<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, 1997 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)
1100 Abernathy Road, Building 500, Suite 715
--------------------------------------------
Atlanta, Georgia 30328
----------------------
(Address of Principal Executive Office)
7000 Central Parkway, Suite 850
-------------------------------
Atlanta, Georgia 30328
----------------------
(Former Address of Principal Executive Office, Moved Since Last Report)
(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, 1997 was
22,895.
1
<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, 1997 and December 31, 1996......................................... 4
Statements of Operations for the three
months ended September 30, 1997 and 1996 and the nine months
ended September 30, 1997 and 1996 ............................................................... 5
Statements of Partners' Capital for the nine months
ended September 30, 1997 and 1996................................................................ 6
Statements of Cash Flows for the nine months ended
September 30, 1997 and 1996...................................................................... 7
Notes to Financial Statements.................................................................... 8 - 9
</TABLE>
3
<PAGE> 4
RWB MEDICAL INCOME PROPERTIES 1 LIMITED PARTNERSHIP
Balance Sheets
September 30, 1997 and December 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
ASSETS 1997 1996
------ ---------- ------------
<S> <C> <C>
Current Assets
Cash and equivalents $4,632,644 $ 766,621
Accounts receivable, less allowance
for doubtful accounts of $719,310 in 1997
and $930,869 in 1996 368,528 3,172,977
Note receivable due within one year -- 956,362
Prepaid expenses and other assets -- 130,423
---------- ------------
Total current assets 5,001,172 5,026,383
Property, plant and equipment, net of
accumulated depreciation -- 8,067,068
Deferred financing costs, less accumulated
amortization of $47,078 in 1997 and
$36,093 in 1996 -- 10,985
---------- ------------
Total assets $5,001,172 $ 13,104,436
========== ============
LIABILITIES AND PARTNERS' CAPITAL
Current Liabilities
Current portion of long term debt $ -- $ 80,000
Accounts payable 428,784 809,741
Accrued payroll and payroll taxes 30,661 294,126
Accrued vacation pay -- 190,526
Accrued real estate taxes -- 196
Accrued insurance 100,961 4,888
Accrued management fees -- 55,285
Patient deposits and trust liabilities -- 66,502
Other accrued expenses 9,481 23,203
Estimated settlements due to third parties 1,689,799 513,939
---------- ------------
Total current liabilities 2,259,686 2,038,406
Mortgage notes and capital lease obligations -- 813,333
Due to affiliates 52,780 260,679
---------- ------------
Total liabilities 2,312,466 3,112,418
---------- ------------
Partners' capital (deficit)
Limited partners 2,688,706 10,290,023
General partners -- (298,005)
---------- ------------
Total partners' capital 2,688,706 9,992,018
---------- ------------
Total liabilities and partners' capital $5,001,172 $ 13,104,436
========== ============
</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, 1997 and 1996
and the Nine Months Ended September 30, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
------------------------- ---------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income:
Patient service revenues, net $(102,821) $ 3,837,108 $ 6,752,219 $ 11,288,233
Other revenue 1,532 7,650 15,276 22,381
--------- ----------- ----------- ------------
Total revenue (101,289) 3,844,758 6,767,495 11,310,614
--------- ----------- ----------- ------------
Operating expenses:
Costs of patient service 11,273 2,143,514 3,932,683 6,176,557
Dietary 113 269,133 445,366 773,866
Household and plant -- 298,449 507,382 874,622
General and administrative 32,800 613,521 1,319,458 1,778,904
Employee health and welfare 2,140 162,111 317,248 564,567
Rent -- -- 458,794 --
Depreciation and
amortization -- 124,915 119,262 371,805
--------- ----------- ----------- ------------
Total operating expenses 46,326 3,611,643 7,100,193 10,540,321
--------- ----------- ----------- ------------
Operating income (loss) (147,615) 233,115 (332,698) 770,293
--------- ----------- ----------- ------------
Other income (expense):
Interest income 58,144 27,848 243,396 87,596
Interest expense -- (21,924) (32,844) (67,081)
Provider fees -- (30,999) (51,665) (92,996)
Gain on sale of properties -- -- 7,463,418 --
--------- ----------- ----------- ------------
Total other
income (expense) 58,144 (25,075) 7,622,305 (72,481)
--------- ----------- ----------- ------------
Net income from continuing
operations (loss) (89,471) 208,040 7,289,607 697,812
Discontinued Operations:
Income (loss) from dis-
continued rental operations -- (99,397) (72,812) (144,955)
--------- ----------- ----------- ------------
Net income (loss) $ (89,471) $ 108,643 $ 7,216,795 $ 552,857
========= =========== =========== ============
Net income (loss) per weighted
average limited partnership unit
outstanding $ (3.91) $ 4.41 $ 301.55 $ 22.46
========= =========== =========== ============
</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, 1997 and December 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Limited Partners General
Units Amount Partners Total
----- ------ -------- -----
<S> <C> <C> <C> <C>
Partners' capital (deficit),
December 31, 1996 22,895 $ 10,290,023 $ (298,005) $ 9,992,018
Distributions to partners
($633.56 per limited
partnership unit outstanding) (14,505,356) (14,751) (14,520,107)
Net income 6,904,039 312,756 7,216,795
--------- ------------ ------------ -----------
Partners' capital,
September 30, 1997 22,895 $ 2,688,706 $ 0 $ 2,688,706
========= ============ ============ ===========
</TABLE>
6
<PAGE> 7
RWB MEDICAL INCOME PROPERTIES 1 LIMITED PARTNERSHIP
Statements of Cash Flows
Nine Months Ended September 30, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Cash received from patient care $ 9,173,374 $ 10,598,917
Cash paid to suppliers and employees (7,797,902) (10,031,338)
Interest received 243,396 87,596
Interest paid (32,844) (67,081)
Provider fees (51,665) (92,996)
Other operating receipts 15,277 22,381
------------ ------------
Net cash provided by operating activities 1,549,636 517,479
------------ ------------
Cash flows from investing activities:
Proceeds from sale of property 17,046,857 --
Collection on loans -- 1,045,102
Cash payments for capital expenditures (13,364) (223,159)
------------ ------------
Net cash provided by investing activities 17,033,493 821,943
------------ ------------
Cash flows from financial activities:
Payment on debt obligations (6,268) (68,710)
Net borrowings (payments) to related parties (190,731) (6,658)
Distributions to partners (14,520,107) (632,197)
------------ ------------
Net cash used by financing activities (14,717,106) (707,565)
------------ ------------
Net increase in cash and equivalents 3,866,023 631,857
Cash and equivalents, beginning of period 766,621 876,850
------------ ------------
Cash and equivalents, end of period $ 4,632,644 $ 1,508,707
============ ============
Reconciliation of net income to net cash
provided by operating activities:
Net income $ 7,216,795 $ 552,857
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 119,262 371,805
Gain on sale of properties (7,463,418) --
Decrease in accounts receivable 2,804,449 (230,283)
Decrease (increase) in third party receivables (219,499) (459,033)
(Increase) in prepaid expenses and other assets 130,422 (25,810)
Increase in accounts payable and
accrued expenses (1,038,375) 307,943
------------ ------------
Net cash provided by operating activities $ 1,549,636 $ 517,479
============ ============
</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, 1996 audited financial statements have been omitted from this
report.
(2) Sale of Properties
On March 31, 1997, RWB Medical Income Properties 1 Limited Partnership
(the "Partnership") closed the sale of its interests in its two remaining
long-term care facilities in Florida and Alabama, and the personal
property and intangible assets related to the operation of those
facilities (the "Properties"). The Properties were sold to Omega
Healthcare Investors, Inc., a Maryland corporation ("Omega"), pursuant to
the asset Purchase and Sale Agreement dated as of February 3, 1997 (the
"Sale Agreement"), by and among the Partnership, RWB Management Corp., the
managing general partner of the Partnership, and Omega as previously
reported by the Partnership.
Aggregate net proceeds from the sale of the Properties was $16,446,857.
The net proceeds and other assets of the Partnership will be distributed
to the Limited Partners of the Partnership in the anticipated liquidation
of the Partnership as described in the Partnership's Current Reports on
Form 8-K filed February 18, 1997 and July 18, 1997. In addition, included
in cash and equivalents is an escrow account for $600,000 which is subject
to the terms of the indemnification provision of the Sale Agreement.
In connection with the closing of the sale of the Properties, the
Partnership entered into an interim lease of the Properties pursuant to
the terms of the Sale Agreement and under which the Partnership provided
for management and operation of the Properties for an interim period. The
lease was terminated May 31, 1997.
(3) Mortgage Notes Payable and Capitalized Lease Obligations
Mortgage notes payable at September 30, 1997 and December 31, 1996 are
summarized as follows:
<TABLE>
<CAPTION>
1997 1996
-------- ---------
<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 $ - $ 893,333
Less amounts due in one year or less - 80,000
-------- ---------
$ - $ 813,333
======== =========
</TABLE>
8
<PAGE> 9
(4) Land, Buildings and Related Personal Property
A summary of land, buildings, related personal property and accumulated
depreciation at September 30, 1997 and December 31, 1996 is as follows:
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Land $ -- $ 525,000
Buildings and improvements -- 11,866,426
Furniture and equipment -- 1,309,265
----------- -----------
Total -- 13,700,691
-----------
Accumulated depreciation -- 5,633,623
----------- -----------
Net property, plant and equipment $ -- $ 8,067,068
=========== ===========
</TABLE>
(5) Related Party Transactions
Through September 30, 1997 QualiCorp, Inc., the parent of RWB Management
Corp. (the Managing General Partner of the Partnership) charged $49,940 of
property management fees and $207,902 of administrative expense to the
Partnership.
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.
9
<PAGE> 10
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
Cash and equivalents balances totaled $4,632,644 at September 30, 1997. As
noted in Footnote 2 of the financial statement, the Partnership has sold its
operating assets. The Partnership is presently collecting its remaining
accounts receivables, paying vendors the remaining balances owed and filing
terminating Medicare and Medicaid cost reports.
The Partnership made the first installment of the liquidation proceeds totaling
$11,795,716 or $515 per unit on May 12, 1997. In addition, on July 11, 1997,
the Partnership distributed $2,518,450 or $110 per unit to the limited
partners. The Partnership had planned to distribute $158 in March 1998; however
the Managing General Partner felt that sufficient cash was available to pay the
$110 distribution. The Partnership expects to distribute the difference of $48
in March 1998, along with any additional funds which may exceed necessary
reserves at that time; however, should the estimated settlement liabilities
change or a claim asserted under the indemnification provision of the Sale
Agreement be made, then such claims or settlement could reduce the funds
available for future distribution.
Operations
The Partnerships' net loss for the quarter ended September 30, 1997 was
$89,471. The operating loss was attributed to additions to the Medicare
settlement reserves, cost reimbursements and other expenses, less interest
earned on cash or equivalent balances of $58,144. It is anticipated that the
future close down expenses of the Partnership will approximate $255,000,
exclusive of any changes to estimated settlement liabilities or claims asserted
under the indemnification provision of the Sales Agreement.
10
<PAGE> 11
PART II
Item 6. Exhibit and reports on 8K
A. Exhibits - 27 Financial Data Schedule (for SEC purposes only).
B. A report on Form 8-K was filed July 18, 1997 describing pursuant to
Item 5 events pertaining to the disposition of Partnership assets.
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: November 7, 1997
----------------------------------------- ------------------
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 1 LIMITED PARTNERSHIP FOR
THE QUARTER ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 4,632,644
<SECURITIES> 0
<RECEIVABLES> 1,087,838
<ALLOWANCES> 719,310
<INVENTORY> 0
<CURRENT-ASSETS> 5,001,172
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,001,172
<CURRENT-LIABILITIES> 2,259,686
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,688,706<F1>
<TOTAL-LIABILITY-AND-EQUITY> 5,001,172
<SALES> 6,752,219
<TOTAL-REVENUES> 6,767,495
<CGS> 0
<TOTAL-COSTS> 7,100,193
<OTHER-EXPENSES> 51,665
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 32,844
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (173,812)
<DISCONTINUED> (72,812)
<EXTRAORDINARY> 7,463,418
<CHANGES> 0
<NET-INCOME> 7,216,795
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>REPRESENT TOTAL PARTNERSHIP CAPITAL INCLUDING NET INCOME NET OF
DISTRIBUTIONS.
</FN>
</TABLE>
