2017-05-08T07:44:37-05:00 2016-06-30 390859910 BAKER TILLY VIRCHOW KRAUSE LLP 1650 MARKET STREET SUITE 4500 PHILADELPHIA PA 19103 990 2015-07-01 232216041 GOOD SHEPHERD REHABILITATION NETWORK GOOD 6107763228 GOOD SHEPHERD PLAZA 850 S 5TH ST ALLENTOWN PA 18103 RONALD J PETULA SVP OF FINANCE & CFO 6107763228 2017-04-28 1 JULIUS C GREEN CPA P00350393 2159720701 2015 2021-01-29 14:40:06Z RONALD J PETULA GOOD SHEPHERD PLAZA 850 S 5TH ST ALLENTOWN PA 18103 116865119 0 X WWW.GOODSHEPHERDREHAB.ORG X 1908 PA TO ENHANCE LIVES, MAXIMIZE FUNCTION, INSPIRE HOPE, AND PROMOTE DIGNITY AND WELL-BEING. 20 19 324 389 133621 132621 6084660 4883660 37938697 38579186 10592887 11656962 1310989 1330804 55927233 56450612 2934240 2348240 0 0 21775108 22539886 28800 38400 2443291 21729170 21620091 46467318 46546617 9459915 9903995 361927345 338771639 148569964 133725950 213357381 205045689 X GOOD SHEPHERD'S MISSION IS: "MOTIVATED BY THE DIVINE GOOD SHEPHERD AND THE PHYSICAL AND COGNITIVE REHABILITATION NEEDS OF OUR COMMUNITIES, OUR MISSION IS TO ENHANCE LIVES, MAXIMIZE FUNCTION, INSPIRE HOPE, AND PROMOTE DIGNITY AND WELL-BEING WITH EXPERTISE AND COMPASSION." 0 0 28030674 2348240 38579186 GOOD SHEPHERD REHABILITATION NETWORK ("GSRN"), BASED IN ALLENTOWN,PENNSYLVANIA IS A NATIONALLY RECOGNIZED REHABILITATION LEADER, OFFERING A CONTINUUM OF CARE FOR PEOPLE WITH PHYSICAL AND COGNITIVE DISABILITIES AND SPECIALIZING IN ASSISTIVE AND REHABILITATION TECHNOLOGY. SPECIALIZED INPATIENT AND OUTPATIENT POST-ACUTE CARE PROGRAMS OFFERED BY GSRN INCLUDE: STROKE, ORTHOPEDICS, BRAIN INJURY, SPINE AND JOINT PAIN, SPINAL CORD INJURY, PEDIATRICS, MULTIPLE SCLEROSIS, AND AMPUTATION. GOOD SHEPHERD OPERATES: 33 OUTPATIENT SITES; 5 INPATIENT SITES; A LONG-TERM ACUTE CARE HOSPITAL; 2 LONG-TERM CARE HOMES FOR PEOPLE WITH SEVERE DISABILITIES; AND AN INDEPENDENT LIVING FACILITY. GOOD SHEPHERD ALSO IS THE MAJORITY OWNER OF A JOINT VENTURE WITH PENN MEDICINE IN PHILADELPHIA, PENNSYLVANIA. GOOD SHEPHERD PENN PARTNERS ("GSPP") PROVIDES THE PHILADELPHIA REGION WITH A CONTINUUM OF POST-ACUTE CARE THAT INCLUDES INPATIENT AND OUTPATIENT REHABILITATION AND LONG-TERM ACUTE CARE. FIFTEEN(15) GSPP PENN THERAPY & FITNESS LOCATIONS PROVIDE OUTPATIENT REHABILITATION SERVICES THROUGHOUT THE GREATER PHILADELPHIA AREA, WHILE PHYSICAL, OCCUPATIONAL, AND SPEECH THERAPY SERVICES ARE PROVIDED WITHIN PENN MEDICINE'S THREE ACUTE-CARE HOSPITALS. GSRN WAS FOUNDED IN 1908 WHEN THE REV. JOHN AND ESTELLA RAKER INVITED A DISABLED ORPHAN NAMED VIOLA INTO THEIR ALLENTOWN, PENNSYLVANIA HOME. GSRN IS AFFILIATED WITH THE EVANGELICAL LUTHERAN CHURCH IN AMERICA AND PROVIDES REHABILITATION SERVICES AT MORE THAN 30 LOCATIONS IN 8 EASTERN PENNSYLVANIA COUNTIES. GOOD SHEPHERD'S MISSION IS: "MOTIVATED BY THE DIVINE GOOD SHEPHERD AND THE PHYSICAL AND COGNITIVE REHABILITATION NEEDS OF OUR COMMUNITIES, OUR MISSION IS TO ENHANCE LIVES, MAXIMIZE FUNCTION, INSPIRE HOPE, AND PROMOTE DIGNITY AND WELL-BEING WITH EXPERTISE AND COMPASSION."GSRN IS THE PARENT ORGANIZATION OF 5 TAX-EXEMPT AFFILIATES THAT OFFER MANY LEVELS OF REHABILITATION CARE. GSRN IS ALSO THE PARENT ORGANIZATION OF ONE TAXABLE AFFILIATE THAT IS A SELF-INSURANCE COMPANY. AS THE PARENT ORGANIZATION, GSRN OPERATES ALL CORPORATE ADMINISTRATIVE FUNCTIONS FOR THE GOOD SHEPHERD AFFILIATES, INCLUDING BUT NOT LIMITED TO ADMINISTRATION, DIETARY, FINANCE, FUNDRAISING, HUMAN RESOURCES, INFORMATION SYSTEMS, MAINTENANCE, MARKETING, AND PASTORAL CARE. 28030674 1 1 0 0 0 0 0 0 0 1 1 1 0 1 1 1 0 1 0 0 0 0 0 1 0 0 0 1 0 1 1 0 0 0 0 0 0 0 0 0 0 1 0 0 0 1 1 1 1 0 0 1 X 318 0 1 324 1 1 1 0 0 0 0 0 0 0 0 0 X 20 19 0 0 0 0 0 1 1 1 1 0 0 1 1 1 1 1 1 1 1 0 PA FL MN X RONALD J PETULA SVP OF FINANCE 6107763228 GOOD SHEPHERD PLAZA 850 SOUTH 5TH ALLENTOWN PA 18103 X DECAMPLI DAVID G CHAIR 0.65 1.95 X X 0 0 0 GUMZ F MARK VICE CHAIR 0.25 0.75 X X 0 0 0 STEWART LAURIE TREASURER 0.25 0.75 X X 0 0 0 BAKER SCOTT A SECRETARY 0.25 0.75 X X 0 0 0 KRISTEL JOHN PRESIDENT/CEO 30.50 29.50 X X 677444 0 28919 BODNYK SANDRA TRUSTEE 0.25 0.75 X 0 0 0 BRENNAN PATRICK J MD TRUSTEE 0.25 0.75 X 0 0 0 DIAZ ALVARO TRUSTEE 0.25 0.75 X 0 0 0 EMRICK PAUL TRUSTEE 0.25 0.75 X 0 0 0 HAYMON ELSBETH G TRUSTEE 0.25 0.75 X 0 0 0 HELLER JAN S TRUSTEE 0.25 0.75 X 0 0 0 JARVA WEISS SANDRA TRUSTEE 0.25 0.75 X 0 0 0 NAKTIN JAAN PETER MD TRUSTEE 0.25 0.75 X 0 0 0 PETRUCCI ROSALIN TRUSTEE 0.25 0.75 X 0 0 0 RICHTER JOHN C TRUSTEE 0.25 0.75 X 0 0 0 SCHMIDT GARY R TRUSTEE 0.25 0.75 X 0 0 0 SNYDER DONALD TRUSTEE 0.25 0.75 X 0 0 0 WARNER JONATHAN TRUSTEE 0.25 0.75 X 0 0 0 WILSON DANIEL J PHD TRUSTEE 0.25 0.75 X 0 0 0 YOUNG ERIC T MD TRUSTEE 0.25 0.75 X 0 0 0 PETULA RONALD J SVP/CFO 30.50 29.50 X 288794 0 17625 MIRANDA JR SAMUEL SVP/CNO 10.00 50.00 X 286884 0 25802 SHAW-PORTER LAURA M VP HUMAN RESOURCES 30.50 29.50 X 278090 0 16831 HYLAND FRANK J EXECUTIVE DIRECTOR GSRN 30.50 29.50 X 194889 0 12330 LYONS DAVID F VP DEVELOPMENT 30.50 29.50 X 180091 0 25764 BONNER MICHAEL A SVP STRATEGIC PLNG/BUSDEV 30.50 29.50 X 179292 0 21072 OLEXA GEORGINE A VP LEGAL AFFAIRS 30.50 29.50 X 153686 0 14512 2239170 0 162855 22 0 1 0 METZ CULINARY MANAGEMENT TWO WOODLAND DRIVE DALLAS PA 18612 DIETARY / FOOD SERVICES 1706368 ACKLEY SWEENEY ADVERTISING INC 9 NORTH 4TH STREET EMMAUS PA 18049 ADVERTISING 660738 ULTIMATE SOFTWARE GROUP PO BOX 930953 ATLANTA GA 31193 SUBSCRIPTION FEES (PAYROLL) 445892 MEDIWARE PO BOX 204176 DALLAS TX 75320 SUPPORT FEES 409469 HCSC LAUNDRY PO BOX 25092 LEHIGH VALLEY PA 18002 LAUNDRY 353132 27 56184 4827476 419491 4883660 MANAGEMENT FEES 561000 38579186 38579186 38579186 13430221 13430221 186576 283634 -97058 -97058 -97058 58357614 60130873 -1773259 -1773259 -1773259 EXPENSE REIMBURSEMENT 900099 1115191 1115191 HEALTH NETWORK LABS REVENUE 900099 230679 230679 CLUBHOUSE REVENUE 621500 68987 68987 13005 13005 1427862 56450612 38579186 133621 12854145 X 2348240 2348240 1345103 309383 1035720 15940258 8285849 6723925 930484 781056 474954 271316 34786 3348943 1952929 1251139 144875 1124526 604218 464416 55892 167089 164056 3033 119169 119169 38400 38400 809812 809812 8311981 4677409 3460761 173811 899377 137 899240 1669572 999982 351743 317847 956676 956676 173270 69181 96013 8076 103 103 4817293 4817293 1794768 1754143 40625 180525 180525 UBIT TAX 17402 17402 CORPORATE ALLOCATIONS 621783 20055 601728 REPAIRS & MAINTENANCE 542098 538881 3217 DUES & SUBSCRIPTIONS 239634 86882 146610 6142 299539 134462 77485 87592 46546617 28030674 16072652 2443291 14272957 6868584 290228 327279 815208 825736 1050156 894506 305195 317188 35374644 22450659 9553825 12923985 214139151 172655768 98895064 123795485 22605561 20163108 361927345 338771639 7473463 6859257 108386747 105076429 7350805 5000000 25358949 16790264 148569964 133725950 X 170771889 163993180 12215487 10233861 30370005 30818648 213357381 205045689 361927345 338771639 X 9903995 -15837067 -2378620 X X 0 1 X 1 0 X 5046851 4971002 6568155 6084660 4883660 27554328 5046851 4971002 6568155 6084660 4883660 27554328 27554328 4761968 6051339 6690029 13720745 13430221 44654302 119980 215788 245390 264363 133621 979142 1264842 1230383 1189466 1223057 1197183 6104931 79292703 214235996 0.34750 0.37200 X SCHEDULE A, PART II, LINE 10, EXPLANATION OF OTHER INCOME: MISCELLANEOUS REVENUE - 2011 AMOUNT: $ 19,735. 2012 AMOUNT: $ 61,713. 2013 AMOUNT: $ 34,484. 2014 AMOUNT: $ 19,732. 2015 AMOUNT: $ 13,005. PROFESSIONAL SVC FEES - 2011 AMOUNT: $ 54,650. 2012 AMOUNT: $ 30,040. EXPENSE REIMBURSEMENT - 2011 AMOUNT: $ 1,182,813. 2012 AMOUNT: $ 1,136,908. 2013 AMOUNT: $ 1,150,457. 2014 AMOUNT: $ 1,133,294. 2015 AMOUNT: $ 1,115,191. MEDICAL RECORDS - 2011 AMOUNT: $ 7,644. 2012 AMOUNT: $ 1,722. TRANSPORTATION - 2013 AMOUNT: $ 4,525. 2014 AMOUNT: $ 1,630. CLUBHOUSE REVENUE - 2014 AMOUNT: $ 68,401. 2015 AMOUNT: $ 68,987. RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED RESTRICTED 22889082 1275753 -504390 1155202 22505243 23846677 157199 -29205 1085589 22889082 21857579 357470 2655570 1023942 23846677 20369987 843128 1601840 957376 21857579 20129443 754521 368887 882864 20369987 0.09000 0.91000 0.00000 0 0 845318 845318 6343509 3155585 3187924 261626 158199 103427 23069854 18694304 4375550 4854337 442571 4411766 12923985 73106301 C ALTERNATIVE INVESTMENTS, AT COST 24757452 C ALTERNATIVE INVESTMENTS, ABSOLUTE RETURN 25931732 F 123795485 BENEFICIAL INTEREST IN PERPETUAL TRUSTS 11647218 BENEFICIAL INTEREST IN CHARITABLE REMAINDER TRUSTS 6829343 DEFERRED FINANCING COSTS, NET 1686547 20163108 CHARITABLE GIFT ANNUITIES 1293641 WORKERS' COMPENSATION 1540847 ANNUITIES PAYABLE 63178 DEFINED CONTRIBUTION PLAN LIABILITY 604213 AMOUNTS DUE TO AFFILIATES 7607585 DERIVATIVE FINANCIAL INSTRUMENT 5680800 16790264 X 35360507 -15837067 -5536672 -21373739 56734246 -283634 -283634 56450612 43672199 283634 283634 43388565 3158052 3158052 46546617 PART V, LINE 4: GOOD SHEPHERD'S ENDOWMENTS PROVIDE INCOME IN PERPETUITY FOR PROGRAMS AND SERVICES, INCLUDING: RESEARCH, TECHNOLOGY, PEDIATRICS, LONG TERM CARE OPERATIONS AND RECREATION, EDUCATION, GENERAL AND NEUROREHABILITATION PROGRAMS, AND FOR THE GENERAL SUPPORT OF GOOD SHEPHERD'S OPERATIONS. PART X, LINE 2: GOOD SHEPHERD PRESCRIBES A RECOGNITION THRESHOLD OF MORE-LIKELY-THAN-NOT TO BE SUSTAINED UPON EXAMINATION BY THE APPROPRIATE TAXING AUTHORITY IN RECORDING TAX LIABILITIES IN THE FINANCIAL STATEMENTS. MEASUREMENT AND RECOGNITION OF THE TAX UNCERTAINTY OCCURS IF THE RECOGNITION THRESHOLD HAS BEEN MET. GOOD SHEPHERD'S POLICY IS TO RECOGNIZE INTEREST RELATED TO UNRECOGNIZED TAX BENEFITS IN INTEREST EXPENSE AND PENALTIES IN OPERATING EXPENSES. GOOD SHEPHERD'S FEDERAL INCOME TAX RETURNS FOR THE YEARS ENDED PRIOR TO JUNE 30, 2013 NO LONGER REMAIN SUBJECT TO EXAMINATION BY THE INTERNAL REVENUE SERVICE. PART XI, LINE 2D - OTHER ADJUSTMENTS: INCOME ON INVESTMENT IN UNCONSOLIDATED SUBSIDIARY 5,983,961. CHANGE IN FAIR VALUE OF DERIVATIVE FINANCIAL INSTRUMENTS -1,080,687. PENSION LIABILITY ADJUSTMENT - UNCONSOLIDATED SUBSIDIARY -949,763. CHANGE IN VALUE OF SPLIT-INTEREST AGREEMENTS -1,192,156. VALUATION LOSS, BENEFICIAL INTEREST IN PERPETUAL TRUSTS -827,110. OTHER CHANGES IN TEMPORARILY RESTRICTED NET ASSETS 154,023. GRANTS TO OTHER ORGANIZATIONS -2,348,240. LOSS ON REFINANCING -4,236,209. INVESTMENT MANAGEMENT FEES NETTED TO INVESTMENT INCOME ON FINANCIALS -809,812. REDUCTION IN EQUITY TO REPORT HEALTH NETWORK LABS REVENUE -230,679. PART XI, LINE 4B - OTHER ADJUSTMENTS: RENTAL EXPENSES -283,634. PART XII, LINE 2D - OTHER ADJUSTMENTS: RENTAL EXPENSES 283,634. PART XII, LINE 4B - OTHER ADJUSTMENTS: GRANTS TO OTHER ORGANIZATIONS 2,348,240. INVESTMENT MANAGEMENT FEES NETTED TO INVESTMENT INCOME ON FINANCIALS 809,812. X X X X 1 SCHULTZ AND WILLIAMS 325 CHESTNUT STREET SUITE 700 PHILADELPHIA PA 19106 DIRECT MAIL CONSULTING 0 0 38400 -38400 38400 -38400 PA FL MN SCHEDULE G, PART I, LINE 2B, COLUMN (V) THE TOTAL AMOUNT PAID TO SCHULTZ AND WILLIAMS FOR FISCAL YEAR JUNE 30, 2016 WAS $38,400. THE $38,400 REPORTED IN SCHEDULE G, PART I RELATES TO DIRECT MAIL CONSULTING. THE AMOUNT OF CONTRIBUTIONS RECEIVED AS A RESULT OF THIS CONSULTING COULD NOT BE EASILY DETERMINED. 1 GOOD SHEPHERD HOME LONG-TERM CARE FACILITY INC GOOD SHEPHERD PLAZA 850 SOUTH 5TH STREET ALLENTOWN PA 18103 232215800 501(C)(3) 519563 N/A N/A CHARITABLE ACTIVITIES GOOD SHEPHERD REHABILITATION HOSPITAL GOOD SHEPHERD PLAZA 850 SOUTH 5TH STREET ALLENTOWN PA 18103 231371947 501(C)(3) 1828677 N/A N/A CHARITABLE ACTIVITIES 2 0 PART I, LINE 2: ALL RECIPIENTS ARE AFFILIATED TAX-EXEMPT ORGANIZATIONS. GSRN SERVES AS THE PARENT ENTITY AND IS AWARE OF THE OPERATIONS AND USE OF FUNDS RECEIVED. X X X X X 0 0 0 0 0 0 0 1 0 KRISTEL JOHN PRESIDENT/CEO 489408 0 188036 0 0 0 12309 0 16610 0 706363 0 0 0 PETULA RONALD J SVP/CFO 228231 0 60563 0 0 0 6584 0 11041 0 306419 0 0 0 MIRANDA JR SAMUEL SVP/CNO 231142 0 55742 0 0 0 12645 0 13157 0 312686 0 0 0 SHAW-PORTER LAURA M VP HUMAN RESOURCES 215558 0 62532 0 0 0 3692 0 13139 0 294921 0 0 0 HYLAND FRANK J EXECUTIVE DIRECTOR GSRN 170397 0 24492 0 0 0 4443 0 7887 0 207219 0 0 0 LYONS DAVID F VP DEVELOPMENT 160368 0 19723 0 0 0 9599 0 16165 0 205855 0 0 0 BONNER MICHAEL A SVP STRATEGIC PLNG/BUSDEV 157867 0 21425 0 0 0 13214 0 7858 0 200364 0 0 0 OLEXA GEORGINE A VP LEGAL AFFAIRS 138797 0 14889 0 0 0 8068 0 6444 0 168198 0 0 0 PART I, LINE 7 GSRN HAS A PERFORMANCE COMPENSATION PROGRAM IN PLACE WHICH IS APPROVED BY THE BOARD. CERTAIN MEMBERS OF MANAGEMENT CAN RECEIVE AN ANNUAL PERFORMANCE PAYMENT ONLY WHEN PRE-DEFINED AND PRE-APPROVED FINANCIAL AND NON-FINANCIAL GOALS ARE ACHIEVED. FOR FISCAL YEAR 2016, A PERFORMANCE PAYMENT WAS ACHIEVED. THE ACTUAL PAYMENT OCCURS IN SEPTEMBER OF THE FOLLOWING FISCAL YEAR. THIS IS NOT GUARANTEED EACH YEAR. A LEHIGH COUNTY GENERAL PURPOSE AUTHORITY 911886539 52480RCE8 2012-12-20 32511568 SEE PART VI 0 0 0 B LEHIGH COUNTY GENERAL PURPOSE AUTHORITY 911886539 52480RAZ3 2011-12-01 34840000 SEE PART VI 0 0 0 C LEHIGH COUNTY GENERAL PURPOSE AUTHORITY 911886539 52480RDA5 2016-06-16 45275609 SEE PART VI 0 0 0 A 955000 32511568 495514 4050059 27968861 2015 0 1 1 1 B 6080000 34840000 34840000 2011 1 0 1 1 C 45275609 717240 44558369 2016 0 1 1 1 A 0 0 1 1 0 0.00000 0.00000 0.00000 0 0 1 B 0 0 1 1 0 0.00000 0.00000 0.00000 0 0 1 C 0 0 1 1 0 0.00000 0.00000 0.00000 0 0 1 A 0 1 0 0 1 0 0 1 1 B 0 0 1 0 1 1 MERRILL LYNCH CAPITAL SERVICES 26.500000000000 0 0 0 0 1 C 0 0 0 0 0 0 0 0 1 A 1 B 1 C 1 PART I, COLUMN F: DESCRIPTION OF PURPOSE: BOND ISSUE A: ADVANCE REFUNDING OF 2004 BONDS, CAPITAL PROJECTS, AND ISSUANCE COSTS BOND ISSUE B: TO REFUND THE 2007B AND 2008A BONDS BOND ISSUE C: PROVIDE FUNDS TO BE USED FOR ADVANCE REFUNDING OF SERIES A OF 2007 BONDS AND PAYMENT OF ISSUANCE COSTS OF THE 2016 BONDS PART IV LINE 6A: THE ESCROW FUND HAS BEEN INVESTED BEYOND THE TEMPORARY PERIOD BUT AT A YIELD BELOW THE YIELD OF THE BONDS. X 9 419491 CLOSING PRICE 0 1 1 PART I, COLUMN (B): THE NUMBER OF CONTRIBUTIONS IN COLUMN B REPRESENTS THE NUMBER OF CONTRIBUTORS. PART I, LINE 32B: THE ORGANIZATION USES A THIRD PARTY TO SELL STOCK THAT IS RECEIVED AS A GIFT TO GOOD SHEPHERD. WE UTILIZE MERRILL LYNCH, ALLENTOWN, WHERE GS HAS AN ACCOUNT ESTABLISHED TO RECEIVE STOCK GIFTS. WE THEN AUTHORIZE THE MERRILL LYNCH BROKER TO SELL THE SHARES AND DEPOSIT PROCEEDS IN OUR ACCOUNT WHENEVER A GIFT OF STOCK IS MADE. FORM 990, PART V, LINE 2: THE SALARY AND BENEFIT EXPENSES REPORTED ON FORM 990, PART IX, AND THE EMPLOYEE INFORMATION REPORTED ON FORM 990, PART VII, ARE THE GOOD SHEPHERD REHABILITATION NETWORK'S ("GSRN") ALLOCATED PAYROLL COSTS BASED ON TIME SPENT. ALL INDIVIDUALS WORKING AT GSRN ARE EMPLOYEES OF THE GOOD SHEPHERD REHABILITATION HOSPITAL ("GSRH") AND ARE REPORTED ON ITS FORM W-3 UNDER EIN: 23-1371947. GSRH IS AN AFFILIATED TAX-EXEMPT ORGANIZATION. FORM 990, PART VI, SECTION A, LINE 7A TWO-THIRDS OF THE ORGANIZATION'S TRUSTEES SHALL BE ELECTED BY THE SYNOD COUNCIL OF THE NORTHEASTERN PENNSYLVANIA SYNOD OF THE EVANGELICAL CHURCH IN AMERICA. FORM 990, PART VI, SECTION A, LINE 7B THE ORGANIZATION'S BYLAWS MAY BE ALTERED, AMENDED, OR REPEALED BY THE BOARD. IN ADDITION, THE AMENDMENT SHALL BE APPROVED BY THE SYNOD COUNCIL OF THE NORTHEASTERN PENNSYLVANIA SYNOD OF THE EVANGELICAL CHURCH IN AMERICA BEFORE TAKING EFFECT. FORM 990, PART VI, SECTION B, LINE 11 THE IRS FORM 990 IS PREPARED USING INFORMATION SOLICITED FROM OFFICERS, DIRECTORS, TRUSTEES, BOARD COMMITTEE MEMBERS, AND MANAGEMENT. THIS GROUP OF INDIVIDUALS IS PROVIDED A DRAFT RETURN BEFORE THE FINAL RETURN IS FILED. QUESTIONS, COMMENTS, AND ADDITIONAL INFORMATION PROVIDED BY THIS GROUP ARE INCORPORATED INTO THE FINAL RETURN. THE FINAL RETURN IS REVIEWED AT A COMMITTEE LEVEL OF THE BOARD PRIOR TO IT BEING FILED. FORM 990, PART VI, SECTION B, LINE 12C THERE IS A SYSTEMATIC PROCESS COORDINATED THROUGH THE GOVERNANCE COMMITTEE WHERE THE CONFLICT OF INTEREST STATEMENTS COMPLETED ANNUALLY BY BOARD MEMBERS AND THE SENIOR LEADERSHIP TEAM MEMBERS ARE REVIEWED BY THE GOVERNANCE COMMITTEE. WHENEVER THE COMMITTEE FEELS THE CONFLICT STATEMENT IS EITHER INCOMPLETE OR FEELS SOMETHING MAY BE MISSING, THE COMMITTEE WILL ASK MANAGEMENT TO PURSUE FURTHER DUE DILIGENCE. WHEN A BOARD MEMBER DOES HAVE AN INHERENT CONFLICT, THE TRUSTEE IS ASKED TO EITHER ABSTAIN FROM VOTING OR EXCUSE HIMSELF FROM THE ROOM DURING THE DISCUSSION AND VOTING. FORM 990, PART VI, SECTION B, LINE 15 THE BOARD OF TRUSTEES OF GOOD SHEPHERD REHABILITATION NETWORK (GSRN) DELEGATE RESPONSIBILITY FOR ADHERENCE TO ALL LEGAL AND REGULATORY REQUIREMENTS AFFECTING EXECUTIVE COMPENSATION TO THE HUMAN RESOURCES / COMPENSATION COMMITTEE OF THE BOARD (THE COMMITTEE). THE COMMITTEE IS PERMITTED TO ENGAGE EXTERNAL RESOURCES AS NECESSARY TO EDUCATE THEM ON NEW LEGAL OR REGULATORY GUIDELINES, MARKET TRENDS AND TO SUPPORT DELIBERATIONS AND DECISION MAKING RELATED TO EXECUTIVE COMPENSATION. THE COMMITTEE SELECTED AND UTILIZES AN INDEPENDENT COMPENSATION CONSULTANT, MERCER- A MARSH & MCCLENNAN COMPANY, (THE CONSULTANT) AS A RESOURCE TO ASSIST WITH DECISIONS RELATED TO EXECUTIVE COMPENSATION. IN ACCORDANCE WITH THE COMMITTEE'S ANNUAL WORK PLAN, THE COMMITTEE REVIEWED AT THE JUNE 2016 MEETING THE FOLLOWING: MERCER (US), INC. CERTIFIES THAT IT (1) IS A COMPENSATION CONSULTING FIRM, (2) PERFORMS COMPENSATION VALUATION STUDIES OF THIS TYPE ON A REGULAR BASIS, AND (3) IS QUALIFIED TO PERFORM THE VALUATIONS OF THE TYPE OF PROPERTY OR SERVICES INVOLVED. DURING MERCER'S REVIEW OF EXECUTIVE COMPENSATION, IT WAS FOUND IN THEIR OPINION TO BE FAIR, REASONABLE AND MARKET APPROPRIATE BASED ON THEIR ANALYSIS OF COMPETITIVE COMPENSATION AND BENEFIT PRACTICES FOR FUNCTIONALLY COMPARABLE POSITIONS IN SIMILARLY SITUATED ORGANIZATIONS. ALL OF THE COMPENSATION MEETINGS ARE FORMALLY DOCUMENTED CONSISTENT WITH BEST GOVERNANCE PRACTICES. FORM 990, PART VI, SECTION C, LINE 19 FINANCIAL STATEMENTS, GOVERNING DOCUMENTS AND POLICIES ARE AVAILABLE UPON REQUEST. FORM 990, PART VI, LINE 1: THE EXECUTIVE COMMITTEE IS COMPRISED OF THE CHAIRS OF ALL THE BOARD COMMITTEES AS WELL AS THE CHAIR AND VICE CHAIR OF THE BOARD. ALL EXECUTIVE COMMITTEE MEMBERS ARE MEMBERS OF THE BOARD OF TRUSTEES. THE EXECUTIVE COMMITTEE CAN ACT ON BEHALF OF THE BOARD OF TRUSTEES IN MOST CASES. ANY FUNDAMENTAL CHANGES WILL GO TO THE FULL BOARD. FORM 990, PART IX, LINE 11G CONSULTANTS: PROGRAM SERVICE EXPENSES 4,677,409. MANAGEMENT AND GENERAL EXPENSES 3,460,761. FUNDRAISING EXPENSES 173,811. TOTAL EXPENSES 8,311,981. FORM 990, PART XI, LINE 9: INCOME ON INVESTMENT IN UNCONSOLIDATED SUBSIDIARY 5,983,961. CHANGE IN FAIR VALUE OF DERIVATIVE FINANCIAL INSTRUMENTS -1,080,687. PENSION LIABILITY ADJUSTMENT - UNCONSOLIDATED SUBSIDIARY -949,763. CHANGE IN VALUE OF SPLIT-INTEREST AGREEMENTS -1,192,156. VALUATION LOSS, BENEFICIAL INTEREST IN PERPETUAL TRUSTS -827,110. OTHER CHANGES IN TEMPORARILY RESTRICTED NET ASSETS 154,023. LOSS ON REFINANCING -4,236,209. REDUCTION IN EQUITY TO REPORT HEALTH NETWORK LABS REVENUE -230,679. FORM 990, PART XI, LINE 2C: THE PROCESSES USED BY THE COMMITTEE THAT ASSUMES RESPONSIBILITY FOR OVERSIGHT OF THE AUDIT OF THE ORGANIZATION'S FINANCIAL STATEMENTS AND THE SELECTION OF AN INDEPENDENT ACCOUNTANT HAVE NOT CHANGED FROM THE PRIOR YEAR. 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