<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, 1996 Commission File Number 2-92396
RWB MEDICAL INCOME PROPERTIES 1 LIMITED PARTNERSHIP
------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C>
Louisiana 72-1007233
----------------------- ------------------------------------
(State of Organization) (IRS Employer Identification Number)
</TABLE>
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 June 30, 1996 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, 1996 and December 31, 1995.............................................. 4
Statements of Operations for the three
months ended June 30, 1996 and 1995 and the six months
ended June 30, 1996 and 1995..................................................................... 5
Statements of Partners' Capital for the six months
ended June 30, 1996 and 1995..................................................................... 6
Statements of Cash Flows for the six months ended
June 30, 1996 and 1995........................................................................... 7
Notes to Financial Statements.................................................................... 8-9
</TABLE>
3
<PAGE> 4
RWB MEDICAL INCOME PROPERTIES 1 LIMITED PARTNERSHIP
Balance Sheets
June 30, 1996 and December 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
ASSETS 1996 1995
------ ---------------- ----------------
<S> <C> <C>
Current Assets
Cash and equivalents $ 1,195,512 $ 876,850
Accounts receivable, less allowance
for doubtful accounts of $798,261 in 1996
and $837,727 in 1995 2,431,938 2,614,844
Estimated settlements due from third parties 423,863 373,738
Note receivable due within one year 1,006,573 1,045,102
Prepaid expenses and other assets 251,310 127,472
---------------- ----------------
Total current assets 5,309,196 5,038,006
Property, plant and equipment net of
accumulated depreciation 8,224,350 8,300,807
Deferred financing costs, less accumulated
amortization of $29,031 in 1996 and
$26,677 in 1995 15,693 20,401
---------------- ----------------
Total assets $ 13,549,239 $ 13,359,214
================ ================
LIABILITIES AND PARTNERS' CAPITAL
Current Liabilities
Current portion of long term debt $ 84,200 $ 84,105
Accounts payable 926,797 834,703
Accrued payroll and payroll taxes 247,370 235,579
Accrued vacation pay 168,775 146,439
Accrued real estate taxes 66,579 193
Accrued insurance 47,530 10,977
Accrued management fees 55,285 53,158
Patient deposits and trust liabilities 76,189 81,190
Other accrued expenses 19,831 23,357
Estimated settlements due to third parties 465,470 417,145
---------------- ----------------
Total current liabilities 2,158,026 1,886,846
Mortgage notes and capital lease obligations 855,800 904,605
Due to affiliates 185,874 240,973
---------------- ----------------
Total liabilities 3,199,700 3,032,424
---------------- ----------------
Partners' capital (deficit)
Limited partners 10,622,518 10,601,361
General partners (272,979) (274,571)
---------------- ------------
Total partners' capital 10,349,539 10,326,790
---------------- ----------------
Total liabilities and partners' capital $ 13,549,239 $ 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 June 30, 1996 and 1995
and the Six Months Ended June 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
----------------------- ------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income:
Patient service revenues, net $ 3,712,495 $ 3,210,927 $ 7,451,125 $ 6,503,132
Other income 7,770 7,469 14,731 14,495
--------------- --------------- --------------- ----------------
Total revenue 3,720,265 3,218,396 7,465,856 6,517,627
--------------- --------------- --------------- ----------------
Operating expenses:
Costs of patient service 2,073,283 1,688,932 4,033,043 3,270,407
Dietary 259,271 263,610 504,733 501,518
Household and plant 289,995 295,026 576,172 582,572
General and administrative 589,561 519,119 1,165,383 1,104,130
Employee health and welfare 184,331 181,170 402,456 366,857
Depreciation and amortization 113,032 124,399 246,890 247,199
--------------- --------------- --------------- ----------------
Total operating expenses 3,509,473 3,072,256 6,928,677 6,072,683
--------------- --------------- --------------- ----------------
Operating income 210,792 146,140 537,179 444,944
--------------- --------------- --------------- ----------------
Other income (expense):
Interest income 29,846 12,093 59,748 24,833
Interest expense (22,153) (26,233) (45,157) (52,238)
Provider fees (30,999) (30,999) (61,998) (61,998)
--------------- --------------- --------------- ----------------
Total other
income (expense) (23,306) (45,139) (47,407) (89,403)
--------------- --------------- --------------- ----------------
Net income from
continuing operations 187,486 101,001 489,772 355,541
--------------- --------------- --------------- ----------------
Discontinued Operations:
Income (loss) from discontinued
rental operations 25,511 (3,408) (45,558) (44,043)
Writedown of asset value - (807,002) - (807,002)
--------------- --------------- --------------- ----------------
Total income (loss) from
discontinued operations 25,511 (810,410) (45,558) (851,045)
--------------- --------------- --------------- ----------------
Net income (loss) $ 212,997 $ (709,409) $ 444,214 $ (495,504)
=============== =============== =============== ================
Net income (loss) per weighted
average limited partnership unit
outstanding $ 8.65 $ (28.82) $ 18.04 $ (20.13)
=============== =============== =============== ================
</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, 1996 and December 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
Limited Partners General
Units 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
($17.12 per limited
partnership unit outstanding) (391,962) (29,503) (421,465)
Net income 413,119 31,095 444,214
----------- ----------- --------- -----------
Partners' capital (deficit),
June 30, 1996 22,895 $10,622,518 $(272,979) $10,349,539
=========== =========== ========= ===========
</TABLE>
6
<PAGE> 7
RWB MEDICAL INCOME PROPERTIES 1 LIMITED PARTNERSHIP
Statements of Cash Flows
Six Months Ended June 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
---------------- ----------------
<S> <C> <C>
Cash flows from operating activities:
Cash received from patient care $ 7,632,230 $ 6,777,281
Cash paid to suppliers and employees (6,628,422) (6,056,215)
Interest received 59,748 24,834
Interest paid (45,157) (52,238)
Provider fees (61,998) (61,998)
Other operating receipts 14,731 15,325
---------------- ----------------
Net cash provided by operating activities 971,132 646,989
---------------- ----------------
Cash flows from investing activities:
Collection on loans 38,529 35,537
Cash payments for capital expenditures (165,727) (312,101)
---------------- -----------------
Net cash used by investing activities (127,198) (276,564)
---------------- -----------------
Cash flows from financial activities:
Additional debt obligations - 218,855
Principal payment on debt obligations (48,710) (40,340)
Net borrowings (payments) to related parties (55,099) (14,344)
Distributions to partners (421,463) (738,550)
---------------- -----------------
Net cash used by financing activities (525,272) (574,379)
---------------- -----------------
Net increase (decrease) in cash 318,662 (203,954)
Cash and equivalents, beginning of period 876,850 1,327,313
---------------- ----------------
Cash and equivalents, end of period $ 1,195,512 $ 1,123,359
================ ================
Reconciliation of net income to net cash
provided by operating activities:
Net income $ 444,214 $ (495,504)
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 246,890 394,478
Writedown of Asset Value - 807,002
Decrease (increase) in accounts receivable 182,906 (398,324)
(Increase) in third party receivables (1,801) (87,583)
(Increase) in prepaid expenses and other assets (123,837) (87,919)
Increase in accounts payable and
accrued expenses 222,760 514,839
---------------- ----------------
Net cash provided by operating activities $ 971,132 $ 646,989
================ ================
</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 June 30, 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 $ 940,000 $ 980,000
Capitalized lease obligation payable monthly
with interest rates from 8% to 13.46% - 8,710
---------------- ----------------
940,000 988,710
Less amounts due in one year or less 84,200 84,105
---------------- ----------------
$ 855,800 $ 904,605
================ ================
</TABLE>
The aggregate annual maturities of mortgage notes payable and capital
lease obligations for the succeeding three fiscal years are as follows:
<TABLE>
<S> <C>
1996 $ 40,000
1997 80,000
1998 820,000
-----------------
$ 940,000
=================
</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 canceled 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, 1996 and December 31, 1995 is as follows:
<TABLE>
<CAPTION>
1996 1995
---------------- ----------------
<S> <C> <C>
Land $ 525,000 $ 525,000
Buildings and improvements 11,701,975 11,590,498
Furniture and equipment 1,386,890 1,322,600
Property under capitalized leases - 16,870
---------------- ----------------
Total 13,613,865 13,454,968
Accumulated depreciation (5,389,515) (5,154,161)
---------------- ----------------
Net property, plant and equipment $ 8,224,350 $ 8,300,807
================ ================
</TABLE>
(4) Related Party Transactions
Through June 30, 1996, Qualicorp, Inc., the parent of RWB Management
Corp. (the Managing General Partner of the Partnership) charged $61,224
of property management fees and $78,459 of administrative expense to the
Partnership.
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.
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 June 30, 1996
to $1,195,512. This represents an increase of $318,662 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. The increase in
accounts payable is due to timing of routine payable cycles. Census levels at
the Southpoint Manor facility were lower in the quarter due to seasonal
adjustments. The July 1996 census has increased, but has not yet returned to
prior levels.
The Partnership presently has one nursing home located in Alabama. According to
industry representatives, the State of Alabama has reached an impasse with the
Health Care Financing Administration (HCFA) which will cause the September
payments for Medicaid patients to be delayed by one month to October 1996. The
Partnership receives approximately $170,000 per month from the Medicaid
program. In addition, the State of Alabama has proposed significant rate
reductions and changes in eligibility requirements which will reduce Medicaid
census levels if implemented.
As indicated in the prior quarterly report, the Partnership has engaged an
investment firm to assist it in evaluating the Partnership's strategic
alternatives. It was expected this evaluation would lead to a sale of the
Partnership properties. However, due to the uncertainty of the Alabama Medicaid
issues described above, the prospective buyer has requested a 90 day extension
of the letter of intent which the Partnership intends to grant.
In May 1996, the Partnership paid a distribution of $8.56 per unit, which
equals a 4% annualized 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
Net income from continuing operations was $187,486 for the quarter ended June
30, 1996, compared to $101,001 for the same quarter of 1995. Patient service
revenue between quarters increased $501,869 due to higher ancillary service
revenue. Operating expenses increased $437,217 to $3,509,473. Ancillary
expenses were $352,726 higher in the second quarter of 1996 than 1995. Nursing
salaries were $56,014 higher in the current quarter as well. General and
Administrative expenses were higher in 1996, as compared to 1995, due to salary
costs and fees. Employee health and benefit costs were slightly higher in 1996
than 1995 due to higher health insurance costs and employment taxes.
Interest income was $29,846 in the quarter as compared to $12,093 in 1995 due
to interest earned on the one million dollar note due from the purchaser of the
Lakecrest Nursing Home.
The Partnership recorded income from discontinued operations for the quarter of
$24,551. The 1995 loss reflects expenses associated with the rental operation
of $3,408. In addition, the Partnership recognized in the second quarter of
1995 a write down of the Merrillville, Indiana facility of $807,002.
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: July 31, 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 JUNE 30, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,195,512
<SECURITIES> 0
<RECEIVABLES> 3,230,199
<ALLOWANCES> 798,261
<INVENTORY> 0
<CURRENT-ASSETS> 5,309,196
<PP&E> 13,613,865
<DEPRECIATION> 5,389,515
<TOTAL-ASSETS> 13,549,239
<CURRENT-LIABILITIES> 2,158,026
<BONDS> 855,800
0
0
<COMMON> 0
<OTHER-SE> 10,349,539<F1>
<TOTAL-LIABILITY-AND-EQUITY> 13,549,239
<SALES> 7,451,125
<TOTAL-REVENUES> 7,465,856
<CGS> 0
<TOTAL-COSTS> 6,928,677
<OTHER-EXPENSES> 61,998
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 45,157
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 489,772
<DISCONTINUED> (45,558)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 444,214
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>REPRESENTS TOTAL PARTNERSHIP CAPITAL INCLUDING NET INCOME NET OF
DISTRIBUTIONS PAID.
</FN>
</TABLE>
