UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                             ______________________

                                    FORM 10-Q

(Mark  One)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT  1934

                 For the quarterly period ended March 31, 2003.

[  ]  TRANSITION  REPORT  PURSUANT  TO  SECTION  13  OR  15(D) OF THE SECURITIES
EXCHANGE  ACT  OF  1934

                        Commission file number   1-14012

                              EMERITUS CORPORATION
             (Exact name of registrant as specified in its charter)

            WASHINGTON                                          91-1605464
     (State or other jurisdiction                             (I.R.S Employer
      of incorporation or organization)                    Identification  No.)

                         3131 Elliott Avenue, Suite 500
                                Seattle, WA 98121
                    (Address of principal executive offices)

                                 (206) 298-2909
              (Registrant's telephone number, including area code)
                          ____________________________

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.  [X]  Yes   [  ]  No

Indicate  by  check  mark  whether  the  Registrant  is an accelerated filer (as
defined  in  Rule  12b-2  of  the  Act).  [  ]  Yes   [X]  No

As  of  April  30, 2003, there were 10,247,226 shares of the Registrant's Common
Stock,  par  value  $.0001,  outstanding.

<PAGE>
<TABLE>
<CAPTION>

                                      EMERITUS CORPORATION

                                              INDEX

                                 Part I.  Financial Information
<S>                                                                                     <C>
                                                                                        Page No.
                                                                                        --------
Item 1.  Financial Statements: . . . . . . . . . . . . . . . . . . . . . . . . . . . .         1

         Condensed Consolidated Balance Sheets as of March 31, 2003, and
         December 31, 2002. . . . . . . . . . . . . . . . . . . . . . . . . . .  . . .         2

         Condensed Consolidated Statements of Operations for the
         Three Months ended March 31, 2003 and 2002 . . . . . . . .. .. . .  . . . . .         3

         Condensed Consolidated Statements of Cash Flows for the Three
         Months ended March 31, 2003 and 2002 . . . . . . . . . . . . . . . . . . . .          4

         Notes to Condensed Consolidated Financial Statements . . . . . . . . . . . . .        5

Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations . . . .. . . . . . . . . . . . .. . . . .. .  . . . . . . . .  .       12


Item 3.  Quantitative  and  Qualitative  Disclosures  About  Market  Risk . . . .  . . .      22


Item 4.  Controls  and  Procedures  . . . . . . . . . . . .. . . . .. .  . . . . . . . .      22



                                 Part II.  Other Information

Note:     Items 1 through 4 of Part II are omitted because they are not applicable.

Item  5.  Other Information  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  23


Item  6.  Exhibits  and  Reports  on  Form  8-K  . . . . . .  . . . .  . . . .  . . . .  . .  23


          Signature. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    26

          Certifications . . . . . . . . . . . . . . . . . . . . . . . . . .. . .  . . . .    27

</TABLE>

<PAGE>


                          PART I. FINANCIAL INFORMATION

ITEM  1.  FINANCIAL  STATEMENTS

               [The rest of this page is intentionally left blank]


                                        1
<PAGE>

<TABLE>
<CAPTION>

                                                EMERITUS CORPORATION
                                        CONDENSED CONSOLIDATED BALANCE SHEETS
                                                     (unaudited)
                                          (In thousands, except share data)
                                                       ASSETS



                                                                                        March 31,      December 31,
                                                                                           2003            2002
                                                                                      --------------  --------------
<S>                                                                                   <C>             <C>
Current Assets:
 Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $       4,954   $       6,960
 Short-term investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          2,903           2,759
 Trade accounts receivable, net. . . . . . . . . . . . . . . . . . . . . . . . . . .          1,612           1,662
 Other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          3,189           3,645
 Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . .          5,195           5,217
                                                                                      --------------  --------------
 Total current assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         17,853          20,243
                                                                                      --------------  --------------
Property and equipment, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . .        119,173         119,583
Property held for development. . . . . . . . . . . . . . . . . . . . . . . . . . . .          1,254           1,254
Notes receivable from and investments in affiliates. . . . . . . . . . . . . . . . .          6,453           6,358
Restricted deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          5,555           5,555
Lease acquisition costs, net . . . . . . . . . . . . . . . . . . . . . . . . . . . .          6,082           6,081
Other assets, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          5,030           3,759
                                                                                      --------------  --------------
 Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $     161,400   $     162,833
                                                                                      ==============  ==============

                                      LIABILITIES AND SHAREHOLDERS' DEFICIT

Current Liabilities:
 Current portion of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . .  $       3,404   $       3,604
 Trade accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           3,145           3,108
 Accrued employee compensation and benefits. . . . . . . . . . . . . . . . . . . . .          5,526           5,355
 Accrued interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          1,320           1,737
 Accrued real estate taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          1,387           2,463
 Accrued dividends on preferred stock . . . . . . . . . . . . . . . . . . . . . . .          14,989          13,457
 Other accrued expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          8,501           9,080
 Deferred revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          3,915           2,884
 Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          5,580           5,040
                                                                                      --------------  --------------
    Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . .          47,767          46,728
                                                                                      --------------  --------------
Long-term debt, less current portion . . . . . . . . . . . . . . . . . . . . . . . .        119,825         119,887
Convertible debentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         32,000          32,000
Deferred gain on sale of communities . . . . . . . . . . . . . . . . . . . . . . . .         20,233          20,324
Deferred rent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          2,516           2,508
Other long-term liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . .            502             894
                                                                                      --------------  --------------
 Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        222,843         222,341
                                                                                      --------------  --------------
Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            358             558
Redeemable preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         25,000          25,000
Commitments and contingencies
Shareholders' Deficit:
Preferred stock, $.0001 par value. Authorized 70,000 shares; issued and outstanding
    33,473 and 30,609 at March 31, 2003, and December 31, 2002, respectively . . . .              -               -
Common stock, $.0001 par value. Authorized 40,000,000 shares; issued and
    outstanding 10,247,226 shares at March 31, 2003, and December 31, 2002 . . . . .              1               1
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         69,328          68,944
Accumulated other comprehensive gain  . . . . . . . . . . . . . . . . . . . . . . . .         1,391           1,247
Accumulated deficit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       (157,521)       (155,258)
                                                                                      --------------  --------------
 Total shareholders' deficit . . . . . . . . . . . . . . . . . . . . . . . . . . . .        (86,801)        (85,066)
                                                                                      --------------  --------------
 Total liabilities and shareholders' deficit . . . . . . . . . . . . . . . . . . . .  $     161,400   $     162,833
                                                                                      ==============  ==============
</TABLE>


      See accompanying Notes to Condensed Consolidated Financial Statements
                     and Management's Discussion and Analysis
                    of Financial Condition and Results of Operations

                                        2
<PAGE>

<TABLE>
<CAPTION>

                               EMERITUS CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (unaudited)
                      (In thousands, except per share data)

                                                 Three Months Ended
                                                     March  31,
                                           ----------------------------
                                                2003           2002
                                            -------------  -------------
<S>                                         <C>            <C>
Revenues:
  Community revenue. . . . . . . . . . . .  $     43,087   $     32,121
  Other service fees . . . . . . . . . . .           993          1,000
  Management fees. . . . . . . . . . . . .         3,097          3,025
                                            -------------  -------------
          Total operating revenues . . . .        47,177         36,146
                                            -------------  -------------

Expenses:
  Community operations . . . . . . . . . .        28,646         20,562
  General and administrative . . . . . . .         5,404          4,923
  Depreciation and amortization. . . . . .         1,846          1,851
  Facility lease expense . . . . . . . . .         8,604          6,728
                                            -------------  -------------
          Total operating expenses . . . .        44,500         34,064
                                            -------------  -------------
          Income from operations.. . . . .         2,677          2,082

Other income (expense):
  Interest income. . . . . . . . . . . . .           156            109
  Interest expense . . . . . . . . . . . .        (3,274)        (2,926)
  Other, net . . . . . . . . . . . . . . .            48           (567)
                                            -------------  -------------
          Net other expense  . . . . . . .        (3,070)        (3,384)
                                            -------------  -------------

          Net loss . . . . . . . . . . . .          (393)        (1,302)

Preferred stock dividends. . . . . . . . .         1,870          1,997
                                            -------------  -------------
          Net loss to common shareholders.  $     (2,263)  $     (3,299)
                                            =============  =============


Loss per common share - basic and diluted.  $      (0.22)  $      (0.32)
                                            =============  =============

Weighted average number of common shares
    outstanding - basic and diluted. . . .        10,247         10,196
                                            =============  =============
</TABLE>


      See accompanying Notes to Condensed Consolidated Financial Statements
                     and Management's Discussion and Analysis
                    of Financial Condition and Results of Operations
                                        3

<PAGE>

<TABLE>
<CAPTION>

                                                      EMERITUS CORPORATION
                                        CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                          (unaudited)
                                                         (In thousands)

                                                                                                Three Months Ended March 31,
                                                                                           ------------------------------------
                                                                                                 2003               2002
                                                                                           -----------------  -----------------
<S>                                                                                        <C>                <C>
Cash flows from operating activities:
  Net loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $           (393)  $         (1,302)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
    Minority interests. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                50                 78
    Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . .             1,846              1,851
    Amortization of deferred gain . . . . . . . . . . . . . . . . . . . . . . . . . . . .               (99)               (61)
    Loss on sale of properties . . . . .  . . . . . . . . . . . . . . . . . . . . . . . .                 -                530
    Write off of deferred gain. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 -                 14
    Changes in operating assets and liabilities . . . . . . . . . . . . . . . . . . . . .            (1,176)            (1,864)
                                                                                           -----------------  -----------------
          Net cash provided by (used in) operating activities . . . . . . . . . . . . . .               228               (754)
                                                                                           -----------------  -----------------

Cash flows from investing activities:
  Acquisition of property and equipment . . . . . . . . . . . . . . . . . . . . . . . . .              (484)               (81)
  Purchase of minority partner interest . . . . . . . . . . . . . . . . . . . . . . . . .                 -             (3,070)
  Proceeds from sale of property and equipment. . . . . . . . . . . . . . . . . . . . . .                 -             25,010
  Management and lease acquisition costs. . . . . . . . . . . . . . . . . . . . . . . . .              (189)            (1,044)
  Advances to affiliates and other managed communities.  . . . .  . . . . . . . . . . . .               (43)              (650)
  Investment in affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               (14)              (110)
  Distributions to minority partners. . . . . . . . . . . . . . . . . . . . . . . . . . .              (299)                 -
                                                                                           -----------------  -----------------
          Net cash provided by (used in) investing activities . . . . . . . . . . . . . .            (1,029)            20,055
                                                                                           -----------------  -----------------

Cash flows from financing activities:
  Proceeds from sale of stock under employee stock purchase plan. . . . . . . . . . . . .                46                  7
  Decrease in Restricted deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 -                668
  Repayment of short-term borrowings. . . . . . . . . . . . . . . . . . . . . . . . . . .              (960)                 -
  Debt issue and other financing costs. . . . . . . . . . . . . . . . . . . . . . . . . .              (232)              (946)
  Proceeds from long-term borrowings. . . . . . . . . . . . . . . . . . . . . . . . . . .                 -             30,609
  Repayment of long-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . .               (59)           (50,789)
                                                                                           -----------------  -----------------
          Net cash used in financing activities . . . . . . . . . . . . . . . . . . . . .            (1,205)           (20,451)
                                                                                           -----------------  -----------------

          Net decrease in cash and cash equivalents.  . . . .  . . . . . . . . . . . . . .           (2,006)            (1,150)

Cash and cash equivalents at the beginning of the period. . . . . . . . . . . . . . . . .             6,960              9,811
                                                                                           -----------------  -----------------

Cash and cash equivalents at the end of the period. . . . . . . . . . . . . . . . . . . .  $          4,954   $          8,661
                                                                                           =================  =================

Supplemental disclosure of cash flow information - cash paid during the period
    for interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $          3,691   $          4,780

Noncash investing and financing activities:
  Unrealized holding gains in investment securities . . . . . . . . . . . . . . . . . . .  $            144   $            129
  Accrued and in-kind preferred stock dividends . . . . . . . . . . . . . . . . . . . . .  $          1,870   $          1,997
</TABLE>


       See accompanying Notes to Condensed Consolidated Financial Statements
                     and Management's Discussion and Analysis
                    of Financial Condition and Results of Operations

                                        4

<PAGE>
                              EMERITUS CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)

CRITICAL  ACCOUNTING  POLICIES  AND  ESTIMATES

The preparation of condensed consolidated financial statements requires Emeritus
to  make  estimates  and  judgments  that affect the reported amounts of assets,
liabilities,  revenues and expenses, and related disclosure of contingent assets
and  liabilities.  On  an  ongoing  basis,  Emeritus  evaluates  its  estimates,
including  those  related  to  resident  programs  and  incentives,  bad  debts,
investments,  intangible  assets,  income  taxes,  financing  operations,
restructuring,  long-term  service  contracts,  contingencies,  self-insured
retention,  insurance  deductibles,  health insurance, and litigation.  Emeritus
bases  its  estimates  on historical experience and on various other assumptions
that are believed to be reasonable under the circumstances, the results of which
form  the  basis  for  making  judgments about the carrying values of assets and
liabilities  that  are  not readily apparent from other sources.  Actual results
may  differ  from  these  estimates  under  different assumptions or conditions.

Emeritus  believes  the  following  critical  accounting  policies  are  most
significant  to  the  judgments  and  estimates  used  in the preparation of its
condensed  consolidated  financial  statements.  Revisions in such estimates are
charged  to  income  in  the  period  in  which  the facts that give rise to the
revision  become  known.

     *  Emeritus utilizes a captive insurance structure to essentially self-fund
        its  primary  layer  of  insurance. This policy is claims-made based and
        covers  losses  and liabilities associated with general and professional
        liability.  The  primary  layer has per occurrence and aggregate limits.
        Within  that primary layer is a self-insured retention, which also has a
        per  occurrence  and  aggregate  limit.  The  Company also has an excess
        policy  which  applies to claims in excess of the primary layer on a per
        claim  basis.  Losses  within  the  primary  layer,  which  includes the
        self-insured  retention,  are  accrued based upon actuarial estimates of
        the  aggregate  liability  for  claims  incurred.

     *  For  health  insurance,  Emeritus self-insures up to a certain level for
        each  occurrence  above which a catastrophic insurance policy covers any
        additional  costs.  Health  insurance  expense  is  accrued  based  upon
        historical experience of the aggregate liability for claims incurred. If
        these  estimates  are  insufficient, additional charges may be required.

     *  For  workers' compensation insurance for insured states (excluding Texas
        and  compulsory  State  Funds),  the  Company  is  on  an incurred loss,
        retrospective  insurance  policy,  retroactively  adjusted,  upward  or
        downward, based upon total incurred loss experience. The premium charged
        by the insurance underwriter is based upon a standard rate determined by
        the  underwriter  to  cover,  amongst other things, estimated losses and
        other  fixed  costs.  The difference between the premium charged and the
        actuarial based estimate of costs, which is expensed on a monthly basis,
        is carried as an asset on the balance sheet. After the end of the policy
        year,  the  insurance  company  conducts  an audit and adjusts the total
        premium  based  upon the actual payroll and actual incurred loss for the
        policy year. Any premium adjustment for the difference between estimated
        and actual payroll and estimated and actual losses will first be applied
        to  the accrued asset and then as an adjustment to workers' compensation
        expense at the time such adjustment is determined. There is a reasonable
        expectation  that  the  incurred  loss  adjustment  will  be  downward,
        resulting  in  a premium refund. The incurred loss adjustment is limited
        to  50%  of  the standard premium with the initial adjustment six months
        after  policy  expiration on December 31, 2003, and annually thereafter.
        For  work-related  injuries  in  Texas, the Company is a non-subscriber,
        meaning  that  work-related  losses  are covered under a defined benefit
        program  outside  of  the Texas Workers' Compensation system. Losses are
        paid  as  incurred  and estimated losses are accrued on a monthly basis.

     *  Emeritus maintains allowances for doubtful accounts for estimated losses
        resulting from the inability of its residents to make required payments.
        If  the  financial  condition  of  Emeritus's
                                        5
<PAGE>
                              EMERITUS CORPORATION
         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
                                   (unaudited)

        residents were to  deteriorate, resulting  in  an  impairment  of  their
        ability to  make  payments,  additional  charges  may  be  required.

     *  Emeritus records a valuation allowance to reduce its deferred tax assets
        to the amount that is more likely than not to be realized, which at this
        time  shows a net asset valuation of zero. While Emeritus has considered
        future  taxable  income  and  ongoing  prudent and feasible tax planning
        strategies  in  assessing  the  need for the valuation allowance, in the
        event  Emeritus  were  to determine that it would be able to realize its
        deferred  tax assets in the future in excess of its net recorded amount,
        an  adjustment  to  the  deferred tax asset would increase income in the
        period  such  determination  was  made.

RECENT  ACCOUNTING  PRONOUNCEMENTS

In  June  2001,  FASB  issued  SFAS  No.  143,  Accounting  for Asset Retirement
Obligations.  SFAS  No.  143 requires the Company to record the fair value of an
asset  retirement  obligation  as a liability in the period in which it incurs a
legal  obligation  associated  with the retirement of tangible long-lived assets
that  result  from the acquisition, construction, development, and/or normal use
of  the  assets.  The  Company  also  records  a  corresponding  asset  that  is
depreciated over the life of the asset. Subsequent to the initial measurement of
the  asset  retirement obligation, the obligation will be adjusted at the end of
each  period  to reflect the passage of time and changes in the estimated future
cash  flows  underlying  the  obligation.  The  Company  adopted SFAS No. 143 on
January  1,  2003.  Adoption  did  not have an impact on the Company's financial
condition  and  results  of  operations.

In  April  2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No.
4,  44  and  64,  Amendment of FASB Statement No. 13, and Technical Corrections.
SFAS  No.  145  amends  existing  guidance  on reporting gains and losses on the
extinguishment  of  debt  to  prohibit the classification of the gain or loss as
extraordinary,  as  the use of such extinguishments have become part of the risk
management  strategy  of many companies. SFAS No. 145 also amends SFAS No. 13 to
require  sale-leaseback  accounting  for  certain  lease modifications that have
economic  effects  similar to sale-leaseback transactions. The provisions of the
Statement  related  to  the  rescission of Statement No. 4 are applied in fiscal
years  beginning  after May 15, 2002. Earlier application of these provisions is
encouraged.  The  provisions  of  the Statement related to Statement No. 13 were
effective  for transactions occurring after May 15, 2002, with early application
encouraged.  The  Company  adopted  SFAS  No. 145 in the fourth quarter of 2002.
Adoption did not have a material impact on the Company's financial condition and
results  of  operations  in  the  quarter  ended  March  31,  2003.

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with
Exit  or  Disposal  Activities.  SFAS No. 146 addresses financial accounting and
reporting  for  costs  associated with exit or disposal activities and nullifies
Emerging  Issues Task Force (EITF) Issue 94-3, Liability Recognition for Certain
Employee  Termination  Benefits  and  Other  Costs  to  Exit  an  Activity.  The
provisions  of this Statement are effective for exit or disposal activities that
are  initiated  after  December  31,  2002,  with  early application encouraged.
Management  cannot  determine  the  impact  of  SFAS  No.  146  on the Company's
financial  statements  as  it  will  be  applied  prospectively.

In  November 2002, the FASB issued Interpretation No. 45, Guarantor's Accounting
and  Disclosure  Requirements  for  Guarantees, Including Indirect Guarantees of
Indebtedness  to  Others, an interpretation of FASB Statements No. 5, 57 and 107
and  a  rescission of FASB Interpretation No. 34. This Interpretation elaborates
on the disclosures to be made by a guarantor in its interim and annual financial
statements  about  its  obligations under guarantees issued.  The Interpretation
also  clarifies  that  a  guarantor  is required to recognize, at inception of a
guarantee,  a  liability  for  the fair value of the obligation undertaken.  The
initial  recognition  and  measurement  provisions  of  the  Interpretation  are
applicable  to  guarantees  issued  or  modified  after  December 31, 2002.  The
disclosure  requirements  are  effective  for financial statements of interim or
annual  periods ending after December 15, 2002.  Adoption did not have an impact
on  the  Company's  financial  condition  and  results  of  operations.

                                        6
<PAGE>
                              EMERITUS CORPORATION
         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
                                   (unaudited)

In  December  2002,  the  FASB  issued  SFAS No. 148, Accounting for Stock-Based
Compensation  -  Transition  and  Disclosure, an amendment of FASB Statement No.
123.  This  Statement  amends FASB Statement No. 123, Accounting for Stock-Based
Compensation,  to  provide  alternative  methods  of  transition for a voluntary
change  to  the  fair  value  method  of  accounting  for  stock-based  employee
compensation.  In addition, this Statement amends the disclosure requirements of
Statement  No.  123  to require prominent disclosures in both annual and interim
financial  statements.  Certain of the disclosure modifications are required for
fiscal  years  ending  after December 15, 2002, and are included in the notes to
these  condensed  consolidated  financial  statements.

In  January  2003,  the  FASB  issued  Interpretation  No.  46, Consolidation of
Variable  Interest  Entities,  an  interpretation  of  ARB  No.  51.  This
Interpretation  addresses  the consolidation by business enterprises of variable
interest  entities as defined in the Interpretation.  The Interpretation applies
immediately  to  variable  interests in variable interest entities created after
January  31,  2003,  and  to  variable  interests  in variable interest entities
obtained  after  January 31, 2003.  For public enterprises, such as the Company,
with  a  variable interest in a variable interest entity created before February
1,  2003,  the Interpretation is applied to the enterprise no later than the end
of  the first annual reporting period beginning after June 15, 2003.  Management
is  currently  evaluating  the  impact  of  this Interpretation on the Company's
financial  statements.

BASIS  OF  PRESENTATION

The  unaudited interim financial information furnished herein, in the opinion of
the  Company's management, reflects all adjustments, consisting of only normally
recurring  adjustments,  which  are  necessary  to  state  fairly  the condensed
consolidated  financial  position,  results  of  operations,  and  cash flows of
Emeritus as of March 31, 2003, and for the three months ended March 31, 2003 and
2002.  The  results  of  operations for the period ended March 31, 2003, are not
necessarily  indicative of the operating results for the full year.  The Company
presumes that those reading this interim financial information have read or have
access  to  its  2002 audited consolidated financial statements and Management's
Discussion  and  Analysis  of Financial Condition and Results of Operations that
are  contained  in  the  2002  Form  10-K  filed March 28, 2003.  Therefore, the
Company  has omitted footnotes and other disclosures herein, which are disclosed
in  the  Form  10-K.

EMERITRUST  TRANSACTIONS

The  Company  holds  interest  in  46  communities referred to as the Emeritrust
communities,  including  25 Emeritrust I communities, 16 Emeritrust II Operating
communities,  and  five  Emeritrust II Development communities, under management
agreements  described  in  the Company's Annual Report on Form 10-K for the year
ended December 31, 2002.  In May 2002, the Company entered into an agreement for
a  third  party  to  operate one of these communities.  The new operator had the
rights  to  all economic benefits, the responsibility for all detriments, and an
option  to purchase this community from the owner.  As of April 1, 2003, the new
operator  exercised  its  option  to  purchase  the community, thus reducing the
numbers above from 46 to 45 for all Emeritrust communities and from 25 to 24 for
the  Emeritrust  I  communities,  respectively.  The  Company does not recognize
management  fees  on  the  Emeritrust  communities  as  revenue in its condensed
consolidated  financial  statements  to  the  extent that it is funding the cash
operating  losses  that  include  them,  although  the  amounts  of  the funding
obligation  each  year  include  management  fees  earned  by Emeritus under the
management  agreements.  Correspondingly,  the  Company  recognizes  the funding
obligation  under  the  agreement,  less  the  applicable management fees, as an
expense  in  its  condensed consolidated financial statements under the category
"Other,  net".  Conversely, if the applicable management fees exceed the funding
obligation,  the  Company  recognizes  the  management  fees  less  the  funding
obligation  as  management  fee  revenue in its condensed consolidated financial
statements.

For  the three months ended March 31, 2003 and 2002, total gross management fees
earned  for  the  Emeritrust  I  communities  were  approximately  $848,000  and
$698,000,  respectively,  of  which  $837,000  and  $698,000, respectively, were
recognized as revenue. For the three months ended March 31, 2003 and 2002, total
gross  management fees earned for the Emeritrust II Development communities were
$185,000,  and  $168,000,  respectively,  of  which  $182,000  and  $155,000,
respectively,  were  recognized  as  revenue  after


                                        7
<PAGE>
                              EMERITUS CORPORATION
         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
                                (unaudited)

reflecting  funding obligations of zero and $35,000, respectively. For the three
months  ended March 31, 2003 and 2002, management fees earned and recognized for
the  Emeritrust  II  Operating  communities,  for  which  there  is  no  funding
obligation,  were $493,000 and $486,000, respectively. Thus, the management fees
recognized  for  all  of  the  Emeritrust communities increased $173,000 for the
first  quarter  of  2003  compared  to  the  comparable  period  in  2002.

The  management  agreements  and  related  options to purchase these communities
expire  June  30,  2003, (except that management agreements with respect to five
communities  continue until December 31, 2003).  Because the Company is not in a
position to exercise the options to acquire the communities prior to expiration,
it  is  currently  in  discussions  with the owners of the communities and their
lenders  to  extend  the  management  agreements and related options.  While the
Company  believes  that these arrangements will be extended, it cannot guarantee
that  these discussions will be successful or, if the arrangements are extended,
what  the  terms  will  be.  If  the  Company is unsuccessful, it could lose the
management  fee revenue from these communities and future rights with respect to
them.

EIGHT  BUILDING  ACQUISITION

On  May  1,  2003,  the  Company  entered  into  a  lease agreement with certain
affiliates  of  Healthcare Realty Trust ("HRT"), a real estate investment trust,
for  eight  assisted  living  communities  (the  "Properties")  in  four  states
containing  an  aggregate  of  489  units.

The  lease  is  for  an  initial 10-year period with three 5-year extensions and
includes an opportunity for the Company to acquire the Properties anytime during
the  second  year for $42.2 million and a purchase option in the third year at a
3%  premium  over  the  original  purchase option price.  In addition, the lease
gives  the  Company the right of first refusal to purchase any of the properties
if  the  owner  decides  to  sell.  The  lease  is a net lease, with base rental
approximating  $3.45  million  annually with a lease escalator at the end of the
first  and  second  lease  years  based  on  a percentage of increased operating
revenues,  with  an  aggregate annual cap of $275,000, and lease escalators each
year  thereafter based on increases in the consumer price index.  HRT has agreed
to  fund  up  to  $500,000  for  capital  expenditure requirements.  The capital
expenditures funded by HRT will increase the basis and purchase option and carry
a  10%  lease  rate.

HRT has also agreed to extend a $600,000 loan to the Company for working capital
purposes  and  for  capital and other improvements to the facilities.  This loan
will  have  a  10-year term with no extensions, bearing interest at 10% annually
with  monthly interest-only payments.  In addition, if the Company exercises its
purchase  option  at any time on any facility, the pro rata principal portion of
the  loan  will  become  due  at  the  time  the  option  is  exercised.

The Properties in this acquisition are purpose-built assisted living communities
in  which  the  Company plans to offer both assisted and memory loss services to
select  communities.

ACCRUED  DIVIDENDS  ON  PREFERRED  STOCK

Since  the  third quarter of 2000, the Company has accrued its obligation to pay
cash  dividends  to both the Series A and Series B preferred shareholders, which
amounted  to  approximately  $15.0  million  at  March  31,  2003, including all
penalties for non-payment.  Since dividends on the Series A shares were not paid
for  six  consecutive  quarters,  the  Series  A  dividends were calculated on a
compounded  basis,  retroactively,  and  the  cumulative effect of approximately
$294,000  was  reflected in the first quarter of 2002.    In addition, since the
Company  had  not  paid  these dividends for more than six consecutive quarters,
under  the  Designation  of  Rights and Preferences of the Series A and Series B
stock  in  the  Company's  Articles  of  Incorporation,  the  Series  A  and  B
shareholders,  as the case may be, may designate one director in addition to the
other  directors  that  they  are  entitled to designate under the shareholders'
agreement.  Under  the  Series  A shareholders' agreement, however, the Series A
shareholders'  right to designate this additional director under the Articles is
limited to circumstances in which they would not otherwise be entitled to name a
director.  Currently,  the  Series  A  shareholders  do  not  have  the right to
designate  an  additional  director.  As  of  January  1,  2002,  the  Series  B
shareholders  became  entitled  to  designate  an  additional director under the
Articles,  but  thus  far  have  chosen  not  to  do  so.

                                        8
<PAGE>
                              EMERITUS CORPORATION
         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
                                   (unaudited)

Series  B  dividends are to be paid in cash and in additional shares of Series B
preferred  shares.  For the paid-in-kind dividends for the first two quarters of
2000,  609  shares  of  Series B preferred shares were issued.  On July 1, 2002,
2,533  additional  shares  were  issued  as  paid-in-kind dividends to cover the
period from July 1, 2000, through June 30, 2002.  Effective October 1, 2002, 331
additional shares were issued as paid-in-kind dividends to cover the period from
July  1, 2002, through September 30, 2002.  On April 1, 2003, 334 shares and 338
shares were issued as paid-in-kind dividends to cover the fourth quarter of 2002
and  the  first  quarter  of  2003,  respectively.

LONG-TERM  DEBT

The  current  portion  of  long-term  debt  at  March  31,  2003,  has decreased
approximately  $200,000  since  December  31,  2002,  primarily due to a paydown
related  to  a  Seller  note  for  one  community.  In January 2003, the Company
reached  an  agreement  with  GMAC  Commercial  Mortgage Corporation ("GMAC") to
extend  a  $6.8  million  note  originally  set to mature February 1, 2003.  The
original  $6.8 million note has been bifurcated into a $6.2 million Note A and a
$560,000  Note  B.  The  new  notes  of  $6.8  million mature March 1, 2006, and
provide  for  monthly principal payments of approximately $22,000 in addition to
interest  at  LIBOR  plus 4.5%, with a floor of 7%, and LIBOR plus 7.75%, with a
floor  of  9.75%,  respectively.

In  connection  with  the  GMAC  extension,  the  original  Seller  note, with a
principal  balance  of  $921,000  at December 31, 2002, was extended to March 1,
2006.  The  principal balance was reduced by a $200,000 payment in February 2003
and  the  note  now  bears  interest  at  12% per annum and provides for monthly
payments,  including  principal  and  interest,  of  $12,500.

Long-term  debt  is  further  discussed  in  the Notes to Condensed Consolidated
Financial  Statements  under  the  category  "Liquidity".

STOCK-BASED  COMPENSATION

The Company applies APB Opinion No. 25, Accounting for Stock Issued to Employees
and related interpretations in measuring compensation costs for its stock option
plans.  The  Company  discloses  pro forma net loss and net loss per share as if
compensation  cost  had  been  determined consistent with Statement of Financial
Accounting  Standards  (SFAS)  No. 123, Accounting for Stock-Based Compensation.

Had  compensation  cost  for  the  Company's  stock  option plan been determined
pursuant  to  SFAS  123, the Company's pro forma net loss and pro forma net loss
per  share,  would  have  been  as  follows:

<TABLE>
<CAPTION>
                                                                Three Months ended March 31,
                                                           -------------------------------------
                                                                  2003               2002
                                                           ------------------  ------------------
                                                           (In thousands, except per share data)
<S>                                                        <C>                 <C>
Net loss to common shareholders:
As reported . . . . . . . . . . . . . . . . . . . . . . .  $          (2,263)  $          (3,299)
Add:  Stock-based employee compensation expense
  included in reported net loss . . . . . . . . . . . . .                  -                   -
Deduct:  Stock-based employee compensation
  determined under fair value based method for all awards               (286)               (199)
                                                           ------------------  ------------------
Pro forma . . . . . . . . . . . . . . . . . . . . . . . .  $          (2,549)  $          (3,498)
                                                           ==================  ==================
Net loss per common share -- basic and diluted:
As reported . . . . . . . . . . . . . . . . . . . . . . .  $           (0.22)  $           (0.32)
                                                           ==================  ==================

Pro forma . . . . . . . . . . . . . . . . . . . . . . . .  $           (0.25)  $           (0.34)
                                                           ==================  ==================
</TABLE>
The  fair  value  of  each  option grant has been estimated on the date of grant
using the Black-Scholes option pricing model with the following assumptions used
for grants in the first quarter of 2003 and 2002:

                                        9
<PAGE>

                              EMERITUS CORPORATION
         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
                                  (unaudited)

dividend  yield  of  0.0%  for all periods; expected volatility of 90.4% for the
first  quarter  of 2003, and 92.8% for the first quarter of 2002, and; risk-free
interest  rates  of  2.5% for the first quarter of 2003, and 4.75% for the first
quarter  of  2002;  and  an  expected  option  term  of  4  years.

LOSS  PER  SHARE

Basic  net  loss  per  share  is  computed  based  on  weighted  average  shares
outstanding  and excludes any potential dilution.  Diluted net loss per share is
computed  on the basis of the weighted average number of shares outstanding plus
dilutive  potential  common shares using the treasury stock method.  The capital
structure  of  Emeritus  includes  convertible  debentures,  redeemable  and
non-redeemable  convertible  preferred  stock,  common stock warrants, and stock
options.  The  assumed  conversion  and  exercise  of these securities have been
excluded  from  the calculation of diluted net loss per share since their effect
is  anti-dilutive.  The loss per common share was calculated on a dilutive basis
without  consideration  of  10,494,991  and 9,507,196 potential common shares at
March 31, 2003 and 2002, respectively, related to outstanding options, warrants,
convertible  debentures,  and  convertible  preferred  stock.

UNREALIZED  HOLDING  GAINS  ON  INVESTMENT  SECURITIES

The  change  in  unrealized  holding  gains  on  investment  securities  for the
three-month  period  ended March 31, 2003, represents the change in value of the
Company's  investment  in  ARV  Assisted  Living,  Inc.  ("ARV").

On  April  23, 2003, ARV announced that, at a special meeting held on that date,
its  shareholders voted to approve the Agreement and Plan of Merger, dated as of
January  3, 2003, between ARV and Prometheus Assisted Living LLC ("Prometheus").

ARV  further announced that the merger transaction closed and trading of the ARV
stock  on the American Stock Exchange ceased on April 23, 2003.  Under the terms
of  the merger, shares of ARV's stock held by shareholders other than Prometheus
and its affiliates were converted into the right to receive merger consideration
of  $3.90  per share, without interest.  On April 25, 2003, the Company received
approximately  $2.9  million  in  exchange  for its 755,884 shares of ARV common
stock  in  which  it  had  a  cost  basis  of  approximately  $1.5 million, thus
recognizing  a  gain  of  approximately  $1.4  million.

OTHER  COMPREHENSIVE  LOSS

Other comprehensive loss includes the following transactions for the three-month
period  ended  March  31,  2003  and  2002,  respectively:

<TABLE>
<CAPTION>

                                        Three Months ended March 31,
                                    ------------------------------------
                                          2003               2002
                                    -----------------  -----------------
                                               (In thousands)
<S>                                 <C>                <C>
Net loss to common shareholders. .  $         (2,263)  $         (3,299)
Other comprehensive income:
     Unrealized holding gains
          on investment securities               144                129
                                    -----------------  -----------------
Comprehensive loss . . . . . . . .  $         (2,119)  $         (3,170)
                                    =================  =================
</TABLE>

LIQUIDITY

The  Company  has  incurred significant operating losses since its inception and
has a working capital deficit of $28.5 million, although $3.9 million represents
deferred  revenue  and  $15.0  million  of  preferred  dividends  is due only if
declared  by the Company's board of directors. At times in the past, the Company
has  been  dependent upon third party financing or disposition of assets to fund
operations.  If  such

                                       10
<PAGE>
                              EMERITUS CORPORATION
         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
                                   (unaudited)

transactions  are  necessary  in the future, Emeritus cannot guarantee that they
will  be  available on a timely basis, on terms attractive to the Company, or at
all.

Throughout  2002  and  continuing  in  the  first  quarter  of 2003, the Company
refinanced  substantially  all of its debt obligations, extending the maturities
of  such  financings  to  dates in 2005 or thereafter, at which time the Company
will  need  to  refinance  or  otherwise  repay  the  obligations.  Many  of the
Company's  debt  instruments  and  leases  contain  "cross-default"  provisions
pursuant  to  which a default under one obligation can cause a default under one
or  more  other  obligations  to  the same lender or lessor.  Such cross-default
provisions affect 16 owned assisted living properties and 64 properties operated
under  leases.  Accordingly, any event of default could cause a material adverse
effect  on  the  Company's  financial  condition  if  such  debt  or  leases are
cross-defaulted.  At March 31, 2003, the Company was in compliance with all such
covenants.

Management  believes that the Company will be able to sustain positive operating
cash  flow  at least through March 31, 2004, and will have adequate cash for all
necessary investing and financing activities including required debt service and
capital  expenditures.


                                       11
<PAGE>


ITEM  2.         MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
OVERVIEW

Emeritus  is  a Washington corporation organized by Daniel R. Baty and two other
founders  in  1993.  In  November 1995, we completed our initial public offering
and  began  our  expansion  strategy.

Through  1998,  we  focused  on  rapidly  expanding  our  operations in order to
assemble  a  portfolio  of  assisted  living communities with a critical mass of
capacity.  We  pursued an aggressive acquisition and development strategy during
that  time,  acquiring 35 and developing 10 communities in 1996, acquiring 7 and
developing 20 communities in 1997, and developing 5 communities in 1998.  During
1999  and  continuing  through  2001,  we  substantially  reduced  our  pace  of
acquisition  and  development activities to concentrate our efforts on improving
the  performance  of  our  existing  facilities.  During  2002 and 2003, we have
resumed  pursuing,  on  a  selective basis, management contracts and acquisition
opportunities,  which  we  believe  will  be  beneficial  to  the  Company.

In our consolidated portfolio, we had an increase in average monthly revenue per
occupied  unit to $2,756 for the first quarter of 2003 from $2,518 for the first
quarter  of 2002, primarily brought about by our rate enhancement program.  This
represents  an  average revenue increase of $238 per month per occupied unit, or
9.5%.  The  average  occupancy  rate decreased to 77.1% for the first quarter of
2003  from  82.0%  for  the  first  quarter  of 2002.  However, the year-to-year
comparison  of  these  results  is skewed by the impact of the 24 building lease
acquisition  in  the  fourth quarter of 2002.  The table below shows the results
exclusive  of  this  acquisition:

<TABLE>
<CAPTION>
                                           Three months ended March 31,
                          -------------------------------------------------------------
                                             2003                             2002
                          ---------------------------------------------  --------------
                                 A             B              C                 D              E
                          -------------  --------------- --------------  --------------  --------------
                                          24 Building     (A  w/o  B)                        (C-D)
                           Consolidated      Lease                        Consolidated      Increase
                            Portfolio      Acquisition                     Portfolio       (Decrease)
                          -------------  --------------- --------------  --------------  --------------
<S>                       <C>             <C>             <C>             <C>             <C>
 Average monthly revenue
   per occupied unit . .  $       2,756   $       2,978   $       2,701   $       2,518   $          183
                          ==============  ==============  ==============  ==============  ==============

 Average occupancy rate.           77.1%           65.0%           80.9%           82.0%          (1.1%)
                          ==============  ==============  ==============  ==============  ==============
</TABLE>

In  our  total operated portfolio, which includes managed communities, we had an
increase  in  average  monthly revenue per occupied unit to $2,689 for the first
quarter  of  2003  from  $2,500 for the first quarter of 2002, primarily brought
about  by  our  rate  enhancement  program.  This  represents an average revenue
increase  of  $189  per month per occupied unit, or 7.6%.  The average occupancy
rate  decreased  to 78.6% for the first quarter of 2003 from 80.8% for the first
quarter  of  2002.  However,  the  year-to-year  comparison  of these results is
skewed  by the impact of the 24 building lease acquisition in the fourth quarter
of  2002.  The  table  below  shows  the  results exclusive of this acquisition:

<TABLE>
<CAPTION>
                                           Three months ended March 31,
                          -------------------------------------------------------------
                                             2003                             2002
                          ---------------------------------------------  --------------
                                 A             B              C                 D              E
                          -------------  --------------- --------------  --------------  --------------
                              Total       24 Building     (A  w/o  B)         Total          (C-D)
                             Operated        Lease                           Operated       Increase
                             Portfolio     Acquisition                       Portfolio     (Decrease)
                          -------------  --------------- --------------  --------------  --------------
<S>                       <C>             <C>             <C>             <C>             <C>
  Average monthly revenue
   per occupied unit . .  $       2,689   $       2,978   $       2,662   $       2,499   $          163
                          ==============  ==============  ==============  ==============  ==============

 Average occupancy rate.           78.6%           65.0%           80.2%           80.8%          (0.6%)
                          ==============  ==============  ==============  ==============  ==============
</TABLE>

                                       12
<PAGE>
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS - CONTINUED

We intend to continue a selective growth strategy through acquiring and managing
new  communities  with  operating  characteristics  consistent  with our current
emphasis  on stabilizing occupancy and enhancing our operating model and service
offerings.  This  change  in  emphasis  is  epitomized by the lease of the eight
communities  as  discussed  in  "Eight  Building  Acquisition"  in  the Notes to
Condensed  Consolidated  Financial Statements and in Management's Discussion and
Analysis  of  Financial  Condition  and  Results  of  Operations.

The  following  table  sets  forth  a  summary  of  our  property  interests:


<TABLE>
<CAPTION>


                                             As of March 31,       As of December  31,     As of March 31,
                                                  2003                    2002                 2002
                                         ----------------------  --------------------  ----------------------
                                         Buildings     Units     Buildings     Units     Buildings    Units
                                         ----------  ----------  ----------  ----------  ---------  ---------
<S>                                      <C>         <C>         <C>         <C>         <C>        <C>
Owned (1) . . . . . . . . . . . . . . .         17       1,687          17       1,687          16      1,579
Leased (1). . . . . . . . . . . . . . .         67       5,279          67       5,279          44      3,716
Managed/Admin Services. . . . . . . . .         94       8,577          94       8,577          88      8,194
Joint Venture/Partnership . . . . . . .          2         219           2         219           3        333
                                         ----------  ----------  ----------  ----------  ---------  ---------
     Operated Portfolio . . . . . . . .        180      15,762         180      15,762         151     13,822

     Percentage increase (2)                    -           -         35.3%       28.7%       13.5%      12.9%
</TABLE>
--------
(1)  Included  in  our  consolidated  portfolio  of  communities.
(2)  The  percentage  increase  indicates the change from the prior year, or, in
the  case  of  March  31,  2003  and  2002,  from  the  end  of  the prior year.

We rely primarily on our residents' ability to pay our charges for services from
their  own  or  familial  resources  and  expect  that  we  will  do  so for the
foreseeable  future.  Although care in an assisted living community is typically
less  expensive  than  in  a skilled nursing facility, we believe that generally
only  seniors with income or assets meeting or exceeding the regional median can
afford  to  reside  in  our  communities.  Inflation or other circumstances that
adversely  affect  seniors'  ability  to  pay for assisted living services could
therefore  have  an  adverse  effect  on  our  business.  All  sources  of
resident-related revenue other than residents' private resources constitute less
than  10%  of  our  total  revenues.

We  have  incurred  net losses since our inception, and as of March 31, 2003, we
had  an  accumulated  deficit  of  approximately  $157.5  million.  These losses
resulted  from  a  number  of  factors,  including:

     *  occupancy  levels  at our communities that were lower for longer periods
        than  we  originally  anticipated;

     *  financing  costs  that we incurred as a result of multiple financing and
        refinancing  transactions;  and

     * administrative and corporate expenses that we increased to facilitate our
        growth  and  maintain  operations.

During  1998,  we  decided  to reduce acquisition and development activities and
dispose  of  select  communities  that had been operating at a loss.  We believe
that  slowing  our  acquisition and development activities has enabled us to use
our  resources  more  efficiently  and increase our focus on enhancing community
operations.  In  2002  and through the first quarter of 2003, along with a focus
on operations, we selectively acquired additional communities and new management
contracts.

                                       13
<PAGE>
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS - CONTINUED

EMERITRUST  TRANSACTIONS

We  hold  interests in 46 communities referred to as the Emeritrust communities,
including  25  Emeritrust  I communities, 16 Emeritrust II Operating communities
and  5  Emeritrust  II  Development  communities,  under  management  agreements
described  in  our  Annual  Report  on Form 10-K for the year ended December 31,
2002.  In  May  2002,  we entered into an agreement for a third party to operate
one  of  these  communities.  The  new  operator  had the rights to all economic
benefits,  the responsibility for all detriments, and an option to purchase this
community  from  the owner.  As of April 1, 2003, the new operator exercised its
option  to purchase the community, thus reducing the numbers above from 46 to 45
for  all  Emeritrust  communities  and  from  25  to  24  for  the  Emeritrust I
communities,  respectively.  We  do  not  recognize  management  fees  on  the
Emeritrust  communities  as  revenue  in  our  condensed  consolidated financial
statements  to  the  extent  that  we are funding the cash operating losses that
include  them,  although the amounts of the funding obligation each year include
management  fees earned by us under the management agreements.  Correspondingly,
we  recognize  the  funding  obligation under the agreement, less the applicable
management  fees,  as  an  expense  in  our  condensed  consolidated  financial
statements  under  the  category  "Other,  net".  Conversely,  if the applicable
management  fees exceed the funding obligation, we recognize the management fees
less  the  funding  obligation  as  management  fee  revenue  in  our  condensed
consolidated  financial  statements.

For  the three months ended March 31, 2003 and 2002, total gross management fees
earned  for  the  Emeritrust  I  communities  were  approximately  $848,000  and
$698,000,  respectively,  of  which  $837,000  and  $698,000, respectively, were
recognized  as  revenue.  For  the  three  months ended March 31, 2003 and 2002,
total gross management fees earned for the Emeritrust II Development communities
were  $185,000,  and  $168,000,  respectively,  of  which $182,000 and $155,000,
respectively, were recognized as revenue after reflecting funding obligations of
zero  and  $35,000, respectively.  For the three months ended March 31, 2003 and
2002,  management  fees  earned  and  recognized for the Emeritrust II Operating
communities,  for  which  there  is  no  funding  obligation,  were $493,000 and
$486,000,  respectively.  Thus,  the  management  fees recognized for all of the
Emeritrust communities increased $173,000 for the first quarter of 2003 compared
to  the  comparable  period  in  2002.

The  management  agreements  and  related  options to purchase these communities
expire  June  30,  2003, (except that management agreements with respect to five
communities continue until December 31, 2003).  Because we are not in a position
to  exercise  the options to acquire the communities prior to expiration, we are
currently in discussions with the owners of the communities and their lenders to
extend  the  management  agreements  and related options.  While we believe that
these  arrangements will be extended, we cannot guarantee that these discussions
will be successful or, if the arrangements are extended, what the terms will be.
If  we  are  unsuccessful,  we  could lose the management fee revenue from these
communities  and  future  rights  with  respect  to  them.

OTHER  TRANSACTIONS

In  January  2003,  we  reached  an  agreement  with  GMAC  Commercial  Mortgage
Corporation  ("GMAC")  to  extend  a  $6.8 million note originally set to mature
February  1,  2003.  The  original  $6.8 million note has been bifurcated into a
$6.2 million Note A and a $560,000 Note B.  The new notes of $6.8 million mature
March  1,  2006,  and  provide  for  monthly principal payments of approximately
$22,000  in  addition  to  interest  at LIBOR plus 4.5%, with a floor of 7%, and
LIBOR  plus  7.75%,  with  a  floor  of  9.75%,  respectively.

In  connection  with  the  GMAC  extension,  the  original  Seller  note, with a
principal  balance  of  $921,000  at December 31, 2002, was extended to March 1,
2006.  The  principal balance was reduced by a $200,000 payment in February 2003
and  the  note  now  bears  interest  at  12% per annum and provides for monthly
payments,  including  principal  and  interest,  of  $12,500.

                                       14
<PAGE>
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS - CONTINUED

EIGHT  BUILDING  ACQUISITION

On  May  1,  2003,  we entered into a lease agreement with certain affiliates of
Healthcare  Realty  Trust  ("HRT"),  a  real  estate investment trust, for eight
assisted  living  communities  (the  "Properties")  in four states containing an
aggregate  of  489  units.

The  lease  is  for  an  initial 10-year period with three 5-year extensions and
includes  an  opportunity  for  us  to acquire the Properties anytime during the
second  year  for  $42.2 million and a purchase option in the third year at a 3%
premium  over  the original purchase option price.  In addition, the lease gives
us  the  right  of  first refusal to purchase any of the properties if the owner
decides to sell.  The lease is a net lease, with base rental approximating $3.45
million annually with a lease escalator at the end of the first and second lease
years  based  on a percentage of increased operating revenues, with an aggregate
annual  cap  of  $275,000,  and  lease  escalators each year thereafter based on
increases  in  the  consumer price index.  HRT has agreed to fund up to $500,000
for  capital  expenditure  requirements.  The capital expenditures funded by HRT
will  increase  the  basis  and  purchase  option  and  carry  a 10% lease rate.

HRT has also agreed to extend a $600,000 loan to us for working capital purposes
and for capital and other improvements to the facilities.  This loan will have a
10-year  term  with no extensions, bearing interest at 10% annually with monthly
interest-only  payments.  In addition, if we exercise our purchase option at any
time on any facility, the pro rata principal portion of the loan will become due
at  the  time  the  option  is  exercised.

The Properties in this acquisition are purpose-built assisted living communities
in  which  we  plan  to  offer  both assisted and memory loss services to select
communities.

INVESTMENT  SECURITIES

On  April  23,  2003,  ARV  Assisted  Living,  Inc. ("ARV") announced that, at a
special  meeting  held  on  that  date,  its  shareholders  voted to approve the
Agreement  and  Plan  of  Merger,  dated  as of January 3, 2003, between ARV and
Prometheus  Assisted  Living  LLC  ("Prometheus").

ARV  further announced that the merger transaction closed and trading of the ARV
stock  on the American Stock Exchange ceased on April 23, 2003.  Under the terms
of  the merger, shares of ARV's stock held by shareholders other than Prometheus
and its affiliates were converted into the right to receive merger consideration
of  $3.90  per  share,  without  interest.  On  April  25,  2003,  we  received
approximately  $2.9  million  in  exchange  for our 755,884 shares of ARV common
stock  in  which  we  had  a  cost  basis  of  approximately  $1.5 million, thus
recognizing  a  gain  of  approximately  $1.4  million.

RESULTS  OF  OPERATIONS

Critical  Accounting  Policies  and  Estimates.

Management's  discussion  and analysis of our financial condition and results of
operations are based upon our condensed consolidated financial statements, which
have  been  prepared in accordance with accounting principles generally accepted
in the United States.  The preparation of these financial statements requires us
to  make  estimates  and  judgments  that affect the reported amounts of assets,
liabilities,  revenues and expenses, and related disclosure of contingent assets
and  liabilities.  On  an  ongoing  basis,  we evaluate our estimates, including
those  related  to  resident  programs  and  incentives, bad debts, investments,
intangible  assets, income taxes, financing operations, restructuring, long-term
service contracts, contingencies, self-insured retention, insurance deductibles,
health  insurance,  and  litigation.  We  base  our  estimates  on  historical
experience  and  on  various  other assumptions that we believe to be reasonable
under  the  circumstances,  the  results  of  which  form  the  basis for making
judgments  about  the  carrying  values  of  assets and liabilities that are not
readily  apparent  from  other  sources.  Actual  results  may differ from these
estimates  under  different  assumptions  or  conditions.

                                       15
<PAGE>
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS - CONTINUED

We  believe  the  following critical accounting policies are most significant to
the  judgments  and  estimates  used  in  the  preparation  of  our  condensed
consolidated  financial  statements.  Revisions in such estimates are charged to
income  in  the  period in which the facts that give rise to the revision become
known.

     *  We  utilize  a  captive insurance structure to essentially self-fund our
        primary  layer of insurance. This policy is claims-made based and covers
        losses  and  liabilities  associated  with  general  and  professional
        liability.  The  primary  layer has per occurrence and aggregate limits.
        Within  that primary layer is a self-insured retention, which also has a
        per  occurrence and aggregate limit. We also have an excess policy which
        applies  to  claims in excess of the primary layer on a per claim basis.
        Losses  within  the  primary  layer,  which  includes  the  self-insured
        retention,  are  accrued based upon actuarial estimates of the aggregate
        liability  for  claims  incurred.

     *  For  health  insurance,  we  self-insure  up to a certain level for each
        occurrence  above  which  a  catastrophic  insurance  policy  covers any
        additional  costs.  Health  insurance  expense  is  accrued  based  upon
        historical experience of the aggregate liability for claims incurred. If
        these  estimates  are  insufficient, additional charges may be required.

     *  For  workers' compensation insurance for insured states (excluding Texas
        and  compulsory  State Funds), we are on an incurred loss, retrospective
        insurance policy, retroactively adjusted, upward or downward, based upon
        total  incurred  loss  experience.  The premium charged by the insurance
        underwriter  is based upon a standard rate determined by the underwriter
        to  cover, amongst other things, estimated losses and other fixed costs.
        The  difference  between  the  premium  charged  and the actuarial based
        estimate  of  costs, which is expensed on a monthly basis, is carried as
        an  asset  on  the  balance sheet. After the end of the policy year, the
        insurance  company conducts an audit and adjusts the total premium based
        upon  the  actual  payroll and actual incurred loss for the policy year.
        Any  premium  adjustment for the difference between estimated and actual
        payroll  and  estimated  and  actual losses will first be applied to the
        accrued asset and then as an adjustment to workers' compensation expense
        at  the  time  such  adjustment  is  determined.  There  is a reasonable
        expectation  that  the  incurred  loss  adjustment  will  be  downward,
        resulting  in  a premium refund. The incurred loss adjustment is limited
        to  50%  of  the standard premium with the initial adjustment six months
        after  policy  expiration on December 31, 2003, and annually thereafter.
        For  work-related  injuries  in  Texas, the Company is a non-subscriber,
        meaning  that  work-related  losses  are covered under a defined benefit
        program  outside  of  the Texas Workers' Compensation system. Losses are
        paid  as  incurred  and estimated losses are accrued on a monthly basis.

     *  We  maintain  allowances  for  doubtful  accounts  for  estimated losses
        resulting from the inability of our residents to make required payments.
        If  the  financial  condition  of  our  residents  were  to deteriorate,
        resulting in an impairment of their ability to make payments, additional
        allowances  may  be  required.

     *  We record a valuation allowance to reduce our deferred tax assets to the
        amount  that  is more likely than not to be realized, which at this time
        shows  a  net  asset  valuation of zero. While we have considered future
        taxable  income and ongoing prudent and feasible tax planning strategies
        in assessing the need for a valuation allowance, in the event we were to
        determine  that  we  would be able to realize our deferred tax assets in
        the  future  in  excess of our net recorded amount, an adjustment to the
        deferred  tax  asset  would  increase  income in the period we made such
        determination.

                                       16
<PAGE>
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS - CONTINUED

COMMON-SIZE  INCOME  STATEMENTS  AND  PERIOD-TO-PERIOD  PERCENTAGE  CHANGE

The  following  table  sets forth, for the periods indicated, certain items from
our  Condensed  Consolidated  Statements  of Operations as a percentage of total
revenues  and the percentage change of the dollar amounts from period to period.

<TABLE>
<CAPTION>


                                                                 Period-to-Period
                                                                     Percentage
                                                                      Increase
                                                                     (Decrease)
                                        Percentage  of  Revenues       Three
                                     ----------------------------      Months
                                           Three Months ended          ended
                                                March 31,            March  31,
                                     ----------------------------  -------------
                                         2003           2002         2002-2003
                                     -------------  -------------  -------------
<S>                                  <C>            <C>            <C>

Revenues. . . . . . . . . . . . . .         100.0%         100.0%          30.5%
Expenses:
     Community operations . . . . .          60.7           56.9           39.3
     General and administrative . .          11.5           13.6            9.8
     Depreciation and amortization.           3.9            5.1           (0.3)
     Facility lease expense . . . .          18.2           18.6           27.9
                                     -------------  -------------  -------------
         Total operating expenses .          94.3           94.2           30.6
                                     -------------  -------------  -------------
Income from operations. . . . . . .           5.7            5.8           28.6
Other income (expense)
     Interest income. . . . . . . .           0.3            0.3           43.1
     Interest expense . . . . . . .          (6.9)          (8.1)          11.9
     Other, net . . . . . . . . . .           0.1           (1.6)          N/A
                                     -------------  -------------  -------------
         Net other expense. . . . .          (6.5)          (9.4)          (9.3)
                                     -------------  -------------  -------------

         Net loss . . . . . . . . .         (0.8%)         (3.6%)        (69.8%)
                                     =============  =============  =============
</TABLE>

Comparison of the three months ended March 31, 2003 and 2002
------------------------------------------------------------

Total  Operating  Revenues:  Total operating revenues for the three months ended
March  31,  2003, increased by $11.1 million to $47.2 million from $36.1 million
for  the  comparable  period  in  2002,  or  30.5%.

Community  revenue  increased by approximately $11.0 million in the three months
ended  March  31, 2003, compared to the three months ended March 31, 2002.  This
increase  is  primarily due to additional revenue related to a 24 building lease
acquisition  in  the fourth quarter of 2002.  These communities, which represent
revenue  of  approximately  $9.5  million,  were  included  in  our consolidated
portfolio  in the first quarter of 2003, but were not included in the comparable
quarter  of  2002.  The  remaining  increase in revenue is attributed to the net
effect  of an increase in average monthly revenue per unit and a decrease in the
occupancy  rate.  Average  monthly  revenue per unit (excluding the 24 community
acquisition  impact which was favorable by $55) was $2,701 for the first quarter
of  2003  compared  to $2,518 for the comparable quarter of 2002, an increase of
approximately 7.3%.  The occupancy rate for the first Quarter of 2003 (excluding
the  24  community  acquisition  impact  which was unfavorable by 3.8 percentage
points)  decreased  1.1  percentage  points  from  the  prior  year  quarter.

Community  Operations:  Community  operating expenses for the three months ended
March 31, 2003, increased by $8.0 million to $28.6 million from $20.6 million in
the first quarter of 2003, or 39.3%. The change was primarily comprised of a net
increase  in  operating expenses of approximately $7.6 million related to the 24
building lease acquisition in the fourth quarter of 2002. The remaining increase
in  operating  expenses  was  primarily  due  to  increases  in personnel costs,
property  taxes  and  utilities.

                                       17
<PAGE>

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS - CONTINUED


Community  operating  expenses  as  a  percentage  of  total  operating  revenue
increased  to 60.7% in the first quarter of 2003 from 56.9% in the first quarter
of  2002.

General  and  Administrative:  General and administrative (G&A) expenses for the
three  months ended March 31, 2003, increased $481,000 to $5.4 million from $4.9
million  for  the  comparable period in 2002, or 9.8%.  As a percentage of total
operating  revenues,  G&A expenses decreased to 11.5% for the three months ended
March  31,  2003,  compared  to 13.6% for the three months ended March 31, 2002.
G&A expenses increased primarily due to increases in the number of employees and
normal  increases  in  employee  salaries.  Recent  growth  in total communities
managed  through  additional  contracts  has  led  to some added operational and
administrative  employees.  Since  more  than half of the communities we operate
are  managed  rather  than  owned  or  leased,  G&A  expense  as a percentage of
operating  revenues  for  all communities, including managed communities, may be
more meaningful for industry-wide comparisons.  G&A as a percentage of operating
revenues  for  all  communities decreased to 5.5% from 5.9% for the three months
ended  March  31,  2003  and  2002,  respectively.

Depreciation  and  Amortization:  Depreciation  and  amortization  for the three
months  ended  March 31, 2003, was $1.8 million compared to $1.9 million for the
comparable  period  in  2002.  In 2003, depreciation and amortization represents
3.9%  of total operating revenues, compared to 5.1% for the comparable period in
2002.  This  decrease  as  a percentage of revenue is primarily due to increased
revenue.

Facility Lease Expense:  Facility lease expense for the three months ended March
31, 2003, was $8.6 million compared to $6.7 million for the comparable period of
2002,  representing  an  increase  of  $1.9 million, or 27.9%.  This increase is
primarily  due  to  the  24  building lease acquisition in the fourth quarter of
2002.  We  leased  67  communities  as  of March 31, 2003, compared to 44 leased
communities  as  of  March  31,  2002.  The  additional  facility  lease expense
approximates  $1.5  million  for  the first quarter of 2003.  The balance of the
increase  was  attributable  to  variable rent escalation provisions in existing
leases.  Facility  lease  expense  as a percentage of revenues was 18.2% for the
three  months  ended  March 31, 2003, and 18.6% for the three months ended March
31,  2002.

Interest Income:  Interest income for the three months ended March 31, 2003, was
$156,000  versus  $109,000  for the comparable period of 2002.  This increase is
primarily attributable to a higher return on certain restricted deposits related
to  a  sale-leaseback  transaction  in  the  fourth  quarter  of  2002.

Interest  Expense:  Interest  expense for the three months ended March 31, 2003,
was  $3.3  million  compared  to $2.9 million for the comparable period of 2002.
This  increase of $348,000, or 11.9%, is primarily attributable to two refinance
transactions  that occurred in 2002.  The additional interest expense related to
the  two  transactions  for  the  three  months  ended  March  31,  2003,  was
approximately  $235,000.  The  remaining  difference  is attributable to van and
auto  lease  interest  expense  primarily  related  to  the  24  building  lease
acquisition in October of 2002 and additional loan fee amortization related to a
refinancing  transaction, which occurred in January of 2003.  As a percentage of
total  operating  revenues, interest expense decreased to 6.9% from 8.1% for the
three  months  ended  March  31,  2003  and  2002,  respectively.

Other, net:  Other, net (expense) for the three months ended March 31, 2003, was
income  of  $48,000 compared to expense of $567,000 for the comparable period in
2002.  The net change of $615,000 is primarily comprised of the following items:
During  the  first quarter of 2003, we amortized deferred gains related to three
communities  of  approximately  $87,000.  During  the  first quarter of 2002, we
repurchased  a  related  party's  economic  interest  in  a  172-unit  community
resulting  in  an  expense of $158,000 and the sale-leaseback of two communities
and  re-lease of two additional communities resulting in an expense of $372,000,
for  a  combined  impact  of  $530,000.

Preferred  dividends:  For  the  three months ended March 31, 2003 and 2002, the
preferred  dividends  were  approximately  $1.9  million  and  $2.0  million,
respectively.  Since  dividends  on  the  Series  A shares were not paid for six
consecutive  quarters,  the  Series  A dividends were calculated on a compounded
cumulative  basis,  retroactively,  and  the  cumulative effect of approximately
$294,000 was reflected in the first quarter of 2002. In addition, since we have
not  paid these dividends for six consecutive quarters, under the Designation of
Rights  and  Preferences  of  the  Series  A and Series B stock in the Company's
Articles  of

                                       18
<PAGE>

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS - CONTINUED

Incorporation,  the  Series  A  and  B  shareholders,  as  the  case may be, may
designate one director in addition to the other directors that they are entitled
to  designate  under  the  shareholders'  agreement.  Under  the  Series  A
shareholders'  agreement, however, the Series A shareholders' right to designate
this additional director under the Articles is limited to circumstances in which
they  would not otherwise be entitled to name a director.  Currently, the Series
A shareholders do not have the right to designate an additional director.  As of
January  1,  2002,  the  Series  B  shareholders became entitled to designate an
additional  director  under the Articles, but thus far have chosen not to do so.

Same  Community  Comparison

We  operated  59  communities on a comparable basis during both the three months
ended  March  31, 2003 and 2002.  The following table sets forth a comparison of
same  community  results  of  operations,  excluding  general and administrative
expenses,  for  the  three  months  ended  March  31,  2003  and  2002.

<TABLE>
<CAPTION>

                                           Three Months ended March 31,
                                                 (In thousands)
                                ---------------------------------------------------
                                                             Dollar     % Change
                                    2003          2002       Change    Fav/(Unfav)
                                ------------  ------------  --------  -------------
<S>                             <C>           <C>           <C>       <C>
Revenue. . . . . . . . . . . .  $    33,615   $    32,355   $ 1,260            3.9%
Community operating expenses .      (20,600)      (19,988)     (612)          (3.1)
                                ------------  ------------  --------  -------------
    Community operating income       13,015        12,367       648            5.2
Depreciation & amortization. .       (1,549)       (1,600)       51            3.2
Facility lease expense . . . .       (6,911)       (6,444)     (467)          (7.2)
                                ------------  ------------  --------  -------------
    Operating income . . . . .        4,555         4,323       232            5.4
Interest expense, net. . . . .       (2,496)       (2,314)     (182)          (7.9)
                                ------------  ------------  --------  -------------
    Net income . . . . . . . .  $     2,059   $     2,009   $    50            2.5%
                                ============  ============  ========  =============
</TABLE>

The  same communities represented $33.6 million or 71.3% of our total revenue of
$47.2  million for the first quarter of 2003.  Same community revenues increased
by  $1.3  million  or  3.9%  for  the  quarter  ended  March  31, 2003, from the
comparable  period  in 2002.  This increase is due to higher average revenue per
unit  offset  by  the combined effect of declines in occupancy.  Average revenue
per  occupied  unit  increased  by  $161  per  month or 6.3%.  Average occupancy
decreased  to 81.1% in the first quarter of 2003 from 81.9% in the first quarter
of  2002.

Community  operating  expenses  increased  approximately  $612,000  due  to  a
combination of factors:  the increase in operating expenses was primarily due to
increases  in  liability  and  health  insurance  and  added  personnel expenses
associated  with  our increasing emphasis on dementia care (Alzheimer's), normal
salary  increases, and other employee costs of $857,000, as well as decreases in
other  operating expense categories of $230,000.  Occupancy expenses, consisting
of  facility  lease expense, depreciation and amortization, and interest expense
combined,  increased  approximately  $598,000 as a result of the net effect of a
refinancing  transaction  related  to  11  buildings  in  December  of 2002, and
variable rent escalation related to other communities, partially offset by lower
interest  rates.  For  the quarter ended March 31, 2003, net income increased to
$2.1  million  from  $2.0  million  for  the  comparable  period  of  2002.

LIQUIDITY  AND  CAPITAL  RESOURCES

For  the  three  months  ended  March  31,  2003, net cash provided by operating
activities  was  $228,000  compared to $754,000 used in operating activities for
the  comparable  period  in the prior year.  The primary components of operating
cash  provided  were the depreciation and amortization of $1.8 million partially
offset  by  the  net  loss  of  $393,000 and the net increase in other operating
assets  and  liabilities  of  $1.2 million.  The primary components of operating
cash  used  for the three months ended March 31, 2002, were the net loss of $1.3
million,  an  increase  in prepaid insurance of $1.4 million in the three months
ended  March  31,  2002,  which  is  typical  in the first quarter of each year,
partially  offset  by  depreciation  and  amortization  of  $1.9  million.

                                       19
<PAGE>

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS - CONTINUED

Net  cash  used  by  investing activities amounted to $1.0 million for the three
months  ended  March  31,  2003,  and  was  comprised primarily of funds used to
purchase  approximately $484,000 of various property and equipment, and $299,000
of partner distributions.  Net cash provided by investing activities amounted to
$20.1  million  for  the  three  months  ended March 31, 2002, and was comprised
primarily  of  funds  of  approximately $25.0 million related to the sale of two
buildings  offset  by  the  purchase  of  minority interest in two buildings for
approximately  $3.1  million,  repayment  of  advances  by  third  parties  and
affiliates  of  $650,000 and additional lease acquisition costs of $1.0 million.

For the three months ended March 31, 2003, net cash used in financing activities
was  $1.2  million  primarily from short-term debt repayments of $960,000, which
include  debt  repayments  related  to  the January 2003 refinancing transaction
discussed  above  in  "Other  Transactions".  Also  related  to that refinancing
transaction, approximately $232,000 relates to debt issuance and other financing
costs.  For  the  three  months ended March 31, 2002, net cash used in financing
activities  was  $20.5  million  primarily  from  the  repayment  of  long-term
borrowings  related  to  the  sale,  minority  interest  purchase,  and  lease
transaction.

We  have  incurred  significant  operating losses since our inception and have a
working  capital  deficit  of  $28.5  million,  although $3.9 million represents
deferred  revenues  and $15.0 million of preferred cash dividends is only due if
declared  by  our  board  of  directors.  At  times  in  the  past, we have been
dependent  upon  third  party  financing  or  disposition  of  assets  to  fund
operations.  If  such  transactions  are  necessary  in  the  future,  we cannot
guarantee  that they will be available on a timely basis, on terms attractive to
us,  or  at  all.

Throughout  2002  and  continuing  in  the  first quarter of 2003, we refinanced
substantially  all  of  our  debt  obligations, extending the maturities of such
financings  to  dates  in  2005  or  thereafter,  at  which time we will need to
refinance  or otherwise repay the obligations.  Many of our debt instruments and
leases  contain "cross-default" provisions pursuant to which a default under one
obligation  can  cause a default under one or more other obligations to the same
lender or lessor.  Such cross-default provisions affect 16 owned assisted living
properties  and  64  operated  under  leases.  Accordingly, any event of default
could cause a material adverse effect on our financial condition if such debt or
leases  are  cross-defaulted.  At  March 31, 2003, we are in compliance with all
such  covenants.

Management believes that we will be able to sustain positive operating cash flow
at  least  through March 31, 2004, and will have adequate cash for all necessary
investing  and  financing activities including required debt service and capital
expenditures.

IMPACT  OF  INFLATION

To  date,  inflation  has  not  had a significant impact on Emeritus.  Inflation
could,  however,  affect  our  future  revenues  and operating income due to our
dependence  on  the  senior resident population, most of whom rely on relatively
fixed  incomes  to  pay  for our services.  The monthly charges for a resident's
unit  and  assisted  living  services  are  influenced  by  the  location of the
community and local competition.  Our ability to increase revenues in proportion
to  increased  operating expenses may be limited.  We typically do not rely to a
significant  extent  on  governmental  reimbursement  programs.  In  pricing our
services,  we  attempt  to  anticipate  inflation  levels,  but  there can be no
assurance  that  we  will  be  able  to respond to inflationary pressures in the
future.

FORWARD-LOOKING  STATEMENTS

"Safe  Harbor"  Statement  under the Private Securities Litigation Reform Act of
1995:  A  number  of the matters and subject areas discussed in this report that
are  not  historical  or current facts deal with potential future circumstances,
operations,  and  prospects. The discussion of such matters and subject areas is
qualified  by  the  inherent  risks  and  uncertainties  surrounding  future
expectations  generally,  and  also may materially differ from our actual future
experience  as  a  result  of  such  factors  as: the effects of competition and
economic  conditions  on  the  occupancy  levels in our communities; our ability
under current market conditions to maintain and increase our resident charges in
accordance  with rate enhancement programs without adversely affecting occupancy
levels;  increases  in  interest  rates  that  would  increase costs as a result

                                       20
<PAGE>

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                      AND RESULTS OF OPERATIONS - CONTINUED

of  variable  rate  debt;  our  ability to control community operation expenses,
including  insurance and utility costs, without adversely affecting the level of
occupancy  and  the level of resident charges; our ability to generate cash flow
sufficient to service our debt and other fixed payment requirements; our ability
to  find sources of financing and capital on satisfactory terms to meet our cash
requirements  to  the  extent  that  they  are not met by operations; and making
satisfactory  arrangements  for  the  continued  operation  of  the  Emeritrust
communities  beyond  June  30,  2003,  when  our management agreements for those
communities  expire.  We  have attempted to identify, in context, certain of the
factors that we currently believe may cause actual future experience and results
to differ from our current expectations regarding the relevant matter or subject
area.  These and other risks and uncertainties are detailed in our reports filed
with  the Securities and Exchange Commission (SEC), including our Annual Reports
on  Form  10-K  and  Quarterly  Reports  on  Form  10-Q.

               [The rest of this page is intentionally left blank]

                                       21
<PAGE>



ITEM  3.   QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET  RISK

Our  earnings  are  affected  by  changes  in  interest rates as a result of our
short-term  and  long-term  borrowings.  We  manage this risk by obtaining fixed
rate  borrowings when possible.  At March 31, 2003, our variable rate borrowings
totaled  approximately  $64.6 million.  If market interest rates were to average
2%  more,  our annual interest expense and net loss would increase approximately
$1.3  million.  This  amount  is  determined  by  considering  the  impact  of
hypothetical  interest  rates  on our outstanding variable rate borrowings as of
March  31, 2003, and does not consider changes in the actual level of borrowings
that  may  occur  subsequent  to  March  31,  2003.  This analysis also does not
consider  the  effects  of  the  reduced level of overall economic activity that
could  exist in such an environment, or our current funding requirements for the
Emeritrust  communities,  nor  does it consider actions that management might be
able to take with respect to our financial structure to mitigate the exposure to
such  a  change.

ITEM  4.  CONTROLS  AND  PROCEDURES

We  maintain  a  set of disclosure controls and procedures and internal controls
designed  to  ensure  that  information  required to be disclosed in our filings
under the Securities Exchange Act of 1934 is recorded, processed, summarized and
reported  within  the  time  periods  specified  in  the Securities and Exchange
Commission's  rules  and  forms.  Our principal executive and financial officers
have  evaluated  our  disclosure controls and procedures within 90 days prior to
the  filing  of this Quarterly Report on Form 10-Q and have determined that such
disclosure  controls  and  procedures  are  effective.

Subsequent  to  our  evaluation,  there  were no significant changes in internal
controls  or  other  factors  that could significantly affect internal controls,
including  any  corrective  actions  with regard to significant deficiencies and
material  weaknesses.

               [The rest of this page is intentionally left blank]

                                       22
<PAGE>
                           PART II. OTHER INFORMATION


ITEMS  1  THROUGH  4  ARE  NOT  APPLICABLE.

ITEM  5.  OTHER  INFORMATION

In  lieu of filing a report on Form 8-K related to a lease acquisition for eight
assisted  living  communities  owned  by  Healthcare Realty Trust, a real estate
investment  trust  ("HRT")  completed  on  May  1,  2003,  we are disclosing the
information  herein.  This  transaction  is  discussed  in  "Eight  Building
Acquisition" in the Notes to the Condensed Consolidated Financial Statements and
in  Management's  Discussion  and Analysis of Financial Condition and Results of
Operations.  The required financial statements for the acquired business are not
included  in this quarterly report at this time, but will be filed on a Form 8-K
within  sixty days after the date on which we would have been required to file a
Form  8-K  disclosing  this  transaction.

Item  6     Exhibits  And  Reports  On  Form  8-K

(a)  Exhibits
<TABLE>
<CAPTION>

                                                                                                       Footnote
  Number                                       Description                                              Number
---------  ------------------------------------------------------------------------------------------- --------

<S>                                                                                                        <C>
10.75  Loyalton of Bloomsburg, Pennsylvania; Loyalton of Creekview, Pennsylvania;
           Loyalton of Harrisburg, Pennsylvania;  Loyalton of Danville, Virginia;
           Loyalton of Harrisonburg, Virginia; Loyalton of Roanoke, Virginia;
           Loyalton of Greensboro, North Carolina; Loyalton of Ravenna, Ohio.
          The following agreements are representative of those executed in connection
          with these properties:
           10.75.1  Lease Agreement by HR Acquisition I Corporation ("Tenant"),
                      Capstone Capital of Pennsylvania, Inc., and HRT Holdings, Inc.
                      (collectively the "Lessor") and  Emeritus Corporation ("Lessee")
                      dated May 1, 2003.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      (1)
           10.75.2  Promissory Note by Emeritus Corporation ("Maker"),
                      for HR ACQUISITION I CORPORATION ("Payee") for principal
                      amount of $600,000.00 dated May 1, 2003.. . . . . . . . . . . . . . . . . . . . . .      (1)
           10.75.3  Bill of Sale, Blanket Conveyance and Assignment by BCC at Bloomsburg, Inc.
                      ("Tenant") and BCC Development and Management Co. ("Manager") to and
                      for the benefit of Capstone Capital of Pennsylvania, Inc. ("HCRT Assignee")
                      and Emeritus Corporation ("Emeritus Assignee") dated May 1, 2003. . . . . . . . . .      (1)
           10.75.4  Bill of Sale, Blanket Conveyance and Assignment by ALCO VI, LLC ("Tenant")
                      and Balance Care at Mechanicsburg, Inc. ("Manager") to and for
                      the benefit of Capstone Capital of Pennsylvania, Inc. ("HCRT Assignee")
                      and Emeritus Corporation ("Emeritus Assignee") dated May 1, 2003. . . . . . . . . .      (1)
           10.75.5  Bill of Sale, Blanket Conveyance and Assignment by Extended Care Operators
                      of Harrisburg, LLC ("Tenant") and BCC at Harrisburg, Inc. ("Manager") to
                      and for the benefit of Capstone Capital of Pennsylvania, Inc. ("HCRT Assignee")
                      and Emeritus Corporation ("Emeritus Assignee") dated May 1, 2003. . . . . . . . . .      (1)
           10.75.6  Bill of Sale, Blanket Conveyance and Assignment by ALCO XI, LLC ("Tenant")
                      and BCC at Danville, Inc. ("Manager") to and for the benefit of
                      HRT Holdings, Inc. ("HCRT Assignee") and Emeritus Corporation
                      ("Emeritus Assignee") dated May 1, 2003. . . . . . . . . . . . . . . . . . . . . .       (1)
           10.75.7  Bill of Sale, Blanket Conveyance and Assignment by ALCO IX, LLC ("Tenant")
                      and BCC at Harrisonburg, Inc. ("Manager") to and for the benefit of
                      HRT Holdings, Inc. ("HCRT Assignee") and Emeritus Corporation
                      ("Emeritus Assignee") dated May 1, 2003. . . . . . . . . . . . . . . . . . . . . .       (1)
           10.75.8  Bill of Sale, Blanket Conveyance and Assignment by ALCO X, LLC ("Tenant")
                      and BCC at Roanoke, Inc. ("Manager") to and for the benefit of
                      HRT Holdings, Inc. ("HCRT Assignee") and Emeritus Corporation
                      ("Emeritus Assignee") dated May 1, 2003. . . . . . . . . . . . . . . . . . . . . .       (1)
           10.75.9  Bill of Sale, Blanket Conveyance and Assignment by
                      Extended Care Operators of Greensboro, LLC ("Tenant")
                      and BCC at Greensboro, Inc. ("Manager") to and for the benefit of
                      HR Acquisition I Corporation ("HCRT Assignee")
                      and Emeritus Corporation ("Emeritus Assignee") dated May 1, 2003.. . . . . . . . .       (1)
           10.75.10 Bill of Sale, Blanket Conveyance and Assignment by
                      Extended Care Operators of Ravenna, LLC ("Tenant")
                      and BCC at Ravenna, Inc. ("Manager") to and for the benefit of
                      HR Acquisition I Corporation ("HCRT Assignee")
                      and Emeritus Corporation ("Emeritus Assignee") dated May 1, 2003.. . . . . . . . .       (1)

                                       23
<PAGE>

                                                                                                       Footnote
  Number                                       Description                                              Number
---------  ------------------------------------------------------------------------------------------- --------

           10.75.11 Operations and Transfer Agreement by and among BCC at Bloomsburg, Inc.
                      ("Tenant"), BCC Development and Management Co. ("Manager") and
                      Balanced Care Corporation ("Parent") and Emeritus Corporation ("New Operator")
                      and Capstone Capital of Pennsylvania, Inc. ("Owner")
                      dated April 30, 2003.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       (1)
           10.75.12 Operations and Transfer Agreement by and among ALCO VI, LLC ("Tenant"),
                      Balanced Care at Mechanicsburg, Inc. ("Manager") and Balanced Care Corporation
                      ("Parent") and Emeritus Corporation ("New Operator")
                      and Capstone Capital of Pennsylvania, Inc. ("Owner") dated April 30, 2003.. . . . .      (1)
           10.75.13 Operations and Transfer Agreement by and among Extended Care Operators
                      of Harrisburg, LLC ("Tenant"), BCC at Harrisburg, Inc. ("Manager")
                      and Balanced Care Corporation ("Parent") and Emeritus Corporation
                      ("New Operator") and HR Acquisition I Corporation ("Owner")
                      dated April 30, 2003. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      (1)
           10.75.14 Operations and Transfer Agreement by and among ALCO XI, LLC ("Tenant"),
                      BCC at Danville, Inc. ("Manager") and Balanced Care Corporation ("Parent")
                      and Emeritus Corporation ("New Operator") and HRT Holdings, Inc. ("Owner")
                      dated April 30, 2003. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      (1)
           10.75.15 Operations and Transfer Agreement by and among ALCO IX, LLC ("Tenant"),
                      BCC at Harrisonburg, Inc. ("Manager") and Balanced Care Corporation ("Parent")
                      and Emeritus Corporation ("New Operator") and HRT Holdings, Inc. ("Owner")
                      dated April 30, 2003.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     (1)
           10.75.16 Operations and Transfer Agreement by and among ALCO X, LLC ("Tenant"),
                      BCC at Roanoke, Inc. ("Manager") and Balanced Care Corporation ("Parent")
                      and Emeritus Corporation ("New Operator") and HRT Holdings, Inc. ("Owner")
                      dated April 30, 2003.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     (1)
           10.75.17 Operations and Transfer Agreement by and among Extended Care Operators
                      of Greensboro, LLC ("Tenant"), BCC at Greensboro, Inc. ("Manager") and
                      Balanced Care Corporation ("Parent")and Emeritus Corporation ("New Operator")
                      and HR Acquisition I Corporation ("Owner") dated April 30, 2003.. . . . . . . . . . . .  (1)
           10.75.18 Operations and Transfer Agreement by and among Extended Care Operators
                      of Ravenna, LLC ("Tenant"), BCC at Ravenna, Inc. ("Manager") and
                      Balanced Care Corporation ("Parent") and Emeritus Corporation ("New Operator")
                      and HR Acquisition I Corporation ("Owner") dated April 30, 2003.. . . . . . . . .  .     (1)
           10.75.19 Assignment and Assumption Agreement by and among BCC at Bloomsburg, Inc.
                      (the "Tenant"), BCC Development and Management Co. ("Manager")
                      and Emeritus Corporation (the "Assignee") dated April 30, 2003. . . . . . . . . . .      (1)
           10.75.20 Assignment and Assumption Agreement by and among ALCO VI, LLC
                      (the "Tenant"), Balanced Care at Mechanicsburg, Inc. ("Manager")
                      and Emeritus Corporation (the "Assignee") dated April 30, 2003. . . . . . . . . . .      (1)
           10.75.21 Assignment and Assumption Agreement by and among Extended Care Operators
                      of Harrisburg, LLC (the "Tenant"), BCC at Harrisburg, Inc. ("Manager")
                      and Emeritus Corporation (the "Assignee") dated April 30, 2003.. . . . . . . . . . .     (1)
           10.75.22 Assignment and Assumption Agreement by and among ALCO XI, LLC
                      (the "Tenant"), BCC at Danville, Inc. ("Manager")
                      and Emeritus Corporation (the "Assignee") dated April 30, 2003.. . . . . . . . . . .     (1)
           10.75.23 Assignment and Assumption Agreement by and among ALCO IX, LLC
                      (the "Tenant"), BCC at Harrisonburg, Inc. ("Manager")
                      and Emeritus Corporation (the "Assignee") dated April 30, 2003.. . . . . . . . . . .     (1)
           10.75.24 Assignment and Assumption Agreement by and among ALCO X, LLC
                      (the "Tenant"), BCC at Roanoke, Inc. ("Manager")
                      and Emeritus Corporation (the "Assignee") dated April 30, 2003.. . . . . . . . . . .     (1)
           10.75.25 Assignment and Assumption Agreement by and among Extended Care Operators
                      of Greensboro, LLC (the "Tenant"), BCC at Greensboro, Inc. ("Manager")
                      and Emeritus Corporation (the "Assignee") dated April 30, 2003.. . . . . . . . . . .     (1)
           10.75.26 Assignment and Assumption Agreement by and among Extended Care Operators
                      of Ravenna, LLC (the "Tenant"), BCC at Ravenna, Inc. ("Manager")
                      and Emeritus Corporation (the "Assignee") dated April 30, 2003.. . . . . . . . . . .     (1)
           10.75.27 Leasehold Mortgage with Security Agreement and Assignment of Rents
                      for location: Bloomsburg, Pennsylvania, by Emeritus Corporation ("Mortgagor"),
                      for the benefit of Capstone Capital of Pennsylvania, Inc.("Mortgagee"),
                      dated May 1, 2003. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     (1)
           10.75.28 Leasehold Mortgage with Security Agreement and Assignment of Rents
                      for location: Mechanicsburg, Pennsylvania, by Emeritus Corporation ("Mortgagor"),
                      for the benefit of Capstone Capital of Pennsylvania, Inc.("Mortgagee"),
                      dated May 1, 2003. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     (1)
           10.75.29 Leasehold Mortgage with Security Agreement and Assignment of Rents
                      for location: Harrisburg, Pennsylvania, by Emeritus Corporation ("Mortgagor"),
                      for the benefit of Capstone Capital of Pennsylvania, Inc.("Mortgagee"),
                      dated May 1, 2003. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     (1)
           10.75.30 Leasehold Deed of Trust with Security Agreement and Assignment of Rents
                      for location: Danville, Virginia, by Emeritus Corporation ("Grantor"),
                      for the benefit of HRT Holdings, Inc.("Beneficiary"), dated May 1, 2003. . . . . . .     (1)

                                       24
<PAGE>

                                                                                                       Footnote
  Number                                       Description                                              Number
---------  ------------------------------------------------------------------------------------------- --------

           10.75.31 Leasehold Deed of Trust with Security Agreement and Assignment of Rents
                      for location: Harrisonburg, Virginia, by Emeritus Corporation ("Grantor"),
                      for the benefit of HRT Holdings, Inc.("Beneficiary"), dated May 1, 2003. . . . . . .     (1)
           10.75.32 Leasehold Deed of Trust with Security Agreement and Assignment of Rents
                      for location: Roanoke, Virginia, by Emeritus Corporation ("Grantor"),
                      for the benefit of HRT Holdings, Inc.("Beneficiary"), dated May 1, 2003. . . . . . .     (1)
           10.75.33 Leasehold Deed of Trust with Security Agreement and Assignment of Rents
                      for location: Greensboro, North Carolina, by Emeritus Corporation ("Grantor"),
                      for the benefit of HR Acquisition I Corporation ("Beneficiary"), dated May 1, 2003..     (1)
           10.75.34 Leasehold Deed of Trust with Security Agreement and Assignment of Rents
                      for location: Ravenna, Ohio, by Emeritus Corporation ("Grantor"),
                      for the benefit of HR Acquisition I Corporation ("Beneficiary"), dated May 1, 2003..     (1)
 99.1      Certification of Periodic Reports
           99.1.1  Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
                      Section 906 of the Sarbanes-Oxley Act of 2002 for Daniel R. Baty dated
                      May 9, 2003. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  (1)(2)
           99.1.2  Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
                      Section 906 of the Sarbanes-Oxley Act of 2002 for Raymond R. Brandstrom
                      dated May 9, 2003. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  (1)(2)
 99.2      Press Releases
           99.2.1  Press Release dated April 30, 2003, announcing disposition of ARV
                      Assisted Living common stock.. . . . . . . . . . . . . . . . . . . . . . . . . . . .     (1)
           99.2.2  Press Release dated May 1, 2003, announcing the 8 building lease acquisition.. . . . .      (1)
           99.2.3  Press Release dated May  8, 2003, reports on first quarter 2003 results. . . . . . . .      (1)
</TABLE>
--------------------------
(1)     Filed  herewith
(2)     A  signed original of this written statement required by Section 906 has
been  provided  to  Emeritus  Corporation  and  will  be  retained  by  Emeritus
Corporation and furnished to the Securities and Exchange Commission or its staff
upon  request.

(b)  Reports  On  Form  8-K.

None.


               [The rest of this page is intentionally left blank]

                                       25
<PAGE>


                                    SIGNATURE

Pursuant  to  the  requirements  of  the  Securities  Exchange  Act of 1934, the
registrant  has  duly  caused  this  report  to  be  signed on its behalf by the
undersigned  thereunto  duly  authorized.

Dated:  May  9,  2003

                                                      EMERITUS  CORPORATION
                                                          (Registrant)


                                                   /s/  Raymond  R.  Brandstrom
                                                   ----------------------------
                                                   Raymond  R.  Brandstrom, Vice
                                                   President of Finance, Chief
                                                   Financial Officer, and
                                                   Secretary

                                       26
<PAGE>

                                 CERTIFICATIONS


I,  Daniel  R.  Baty,  Chief  Executive  Officer,  certify  that:

1.  I  have reviewed this quarterly report on Form 10-Q of Emeritus Corporation;

2.  Based  on  my  knowledge,  this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
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
quarterly  report;

3.  Based  on  my  knowledge,  the  financial  statements,  and  other financial
information  included  in  this quarterly report, fairly present in all material
respects  the  financial  condition, results of operations and cash flows of the
registrant  as  of,  and  for,  the  periods presented in this quarterly report;

4.  The  registrant's  other  certifying  officer  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  registrant  and  we  have:

     a) designed such disclosure controls and procedures to ensure that material
        information  relating  to  the  registrant,  including  its consolidated
        subsidiaries,  is  made  known  to  us  by others within those entities,
        particularly  during  the  period in which the quarterly 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
        quarterly  report  (the  "Evaluation  Date");  and

     c)  presented  in  this  quarterly  report  our  conclusions  about  the
        effectiveness  of  the  disclosure  controls and procedures based on our
        evaluation  as  of  the  Evaluation  Date;

5.  The registrant's other certifying officer and I have disclosed, based on our
most  recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

     a)  all  significant  deficiencies  in  the design or operation of internal
        controls  (a  pre-existing  term relating to internal controls regarding
        financial  reporting)  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  registrant's  other  certifying  officer  and  I have indicated in this
quarterly  report  whether  or  not  there  were significant changes in internal
controls  or  in other factors that could significantly affect internal controls
subsequent  to  the  date  of their evaluation, including any corrective actions
with  regard  to  significant  deficiencies  and  material  weaknesses.

                                            /s/    Daniel  R.  Baty
                                           ----------------------------
                                            Daniel  R.  Baty
                                            Chief  Executive  Officer
                                            May  9,  2003

                                       27
<PAGE>

I,  Raymond  R.  Brandstrom,  Chief  Financial  Officer,  certify  that:

1.  I  have reviewed this quarterly report on Form 10-Q of Emeritus Corporation;

2.  Based  on  my  knowledge,  this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
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
quarterly  report;

3.  Based  on  my  knowledge,  the  financial  statements,  and  other financial
information  included  in  this quarterly report, fairly present in all material
respects  the  financial  condition, results of operations and cash flows of the
registrant  as  of,  and  for,  the  periods presented in this quarterly report;

4.  The  registrant's  other  certifying  officer  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  registrant  and  we  have:

     a) designed such disclosure controls and procedures to ensure that material
        information  relating  to  the  registrant,  including  its consolidated
        subsidiaries,  is  made  known  to  us  by others within those entities,
        particularly  during  the  period in which the quarterly 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
        quarterly  report  (the  "Evaluation  Date");  and

     c)  presented  in  this  quarterly  report  our  conclusions  about  the
        effectiveness  of  the  disclosure  controls and procedures based on our
        evaluation  as  of  the  Evaluation  Date;

5.  The registrant's other certifying officer and I have disclosed, based on our
most  recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

     a)  all  significant  deficiencies  in  the design or operation of internal
        controls  (a  pre-existing  term relating to internal controls regarding
        financial  reporting)  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  registrant's  other  certifying  officer  and  I have indicated in this
quarterly  report  whether  or  not  there  were significant changes in internal
controls  or  in other factors that could significantly affect internal controls
subsequent  to  the  date  of their evaluation, including any corrective actions
with  regard  to  significant  deficiencies  and  material  weaknesses.

                                            /s/    Raymond  R.  Brandstrom
                                            --------------------------------
                                            Raymond  R.  Brandstrom
                                            Chief  Financial  Officer
                                            May  9,  2003

                                       28
<PAGE>