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, 1999
[ ] Transition report under Section 13 or 15(d) of the Exchange Act for the
transition period
From to
------------------------------ ---------------------------------
Commission file number 0-14752.
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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 .
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<PAGE>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
CAPITAL SENIOR LIVING COMMUNITIES, LP
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 1999 AND DECEMBER 31, 1998
June 30, December 31,
1999 1998
---- ----
(Unaudited)
ASSETS
- ------
<S> <C> <C>
Cash and cash equivalents $ 1,937,676 $ 6,111,572
Cash, restricted 20,958 20,958
Accounts receivable, net of allowance for doubtful
accounts of $29,432 in 1999 and $52,462 in 1998 24,523 46,666
Prepaid expenses and other 576 1,441
---------------- --------------
Total assets $ 1,983,733 $ 6,180,637
================ ==============
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Accrued expenses and other liabilities $ 189,744 $ 189,150
---------------- --------------
Total liabilities 189,744 189,150
---------------- --------------
PARTNERS' CAPITAL:
General partner 178,327 165,446
Limited partner 1 1
Beneficial unit certificates, 1,264,000
issued and 1,117,692 outstanding 3,838,767 8,049,146
Repurchased beneficial unit certificates (2,223,106) (2,223,106)
---------------- --------------
Total partners' capital 1,793,989 5,991,487
---------------- --------------
Total liabilities and partners' capital $ 1,983,733 $ 6,180,637
================ ==============
</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 June 30, 1999 AND 1998
-------------------------------------------------
(UNAUDITED)
-----------
Three Months ended June 30
--------------------------
1999 1998
---- ----
<S> <C> <C>
RENTAL AND OTHER INCOME
Nursing $ 10,238 $ (9,300)
Other 0 88,012
-------------- --------------
Total rental and other income 10,238 78,712
EXPENSES:
Salaries, wages and benefits 9,664 (102,453)
Operating and other administrative expenses
(adjustments) 4,028 (10,520)
-------------- --------------
Total expenses 13,692 (112,973)
-------------- --------------
Income (loss) from operations (3,454) 191,685
OTHER INCOME:
Interest income 20,274 52,413
-------------- --------------
Total other income 20,274 52,413
-------------- --------------
NET INCOME $ 16,820 $ 244,098
============== ==============
NET INCOME ALLOCATION:
General partner $ 1,682 $ 2,441
Beneficial unit certificate holders 15,138 241,657
-------------- --------------
Total $ 16,820 $ 244,098
============== ==============
NET INCOME PER BENEFICIAL UNIT
CERTIFICATE $ .01 $ .22
============== ==============
OUTSTANDING BENEFICIAL UNIT
CERTIFICATES 1,117,692 1,117,692
============== ==============
</TABLE>
See notes to financial statements
2
<PAGE>
<TABLE>
<CAPTION>
CAPITAL SENIOR LIVING COMMUNITIES, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED June 30, 1999 AND 1998
-----------------------------------------------
(UNAUDITED)
-----------
Six Months ended June 30
------------------------
1999 1998
---- ----
<S> <C> <C>
RENTAL AND OTHER INCOME
Nursing $ 85,705 $ 160
Other 0 90,727
-------------- --------------
Total rental and other income 85,705 90,887
EXPENSES:
Salaries, wages and benefits 18,109 (88,182)
Operating and other administrative expenses
(adjustments) 766 34,022
-------------- --------------
Total expenses 18,875 (54,160)
-------------- --------------
Income from operations 66,830 145,047
OTHER INCOME:
Interest income 61,980 784,890
-------------- --------------
Total other income 61,980 784,890
-------------- --------------
NET INCOME $ 128,810 $ 929,937
============== ==============
NET INCOME ALLOCATION:
General partner $ 12,881 $ 9,299
Beneficial unit certificate holders 115,929 920,638
-------------- --------------
Total $ 128,810 $ 929,937
============== ==============
NET INCOME PER BENEFICIAL UNIT
CERTIFICATE $ .10 $ .82
============== ==============
OUTSTANDING BENEFICIAL UNIT
CERTIFICATES 1,117,692 1,117,692
============== ==============
</TABLE>
See notes to financial statements
3
<PAGE>
<TABLE>
<CAPTION>
CAPITAL SENIOR LIVING COMMUNITIES, L.P.
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
FOR THE SIX MONTHS ENDED JUNE 30, 1999
--------------------------------------
(UNAUDITED)
-----------
Beneficial Repurchased
Unit Beneficial Limited General
Certificates Unit Certificates Partner Partner Total
------------ ----------------- ------- -------
<S> <C> <C> <C> <C>
BALANCE, December 31, 1998 $ 8,049,146 $ (2,223,106) $ 1 $ 165,446 $ 5,991,487
Net Income 115,929 - - 12,881 128,810
Net Income Distribution
Adjustment (313,482) - - 313,482 -
Distributions (4,012,826) - - (313,482) (4,326,308)
--------------- ------------- ------------- ------------- ----------------
BALANCE, June 30, 1999 $ 3,838,767 $ (2,223,106) $ 1 $ 178,327 $ 1,793,989
================ ============= ============= ============= ================
</TABLE>
See notes to financial statements
4
<PAGE>
<TABLE>
<CAPTION>
CAPITAL SENIOR LIVING COMMUNITIES, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998
-----------------------------------------------
(UNAUDITED)
-----------
For the Six Months
Ended June 30,
------------------
1999 1998
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 128,810 $ 929,937
Adjustments to reconcile net income
to net cash provided by operating activities:
Provision for bad debts (22,818) (62,486)
Changes in assets and liabilities:
Accounts receivable 44,961 451,746
Prepaid expenses and other 865 4,190
Accrued expenses and other liabilities 594 (33,777)
-------------- --------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 152,412 1,289,610
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions (4,326,308) (61,624,114)
--------------- ------------
NET CASH USED IN
FINANCING ACTIVITIES (4,326,308) (61,624,114)
--------------- --------------
NET DECREASE IN CASH AND
CASH EQUIVALENTS (4,173,896) (60,334,504)
CASH AND CASH EQUIVALENTS, Beginning of Period 6,111,572 66,818,286
-------------- --------------
CASH AND CASH EQUIVALENTS, End of Period $ 1,937,676 $ 6,483,782
============== ==============
</TABLE>
See notes to financial statements
5
<PAGE>
CAPITAL SENIOR LIVING COMMUNITIES, L.P.
---------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
JUNE 30, 1999
-------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
-------------------------------------------
Principals of Consolidation
- ---------------------------
The accompanying consolidated balance sheet, as of June 30, 1999, 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 accompanying consolidated balance sheet, as of December 31, 1998, has been
derived from audited consolidated financial statements of the Partnership for
the year ended December 31, 1998, and the accompanying unaudited consolidated
financial statements, as of June 30, 1999 and 1998, have been prepared pursuant
to the rules and regulations of the Securities and Exchange Commission. Certain
information and note disclosures normally included in the annual financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to those rules and regulations. For
further information, refer to the financial statements and notes thereto for the
year ended December 31, 1998 included in the Partnership's Annual Report on Form
10-K filed with the Securities and Exchange Commission on March 31, 1999.
In the opinion of management, the accompanying consolidated financial statements
contain all adjustments (all of which were normal recurring accruals) necessary
to present fairly the Partnership's financial position as of June 30, 1999 and
1998. The results of operations for the six month period ended June 30, 1999 are
not necessarily indicative of the results for the year ending December 31, 1999.
2. COMMITMENTS:
------------
The Partnership had $20,958 in certificates of deposit at June 30, 1999 and
December 31, 1998, 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
second fiscal quarter ended June 30, 1999 and 1998, were $7,558 and $13,930,
respectively.
6
<PAGE>
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. DISTRIBUTIONS
-------------
On March 12, 1998, a distribution of $61,000,000 was made available to the BUC
Holders, of which $60,711,351 has been disbursed to the BUC Holders and a
$1,802,800 distribution was disbursed to the general partner. In March 1999, a
distribution of $3,731,518 was made available to the BUC Holders, of which
$3,731,518 has been disbursed to the BUC Holders and a $313,482 distribution was
disbursed to the general partner.
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, 1999, 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 1999 COMPARED WITH SIX MONTHS OF 1998
- ---------------------------------------------------------
Rental and other income for the six months ended June 30, 1999 and 1998 was
$85,705 and $90,887, respectively. The decreased revenues of $5,182 from the six
months ended June 30, 1999 compared to June 30, 1998 is attributable to a prior
year Medicare cost settlement and legal settlement. Total expenses (adjustments)
for the six months ended June 30, 1999 and 1998 were $18,875 and $(54,160),
respectively. The increased expenses of $73,035 from the six months ended June
30, 1999 and 1998 is attributable to a workers compensation refund received in
1998. Interest income for the six months ended June 30, 1999 and 1998 was
$61,980 and $784,890, respectively. Interest income decreased $722,910 from the
six months ended June 30, 1998 to 1999 and is due to decreased cash reserves
held in investments resulting from cash distributions made in 1998 and 1999.
For the three months ended June 30, 1999 compared with the three months ended
June 30, 1998, the Partnership's revenue and expenses were impacted by the same
shifts of revenue and expenses as discussed above.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
As of June 30, 1999, the Partnership had cash and cash equivalents of
$1,937,676. It is the intention of the general partner to wind down the business
affairs of the Partnership and to substantially distribute its cash holdings,
7
<PAGE>
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 to the BUC Holders, of which $60,711,351 has been
disbursed to the BUC Holders and a $1,802,800 distribution was disbursed to the
general partner. The remaining 1998 declared distribution available for
disbursement is $288,649. In March 1999, a distribution of $3,731,518 was made
available to the BUC Holders, of which $3,731,518 has been disbursed to the BUC
Holders and a $313,482 distribution was disbursed to the general partner.
Approximately, $1,500,000 will be retained as a working capital reserve.
YEAR 2000 ISSUE
- ---------------
The Year 2000 Issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any of the Partnership's
computer programs or hardware that have date-sensitive software or embedded
chips may recognize the year 2000 as a date other than the year 2000. This could
result in a system failure or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to process transactions,
send invoices, or engage in similar normal business activities. Based on ongoing
assessments, the Partnership has developed a program to modify or replace
significant portions of its software and certain hardware, which are generally
PC-based systems, so that those systems will properly utilize dates beyond
December 31, 1999. The Partnership completed software reprogramming and software
and hardware replacement by December 31, 1998, with 100% completion targeted for
September 30, 1999. The Partnership presently believes that these modifications
and replacements of existing software and certain hardware will mitigate the
Year 2000 Issue. However, if such modifications and replacements are not
completed timely, the Year 2000 Issue could have a material impact on the
operations of the Partnership.
The Partnership has assessed its exposure to operating equipment, and such
exposure is not significant due to the nature of the Partnership's business.
The Partnership is not aware of any external agent with a Year 2000 Issue that
would materially impact the Partnership's results of operations, liquidity, or
capital resources. However, the Partnership has no means of determining whether
or ensuring that external agents will be year 2000 ready. The inability of
external agents to complete their year 2000 resolution process in a timely
fashion could materially impact the Partnership.
Management of the Partnership believes it has an effective program in place to
resolve the Year 2000 Issue in a timely manner. As noted above, the Partnership
has completed most but not all necessary phases of its year 2000 program. In the
event that the Partnership does not complete the current program or any
additional phases, the Partnership could incur disruptions to its operations. In
addition, disruptions in the economy generally resulting from Year 2000 Issues
could also materially adversely affect the Partnership. The Partnership could be
subject to litigation for computer systems failure. The amount of potential
liability and lost revenue cannot be reasonably estimated at this time.
The Partnership currently has no contingency plans in place in the event it does
not complete all phases of its year 2000 program. The Partnership plans to
evaluate the status of completion in mid 1999 and determine whether such a plan
is necessary.
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. Exhibits and Reports on Form 8-K
(A) Exhibit:
27.1 Financial Data Schedule
(B) Reports on Form 8-K
None.
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 13, 1999 By: /s/ Keith Johannessen
-------------------------
Keith Johannessen
President
10
<PAGE>
<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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<EXCHANGE-RATE> 1
<CASH> 1,958,634
<SECURITIES> 0
<RECEIVABLES> 53,955
<ALLOWANCES> (29,432)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,983,733
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,793,989
<TOTAL-LIABILITY-AND-EQUITY> 1,983,733
<SALES> 0
<TOTAL-REVENUES> 147,685
<CGS> 0
<TOTAL-COSTS> 18,875
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 128,810
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 128,810
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
