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 June 30, 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 0-14436
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.)
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
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
THERE ARE NO EXHIBITS
PAGE ONE OF 15 PAGES.
PART I. - FINANCIAL INFORMATION
CONSOLIDATED RESOURCES HEALTH CARE FUND V
CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, December 31,
1996 1995
ASSETS
Current assets:
Cash and cash equivalents $ 4,709 $ 319,587
Accounts receivable, net of allowance
for doubtful accounts of $168,133 1,203,540 876,593
Prepaid expenses 469,216 292,926
Property held for sale (Notes 5 and 7) 8,374,405 8,521,347
Total current assets 10,051,870 10,010,453
Other:
Deferred loan costs, net of accumulated
amortization of $130,882 and $120,430 - 10,452
Total other assets - 10,452
$ 10,051,870 $ 10,020,905
LIABILITIES AND PARTNERS' DEFICIT
Current liabilities:
Current maturities of long-term
debt, including debt in default
$3,491,885 (Note 7) $ 8,481,735 $ 8,499,759
Trade accounts payable 328,176 302,448
Insurance payable 50,126 3,262
Accrued interest (Note 7) 1,992,197 1,955,432
Accrued real estate taxes 548,372 438,769
Other liabilities 365,727 347,289
Total current liabilities 11,766,333 11,546,959
Deferred gain on installment sale 278,166 278,166
Total liabilities 12,044,499 11,825,125
Partners' deficit:
Limited partners (1,195,188) (1,014,315)
General partners (797,441) (789,905)
Total partners' deficit (1,992,629) (1,804,220)
$ 10,051,870 $ 10,020,905
See accompanying notes to consolidated financial statements. 2
CONSOLIDATED RESOURCES HEALTH CARE FUND V
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended Six months ended
June 30, June 30,
1996 1995 1996 1995
Revenues:
Operating revenues $2,613,239 $2,633,426 $5,203,147 $5,109,621
Interest income 14,024 19,815 28,777 41,824
Total revenues 2,627,263 2,653,241 5,231,924 5,151,445
Expenses:
Operating expenses 2,459,491 2,414,413 4,874,858 4,806,505
Interest 170,579 159,113 320,258 315,880
Depreciation and amort 91,341 97,008 193,135 190,664
Partnership administration
costs 10,194 10,389 32,082 31,066
Total expenses 2,731,605 2,680,923 5,420,333 5,344,115
Operating loss (104,342) (27,682) (188,409) (192,670)
Extraordinary gain on
extinguishment of debt
and transfer of property
(Notes 5 and 6) - - - 6,889,102
Net income (loss) $ (104,342) $ (27,682) $ (188,409) $6,696,432
Net income (loss) per L.P. unit
Loss before extraordinary
gain (3.38) (0.90) (6.11) (6.44)
Extraordinary gain on
extinguishment of - 0.00 - 230.44
Net income (loss)
per L.P. unit $ (3.38) $ (0.90) $ (6.11) $ 224.00
L.P. units outstanding 29,596 29,596 29,596 29,596
See accompanying notes to consolidate 3
CONSOLIDATED RESOURCES HEALTH CARE FUND V
CONSOLIDATED STATEMENTS OF PARTNERS' DEFICIT
(Unaudited)
Total
Partners'
General Limited Deficit
Balance, at December 31, 1994 $ (6,998,320) $ (1,039,239) $ (8,037,559)
Net loss 61,184 6,635,248 6,696,432
Balance, at June 30, 1995 $ (6,937,136) $ 5,596,009 $ (1,341,127)
Balance, at December 31, 1995 $ (789,905) $ (1,014,315) $ (1,804,220)
Net loss (7,536) (180,873) (188,409)
Balance, at June 30, 1996 $ (797,441) $ (1,195,188) $ (1,992,629)
See accompanying notes to consolidated financial statements. 4
CONSOLIDATED RESOURCES HEALTH CARE FUND V
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six months ended June 30,
1996 1995
Operating Activities:
Cash received from residents and
government agencies $ 4,876,201 $ 5,348,813
Cash paid to suppliers and employees (4,880,271) (4,744,386)
Interest received 28,777 41,824
Interest paid (283,493) (279,902)
Property taxes paid (2,327) (269,850)
Cash provided by (used
in) operating activities (261,113) 96,499
Investing Activities:
Disposals of property and equipment (35,741) (40,948)
Cash used in investing activities (35,741) (40,948)
Financing Activities:
Principal payments on long-term debt (18,024) (49,789)
Cash used in financing activities (18,024) (49,789)
Net increase (decrease) in cash and cash equival (314,878) 5,762
Cash and cash equivalents, beginning of period 319,587 716,188
Cash and cash equivalents, end of period $ 4,709 $ 721,950
See accompanying notes to consolidated financial statements. 5
CONSOLIDATED RESOURCES HEALTH CARE FUND V
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six months ended June 30,
1996 1995
Reconciliation of Net Income (Loss) to Cash
Used in Operating Activities:
Net income (loss) $ (188,409) $ 6,696,432
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation and amortization 193,135 190,664
Gain on extinguishment of debt
and transfer of property - (6,889,102)
Changes in operating assets and liabilities:
Accounts receivable (326,947) 239,191
Other current assets (176,290) 82,066
Trade accounts payable and other
current liabilities 237,398 (222,752)
Cash provided by (used in)
operating activities $ (261,113) $ 96,499
See accompanying notes to consolidated financial statements. 6
CONSOLIDATED RESOURCES HEALTH CARE FUND V
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1996
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 six months
ended June 30, 1996, are not necessarily indicative of the results
to be expected for the year ending December 31, 1996.
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, 1995, 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 400 Perimeter Center Terrace, Suite 970, Atlanta, Georgia,
30346.
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:
Six Months Ended
June 30,
1996 1995
Charged to costs and expenses:
Property management and oversight
management fees $312,672 $310,845
Financial accounting, data processing,
tax reporting, legal and compliance,
investor relations and supervision
of outside services $32,081 $31,066
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
negotiate satisfactory settlements with its lenders and to sell
its facilities in an orderly fashion.
NOTE 5.
At June 30, 1996 and December 31, 1995, 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 6, 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
June 30, 1996, 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 1996 or 1997. The net book values of the properties at
June 30, 1996, were $4,667,993 and $1,427,175 for River Hills
South and Plantation Care Center, respectively.
NOTE 6.
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 $1,029,080
which is included in an extraordinary gain on the forgiveness of
debt for the first quarter ended March 31, 1995.
NOTE 7.
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 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 1996. 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. This note accrues interest at 7% per annum. The
Partnership is currently in negotiations with the lender, and has
found a prospective purchaser for the facility.
NOTE 8.
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
has been extended on a month-to-month basis.
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,
1996. 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.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
WelCare Acquisition Corp., an affiliate of WelCare International,
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 of $5,860,022 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, 1995, 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, 1995. 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.
At June 30 1996 and December 31, 1995, the Partnership classified
its remaining facilities as Property held for sale in the
accompanying balance sheets.
Results of Operations
Revenues:
Operating revenue showed an decrease of $20,187 for the quarter
ended June 30, 1996 as compared to the second quarter of the prior
year. This decrease was due primarily to a lower private and
Medicaid census at River Hills South as compared to the prior
year. The decrease is partially offset by an increase in revenue
at Plantation Care Center.
Expenses:
Operating expenses showed a increase of $68,353 for the quarter
ended June 30, 1996, compared to the same period of the prior
year. Operating expenses at Plantation decreased slightly, which
were offset by increases in expenses at RHS due to general
inflationary increases along with higher costs associates incurred
for heavy care patients.
Liquidity and Capital Resources
At June 30, 1996, the Partnership held cash and cash equivalents
of $4,709, a decrease of $314,878 from December 31, 1995. Cash is
being held in reserve for working capital, capital improvements,
and operating contingencies.
On July 31, 1996 the Partnership received $236,818 through an
interim Medicare settlement payment for Plantation and River Hills
South for the cost report year ended December 31, 1995.
Additionally, the Partnership received $200,000 on August 12, 1996
through the collection of the Partnerships note receivable
relating to the sale of Brushwood Care Center in 1991. These
significant cash receipts will be used to meet the Partnership's
current and ongoing obligations.
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 1996. 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 to the a sale of the facility. The Partnership will
continue its efforts to sell Plantation. The Partnership will
likely have to pay down the debt associated with Plantation in
conjuction with the sale. Funds for this debt reduction would
have to come from the disposition of other Partnership assets.
Should the Partnership be unable to negotiate a settlement with
the holder of Plantation's debt, the Partnership's ability to
continue as a going concern could be adversely affected.
As of June 30, 1996, the Partnership was current on its debt
service related to its mortgage secured by RHS.
As of June 30, 1996, 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 1996, due to the continued negative operating results
generated by Plantation, the potential payment of tax certificates
secured by Village Inn. 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.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None
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
Managing General Partner
Date:August 19, 1996 By: /s/ J. Stephen Eaton
J. Stephen Eaton,
President
Date:August 19, 1996 By: /s/ Alan C. Dahl
Alan C. Dahl,
Vice President and Principal
Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains unaudited summary financial information extracted from
the June 30, 1996 10-Q and is qualified in its entirety by reference to such
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</LEGEND>
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