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 0-15694
CONSOLIDATED RESOURCES HEALTH CARE FUND VI
(Exact name of registrant as specified in its charter)
Georgia 58-1677247
(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 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 12 PAGES.
PART I. - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED RESOURCES HEALTH CARE FUND VI
BALANCE SHEETS
September 30, December 31,
1995 1994
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 967,381 $ 776,254
Accounts receivable 665,294 910,853
Prepaid insurance 2,471 32,519
Other current assets 26,515 75,254
Property held for sale (Notes 5 and 6) 2,602,511 8,697,111
Total current assets 4,264,172 10,491,991
$ 4,264,172 $ 10,491,991
LIABILITIES AND PARTNERS' EQUITY
Current liabilities:
Current maturities of long-term
debt obligations, (Note 5) $ - $ 7,885,442
Trade accounts payable 142,463 331,463
Accrued compensation 190,377 170,914
Accrued interest - 27,636
Provider taxes payable 19,011 21,437
Other liabilities 296,653 257,882
Total liabilities 648,504 8,694,774
Partners' equity (deficit):
Limited partners 3,990,645 2,186,922
General partners (374,977) (389,705)
Total partners' equity 3,615,668 1,797,217
$ 4,264,172 $ 10,491,991
See accompanying notes to financial statements. 2
CONSOLIDATED RESOURCES HEALTH CARE FUND VI
STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
1995 1994 1995 1994
Revenues:
Operating revenues $1,514,186 $2,399,034 $4,411,531 $6,527,226
Interest income 4,033 38,604 30,067 101,257
Total revenues 1,518,219 2,437,638 4,441,598 6,628,483
Expenses:
Operating expenses 1,444,935 1,862,689 4,362,932 5,339,166
Interest - 253,801 69,604 762,505
Depreciation and amortizati 66,385 192,443 249,234 573,302
Loan extension fee (Note 7) - 192,262 - 192,262
Partnership administration
costs 1,949 3,508 125,055 164,384
Total expenses 1,513,269 2,504,703 4,806,825 7,031,619
Operating income (loss) 4,950 (67,065) (365,227) (403,136)
Gain on sales of
properties (Note 5) - - 2,933,678 -
Litigation settlement
income (Note 4) - - - 91,301
Net income(loss) $ 4,950 $ (67,065) $2,568,451 $ (311,835)
Net income(loss) per L.P. un$ 0.16 $ (2.20) $ 87.13 $ (10.21)
L.P. units outstanding 29,308 29,308 29,308 29,308
See accompanying notes to financial statements. 3
CONSOLIDATED RESOURCES HEALTH CARE FUND VI
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
(Unaudited)
Total
Partners'
General Limited Equity
Balance, at December 31, 1993 $ (363,359) $ 3,419,214 $ 3,055,855
Distributions - (450,000) (450,000)
Net loss (12,473) (299,362) (311,835)
Balance, at September 30, 1994 $ (375,832) $ 2,669,852 $ 2,294,020
Balance, at December 31, 1994 $ (389,705) $ 2,186,922 $ 1,797,217
Distribution - (750,000) (750,000)
Net income 14,728 2,553,723 2,568,451
Balance, at September 30, 1995 $ (374,977) $ 3,990,645 $ 3,615,668
See accompanying notes to financial statements. 4
CONSOLIDATED RESOURCES HEALTH CARE FUND VI
STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended September 30,
1995 1994
Operating Activities:
Cash received from residents
and government agencies $ 4,657,090 $ 6,390,167
Cash paid to suppliers and employees (4,454,048) (4,947,319)
Settlement received - 91,301
Interest received 30,067 101,257
Interest paid (97,240) (795,969)
Loan extension fee (192,262)
Property taxes paid (88,344) (136,968)
Cash provided by operating activities 47,525 510,207
Investing Activities:
Payments for purchases of property
and equipment (79,492) (159,388)
Proceeds from sales of properties 8,858,536 -
Cash provided by (used in) investing activities 8,779,044 (159,388)
Financing Activities:
Principal payments on long-term debt (7,885,442) (70,805)
Distributions to limited partners (750,000) (450,000)
Cash used in financing activities (8,635,442) (520,805)
Net increase (decrease) in cash and cash equival 191,127 (169,986)
Cash and cash equivalents, beginning of period 776,254 1,327,584
Cash and cash equivalents, end of period $ 967,381 $ 1,157,598
See accompanying notes to financial statements. 5
CONSOLIDATED RESOURCES HEALTH CARE FUND VI
STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended September 30,
1995 1994
Reconciliation of Net Income (Loss) to Cash
Provided by Operating Activities:
Net income (loss) $ 2,568,451 $ (311,835)
Adjustments to reconcile net income (loss)
to cash provided by operating
activities:
Depreciation and amortization 249,234 573,302
Gain on sale (2,933,678) -
Changes in assets and liabilties:
Accounts receivable 245,559 (137,059)
Prepaid expenses and other 30,048 350,950
Other assets 48,739 -
Trade accounts payable and
accrued liabilities (160,828) 34,849
Cash provided by operating activities $ 47,525 $ 510,207
See accompanying notes to financial statements. 6
CONSOLIDATED RESOURCES HEALTH CARE FUND VI
NOTES TO 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
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-VI (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 Partnership's general partners and their 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$262,558 $244,187
Financial accounting, data processing,
tax reporting, legal and compliance,
investor relations and supervision
of outside services . . . . . . . . . $109,822 $150,559
NOTE 4.
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 $91,301 during 1994.
7
NOTE 5.
On January 31, 1995, following the pursuit of several offers, the
Partnership sold Paradise Cove Retirement Park ("Paradise Cove")and
Highland Cove Retirement Center ("Highland Cove") to Life
Care Centers of America, Inc., an unaffiliated company that has
managed the two retirement centers since March 1991. These
centers were included in Property held for sale at December 31,
1994. The purchase prices were $6,000,000 and $2,798,574 for
Highland Cove and Paradise Cove, respectively. The Partnership
used the sales proceeds to satisfy $7,960,287 in mortgage debts
secured by Highland Cove, Paradise Cove, and Grandview Manor.
The Partnership recognized a gain on the sales of $2,933,678.
NOTE 6.
Property held for sale at September 30, 1995, consisted of the
Partnership's two nursing home facilities. At December 31, 1994,
Property held for sale included the Partnership's two nursing
home facilities and two retirement centers. The two retirement
centers were sold on January 31, 1995, as discussed more fully in
Note 5.
NOTE 7.
During the third quarter of 1994, the Partnership paid a $192,262
extension fee to a lender that provided a six month extension for
mortgage debts that would have matured August 1, 1994. These
debts were satisfied in connection with the sales of two
retirement centers in January 1995, as discussed more fully in
Note 5.
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 parent
company 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-VI, a wholly-
owned subsidiary of WelCare Acquisition Corp., as Managing
General Partner of the Partnership. On January 7, 1992, WelCare
Service Corporation-VI was admitted as Managing General Partner.
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
8
all of its assets, the approved proposal requires that the
Managing General Partner dissolve the Partnership.
The Partnership will continue to operate its remaining facilities
and plans to sell them to prospective purchasers. Accordingly,
at September 30, 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 revenues showed a decrease of $884,848 for the quarter
ended September 30, 1995, as compared to the third quarter of the
prior year. The Partnership sold its two retirement centers
Paradise Cove Retirement Park ("Paradise Cove") and Highland Cove
Retirement Center ("Highland Cove") on January 31, 1995.
Operating Revenues generated by the sold centers were $931,230 in
the third quarter of 1994. The reduction in revenues from the
sales was partially offset by increased reimbursement rates and
increased Medicare patient days at the partnership's two
remaining nursing facilities.
Expenses:
Operating expenses showed a decrease of $459,236 for the quarter
ended September 30, 1995, as compared to the third quarter of the
prior year. As discussed above, the Partnership sold its two
retirement centers during the first quarter of 1995. Operating
expenses incurred by the sold centers were $590,262 in the third
quarter of 1994. The increase in expenses at the partnership's
two remaining nursing facilities was due primarily to the
increased Medicare patient days which resulted in higher staffing
costs and increased therapy costs.
Liquidity and Capital Resources:
At September 30, 1995, the Partnership held cash and cash
equivalents of $967,381 an increase of $191,127 from the amount
held at December 31, 1994. Cash is being held in reserve for
working capital and operating contingencies.
As discussed in Item 1, Note 5, the Partnership sold its two
retirement centers on January 31, 1995. The proceeds from the
sales were used to satisfy all of the Partnership's mortgage debt
obligations which would have matured February 1, 1995. As a
result, the Partnership's two remaining nursing facilities are
owned free and clear of all debt. The sale also provided cash to
the Partnership of approximately $800,000, of which $750,000 was
distributed to the Limited Partners on February 10, 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
9
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.
Based on the Partnership's present cash balance, the satisfaction
of maturing debt on January 31, 1995, and the expectation of
break-even or positive cash flow from operations, management
believes the Partnership will have sufficient cash resources to
meet its operating and capital requirements during the next
twelve months. The Partnership does not, however, have existing
lines of credit to draw on in the unlikely event that present
resources or cash flow from operations should be inadequate.
10
PART II - OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K.
None
11
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 VI
By: WELCARE SERVICE CORPORATION - VI
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
12
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This schedule contains unaudited summary financial information extracted from
the September 30, 1995 10-Q and is qualified in its entirety by reference to
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