UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K405
For annual and transition reports pursuant to sections 13 or 15 (d) of the
Securities Exchange Act of 1934.
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
-----------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___to___
Commission file number 0-14435
CONSOLIDATED RESOURCES HEALTH CARE FUND IV
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Georgia 58-1582370
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(State or other jurisdiction of (I.R.S. Employer
corporation or organization) identification No.)
400 Perimeter Center Terrace, Suite 650, Atlanta, Georgia 30346
- --------------------------------------------------------------------------------
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code 770-698-9040
------------
Securities registered pursuant to Section 12(b)of the Act:None
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Securities registered pursuant to Section 12(g)of the Act:Limited Partnership
- -----------------------------------------------------------
Units
Indicate by check mark 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, and (2) has been subject to such filing requirements
for the past 90 days. Yes x No
----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulations S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definite proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]
All of the registrant's 26,283 Limited Partnership Units are held by
non-affiliates. The aggregate market value of units held by non-affiliates is
not determinable since there is no public trading market for Limited Partnership
Units and transfers of units are subject to certain restrictions.
Documents Incorporated by Reference: See Page 29.
SEE INDEX TO EXHIBITS ON PAGE 31.
PAGE ONE OF 32 PAGES.
<PAGE>
PART I
ITEM 1. BUSINESS
Consolidated Resources Health Care Fund IV (the "Partnership") was organized on
August 10, 1984, as a Limited Partnership under the provisions of the Georgia
Uniform Limited Partnership Act.
At December 31, 1996, the Partnership had three general partners (the "General
Partners"), WelCare Consolidated Resources Corporation of America, a Nevada
corporation, serving as the corporate general partner ("WCRCA" or the "Corporate
General Partner"), Consolidated Associates IV, and WelCare Service
Corporation-IV ("WSC-IV" or the "Managing General Partner"), a Georgia
Corporation, serving as managing general partner. At December 31, 1996, WCRCA
and WSC-IV were wholly-owned subsidiaries of Centennial Acquisition Corporation
("CAC"), a Georgia corporation, which is in turn a wholly-owned subsidiary of
Centennial Healthcare Corporation, ("Centennial"). Prior to December 1996, CAC
and Centennial were known as WelCare Acquisition Corp. and WelCare
International, Inc., respectively. Consolidated Associates IV, a Georgia general
partnership, is composed of WCRCA, as the managing general partner, and
individuals who were previously associated with Consolidated Resources
Corporation of America ("CRCA"). On January 30, 1997, all of the stock of the
Corporate General Partner and the Managing General Partner was sold to
Consolidated Partners Corporation, which is wholly-owned by the president of
Centennial, who is also a general partner of Consolidated Associates IV.
On October 15, 1984, a Registration Statement on Form S-1 was declared effective
by the Securities and Exchange Commission whereby the Partnership offered for
sale $30,000,000 of Limited Partnership Units. The Limited Partnership Units
represent equity interests in the Partnership and entitle the holders thereof
("Limited Partners") to participate in certain allocations and distributions of
the Partnership. The sale of Limited Partnership Units closed in April 1985 with
26,283 units sold at $1,000 each, for gross proceeds of $26,283,000 to the
Partnership.
The Partnership's primary business and only industry segment is to own, operate
and ultimately dispose of a diversified portfolio of health care related real
properties for the benefit of its Limited Partners. As of December 31, 1996 and
1995, the Partnership owned two nursing homes in Kansas. During October 1995,
the Partnership sold a nursing home located in Missouri (See Item 8, Note 7).
Current Developments
A majority in interest of the Partnership's Limited Partners approved a
proposal, on October 18, 1994, which provides for the sale of all of the
remaining Partnership assets and the eventual dissolution of the Partnership, as
outlined in a proxy statement dated September 28, 1994. Under the approved
proposal, the Limited Partners consented for the Managing General Partner to
attempt to sell or otherwise dispose of its remaining properties prior to
October 18, 1997. Upon the disposition of all of its assets, the approved
proposal requires that the Managing General Partner dissolve the Partnership.
As discussed in Item 8, Note 4, the Partnership's mortgage debt obligations were
in default as of December 31, 1996. The Partnership will continue to operate the
facilities and plans to sell the properties to prospective purchasers. The
Managing General Partner anticipates that the Partnership's two remaining
facilities will be sold during 1997. Mortgage debt obligations secured by these
facilities matured April 1996. The Partnership has obtained an extension from
the lender until May 31, 1997 to satisfy these debts.
Operation of Nursing Home Facilities
At the beginning of 1991, all six of the Partnership's existing nursing homes
were managed by National Heritage, Inc. ("NHI"). NHI, a New York Stock Exchange
listed company, was affiliated with the Partnership prior to Centennial's
subsidiary's acquisition of the Corporate General Partner on November 20, 1990.
Effective March 1, 1991, NHI was terminated as manager of Kent's Nursing Center
and Life Care Centers of America, Inc. ("LCCA"), a privately-owned corporation,
began managing this facility. In September 1991, the Partnership terminated NHI
as manager of the Partnership's three facilities located in Kansas. In the
fourth quarter of 1991, the Partnership notified NHI that effective January 31,
1992, NHI was terminated from
<PAGE>
providing management services at the Partnership's remaining two facilities.
Lawsuits between the Partnership and NHI ensued and on December 31, 1991, NHI
and the Partnership entered into a Consent Order which allowed NHI to perform
accounting services for two facilities under the supervision of the Corporate
General Partner and the Court. This litigation was resolved in October 1993 and
NHI no longer performs accounting or any other services for the Partnership's
facilities.
An affiliate of the Corporate General Partner assumed direct management
responsibilities for the three Kansas facilities following NHI's termination
effective September 1, 1991, and at River Oaks Care Center and Heritage Manor of
Mountain Grove effective February 1, 1992. This affiliate received a management
fee of 6% of gross revenues at Heritage Manor of Hiawatha, Heritage Manor of
Mountain Grove and Heritage Manor of Emporia, and an aggregate management and
accounting fee of 6% of gross revenues at Heritage Manor of Hoisington and River
Oaks Care Center. An affiliate of the Corporate General Partner provided
oversight management services for Kent's Nursing Center and received a fee equal
to 1% of gross revenues. A management fee of 5% of Kent's Nursing Center's gross
revenues was paid to LCCA. Kent's Nursing Center, Heritage Manor of Hiawatha and
River Oaks Care Center were sold by the Partnership during 1993.
As a result of efforts made by the Corporate General Partner, in 1991 a
distribution of $150,000 was made to the Limited Partners, the first such
distribution since 1987. No distributions were made in 1992. During 1993, the
Partnership distributed $750,000 to the Limited Partners as proceeds from the
facility sales. During 1994, the Partnership distributed $1,000,000 to the
Limited Partners from the sale of Rainbow Springs. No limited partner
distributions were made during 1995 or 1996.
The Partnership's Rainbow Springs parcel contained undeveloped land, a partially
developed hotel and two operating 18-hole golf courses. The Rainbow Springs
facility competed with other golf courses in the Milwaukee, WI market, as well
as against other facilities with spring and summer recreational activities. In
1989, the joint owner of Rainbow Springs filed for bankruptcy protection. The
bankruptcy court, having jurisdiction over this joint owner, ordered a public
auction to take place on January 31, 1994, and the sale of the property was
closed on March 21, 1994.
As of December 31, 1996, the Partnership employed approximately 128 persons,
including administrative, nursing, dietary, social services and maintenance
personnel.
The services provided at the Partnership's nursing facilities consist of
long-term nursing care. Nursing care consists of 24 hour professional nursing
care and related medical services prescribed by the resident's physician, as
well as assistance or supervision with activities of daily living such as
dressing, grooming, bathing, medication and dietary needs.
All of the nursing facilities are certified to receive benefits under joint
Federal and state funded programs administered by the state of Kansas to provide
medical assistance to the indigent, known generally as the "Medicaid". Benefits
under the Federal Health Insurance for the Aged Act ("Medicare") are for skilled
care only in those facilities which are certified for this program. Medicaid
reimbursement formulas vary by state and are established in accordance with
Federal guidelines. Typically, Medicaid provides for reimbursement for nursing
home care of an all-inclusive nature up to specified limits based on historical
costs, with adjustments for inflation. Federal law requires that Medicaid
reimbursement rates be reasonable and adequate to meet the costs that must be
incurred by efficiently and economically operated facilities to provide care and
services in conformity with applicable laws, regulations and quality and safety
standards. Medicaid payments are generally set prospectively for each facility,
with the exception of a few states, where retrospective settlement exists.
The Medicare and Medicaid programs are subject to statutory and regulatory
changes, administrative rulings, interpretations of policy and determinations by
intermediaries, and to governmental funding restrictions, all of which may
materially increase or decrease program payments to long-term care facilities
and could adversely affect the operations of the Partnership's nursing home
facilities.
In the operation and sale of its long-term care facilities, the Partnership
competes with a number of individuals and entities, including large, national
nursing home chains and small, locally owned geriatric facilities. Some
competing operators have greater financial resources than the Partnership or may
operate on a nonprofit basis
<PAGE>
or as charitable organizations. The degree of success with which the
Partnership's facilities compete varies by location and depends on a number of
factors. The Partnership believes the quality of care provided, the reputation
and physical appearance of facilities and, in the case of private pay patients,
charges for services, are significant competitive factors. There is limited, if
any, competition in price with respect to Medicaid and Medicare patients since
revenues for services to such patients are strictly controlled and based on
fixed rates and cost reimbursement principles. In light of these factors, the
Partnership seeks to meet competition in each locality by improving the quality
of services provided at its facilities, establishing a reputation within the
local medical community for providing excellent care services, and by responding
appropriately to regional variations in demographics and tastes. In most states,
approval by state healthcare regulatory agencies must be obtained and a
Certificate of Need ("CON") or authorization issued before new long-term care
beds can be constructed. This tends to stabilize competition. However, some
states have already or are considering a repeal of CON programs. The Partnership
owns two facilities in Kansas which does not currently require a CON.
The following table sets forth information regarding the average daily census
and sources of patient revenues at the Partnership's facilities at December 31,
1996:
Average Daily Census for Year Ended Revenues for Year Ended
December 31,1996 December 31,1996
-------------------------------------- ----------------------
Medicaid 70 55% 48%
Private Pay 53 41% 28%
VA, Medicare and Other 5 4% 24%
--- ---- ----
128 100% 100%
===== === ===
Overall Occupancy Rate 86%
===
Because of a changing census mix (i.e. private pay patients vs. government
reimbursed patients), the occupancy required for a facility to achieve an
operating break-even point cannot be determined precisely. Generally, a greater
ratio of Medicaid patients will require a higher occupancy to reach a break-even
point. On the other hand, a high Medicare census can lower the number of
patients necessary to reach the break-even point due to higher reimbursement
rates.
All licensed beds in the operating facilities are available except in a few
instances where a small number of rooms have been taken out of service to be
utilized as office space and ancillary support areas, (i.e., revenue generating
rehabilitation services).
ITEM 2. DESCRIPTION OF PROPERTY
The following table sets forth the investment portfolio of the Partnership at
December 31, 1996. The buildings of the projects and the land on which they are
located are owned by the Partnership. The fee is subject in each case to secured
debt, which is in default, as set forth more fully in Item 8, Note 4.
<PAGE>
Properties (dollars in 000's)
---------------------------------------
Secured Acquisition Net Book Date
Property Debt Cost Value Acquired
Heritage Manor
of Emporia
Emporia, KS
79 Licensed Nursing
Home Beds $1,048 $2,809 $216(1) October 1985
Heritage Manor
of Hoisington
Hoisington, KS
70 Licensed Nursing
Home Beds 609 1,387 397(1) July 1985
----- ----- ----
Totals $1,657 $4,196 $613
====== ====== ====
(1) provision was made to write down this facility, to its estimated fair value
or net realizable value at the time of the write-down as determined by the
Corporate General Partner (See Item 8, Note 6). The amount reflects this
write-down.
Occupancy Levels and Rental Rates
The following table sets forth the occupancy levels and rental rates for the
last five years for the facilities owned by the Partnership as of December 31,
1996. Rental rates are presented as Per-Patient-Day amounts ("PPD"), the
standard of comparison used in the long-term care industry. The PPD amount
represents the average revenue received per day of care provided.
<PAGE>
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
Heritage Manor of
Emporia
Occupancy Rate 80% 86% 89% 91% 78%
Rental Rate (PPD) $78.00 $70.00 $64.00 $57.00 $47.00
Heritage Manor of
Hoisington
Occupancy Rate 93% 92% 94% 98% 97%
Rental Rate (PPD) $72.00 $68.00 $61.00 $53.00 $49.00
ITEM 3. LEGAL PROCEEDINGS
The Partnership is not a party to any material pending legal proceedings, other
than ordinary litigation routine to the Partnership's business.
The Partnership and Southmark reached a settlement which was filed with the
Bankruptcy Court in January 1994 regarding the claims filed by the Partnership
against Southmark and Southmark's suit against the Partnership. Under this
settlement agreement, Southmark released all claims against the Partnership.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S UNITS OF LIMITED PARTNERSHIP
AND SECURITY HOLDER MATTERS
(A) No market for Limited Partnership Units exists nor is one expected to
develop.
(B) Title of Class Number of Record Unit Holders
Limited Partnership Units 2,909 as of March 28, 1997
(C) Due to improvements in operations following Centennial's subsidiary's
acquisition of the Corporate General Partner and proceeds received
from the sale of Heritage Manor of Red Boiling Springs, the Corporate
General Partner caused the Partnership to distribute $150,000 to the
Limited Partners in 1991. This was the first distribution to the
Limited Partners since 1987. In 1994 and 1993, the Partnership
distributed $1,000,000 and $750,000, respectively, of proceeds from
sales of twoproperties.
Future distributions are dependent on the Partnership's ability to
meet its ongoing obligations and to generate proceeds from the sale of
its assets in excess of existing debt. Cumulative distributions paid
to the Limited Partners as of December 31, 1996, were $5,446,590.
There have been no distributions to the General Partners. See
Liquidity and Capital Resources section of Item 7, Management's
Discussion and Analysis of Financial Condition and Results of
Operations and Item 8, Note 5 for discussion of distributions.
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth a summary of selected financial data for the
Partnership. This summary should be read in conjunction with the notes to the
Partnership's financial statements appearing in Item 8.
Years Ended December 31, (dollars in 000's, except per unit figures)
--------------------------------------------------------------------
Statements of
Operations 1996 1995(1) 1994(2) 1993(3) 1992
- ---------- ---- ------ ------ ------ ----
Operating revenue $3,358 $5,321 $4,997 $9,319 $11,111
Income (loss) before
extraordinary gain (231) (365) (356) 1,520 (3,049)
Net income (loss) (231) 1,901 (46) 2,853 (3,049)
Income (loss) before
extraordinary gain per
Limited Partnership Unit(8.44) (12.90) (12.30) 58.25 (111.38)
Net income (loss) per
Limited Partnership Unit (8.44) 69.86 (0.99) 108.49 (111.38)
Distribution paid per
Limited Partnership Unit - - 38.05 28.54 -
<PAGE>
At December 31, (dollars in 000's)
-----------------------------------------------------------
Balance Sheets 1996 1995 1994 1993 1992
- -------------- ---- ---- ---- ---- ----
Property and equipment,net $ - $ - $ - $3,506 $5,443
Property held for sale 613 744 3,268 2,016 3,558
Total assets 1,550 1,953 5,194 7,870 11,186
Current maturities of debt 1,657 1,764 4,683 2,007 2,777
Long-term debt obligations,
less current maturities - - - 2,825 5,380
Partners' deficit (472) (241) (2,142) (1,096) (3,200)
(1) During 1995, the Partnership sold one facility.
(2) During 1994, the Partnership sold one facility.
(3) During 1993, the Partnership sold three facilities.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Certain statements contained in this Management Discussion and Analysis are not
based on historical facts, but are forward-looking statements that are based
upon numerous assumptions about future conditions that may ultimately prove to
be inaccurate. Actual events and results may materially differ from anticipated
results described in such statements. The Partnership's ability to achieve such
results is subject to certain risks and uncertainties. Such risks and
uncertainties include, but are not limited to, changes in healthcare
reimbursement systems and rates, the availability of prospective purchasers for
its facilities, and other factors affecting the Partnership's business that may
be beyond its control.
Plan of Operations
A majority in interest of the Partnership's Limited Partners approved a
proposal, on October 18, 1994, which provides for the sale of all of the
Partnership's remaining assets and the eventual dissolution of the Partnership,
as outlined in a proxy statement dated September 28, 1994. Under the approved
proposal, the Limited Partners consented for the Managing General Partner to
attempt to sell or otherwise dispose of its remaining properties prior to
October 18, 1997. Upon the disposition of all of its assets, the approved
proposal requires that the Managing General Partner dissolve the Partnership.
As discussed in Item 8, Note 4, the Partnership's two mortgage debt obligations
were in default as of December 31, 1996 and are due May 31, 1997 pursuant to an
extension obtained January 31, 1997. The Partnership will continue to operate
the facilities and plans to: (A) sell the properties to prospective purchasers,
or (B) negotiate a settlement with its lenders.
At December 31, 1996 and 1995, the Partnership held available for sale all of
its nursing home facilities. Accordingly, the Partnership classified the
facilities as Property held for sale in the accompanying balance sheets. On
October 18, 1995, The Oaks of Mountain Grove ("Mountain Grove") was sold.
Results of Operations
Revenue:
1996 compared to 1995
Operating revenues decreased $1,962,506 for 1996 as compared to the prior year.
Of this net decrease $2,274,988 was due to the sale of Mountain Grove in 1995,
which was offset by an increase in revenues at the Partnership's two remaining
nursing facilities due to an increase in the volume of therapy services provided
<PAGE>
and increases in Medicare and Medicate reimbursement rates which more than
offset a decrease in patients in 1996 as compared to 1995 censusat Emporia.
1995 compared to 1994
Operating revenues increased by $323,347 for 1995 compared to the prior year. On
October 18, 1995, Mountain Grove was sold. During the time it was owned by the
Partnership in 1995, Mountain Grove generated $2,274,988 in revenues. During
1994, Mountain Grove generated $1,873,943 in revenues. The remaining increase
over the prior year was due primarily to increases in rates at the Partnership's
two remaining facilities, along with a favorable increase in Medicare census and
therapy utilization in 1995 as compared to 1994.
Expenses:
1996 compared to 1995
Operating expenses decreased $2,032,804 for 1996 as compared to the prior year.
Of this net decrease, $2,114,511 was due to the sale of Mountain Grove in 1995,
which was offset by an increase in expenses at the Partnership's two remaining
nursing facilities due to inflationary increases along with increased expenses
associated with an increase in the volume of therapy services provided in both
facilities.
1995 compared to 1994
Operating expenses increased by $95,817 for 1995. As discussed above, Mountain
Grove was sold during 1995. This facility incurred $2,114,511 in operating
expenses during the time it was owned by the Partnership in 1995. During 1994,
Mountain Grove incurred $1,933,092 in operating expenses. The increase at
Mountain Grove was due primarily to salary increases and additional therapy
utilization as compared to the prior year. The reduction in operating expenses
at the Partnership's remaining facilities was due to reductions in expenses
associated with a decrease in overall patient census.
Liquidity and Capital Resources
At December 31, 1996, the Partnership held cash and cash equivalents of
$723,569. Cash is being held in reserve for working capital and operating
contingencies.
During 1995 and 1996, the Partnership maintained current debt service payments
on all of its debt secured by facilities currently owned by the Partnership. The
Partnership should produce sufficient cash flow from operations during 1997 to
continue to satisfy current monthly debt service obligations. The Partnership
anticipates the satisfaction of these debts through sales of the facilities
during 1997. Under terms of a current agreement with the lender, these loans
must be reapid prior to May 31, 1997.
As of December 31, 1996, the Partnership was not obligated to perform any major
capital additions or renovations and no such capital expenditures or renovations
are planned for 1997. Necessary minor repairs, maintenance and capital
expenditures are expected to be funded by existing cash reserves.
Significant changes have and will continue to be made in government
reimbursement programs, and such changes could have a material impact on future
reimbursement formulas. Based on information currently available, Management
does not believe that proposed legislation will have an adverse effect on the
Partnership's operations. However, as health care reform is ongoing, the
long-term effects of such changes cannot be accurately predicted at the present
time.
The Partnership is in default on the long-term debt obligations secured by
Hoisington and Emporia as these loans were originally due April 1996. The
Partnership is currently seeking purchasers for these facilities at a sales
price that would satisfy the operating and debt obligations of the facilities.
There can be no assurance that the facilities can be sold prior to foreclosure
or that the Partnership will be able to obtain additional extensions from the
lender. However, as long as these default situations exist, the Partnership
remains at risk relative to these loans. The Partnership has no existing lines
of credit to draw upon should present resources or cash flow from operations be
inadequate.
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index Page Number
Report of Independent Certified Public Accountants 11
Consolidated Financial Statements
Balance Sheets - December 31, 1996 and 1995 12-13
Statements of Operations 14
- Years ended December 31, 1996, 1995 and 1994
Statements of Partners' Deficit 15
- Years ended December 31, 1996, 1995 and 1994
Statements of Cash Flows 16
- Years ended December 31, 1996, 1995 and 1994
Summary of Significant Accounting Policies 17-19
Notes to Consolidated Financial Statements 20-23
The following financial statement schedule for the years ended December 31,
1996, 1995 and 1994 of the Registrant is submitted herewith in response to Item
14 (a)(2):
Schedule II - Valuation and Qualifying Accounts 25
All other schedules of the Partnership for which provision is made in the
applicable regulations of the Securities and Exchange Commission are not
required under the related instructions, are inapplicable or have been disclosed
in the notes to the consolidated financial statements and, therefore, have been
omitted.
<PAGE>
Report of Independent Certified Public Accountants
The Partners
Consolidated Resources Health Care Fund IV and Subsidiaries
We have audited the accompanying consolidated balance sheets of Consolidated
Resources Health Care Fund IV and Subsidiaries (limited partnerships) (the
"Partnership") as of December 31, 1996 and 1995, and the related consolidated
statements of operations, partners' deficit and cash flows for each of the three
years in the period ended December 31, 1996. We have also audited the schedule
listed in the accompanying index. These consolidated financial statements and
schedule are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these consolidated financial
statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the consolidated financial statements and
schedule are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the consolidated
financial statements and schedule. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the consolidated financial statements
and schedule. We believe that our audits provide a reasonable basis for our
opinion.
The Partnership is operating its properties under a plan approved by its Limited
Partners, as described in the Summary of Significant Accounting Policies, to
sell or otherwise dispose of its remaining properties by October 18, 1997. The
financial statements have been presented on a basis similar to liquidation
accounting. As discussed in Notes 3 and 4 of the consolidated financial
statements, the Partnership has suffered recurring losses from operations, has a
working capital deficiency, has defaulted on certain debt, and has no assurance
of any financial support from the General Partners. These conditions raise
substantial doubt about the Partnership's ability to operate as a going concern
until it is able to realize its plan to sell or otherwise dispose of its
remaining properties by October 18, 1997. Management's plans regarding these
matters are described in the Summary of Significant Accounting Policies and Note
3. The consolidated financial statements and schedule do not include any
adjustments that might result from the outcome of these uncertainties.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Consolidated Resources Health Care Fund IV and Subsidiaries (limited
partnerships) at December 31, 1996 and 1995, and the consolidated results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1996, in conformity with generally accepted accounting
principles.
Also, in our opinion, the schedule presents fairly, in all material respects,
the information set forth therein.
BDO Seidman, LLP
Atlanta, Georgia
March 28, 1997
<PAGE>
Consolidated Resources Health Care Fund IV and Subsidiaries
(limited partnerships)
Consolidated Balance Sheets
December 31, 1996 1995
------ -----
Assets
Current
Cash and cash equivalents (Note 10) $723,569 $628,543
Patient accounts receivable and third party
settlements, net of allowance for doubtful accounts
of $72,978 in 1995 (Note 9) 165,545 477,805
Prepaid expenses and other 901 18,529
Property held for sale (Notes 4 and 6) 613,198 744,147
------- --------
Total current assets 1,503,213 1,869,024
--------- ---------
Other
Restricted escrow and other deposits (Note 4) 46,979 49,241
Deferred loan costs, net of accumulated
amortization of $71,312 in 1995 - 34,931
------ --------
Total other assets 46,979 84,172
------ --------
$1,550,192 $1,953,196
========== ==========
See accompanying summary of significant accounting policies and notes to
consolidated financial statements.
<PAGE>
Consolidated Resources Health Care Fund IV and Subsidiaries
(limited partnerships)
Consolidated Balance Sheets
December 31, 1996 1995
------ -----
Liabilities and Partners' Deficit
Current liabilities
Mortgage debt obligations in default (Note 4) $1,656,836 $1,763,962
Accounts payable and accrued expenses 156,163 156,102
Accrued compensation 103,960 126,004
Insurance payable 58,062 58,255
Accrued interest (Note 4) 17,916 46,637
Accrued real estate taxes 29,455 43,376
------- --------
Total liabilities 2,022,392 2,194,336
--------- ---------
Commitments and Contingencies (Notes 3, 4 and 10)
Partners' deficit (Note 5)
Limited partners 211,038 432,856
General partners (683,238) (673,996)
-------- ---------
Total partners' deficit (472,200) (241,140)
-------- --------
$1,550,192 $1,953,196
========== ==========
See accompanying summary of significant accounting policies and notes to
consolidated financial statements.
<PAGE>
Consolidated Resources Health Care Fund IV and Subsidiaries
(limited partnerships)
Consolidated Statements of Operations
Years ended December 31, 1996 1995 1994
------ ------ ------
Revenue
Operating revenue (Notes 7 and 9) $3,358,072 $5,320,578 $4,997,231
Interest income 26,748 29,587 73,854
------- -------- -------
Total revenue 3,384,820 5,350,165 5,071,085
--------- --------- ---------
Expenses
Operating expenses (Note 7) 2,859,314 4,814,084 4,718,267
Interest expense (Note 4) 161,990 445,608 453,979
Depreciation and amortization 191,258 302,419 324,202
Management fee substantially
to all affiliates (Note 2) 210,655 313,790 317,271
Real estate taxes 17,340 43,518 41,284
Partnership administration costs
substantially all to affiliates 175,323 173,452 179,060
(Note 2) ------- -------- -------
Total operating costs and expenses 3,615,880 6,092,871 6,034,063
--------- --------- ---------
Operating loss (231,060) (742,706) (962,978)
Gain on sales of properties (Note 7) - 377,591 607,169
------- -------- -------
Loss before extraordinary gain (231,060) (365,115) (355,809)
Extraordinary gain on extinguishment
of debt (Notes 1 and 8) - 2,266,170 309,730
------- --------- -------
Net income (loss) $(231,060) $1,901,055 $(46,079)
========= ========== ========
Loss per limited partnership unit
before extraordinary gain $(8.44) $(12.90) $(12.30)
Extraordinary gain from debt extinguishment - 82.76 11.31
---- --------- --------
Net income (loss) per limited
partnership unit $(8.44) $ 69.86 $(0.99)
====== ========= ======
Distributions paid per limited
partnership unit - $ - $ 38.05
====== ======== ========
Limited partnership units outstanding 26,283 26,283 26,283
======= ======== =======
See accompanying summary of significant accounting policies and notes to
consolidated financial statements.
<PAGE>
Consolidated Resources Health Care Fund IV and Subsidiaries
(limited partnerships)
Consolidated Statements of Partners' Deficit
Years Ended December 31, 1996, 1995 and 1994
Total
Partners'
Limited General Deficit
Balance, at January 1, 1994 $(383,426) $(712,690) $(1,096,116)
Net loss (20,058) (26,021) (46,079)
Distributions (Note 5) (1,000,000) - (1,000,000)
---------- --------- ----------
Balance, at December 31, 1994 (1,403,484) (738,711) (2,142,195)
Net income 1,836,340 64,715 1,901,055
--------- --------- ---------
Balance, at December 31 , 1995 432,856 (673,996) (241,140)
Net loss (221,818) (9,242) (231,060)
-------- --------- --------
Balance, at December 31, 1996 $211,038 $(683,238) $(472,200)
======== ========= =========
See accompanying summary of significant accounting policies and notes to
consolidated financial statements.
<PAGE>
Consolidated Resources Health Care Fund IV and Subsidiaries
(limited partnerships)
Consolidated Statements of Cash Flows
Years ended December 31, 1996 1995 1994
------ ------ -----
Operating activities
Net income (loss) $(231,060) $1,901,055 $(46,079)
Adjustments to reconcile net income(loss)
to cash provided by (used in)
operating activities:
Depreciation and amortization 191,258 302,419 324,202
Bad debt expense 167,805 - 9,754
Gain on sale of properties - (377,591) (607,169)
Extraordinary gain on debt forgiveness - (2,266,170) (309,730)
Changes in assets and liabilities:
Accounts receivable 144,455 (110,660) 260,418
Prepaid expenses and other 17,628 19,423 38,184
Other assets 37,193 80,511 3,743
Accounts payable and accrued liabilities (64,818) 174,167 (34,444)
------- -------- -------
Cash provided by(used in)operating activities 262,461 (276,846) (361,121)
------- --------- --------
Investing activities
Additions to property held for sale (60,309) (70,489) (74,263)
Net proceeds from sale of properties - - 1,410,283
Proceeds from repayment of note receivable - 250,000 -
------ -------- ------
Cash provided by(used in)investing activities (60,309) 179,511 1,336,020
------- -------- ---------
Financing activities
Principal payments on long term
debt obligations (107,126) (94,443) (148,398)
Distributions to limited partners - - (1,000,000)
Cash proceeds from settlement - - 76,342
------- -------- --------
Cash used in financing activities (107,126) (94,443) (1,072,056)
-------- -------- ----------
Net increase (decrease) in cash and cash
equivalents 95,026 (191,778) (97,157)
Cash and cash equivalents, beginning of year 628,543 820,321 917,478
-------- -------- -------
Cash and cash equivalents, end of year $723,569 $628,543 $820,321
======== ======== ========
See accompanying summary of significant accounting policies and notes to
consolidated financial statements.
20
<PAGE>
Consolidated Resources Health Care Fund IV and Subsidiaries
(limited partnerships)
Summary of Significant Accounting Policies
Organization
Consolidated Resources Health Care Fund IV (the "Partnership") was organized on
August 10, 1984 as a Limited Partnership under the provisions of the Georgia
Uniform Limited Partnership Act for the purpose of acquiring, operating and
holding for investment and future capital appreciation income producing,
healthcare related real properties. The Partnership currently operates two
nursing homes in Kansas. The occupancy rate, in the aggregate, for the
Partnership's properties was 86% for the year ended December 31, 1996.
The General Partners of the Partnership are WelCare Consolidated Resources
Corporation of America, ("WCRCA" or the "Corporate General Partner"), a Nevada
corporation, WelCare Service Corporation-IV as managing general partner
("WSC-IV" or the "Managing General Partner"), a Georgia corporation, and
Consolidated Associates IV ("CA-IV"), a Georgia general partnership
(collectively the "General Partners"). At December 31, 1996, WCRCA and WSC-IV
were wholly-owned subsidiaries of Centennial Acquisition Corporation ("CAC"),
formerly known as WelCare Acquisition Corp., which in turn, is a subsidiary of
Centennial Healthcare Corporation ("Centennial"), formerly known as WelCare
International, Inc. CA-IV is composed of WCRCA, as the managing general partner,
and individuals who were associated with Consolidated Resources Corporation of
America ("CRCA"). On January 30, 1997, all of the stock of the Corporate General
Partner and Managing General Partner of the Partnership was sold to Consolidated
Partners Corporation, which is wholly-owned by the president of Centennial who
is also a general partner of CA-IV.
Pursuant to an agreement dated October 30, 1985, CRCA, a Georgia corporation
that initially was the Corporate General Partner of the Partnership, was merged
into a subsidiary of Southmark Corporation ("Southmark"). The name of the
surviving Southmark subsidiary was then changed to Southmark Consolidated
Resources Corporation of America ("SCRCA"). Southmark emerged from Chapter 11
bankruptcy on August 10, 1990 and liquidated most of its assets under its plan
of reorganization. On November 20, 1990, CAC acquired from Southmark all the
stock of SCRCA whose name was then changed to WelCare Consolidated Resources
Corporation of America. Effective January 1992, WSC-IV, was added as the
Managing General Partner to the Partnership.
A majority in interest of the Partnership's Limited Partners approved a
proposal, on October 18, 1994, which provides for the sale of all of the
Partnership's remaining assets and the eventual dissolution of the Partnership,
as outlined in a proxy statement dated September 28, 1994. Under the approved
proposal, the Limited Partners consented for the Managing General Partner to
attempt to sell or otherwise dispose of its remaining properties prior to
October 18, 1997. Upon the disposition of all of its assets, the approved
proposal requires that the Managing General Partner dissolve the Partnership.
As discussed in Note 4, the Partnership's two mortgage debt obligations were in
default as of December 31, 1996. These obligations matured on April 1, 1996. The
Partnership has obtained an extension from the lender until May 31, 1997 to
allow for the sale of the facilities. Under the extension, the Partnership is
obligated to make monthly principal and interest payments (see Note 4). In
consideration for the extension, the Partnership paid the lender $50,000 on
January 31, 1997. The Partnership has also paid the lender a refundable
extension fee equal to 1% of the balance of the mortgage debt obligations as of
January 31, 1997. The extension fee will be forfeited by the Partnership if the
mortgage debt obligations are not satisfied by May 31, 1997. The Partnership
will continue to operate the facilities and is actively seeking a buyer for
these properties and plans to either sell the properties to prospective
purchasers, or negotiate a settlement with its lenders.
The consolidated financial statements do not reflect assets the partners may
have outside their interests in two inactive limited Partnerships, nor any
personal obligations, including income taxes, of the individual partners.
Consolidation
The consolidated financial statements include the accounts of the Partnership
and two inactive limited partnerships in which it holds a majority interest. All
significant intercompany balances and transactions have been eliminated. The
amount of minority interest is immaterial.
<PAGE>
Consolidated Resources Health Care Fund IV and Subsidiaries
(limited partnerships)
Summary of Significant Accounting Policies
Property Held for Sale
Property held for sale at December 31, 1996 and 1995, consists of two nursing
home facilities owned by the Partnership. In accordance with a plan approved by
the Limited Partners on October 18, 1994, the Managing General Partner has been
given permission to either sell or otherwise dispose of the Partnership's assets
by October 18, 1997.
Depreciation and Amortization
Property and equipment are depreciated using the straight-line method over lives
of 5 to 30 years. Amortization of leased assets is included in depreciation and
amortization expense. Renewals and betterments are capitalized and repairs and
maintenance are charged to operations as incurred.
Deferred Loan Costs
Deferred loan costs were amortized over the terms of the respective loans using
the straight-line method. Amortization of deferred loan costs is included in
depreciation and amortization expense. At December 31, 1996, all deferred loan
costs had been fully amortized.
Operating Revenue
Operating revenue is recorded when services are rendered and includes amounts
reimbursable by Medicaid and Medicare. Medicare revenue is recorded at the
applicable net reimbursement rates; therefore, no contractual adjustments are
reported.
Income Taxes
No provision has been made in the financial statements for Federal income taxes
because under current law, no Federal income taxes are paid directly by the
Partnership. The Partnership reports certain transactions differently for tax
and financial statement purposes.
Allocation of Net Income or Net Loss
The Partnership's net profits and net losses (other than net profits or net
losses from a sale or refinancing of Partnership property) are allocated 96% to
the Limited Partners and 4% to the General Partners. Distributions are allocated
on the basis described in Note 5.
Net profits and losses resulting from a sale or refinancing shall be allocated
99% to the Limited Partners and 1% to the General Partners. Net profits
resulting from a sale or refinancing shall be allocated in the following order:
1. First, 1% to the General Partners and 99% to the Limited Partners until the
net profits allocated to the Limited Partners from such sale or refinancing
equals the excess of the greater of the following items over their capital
account immediately prior to such sale or refinancing: (a) zero; or (b) the
Limited Partners'invested capital immediately prior to such sale or refinancing
plus 9% per annum of the Limited Partners' average invested capital for all
fiscal years to the extent not received through prior distributions of
distributable cash from operations or sale or refinancing proceeds; or
<PAGE>
Consolidated Resources Health Care Fund IV and Subsidiaries
(limited partnerships)
Summary of Significant Accounting Policies
(c) the amount of sale or refinancing proceeds distributable to the Limited
Partners;
(2) Second, to the General Partners until the net profits allocated to the
General Partners from such sale or refinancing equals the excess of the greater
of the following items over their capital account immediately prior to such sale
or refinancing: (a) zero; or (b) the amount of sale or refinancing proceeds
distributable to the General Partners from such sale or refinancing; Third, any
remaining net profits shall be allocated 15% to the General Partners and 85% to
the Limited Partners.
Net Income (Loss) Per Limited Partnership Unit
Net income (loss) per Limited Partnership Unit is computed by dividing net
income (loss) allocated to the Limited Partners by the number of Limited
Partnership units outstanding.
Reclassifications
Certain 1995 and 1994 amounts have been reclassified to conform to the 1996
presentation.
Statements of Cash Flows
For purposes of this statement, cash equivalents include bank repurchase
agreements backed by U.S. Government Securities, U.S. Treasury Obligations and
money market funds with original maturities of three months or less.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
<PAGE>
Consolidated Resources Health Care Fund IV and Subsidiaries
(limited partnerships)
Notes to Consolidated Financial Statements
1. Transactions With Former Affiliates
Amounts claimed payable to former affiliates (primarily Southmark and the
Corporate General Partner) totalled $2,266,170 including accrued interest, at
December 31, 1994. In July 1991, Southmark filed suit demanding payment of these
alleged advances. In 1991, after CAC's affiliate acquired the Corporate General
Partner, it challenged the validity of these payables through claims filed
against the Southmark Bankruptcy Estate. In February 1994, the suits were
settled whereby the Partnership was released of all liabilities to Southmark
(see Note 8). Accordingly, during 1995 and 1994, the Partnership recorded a gain
on debt extinguishment related to this settlement totalling $2,266,170 and
$309,730, respectively. Amounts included in the gain on debt forgiveness in 1994
include payables to Southmark and former affiliates of Southmark of $233,388
plus settlement proceeds paid to the Partnership by Southmark totalling $76,342.
All remaining amounts owed to affiliates and former affiliates were forgiven in
1995.
2. Management Fees and Affiliate Transactions
During 1996, 1995 and 1994 an affiliate of the Corporate General Partner
received management fees of 6 % of gross operating revenues from the facilities
that the affiliate managed totalling $210,655, $313,790 and $317,271,
respectively. The affiliate was also reimbursed for costs incurred in connection
with the administration of Partnership activities of $64,534, $58,176 and
$55,928, during the same periods, respectively, which are included in the
Partnership Administration Costs on the accompanying Consolidated Statements of
Operations.
3. Going Concern
The Partnership's consolidated financial statements have been presented on the
basis that it is a going concern, which contemplates the realization of assets
and the satisfaction of liabilities in the normal course of business. At
December 31, 1996, the Partnership has experienced working capital deficiencies,
had defaulted on certain debt obligations and had no assurance of any financial
support from the General Partners. The Partnership does not anticipate improved
liquidity during the remainder of 1997.
The Partnership's continued existence is dependent upon its ability to generate
sufficient cash flow to meet its obligations on a timely basis, to comply with
the terms of its financing agreements, and to obtain additional financing as may
be required. The Partnership is in the process of seeking buyers for its two
remaining facilities. Debt obligations secured by these facilities originally
matured April 1, 1996. The Partnership is currently under an extension of the
due date on these obligations until May 31, 1997. The inability to obtain
additional extensions could result in foreclosure and a loss of the facilities.
4. Mortgage Obligations
Mortgage debt obligations consisted of:
1996 1995
9.6% note related to Heritage Manor of Emporia,
collateralized by real estate with recourse
to other assets of the Partnership,payable in
monthly installments of principal and interest
of $14,281, due April 1, 1996. $ 1,047,435 $ 1,115,192
9.6% note related to Heritage Manor of Hoisington,
collateralized by real estate with recourse to
other assets of the Partnership,payable in
monthly installments of principal and
interest of $8,305, due April 1, 1996. 609,401 648,770
------- -------
$1,656,836 $1,763,962
========== ==========
The Partnership was in default on the mortgage debt related to Heritage Manor of
Hoisington and Heritage Manor of Emporia at December 31, 1996 and 1995 due to
failure to maintain certain minimum debt service escrow balances. Furthermore,
each of the debt obligations matured on April 1, 1996. As a result, these
obligations are classified as current liabilities in the accompanying balance
sheets for 1996 and 1995.
At December 31, 1996 and 1995, substantially all property held for sale is held
as collateral for mortgage debt obligations.
The Partnership paid interest of $190,711, $471,486 and $430,665 in 1996, 1995
and 1994, respectively.
Restricted escrow and other deposits include amounts held by lenders under
various note terms.
Due to the default provisions described above, it is not practical to estimate
the fair value of the Partnership's mortgage obligations.
5. Distributions
Distributions to the Partners are paid from operations of the Partnership's
properties, or from sales or refinancing of properties. Cash from operations is
distributed 96% to the Limited Partners and 4% to the General Partners. However,
no distributions of cash from operations may be made to the General Partners in
any year until the Limited Partners have received distributions for such year
equal to 9% of their invested capital.
Distributions of cash from sales and refinancing are made in the following
order: (a)first to the Limited Partners in an amount equal to their invested
capital; then, (b) to the Limited Partners in an amount necessary to provide the
Limited Partners with a 9% cumulative, non-compounded return on invested capital
to the extent not previously received through distributions of distributable
cash from operations; then, (c) to the General Partners in an amount up to 3% of
the sales price of all properties on a cumulative basis; then, (d) the balance
15% to the General Partners and 85% to the Limited Partners.
During 1994, the Partnership distributed $1,000,000 of proceeds from the sale of
the Rainbow Springs facility (see Note 7). No distributions were made during
1995 or 1996. Cumulative distributions paid to the Limited Partners as of
December 31, 1996 were $5,446,590. There have been no distributions to the
General Partners.
6. Property Held for Sale and Loss from Write-Down of Properties
The Partnership recorded write-downs to reduce the carrying value of certain
properties to their estimated net realizable value as determined by the
Corporate General Partner. These writedowns were as follows as of December 31,
1996 and 1995:
Heritage Manor of Emporia $1,317,825
Heritage Manor of Hoisington 447,506
-------
$1,765,331
==========
<PAGE>
Consolidated Resources Health Care Fund IV and Subsidiaries
(limited partnerships)
Notes to Consolidated Financial Statements
Property held for sale at December 31, 1996, consisted of the Partnership's two
nursing home facilities.
Heritage Manor of Emporia
Heritage Manor of Hoisington $215,818
397,380
-------
$613,198
========
7. Property Dispositions
The Oaks of Mountain Grove ("Mountain Grove") was sold effective October 18,
1995, and a gain of $377,591 was recognized. Under the terms of the agreement,
the purchaser acquired all the assets except patient accounts receivables, and
assumed bonds payable of $2,825,000 and accrued interest thereon. In connection
with the sale, the Partnership paid cash of $45,697, for closing costs and
certain accrued operating expenses. During the period January 1 through October
18, 1995, Mountain Grove earned approximately $2,275,000 in revenues and
incurred approximately $2,115,000 in expenses.
Heritage Manor of Red Boiling Springs was sold effective April 30, 1991. In
connection with the sale, the Partnership received a $250,000 note receivable,
bearing interest at 11%, from the purchaser. The note receivable was collected
in September 1995.
In 1989, the joint owner of Rainbow Springs filed for bankruptcy protection.
Rainbow Springs was auctioned for sale by the bankruptcy court with jurisdiction
over this joint owner on January 31, 1994. The sale was closed on March 31, 1994
at a sales price of $4,200,000. Under the allocation of proceeds, the
Partnership received proceeds of $1,410,283 (net of delinquent real estate taxes
totalling $1,213,468) and recognized a gain on sale of $607,169.
8. Southmark Litigation
In November 1990, the Partnership filed claims against Southmark in the United
States Bankruptcy Court for the Northern District of Texas. In August 1991, the
Partnership was served notice that on July 12, 1991, Southmark filed suit
against the Partnership, the Corporate General Partner, partnerships controlled
by affiliates of the Corporate General Partner and partnerships and corporations
which are unaffiliated with the Partnership or the Corporate General Partner.
The suit was also filed in the United States Bankruptcy Court for the Northern
District of Texas, Dallas Division. On October 15, 1991, the Partnership filed
its response, including counterclaims against Southmark, for alleged fraud and
misrepresentation and asserting that in fact Southmark owed amounts to the
Partnership as represented by Proof of Claims filed against Southmark's
bankruptcy estate.
The Partnership and Southmark reached a settlement agreement effectively filed
with the Bankruptcy Court in January 1994, regarding the claims filed by the
Partnership against Southmark and Southmark's suit against the Partnership.
Under this settlement agreement, Southmark releases all claims against the
Partnership and recognized the Partnership's claims. In settlement of the
Partnership's claims, Southmark paid $76,345 to the Partnership in 1994.
9. Cost Reimbursements
Accounts receivable and operating revenue include amounts estimated by
management to be reimbursable by Medicaid under the provisions of cost
reimbursement formulas in effect. Final determination of amounts earned is
subject to audit by the intermediaries. In the opinion of management, adequate
provision has been made for any adjustments that may result from such audits.
Differences between estimated provisions and final settlement are reflected as
charges or credits to operating revenue in the year finalized. Medicaid
<PAGE>
Consolidated Resources Health Care Fund IV and Subsidiaries
(limited partnerships)
Notes to Consolidated Financial Statements
accounted for approximately 48%, 49% and 51% of operating revenue during 1996,
1995 and 1994, respectively.
Significant changes have and will continue to be made in government
reimbursement programs, and such changes could have a material impact on future
reimbursement formulas.
Accounts receivable are recorded at net realizable value and relate principally
to amounts due from various state Medicaid programs. Receivables from these
programs were approximately as follows:
1996 1995
---- ----
Kansas $173,000 $110,000
Missouri - 75,000
Amounts due from Medicaid programs are usually paid on an interim and final
basis, depending on the state, generally within 30 to 60 days from date of
billing.
10. Concentration of Credit Risk
At December 31, 1996, the Partnership had and cash on deposit with a bank which
exceeded Federal Deposit Insurance Corporation limits by $585,180.
11. Supplemental Disclosures of Cash Flow Information
As discussed in Note 1, the Partnership had a forgiveness of debt due to
Southmark in 1995 and 1994. In connection with the forgiveness, gains of
$2,266,170 and $309,730 were recorded in 1995 and 1994, respectively.
The above amounts are included in the extraordinary gain of debt forgiveness on
the accompanying statements of cash flows.
<PAGE>
SCHEDULE
<PAGE>
Consolidated Resources Health Care Fund IV and Subsidiaries
(limited partnerships)
Schedule II - Valuation and Qualifying Accounts
Years Ended December 31, 1996, 1994 and 1993
Balance at Additions Balance at
beginning of charged to costs Deductions(1) end of year
year and expenses
1996
Allowance for
doubtful accounts $ 72,978 $ 167,805 $(240,783) $ -
========== ========= ========= =======
1995
Allowance for
doubtful accounts $ 72,978 $ - $ $72,978
========== ========= ======== =======
1994
Allowance for
doubtful accounts $ 80,864 $ 9,754 $(17,640) $72,978
========== ========= ======== =======
(1) Represents direct write-offs of receivables.
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTIONS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Partnership does not have officers or directors. At December 31, 1991, the
General Partners of the Partnership were WelCare Consolidated Resources
Corporation of America ("WCRCA"), and Consolidated Associates IV. Effective
January 7, 1992, WSC-IV was added as Managing General Partner of the
Partnership. The executive officers and director of WSC-IV and WCRCA, who
control the affairs of the Partnership, are as follows:
Name and Position Age Other Principal Occupations and Other Directionship
During the Past 5 Years
J. Stephen Eaton 46 J. Stephen Eaton is sole Chairman of the Board and
President, Chief Executive the founder of Centennial HealthCare Corporation
Officer and Sole Director and has served as its President and Chief Executive
Officer since its inception in February 1989.
Mr. Eaton has been involvedin the long-term care
industry since 1982. Mr. Eaton also serves as a
director of Saint Joseph's Mercy Care Corporation,
a non-profit corporation based in Atlanta,
Georgia which provides mobile health seervices
to the homeless and other underserved
populations, and of Saint Joseph's Health System, a
major tertiary care hospital and health system in
Atlanta, Georgia.
Alan C. Dahl 36 Alan C. Dahl has served as Executive Vice President
Vice President, Chief Chief Financial Officer, and Director of Centennial
Financial Officer HealthCare Corporation since January 1996. From
and Treasurer February 1991 to December 1995, he served as senior
vice president. Mr. Dahl has been involved in
healthcare finance for the past eleven years.
Mr. Dahl was previously senior vice president of
Southmark Public Syndications, Inc.,a subsidiary of
Southmark Corporation. Mr.Dahl, a certified
public accountant, also worked in the tax
department at Arthur Young & Company.
ITEM 11. EXECUTIVE COMPENSATION
No individual principal or principals as a group received any direct
remuneration from the Partnership.
The General Partners are not compensated directly for their services as general
partners of the Partnership. See Item 13 and Item 8, Note 2 for further
discussion of compensation paid to affiliates of the General Partners.
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(A) Security ownership of certain beneficial owners.
No individual or group as defined by Section 13(d)(3) of the Securities
Exchange Act of 1934, known to the Partnership is the beneficial owner of
more than 5% of the Partnership's securities.
(B) Security ownership of management.
The General Partners and their management own less than 1%.
The General Partners are entitled to distributions of cash from operations
and from "other sources" (primarily from the sale or refinancing of
Partnership properties, as set forth in Item 8, Note 4).
(C) Change in control.
On January 30, 1997, all of the stock of the Corporate General Partner and
Managing General Partner of the Partnership was sold to Consolidated
Partners Corporation, which is wholly-owned by the president of Centennial
who is also a general partner of Consolidated Associates IV.
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Affiliates and former affiliates of the General Partners, in accordance with the
Partnership Agreement, may receive compensation for services rendered. The
following is a summary of compensation paid to or accrued for the benefit of the
General Partners and affiliates in 1995:
Management fees .......................................... $210,655
Partnership activities (1)...................................... 64,534
(1) For reimbursement of expenses incurred by the Corporate General Partner in
performing certain administrative functions, including investor relations and
accounting.
See Note 2 to the accompanying consolidated financial statements appearing in
Part II, Item 8.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) (1) The following financial statements are included in Part II, Item 8:
Consolidated Financial Statements:
Report of Independent Certified Public Accountants
Balance Sheets - as of December 31, 1996 and 1995
Statements of Operations - for the Years Ended December 31, 1996, 1995 and 1994
Statements of Partners' Deficit - for the Years Ended
December 31, 1996,1995 and 1994
Statements of Cash Flows - for the Years Ended December 31, 1996, 1995 and 1994
Summary of Significant Accounting Policies
Notes to Consolidated Financial Statements
(2) The following financial statement schedule is included in Part II,
Item 8:
Schedule II - Valuation and Qualifying Accounts
All other schedules are omitted since they are not required,and
are not applicable or the financial information required is included
in the financial statements or notes thereto.
<PAGE>
(3) Exhibits:
The following exhibits are incorporated by reference and are an integral part of
this Form 10-K.
Exhibit Number
(as per Exhibit Table) Document Description
2.1 Liquidation Proposal incorporated by reference to the Proxy Statement
filed on September 28, 1994 file 0-14435.
3.1 Amended and Restated Agreement of Limited Partnership of Consolidated
Resources Health Care Fund IV incorporated by reference to Exhibit A
to the Registration Statement on Form S-1, Page A-1, File No. 2-93219.
3.2 Amendment to Amended and Restated Agreement of Limited Partnership of
Consolidated Resources Health Care Fund IV incorporated by reference to
Exhibit A to Proxy Statement filed on November 19,1991,File No. 0-14435
21 Subsidiaries
27 Financial Data Schedules
(b) Reports on Form 8-K
(1) None
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
CONSOLIDATED RESOURCES HEALTH CARE FUND IV
(Registrant)
By: WELCARE SERVICE CORPORATION - IV
--------------------------------
Managing General Partner
By: /s/ J. Stephen Eaton
------------------
Date:04/15/97 J. Stephen Eaton,
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons, on behalf of the Registrant and
in the capacities and on the dates indicated:
By: /s/ J. Stephen Eaton
-----------------
Date:04/15/97 J. Stephen Eaton,
Sole Director and Principal
Executive Officer of the
Managing General Partner
By: /s/ Alan C. Dahl
------------
Date:04/15/97 Alan C. Dahl
Chief Financial Officer
of the Managing General Partner
<PAGE>
Exhibit Index
Exhibit Number Description Sequential Page Number
2.1 Liquidation Proposal incorporated by reference to the N/A
Proxy Statement filed on September 28, 1994 file 0-14435.
3.1 Amended and Restated Agreement of Limited N/A Partnership of N/A
Consolidated Resources Health Care Fund IV incorporated by
reference to Exhibit A to the Registration Statement on Form
S-1, Page A-1, File No.
2-93219.
3.2 Amendment to Amended and Restated Agreement of N/A Limited N/A
Partnership of Consolidated Resources Health Care Fund IV
incorporated by reference to Exhibit A to Proxy Statement
filed on November 19, 1991, File No.
0-14435.
21 Subsidiaries E
27 Financial Data Schedules E
E submitted electronically as a separate document
herewithin the Registrant's Form 10-K405
Exhibit 21
SUBSIDIARY (LIMITED PARTNERSHIPS)
Hiawatha Healthcare, Ltd. (Inactive)
Rainbow Springs Associates, L.P. (Inactive)
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS AUDITED SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
DECEMBER 31, 1996 10-K AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
10-K.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 723,569
<SECURITIES> 0
<RECEIVABLES> 238,523
<ALLOWANCES> 72,978
<INVENTORY> 0
<CURRENT-ASSETS> 1,503,213
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,550,192
<CURRENT-LIABILITIES> 2,022,392
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 211,038
<TOTAL-LIABILITY-AND-EQUITY> 1,550,192
<SALES> 3,358,072
<TOTAL-REVENUES> 3,384,820
<CGS> 2,859,314
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<INCOME-TAX> (231,060)
<INCOME-CONTINUING> (231,060)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (231,060)
<EPS-PRIMARY> (8.440)
<EPS-DILUTED> (8.440)
</TABLE>
