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, 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 14 PAGES.
PART I. - FINANCIAL INFORMATION
CONSOLIDATED RESOURCES HEALTH CARE FUND V
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
1996 1995
ASSETS
Current assets:
Cash and cash equivalents $ 285,439 $ 319,587
Accounts receivable, net of allowance
for doubtful accounts of $168,133 1,109,442 876,593
Prepaid expenses 342,539 292,926
Property held for sale (Notes 5 and 7) 8,284,780 8,521,347
Total current assets 10,022,200 10,010,453
Other:
Deferred loan costs, net of accumulated
amortization of $130,881 and $120,430 - 10,452
Total other assets - 10,452
$ 10,022,200 $ 10,020,905
LIABILITIES AND PARTNERS' DEFICIT
Current liabilities:
Current maturities of long-term debt,
including debt in default of
$3,491,885 (Note 8) $ 8,390,442 $ 8,499,759
Trade accounts payable 382,635 302,448
Insurance payable 60,113 3,262
Accrued interest (Note 7) 2,063,790 1,955,432
Accrued real estate taxes 420,239 438,769
Other liabilities 265,770 347,289
Total current liabilities 11,582,989 11,546,959
Deferred gain on installment sale - 278,166
Total liabilities 11,582,989 11,825,125
Partners' deficit:
Limited partners (766,276) (1,014,315)
General partners (794,513) (789,905)
Total partners' deficit (1,560,789) (1,804,220)
$ 10,022,200 $ 10,020,905
See accompanying notes to consolidated financial statements.
CONSOLIDATED RESOURCES HEALTH CARE FUND V
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
1996 1995 1996 1995
Revenues:
Operating revenues $2,724,215 $2,537,704 $7,927,362 $7,647,325
Interest income 15,767 19,516 44,544 61,340
Total revenues 2,739,982 2,557,220 7,971,906 7,708,665
Expenses:
Operating expenses 2,547,532 2,476,924 7,422,390 7,283,429
Interest 132,144 158,515 452,402 474,395
Depreciation and amortization 91,342 91,860 284,477 282,524
Partnership administration
costs 15,290 19,799 47,372 50,865
Total expenses 2,786,308 2,747,098 8,206,641 8,091,213
Operating loss (46,326) (189,878) (234,735) (382,548)
Loss on transfer of
property (Note 7) - - - (1,465,761)
Recognition of
Deferred Gain (Note 8) 478,166 - 478,166 -
Income (loss) before
extraordinary gain 431,840 (189,878) 243,431 (1,848,309)
Extraordinary gain on
extinguishment of debt
(Note 7) - - - 2,494,842
Extraordinary gain on
settlement of advances - - - 5,860,022
Net income (loss) $ 431,840 $ (189,878) $ 243,431 $6,506,555
Net income (loss) per L.P. unit
Income (loss) before
extraordinary gain 14.49 (6.16) 8.38 (61.45)
Extraordinary gain on
extinguishment of debt - - - 83.45
Extraordinary gain on
settlement of advances - - - 196.02
Net income (loss)
per L.P. unit $ 14.49 $ (6.16) $ 8.38 $ 218.02
L.P. units outstanding 29,596 29,596 29,596 29,596
See accompanying notes to consolidated financial statements.
CONSOLIDATED RESOURCES HEALTH CARE FUND V
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended September
1996 1995
Operating Activities:
Cash received from residents and
government agencies $ 7,694,514 $ 7,769,962
Cash paid to suppliers and employees (7,344,792) (7,170,581)
Interest received 44,544 61,340
Interest paid (344,044) (416,581)
Property taxes paid (137,596) (269,849)
Cash used in
operating activities (87,374) (25,709)
Investing Activities:
Additions to property and equipment (37,458) (65,762)
Collection of Intercompany Note Receivable 200,000 -
Cash (used in) provided by investing activities 162,542 (65,762)
Financing Activities:
Principal payments on long-term debt (109,316) (74,228)
Cash used in financing activities (109,316) (74,228)
Net decrease in cash and cash equivalents (34,148) (165,699)
Cash and cash equivalents, beginning of period 319,587 716,188
Cash and cash equivalents, end of period $ 285,439 $ 550,489
See accompanying notes to consolidated financial statements.
CONSOLIDATED RESOURCES HEALTH CARE FUND V
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended September
1996 1995
Reconciliation of Net Income to Cash
Used in Operating Activities:
Net income $ 243,431 $ 4,995,516
Adjustments to reconcile net income
to net cash used in operating activities:
Depreciation and amortization 284,477 282,524
Loss on transfer of property - 1,465,761
Gain on settlement of advances - (4,348,983)
Gain on extinguishment of debt - (2,494,842)
Gain on recognition of deferred gain (478,166) -
Changes in operating assets and liabilities:
Accounts receivable (232,849) 122,637
Other current assets (49,613) 48,138
Trade accounts payable and other
current liabilities 145,346 (96,460)
Cash used in operating activities $ (87,374) $ (25,709)
See accompanying notes to consolidated financial statements.
CONSOLIDATED RESOURCES HEALTH CARE FUND V
CONSOLIDATED STATEMENTS OF PARTNERS' DEFICIT
(Unaudited)
Total
Partners'
General Limited Deficit
Balance, at December 31, 1994 $ (1,039,239) $ (6,998,320) $ (8,037,559)
Net income 229,390 6,277,165 6,506,555
Balance, at September 30, 1995 $ (809,849) $ (721,155) $ (1,531,004)
Balance, at December 31, 1995 $ (789,905) $ (1,014,315) $ (1,804,220)
Net income (loss) (4,608) 248,039 243,431
Balance, at September 30, 1996 $ (794,513) $ (766,276) $ (1,560,789)
See accompanying notes to consolidated financial statements.
CONSOLIDATED RESOURCES HEALTH CARE FUND V
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 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 nine months
ended September 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 650, 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:
Nine Months Ended
September 30,
1996 1995
Charged to costs and expenses:
Property management and oversight
management fees $476,130 $463,113
Financial accounting, data processing,
tax reporting, legal and compliance,
investor relations and supervision
of outside services $ 47,373 $ 75,629
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 September 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
September 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
September 30, 1996, were $4,600,572 and $1,404,972 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 net loss on the transfer of the property of
$1,029,080 which was recognized in 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 has agreed to sell Plantation to a third party
purchaser and is in the process of closing the transaction. Under
the agreement, the Partnership will pay $200,000 to the facility's
lender for accrued interest and a reduction in the principal
balance of the $1,250,000 note payable secured by the facility.
As consideration, the purchaser will assume the facility's note
payable. The Partnership anticipates that the sale will close
before the end of 1996.
Note 8.
In August 1996, the Partnership received $200,000 in satisfaction
of a contingent note receivable given by the purchaser of
Brushwood Care Center ("Brushwood"), a facility sold by the
Partnership in 1991. The amount paid on the note receivable was
based on the facility's financial performance subsequent to the
sale. A portion of the gain from the sale of Brushwood in 1991,
$278,166, was deferred, as the sale was accounted for as an
installment sale whereby profit recognition is based on the
percentage of profit to the sales price and is recognized on total
cash payments to total sales price. Upon collection of the
contingent note receivable, the Partnership recognized the
deferred gain in the third quarter ended September 30, 1996.
Accordingly, the total gain recognized on the sale during the
third quarter 1996 was $478,166.
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, 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.
At September 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 increase of $186,511 for the quarter
ended September 30, 1996, as compared to the third quarter of the
prior year. Most of this increase was due primarily to a higher
patient census at Plantation as compared to the same period in the
prior year. RHS experienced an increase in total revenue due in
part to a slight increase in the facility's census and a favorable
increase in the number of private residents as compared to the
same period in the prior year.
Expenses:
Operating expenses showed a increase of $70,608 for the quarter
ended September 30, 1996, compared to the same period of the prior
year. Operating expenses at Plantation decreased as compared to
the same period in the prior year, due primarily to success in
controlling the facility's staffing costs. This decrease was
offset by increased staffing and ancillary costs experienced by
RHS due to an increase in the number of higher acuity patients as
compared to the same period in the prior year.
Liquidity and Capital Resources
At September 30, 1996, the Partnership held cash and cash
equivalents of $285,439, a decrease of $34,148 from December 31,
1995. Cash is being held in reserve for working capital, capital
improvements, 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 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 the current
agreement to sell the facility, the Partnership will be able to
satisfy the note receivable which is recourse to the Partnership.
As discussed in Item 1, Note 7, the Partnership will have to pay
approximately $200,000 to the lender. Funds for this debt
reduction will have to come from cash reserves of the Partnership.
Should the Partnership be unable to successfully close the current
sale of the facility, the Partnership's ability to continue as a
going concern could be adversely affected.
As of September 30, 1996, the Partnership was current on its
monthly debt service payments related to its mortgage secured by
RHS.
As of September 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 anticipated $200,000 payment to
Plantation's lender in conjunction with the sale of the facility,
and 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: November 14, 1996 By: /s/ J. Stephen Eaton
J. Stephen Eaton,
President
Date: November 14, 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 SEPTEMBER 30, 1996 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH 10-Q.
</LEGEND>
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