2014-10-08T09:14:02-05:00 2013-12-31 861065772 DELOITTE TAX LLP 201 E KENNEDY BLVD SUITE 1200 TAMPA FL 33602 990 2013-01-01 592317607 SANTAFE HEALTHCARE INC SANT 3523728400 POBOX 749 GAINESVILLE FL 326270749 RANDALL L STUART ASSISTANT TREASURER 3523378730 2014-09-30 1 STEVEN E ROVNER P00648526 8132738300 2013 2015-11-30 17:44:51Z MICHAEL P GALLAGHER POBOX 749 GAINESVILLE FL 326270749 43483557 0 X WWW.SANTAFEHEALTHCAREFL.ORG X 1982 FL TO IMPROVE THE HEALTH AND WELL-BEING OF PEOPLE IN THE COMMUNITIES WE SERVE. 11 10 6 0 0 0 5000000 21380000 4908655 6213352 581401 237204 1236710 2039 11726766 27832595 2706869 3648575 0 0 11950712 17605704 0 0 0 2046167 2383824 16703748 23638103 -4976982 4194492 51117390 68422933 46422626 31341017 4694764 37081916 X THE MISSION OF SANTAFE HEALTHCARE, INC. IS TO SERVE AS THE NOT-FOR-PROFIT SYSTEM PARENT FOR ITS FAMILY OF NOT-FOR-PROFIT, MISSION-DRIVEN AFFILIATE ORGANIZATIONS. SEE SCHEDULE O FOR CONTINUATION OF THE ORGANIZATION'S MISSION.(CONTINUED FROM PAGE 2, PART III) SANTAFE HEALTHCARE DELIVERS ITS MISSION BY PROVIDING FINANCIAL MANAGEMENT AND OVERSIGHT, AND STRATEGIC MANAGEMENT AND EXPERTISE TO ITS AFFILIATES, WHILE PROMOTING THE EFFECTIVE PROVISION OF HEALTHCARE, HOSPICE AND PALLIATIVE CARE, AND SENIOR HOUSING AND RELATED SERVICES THROUGH ITS AFFILATES. THIS MISSION IS GOVERNED THROUGH A LOCAL, COMMUNITY-BASED BOARD WHICH PROVIDES STRATEGIC DIRECTION AND VALUES-BASED OVERSIGHT AND SUPPORT. 0 0 6211961 3648575 6213352 SANTAFE HEALTHCARE PROVIDED GOVERNANCE AND OVERSIGHT TO THE FOLLOWING AFFILIATED CHARITABLE, TAX-EXEMPT AND NOT-FOR-PROFIT ORGANIZATIONS: NORTH CENTRAL FLORIDA HOSPICE, INC.; SANTAFE SENIOR LIVING, INC.; NORTH FLORIDA RETIREMENT VILLAGE, INC.; BVG ACQUISITION, INC.; BONITA SPRINGS RETIREMENT VILLAGE, INC.; EAST RIDGE RETIREMENT VILLAGE, INC.; SANTAFE SENIOR LIVING FOUNDATION, INC.; AVMED, INC.; AND SF HOLDING CORP., INC. TOTAL PROGRAM SERVICES EXPENSES FOR THESE AFFILIATED ORGANIZATIONS REPRESENTED APPROXIMATELY $929 MILLION IN 2013. 6211961 1 1 0 0 0 0 0 0 0 0 1 0 0 1 1 1 0 1 0 0 0 0 0 0 0 0 0 1 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 0 1 66 0 1 6 1 0 0 0 0 0 0 0 0 0 0 X 11 10 0 0 0 0 0 0 0 1 1 0 0 1 1 1 1 1 1 1 1 0 X RANDALL L STUART ASST TREASURER 3523378730 4300 NW 89TH BLVD GAINESVILLE FL 326065688 X SCOTTIE J BUTLER CHAIRMAN/DIRECTOR 4.00 0.00 X X 82232 0 0 JOE G DUNLAP VICE CHAIRMAN/TREASURER/DIRECTOR 1.00 3.00 X X 18949 72756 0 ALBERT E DOTSON PHD SECRETARY/DIRECTOR 1.00 0.00 X X 60124 0 0 BEN I DOERR JR DIRECTOR 1.00 0.00 X 59256 0 0 RICHARD M ANDERSON MD DIRECTOR 1.00 0.00 X 56207 0 0 GEORGE E FLETCHER DIRECTOR 1.00 0.00 X 59471 0 0 THOMAS A NATIELLO PHD DIRECTOR 1.00 0.00 X 54464 0 0 JACKSON N SASSER PHD DIRECTOR 1.00 0.00 X 59144 0 0 JAMES L STRINGFELLOW DIRECTOR 1.00 0.00 X 57402 0 0 GLENDA E HOOD DIRECTOR 1.00 0.00 X 59798 0 0 MICHAEL P GALLAGHER CHIEF EXECUTIVE OFFICER/PRESIDENT/DIRECTOR 4.90 55.10 X X 2238682 0 269719 STEVEN M ZIEGLER ASSISTANT SECRETARY 0.90 62.10 X 0 508883 130033 CATHERINE E AYERS ASSISTANT SECRETARY 14.90 45.10 X 0 648455 150751 RANDALL L STUART ASSISTANT TREASURER 3.00 62.00 X 775275 0 157949 TROY R HART PRESIDENT SENIOR LIVING 4.50 45.50 X 496831 0 82897 TIMOTHY J BOWEN PRESIDENT HAVEN HOSPICE 0.10 50.00 X 475624 0 87898 JOSEPH GIRARDI VICE PRESIDENT FINANCE SENIOR LIVING 0.10 39.90 X 204825 0 40152 4758284 1230094 919399 5 0 1 0 AVMED INC PO BOX 749 GAINESVILLE FL 326270749 MANAGEMENT 1337089 DELOITTE & TOUCHE LLP 201 EAST KENNEDY BOULEVARD TAMPA FL 336024940 AUDIT SERVICES 728625 C DAVID COFFEY PA 5346 SW 91ST TERRACE GAINESVILLE FL 32608 LEGAL 182311 CAPITAL RESEARCH & CONSULTING 15 SOUTH RAYMOND AVENUE STE 200 PASADENA CA 91105 CONSULTING 117804 4 21380000 21380000 MANAGEMENT FEES 561000 6213352 6213352 6213352 471324 471324 15416842 15650962 -234120 -234120 -234120 REBATE 900099 1108 1108 OTHER 900099 931 931 2039 27832595 6213352 0 239243 3648575 3648575 3294639 3294639 2497912 786360 1711552 11661676 101244 11560432 39114 28507 10607 112363 24584 87779 1337089 1337089 137581 8420 129161 80125 80125 100058 100058 491489 254332 237157 43152 1200 41952 42705 42705 104285 104285 8156 8156 17534 17534 COMMUNITY SPONSORSHIPS 21650 21650 23638103 6211961 17426142 0 2750224 22762717 100000 100000 66250 66250 902154 12075 891262 890079 7858641 1520514 15342130 15342130 24108883 27741243 51117390 68422933 1209618 3173158 45213008 28167859 46422626 31341017 X 4694764 37081916 4694764 37081916 51117390 68422933 X 4194492 -168680 6590 28354750 X X 0 1 X 1 0 X X X 0 0 0 NORTH CENTRAL FLORIDA HOSPICE 592490893 9 1 1 0 NORTH FLORIDA RETIREMENT VILLAGE 591912330 9 1 1 0 SANTAFE SENIOR LIVING FOUNDATION INC 264464727 7 0 1 0 BVG ACQUISITION INC 203701186 9 0 1 3648575 EAST RIDGE RETIREMENT VILLAGE INC 590903331 9 0 1 0 BONITA SPRINGS RETIREMENT VILLAGE INC 262386152 9 0 1 0 6 3648575 PART I, LINE 11: SANTAFE HEALTHCARE, INC. (SFHC) IS A TYPE II SUPPORTING ORGANIZATION THAT IDENTIFIES ITS SUPPORTED ORGANIZATIONS BY CLASS OR PURPOSE IN ITS ARTICLES OF INCORPORATION IN ACCORDANCE WITH TREASURY REGULATION SECTION 1.509(A)4(D)(2)(B). PART I, LINE 11: DURING 2013, SFHC PROVIDED $3,648,575 OF SUPPORT FOR THE BENEFIT OF BVG ACQUISITION, INC. (BVG). THE SUPPORT WAS CONTRIBUTED AS A GRANT FROM SFHC TO SANTAFE SENIOR LIVING, INC. (SFSL), THE PARENT ENTITY OF BVG. SFSL IS NOT A SUPPORTED ORGANIZATION OF SFHC AND THEREFORE IS NOT LISTED ON SCHEDULE A, PART I, LINE 11H. THUS, THE SUPPORT IS REPORTED AS PROVIDED TO BVG. RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED 738448 738448 163706 12075 151631 890079 DUE FROM AFFILIATES 20796546 LIQUIDITY SUPPORT AGREEMENT INVESTMENT 5050590 ACCRUED INTEREST RECEIVABLE 41546 DEFERRED COMPENSATION ASSETS 1852561 27741243 ACCRUED PENSION LIABILITY 24811703 OTHER LIABILITIES 278501 BENEFITS PAYABLE 2982122 DUE TO AFFILIATES 95533 28167859 X 6452595 0 6452595 21380000 21380000 27832595 19989528 0 19989528 3648575 3648575 23638103 PART X, LINE 2: EXPLANATION FOR UNCERTAIN TAX POSITIONS UNDER ASC 740: SFHC AND THE AFFILIATES HAVE NO UNCERTAIN TAX POSITIONS AS OF DECEMBER 31, 2013. SFHC AND AFFILIATES INCURRED NO INTEREST EXPENSE OR PENALTIES RELATED TO UNCERTAIN INCOME TAX PROVISIONS IN 2013 OR 2012. TAX YEARS 2010 THROUGH 2012 ARE SUBJECT TO EXAMINATION BY FEDERAL AND STATE TAXING AUTHORITIES. THERE ARE NO INCOME TAX EXAMINATIONS IN PROCESS AS OF THE DATE OF THIS REPORT. PART XI, LINE 4B - OTHER ADJUSTMENTS: CONTRIBUTION FROM AVMED, INC. RECOGNIZED FOR TAX PURPOSES 12,500,000. CONTRIBUTION FROM SANTAFE SENIOR LIVING, INC. RECOGNIZED FOR TAX PURPOSES 8,880,000. PART XII, LINE 4B - OTHER ADJUSTMENTS: DISTRIBUTION TO SANTAFE SENIOR LIVING, INC. 3,648,575. 1 SANTAFE SENIOR LIVING INC PO BOX 749 GAINESVILLE FL 326270749 203700526 501(C)(3) 3648575 TO ASSIST SANTAFE SENIOR LIVING, INC. FULFULL ITS CHARITABLE MISSION. 1 PART I, LINE 2: SANTAFE HEALTHCARE, INC. AND SANTAFE SENIOR LIVING, INC. SHARE COMMON MANAGEMENT. AS A RESULT, MANAGEMENT ENSURES THE USE OF GRANT FUNDS BY SANTAFE SENIOR LIVING IS CONSISTENT WITH THEIR INTENDED PURPOSE. X X 1 1 X X X X X 0 1 0 0 0 0 0 0 0 MICHAEL P GALLAGHER CHIEF EXECUTIVE OFFICER/PRESIDENT/DI 879090 0 870216 0 489376 0 244268 0 25451 0 2508401 0 204750 0 STEVEN M ZIEGLER ASSISTANT SECRETARY 0 315764 0 182501 0 10618 0 99376 0 30657 0 638916 0 29521 CATHERINE E AYERS ASSISTANT SECRETARY 0 311271 0 206569 0 130615 0 118061 0 32690 0 799206 0 61694 RANDALL L STUART ASSISTANT TREASURER 372556 0 236136 0 166583 0 134571 0 23378 0 933224 0 70359 0 TROY R HART PRESIDENT SENIOR LIVING 306900 0 138378 0 51553 0 63147 0 19750 0 579728 0 28377 0 TIMOTHY J BOWEN PRESIDENT HAVEN HOSPICE 296681 0 111383 0 67560 0 64646 0 23252 0 563522 0 28137 0 JOSEPH GIRARDI VICE PRESIDENT FINANCE SENIOR LIVING 172944 0 30085 0 1796 0 16587 0 23565 0 244977 0 0 0 PART I, LINE 1A CERTAIN DIRECTORS AND THEIR COMPANIONS ATTENDED COMPANY PAID INDUSTRY SEMINARS AND TRADE CONVENTIONS AT THE REQUEST OF SANTAFE HEALTHCARE, INC. ALL BUSINESS COSTS, INCLUDING TRAVEL COSTS, PAID DIRECTLY BY THE ORGANIZATION OR REIMBURSED TO THE LISTED PERSON, WERE ACCOUNTED FOR UNDER AN ACCOUNTABLE PLAN UTILIZED BY THE ORGANIZATION. NO PART OF ANY TRAVEL COST WAS DEEMED A BENEFIT FOR ANY PERSON LISTED IN FORM 990, PART VII. INCIDENTAL EXPENSES ARE NOT REIMBURSED BY THE ORGANIZATION. TAX GROSS-UP PAYMENTS OCCUR FOR GROUP VARIABLE LIFE INSURANCE PREMIUMS PAID ON BEHALF OF THE LISTED AND OTHER EMPLOYEES. EMPLOYER PAID PREMIUMS ARE DEEMED TO BE TAXABLE COMPENSATION AND ARE GROSSED-UP FOR THE TAX IMPACT PRIOR TO BEING ADDED AS IMPUTED INCOME TO AN EMPLOYEE'S YEAR-END FORM W-2. TAX GROSS-UP PAYMENTS ARE PROVIDED FOR VESTED DISTRIBUTIONS FROM THE DEFINED CONTRIBUTION AND (NOW FROZEN) DEFINED BENEFIT PENSION RESTORATION PLANS. PART I, LINE 3 MICHAEL P GALLAGHER IS THE PRESIDENT AND CHIEF EXECUTIVE OFFICER (CEO) OF SANTAFE HEALTHCARE, INC. (SANTAFE). MR. GALLAGHER IS COMPENSATED BY SANTAFE. SANTAFE UTILIZES THE FOLLOWING PROCESS TO ESTABLISH THE CEO'S COMPENSATION AND BENEFITS: ANNUALLY, THE BOARD OF DIRECTORS RETAINS AN INDEPENDENT THIRD PARTY COMPENSATION AND BENEFITS CONSULTING FIRM TO CONDUCT A MARKET COMPETITIVENESS REVIEW OF THE CEO'S TOTAL DIRECT COMPENSATION (BASE SALARY, ANNUAL INCENTIVES AND LONG TERM INCENTIVES) AND BENEFITS. THE COMPETITIVE ANALYSIS INCLUDES COMPARISON TO SIMILAR POSITIONS IN COMPANIES OF SIMILAR SIZE WITHIN THE SAME OR SIMILAR INDUSTRY. THE INDEPENDENT CONSULTING FIRM MAKES RECOMMENDATIONS, IF ANY, DIRECTLY TO THE BOARD OF DIRECTORS. THE BOARD OF DIRECTORS ESTABLISHES THE FINAL COMPENSATION AND BENEFIT PACKAGE FOR THE CEO TAKING INTO CONSIDERATION THE MARKET COMPETITIVENESS REVIEW AND FINAL RECOMMENDATION OF THE INDEPENDENT CONSULTING FIRM. THE INDEPENDENT CONSULTING FIRM PROVIDES AN OPINION LETTER REGARDING THE REASONABLENESS OF THE CEO'S FINAL COMPENSATION AND BENEFITS PACKAGE. THE ACTIONS OF THE BOARD ARE DOCUMENTED IN THE MINUTES OF THE BOARD MEETING. PART I, LINE 4B EXPLANATION: (RELATES TO PART I, LINE 4A): LISTED PERSONS RECEIVING A SEVERANCE PAYMENT OR CHANGE OF CONTROL PAYMENT IN THE YEAR: LISTED PERSONS ARE EMPLOYEES OF SANTAFE OR RELATED ORGANIZATIONS AND ARE COVERED UNDER A SEVERANCE POLICY FOR THEIR RESPECTIVE RELATED ORGANIZATION. THE SEVERANCE POLICY INCLUDES MONTHLY PAYMENTS UP TO A MAXIMUM OF 12 MONTHS UNDER QUALIFYING CIRCUMSTANCES. NO ONE LISTED RECEIVED SEVERANCE OR CHANGE OF CONTROL PAYMENTS DURING 2013. PART I, LINE 4B: LISTED PERSONS PARTICIPATING IN A SUPPLEMENTAL NONQUALIFIED RETIREMENT PLAN IN THE YEAR: SANTAFE HEALTHCARE, INC. (SANTAFE) MAINTAINS TWO ACTIVE NONQUALIFIED DEFERRED COMPENSATION RETIREMENT PLANS FOR A CERTAIN GROUP OF EXECUTIVES TO INCLUDE THOSE LISTED EMPLOYEES OF SANTAFE OR RELATED ORGANIZATIONS. ONE PLAN RESTORES RETIREMENT BENEFITS EQUIVALENT TO QUALIFIED 401(K) BENEFITS ON INCOME EARNED IN EXCESS OF INTERNAL REVENUE SERVICE CODE SECTION 401 (A) (17) RECOGNIZABLE PAY LIMITS (A DEFINED CONTRIBUTION RESTORATION PLAN). VESTING FOR THIS PLAN IS ACHIEVED AT AGE 55 AND 10 YEARS OF SERVICE OR AT AGE 65 AND 5 YEARS OF SERVICE. THE SECOND SUPPLEMENTAL DEFINED CONTRIBUTION PLAN PROVIDES ADDITIONAL RETIREMENT INCOME BASED ON A PERCENTAGE OF BASE SALARY AND VESTS AT THREE AND FIVE YEARS OF SERVICE. MR. GALLAGHER RECEIVED $378,945 FROM SUPPLEMENTAL NONQUALIFIED RETIREMENT PLANS IN 2013. MR. HART RECEIVED $37,734 FROM A SUPPLEMENTAL NONQUALIFIED RETIREMENT PLAN IN 2013. MR. STUART RECEIVED $149,343 FROM A SUPPLEMENTAL NONQUALIFIED RETIREMENT PLAN IN 2013. MR. BOWEN RECEIVED $52,095 FROM A SUPPLEMENTAL NONQUALIFIED RETIREMENT PLAN IN 2013. STEVEN M ZIEGLER AND CATHERINE E AYERS ARE EMPLOYEES OF AVMED, INC. (AVMED) A RELATED TAX-EXEMPT ORGANIZATION. THEY PARTICIPATE IN TWO NONQUALIFIED DEFERRED COMPENSATION RETIREMENT PLANS SPONSORED BY AVMED FOR A CERTAIN GROUP OF EXECUTIVES. ONE PLAN RESTORES RETIREMENT BENEFITS EQUIVALENT TO QUALIFIED 401(K) BENEFITS ON INCOME EARNED IN EXCESS OF INTERNAL REVENUE SERVICE CODE SECTION 401 (A) (17) RECOGNIZABLE PAY LIMITS (A DEFINED CONTRIBUTION RESTORATION PLAN). VESTING IS ACHIEVED AT AGE 55 AND 10 YEARS OF SERVICE OR AT AGE 65 AND 5 YEARS OF SERVICE. THE SECOND SUPPLEMENTAL DEFINED CONTRIBUTION PLAN PROVIDES ADDITIONAL RETIREMENT INCOME BASED ON A PERCENTAGE OF BASE SALARY AND VESTS AT THREE AND FIVE YEARS OF SERVICE. MS. AYERS RECEIVED $105,481 FROM SUPPLEMENTAL NONQUALIFED RETIREMENT INCOME PLANS IN 2013. PART II: CERTAIN SENIOR EXECUTIVES ARE ACCOUNTABLE FOR AND PERFORM SERVICES FOR SANTAFE HEALTHCARE, INC. AND EACH OF ITS AFFILIATES. SANTAFE HEALTHCARE AND AFFILIATES REPRESENT A DIVERSIFIED FAMILY OF NOT-FOR-PROFIT ORGANIZATIONS WITH $2 BILLION IN GROSS RECEIPTS AND APPROXIMATELY 2,000 EMPLOYEES. THESE SENIOR EXECUTIVES ARE PAID DIRECTLY BY EITHER SANTAFE HEALTHCARE, INC. OR AVMED, INC. AND THEIR COMPENSATION AND BENEFITS ARE APPORTIONED AND CHARGED TO THE RESPECTIVE AFFILIATE BASED ON THE ESTIMATED AMOUNT OF TIME SPENT ON EACH AFFILIATE'S ACTIVITIES. FOR 2013, THE FOLLOWING PERCENTAGES OF EACH EXECUTIVE'S COMPENSATION AND BENEFITS (FOR THOSE SENIOR EXECUTIVES PAID BY A RELATED ORGANIZATION) IS APPORTIONED AND CHARGED TO SANTAFE HEALTHCARE, INC. AS FOLLOWS: 25% - CATHERINE E AYERS, ASSISTANT SECRETARY 1% - STEVEN M ZIEGLER, ASSISTANT SECRETARY FOR 2013, THE FOLLOWING PERCENTAGES OF EACH EXECUTIVE'S COMPENSATION AND BENEFITS FOR THOSE SENIOR EXECUTIVES PAID BY SANTAFE HEALTHCARE, INC. IS APPORTIONED AND CHARGED TO CERTAIN AFFILIATES AS FOLLOWS: 92% - MICHAEL P GALLAGHER, PRESIDENT & CEO 95% - RANDALL L STUART, SENIOR VICE PRESIDENT & CFO FORM 990, PART VI, SECTION B, LINE 11 THE ORGANIZATION'S PROCESS FOR ENSURING THE ACCURATE PREPARATION, REVIEW AND APPROVAL OF THE 2013 FORM 990 BEGAN WITH PROFESSIONAL DEVELOPMENT OF STAFF (SEVERAL OF WHICH ARE CPAS) WHICH WERE INVOLVED IN THE PREPARATION OF THE 2013 FORM 990. IN ADDITION TO STAFF DEVELOPMENT, WHICH INCLUDED ATTENDING TAX SEMINARS AND CLASSES, MANAGEMENT ALSO CONSULTED WITH INDEPENDENT ACCOUNTING FIRMS AND TAX LEGAL COUNSEL REGARDING THE IRS FORM 990 CODE AND FILING REQUIREMENTS. THE ORGANIZATION ALSO PREVIOUSLY EDUCATED ITS MANAGEMENT TEAM, OFFICERS AND DIRECTORS, WITH THE ASSISTANCE OF DELOITTE TAX LLP, REGARDING THE FORM 990 AND THEIR INVOLVEMENT IN REVIEWING THE RETURN. FOLLOWING MANAGEMENT'S PREPARATION OF THE 2013 FORM 990, DELOITTE TAX LLP REVIEWED THE 2013 FORM 990. A COPY OF THE 2013 FORM 990 AND ATTACHMENTS WERE PROVIDED TO THE ORGANIZATION'S CURRENT BOARD OF DIRECTORS FOR THEIR REVIEW AND COMMENT. EXECUTIVE MANAGEMENT ADDRESSED ANY QUESTIONS RAISED BY THE BOARD MEMBERS PRIOR TO FILING THE 2013 FORM 990 AND ATTACHMENTS WITH THE IRS. FORM 990, PART VI, SECTION B, LINE 12C SANTAFE HEALTHCARE HAS A POLICY FOR MONITORING AND ENFORCING COMPLIANCE WITH ITS CONFLICT OF INTEREST POLICY. THE POLICY DETAILS THAT THE CORPORATE SECRETARY HAS RESPONSIBILITY FOR DELIVERY AND RECEIPT OF DIRECTOR AND OFFICER CONFLICT OF INTEREST STATEMENTS. THE HUMAN RESOURCES DEPARTMENT OBTAINS AN ACKNOWLEDGMENT OF UNDERSTANDING OF THE CONFLICT OF INTEREST POLICY FROM EVERY NEW EMPLOYEE AT THE DATE OF HIRE AND FROM ALL EMPLOYEES ANNUALLY. ANNUAL CONFLICT OF INTEREST STATEMENTS ARE REVIEWED BY INTERNAL STAFF TO ENSURE RECORDS ARE COMPLETE. AS PART OF THE CORPORATE CONTRACT REVIEW PROCESS, CONSIDERATION IS GIVEN TO ANY POTENTIAL CONFLICTS OF INTEREST INVOLVING OPERATIONAL OR FINANCIAL TRANSACTIONS. ALL EMPLOYEES AND BOARD MEMBERS ARE EXPECTED TO NOTIFY THE CORPORATE COMPLIANCE OFFICER IF A POTENTIAL CONFLICT EXISTS. IF A CASE IS DISCOVERED OR REPORTED, THE CORPORATE COMPLIANCE OFFICER MAKES A REPORT TO THE LEGAL DEPARTMENT AND THE CHAIRMAN OF THE BOARD AS TO THE FACTS AND CIRCUMSTANCES SURROUNDING THE INCIDENT. MEMORANDUMS (OR MINUTES) ARE MADE OF EVERY FINAL DECISION, INCLUDING THE REASONS THEREFORE AND THE ACTION TAKEN, WHETHER THE QUESTION IS DETERMINED TO BE SUBSTANTIAL OR NOT; AND A COPY OF SUCH MEMORANDUM (OR MINUTES) IS FILED WITH THE CORPORATE SECRETARY FOR EXAMINATION BY THE BOARD OF DIRECTORS. FORM 990, PART VI, SECTION B, LINE 15 MICHAEL P GALLAGHER IS THE PRESIDENT AND CHIEF EXECUTIVE OFFICER (CEO) OF SANTAFE HEALTHCARE, INC. (SANTAFE). MR. GALLAGHER IS DIRECTLY COMPENSATED BY SANTAFE. SANTAFE UTILIZES THE FOLLOWING PROCESS TO ESTABLISH THE CEO'S COMPENSATION AND BENEFITS: THE BOARD OF DIRECTORS ANNUALLY RETAINS AN INDEPENDENT THIRD PARTY COMPENSATION AND BENEFITS CONSULTING FIRM TO CONDUCT A MARKET COMPETITIVENESS REVIEW OF THE CEO'S TOTAL DIRECT COMPENSATION (BASE SALARY, ANNUAL INCENTIVES AND LONG TERM INCENTIVES) AND BENEFITS. THE COMPETITIVE ANALYSIS INCLUDES COMPARISON TO SIMILAR POSITIONS IN COMPANIES OF SIMILAR SIZE WITHIN THE SAME OR SIMILAR INDUSTRY. THE INDEPENDENT CONSULTING FIRM MAKES RECOMMENDATIONS, IF ANY, DIRECTLY TO THE BOARD OF DIRECTORS. THE BOARD OF DIRECTORS ESTABLISHES THE FINAL COMPENSATION AND BENEFIT PACKAGE FOR THE CEO TAKING INTO CONSIDERATION THE MARKET COMPETITIVENESS REVIEW AND FINAL RECOMMENDATION OF THE INDEPENDENT CONSULTING FIRM. THE INDEPENDENT CONSULTING FIRM PROVIDES AN OPINION LETTER REGARDING THE REASONABLENESS OF THE FINAL COMPENSATION AND BENEFITS PACKAGE. THE ACTIONS OF THE BOARD ARE DOCUMENTED IN THE MINUTES OF THE BOARD MEETING. FORM 990, PART VI, SECTION B, LINE 15B: PROCESS FOR DETERMINING COMPENSATION FOR ALL EMPLOYEE OFFICERS AND KEY EMPLOYEES FOR SANTAFE HEALTHCARE, INC. (SANTAFE) IS AS FOLLOWS: THE SANTAFE BOARD OF DIRECTORS ANNUALLY RETAINS AN INDEPENDENT THIRD PARTY COMPENSATION AND BENEFITS FIRM (FIRM) TO CONDUCT A MARKET COMPETITIVENESS REVIEW OF ALL EXECUTIVES' TOTAL DIRECT COMPENSATION (BASE SALARY, ANNUAL INCENTIVES, AND LONG-TERM INCENTIVES) AND BENEFITS. THE COMPETITIVE ANALYSIS INCLUDES COMPARISONS TO SIMILAR POSITIONS IN COMPANIES OF SIMILAR SIZE WITHIN THE SAME OR SIMILAR INDUSTRY. AFTER COMPLETION OF ITS REVIEW, THE INDEPENDENT CONSULTING FIRM MAKES RECOMMENDATIONS, IF ANY, DIRECTLY TO THE SANTAFE BOARD OF DIRECTORS. THE INDEPENDENT CONSULTING FIRM PROVIDES AN OPINION LETTER REGARDING THE REASONABLENESS OF TOTAL DIRECT COMPENSATION AND EXECUTIVE BENEFITS. THE ACTIONS OF THE BOARD ARE DOCUMENTED IN THE MINUTES OF THE BOARD MEETING. THE BOARD OF DIRECTORS RETAINS AN INDEPENDENT THIRD PARTY CONSULTANT TO CONDUCT A MARKET COMPETITIVENESS REVIEW OF THE BOARD OF DIRECTORS' (INCLUDING OFFICER POSITIONS) COMPENSATION EVERY TWO TO THREE YEARS. THE COMPETITIVENESS ANALYSIS INCLUDES COMPARISONS TO BOTH NOT-FOR-PROFIT AND PUBLIC COMPANY (EXCLUDING EQUITY COMPONENT) DATA FOR COMPANIES WITHIN THE SAME OR SIMILAR INDUSTRY. ANY COMPENSATION CHANGES ARE APPROVED BY THE BOARD OF DIRECTORS BASED ON THE MARKET COMPETITIVENESS STUDY. A MARKET COMPETITIVENESS STUDY WAS CONDUCTED IN NOVEMBER 2012 FOR CHANGES MADE EFFECTIVE JANUARY 1, 2013. FORM 990, PART VI, SECTION C, LINE 19 SANTAFE HEALTHCARE'S PROCEDURE FOR MAKING VARIOUS DOCUMENTS AVAILABLE TO THE PUBLIC: SANTAFE HEALTHCARE, INC. MAKES ITS GOVERNING DOCUMENTS AVAILABLE TO THE PUBLIC ON A CASE BY CASE BASIS IF REQUESTED DIRECTLY FROM THE ORGANIZATION. THE ARTICLES OF INCORPORATION CAN BE ACCESSED DIRECTLY THROUGH THE FLORIDA DEPARTMENT OF STATE, DIVISION OF CORPORATIONS WEBSITE AT WWW.SUNBIZ.ORG. THE CORPORATE CONFLICT OF INTEREST POLICY AND AUDITED COMBINED FINANCIAL STATEMENTS, WHICH INCLUDE SANTAFE HEALTHCARE, CAN BE OBTAINED DIRECTLY FROM THE ORGANIZATION UPON WRITTEN REQUEST. FORM 990, PART VII, SECTION A, LINE 1A: COMPENSATION PAID BY RELATED ORGANIZATIONS: CERTAIN SENIOR EXECUTIVES ARE ACCOUNTABLE FOR AND PERFORM SERVICES FOR SANTAFE HEALTHCARE, INC. AND EACH OF ITS AFFILIATES. SANTAFE HEALTHCARE AND AFFILIATES REPRESENT A DIVERSIFIED FAMILY OF NOT-FOR-PROFIT ORGANIZATIONS WITH $2 BILLION IN GROSS RECEIPTS AND APPROXIMATELY 2,000 EMPLOYEES. THESE SENIOR EXECUTIVES ARE PAID DIRECTLY BY EITHER SANTAFE HEALTHCARE, INC. OR AVMED, INC. AND THEIR COMPENSATION AND BENEFITS ARE APPORTIONED AND CHARGED TO THE RESPECTIVE AFFILIATE BASED ON THE ESTIMATED AMOUNT OF TIME SPENT ON EACH AFFILIATE'S ACTIVITIES. FOR 2013, THE FOLLOWING PERCENTAGES OF EACH EXECUTIVE'S COMPENSATION AND BENEFITS (FOR THOSE SENIOR EXECUTIVES PAID BY A RELATED ORGANIZATION) IS APPORTIONED AND CHARGED TO SANTAFE HEALTHCARE, INC. AS FOLLOWS: 25% - CATHERINE E AYERS, ASSISTANT SECRETARY 1% - STEVEN M ZIEGLER, ASSISTANT SECRETARY FOR 2013, THE FOLLOWING PERCENTAGES OF EACH EXECUTIVE'S COMPENSATION AND BENEFITS FOR THOSE SENIOR EXECUTIVES PAID BY SANTAFE HEALTHCARE, INC. IS APPORTIONED AND CHARGED TO CERTAIN AFFILIATES AS FOLLOWS: 92% - MICHAEL P. GALLAGHER, PRESIDENT & CEO 95% - RANDALL L. STUART, SENIOR VICE PRESIDENT & CFO FORM 990, PART XI, LINE 9: CHANGE IN MINIMUM LIABILITY FOR QUALIFIED PENSION PLAN 28,354,750. FORM 990, PART XII, LINE 2C: AUDIT COMMITTEE OVERSIGHT OF THE FINANCIAL STATEMENT AUDIT: THERE HAS BEEN NO CHANGE FROM THE PRIOR YEAR TO THE PROCESS RELATED TO AUDIT OVERSIGHT AND SELECTION OF THE INDEPENDENT ACCOUNTANT FOR THE ORGANIZATION. FORM 990, PART VII, SECTION B, INDEPENDENT CONTRACTORS: COMPENSATION TO INDEPENDENT CONTRACTORS IN THIS SECTION INCLUDE BOTH PAYMENTS MADE BY SFHC FOR ITS SOLE BENEFIT AND ALSO PAYMENTS MADE FOR THE BENEFIT OF RELATED ENTITIES. AVMED INC PO BOX 749 GAINESVILLE FL 326270749 592742907 HEALTH CARE FL 501(C)(4) N/A SANTAFE HEALTHCARE INC 1 NORTH FLORIDA RETIREMENT VILLAGE INC PO BOX 749 GAINESVILLE FL 326270749 591912330 RETIREMENT COMMUNITY FL 501(C)(3) 9 SANTAFE HEALTHCARE INC 1 NORTH CENTRAL FLORIDA HOSPICE INC PO BOX 749 GAINESVILLE FL 326270749 592490893 HOSPICE CARE FL 501(C)(3) 9 SANTAFE HEALTHCARE INC 1 SANTAFE SENIOR LIVING INC PO BOX 749 GAINESVILLE FL 326270749 203700526 MANAGEMENT AND FINANCIAL SUPPORT FOR NOT-FOR-PROFIT AFFILIATES FL 501(C)(3) 11A TYPE I SANTAFE HEALTHCARE INC 1 BVG ACQUISITION INC PO BOX 749 GAINESVILLE FL 326270749 203701186 RETIREMENT COMMUNITY FL 501(C)(3) 9 SANTAFE SENIOR LIVING INC 1 EAST RIDGE RETIREMENT VILLAGE INC PO BOX 749 GAINESVILLE FL 326270749 590903331 RETIREMENT COMMUNITY FL 501(C)(3) 9 SANTAFE SENIOR LIVING INC 1 BONITA SPRINGS RETIREMENT VILLAGE INC PO BOX 749 GAINESVILLE FL 326270749 262386152 RETIREMENT COMMUNITY FL 501(C)(3) 9 SANTAFE SENIOR LIVING INC 1 SANTAFE SENIOR LIVING FOUNDATION INC PO BOX 749 GAINESVILLE FL 326270749 264464727 CHARITABLE & EDUCATIONAL PURPOSES FL 501(C)(3) 7 SANTAFE SENIOR LIVING INC 1 SF HOLDING CORPINC & SUBSIDIARY PO BOX 749 GAINESVILLE FL 326270749 592903901 HOLDING COMPANY FL N/A C 0 0 1 1 1 0 0 0 0 0 0 0 1 1 1 0 1 1 0 0 SANTAFE SENIOR LIVING INC B 3648575 ACTUAL CASH CONTRIBUTED AVMED INC C 12500000 ACTUAL CASH CONTRIBUTED SANTAFE SENIOR LIVING INC C 8880000 ACTUAL CASH CONTRIBUTED BVG ACQUISITION INC D 6698700 HIGHEST LOAN BALANCE DURING 2013 NORTH CENTRAL FLORIDA HOSPICE INC L 1095569 FMV OF SERVICES AVMED INC L 3028368 FMV OF SERVICES SANTAFE SENIOR LIVING INC L 2089414 FMV OF SERVICES AVMED INC M 1337089 FMV OF SERVICES AVMED INC P 115381 ACTUAL INVOICES NORTH CENTRAL FLORIDA HOSPICE INC Q 621167 ACTUAL INVOICES AVMED INC Q 707996 ACTUAL INVOICES SANTAFE SENIOR LIVING INC Q 688489 ACTUAL INVOICES NORTH FLORIDA RETIREMENT VILLAGE INC Q 110269 ACTUAL INVOICES