<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 September 30, 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 September 30, 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
Item 1. Report on Form 8-K ............................................ 11
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, September 30, 1996 and December 31, 1995 ........... 4
Statements of Operations for the three
months ended September 30, 1996 and 1995 and the nine months
ended September 30, 1996 and 1995 .................................. 5
Statements of Partners' Capital for the nine months
ended September 30, 1996 and 1995 .................................. 6
Statements of Cash Flows for the nine months ended
September 30, 1996 and 1995 ........................................ 7
Notes to Financial Statements ...................................... 8-9
</TABLE>
3
<PAGE> 4
RWB MEDICAL INCOME PROPERTIES 1 LIMITED PARTNERSHIP
Balance Sheets
September 30, 1996 and December 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
ASSETS 1996 1995
----------- -----------
<S> <C> <C>
Current Assets
Cash and equivalents $ 1,508,707 $ 876,850
Accounts receivable, less allowance
for doubtful accounts of $836,514 in 1996
and $837,727 in 1995 2,845,127 2,614,844
Estimated settlements due from third parties 730,883 373,738
Note receivable due within one year - 1,045,102
Prepaid expenses and other assets 153,283 127,472
----------- -----------
Total current assets 5,238,000 5,038,006
Property, plant and equipment, net of
accumulated depreciation 8,159,222 8,300,807
Deferred financing costs, less accumulated
amortization of $33,739 in 1996 and
$26,677 in 1995 13,339 20,401
----------- -----------
Total assets $13,410,561 $13,359,214
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Current Liabilities
Current portion of long term debt $ 80,000 $ 84,105
Accounts payable 1,047,568 834,703
Accrued payroll and payroll taxes 194,358 235,579
Accrued vacation pay 148,040 146,439
Accrued real estate taxes 99,772 193
Accrued insurance 49,394 10,977
Accrued management fees 55,285 53,158
Patient deposits and trust liabilities 79,291 81,190
Other accrued expenses 19,831 23,357
Estimated settlements due to third parties 315,257 417,145
----------- -----------
Total current liabilities 2,088,796 1,886,846
Mortgage notes and capital lease obligations 840,000 904,605
Due to affiliates 234,315 240,973
----------- -----------
Total liabilities 3,163,111 3,032,424
----------- -----------
Partners' capital (deficit)
Limited partners 10,527,575 10,601,361
General partners (280,125) (274,571)
----------- -----------
Total partners' capital 10,247,450 10,326,790
----------- -----------
Total liabilities and partners' capital $13,410,561 $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 September 30, 1996 and 1995
and the Nine Months Ended September 30, 1996 and 1995
(Unaudited)
<TABLE>
Three Months Ended Nine Months Ended
September 30 September 30
------------------------------ --------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income:
Patient service revenues, net $ 3,837,108 $3,293,074 $11,288,233 $ 9,872,160
Rental income - - - 36,300
Other net 7,650 6,286 22,381 19,828
---------------- ---------- ----------- -----------
Total revenue 3,844,758 3,299,360 11,310,614 9,928,288
---------------- ---------- ----------- -----------
Operating expenses:
Costs of patient service 2,143,514 1,780,046 6,176,557 5,050,453
Dietary 269,133 267,699 773,866 769,217
Household and plant 298,449 307,685 874,622 890,257
General and administrative 613,521 527,786 1,778,904 1,631,915
Employee health and welfare 162,111 182,320 564,567 549,178
Depreciation and amortization 124,915 126,999 371,805 471,911
---------------- ---------- ----------- -----------
Total operating expenses 3,611,643 3,192,535 10,540,321 9,362,931
---------------- ---------- ----------- -----------
Operating income 233,115 106,825 770,293 565,357
---------------- ---------- ----------- -----------
Other income (expense):
Interest income 27,848 20,230 87,596 45,063
Interest expense (21,924) (28,616) (67,081) (80,854)
Provider fees (30,999) (30,999) (92,996) (92,996)
---------------- ---------- ----------- -----------
Total other
income (expense) (25,075) (39,385) (72,481) (128,787)
---------------- ---------- ----------- -----------
Net income from
continuing operations 208,040 67,440 697,812 436,570
---------------- ---------- ----------- -----------
Discontinued Operations
Loss from operations of dis-
continued operations of Lakecrest
Nursing Home (99,397) (302,073) (144,955) (359,703)
Loss on sale of Lakecrest Nursing
Home - (586,906) - (1,393,908)
---------------- ---------- ----------- -----------
Net loss from discontinued
operations (99,397) (888,979) (144,955) (1,753,611)
---------------- ---------- ----------- -----------
Net income (loss) $ 108,643 $ (821,539) $ 552,857 $(1,317,041)
================ ========== =========== ===========
Net income (loss) per weighted
average limited partnership unit
outstanding $ 4.41 $ (33.37) $ 22.46 $ (53.50)
================ ========== =========== ===========
</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 Nine Months Ended September 30, 1996 and December 31, 1995
(Unaudited)
<TABLE>
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
($25.68 per limited
partnership unit outstanding) (587,943) (44,254) (632,197)
Net income (loss) 514,157 38,700 552,857
-------- ----------- --------- -----------
Partners' capital (deficit),
September 30, 1996 22,895 $10,527,575 $(280,125) $10,247,450
======== =========== ========= ===========
</TABLE>
6
<PAGE> 7
RWB MEDICAL INCOME PROPERTIES 1 LIMITED PARTNERSHIP
Statements of Cash Flows
Nine Months Ended September 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
------------- ------------
<S> <C> <C>
Cash flows from operating activities:
Cash received from patient care $ 10,598,917 $ 9,847,781
Cash paid to suppliers and employees (10,031,338) (8,576,294)
Interest received 87,596 45,063
Interest paid (67,081) (80,854)
Provider fees (92,996) (92,996)
Other operating receipts 22,381 19,828
------------ -----------
Net cash provided by operating activities 517,479 1,162,528
------------ -----------
Cash flows from investing activities:
Proceeds from sale of property - 4,000,000
Loans made - (1,133,261)
Collection on loans 1,045,102 53,864
Cash payments for capital expenditures (223,159) (160,358)
------------ -----------
Net cash provided by investing activities 821,943 2,760,245
------------ -----------
Cash flows from financial activities:
Additional debt obligations - 218,855
Principal payment on debt obligations (68,710) (280,019)
Net borrowings (payments) to related parties (6,658) 4,757
Distributions to partners (632,197) (1,107,825)
------------ -----------
Net cash used by financing activities (707,565) (1,164,232)
------------ -----------
Net increase in cash and equivalents 631,857 2,758,541
Cash and equivalents, beginning of period 876,850 1,327,312
------------ -----------
Cash and equivalents, end of period $ 1,508,707 $ 4,085,853
============ ===========
Reconciliation of net income to net cash
provided by operating activities:
Net income $ 552,857 $(1,317,041)
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 371,805 471,911
Loss on disposal of property - 1,753,611
(Increase) in accounts receivable (230,283) (73,106)
Decrease (increase) in third party receivables (459,033) 12,418
(Increase) in prepaid expenses and other assets (25,810) (26,413)
Increase in accounts payable and
accrued expenses 307,943 341,148
------------ -----------
Net cash provided by operating activities $ 517,479 $ 1,162,528
============ ===========
</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 September 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 $920,000 $980,000
Capitalized lease obligation payable monthly
with interest rates from 8% to 13.46% - 8,710
-------- --------
920,000 988,710
Less amounts due in one year or less 80,000 84,105
-------- --------
$840,000 $904,605
======== ========
</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>
1996 $ 20,000
1997 80,000
1998 820,000
------------
$ 920,000
============
</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. When the acquisition occurred, the Partnership held the
property for sale. The sale of the assets occurred on September 1, 1995
(see footnote 4 below).
A summary of land, buildings, related personal property and accumulated
depreciation at September 30, 1996 and December 31, 1995 is as follows:
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Land $ 525,000 $ 525,000
Buildings and improvements 11,688,831 11,590,498
Furniture and equipment 1,457,467 1,322,600
Property under capitalized leases - 16,870
----------- -----------
Total 13,671,298 13,454,968
Accumulated depreciation (5,512,076) (5,154,161)
----------- -----------
Net property, plant and equipment $ 8,159,222 $ 8,300,807
=========== ===========
</TABLE>
(4) Discontinued Operations and Sale of Lakecrest Nursing Home
Lakecrest Nursing Home, located in Merrillville, Indiana, was sold on
September 1, 1995. The loss from discontinued operations was $302,073 for
the quarter ended September 30, 1995 and $359,703 for the nine months
ended September 30, 1995. In addition, the Partnership recorded a loss on
the sale of the Lakecrest Nursing Home of $586,906 for the quarter ended
September 30, 1995 and $1,393,908 for the nine months ended September 30,
1995.
As noted in footnote 3, the operation of the Lakecrest Nursing Home was
acquired on May 1, 1995 as a stock acquisition. Prior to that time, the
Partnership had recorded rental income from the leased assets.
Consequently, the operation of the facility has been shown as a
discontinued operation effective May 1, 1995. The results of operations
for the period ended September 30, 1995 were:
<TABLE>
<S> <C>
Revenue, net $1,016,496
Expense 1,376,199
----------
Net Loss $ (359,703)
==========
</TABLE>
(5) Related Party Transactions
Through September 30, 1996, QualiCorp, Inc., the parent of RWB Management
Corp. (the Managing General Partner of the Partnership) charged $108,269
of property management fees and $118,855 of administrative expense to the
Partnership.
Through September 30, 1995, QualiCorp, Inc., the parent of RWB Management
Corp. (the Managing General Partner of the Partnership) charged $92,046 of
property management fees and $114,711 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 balances for the nine months ended September 30 have increased $631,857.
This increase was due to the collection of the one million dollar promissory
note which was received in September 1996. Accounts receivable due from
patients continued to increase in the third quarter due to continuing slow
certifications of Medicaid patients and delayed payments from the managed care
companies. Ongoing physical plant improvement and equipment additions are
scheduled to continue until the fourth quarter and will total approximately
$50,000.
Due to the continued uncertainty of the Alabama Medicaid issues referred to in
prior quarterly reports, the prospective purchaser of the Partnership assets
has communicated it will not proceed with the proposed transaction. The
Managing General Partner, in conjunction with its investment bankers, has
re-opened discussions with other companies who had expressed an interest in the
assets in the hope of negotiating a sale of the assets to one of them.
The Partnership will make its regular distribution of $8.56 per unit on
November 15.
The Partnership will continue to make quarterly distributions to its limited
partners based upon cash flow generated by facility operations after
considering cash requirements for debt services, needed improvement to its
property and cash reserves. There can be no assurance the current distribution
of $8.56 per unit per quarter will be maintained into 1997.
Operations
The Partnership net income for the quarter ended September 30, 1996 was
$108,643 which included a loss from the discontinued operation of Lakecrest
Nursing Home of $99,397. The net income from continuing operations of $208,040
compared favorably to the third quarter of 1995 profit of $67,440. The
improved earnings in 1996 as compared to 1995 is due to improved managed care
rates.
Expenses on a year to date basis reflect the fact the Partnership's continued
expansion of its ancillary programs. The cost of patient care increased for
the nine months ended September 30, 1996 over 1995 by $1,126,104 with
approximately $1,067,500 being attributed to the expanded ancillary programs.
General and Administrative costs increased $146,989 due to higher salary costs,
increased insurance charges and legal fees.
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: October 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 SEPTEMBER 30, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,508,707
<SECURITIES> 0
<RECEIVABLES> 3,681,641
<ALLOWANCES> 836,514
<INVENTORY> 0
<CURRENT-ASSETS> 5,238,000
<PP&E> 13,671,298
<DEPRECIATION> 5,512,076
<TOTAL-ASSETS> 13,410,561
<CURRENT-LIABILITIES> 2,088,796
<BONDS> 840,000
0
0
<COMMON> 0
<OTHER-SE> 10,247,450<F1>
<TOTAL-LIABILITY-AND-EQUITY> 13,410,561
<SALES> 11,288,233
<TOTAL-REVENUES> 11,310,614
<CGS> 0
<TOTAL-COSTS> 10,540,321
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 67,081
<INCOME-PRETAX> 697,812
<INCOME-TAX> 0
<INCOME-CONTINUING> 697,812
<DISCONTINUED> (144,955)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 552,857
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>REPRESENTS TOTAL PARTNERSHIP CAPITAL INCLUDING NET INCOME NET OF
DISTRIBUTIONS PAID.
</FN>
</TABLE>
