<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 March 31, 1996 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)
(770) 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 March 31, 1996 was
22,895.
<PAGE> 2
TABLE OF CONTENTS
PART I
<TABLE>
<CAPTION>
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, March 31, 1996 and December 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . 4
Statements of Operations for the three
months ended March 31, 1996 and 1995. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Statements of Partners' Capital for the three
months ended March 31, 1996 and December 31, 1995. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Statements of Cash Flows for the three months ended
March 31, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 - 9
</TABLE>
3
<PAGE> 4
RWB MEDICAL INCOME PROPERTIES 1 LIMITED PARTNERSHIP
Balance Sheets
March 31, 1996 and December 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
ASSETS 1996 1995
------ --------------- ---------------
<S> <C> <C>
Current Assets
Cash and equivalents $ 1,091,254 $ 876,850
Accounts receivable, less allowance
for doubtful accounts of $833,339 in 1996
and $837,727 in 1995 2,330,279 2,614,844
Estimated settlements due from third parties 559,943 373,738
Note receivable due within one year 1,026,029 1,045,102
Prepaid expenses and other assets 279,251 127,472
--------------- ---------------
Total current assets 5,286,756 5,038,006
Property, plant and equipment net of
accumulated depreciation 8,239,615 8,300,807
Deferred financing costs, less accumulated
amortization of $29,031 in 1996 and
$26,677 in 1995 18,047 20,401
--------------- ---------------
Total assets $ 13,544,418 $ 13,359,214
=============== ===============
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
Current Liabilities
Current portion of long term debt $ 84,200 $ 84,105
Accounts payable 984,876 834,703
Accrued payroll and payroll taxes 250,320 235,579
Accrued vacation pay 132,785 146,439
Accrued real estate taxes 33,386 193
Accrued insurance 103,987 10,977
Accrued management fees 55,285 53,158
Patient deposits and trust liabilities 69,211 81,190
Other accrued expenses 19,831 23,357
Estimated settlements due to third parties 376,096 417,145
--------------- ---------------
Total current liabilities 2,109,977 1,886,846
Mortgage notes and capital lease obligations 883,653 904,605
Due to affiliates 203,513 240,973
--------------- ---------------
Total liabilities 3,197,143 3,032,424
--------------- ---------------
Partners' capital (deficit)
Limited partners 10,620,412 10,601,361
General partners (273,137) (274,571)
--------------- ---------------
Total partners' capital 10,347,275 10,326,790
--------------- ---------------
Total liabilities and partners' capital $ 13,544,418 $ 13,359,214
=============== ===============
</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 March 31, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
--------------- ---------------
<S> <C> <C>
Income:
Patient service revenues, net $ 3,738,630 $ 3,292,205
Other revenue 6,961 7,026
--------------- ---------------
Total revenue 3,745,591 3,299,231
--------------- ---------------
Operating expenses:
Costs of patient service 1,959,760 1,581,474
Dietary 245,462 237,908
Household and plant 286,178 287,546
General and administrative 575,822 585,011
Employee health and welfare 218,125 185,687
Depreciation and amortization 133,857 122,801
--------------- ---------------
Total operating expenses 3,419,204 3,000,427
--------------- ---------------
Operating income 326,387 298,804
--------------- ---------------
Other income (expense):
Interest income 29,902 12,740
Interest expense (23,003) (26,005)
Provider fees (30,999) (30,999)
--------------- ---------------
Total other income (expense) (24,100) (44,264)
--------------- ---------------
Net income from continuing operations 302,287 254,540
Discontinued Operations:
Income (loss) from discontinued
rental operations (71,070) (40,634)
--------------- ---------------
Net income $ 231,217 $ 213,906
=============== ===============
Net income per weighted average
limited partnership unit outstanding $ 9.39 $ 8.69
=============== ===============
</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 Three Months Ended March 31, 1996 and December 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
Limited Partners General
Unit Amount Partners Total
---- ------ -------- -----
<S> <C> <C> <C> <C>
Partners' capital (deficit),
December 31, 1995 22,895 $10,601,361 $(274,571) $10,326,790
Distributions to partners
($8.56 per limited
partnership unit outstanding) (195,981) (14,751) (210,732)
Net income 215,032 16,185 231,217
------ ----------- --------- -----------
Partners' capital (deficit),
March 31, 1996 22,895 $10,620,412 $(273,137) $10,347,275
====== =========== ========= ===========
</TABLE>
6
<PAGE> 7
RWB MEDICAL INCOME PROPERTIES 1 LIMITED PARTNERSHIP
Statements of Cash Flows
Three Months Ended March 31, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
--------------- ---------------
<S> <C> <C>
Cash flows from operating activities:
Cash received from patient care $ 3,795,941 $ 3,175,372
Cash paid to suppliers and employees (3,244,110) (2,893,641)
Interest received 29,902 12,740
Interest paid (23,003) (26,005)
Provider fees (30,999) (30,999)
Other operating receipts 6,961 6,073
--------------- ---------------
Net cash provided by operating activities 534,692 243,540
--------------- ---------------
Cash flows from investing activities:
Collection on loans 19,073 17,611
Cash payments for capital expenditures (70,312) (10,169)
--------------- ----------------
Net cash provided (used) by investing activities (51,239) 7,442
--------------- ---------------
Cash flows from financing activities:
Principal payment on debt obligations (20,857) (19,532)
Net borrowings (payments) to related parties (37,460) (15,164)
Distributions to partners (210,732) (369,275)
--------------- ---------------
Net cash used by financing activities (269,049) (403,971)
--------------- ----------------
Net increase (decrease) in cash 214,404 (152,989)
Cash and equivalents, beginning of period 876,850 1,327,312
--------------- ---------------
Cash and equivalents, end of period $ 1,091,254 $ 1,174,323
=============== ===============
Reconciliation of net income to net cash
provided by operating activities:
Net income $ 231,217 $ 213,906
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 133,857 196,086
Decrease (increase) in accounts receivable 284,565 46,156
Decrease (increase) in third party receivables (227,254) (200,243)
(Increase) in prepaid expenses and other assets (151,778) (78,621)
Increase in accounts payable and
accrued expenses 264,085 66,256
--------------- ---------------
Net cash provided by operating activities $ 534,692 $ 243,540
=============== ===============
</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, 1995 audited financial statements have been omitted
from this report.
(2) Mortgage Notes Payable and Capitalized Lease Obligations
Mortgage notes payable at March 31, 1996 and December 31, 1995 are
summarized as follows:
<TABLE>
<CAPTION>
1996 1995
--------------- ---------------
<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 $ 960,000 $ 980,000
Capitalized lease obligation payable monthly
with interest rates from 8% to 13.46% 7,853 8,711
--------------- ---------------
967,853 988,711
Less amounts due in one year or less 84,200 84,105
--------------- ---------------
$ 883,653 $ 904,606
=============== ===============
</TABLE>
The aggregate annual maturities of mortgage notes payable and capital
lease obligations for the succeeding five fiscal years are as follows:
<TABLE>
<S> <C> <C>
1996 $ 63,078
1997 84,105
1998 821,368
-----------------
$ 968,551
Less amounts representing interest
on capital lease obligations (698)
-----------------
Net present value $ 967,853
=================
</TABLE>
8
<PAGE> 9
(3) Land, Buildings and Related Personal Property
A summary of land, buildings, related personal property and accumulated
depreciation at March 31, 1996 and December 31, 1995 is as follows:
<TABLE>
<CAPTION>
1996 1995
--------------- ---------------
<S> <C> <C>
Land $ 525,000 $ 525,000
Buildings and improvements 11,596,519 11,590,498
Furniture and equipment 1,386,890 1,322,600
Property under capitalized leases 16,870 16,870
--------------- ---------------
Total 13,525,279 13,454,968
Accumulated depreciation (5,285,664) (5,154,161)
--------------- ---------------
Net property, plant and equipment $ 8,239,615 $ 8,300,807
=============== ===============
</TABLE>
(4) Discontinued Operations and Sale of Lakecrest
Lakecrest Nursing Home, located in Merrillville, Indiana, was sold on
September 1, 1995. The Partnership had leased this facility under an
operating lease through May 1, 1995 at which time the stock of the lessee
was purchased by the Partnership in order to facilitate a sale of the
nursing home. Expenses associated with the operation and settlement of
the remaining assets of the nursing home are shown on the Statements of
Operations as income (loss) from discontinued operations.
(5) Related Party Transactions
Through March 31, 1996 QualiCorp, Inc., the parent of RWB Management
Corp. (the Managing General Partner of the Partnership) charged $31,167
of property management fees and $47,157 of administrative expense to the
Partnership.
Through March 31, 1995 QualiCorp, Inc., the parent of RWB Management
Corp. (the Managing General Partner of the Partnership) charged $33,784
of property management fees and $40,054 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
Cash and equivalent balances increased during the quarter ended March 31, 1996
to $1,091,254. This represents an increase of $214,403 from December 31, 1995.
The improvement in the cash balances was due to improved accounts receivable
collections, primarily in the Medicare and managed care areas. Third party
settlement accounts increased during the quarter due to higher ancillary costs
which have not been fully reflected in the interim Medicare reimbursement
rates. The increase in accounts payable is due to annual renewals of various
insurance policies and routine payables.
During the quarter, the Partnership engaged an investment firm to assist in
evaluating the Partnership's strategic alternatives, which could include a
possible sale of the Partnership assets.
In February 1996, the Partnership paid a distribution of $8.56 per unit, which
equals a 4% return on the original $1,000 per unit investment less the return
of capital of $144 per unit. Although the Partnership expects to continue to
make distributions to its limited partners based upon cash flow generated from
operations, after considering cash required for debt service, necessary
improvements to its properties and working capital reserves, no assurances can
be given that distributions will be made in the future.
Operations
The net income from continuing operations was $302,287 for the quarter ended
March 31, 1996 compared to $254,540 for the same quarter of 1995. Patient
service revenue between quarters increased $446,425 due to higher ancillary
service revenue. Operating expenses increased $417,777 to $3,419,204 due to
higher ancillary service expenses. Ancillary expenses were $346,266 higher in
the first quarter of 1996 than 1995. General and Administrative expenses were
$575,822 in 1996, as compared to $585,011 in 1995, due to lower management
fees. Employee health and benefit costs were $32,438 higher in 1996 than 1995
due to rising health insurance costs and employment taxes.
Interest income was $29,902 in the quarter as compared to $12,740 in 1995
because of additional interest income on the one million dollar note due from
the purchaser of the Lakecrest Nursing Home.
The loss on discontinued operations for the quarter was $71,070 as compared to
$40,634 in the 1995 quarter. The 1996 loss reflects expenses associated with
the rental operation and will continue to occur in future quarters.
10
<PAGE> 11
PART II
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: April 30, 1996
------------------------------------- -------------------
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 QUARTER ENDED MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 1,091,254
<SECURITIES> 0
<RECEIVABLES> 3,163,618
<ALLOWANCES> 833,339
<INVENTORY> 0
<CURRENT-ASSETS> 5,286,756
<PP&E> 13,525,279
<DEPRECIATION> 5,285,664
<TOTAL-ASSETS> 13,544,418
<CURRENT-LIABILITIES> 2,109,977
<BONDS> 883,653
0
0
<COMMON> 0
<OTHER-SE> 10,347,275<F1>
<TOTAL-LIABILITY-AND-EQUITY> 13,544,418
<SALES> 3,738,630
<TOTAL-REVENUES> 3,745,591
<CGS> 0
<TOTAL-COSTS> 3,419,204
<OTHER-EXPENSES> 30,999
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 23,003
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 302,287
<DISCONTINUED> (71,070)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 231,217
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>5.02(31) REPRESENTS TOTAL PARTNERSHIP CAPITAL INCLUDING NET INCOME NET OF
DISTRIBUTIONS.
</FN>
</TABLE>
