UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
For annual and transitions 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, 1994
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 404-698-9040
Securities registered pursuant to Section 12(b) of the Act: None
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 ]
Of the registrant's 29,308 Limited Partnership Units, 29,097 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 41.
NO EXHIBITS.
PAGE ONE OF 43 PAGES.
1<PAGE>
PART I
ITEM 1. BUSINESS
Consolidated Resources Health Care Fund VI (the "Partnership")
was organized on January 2, 1985, as a Limited Partnership under
the provisions of the Georgia Uniform Limited Partnership Act.
At December 31, 1994, the Partnership had three general partners
(the "General Partners"), Consolidated Associates VI, a Georgia
general partnership, Consolidated Resources VI, Inc. as the
corporate general partner ("CR-VI" or the "Corporate Partner"),
and WelCare Service Corporation-VI, a Georgia corporation as
managing general partner ("WSC-VI" or the "Managing General
Partner"). WSC-VI is a wholly owned subsidiary of WelCare
Acquisition Corp., which is in turn a wholly-owned subsidiary of
WelCare International, Inc. ("WelCare"). CR-VI, a Georgia
corporation, is a wholly-owned subsidiary of WelCare Consolidated
Resources Corporation of America ("WCRCA"). WCRCA, a Nevada
corporation, is a wholly-owned subsidiary of WelCare Acquisition
Corp. WelCare, a privately owned Georgia corporation, is engaged
in the operation, acquisition, property management and oversight
management of long-term care facilities. Consolidated Associates
VI is composed of WCRCA, as the managing general partner, and
individuals who were previously associated with Consolidated
Resources Corporation of America ("CRCA").
Pursuant to an agreement dated October 30, 1985, CRCA, a Georgia
corporation that initially controlled 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, a Georgia
corporation, emerged from Chapter 11 bankruptcy on August 10,
1990 and liquidated most of its assets pursuant to its plan of
reorganization. On November 20, 1990, WelCare, through its
subsidiary WelCare Acquisition Corp. ("WAC"), acquired from
Southmark all the stock of SCRCA whose name was then changed to
WelCare Consolidated Resources Corporation of America. Southmark
has not been affiliated with the Partnership since November 1990.
WSC-VI was added as the Managing General Partner of the
Partnership on January 7, 1992, following the approval by a
majority-in-interest of the Partnership's limited partners. The
acquisition of SCRCA and the addition of WSC-VI as Managing
General Partner of the Partnership did not result in a change in
compensation to the General Partners (See Item 8, Note 2).
On December 27, 1985, 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 (the "Limited Partners") to participate in certain
allocations and distributions of the Partnership. The sale of
Limited Partnership Units closed in December 1986 with 29,308
units sold at $1,000 each, or gross proceeds of $29,308,000 to
the Partnership.
2<PAGE>
The Partnership's primary business and only industry segment is
to own, operate and ultimately dispose of a diversified portfolio
of health care related and geriatric real properties for the
benefit of its Limited Partners. On January 1, 1994 and December
31, 1994, the Partnership owned four facilities. (See Item 8,
Note 7). Effective January 31, 1995, the Partnership sold two
facilities located in Nevada and Utah (See Item 8, Note 13).
Current Developments
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 the facilities and plans
to (A) attempt to refinance the related mortgage debt obligations
encumbering the properties or (B) sell the properties to
prospective purchasers. The Managing General Partner believes
that there is no assurance that the properties can be refinanced
and, therefore, the properties could be lost to foreclosure by
the lender. The Managing General Partners will seek to sell
these properties as an alternative to refinancing or foreclosure.
Operation of Nursing Home Facilities
On January 1, 1991, National Heritage, Inc. ("NHI") (currently
known as Evergreen Health Care, Inc.) managed all of the
Partnership's nursing homes and a NHI subsidiary managed the
Partnership's two retirement centers. NHI, a New York Stock
Exchange listed company, was affiliated with the Partnership
prior to WAC's acquisition of control of the Corporate General
Partner on November 20, 1990. During the fourth quarter of 1991,
the Partnership notified NHI that their management contracts were
terminated effective on January 1, 1992, for Grandview Manor, and
April 1, 1992, for the other nine nursing homes then owned by the
Partnership. Commencing on these dates, these facilities were
managed by an affiliate of the General Partners. Effective
March 1, 1991, the management of the two retirement centers
changed to American Lifestyles, Inc. ("ALI"), a division of Life
Care Centers of America, Inc. ALI is not an affiliate of the
Partnership.
Prior to WAC's acquisition of control of the Corporate General
Partner, no distributions had been made to the Limited Partners
since 1988. As a result of efforts made by the Corporate General
Partner, in 1991, the Partnership made two quarterly
distributions of $200,000 each and a special distribution of
$499,994. During 1992, the Partnership increased the quarterly
distributions and made distributions totalling $850,000. During
1993, the Managing General Partner caused the Partnership to
distribute a total of $6,300,000, $1,800,000 from operations and
$4,500,000 following the sale of certain of the Partnership's
facilities. During 1994, distributions of $600,000 were made to
the Limited Partners.
3<PAGE>
Due to the efforts of the General Partners since WAC acquired
control of the Corporate General Partner, the Partnership has
continued to generate positive cash flow and provide
distributions to the Limited Partners. Cash reserves are
adequate to meet the ongoing operating needs of the Partnership.
As of December 31, 1994, the Partnership employed approximately
268 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. The two
retirement centers owned by the Partnership during 1994 provided
apartment living for ambulatory senior citizens who do not
require assistance in their daily activities.
4<PAGE>
The Partnership's two remaining nursing facilities are certified
to receive benefits under joint Federal and State funded programs
administered by the respective states to provide medical
assistance to the indigent, known generally as the "Medicaid"
program. Both nursing facilities are certified for benefits
under the Federal Health Insurance for the Aged Act ("Medicare")
which provides for reimbursement for skilled care only in those
facilities which are certified for this program. The
Partnership's two retirement centers received revenue on a
private pay basis from the resident renting the unit.
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 which are incurred by efficiently and economically
operated facilities to provide care and services in conformity
with applicable laws, regulations and quality and safety
standards.
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 properties, the Partnership competes
with a number of individuals and entities, including large,
national nursing home chains and small, locally owned geriatric
care facilities. Some competing operators have greater financial
resources than the Partnership or may operate on a nonprofit
basis 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 that
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 health care
regulatory agencies must be obtained, and a Certificate of Need
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 repeal of Certificate of
Need programs.
5<PAGE>
The following table sets forth information regarding the average
daily census and sources of patient revenues at the Partnership's
facilities at December 31, 1994:
Average Daily Census Revenues for
for Year Ended Year Ended
December 31, 1994 December 31, 1994
Medicaid 175 79% 43%
Private Pay 30 14% 45%
VA, Medicare and Other 6 3% 8%
Retirement Center 10 4% 4%
221 100.0% 100.0%
Overall Occupancy Rate 87.0%
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 reduce the
occupancy break-even point due to a higher reimbursement rate.
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, including revenue generating rehabilitation
services.
The two retirement centers are much like apartment complexes with
additional services provided to attract the elderly including
limited transportation, cleaning, and food services. These
facilities operate at break-even with an occupancy of
approximately 85% to 95%.
ITEM 2. DESCRIPTION OF PROPERTY
The following table sets forth the investment portfolio of the
Partnership at December 31, 1994. The buildings of the projects
and the land on which they are located are owned by the
Partnership in fee simple or under long-term ground lease.
6<PAGE>
Properties
Net
Secured Book
Debt Acquisition Value Date
Property (in 000's) Cost (in 000's) Acquired
Grandview Manor
Nursing Home
Camp Point, IL
118 Licensed
Nursing Home
Beds $ 918(c) $2,741 $ 730(a) Aug 1986
Heritage Manor
of Westwood
Shreveport, LA
142 Licensed
Nursing Home
Beds 0 3,747 2,042(a) Sep 1986
Paradise Cove (b)
Retirement Center
Las Vegas, NV
110 Units 2,758(c) 5,413 2,379(a) Sep 1986
Highland Cove (b)
Retirement Center
Shreveport, LA
142 Units 4,209(c) 10,016 3,546(a) Nov 1986
$ 7,885 $21,917 $ 8,697
TOTALS: Nursing Homes 260 Beds
Retirement Centers 252 Units
(a) A provision was made to write down these facilities, for
Partnership financial statement purposes, to their net
realizable values as determined by the Corporate General
Partner at the time of the write-downs (See Item 8, Note 5).
The amounts reflect these write-downs.
(b) These properties were sold effective January 31, 1995 and
were recorded as property held for sale as of December 31,
1994 (See Item 8, Note 13).
(c) These secured debts were paid off January 31, 1995, with the
proceeds from the sales of Paradise Cove and Highland Cove.
7<PAGE>
Rental Rates and Occupancy
Years ended December 31,
1994 1993 1992 1991
Grandview Manor
Nursing Home
Occupancy Rate 81% 85% 92% 83%
Rental Rate (PPD) $62 $62 $57 $49
Heritage Manor
of Westwood
Occupancy Rate 81% 79% 82% 90%
Rental Rate (PPD) $67 $63 $58 $47
Paradise Cove
Retirement Center
Occupancy Rate 96% 92% 89% 93%
Rental Rate $883 $850 $849 $805
Highland Cove
Retirement Center
Occupancy Rate 89% 88% 94% 88%
Rental Rate $974 $981 $954 $903
Rental rates for nursing homes are presented using Per-Patient-
Day amounts ("PPD") the industry standard for comparison. The
PPD amount is the average rental revenue for a day of housing and
services.
Rental Rate of retirement apartment presented as the Average
Monthly Rent per unit.
ITEM 3. LEGAL PROCEEDINGS
Southmark Corporation Bankruptcy
In November 1990, the Partnership filed claims against Southmark
in the United States Bankruptcy Court for the Northern District
of Texas. In August of 1991, the Partnership was served notice
that on July 12, 1991, Southmark filed suit against the
Partnership, the Corporate General Partner, and partnerships
controlled by affiliates of the Corporate General Partner. The
suit was also filed in the United States Bankruptcy Court for the
Northern District of Texas, Dallas Division (the "Bankruptcy
Court"). In this suit, Southmark was seeking $126,361, alleging
a fraudulent, preferential or post-petition transfer. 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 (See Item 8, Note 8).
The Partnership and Southmark reached a settlement which was
filed with the Bankruptcy Court in January 1994 (See Item 8, Note
8).
8<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S UNITS OF LIMITED PARTNERSHIP AND
RELATED 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 3,407 as of March 1995
(C) Due to improved operations and the sale of facilities
following the change of control of the Corporate General
Partner, the Partnership reinstituted distributions in 1991.
The Partnership distributed $899,994 to the Limited Partners
during 1991, $850,000 in 1992, $6,300,000 in 1993 and
$600,000 in 1994. The Corporate General Partner anticipates
that distributions will continue at a reduced level in 1995
due to the sales of the Partnerships' two retirement centers
in January 1995.
Distributions had been suspended since 1988 and thus there
were no distributions to the Limited Partners in 1990.
Cumulative distributions paid to the Limited Partners as of
December 31, 1994, were $11,446,595. There have been no
distributions to the General Partners. See Item 7 -
Management's Discussion and Analysis of Financial Condition
and Results of Operations and Item 8, Note 4 for discussion
of distributions.
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth a summary of certain 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.
9<PAGE>
Year Ended December 31, (000's)
Statement of
Operations 1994 1993(1) 1992 1991(2) 1990
Operating revenue $8,846 $21,969 $25,378 $24,413 $23,452
Income (loss) before
extraordinary gain (659) 2,054 520 117 (9,033)
Net income (loss) (659) 2,054 520 1,537 (7,608)
Income (loss) before
extra-ordinary gain
per weighted average
L.P. Unit (in dollars) (21.57) 70.31 17.03 3.07 (303.18)
Net income (loss)
per weighted average
L.P. Unit (in dollars) (21.57) 70.31 17.03 51.04 (255.05)
Distribution paid
per weighted average
L.P. Unit (in dollars) 20.47 214.96 29.00 30.71 -
(1) During 1993, the Partnership sold eight facilities.
(2) During 1991, the Partnership sold two facilities.
December 31, (000's)
Balance sheets 1994(4) 1993(1) 1992 1991(2) 1990(3)
Property and equip-
ment, net $ 2,772 $ 9,238 $23,533 $20,968 $28,113
Total assets 10,492 11,841 28,360 31,751 33,227
Long-term debt
obligations, less
current maturities - - 19,385 19,581 21,990
Partners' equity 1,797 3,056 7,302 7,632 6,995
(1) During 1993, the Partnership sold eight facilities (See Item 8).
(2) During 1991, the Partnership sold two facilities and one facility
was classified as property held for sale.
(3) During 1990, one facility was sold and two facilities were
foreclosed on by their lenders, prior to WelCare's affiliate's
acquisition of the Corporate General Partner.
(4) During 1994, two facilities were transferred to property held for
sale.
10<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Plan of Operations
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 the facilities and plans
to (A) attempt to refinance the related mortgage debt obligations
encumbering the properties or (B) sell the properties to
prospective purchasers. The Managing General Partner believes
that there is no assurance that the properties can be refinanced
and, therefore, the properties could be lost to foreclosure by
the lender. The Managing General Partners will seek to sell
these properties as an alternative to refinancing or foreclosure.
At December 31, 1994, the Partnership has held available for sale
all of its nursing home facilities. Accordingly, the Partnership
has classified the facilities as property held for sale in the
accompanying balance sheet. Subsequent to December 31, 1994, the
Partnership sold Highland Cove Retirement Center and Paradise
Cove Retirement Center to an independent third party as more
fully described in Item 8, Note 12 and retired the Partnership's
mortgage debt obligations with the sale proceeds.
Results of Operations
Revenue:
1994 compared to 1993:
Operating revenues decreased by $13,122,938 in 1994 as compared
to the prior year. Effective October 1, 1993, eight of the
Partnership's facilities were sold and therefore nine months of
revenues generated by these facilities are included in 1993
operations. During 1993, the Partnership's facilities sold
during 1993 generated revenues of $13,632,441. Revenues for 1994
at the Partnership's remaining facilities increased primarily due
to inflationary rate increases.
1993 compared to 1992:
Operating revenues decreased by $3,408,730 in 1993 compared to
the prior year. As discussed above, eight of the Partnership's
facilities were sold and therefore only nine months of revenues
generated by these facilities are included in 1993 operations.
During 1992, the Partnership's facilities sold during 1993
generated revenues of approximately $3,815,000 in excess of that
produced prior to the sale in 1993. Revenues for 1993 at the
11<PAGE>
Partnership's remaining facilities increased primarily due to
inflationary rate increases.
Expenses:
1994 compared to 1993:
Operating expenses decreased by $10,831,796 in 1994 as compared
to the prior year. This decrease is primarily due to the sale of
eight of the Partnership's facilities effective October 1, 1993.
During 1993 the sold facilities produced operating expenses of
approximately $11,634,000. Operating expenses for 1994 at the
Partnership's remaining facilities increased due to staffing
costs, expenses associated with additional services and
inflationary increases.
1993 compared to 1992:
Operating expenses decreased by $1,038,667 in 1993 as compared to
the prior year. This decrease is primarily due to the sale of
eight of the Partnership's facilities as discussed above. During
1992, these sold facilities produced operating expenses of
approximately $1,783,000 in excess of that produced prior to the
sale in 1993. Operating expenses for 1993 at the Partnership's
remaining facilities increased due to staffing costs, expenses
associated with additional services and inflationary increases.
12<PAGE>
Liquidity and Capital Resources
At December 31, 1994, the Partnership held cash and cash
equivalents of $776,254, a decrease of $551,330 from the amount
held at December 31, 1993. During 1994, the Partnership made
distributions to the Limited Partners totalling $600,000. Cash
is being held in reserve for working capital and operating
contingencies.
During 1994, cash flow from operations and cash reserves from
1993 were adequate to cover all operating and debt service
obligations of the Partnership and provide for distributions to
the Limited Partners. During 1994, the Partnership produced
positive cash flow from operations and the General Partners
anticipate that the Partnership should generate positive cash
flow during 1995.
During 1991, as a result of improvements in operations, the
Partnership reinstated distributions to the Limited Partners.
During 1992, the Managing General Partner caused the Partnership
to make quarterly distributions, with $850,000 paid to the
Limited Partners during the year. During 1993, the Partnership
distributed $6,300,000 to the Limited Partners which included
proceeds from the sale of eight of the Partnership's properties
which occurred in 1993. During 1994, distributions of $600,000
were made to the Limited Partners.
As of December 31, 1994, the Partnership was not obligated to
perform any major capital additions or renovations. No such
major capital expenditures or renovations are planned for 1995,
other than necessary repairs, maintenance and improvements which
will be funded by operations.
During 1993, the Partnership sold eight facilities, five located
in Mississippi and three located in Louisiana. This sale allowed
the Partnership to meet maturing debt obligations, reduce the
level of debt at the Partnership's remaining facilities and fund
a return of equity distribution to the Limited Partners.
As of December 31, 1994, the Partnership was obligated under
mortgages totalling $7,885,442 secured by three of its four
facilities and maturing on February 1, 1995. The Partnership's
fourth facility, Heritage Manor of Westwood, is owned free and
clear of all debt.
As discussed in Item 8, Note 13, 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 remaining 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.
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
13<PAGE>
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
positive cash flow from operations, management believes the
Partnership will have sufficient cash resources to meet its
operating and capital requirements in 1995. 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.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index Page Number
Report of Independent Certified
Public Accountants 16
Financial Statements
Balance Sheets - December 31, 1994 and 1993 17 & 18
Statements of Operations
- Years ended December 31, 1994, 1993 and 1992 18
Statements of Partners' Equity (Deficit)
- Years ended December 31, 1994, 1993 and 1992 19
Statements of Cash Flows
- Years ended December 31, 1994, 1993 and 1992 20
Summary of Significant Accounting Policies 22
Notes to Financial Statements 26
14<PAGE>
The following financial statement schedules, for the years ended
December 31, 1994, 1993 and 1992, of the Registrant are submitted
herewith in response to Item 14 (a)(2):
Schedule V - Property and Equipment 33
Schedule VI - Accumulated Depreciation
of Property and Equipment 34
Schedule VII - Valuation and Qualifying
Accounts 35
Schedule X - Supplementary Income Statement
Information 36
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 financial
statements and, therefore, have been omitted.
15<PAGE>
Report of Independent Certified Public Accountants
The Partners
Consolidated Resources Health Care Fund VI
We have audited the accompanying balance sheets of
Consolidated Resources Health Care Fund VI (a limited
partnership) (the "Partnership"), as of December 31, 1994
and 1993, and the related statements of operations,
partners' equity (deficit) and cash flows for each of the
years in the three year period ended December 31, 1994. We
have also audited the schedules listed in the accompanying
index. These financial statements and schedules are the
responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial
statements and schedules based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable assurance
about whether the financial statements and schedules are
free of material misstatement. An audit includes examining
on a test basis evidence supporting the amounts and
disclosures in the financial statements and schedules. An
audit also includes assessing the accounting principles used
and significant estimates made by management, as well as
evaluating the overall presentation of the financial
statements and schedules. 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.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial
position of Consolidated Resources Health Care Fund VI (a
limited partnership) at December 31, 1994 and 1993, and the
results of its operations and its cash flows for each of the
years in the three year period ended December 31, 1994 in
conformity with generally accepted accounting principles.
Also, in our opinion, the schedules present fairly, in all
material respects, the information set forth therein.
BDO Seidman
Atlanta, Georgia
March 10, 1995
16<PAGE>
CONSOLIDATED RESOURCES HEALTH CARE FUND VI
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
December 31, 1994 1993
ASSETS
CURRENT
Cash and cash equivalents (Note 11) $ 776,254 $ 1,327,584
Accounts receivable, net (Note 9) 910,853 808,303
Prepaid insurance 32,519 110,640
Other current assets 75,254 340,015
Property held for sale (Note 12) 8,697,111 -
Total current assets 10,491,991 2,586,542
PROPERTY AND EQUIPMENT
(Notes 3, 5, 7 and 12)
Land - 302,331
Buildings and improvements - 13,106,657
Equipment and furnishings - 1,709,252
- 15,118,240
Less accumulated depreciation
and amortization - 5,879,702
Net property and equipment - 9,238,538
OTHER ASSETS
Deferred loan costs, net - 16,348
$10,491,991 $11,841,428
See accompanying summary of significant accounting policies
and notes to financial statements.
17<PAGE>
CONSOLIDATED RESOURCES HEALTH CARE FUND VI
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
December 31, 1994 1993
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt
obligations (Notes 1, 3 and 12) $ 7,885,442 $ 8,006,691
Trade accounts payable 331,463 240,437
Accrued compensation 170,914 129,287
Accrued interest (Note 3) 27,636 82,793
Provider taxes payable (Note 10) 21,437 20,812
Other liabilities 257,882 305,553
Total liabilities 8,694,774 8,785,573
COMMITMENTS AND CONTINGENCIES
(Notes 10, 11, 12 and 13)
PARTNERS' EQUITY (DEFICIT) (Note 4)
Limited partners 2,186,922 3,419,214
General partners (389,705)
(363,359)
Total partners' equity 1,797,217 3,055,855
$10,491,991 $11,841,428
See accompanying summary of significant accounting policies
and notes to financial statements.
18<PAGE>
CONSOLIDATED RESOURCES HEALTH CARE FUND VI
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
Years ended December 31, 1994 1993 1992
Revenues
Operating revenue $ 8,846,005 $21,968,943 $25,377,673
Interest income 64,847 98,955 109,773
Total revenues 8,910,852 22,067,898 25,487,446
Expenses
Operating expenses 6,610,071 17,441,867 18,480,534
Interest 1,015,504 2,034,273 2,580,080
Depreciation and
amortization 773,842 1,654,701 1,905,300
Management fees (Note 2) 523,483 1,322,772 1,537,472
Real estate taxes 229,355 294,419 317,351
Partnership administration
costs 220,144 235,816 146,699
Loan extension fees
(Note 3) 288,392 - -
Total expenses 9,660,791 22,983,848 24,967,436
Operating income (loss) (749,939) (915,950) 520,010
Litigation settlement income
(Note 8) 91,301 - -
Gain on disposition
of properties (Note 7) - 2,969,662 -
Net income (loss) $ (658,638) $ 2,053,712 $ 520,010
Net income (loss) per L.P.
unit $ (21.57) $ 70.31 $ 17.03
Distributions paid per L.P.
unit $ 20.47 $ 214.96 $ 29.00
L.P. units outstanding 29,308 29,308 29,308
See accompanying summary of significant accounting policies and
notes to financial statements.
19<PAGE>
CONSOLIDATED RESOURCES HEALTH CARE FUND VI
(A LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
Total
Partners'
Limited General Equity
Balance,
at December 31, 1991 $ 8,009,351 $ (377,218) $ 7,632,133
Net income 499,210 20,800 520,010
Distributions (850,000) - (850,000)
Balance,
at December 31, 1992 7,658,561 (356,418) 7,302,143
Net income (loss) 2,060,653 (6,941) 2,053,712
Distributions (6,300,000) - (6,300,000)
Balance,
at December 31, 1993 3,419,214 (363,359) 3,055,855
Net loss (632,292) (26,346) (658,638)
Distributions (600,000) - (600,000)
Balance,
at December 31, 1994 $ 2,186,922 $ (389,705) $ 1,797,217
See accompanying summary of significant accounting policies
and notes to financial statements.
20<PAGE>
CONSOLIDATED RESOURCES HEALTH CARE FUND VI
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
Years ended December 31, 1994 1993 1992
Operating activities
Net income (loss) $(658,638) $ 2,053,712 $ 520,010
Adjustments to reconcile
net income to cash
provided by operating
activities:
Depreciation and
amortization 773,842 1,654,701 1,905,300
(Increase) decrease in
Workers' Compensation
funding pool - - (6,741)
Bad debts - 289,764 205,969
Gain on disposition
of properties - (2,969,662) -
Changes in assets
and liabilities:
Trade accounts
receivable (102,550) 1,145,545 (111,651)
Prepaid expenses
and other 78,121 233,057 (51,149)
Other assets 264,761 5,570 -
Trade accounts payable
and accrued
liabilities 30,450 (828,425) (640,438)
Cash provided by operating
activities 385,986 1,584,262 1,821,300
Investing activities
Payment for purchases of
property and equipment (216,067) (399,000) (370,573)
Proceeds from sale
of properties - 16,056,985 -
Cash provided by (used in)
investing activities (216,067) 15,657,985 (370,573)
Financing activities
Principal payments
on long-term debt
obligations (121,249) (11,444,223) (2,421,020)
Distributions to limited
partners (600,000) (6,300,000) (850,000)
Cash used in financing
activities (721,249) (17,744,223) (3,271,020)
Net decrease in cash and
cash equivalents (551,330) (501,976) (1,820,293)
21<PAGE>
CONSOLIDATED RESOURCES HEALTH CARE FUND VI
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
Years ended December 31, 1994 1993 1992
Net decrease in cash
and cash equivalents,
brought forward (551,330) (501,976) (1,820,293)
Cash and cash equivalents,
beginning of year 1,327,584 1,829,560 3,649,853
Cash and cash equivalents,
end of year $ 776,254 $1,327,584 $1,829,560
See accompanying summary of significant accounting policies and notes to
financial statements.
22<PAGE>
CONSOLIDATED RESOURCES HEALTH CARE FUND VI
(A LIMITED PARTNERSHIP)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Consolidated Resources Health Care Fund VI (the "Partnership")
was organized on January 2, 1985 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 occupancy rate, in the aggregate,
for the Partnership's properties was 87% for the year ended
December 31, 1994.
The General Partners of the Partnership are WelCare Service
Corporation-VI, a Georgia corporation ("WSC-VI"), Consolidated
Resources VI, Inc. serving as the Corporate General Partner, a
Georgia corporation and a wholly-owned subsidiary of WelCare
Consolidated Resources Corporation of America ("WCRCA"), and
Consolidated Associates VI, a Georgia general partnership
(collectively the "General Partners"). WSC-VI and WCRCA are
wholly-owned subsidiaries of WelCare Acquisition Corp., which is
a wholly-owned subsidiary of WelCare International, Inc.
("WelCare"). WelCare, a privately-owned Georgia corporation, is
engaged in the operation, acquisition, property management and
oversight management of long-term care facilities. Consolidated
Associates VI is composed of WCRCA, as the managing general
partner, and individuals who were previously associated with
Consolidated Resources Corporation of America ("CRCA").
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 has liquidated most of its
assets pursuant to a plan of reorganization. On November 20,
1990, WelCare Acquisition Corp. acquired from Southmark all the
stock of SCRCA whose name was then changed to WelCare
Consolidated Resources Corporation of America. Effective January
7, 1992, WSC-VI was added as the managing general partner.
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 the facilities and plans
to (A) attempt to refinance the related mortgage debt obligations
encumbering the properties or (B) sell the properties to
23<PAGE>
CONSOLIDATED RESOURCES HEALTH CARE FUND VI
(A LIMITED PARTNERSHIP)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
prospective purchasers. The Managing General Partner believes
that there is no assurance that the properties can be refinanced
and, therefore, the properties could be lost to foreclosure by
the lender. The Managing General Partners will seek to sell
these properties as an alternative to refinancing or foreclosure.
At December 31, 1994, the Partnership has held available for sale
all of its nursing home facilities. Accordingly, the Partnership
has classified the facilities as property held for sale in the
accompanying balance sheet.
The financial statements do not reflect assets the partners may
have outside their interests in the Partnership, nor any personal
obligations, including income taxes, of the individual partners.
Property Held for Sale
Property held for sale at December 31, 1994 consists of two
nursing home facilities and two retirement centers owned by the
Partnership and carried at the lower of cost or net realizable
value less estimated cost to dispose. 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. Accordingly, all facilities of the Partnership have been
classified as property held for sale as of December 31, 1994. As
discussed in Note 12, the two retirement centers were sold in
January 1995.
Property and Equipment
Property and equipment as of December 31, 1993 consists of two
nursing home facilities and two retirement centers which are
recorded at cost less appropriate reductions for permanent
declines in net realizable value. Property and equipment are not
adjusted for increases in net realizable value.
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.
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.
24<PAGE>
CONSOLIDATED RESOURCES HEALTH CARE FUND VI
(A LIMITED PARTNERSHIP)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
25<PAGE>
CONSOLIDATED RESOURCES HEALTH CARE FUND VI
(A LIMITED PARTNERSHIP)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 (see Note 6).
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 determined by the method
described in Note 4.
Net 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
(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;
(3) Third, any remaining net profits shall be allocated 15% to
the General Partners and 85% to the Limited Partners.
26<PAGE>
CONSOLIDATED RESOURCES HEALTH CARE FUND VI
(A LIMITED PARTNERSHIP)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Upon dissolution of the Partnership, the General Partners are
required to contribute to the Partnership an amount equal to the
lesser of (1) the deficit balances in their capital accounts at
the time of dissolution, or (2) $296,010, which is 1.01% of
capital contributions made by the Limited Partners. Any funds so
contributed will become assets of the Partnership to be
liquidated as provided by the Partnership agreement. This
provision could affect the amounts of income or loss allocated to
the Limited Partners' and General Partners' capital accounts.
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 1993 amounts have been reclassified to conform with the
1994 presentation.
Statements of Cash Flows
For purposes of this statement, cash equivalents include bank
repurchase agreements, commercial paper, and certificates of
deposits with original maturities of three months or less.
27<PAGE>
CONSOLIDATED RESOURCES HEALTH CARE FUND VI
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
1. Transactions With Former Affiliates
The Partnership has mortgages secured by owned facilities payable
to Southmark, totalling $7,885,442 and $8,006,691 at December 31,
1994 and 1993, respectively, (See Notes 3 and 13).
2. Management Fees
During 1991, an affiliate of the Corporate General Partner
assumed management responsibility for all of its nursing homes
and received a fee of 5% of gross revenues. During 1992, the
affiliate assumed the accounting function of the homes and
received an additional fee of 1% of gross revenues.
This affiliate of the Corporate General Partner earned management
and oversight fees from the Partnership of $336,518, $559,747 and
$564,094 during 1994, 1993 and 1992, respectively. Affiliates
were reimbursed for costs incurred in connection with the
administration of Partnership activities of $170,501, $199,565
and $88,407 during 1994, 1993 and 1992, respectively.
The two retirement centers, effective March 1, 1991, were managed
by a company that is unaffiliated with WelCare, Southmark, or NHI
for a fee of 5% of gross revenues.
3. Long-Term Debt Obligations
Long-term debt obligations included in current maturities
consisted of:
1994 1993
12% notes, collateralized
by property and equipment with
a net book value of approximately
$6,654,000 requiring monthly
payments of principal and
interest based on a 30-year
amortization, due February
1, 1995 (See Note 13) $7,885,442 $8,006,691
28<PAGE>
CONSOLIDATED RESOURCES HEALTH CARE FUND VI
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
At December 31, 1994, substantially all property and equipment of
the facilities was held as collateral for long-term debt
obligations, except for net property and equipment of $2,041,340
relating to Heritage Manor of Westwood.
During 1994, the Partnership paid $288,392 in loan extension fees
to the lender relating to debt maturing on August 1, 1994. The
due date was extended to February 1, 1995. As discussed in Note
13, these debt obligations were satisfied in connection with the
sales of two facilities on January 31, 1995.
As discussed more fully in Note 7, Heritage Manor of Ferriday,
Heritage Manor of Franklinton, Heritage Manor of Bossier, Hilltop
Manor Healthcare Center, McComb Extended Care, Starkville Manor,
Winona Manor, and Gleburney Nursing Home were sold in 1993. The
12% notes which related to these properties were satisfied in
connection with the sales of these homes.
The Partnership paid interest of $1,070,661, $2,024,945 and
$2,848,808 in 1994, 1993 and 1992, respectively.
4. 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 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 sale
price of all properties on a cumulative basis; then,
(d) the balance 15% to the General Partners and 85% to the
Limited Partners.
29<PAGE>
CONSOLIDATED RESOURCES HEALTH CARE FUND VI
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
The Partnership distributed to the Limited Partners $600,000,
$6,300,000 and $850,000 during 1994, 1993 and 1992, respectively.
There have been no distributions to the General Partners.
5. Loss From Write-Down of Properties
Prior to 1992, 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 write-downs were as follows as of December 31, 1994.
Highland Cove Retirement Center $4,005,190
Paradise Cove Retirement Center 1,479,197
Grandview Manor Nursing Home 1,001,839
Heritage Manor of Westwood 312,463
$6,798,689
During 1994, all facilities owned by the Partnership were
reclassified from Property and Equipment and are included in
Property Held for Sale on the accompanying balance sheet as of
December 31, 1994. The amount recorded as Property Held for Sale
is recorded net of accumulated depreciation. The net book value
of these facilities along with the related accumulated
depreciation are as follows as of December 31, 1994.
Net Book Accumulated
Value Depreciation
Highland Cove Retirement Center $3,546,073 $2,547,464
Paradise Cove Retirement Center 2,378,786 1,556,063
Grandview Manor Nursing Home 2,041,840 1,426,722
Heritage Manor of Westwood 730,412 1,106,947
$8,697,111 $6,637,196
6. Taxable Income
A reconciliation between the financial statement net income
(loss) and income (loss) for tax purposes follows:
Years ended December 31, 1994 1993 1992
Financial statement
net income (loss) $ (658,638) $2,053,712 $ 520,010
Add:
Bad debts per
financial statements 96,858 289,764 90,073
Jobs tax credit salary
reduction - 18,328 39,229
Other 226 8,706 16,610
30<PAGE>
CONSOLIDATED RESOURCES HEALTH CARE FUND VI
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
Years ended December 31, 1994 1993 1992
Deduct:
Excess of tax over
financial statement
depreciation (354,040) (110,242) (133,843)
Excess of tax over
financial statement
amortization (7,063) (129) (13,584)
Excess of financial
over tax gain on sale
of properties - (885,305) -
Financial statement
income excluded from
taxable income (319,231) (121,052)
(435,514)
Taxable income (loss) $(1,241,888) $1,253,782 $ 82,981
7. Property Dispositions
On October 20, 1993, the Partnership sold five facilities located
in Mississippi and three located in Louisiana for $16,056,985
(net of certain adjustments and prorations) pursuant to a
purchase and sale agreement dated as of October 1, 1993. The
purchase price for the eight facilities was paid in cash and each
of the facilities was sold for amounts in excess of their
respective net book values which resulted in a recognized gain of
approximately $2,970,000.
The eight facilities sold were Heritage Manor of Ferriday,
Heritage Manor of Franklinton, Heritage Manor of Bossier,
Glenburney Manor, Hilltop Manor, McComb Extended Care Center,
Starkville Manor and Winona Manor. During the nine months ended
September 30, 1993, these sold facilities earned approximately
$13,632,000 in revenue and incurred approximately $11,634,000 in
expenses.
After repayment of existing debt obligations on the eight
facilities sold, the Partnership received $5,042,903 in cash
proceeds, $550,000 of which was used to pay down the existing
debt secured by Grandview Manor and Paradise Cove Retirement
Center.
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 of 1991, the Partnership was served notice
that Southmark filed suit against the Partnership, the Corporate
31<PAGE>
CONSOLIDATED RESOURCES HEALTH CARE FUND VI
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
General Partner, and partnerships and corporations which are
unaffiliated with the Partnership or the Corporate General
Partner. In this suit, Southmark was seeking $126,361 alleging a
fraudulent, preferential or post-petition transfer. 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 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.
9. Cost Reimbursements
Accounts receivable and operating revenue include amounts
estimated by management to be reimbursable by Medicaid and other
third-party programs 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
programs accounted for approximately 79%, 70% and 72% of
operating revenue during 1994, 1993 and 1992, respectively.
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:
1994 1993
Illinois $542,225 $454,000
Louisiana 197,388 208,000
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.
Amounts due from Medicaid programs are generally paid on an
interim and final basis, depending on the state, primarily within
30 to 60 days from date of billing.
10. Provider Taxes
32<PAGE>
CONSOLIDATED RESOURCES HEALTH CARE FUND VI
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
During 1994, 1993 and 1992, the State of Illinois assessed
nursing home facilities a provider tax based on patient days. In
July 1992, the states of Louisiana and Mississippi began
assessing provider taxes which are also based on patient days.
The provider taxes are considered allowable costs under each
state's Medicaid cost reimbursement program. At December 31,
1994, the Partnership owned one facility in Illinois and one
facility in Louisiana. The Partnership sold its Mississippi
homes during 1993.
11. Concentrations of Credit Risk
At December 31, 1994, the Partnership had cash invested in
commercial paper totalling $350,000 and cash on deposit with a
bank which exceeded Federal Deposit Insurance Corporation limits
by $271,000.
12. Subsequent Event
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. The
purchase price was $6,000,000 for Highland Cove and $2,798,574
for Paradise Cove. Highland Cove and Paradise Cove had net book
values of approximately $3,546,000 and $2,379,000, respectively,
at December 31, 1994. The Partnership used the proceeds from the
sale to satisfy the existing debt secured by Highland Cove,
Paradise Cove, and Grandview Manor which totalled approximately
$7,885,000 at December 31, 1994. The Partnership has no
continuing liability with respect to these obligations. The
Partnership anticipates recognizing a gain on the sales of
approximately $2,880,000 in 1995. The retirement centers were,
accordingly, reclassified from property and equipment to property
held for sale on the accompanying 1994 balance sheet.
33<PAGE>
34<PAGE>
SCHEDULES
CONSOLIDATED RESOURCES HEALTH CARE FUND VI
(A LIMITED PARTNERSHIP)
SCHEDULE V - PROPERTY AND EQUIPMENT
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
Balance at Balance
beginning Additions Other at end
Classification of year at cost Retirements(1) changes(2) of year
1994
Land $ 302,331 $ - $ - $ (302,331) $ -
Buildings and
improvements 13,106,657 97,982 - (13,204,639) -
Equipment and
furnishings 1,709,252 118,085 - (1,827,337) -
$15,118,240 $ 216,067 $ - $(15,334,307) $ -
1993
Land $ 905,240 $ - $ 602,909 $ - $ 302,331
Buildings and
improvements 30,078,702 59,000 17,031,045 - 13,106,657
Equipment and
furnishings 3,947,881 340,000 2,578,629 - 1,709,252
$34,931,823 $ 399,000 $20,212,583 $ - $15,118,240
1992
Land $ 849,575 $ - $ - $ 55,665 $ 905,240
Buildings and
improvements 24,683,748 63,117 - 5,331,837 30,078,702
Equipment and
furnishings 3,243,724 307,456 - 396,701 3,947,881
$28,777,047 $ 370,573 $ - $ 5,784,203 $34,931,823
(1) Eight facilities were sold in 1993.
(2) One facility, which was transferred to
property held for sale in 1991, was
transferred back to property and equipment in
1992. Two facilities were transferred to
property held for sale in 1994.
35<PAGE>
CONSOLIDATED RESOURCES HEALTH CARE FUND VI
(A LIMITED PARTNERSHIP)
SCHEDULE VI - ACCUMULATED DEPRECIATION OF PROPERTY
AND EQUIPMENT
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
Balance at Balance
beginning Additions Other at end
Classification of year at cost Retirements(1) changes(2) of year
1994
Buildings and
improvements $ 4,388,659 $ 667,165 $ - $(5,055,824) $ -
Equipment and
furnishings 1,491,043 90,329 - (1,581,372) -
$ 5,879,702 $ 757,494 $ - $(6,637,196) $ -
1993
Buildings and
improvements $ 7,942,533 $1,224,704 $4,778,578 $ - $ 4,388,659
Equipment and
furnishings 3,456,473 381,252 2,346,682 - 1,491,043
$11,399,006 $1,605,956 $7,125,260 $ - $ 5,879,702
1992
Buildings and
improvements $ 5,407,116 $1,394,940 $ - $ 1,140,477 $ 7,942,533
Equipment and
furnishings 2,402,356 450,778 - 603,339 3,456,473
$ 7,809,472 $1,845,718 $ - $ 1,743,816 $11,399,006
(1) Eight facilities were sold in 1993.
(2) One facility, which was transferred to
property held for sale in 1991, was
transferred back to property and equipment in
1992. Two facilities were transferred to
property held for sale in 1994.
36<PAGE>
CONSOLIDATED RESOURCES HEALTH CARE FUND VI
(A LIMITED PARTNERSHIP)
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
Balance at Additions Balance
beginning charged to at end
of year cost Deductions of year
1994
Allowance for
doubtful accounts $222,373 $ 96,858 $319,231 $ -
1993
Allowance for
doubtful accounts $222,938 $289,764 $290,329 $222,373
1992
Allowance for
doubtful accounts $149,285 $205,969 $132,316 $222,938
37<PAGE>
CONSOLIDATED RESOURCES HEALTH CARE FUND VI
(A LIMITED PARTNERSHIP)
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
Charged to
operating
expenses
1994
Repairs and maintenance $ 153,229
1993
Repairs and maintenance $ 530,796
1992
Repairs and maintenance $ 595,834
38<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Partnership does not have officers or directors. At December
31, 1994, the General Partners of the Partnership were WelCare
Service Corporation-VI, Consolidated Resources VI, Inc., and
Consolidated Associates VI. The executive officers and director
of WelCare Service Corporation-VI and Consolidated Resources VI,
Inc., who control the affairs of the Partnership, are as follows:
Name and Other Principal Occupations and Other
Position Age Directorships During the Past 5 Years
J. Stephen Eaton
President and 44 Mr. Eaton has been President and Director
Director of WelCare International, Inc. since its
formation in February 1989. WelCare
International, Inc., an affiliate of the
General Partners, is engaged in the
operation, acquisition, property management
and oversight management of long-term care
facilities. From 1984 to 1988, Mr. Eaton
was President of CRCA Marketing, Inc. which
later became Southmark Consolidated
Securities Corporation. Mr. Eaton was a
director of Consolidated Resources
Corporation of America from 1984 to 1986.
Since 1988, Mr. Eaton has served as a
Director and is currently Chairman of St.
Joseph's Mercy Care Corporation, a non-
profit corporation.
Kent C. Fosha, 53 Mr. Fosha has been Senior Vice President of
Sr. WelCare International, Inc. since 1990.
Senior Vice WelCare International, Inc., an affiliate
President of the General Partners, is engaged in the
Operations operation, acquisition, property management
and oversight management of long-term care
facilities. From 1987 to 1990, Mr. Fosha
was Division Vice President of National
Heritage, Inc. From 1981 to 1987, Mr.
Fosha was Vice President, Operations for
Beverly Enterprises, Inc. Mr. Fosha was
President of the Georgia Health Care
Association during 1986-1987. Mr. Fosha is
a licensed nursing home administrator in
the state of Georgia.
Alan C. Dahl 33 Mr Dahl has been Senior Vice President of
Senior Vice WelCare International, Inc. since February,
President 1991. WelCare International, Inc., an
affiliate of the General Partners, is
engaged in the operation, acquisition,
39<PAGE>
property management and oversight
management of long-term care facilities.
From May, 1989 to February, 1991, Mr. Dahl
was a Senior Vice President - Investor
Operations of Southmark Public
Syndications, Inc. Mr. Dahl held various
other officer positions in Southmark-
affiliated entities from 1986 to February,
1991. From 1983 to 1986, Mr. Dahl, a
certified public accountant, was in the tax
department at Ernst & Young.
ITEM 11. EXECUTIVE COMPENSATION
No individual principal or principals as a group received any
direct renumeration from the Partnership.
The General Partners are not compensated directly for their
services as General Partners of the Partnership. See Item 13 and
Note 2 to the financial statements appearing in Item 8 for
further discussion of compensation paid to affiliates of the
General Partners.
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.
None.
40<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 1994.
Oversight and management fees $336,518
Administration of Partnership activities (1) 170,501
(1) For reimbursement of expenses incurred by the General
Partners in performing certain administrative functions
including investor relations and accounting. See Note 2 to
the accompanying financial statements appearing in Item 8.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON
FORM 8-K
(a) The following documents are filed as a part of this report:
1. Financial Statements Included in Part II, Item 8:
Report of Independent Certified Public Accountants
Balance Sheets
as of December 31, 1994 and 1993
Statements of Operations
for the Years Ended December 31, 1994, 1993 and 1992
Statements of Partners' Equity (Deficit)
for the Years Ended December 31, 1994, 1993 and 1992
Statements of Cash Flows
for the Years Ended December 31, 1994, 1993 and 1992
Summary of Significant Accounting Policies
Notes to Financial Statements
2. Schedules Included in Part II, Item 8:
Schedule V - Property and Equipment
for the Years Ended December 31, 1994, 1993 and 1992
Schedule VI - Accumulated Depreciation of Property and
Equipment for the Years Ended December 31, 1994, 1993
and 1992
Schedule VIII - Valuation and Qualifying Accounts
for the Years Ended December 31, 1994, 1993 and 1992
Schedule X - Supplementary Income Statement Information
for the Years Ended December 31, 1994, 1993 and 1992
41<PAGE>
Other schedules are omitted since they are not required, are not
applicable or the financial information required is included in
the financial statements or notes thereto.
3. Exhibits:
Exhibit Number Document Description
2.1 Liquidation Proposal incorporated by
reference to the Proxy Statement filed
on September 28, 1994, file No. 0-15694.
3.1 Amended and Restated Agreement of
Limited Partnership of Consolidated
Resources Health Care Fund VI,
incorporated by reference to Exhibit A
to the Registration Statement on Form S-
1, File No. 33-425.
3.2 Amendment to Amended and Restated
Agreement of Limited Partnership of
Consolidated Resources Health Care Fund
VI, incorporated by reference to the
Proxy Statement filed on November 19,
1991, File No. 0-15694.
10.1 Management Agreement dated as of January
1, 1992 by Consolidated Resources Health
Care Fund VI and WelCare International
Management Corporation, incorporated by
reference to Form 10-Q for the quarter
ended March 31, 1992.
(b) Reports on Form 8-K:
On October 18, 1994, the Partnership filed a Form 8-K
announcing the Partnership had received the requisite
of a majority in interest of the Limited Partners to
approve the Liquidation Proposal pursuant to a proxy
statement delivered to the Limited Partners September
28, 1994.
42<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 VI
By: CONSOLIDATED RESOURCES VI, INC.
Corporate General Partner
Date: March 30, 1995 /s/ J. Stephen Eaton
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:
Date: March 30, 1995 /s/ J. Stephen Eaton
J. Stephen Eaton,
Sole Director and
Principal Executive Officer of the
Corporate General Partner
Date: March 30, 1995 /s/ Alan C. Dahl
Alan C. Dahl,
Principal Financial Officer of the
Corporate General Partner
43<PAGE>
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