Delbert L. and Margaret J. Baker - Page 17

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          Similar charts were included detailing an allocation of expenses            
          to the ALU and SCU.  The report states that the SNF, ALU, and SCU           
          expense information listed above does not include an allocation             
          of amortization of debt issue cost, amortization of preopening              
          cost, or an allocation of interest expense.  Specific expenses              
          associated with the pool, spa, and exercise facilities at Village           
          West are not identified in the financial information in the                 
          report.                                                                     
               In allocating expenses to the SNF, the following explanation           
          was provided:                                                               
          Line Item                                 Description                       
          Food service                  Percent of total contract                     
          Payroll and benefit           Direct labor costs plus benefits              
          Departmental costs            All expenses in specific dept.,               
                                        except payroll and benefits                   
          Housekeeping and laundry      Percent of total contract                     
          Food service                  Benefits of employees directly                
                                        allocated to cost center                      
          Maintenance                   A specific employee dedicated to              
                                        the health care facility                      
          Landscape                     Based on previous time study                  
          Administration                Based on previous time study                  
          Insurance                     Policies directly related to                  
                                        facility plus 10 percent of other             
                                        policies                                      
          Linens                        Linens purchased directly for the             
                                        SNF                                           
          Depreciation and             Directly from the fixed asset                  
          amortization                  program                                       
          Contracts                     Alarm system, copiers, fire drill,            
                                        Medical Director, etc. (No                    
                                        ancillary contractors)                        
          Utilities                     10 percent of the total utilities             
                                        for AFVW                                      
          Interest expense              10 percent of total interest                  
                                        expense for AFVW                              






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