<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, 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)
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, 1997 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 . . . . . . . . 9
PART II
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</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, 1997 and December 31, 1996 . . . . . . . . . . 4
Statements of Operations for the three
months ended March 31, 1997 and 1996. . . . . . . . . . . . . . . . . . . 5
Statements of Partners' Capital for the three
months ended March 31, 1997 and December 31, 1996. . . . . . . . . . . . 6
Statements of Cash Flows for the three months ended
March 31, 1997 and 1996 . . . . . . . . . . . . . . . . . . . . . . . . . 7
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . 8-9
</TABLE>
3
<PAGE> 4
RWB MEDICAL INCOME PROPERTIES 1 LIMITED PARTNERSHIP
Balance Sheets
March 31, 1997 and December 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
ASSETS 1997 1996
------ ------------ -----------
<S> <C> <C>
Current Assets
Cash and equivalents $ 1,947,806 $ 766,621
Accounts receivable, less allowance
for doubtful accounts of $1,037,012 in 1997
and $930,869 in 1996 2,583,786 3,172,977
Due from escrow agent 17,064,025 -
Estimated settlements due from third parties 364,328 956,362
Prepaid expenses and other assets 37,705 130,423
----------- -----------
Total current assets 21,997,650 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 $21,997,650 $13,104,436
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
Current Liabilities
Current portion of long term debt $ - $ 80,000
Accounts payable 1,270,241 809,741
Accrued payroll and payroll taxes 297,798 294,126
Accrued vacation pay - 190,526
Accrued real estate taxes - 196
Accrued insurance 113,150 4,888
Accrued management fees 1,305,813 55,285
Patient deposits and trust liabilities 47,343 66,502
Other accrued expenses 19,863 23,203
Estimated settlements due to third parties 1,498,140 513,939
----------- -----------
Total current liabilities 4,552,348 2,038,406
Mortgage notes and capital lease obligations - 813,333
Due to affiliates 122,895 260,679
----------- -----------
Total liabilities 4,675,243 3,112,418
----------- -----------
Partners' capital (deficit)
Limited partners 17,630,926 10,290,023
General partners (308,519) (298,005)
----------- -----------
Total partners' capital 17,322,407 9,992,018
----------- -----------
Total liabilities and partners' capital $21,997,650 $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 March 31, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
---------- -----------
<S> <C> <C>
Income:
Patient service revenues, net $4,065,294 $3,738,630
Other revenue 7,421 6,961
---------- ----------
Total revenue 4,072,715 3,745,591
---------- ----------
Operating expenses:
Costs of patient service 2,300,061 1,959,760
Dietary 259,103 245,462
Household and plant 292,231 286,178
General and administrative 752,477 575,822
Employee health and welfare 176,981 218,125
Depreciation and amortization 119,262 133,857
---------- ----------
Total operating expenses 3,900,115 3,419,204
---------- ----------
Operating income 172,600 326,387
---------- ----------
Other income (expense):
Interest income 13,504 29,902
Interest expense (21,758) (23,003)
Provider fees (30,999) (30,999)
Gain on sale of properties 7,480,586 -
---------- ----------
Total other income (expense) 7,441,333 (24,100)
---------- ----------
Net income before loss on discontinued operations 7,613,933 302,287
Discontinued Operations:
Income (loss) from discontinued
rental operations (72,812) (71,070)
---------- ----------
Net income $7,541,121 $ 231,217
========== ==========
Net income per weighted average
limited partnership unit outstanding $ 329.19 $ 9.39
========== ==========
</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, 1997 and December 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Limited Partners General
Unit 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
($8.56 per limited
partnership unit outstanding) (195,981) (14,751) (210,732)
Gain on sale of properties 7,480,586 - 7,480,586
Net income 56,298 4,237 60,535
-------- ----------- --------- -----------
Partners' capital (deficit),
March 31, 1997 22,895 $17,630,926 $(308,519) $17,322,407
======== =========== ========= ===========
</TABLE>
6
<PAGE> 7
RWB MEDICAL INCOME PROPERTIES 1 LIMITED PARTNERSHIP
Statements of Cash Flows
Three Months Ended March 31, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Cash received from patient care $ 5,001,899 $ 3,795,941
Cash paid to suppliers and employees (3,420,737) (3,244,110)
Interest received 13,504 29,902
Interest paid (21,757) (23,003)
Provider fees (30,999) (30,999)
Other operating receipts 7,421 6,961
----------- -----------
Net cash provided by operating activities 1,549,331 534,692
----------- -----------
Cash flows from investing activities:
Collection on loans - 19,073
Cash payments for capital expenditures (13,364) (70,312)
----------- -----------
Net cash provided (used) by investing activities (13,364) (51,239)
----------- -----------
Cash flows from financing activities:
Principal payment on debt obligations (6,268) (20,857)
Net borrowings (payments) to related parties (137,782) (37,460)
Distributions to partners (210,732) (210,732)
----------- -----------
Net cash used by financing activities (354,782) (269,049)
----------- -----------
Net increase (decrease) in cash 1,181,185 214,404
Cash and equivalents, beginning of period 766,621 876,850
----------- -----------
Cash and equivalents, end of period $ 1,947,806 $ 1,091,254
=========== ===========
Reconciliation of net income to net cash
provided by operating activities:
Net income $ 7,541,121 $ 231,217
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 119,262 133,857
Gain on sale of property (7,480,586) -
(Increase) decrease in:
Accounts receivable 589,191 284,565
Third party receivables 347,416 (227,254)
Prepaid expenses and other assets (141,338) (151,778)
Increase (decrease) in:
Accounts payable and accrued expenses 574,265 264,085
----------- -----------
Net cash provided by operating activities $ 1,549,331 $ 534,692
=========== ===========
</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 previously reported
by the Partnership.
Aggregate net proceeds from the sale of the Properties was $16,464,025,
which was held by the escrow agent at March 31, 1997. 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 Report on Form 8-K
dated February 18, 1997. In addition, the escrow agent held $600,000
which is subject to the terms of the indemnification provision of the
sales 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 will
provide for management and operation of the Properties for an interim
period. The Partnership borrowed $1,282,000 from Omega under a
non-recourse loan to fund operations and management of the Properties
during such interim period.
(3) Mortgage Notes Payable and Capitalized Lease Obligations
Mortgage notes payable at March 31, 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 March 31, 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 March 31, 1997 QualiCorp, Inc., the parent of RWB Management Corp.
(the Managing General Partner of the Partnership) charged $49,940 of
property management fees and $51,278 of administrative expense to the
Partnership.
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.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
Cash and equivalents balances totaled $1,947,806 at March 31, 1997, an increase
of $1,181,185 from December 31, 1996. This increase was due to better accounts
receivable collections and settlement of third party, primarily Medicare,
receivable issues. Accounts Payable to be paid to suppliers increased between
quarters due to scheduling of payments and will be liquidated in the normal
payment process in future months.
Payments for capital expenditures were $13,364 in the first quarter of 1997.
On February 14, 1997, the Partnership paid distributions to Limited Partners
totaling $8.56 per unit, equaling a 4% annualized return on the initial
investment of $1000 per unit less a $144 return of capital from sale proceeds
returned in prior years.
The Partnership expects to make the first installment of liquidation proceeds,
totaling $11,795,716 or $515 per unit, to the limited partners on or about May
9, 1997.
Operations
The Partnership's net income for the quarter ended March 31, 1997 was
$7,541,121, including a gain on sale of its nursing home properties of
$7,480,586. Net income before the gain on the sale of the properties for the
period was $60,535 compared to $231,217 for the same quarter of the previous
year.
9
<PAGE> 10
Total revenue increased to $4,072,715 in the quarter or 9% higher than the
quarter ended March 31, 1996. Operating expenses increased $480,911 between
quarters due to higher cost of patient services, primarily salary and wage
increases and higher ancillary services costs which is reflected in the higher
revenue recorded. The Partnership also recognized sick pay cost in the first
quarter of 1997 of $84,500. In addition, general and administrative costs
increased $176,655. This increase was due in part to the Partnerships
increasing its workers compensation reserves for claims assessments in prior
years.
PART II
Item 6. Exhibit and reports on 8K
Exhibit
27 Financial Data Schedule (for SEC use only).
Reports on 8K
A. A report on Form 8-K was filed February 18, 1997 pertaining to the
disposition of Partnership assets.
B. A report on Form 8-K was filed on April 15, 1997 pertaining to the
disposition of assets and distribution of net proceeds to the limited
partners in the anticipated liquidation of the Partnership.
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, 1997
------------------------------------- --------------
John H. Stoddard
President and Chief Financial Officer
RWB Management Corp.
Managing General Partner
10
<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 MARCH 31,1997, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-1-1997
<PERIOD-END> MAR-31-1997
<CASH> 1,947,806
<SECURITIES> 0
<RECEIVABLES> 3,620,798
<ALLOWANCES> 1,037,012
<INVENTORY> 0
<CURRENT-ASSETS> 21,997,650
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 21,997,650
<CURRENT-LIABILITIES> 4,552,348
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 17,322,407<F1>
<TOTAL-LIABILITY-AND-EQUITY> 21,997,650
<SALES> 4,065,294
<TOTAL-REVENUES> 4,072,715
<CGS> 0
<TOTAL-COSTS> 3,900,115
<OTHER-EXPENSES> 30,999
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21,758
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 133,347
<DISCONTINUED> (72,812)
<EXTRAORDINARY> 7,480,586
<CHANGES> 0
<NET-INCOME> 7,541,121
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1> 5.02(31) REPRESENT TOTAL PARTNERSHIP INCLUDING
NET INCOME NET OF DISTRIBUTION.
</FN>
</TABLE>
