SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
(Mark One)
[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the quarterly period ended June 30, 1998
[ ] Transition report under Section 13 or 15(d) of the Exchange Act for the
transition period
From to
Commission file number 0-14752.
CAPITAL SENIOR LIVING COMMUNITIES, L.P.
(Exact name of Small Business Issuer as Specified in Its Charter)
DELAWARE 35-1665759
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
14160 Dallas Parkway, Suite 300, Dallas, Texas 75240
(Address of Principal Executive Offices)
(972) 770-5600
(Issuer's Telephone Number, Including Area Code)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes[x] No[ ]
Transitional Small Business Disclosure Format Yes [ ] No [x].
<PAGE>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
CAPITAL SENIOR LIVING COMMUNITIES, LP
CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1998 AND DECEMBER 31, 1997
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
(Unaudited) (Audited)
----------- ---------
ASSET
<S> <C> <C>
OTHER ASSETS:
Cash and cash equivalents $ 6,483,782 $ 66,818,286
Cash, restricted 19,960 19,960
Accounts receivable, net of allowance for doubtful accounts
of $83,116 in 1998 and $145,602 in 1997 210,564 599,824
Prepaid expenses and other 699 4,889
---------------- --------------
Total assets $ 6,715,005 $ 67,442,959
================ ==============
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Accrued expenses and other liabilities $ 114,053 $ 147,830
---------------- --------------
Total liabilities 114,053 147,830
---------------- --------------
PARTNERS' CAPITAL:
General partner 81,825 482,718
Limited partner 1 1
Beneficial unit certificates, 1,264,000
issued and 1,117,692 outstanding 8,742,232 69,035,516
Repurchased beneficial unit certificates (2,223,106) (2,223,106)
---------------- --------------
Total partners' capital 6,600,952 67,295,129
---------------- --------------
Total liabilities and partners' capital $ 6,715,005 $ 67,442,959
================ ==============
</TABLE>
See notes to financial statements
1
<PAGE>
CAPITAL SENIOR LIVING COMMUNITIES, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months ended June 30,
1998 1997
---- ----
<S> <C> <C>
RENTAL AND OTHER INCOME
Independent $ 0 $ 1,899,952
Assisted Living 0 422,666
Nursing (9,300) 3,044,773
Facility lease income 0 1,059,749
Other 88,012 221,215
-------------- --------------
Total rental and other income 78,712 6,648,355
EXPENSES:
Salaries, wages and benefits (102,453) 2,256,889
Operating and other administrative expenses (10,520) 2,390,958
Depreciation and amortization 0 471,721
-------------- --------------
Total expenses (112,973) 5,119,568
-------------- --------------
Income from operations 191,685 1,528,787
OTHER INCOME (EXPENSE):
Interest income 52,413 645,502
Interest expense 0 (212,615)
Minority interest 0 (156,275)
-------------- --------------
Total other income (expense) 52,413 276,612
-------------- --------------
NET INCOME $ 244,098 $ 1,805,399
============== ==============
NET INCOME ALLOCATION:
General partner $ 2,441 $ 18,054
Beneficial unit certificate holders 241,657 1,787,345
-------------- --------------
Total $ 244,098 $ 1,805,399
============== ==============
NET INCOME PER BENEFICIAL UNIT
CERTIFICATE $ .22 $ 1.56
============== ==============
OUTSTANDING BENEFICIAL UNIT
CERTIFICATES 1,117,692 1,117,692
============== ==============
</TABLE>
See notes to financial statements
2
<PAGE>
CAPITAL SENIOR LIVING COMMUNITIES, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months ended June 30,
1998 1997
---- ----
<S> <C> <C>
RENTAL AND OTHER INCOME
Independent $ 0 $ 3,747,265
Assisted Living 0 853,078
Nursing 160 5,455,527
Facility lease income 0 2,157,973
Other 90,727 461,410
-------------- --------------
Total rental and other income 90,887 12,675,253
EXPENSES:
Salaries, wages and benefits (88,182) 4,506,782
Operating and other administrative expenses 34,022 4,652,228
Depreciation and amortization 0 943,443
-------------- --------------
Total expenses (54,160) 10,102,453
-------------- --------------
Income from operations 145,047 2,572,800
OTHER INCOME (EXPENSE):
Interest income 784,890 787,696
Interest expense 0 (386,347)
Minority interest 0 (395,462)
-------------- --------------
Total other income (expense) 784,890 5,887
-------------- --------------
NET INCOME $ 929,937 $ 2,578,687
============== ==============
NET INCOME ALLOCATION:
General partner $ 9,299 $ 25,787
Beneficial unit certificate holders 920,638 2,552,900
-------------- --------------
Total $ 929,937 $ 2,578,687
============== ==============
NET INCOME PER BENEFICIAL UNIT
CERTIFICATE $ .82 $ 2.23
============== ==============
OUTSTANDING BENEFICIAL UNIT
CERTIFICATES 1,117,692 1,117,692
============== ==============
</TABLE>
See notes to financial statements
3
<PAGE>
CAPITAL SENIOR LIVING COMMUNITIES, L.P.
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
Beneficial Repurchased
Unit Beneficial Limited General
Certificates Unit Certificates Partner Partner Total
------------ ----------------- ------- ------- -----
<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1997 $ 69,035,516 $ (2,223,106) $ 1 $ 482,718 $ 67,295,129
Net Income 920,638 0 0 9,299 929,937
Net Income Distribution
Adjustment (1,392,608) 0 0 1,392,608 0
Distributions (59,821,314) 0 0 (1,802,800) (61,624,114)
--------------- ------------- ------------- ------------- ----------------
BALANCE, June 30, 1998 $ 8,742,232 $ (2,223,106) $ 1 $ 81,825 $ 6,600,952
================ ============= ============= ============= ================
</TABLE>
See notes to financial statements
4
<PAGE>
CAPITAL SENIOR LIVING COMMUNITIES, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
For the Six Months
Ended June 30,
1998 1997
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 929,937 $ 2,578,687
Adjustments to reconcile net income
to net cash provided by (used in) operating activities:
Depreciation 0 826,128
Amortization of deferred financing charges 0 117,315
Provision for bad debt (62,486) 28,061
Minority interest 0 395,462
Changes in assets and liabilities, net of effects of acquisitions:
Cash, restricted 0 37,330
Accounts receivable 451,746 (644,918)
Prepaid expenses and other 4,190 27,186
Accrued expenses and other liabilities (33,777) 142,308
Customer Deposits 0 9,490
-------------- --------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 1,289,610 3,517,049
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash acquired upon consolidation of HCP 0 8,995,455
Additions to property and equipment 0 (553,533)
Investments in limited partnerships 0 (14,155,889)
-------------- --------------
NET CASH USED IN
INVESTING ACTIVITIES 0 (5,713,967)
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds on note 0 6,000,000
Payments on notes payable 0 (760,991)
Distributions (61,624,114) 0
Repurchase of beneficial unit certificates 0 (960,752)
-------------- --------------
NET CASH PROVIDED (USED) IN
FINANCING ACTIVITIES (61,624,114) 4,278,257
-------------- --------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (60,334,504) 2,081,339
CASH AND CASH EQUIVALENTS, Beginning of Period 66,818,286 10,463,887
-------------- --------------
CASH AND CASH EQUIVALENTS, End of Period $ 6,483,782 $ 12,545,226
============== ==============
</TABLE>
See notes to financial statements
5
<PAGE>
CAPITAL SENIOR LIVING COMMUNITIES, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Principals of Consolidation
The accompanying consolidated balance sheet, as of June 30, 1998, includes the
accounts of the Partnership and its 99%-owned subsidiary, Retirement
Partnership, Ltd. In addition, the accompanying consolidated statement of
operations, as of June 30, 1997, includes the accounts of HealthCare Properties,
L.P. ("HCP"). The Partnership's interest in HCP was subsequently sold on
November 3, 1997. All significant intercompany accounts and transactions have
been eliminated in consolidation. The 1% minority interest in Retirement
Partnership, Ltd. is not presented separately due to its immateriality.
The financial information has been prepared in accordance with the Partnership's
customary accounting practices and has not been audited. In the opinion of
management, the information presented reflects all adjustments necessary for a
fair statement of interim results. All such adjustments are of a normal and
recurring nature. The financial statements should be read in conjunction with
the consolidated financial statements and the footnotes thereto included in the
Partnership's annual report filed in Form 10-KSB for the year ended December 31,
1997.
Cash Equivalents
The Partnership considers investments with original maturities of three months
or less to be cash equivalents.
2. COMMITMENTS AND CONTINGENCIES:
The Partnership had $19,960 in certificates of deposit at June 30, 1998 and
December 31, 1997 respectively, restricted for utility deposits. The
certificates of deposit mature one year from the original purchase date.
3. TRANSACTIONS WITH RELATED PARTIES:
In accordance with the Partnership Agreement, the general partner, Retirement
Living Communities, L.P. ("RLC"), does not receive any fees from the Partnership
but may be reimbursed by the Partnership for any actual costs and expenses
incurred in connection with the operations of the Partnership. In addition, an
affiliate of RLC is managing the assets of the Partnership and of HCP. Capital
Realty Group Senior Housing, Inc. also receives reimbursements and fees from
HCP.
6
<PAGE>
In addition, the Partnership and HCP has no employees. An affiliate of RLC makes
gross payroll deposits and health insurance premium payments on behalf of the
properties owned by the Partnership and HCP, which are reimbursed by the
Partnership, and is required to fund any excess health insurance claims not
covered by the Partnership's health premiums or related insurance policy.
Reimbursements and fees paid to the general partner and affiliates of the
general partner are as follows:
Six months ended Six months ended
June 30, 1998 June 30, 1997
------------- -------------
Salary and benefit reimbursements $ 0 $ 4,259,624
Administrative reimbursements 29,352 280,329
Asset management fees 0 222,289
Property management fees 0 683,677
General partner management fees 0 45,802
----------------- -----------------
$ 29,352 $ 5,491,721
================= =================
In the second quarter of 1997, the Partnership received a loan from two
affiliates of the general partner totaling $500,000. The loan was repaid in the
second quarter of 1997 and paid accrued interest at 10% of $3,014.
In addition, a 50% partner of RLC is chairman of the board of a bank where the
Partnership holds the majority of its operating cash accounts.
4. DISPOSITION OF PROPERTY
On July 8, 1997, the Partnership entered into an asset purchase agreement with
an affiliate of RLC, Capital Senior Living Properties, Inc. ("CSLP"), pursuant
to which the Partnership had agreed to sell substantially all of its assets,
other than working capital, to CSLP conditioned upon, among other things, the
funding of the parent company of CSLP's initial public offering. On November 3,
1997, the Partnership sold its four retirement projects, its interest in Encore
Limited Partnership, its interest in HCP, and its interest in the Pension Notes
and limited partnership interests of NHP Retirement Housing Partners I Limited
Partnership ("NHP") to CSLP for $76,617,993. The Partnership obtained
independent valuations of properties from third party valuation firms, which
were utilized in determining the sales price. Sales proceeds were paid by the
assumption of the Lehman loan of $70,883,798 and by delivery of short term note
of $5,784,195. The short term note was subsequently paid in full on November 6,
1997. After payment of closing costs and broker fees, net cash proceeds to the
Partnership were $336,736. Effective November 6, 1997, restrictions on U.S.
Treasury bills being held were released and such U.S. Treasury bills in the
principal amount of $64,202,685 became an unrestricted asset of the Partnership.
In conjunction with the sale of the Partnership's investment in HCP, and in
compliance with Section 16b of the Securities and Exchange Act, the Partnership
paid to HCP $440,007 in short swing profits made on purchases of interests in
HCP within a six month period prior to the sale.
7
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This discussion should be read in conjunction with the financial statements of
Capital Senior Living Communities, L.P. (the "Partnership") included in this
Report.
As of June 30, 1998, the Partnership's assets included a 99% interest in
Retirement Partnership, Ltd. (the "Partnership Subsidiary").
RESULTS OF OPERATIONS
Since the sale of Partnership property on November 3, 1997, the Partnership's
primary source of funds is interest income earned on cash holdings.
FIRST SIX MONTHS OF 1998 COMPARED WITH FIRST SIX MONTHS OF 1997
Rental and other income for the six months ended June 30, 1998 and 1997 was
$90,887 and $12,675,253, respectively. The decreased revenues of $12,584,366
from the six months ended June 30, 1997 to 1998 is attributable to the sale of
Partnership properties in November, 1997. Interest income for the six months
ended June 30, 1998 and 1997 was $784,890 and $787,696, respectively. Interest
income slightly decreased $2,806 from the six months ended June 30, 1997 to
1998. Total expenses for the six months ended June 30, 1998 and 1997 were
$(54,160) and $10,102,453, respectively. The decreased expenses of $10,156,613
from the six months 1997 to 1998 is attributable to the sale of Partnership
properties in November, 1997. During the second quarter ended June 30, 1998, the
Partnership received a workers compensation refund of $113,792, resulting in a
credit balance for salaries, wages and benefits of $88,182 for the six months
ended June 30, 1998 and $102,453 for the three months ended June 30, 1998.
The Partnership incurred no depreciation and amortization, interest expense and
minority interest expense for the three months and six months ended June 30,
1998 in comparison to the respective periods in 1997 due to the sale of
Partnership assets in November, 1997. For the three months ended June 30, 1998
compared with the three months ended June 30, 1997, the Partnership's revenue
and expenses were impacted by the same shifts of revenue and expenses as
discussed above. Interest income significantly decreased $593,089 from the three
months ended June 30, 1997 to 1998 due to less cash available for investment
resulting from cash distributions made in the second quarter of 1998.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1998, the Partnership had cash and cash equivalents of
$6,483,782. It is the intention of the general partner to wind down the business
affairs of the Partnership and to substantially distribute its cash holdings,
leaving a small working capital reserve available for obligations that may
result from future contingencies. On March 12, 1998, a distribution of
$61,000,000 was made available, of which $59,821,314 has been disbursed to the
BUC Holders and a $1,802,800 distribution was disbursed to the general partner.
Approximately, $4,700,000 will be retained as a working capital reserve.
8
<PAGE>
PART II OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6.
No reports on Form 8-K have been filed by the registrant during the quarter
ended June 30, 1998.
Item 27 Financial Data Schedule required by Item 601 of Regulation S-B
9
<PAGE>
SIGNATURES
- ----------
Pursuant to the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
CAPITAL SENIOR LIVING COMMUNITIES, L.P.
By: RETIREMENT LIVING COMMUNITIES, L.P.
General Partner
By: CAPITAL RETIREMENT GROUP, INC.
General Partner
Date: August 14, 1998 By:/s/Keith Johannessen
------------------------
Keith Johannessen
President
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000789283
<NAME> Capital Senior Living Communities, L.P.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> APR-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 6,503,742
<SECURITIES> 0
<RECEIVABLES> 293,680
<ALLOWANCES> (83,116)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,715,005
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 6,600,952
<TOTAL-LIABILITY-AND-EQUITY> 6,715,005
<SALES> 0
<TOTAL-REVENUES> 131,125
<CGS> 0
<TOTAL-COSTS> (112,973)
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 244,098
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 244,098
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
