two HVAC systems. As of
         December 31, 1996, no date has been set for the start of the work on
         the HVAC systems.


                                                                               9

<PAGE>

                                                                           Cont.
               CUSHMAN MANAGEMENT ASSOCIATES, INC. AND AFFILIATES

                     NOTES TO COMBINED FINANCIAL STATEMENTS

                                DECEMBER 31, 1996
                             (DOLLARS IN THOUSANDS)


NOTE 6 - LONG-TERM DEBT

         The Companies are obligated under long-term debt at December 31, 1996
         as follows:


<TABLE>
<S>                                                                                         <C>  
9% first mortgage to Salem Five, secured by real estate and guaranteed
by a majority of the shareholders, payable in monthly payments of $8,
including interest with a balloon payment of all unpaid principal and
interest due on October 8, 1999.

                                                                                            $   791

9% 3 - year mortgage to Salem Five, due November 17, 1999, secured by
real estate and guaranteed by a majority of the shareholders, payable
in monthly installments of $6 including interest with a balloon
payment due November 17, 1999.

                                                                                                352

9% 25-year first mortgage to Ipswich Savings Bank, due October 1,
2017, secured by land and buildings of Cushman Management Associates,
Inc., payable in monthly installments of $2 including interest
                                                                                                238
                                                                                     ---------------

   Total                                                                                      1,381
Current maturities                                                                               61
                                                                                     ---------------

Long-term debt, net                                                                         $ 1,320
                                                                                     ===============
</TABLE>


                                                                              10


<PAGE>


                                                                           Cont.
               CUSHMAN MANAGEMENT ASSOCIATES, INC. AND AFFILIATES

                     NOTES TO COMBINED FINANCIAL STATEMENTS

                                DECEMBER 31, 1996
                             (DOLLARS IN THOUSANDS)


NOTE 6 - LONG-TERM DEBT (Continued)

         Interest incurred on the above long-term debt amounted to $119 for
         1996.

         Following are maturities of long-term debt for each of the next five
         years:

<TABLE>
<CAPTION>
                                Amount
                           ------------------
<S>                                 <C>    
1997                                 $    61
1998                                      69
1999                                   1,027
2000                                       5
2001                                       6

</TABLE>

NOTE 7 - CONCENTRATION OF CREDIT RISK

         Financial instruments that potentially subject the Companies to
         concentrations of credit risk consist principally of the following:

                  a.) CASH: The Companies maintain cash balances in several
                  federally insured financial institutions in the same
                  geographic area. The cash exceeding federally insured limits
                  totaled $995 at December 31, 1996. There may be times during
                  the year when uninsured cash is significantly higher.

                  b.) ACCOUNTS RECEIVABLE: The Companies extend unsecured credit
                  to their private patients and patients covered under
                  third-party payor arrangements. Accounts receivable from
                  private patients and third-party payors totaled $2,015 at
                  December 31, 1996. See Note (2) and Note (3) for details of
                  third-party payor arrangements and receivable balances,
                  respectively.

                  d.) DUE FROM RELATED PARTIES: The Companies extend unsecured
                  credit to their affiliates and owners. The balance due from
                  related parties totaled $124 at December 31, 1996. See Note
                  (4) for further details.


                                                                              11


<PAGE>


                                                                           Cont.
               CUSHMAN MANAGEMENT ASSOCIATES, INC. AND AFFILIATES

                     NOTES TO COMBINED FINANCIAL STATEMENTS

                                DECEMBER 31, 1996
                             (DOLLARS IN THOUSANDS)


NOTE 8 - COMMITMENTS AND CONTINGENCIES

         a) Pursuant to the Commonwealth of Massachusetts Medical Assistance
         Program regulations, the Companies are members of a group of related
         nursing homes (the Group) which are considered to be under common
         ownership. Consequently, all members of the Group are contingently
         liable for the recoupments of liabilities of other members of the
         Group.

         b) A significant portion of the Companies' revenues are derived from
         services reimbursable under the Medicaid program, (See Note 2). The
         base year costs utilized in calculating the Medicaid prospective rates
         are subject to audit which could result in a retroactive rate
         adjustment for all years in which that base year's costs are utilized
         in calculating the prospective rate. It is not possible at this time to
         determine whether the Companies will be audited or if a retroactive
         rate adjustment would result.

         c.) A portion of the Companies' revenues are derived from services
         under the Medicare program, (see Note 2). Under this program all cost
         report years are subject to audit which could result in a retroactive
         rate adjustment. It is not possible at this time to determine whether
         the Companies will be audited or if a retroactive rate adjustment will
         result.

         If the Companies' Medicare Fiscal Intermediary were to issue prudent
         buyer adjustments for 1996 using the same methodology as applied to
         1995, as detailed in Note 9 (b), this would result in a payable to the
         Medicare program of approximately $280. The Companies would vigorously
         contest any adjustments made by the fiscal intermediary. In addition,
         the Companies contract with outside suppliers of therapy services
         provides for indemnification to the Companies in the event that
         Medicare limits reimbursement to less then cost. Consequently, no
         provision has been made to the accompanying financial statements.

NOTE 9 - SUBSEQUENT EVENTS

         A.) SALE OF THE NURSING HOMES: In August 1997, the Companies sold their
         property and equipment and operating licenses of the nursing homes. The
         Companies would retain all assets, other than property and equipment,
         and all liabilities.


                                                                              12

<PAGE>
                                                                           Cont.
               CUSHMAN MANAGEMENT ASSOCIATES, INC. AND AFFILIATES

                     NOTES TO COMBINED FINANCIAL STATEMENTS

                                DECEMBER 31, 1996
                             (DOLLARS IN THOUSANDS)


NOTE 9 - SUBSEQUENT EVENTS (Continued)

         B.)  MEDICARE SETTLEMENTS: In 1997, the Companies' Medicare Fiscal
              Intermediary issued settlements for 1995, which include a
              limitation of the ancillary therapy services to less than cost.
              These settlements result in a payable to the Medicare program of
              approximately $130. The Companies strongly disagree with these
              settlements and will vigorously contest these settlements through
              the appeal process.

         The Companies contract with outside suppliers of therapy services
         provides for indemnification to the Companies in the event that
         Medicare limits reimbursement to less than the providers cost,
         consequently, no provision has been made in the accompanying financial
         statement for this retroactive adjustment.


                                                                              13