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 OF 1934
For the period ended March 31, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-13415
CONSOLIDATED RESOURCES HEALTH CARE FUND II
(Exact name of registrant as specified in its charter)
Georgia 58-1542125
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) (identification No.)
7000 Central Parkway, Suite 970, Atlanta, Georgia 30328
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 404-698-9040
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,
and (2) has been subject to such filing requirements for the past
90 days. Yes x No
THERE ARE NO EXHIBITS.
PAGE ONE OF 11 PAGES.
PART I. FINANCIAL INFORMATION
CONSOLIDATED RESOURCES HEALTH CARE FUND II
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
1995 1994
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 1,022,673 $ 1,196,256
Accounts receivable, net of
allowance for doubtful accounts
of $43,636 and $39,850 538,807 586,929
Prepaid expenses and other 65,676 108,229
Total current assets 1,627,156 1,891,414
Property and equipment
Land 179,341 179,341
Buildings and improvements 6,206,414 6,187,000
Equipment and furnishings 439,391 435,826
6,825,146 6,802,167
Accumulated depreciation and amortization (3,070,862) (2,977,111)
Net property and equipment 3,754,284 3,825,056
Other
Restricted escrows and other deposits 297,315 239,657
Deferred loan costs, net of
accumulated amortization
of $9,407 and $8,369 23,443 23,701
Total other assets 320,758 263,358
$ 5,702,198 $ 5,979,828
LIABILITIES AND PARTNERS' DEFICIT
Current liabilities:
Current maturities of long-term debt $ 59,009 $ 57,886
Accounts payable 319,638 373,786
Accrued expenses 79,388 108,515
Accrued management fees 696,527 702,510
Other liabilities 298,392 343,183
Total current liabilities 1,452,954 1,585,880
Advances from former affilates 5,651,854 5,651,854
Long-term obligations,
less current maturities 4,311,125 4,326,316
Total liabilities 11,415,933 11,564,050
Partners' deficit :
Limited partners (5,279,615) (5,149,283)
General partners (434,120) (434,939)
Total partners' deficit (5,713,735) (5,584,222)
$ 5,702,198 $ 5,979,828
See accompanying notes to consolidated financial statements 2
CONSOLIDATED RESOURCES HEALTH CARE FUND II
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended March 31,
1995 1994
Revenue:
Operating revenue $1,542,352 $1,472,814
Interest income 10,845 8,392
Total revenue 1,553,197 1,481,206
Expenses:
Operating expenses 1,346,285 1,233,942
Depreciation and amortization 94,007 91,975
Interest 82,150 83,227
Partnership adminstration costs 10,268 14,217
Total operating costs and expenses 1,532,710 1,423,361
Net income $ 20,487 $ 57,845
Net income per L.P. unit $ 1.31 $ 3.70
L.P. units outstanding 15,000 15,000
See accompanying notes to consolidated financial statements 3
CONSOLIDATED RESOURCES HEALTH CARE FUND II
CONSOLIDATED STATEMENTS OF PARTNERS' DEFICIT
(Unaudited)
Total
Partners'
Limited General Deficit
Balance, at Demember 31, 1993 $(5,327,139) $ (442,350) $(5,769,489)
Net income 55,531 2,314 57,845
Balance, at March 31, 1994 $(5,271,608) $ (440,036) $(5,711,644)
Balance, at December 31, 1994 $(5,149,283) $ (434,939) $(5,584,222)
Net income 19,668 819 20,487
Distribution (150,000) - (150,000)
Balance, at March 31,1995 $(5,279,615) $ (434,120) $(5,713,735)
See accompanying notes to consolidated financial statements 4
CONSOLIDATED RESOURCES HEALTH CARE FUND I
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three months ended March 3
1995 1994
Operating Activities:
Cash received from residents and
government agencies $ 1,590,474 $ 1,576,634
Cash paid to suppliers and employers (1,448,047) (1,253,123)
Cash paid into restricted escrows (57,658) (28,436)
Interest received 10,845 8,392
Interest paid (82,152) (83,227)
Cash provided by operating 13,462 220,240
Investing Activities:
Additions to property and equipment (22,980) (19,239)
Financing Activities:
Principle payments on long-term debt (14,068) (16,166)
Distribution (150,000) -
Cash used in financing activities (164,068) (16,166)
Net increase (decrease) in cash (173,586) 184,835
Cash and cash equivalents, beginning of period 1,196,256 1,083,173
Cash and cash equivalents, end of period $ 1,067,861 $ 1,268,009
See accompanying notes to consolidated financial statements 5
CONSOLIDATED RESOURCES HEALTH CARE FUND II
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended March 31,
1995 1994
Reconciliation of Net Income (Loss) to cash
Provided by Operating Activities:
Net income $ 20,487 $ 57,845
Adjustments to reconcile net income
to cash provided by
operating activities:
Depreciation and amortization 94,007 91,975
Changes in assets and liabilities
Accounts receivable 48,122 103,820
Restricted escrows (57,658) (28,436)
Other current assets 42,553 15,201
Accounts payable and accrued liabil (134,049) (20,165)
Cash provided by operating activities $ 13,462 $ 220,240
See accompanying notes to consolidated financial statements 6
CONSOLIDATED RESOURCES HEALTH CARE FUND II
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1995
NOTE 1.
The financial statements are unaudited and reflect all
adjustments (consisting only of normal recurring adjustments)
which are, in the opinion of management, necessary for a fair
presentation of the Partnership's financial position and
operating results for the interim periods. The results of
operations for the three months ended March 31, 1995, are not
necessarily indicative of the results to be expected for the year
ending December 31, 1995.
NOTE 2.
The consolidated financial statements should be read in
conjunction with the consolidated financial statements and the
notes thereto contained in the Partnership's Annual Report on
Form 10-K for the year ended December 31, 1994, as filed with the
Securities and Exchange Commission, a copy of which is available
upon request by writing to WelCare Service Corporation-II (the
"Managing General Partner"), at 7000 Central Parkway, Suite 970,
Atlanta, Georgia 30328.
NOTE 3.
A summary of compensation paid to or accrued for the benefit of
the Partnership's general partners and their affiliates and
amounts reimbursed for costs incurred by these parties on the
behalf of the Partnership are as follows:
Three Months Ended
March 31,
1995 1994
Charged to costs and expenses:
Property management and oversight
management fees . . . . . . . . . . $20,711 $19,688
Financial accounting, data processing,
tax reporting, legal and compliance,
investor relations and supervision
of outside services . . . . . . . . $10,268 $6,523
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
WelCare Acquisition Corp. acquired the stock of the Partnership's
Corporate General Partner from Southmark Corporation
("Southmark") on November 20, 1990. The results of operations
for periods prior to November 20, 1990, occurred under the
direction and management of Southmark affiliates and not under
the direction and management of WelCare's affiliates.
Following the first year of WelCare's affiliate's management of
the affairs of the Partnership, the Limited Partners
overwhelmingly elected WelCare Service Corporation-II, a wholly-
7
owned subsidiary of WelCare Acquisition Corp., as managing
general partner. On January 7, 1992, WelCare Service
Corporation-II was admitted as Managing General Partner.
Results of Operations
Revenues:
Operating revenue showed an increase of $69,538 for the quarter
ended March 31, 1995, compared to the same period for the prior
year. Operating revenues increased primarily due to increases in
Medicare and Medicaid reimbursement rates and ancillary services
at the Partnership's nursing facility, and increases in home
health services being provided at the Partnership's retirement
facility.
Expenses:
Operating expenses showed an increase of $112,333 for the quarter
ended March 31, 1995, as compared to the same period for the
prior year. This increase in operating expenses is largely due
to increased use of skilled nursing and therapy personnel to
accommodate the additional Medicare and heavy-care patients at
the Partnership's nursing facility and the addition of contract
nursing at the Partnership's retirement facility, to accommodate
the increase in home health services.
Liquidity and Capital Resources:
At March 31, 1995, the Partnership held cash and cash equivalents
of $1,067,861, an decrease of $128,395 from December 31, 1994.
This reduction in cash is due to the distribution of $150,000 to
the Limited Partners. The cash balance will be necessary to meet
the Partnership's current obligations and for operating reserves.
In addition, cash balances maintained at the two Partnership
facilities will have to be maintained in accordance with
operating reserves established by HUD.
Due to the efforts of the Managing General Partner, the
Partnership distributed $150,000 to the Partnership's Limited
Partners in February 1995. In 1990 when WelCare Acquisition
Corp. acquired the stock of the corporate general partner from
Southmark, the Partnership had been experiencing significant
operating losses. The Managing General Partner successfully
reversed these operating losses and enabled the partnership to
return to profitability during the first quarter of 1993. As a
result the Partnership was able to distribute $150,000 to its
Limited Partners during the February 1995. The Managing General
Partner anticipates distributions from operating cash flow will
continue in future periods. However, the Partnership's ability
to make distributions may be limited by HUD's requirements for
operation reserves at the facilities.
As of March 31, 1995, the Partnership was not obligated to
perform any major capital additions or renovations. No such
major capital expenditures or renovations are planned for the
next 12 months, other than necessary repairs, maintenance and
improvements which are expected to be funded by operations.
The Partnership should produce sufficient cash flow to meet its
ongoing obligations associated with the two facilities currently
8
owned by the Partnership. In addition, the Partnership's cash
reserves are considered adequate to meet contingent liabilities
related to third party reimbursements from the operation of the
Colorado facilities previously owned by the Partnership. During
1995, the Partnership has not received any demands for payment of
any actual or contingent liabilities related to these previously
owned facilities. The Partnership has no existing lines of
credit or assurance of financial support from the General
Partners should the need arise.
9
PART II - OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None
10
SIGNATURES
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.
CONSOLIDATED RESOURCES HEALTH CARE FUND II
By: WELCARE CONSOLIDATED RESOURCES
CORPORATION OF AMERICA
Corporate General Partner
Date: May 22, 1995 By: /s/ J. Stephen Eaton
J. Stephen Eaton
Sole Director and
Principal Executive Officer of
the Corporate General Partner
Date: May 22, 1995 By: /s/ Alan C. Dahl
Alan C. Dahl
Principal Financial Officer of
the Corporate General Partner
11
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THIS SCHEDULE CONTAINS UNAUDITED SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
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10-Q.
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