<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended June 30, 1995 Commission File Number 2-92396
RWB MEDICAL INCOME PROPERTIES 1 LIMITED PARTNERSHIP
------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Louisiana 72-1007233
--------- ----------
(State of Organization) (IRS Employer Identification Number)
7000 Central Parkway, Suite 850
-------------------------------
Atlanta, Georgia 30328
----------------------
(Address of Principal Executive Office)
(404) 668-1080
--------------
Registrant's Telephone Number, Including Area Code
Indicate by check 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.
Yes X No
----- -----
The number of limited partnership units outstanding at June 30, 1995 was
22,895.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I
Page No.
<S> <C> <C>
Item 1. Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 - 9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . 10
PART II
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
2
<PAGE> 3
PART I
ITEM 1.
FINANCIAL INFORMATION
RWB MEDICAL INCOME PROPERTIES 1 LIMITED PARTNERSHIP
INDEX
<TABLE>
<CAPTION>
Page No.
<S> <C>
Balance Sheets, June 30, 1995 and December 31, 1994 . . . . . . . . . . . . . . . . . . . . 4
Statements of Operations for the three
months ended June 30, 1995 and 1994 and the six months
ended June 30, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Statements of Partners' Capital for the six months
ended June 30, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Statements of Cash Flows for the six months ended
June 30, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 - 9
</TABLE>
3
<PAGE> 4
RWB MEDICAL INCOME PROPERTIES 1 LIMITED PARTNERSHIP
Balance Sheets
June 30, 1995 and December 31, 1994
(Unaudited)
<TABLE>
<CAPTION>
ASSETS 1995 1994
--------------- --------------
<S> <C> <C>
Current Assets
Cash and equivalents $ 1,123,359 $ 1,327,313
Accounts receivable, less allowance
for doubtful accounts of $695,006 in 1995
and $1,233,671 in 1994 2,359,760 1,961,437
Current portion of note receivable 75,592 72,600
Prepaid expenses and other assets 271,462 183,543
--------------- --------------
Total current assets 3,830,173 3,544,893
Notes receivable 6,573 779,447
Property, plant and equipment net of
accumulated depreciation 13,338,871 13,498,598
Deferred financing costs, less accumulated
amortization of $21,970 in 1995 and
$17,262 in 1994 25,108 29,816
--------------- --------------
Total assets $ 17,200,725 $ 17,852,754
=============== ==============
LIABILITIES AND PARTNERS' CAPITAL
Current Liabilities
Current portion of long term debt $ 171,808 $ 86,679
Accounts payable 594,910 427,988
Accrued payroll and payroll taxes 258,295 227,285
Accrued vacation pay 258,156 146,113
Accrued real estate taxes 101,336 191
Accrued insurance 80,780 77,614
Accrued management fees 77,135 15,870
Patient deposits and trust liabilities 134,546 95,247
Other accrued expenses 23,511 23,531
Estimated settlements due to third parties 172,210 259,793
--------------- --------------
Total current liabilities 1,872,687 1,360,311
Mortgage notes and capital lease obligations 1,077,422 984,037
Due to affiliates 179,110 202,846
--------------- --------------
Total liabilities 3,129,219 2,547,194
--------------- --------------
Partners' capital (deficit)
Limited partners 14,360,451 15,508,120
General partners (288,945) (202,560)
--------------- ---------------
Total partners' capital 14,071,506 15,305,560
--------------- --------------
Total liabilities and partners' capital $ 17,200,725 $ 17,852,754
=============== ==============
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE> 5
RWB MEDICAL INCOME PROPERTIES 1 LIMITED PARTNERSHIP
Statements Of Operations
For The Three Months Ended June 30, 1995 and 1994
and the Six Months Ended June 30, 1995 and 1994
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
----------------------- -----------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income:
Patient service revenues, net $ 3,933,719 $ 3,030,464 $ 7,226,877 $ 6,084,315
Rental income - 165,000 36,300 330,000
--------------- --------------- -------------- ---------------
Total revenue 3,933,719 3,195,464 7,263,177 6,414,315
--------------- --------------- -------------- ---------------
Operating expenses:
Costs of patient service 2,019,880 1,412,520 3,601,355 2,743,138
Costs of rentals - 3,304 - 10,902
Dietary 328,058 250,895 565,966 487,573
Household and plant 389,570 283,579 677,116 539,338
General and administrative 631,292 503,030 1,219,952 1,081,319
Employee health and welfare 233,048 160,601 418,735 352,028
Depreciation and amortization 198,392 234,891 394,478 478,674
--------------- --------------- -------------- ---------------
Total operating expenses 3,800,240 2,848,820 6,877,602 5,692,972
--------------- --------------- -------------- ---------------
Operating income 133,479 346,644 385,575 721,343
--------------- --------------- -------------- ---------------
Other income (expense):
Interest income 12,093 7,872 24,834 16,444
Interest expense (26,233) (22,443) (52,238) (42,474)
Provider fees (30,999) (30,999) (61,998) (61,998)
Other net 9,252 5,069 15,325 11,651
Writedown of asset value (807,002) - (807,002) -
--------------- --------------- -------------- ---------------
Total other
income (expense) (842,889) (40,501) (881,079) (76,377)
--------------- --------------- -------------- ---------------
Net income (loss) $ (709,410) $ 306,143 $ (495,504) $ 644,966
=============== =============== =============== ===============
Net income per weighted
average limited partnership unit
outstanding $ (28.82) $ 12.44 $ (20.13) $ 26.20
=============== =============== =============== ===============
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE> 6
RWB MEDICAL INCOME PROPERTIES 1 LIMITED PARTNERSHIP
Statements of Partners' Capital
For the Six Months Ended June 30, 1995 and December 31, 1994
(Unaudited)
<TABLE>
<CAPTION>
Limited Partners General
Units Amount Partners Total
----- ------ -------- -----
<S> <C> <C> <C> <C>
Partners' capital (deficit),
December 31, 1994 22,895 $15,508,120 $(202,560) $15,305,560
Distributions to partners
($15.00 per limited
partnership unit outstanding) (686,850) (51,700) (738,550)
Net income (loss) (460,819) (34,685) (495,504)
------ ------------ --------- -----------
Partners' capital (deficit),
June 30, 1995 22,895 $14,360,451 $(288,945) $14,071,506
====== =========== ========= ===========
</TABLE>
6
<PAGE> 7
RWB MEDICAL INCOME PROPERTIES 1 LIMITED PARTNERSHIP
Statements of Cash Flows
Six Months Ended June 30, 1995 and 1994
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
--------------- ---------------
<S> <C> <C>
Cash flows from operating activities:
Cash received from patient care $ 6,777,281 $ 6,673,879
Cash paid to suppliers and employees (6,056,215) (5,257,188)
Interest received 24,834 16,444
Interest paid (52,238) (42,474)
Provider fees (61,998) (61,998)
Other operating receipts 15,325 11,651
--------------- ---------------
Net cash provided by operating activities 646,989 1,340,314
--------------- ---------------
Cash flows from investing activities:
Loans made - (498,612)
Collection on loans 35,537 32,850
Cash payments for capital expenditures (312,101) (31,878)
--------------- ---------------
Net cash provided (used) by investing activities (276,564) (497,640)
--------------- ---------------
Cash flows from financial activities:
Additional debt obligations 218,855 -
Principal payment on debt obligations (40,340) (51,910)
Net borrowings (payments) to related parties (14,344) 4,150
Distributions to partners (738,550) (738,550)
--------------- ---------------
Net cash used by financing activities (574,379) (786,310)
--------------- ---------------
Net increase (decrease) in cash (203,954) 56,364
Cash and equivalents, beginning of period 1,327,313 565,622
--------------- ---------------
Cash and equivalents, end of period $ 1,123,359 $ 621,986
=============== ===============
Reconciliation of net income to net cash
provided by operating activities:
Net income $ (495,504) $ 644,966
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 394,478 478,674
Writedown of Asset Value 807,002 -
Decrease (increase) in accounts receivable (398,324) 45,105
Decrease (increase) in third party receivables (87,583) 214,460
(Increase) in prepaid expenses and other assets (87,919) (119,999)
Increase in accounts payable and
accrued expenses 514,839 77,108
--------------- ---------------
Net cash provided by operating activities $ 646,989 $ 1,340,314
=============== ===============
</TABLE>
The accompanying notes are an integral part of these statements.
7
<PAGE> 8
RWB MEDICAL INCOME PROPERTIES 1 LIMITED PARTNERSHIP
Notes to Financial Statements
(Unaudited)
(1) Financial Statements
These financial statements have been prepared in accordance with generally
accepted accounting principles. The financial information included in
these financial statements is unaudited, however, in management's
opinion, all normal recurring adjustments necessary for a fair
presentation of the results of operations for the periods included have
been made.
Footnote disclosures which would substantially duplicate those contained
in the December 31, 1994 audited financial statements have been omitted
from this report.
(2) Mortgage Notes Payable and Capitalized Lease Obligations
Mortgage notes payable at June 30, 1995 and December 31, 1994 are
summarized as follows:
<TABLE>
<CAPTION>
1995 1994
--------------- ---------------
<S> <C> <C>
Prime plus 1% mortgage note payable
in monthly principal installments
of $6,667 plus interest, with a final
balloon principal payment due
March 1, 1998 $ 1,020,000 $ 1,056,200
Promissory note due in monthly
principal and interest payments of
$8,200, with final payment
due January, 1998 218,855 -
Capitalized lease obligation payable monthly
with interest rates from 8% to 13.46% 10,375 14,516
--------------- ---------------
$ 1,249,230 $ 1,070,716
=============== ===============
</TABLE>
The aggregate annual maturities of mortgage notes payable and capital
lease obligations for the succeeding four fiscal years are as follows:
<TABLE>
<S> <C> <C>
1995 $ 75,027
1996 168,838
1997 177,027
1998 829,505
-----------------
$ 1,250,397
Less amounts representing interest
on capital lease obligations (1,167)
-----------------
Net present value $ 1,249,230
=================
</TABLE>
8
<PAGE> 9
(3) Land, Buildings and Related Personal Property
On May 1, 1995, the Partnership purchased the stock of Lakecrest Nursing
Home, Inc., formerly Atrium Living Centers of Indiana, Inc., for a
nominal amount and cancelled the lease agreement. The transaction is
accounted for as a purchase and the results of operations are
consolidated with the Partnership for the period beginning May 1, 1995.
A summary of land, buildings, related personal property and accumulated
depreciation at June 30, 1995 and December 31, 1994 is as follows:
<TABLE>
<CAPTION>
1995 1994
--------------- ---------------
<S> <C> <C>
Land $ 1,209,226 $ 1,209,226
Buildings and improvements 16,033,500 16,115,557
Furniture and equipment 1,821,940 1,509,840
Property under capitalized leases 50,033 50,033
--------------- ---------------
Total $ 19,114,699 $ 18,884,656
Accumulated depreciation (5,775,828) (5,386,058)
--------------- ---------------
Net property, plant and equipment $ 13,338,871 $ 13,498,598
=============== ===============
</TABLE>
(4) Related Party Transactions
Through June 30, 1995, QualiCorp, Inc., the parent of RWB Management
Corp. (the Managing General Partner of the Partnership) charged $61,691
of property management fees and $77,569 of administrative expense to the
Partnership.
Through June 30, 1994, QualiCorp, Inc., the parent of RWB Management
Corp. (the Managing General Partner of the Partnership) charged $66,339
of property management fees and $90,785 of administrative expense to the
Partnership.
9
<PAGE> 10
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
On May 1, 1995, the Partnership purchased the operations of the Merrillville,
Indiana facility in anticipation of selling the facility in the near future.
The Partnership, in addition, recorded, during the second quarter, a writedown
of the Merrillville, Indiana asset value of $807,002. This writedown will
bring the basis of the property down to $5,000,000.
Cash balances have declined during the first six months of 1995 due to higher
receivables and higher expenditures incurred at its Miami Beach, Florida
facility. The higher expenditures were made to enable the facility to take
higher acuity patients from the managed care marketplace. In addition, the
Partnership continues to make improvements to its property, including leasehold
and equipment additions, to better compete for subacute patients. It is
projected these expenditures will total an additional $150,000 through year
end.
The Partnership paid a distribution to its limited partners in May 1995 of
$15.00 per unit, which equals a 6% annualized return on an original investment
of $1,000 per unit. The Partnership expects to make quarterly distributions to
its limited partners based on cash flow generated by facility operations after
considering cash requirements for debt payments, necessary improvements to its
properties and working capital reserves.
Operations
The net loss for the second quarter of 1995 was $709,410 and as indicated,
included a writedown of the asset carrying value of its Merrillville, Indiana
facility. Without the writedown, the results for the quarter would have shown
a profit of $97,592 as compared to $306,143 for the second quarter of 1994.
The primary reason for the lower earnings in 1995 as compared to 1994 is due to
the Merrillville, Indiana facility. In addition, the Miami Beach, Florida
facility had lower earnings due to higher staffing, repair and maintenance and
ancillary service costs.
Rental income of $165,000 in 1994 was from the Merrillville, Indiana property.
In 1995, for the period prior to the purchase of the operations, the actual
operating loss of the facility was reserved against the rental income received.
10
<PAGE> 11
PART III
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits. 27 Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K. There were no reports on Form 8-K filed for the
quarter ended March 31, 1995.
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.
RWB MEDICAL INCOME PROPERTIES 1
LIMITED PARTNERSHIP
Registrant
By: /s/ John H. Stoddard Date: July 31, 1995
-------------------- -------------
John H. Stoddard
President and Chief Financial Officer
RWB Management Corp.
Managing General Partner
11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF RWB MEDICAL INCOME PROPERTIES I LIMITED PARTNERSHIP FOR
THE SIX MONTHS ENDED JUNE 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 1,123,359
<SECURITIES> 0
<RECEIVABLES> 3,054,766
<ALLOWANCES> 695,006
<INVENTORY> 0
<CURRENT-ASSETS> 3,830,173
<PP&E> 19,114,699
<DEPRECIATION> 5,775,828
<TOTAL-ASSETS> 17,200,725
<CURRENT-LIABILITIES> 1,872,687
<BONDS> 1,077,422
<COMMON> 0
0
0
<OTHER-SE> 14,071,506<F1>
<TOTAL-LIABILITY-AND-EQUITY> 17,200,725
<SALES> 0
<TOTAL-REVENUES> 7,263,177
<CGS> 0
<TOTAL-COSTS> 6,877,602
<OTHER-EXPENSES> 828,841
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 52,238
<INCOME-PRETAX> (495,504)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (495,504)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>5-02(31) REPRESENTS TOTAL PARTNERSHIP CAPITAL INCLUDING NET INCOME NET OF
DISTRIBUTIONS.
</FN>
</TABLE>
