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 March 31, 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
<TABLE>
<CAPTION>
CAPITAL SENIOR LIVING COMMUNITIES, LP
CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1998 AND DECEMBER 31, 1997
------------------------------------------
March 31, December 31,
1998 1997
(Unaudited) (Audited)
----------- ------------
ASSET
- -----
<S> <C> <C> <C> <C> <C> <C>
OTHER ASSETS:
Cash and cash equivalents $ 25,238,417 $ 66,818,286
Cash, restricted 19,960 19,960
Accounts receivable, net of allowance for doubtful accounts
of $114,809 in 1998 and $145,602 in 1997 503,237 599,824
Prepaid expenses and other 2,794 4,889
---------------- --------------
Total assets $ 25,764,408 $ 67,442,959
================ ==============
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Accrued expenses and other liabilities $ 126,718 $ 147,830
----------------- --------------
Total liabilities 126,718 147,830
----------------- --------------
PARTNERS' CAPITAL:
General partner 79,384 482,718
Limited partner 1 1
Beneficial unit certificates, 1,264,000
issued and 1,117,692 outstanding 27,781,411 69,035,516
Repurchased beneficial unit certificates (2,223,106) (2,223,106)
----------------- --------------
Total partners' capital 25,637,690 67,295,129
----------------- --------------
Total liabilities and partners' capital $ 25,764,408 $ 67,442,959
================= ==============
</TABLE>
See notes to financial statements
1
<PAGE>
<TABLE>
<CAPTION>
CAPITAL SENIOR LIVING COMMUNITIES, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
--------------------------------------------------
(UNAUDITED)
-----------
Three Months ended March 31,
----------------------------
1998 1997
---- ----
<S> <C> <C>
RENTAL AND OTHER INCOME
Independent $ 0 $ 1,847,313
Assisted Living 0 430,412
Nursing 9,460 1,204,606
Other 2,715 240,195
-------------- --------------
12,175 3,722,526
INTEREST INCOME 732,477 64,445
INCOME ON INVESTMENTS 0 159,294
-------------- --------------
Total income 744,652 3,946,265
-------------- --------------
EXPENSES:
Salaries, wages and benefits 14,271 1,425,780
Operating and other administrative expenses 44,542 1,593,625
Depreciation and amortization 0 195,216
-------------- --------------
Total expenses 58,813 3,214,621
-------------- --------------
NET INCOME $ 685,839 $ 731,644
============== ==============
NET INCOME ALLOCATION:
General partner $ 6,858 $ 7,316
Beneficial unit certificate holders 678,981 724,328
-------------- --------------
Total $ 685,839 $ 731,644
============== ==============
NET INCOME PER BENEFICIAL UNIT
CERTIFICATE $ .61 $ .63
============== ==============
OUTSTANDING BENEFICIAL UNIT
CERTIFICATES 1,117,692 1,151,426
============== ==============
</TABLE>
See notes to financial statements
2
<PAGE>
<TABLE>
<CAPTION>
CAPITAL SENIOR LIVING COMMUNITIES, L.P.
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
FOR THE THREE MONTHS ENDED MARCH 31, 1998
-----------------------------------------
(UNAUDITED)
-----------
<S> <C> <C> <C> <C> <C>
Beneficial Repurchased
Unit Beneficial Limited General
Certificates Unit Certificates Partner Partner Total
------------ ----------------- -------- ------- -----
BALANCE, December 31, 1997 $ 69,035,516 $ (2,223,106) $ 1 $ 482,718 $ 67,295,129
Net Income 678,981 - - 6,858 685,839
Net Income (1,392,608) - - 1,392,608 0
Distribution
Adjustment
Distributions (40,540,478) - - (1,802,800) (42,343,278)
-------------- --------------- ---------- ---------- ---------------
BALANCE, March 31, 1998 $ 27,781,411 $ (2,223,106) $ 1 $ 79,384 $ 25,637,690
================ =============== ========== =========== ===============
</TABLE>
See notes to financial statements
3
<PAGE>
<TABLE>
<CAPTION>
CAPITAL SENIOR LIVING COMMUNITIES, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
--------------------------------------------------
(UNAUDITED)
-----------
<S> <C> <C>
For the Three Months
Ended March 31,
---------------
1998 1997
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 685,839 $ 731,644
Adjustments to reconcile net income
to net cash provided by (used in) operating activities:
Depreciation 0 163,410
Amortization of deferred financing charges 0 31,806
Provision for bad debt (30,793) 0
Amortization of deferred income 0 (44,864)
Equity in earnings of investee 0 (110,230)
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable 127,380 (32,820)
Prepaid expenses and other 2,095 46,021
Accrued expenses and other liabilities (21,112) 121,953
Customer Deposits 0 7,405
-------------- --------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 763,409 914,325
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment 0 (202,668)
Investments in limited partnerships 0 (8,008,436)
-------------- --------------
NET CASH USED IN
INVESTING ACTIVITIES 0 (8,211,104)
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions (42,343,278) 0
Repurchase of beneficial unit certificates 0 (329,620)
-------------- --------------
NET CASH USED IN
FINANCING ACTIVITIES (42,343,278) (329,620)
-------------- --------------
NET DECREASE IN CASH AND
CASH EQUIVALENTS (41,579,869) (7,626,399)
CASH AND CASH EQUIVALENTS, Beginning of Period 66,818,286 10,463,887
-------------- --------------
CASH AND CASH EQUIVALENTS, End of Period $ 25,238,417 $ 2,837,488
============== ==============
</TABLE>
See notes to financial statements
4
<PAGE>
CAPITAL SENIOR LIVING COMMUNITIES, L.P.
---------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
MARCH 31 1998
-------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
-------------------------------------------
Principals of Consolidation
- ---------------------------
The accompanying consolidated balance sheet, as of March 31, 1998, includes the
accounts of the Partnership and its 99%-owned subsidiary, Retirement
Partnership, Ltd. 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 March 31, 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. Partnership expenses
incurred by RLC and affiliates, which were expensed by the Partnership for the
first fiscal quarter ended March 31, 1998 and 1997, were $15,422 and $105,357,
respectively. Management fees reimbursed and expensed by the Partnership to RLC
and affiliates for the first fiscal quarter ended March 31, 1998 and 1997, were
$0 and $241,928, respectively.
In addition, the Partnership 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, 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. Reimbursed gross
payroll deposits and health insurance premiums, which were expensed by the
Partnership during the first fiscal quarter of 1998 and 1997, were $0 and
$1,322,908, respectively.
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,
5
<PAGE>
1997, the Partnership sold its four retirement projects, its interest in Encore
Limited Partnership, its interest in HealthCare Properties, L.P. ("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.
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 March 31, 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 QUARTER OF 1998 COMPARED WITH FIRST QUARTER OF 1997
- ---------------------------------------------------------
Rental and other income for the first fiscal quarter ended March 31, 1998 and
1997 was $12,175 and $3,722,526, respectively. The decreased revenues of
$3,710,351 from the first quarter of 1997 to 1998 is attributable to the sale of
Partnership properties in November, 1997. Interest income for the first fiscal
quarter ended March 31, 1998 and 1997 was $732,477 and $64,445, respectively.
Interest income increased $668,032 from the first quarter ended 1997 to the
first quarter ended 1998 due to interest income earned on additional cash
holdings from the sale of Partnership assets in November, 1997. Income on
investments decreased from $159,294 for the first quarter in 1997 to $0 for the
first quarter in 1998 and is due to the sale of Partnership properties in
November, 1997. Total expenses for the first quarter ended March 31, 1998 and
1997 was $58,813 and $3,214,621, respectively. The decreased expenses of
$3,155,808 from the first quarter of 1997 to 1998 is attributable to the sale of
Partnership properties in November, 1997.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
As of March 31, 1998, the Partnership had cash and cash equivalents of
$25,238,417. 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 $40,540,478 was 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.
6
<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. Exhibits and Reports on Form 8-K
(a) Item 27 Financial Data Schedule required by Item 601 of
Regulation S-B
(b) No reports on Form 8-K have been filed by the registrant during
the quarter ended March 31, 1998.
<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: May 13, 1998 By: /s/ Keith Johannessen
-----------------------------------
Keith Johannessen
President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Financial Data Sheet for Capital Senior Living Communities, L.P.
</LEGEND>
<CIK> 0000789283
<NAME> Capital Senior Living Communities, L.P.
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<CASH> 25,258,377
<SECURITIES> 0
<RECEIVABLES> 618,046
<ALLOWANCES> (114,809)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 25,764,408
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 25,637,690
<TOTAL-LIABILITY-AND-EQUITY> 25,764,408
<SALES> 0
<TOTAL-REVENUES> 744,652
<CGS> 0
<TOTAL-COSTS> 58,813
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 685,839
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 685,839
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
