UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark one)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
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 0-14436
CONSOLIDATED RESOURCES HEALTH CARE FUND V
(Exact name of registrant as specified in its charter)
Georgia 58-1618135
(State or other jurisdiction(I.R.S. Employer
of incorporation or organization)(identification No.)
7000 Central Parkway, Suite 970, Atlanta, Georgia 30328
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 770-698-9040
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 of1934 during the preceding 12 months, and (2) has
been subject to such filing requirements for the past 90 days.
Yes x No
THERE ARE NO EXHIBITS
PAGE ONE OF 14 PAGES.
PART I. - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATMENTS
CONSOLIDATED RESOURCES HEALTH CARE FUND V
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
1995 1994
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 550,490 $ 716,188
Accounts receivable, net of allowance
for doubtful accounts of $168,133 1,077,212 1,199,849
Prepaid expenses 309,013 357,152
Property held for sale (Notes 5 and 7) 8,594,354 10,267,062
Total current assets 10,531,069 12,540,251
Other:
Deferred loan costs, net of accumulated
amortization of $117,157 and $107,341 13,725 23,540
Total other assets 13,725 23,540
$ 10,544,794 $ 12,563,791
LIABILITIES AND PARTNERS' DEFICIT
Current liabilities:
Current maturities of long-term debt,
including debt in default of $3,624,314
and $3,491,885 (Note 8) $ 8,526,340 $ 9,982,997
Trade accounts payable 328,164 372,530
Insurance payable 78,971 98,462
Medicaid settlement payable (Note 6) 258,969 258,969
Accrued interest (Note 7) 3,425,882 4,480,481
Accrued real estate taxes 410,750 487,613
Other liabilities 279,595 293,149
Total current liabilities 13,308,671 15,974,201
Advances from former affiliates - 4,348,983
Deferred gain on installment sale 278,166 278,166
Total liabilities 13,586,837 20,601,350
Partners' deficit:
Limited partners (2,171,752) (6,998,320)
General partners (870,291) (1,039,239)
Total partners' deficit (3,042,043) (8,037,559)
$ 10,544,794 $ 12,563,791
See accompanying notes to consolidated financial statements. 2
CONSOLIDATED RESOURCES HEALTH CARE FUND V
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
1995 1994 1995 1994
Revenues:
Operating revenues $2,537,704 $2,626,381 $7,647,325 $7,447,897
Interest income 19,516 32,940 61,340 70,131
Total revenues 2,557,220 2,659,321 7,708,665 7,518,028
Expenses:
Operating expenses 2,476,924 2,573,098 7,283,429 7,472,316
Interest 158,515 162,591 474,395 477,392
Depreciation and amortization 91,860 93,976 282,524 282,120
Partnership administration
costs 19,799 6,851 50,865 143,055
Total expenses 2,747,098 2,836,516 8,091,213 8,374,883
Operating loss (189,878) (177,195) (382,548) (856,855)
Loss on transfer of
property (Note 7) - - (1,465,761) -
Litigation settlement
income (Note 10) - - - 32,354
Loss before extraordinary
gain (189,878) (177,195) (1,848,309) (824,501)
Extraordinary gain on
extinguishment of debt
(Note 7) - - 2,494,842 -
Extraordinary gain on
settlement of advances - - 4,348,983 -
( Note 10)
Net income (loss) $ (189,878) $ (177,195) $4,995,516 $ (824,501)
Net income (loss) per L.P. unit
Loss before extraordinary
gain (6.16) (5.75) (61.44) (26.74)
Extraordinary gain on
extinguishment of debt - - 83.45 -
Extraordinary gain on
settlement of advances - - 141.07 -
Net income (loss)
per L.P. unit $ (6.16) $ (5.75) $ 163.08 $ (26.74)
L.P. units outstanding 29,596 29,596 29,596 29,596
See accompanying notes to consolidated financial statements. 3
CONSOLIDATED RESOURCES HEALTH CARE FUND V
CONSOLIDATED STATEMENTS OF PARTNERS' DEFICIT
(Unaudited)
Total
Partners'
General Limited Deficit
Balance, at December 31, 1993 $ (966,115) $ (5,243,348) $ (6,209,463)
Net loss (32,980) (791,521) (824,501)
Balance, at September 30, 1994 $ (999,095) $ (6,034,869) $ (7,033,964)
Balance, at December 31, 1994 $ (1,039,239) $ (6,998,320) $ (8,037,559)
Net income 168,948 4,826,568 4,995,516
Balance, at September 30, 1995 $ (870,291) $ (2,171,752) $ (3,042,043)
See accompanying notes to consolidated financial statements. 4
CONSOLIDATED RESOURCES HEALTH CARE FUND V
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended September 30,
1995 1994
Operating Activities:
Cash received from residents and
government agencies $ 7,769,962 $ 7,557,288
Cash paid to suppliers and employees (7,170,581) (7,381,817)
Settlement received - 32,354
Interest received 61,340 70,131
Interest paid (416,581) (531,625)
Property taxes paid (269,849) (163,878)
Cash used in operating activities (25,709) (417,547)
Investing Activities:
Additions to property and equipment (65,762) (25,740)
Cash used in investing activities (65,762) (25,740)
Financing Activities:
Principal payments on long-term debt (74,228) (27,278)
Cash used in financing activities (74,228) (27,278)
Net decrease in cash and cash equivalents (165,698) (470,565)
Cash and cash equivalents, beginning of period 716,188 1,164,637
Cash and cash equivalents, end of period $ 550,490 $ 694,072
See accompanying notes to consolidated financial statements. 5
CONSOLIDATED RESOURCES HEALTH CARE FUND V
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended September 30,
1995 1994
Reconciliation of Net Income (Loss) to Cash
Used in Operating Activities:
Net income (loss) $ 4,995,516 $ (824,501)
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation and amortization 282,524 282,120
Loss on transfer of property 1,465,761 -
Gain on settlement of advances (4,348,983) -
Gain on extinguishment of debt (2,494,842) -
Changes in operating assets and liabilities:
Accounts receivable 122,637 109,391
Other current assets 48,139 46,431
Trade accounts payable and other
current liabilities (96,460) (30,988)
Cash used in operating activities $ (25,709) $ (417,547)
See accompanying notes to consolidated financial statements. 6
CONSOLIDATED RESOURCES HEALTH CARE FUND V
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1995
NOTE 1.
The financial statements are unaudited and reflect all
adjustments (consisting only of normal recurring adjustments)
which are, in the opinion of management, necessary for a fair
presentation of the Partnership's financial position and
operating results for the interim periods. The results of
operations for the nine months ended September 30, 1995, are not
necessarily indicative of the results to be expected for the year
ending December 31, 1995.
NOTE 2.
The financial statements should be read in conjunction with the
consolidated financial statements and the notes thereto contained
in the Partnership's Annual Report on Form 10-K for the year
ended December 31, 1994, as filed with the Securities and
Exchange Commission, a copy of which is available upon request by
writing to WelCare Service Corporation-V (the "Managing General
Partner"), at 7000 Central Parkway, Suite 970, Atlanta, Georgia,
30328.
NOTE 3.
A summary of compensation paid to or accrued for the benefit of
the general partners and affiliates and amounts reimbursed for
costs incurred by these parties on the behalf of the Partnership
are as follows:
Nine Months Ended
September 30,
1995 1994
Charged to costs and expenses:
Property management and oversight
management fees . . . . . . . . . . $427,113 $444,661
Financial accounting, data processing,
tax reporting, legal and compliance,
investor relations and supervision
of outside services . . . . . . . . $ 50,865 $ 57,922
NOTE 4.
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. The Partnership
has working capital deficiencies, 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 continue as a going concern. The
Partnership's continued existence is dependent on its ability to
7
generate sufficient cash flow to obtain alternative financing
from refinancing sourcesin order to meet its ongoing obligations.
NOTE 5.
At September 30, 1995 and December 31, 1994, the Partnership
included all of its remaining facilities in Property held for
sale as the Partnership intends to dispose of its remaining
facilities.
Champaign Opportunity House ("Champaign") and Village Inn Nursing
Home ("Village Inn") were reclassed to Property Held for Sale in
1991. As discussed more fully in Note 7, Champaign was
transferred in March 1995, in satisfaction of a note secured by
the facility. The net book value of the Village Inn property at
September 30, 1995, was $2,279,237.
During 1994, River Hills South and Plantation Care Center were
reclassed from property and equipment to Property held for sale.
The Partnership anticipates these properties will be disposed of
during 1995 or 1996. The net book values of the properties at
September 30, 1995, were $4,834,664 and $1,480,453 for River
Hills South and Plantation Care Center, respectively.
NOTE 6.
In March 1994, the Partnership received notification from the
Idaho Medicaid program that the Partnership owes the state
$149,485 and $109,484, respectively, for Medicaid overpayments
made to the Partnership during 1993 and 1992. These amounts
relate to two Idaho facilities in which the Partnership sold its
interests in 1993. These settlement amounts reduced operating
revenue in 1994 and are included in Medicaid settlements payable
in the accompanying balance sheets.
NOTE 7.
On March 24 1995, the Partnership transferred a deed in lieu of
foreclosure to the holder of the note secured by a mortgage on
Champaign. This note was recourse to the Partnership. The
General Partner successfully negotiated the transfer of deed in
full satisfaction of the note with the lender. The outstanding
principal and accrued interest on the note satisfied by the
transfer was $2,494,842. In connection with the transfer, the
Partnership paid $61,882 in back property taxes on Champaign.
The net book value of the property was $1,465,761. The
Partnership recognized a loss on the transfer of the property of
$1,465,761 and an extraordinary gain on the forgiveness of debt
of $2,494,842.
NOTE 8.
The Partnership continues not to make debt service payments on
the mortgage note secured by Village Inn. Debt service payments
on this note were ceased when this facility was closed prior to
8
the acquisition of the Corporate General Partner by WelCare
Acquisition Corp. on November 20, 1990. Village Inn has tax
certificates of approximately $130,000 outstanding for accrued
real estate taxes that may require redemption by the Partnership
during 1995. The recourse note secured by Village Inn could have
an adverse effect on the Partnership and its ability to continue
as a going concern, should the holder of the note pursue its
satisfaction.
The Partnership ceased debt service on its $1,250,000 note
payable secured by a mortgage on Plantation Care Center
("Plantation"), during March 1995. The Partnership is currently
in negotiations with the lender, and has found a prospective
purchaser for the facility. This note accrues interest at 7% per
annum.
NOTE 9.
Effective April 1, 1995, the Partnership transferred the
operational management responsibilities for Plantation to
Westcare Management, Inc. ("Westcare"), an unaffiliated
management company. The management agreement provides for
management fees of 3.5% of gross facility revenues. The
management agreement with Westcare expires March 31, 1996.
The Partnership also signed a right of first refusal and option
agreement with Westcare with respect to Plantation. Under the
terms of the agreement, Westcare has the option to purchase
Plantation for $1,250,000, plus any unpaid interest that accrues
on the note payable secured by the facility after February 1,
1995. The purchase price is substantially equal to the
underlying secured debt on the facility. The option agreement
will continue until the management agreement is terminated.
An affiliate of the general partner, will continue to provide
accounting and data processing services to the Plantation during
the term of the Westcare management agreement.
NOTE 10.
The Partnership and Southmark Corporation ("Southmark") reached a
settlement which was 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, Southmark released all claims against the
Partnership and recognized the Partnership's claims. In
settlement of the Partnership's claims, Southmark paid the
Partnership $32,354 during 1994.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
WelCare Acquisition Corp., an affiliate of WelCare International,
9
Inc. ("WelCare"), acquired the stock of the Partnership's
corporate general partner from Southmark Corporation on November
20, 1990. The results of operations for periods prior to
November 20, 1990, occurred under the direction and management of
Southmark affiliates and not under the direction and management
of WelCare's affiliates.
Following the first full year of WelCare's affiliate's management
of the affairs of the Partnership, the Limited Partners
overwhelmingly elected WelCare Service Corporation-V, a wholly-
owned subsidiary of WelCare Acquisition Corp., as Managing
General Partner. On January 7, 1992, WelCare Service
Corporation-V was admitted as Managing General Partner.
During the first quarter of 1995, the Partnership recognized a
gain on the settlement of advances as all litigation issues have
been resolved with Southmark. Prior to the settlement, Southmark
and the Corporate General Partner of the Partnership each
asserted their position with respect to operating advances made
to the Partnership prior to 1990.
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.
The Partnership will continue to operate Plantation Care Center
("Plantation") and River Hills South ("RHS") and plans to sell
all of the Partnership's remaining facilities to prospective
purchasers or negotiate a settlement with its lenders.
Accordingly, at March 31, 1995 and December 31, 1994, the
Partnership classified its remaining facilities as Property held
for sale in the accompanying balance sheets.
Results of Operations
Revenues:
Operating revenue showed a decrease of $88,677 for the quarter
ended September 30, 1995, as compared to the third quarter of the
prior year. Operating revenues at Plantation decreased by
$122,990 due primarily to a lower patient census as compared to
the prior year.
10
Expenses:
Operating expenses showed a decrease of $85,567 for the quarter
ended September 30, 1995, compared to the same period of the
prior year. Operating expenses at Plantation decreased by
$32,109 due to reduced staffing necessitated by lower patient
census.
Liquidity and Capital Resources
At September 30, 1995, the Partnership held cash and cash
equivalents of $550,490, a decrease of $165,698 from December 31,
1994. Cash is being held in reserve for working capital and
operating contingencies.
On March 24, 1995, the General Partner negotiated the transfer of
the Partnership's interest in Champaign to the holder of a
recourse note that was secured by a mortgage on the facility.
The Partnership paid $61,882 in back taxes in connection with
this transfer and satisfied its obligation under the mortgage
with the transfer. The remaining closed facility, Village Inn,
has tax certificates of approximately $130,000 outstanding for
accrued real estate taxes that may require redemption by the
Partnership during 1995. The recourse note secured by Village
Inn could have an adverse effect on the Partnership and its
ability to continue as a going concern, should the holder of the
note pursue its satisfaction.
Due to negative operating cash flow generated by Plantation, the
Partnership ceased debt service on its $1,250,000 note payable
secured by the facility during March 1995. Based on current
offers from prospective purchasers, a sale of the facility would
not satisfy this obligation. As a result, the Partnership is
currently in negotiations with the lender. As discussed in Item
1, Note 8, the facility's operational management was changed to a
local management company with the expectation that the
transaction would lead the a sale of the facility. The
Partnership will continue its efforts to sell Plantation in an
amount that would satisfy the facility's underlying debt. Should
the Partnership be unable to negotiate a settlement with the
holder of Plantation's debt or sell the facility at an amount
equal to its debt, the Partnership's ability to continue as a
going concern could be adversely affected.
As of September 30, 1995, the Partnership was current on its debt
service related to its mortgage secured by RHS.
During March 1995, the Partnership was notified by the Idaho
Medicaid program that the Partnership will have to pay
approximately $258,000 in retrospective settlements related to
its previously sold Idaho facilities. The Partnership is
currently in the process of negotiating a payment plan for these
11
settlements with the state. these amounts will be due during the
third quarter of 1995.
As of September 30, 1995, the Partnership was not obligated to
perform any major capital additions or renovations. No such
major capital expenditures or renovations are planned for the
next 12 months, other than necessary repairs, maintenance and
improvements which are expected to be funded by operations.
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
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 does not anticipate improved liquidity during the
remainder of 1995, due to the continued negative operating
results generated by Plantation, the potential payment of tax
certificates secured by Village Inn and the potential settlement
payments due to the Idaho Medicaid program. Should the
Partnership's cash reserves prove inadequate, the Partnership has
no existing lines of credit to draw on or the ability to borrow
against its other facilities.
12
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None
13
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.
CONSOLIDATED RESOURCES HEALTH CARE FUND V
By: WELCARE SERVICE CORPORATION - V
Its Managing General Partner
Date: 11/14/95 By: /s/ J. Stephen Eaton
J. Stephen Eaton,
President
Date: 11/14/95 By: /s/ Alan C. Dahl
Alan C. Dahl,
Vice President and Principal
Financial Officer
14
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This schedule contains unaudited summary financial information extracted from
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