SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549-1004
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1995
Commission File Number 0-16415
CUMBERLAND HEALTHCARE, L.P. I-A
(Exact name of Registrant as specified in its Charter)
Delaware 59-2660778
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
880 Carillon Parkway, St. Petersburg, Florida 33716
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (813) 573-3800
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 and Exchange Act of 1934
during the preceding 12 months (or 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
Number of Units at
Title of Each Class June 30, 1995
Units of Limited Partnership
Interest: $1,000 per unit 30,000
DOCUMENTS INCORPORATED BY REFERENCE
Parts I and II, 1994 Form 10-K, filed with the
Securities and Exchange Commission on April 12, 1995,
Parts III and IV - Form S-11 Registration Statement
and all amendments and supplements thereto
File No. 33-4301<PAGE>
CUMBERLAND HEALTHCARE, L.P. I-A
(a Limited Partnership)
INDEX TO COMBINED FINANCIAL STATEMENTS
Page Number
Part I. Financial Information
Item 1. Financial Statements
Combined Balance Sheets -
As of June 30, 1995 and December 31, 1994 3
Combined Statements of Operation -
For the Six Months Ended June 30, 1995 and 1994 4
For the Three Months Ended June 30, 1995 and 1994 5
Combined Statements of Cash Flows -
For the Six Months Ended June 30, 1995 and 1994 6
Notes to Combined Financial Statements 7-9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10-11
Part II. Other Information
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 13
<PAGE>
CUMBERLAND HEALTHCARE, L.P. I-A
(a Limited Partnership)
COMBINED BALANCE SHEET
June 30, December 31,
1995 1994
ASSETS (Unaudited) (Audited)
Cash and Cash Equivalents $ 1,558,699 $ 1,202,175
Restricted Cash 61,090 52,780
Accounts Receivable (Net of Allowance of
$63,866 and $63,866) 613,030 1,008,629
Prepaid Expenses 114,359 44,683
Deferred Debt Costs (Net of Accumulated
Amortization of $48,965 and $39,247) 98,058 102,777
Intangible Assets (Net of Accumulated
Amortization of $27,737 and $22,190) 416,061 421,608
Investment Properties, at Cost (Net of
Accumulated Depreciation and Amortization
of $11,230,176 and $10,874,938) 19,139,533 19,471,007
Construction in Progress 4,950 0
Total Assets $ 22,005,780 $ 22,303,659
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Accounts Payable $ 1,101,003 $ 1,067,429
Accrued Payroll 232,604 219,284
Interest Payable - Affiliate 0 6,582
- Other 35,606 33,569
Payable to Related Parties
- General Partner 10,513 26,435
- Affiliates 327,528 312,528
Mortgage Notes Payable
- Affiliate 0 500,000
- Other 8,101,310 8,282,947
Minority Interest 672,045 630,570
Total Liabilities 10,480,609 11,079,344
Partners' Equity:
Limited Partners (30,000 units outstanding
at June 30, 1995 and December 31, 1994) 11,820,749 11,525,910
General Partner (295,578) (301,595)
Total Partners' Equity 11,525,171 11,224,315
Total Liabilities and Partners' Equity $ 22,005,780 $ 22,303,659
CUMBERLAND HEALTHCARE, L.P. I-A
(a Limited Partnership)
COMBINED STATEMENTS OF OPERATIONS
(Unaudited)
FOR THE SIX MONTHS ENDED
June 30, June 30,
1995 1994
Revenues:
Resident Service Revenues $ 2,801,137 $ 2,381,635
Rental Income 1,626,470 1,572,089
Interest Income 27,931 15,409
Total Revenues 4,455,538 3,969,133
Expenses:
Resident Service Expenses 2,371,957 2,099,686
Interest Expense - Affiliate 637 68,466
- Other 357,964 347,801
Rent Expense 150,142 139,376
Property Management Fees - General Partner 20,112 19,464
General and Administrative - Affiliates 14,118 18,364
- Other 61,659 55,389
Depreciation and Amortization 371,312 625,891
Total Expenses 3,347,901 3,374,437
Net Operating Income $ 1,107,637 $ 594,696
Minority Interest in Net (Income) Loss
of Combined Subsidiary (41,475) 29,303
Net Income $ 1,066,162 $ 623,999
Allocation of Net Income
Limited Partners $ 1,044,839 $ 611,519
General Partner 21,323 12,480
Total Income $ 1,066,162 $ 623,999
Net Income Per $1,000 Limited Partnership Unit $ 34.83 $ 20.38
Number of Limited Partnership Units 30,000 30,000
<PAGE>
CUMBERLAND HEALTHCARE, L.P. I-A
(a Limited Partnership)
COMBINED STATEMENTS OF OPERATIONS
(Unaudited)
FOR THE THREE MONTHS ENDED
June 30, June 30,
1995 1994
Revenues:
Resident Service Revenues $ 1,481,606 $ 1,220,324
Rental Income 814,034 788,354
Interest Income 11,190 3,275
Total Revenues 2,306,830 2,011,953
Expenses:
Resident Service Expenses 1,210,891 1,051,306
Interest Expense - Affiliate 0 19,447
- Other 154,800 173,823
Rent Expense 75,071 69,688
Property Management Fees - General Partner 10,062 9,760
General and Administrative - Affiliates 367 5,808
- Other 34,521 34,417
Depreciation and Amortization 185,715 312,689
Total Expenses 1,671,427 1,676,938
Net Operating Income $ 635,403 $ 335,015
Minority Interest in Net (Income) Loss
of Combined Subsidiary (46,046) 54
Net Income $ 589,357 $ 335,069
Allocation of Net Income
Limited Partners $ 577,570 $ 328,368
General Partner 11,787 6,701
Total Income $ 589,357 $ 335,069
Net Income Per $1,000 Limited Partnership Unit $ 19.25 $ 10.95
Number of Limited Partnership Units 30,000 30,000
<PAGE>
CUMBERLAND HEALTHCARE, L.P. I-A
(a Limited Partnership)
COMBINED STATEMENTS OF CASH FLOWS
(Unaudited)
FOR THE SIX MONTHS ENDED
June 30, June 30,
1995 1994
Cash Flows from Operating Activities:
Net Income $ 1,066,162 $ 623,999
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Depreciation and Amortization 371,312 625,891
Minority Interest in Net Income (Loss)
of Combined Subsidiary 41,475 (29,303)
Changes in Operating Assets and Liabilities:
(Increase) Decrease in Accounts Receivable 395,599 (110,176)
(Increase) Decrease in Prepaid Expenses (69,676) (11,121)
(Increase) Decrease in Restricted Cash (8,310) (1,538)
Increase (Decrease) in Payable to Related
Parties (7,504) (1,234)
Increase (Decrease) in Payables and Accruals 48,931 39,620
Net Cash Provided by Operating
Activities 1,837,989 1,136,138
Cash Flows from Investing Activities:
(Additions) to Investment Properties (24,573) (30,766)
(Additions) to Construction in Progress (4,950) (60,437)
Net Cash Provided by (Used in)
Investing Activities (29,523) (91,203)
Cash Flows from Financing Activities:
Payments of Notes Payable (681,637) (2,463,805)
(Increase) Decrease in Deferred Debt Cost (4,999) 0
Distribution to Partners:
Limited Partners (750,000) (450,000)
General Partner (15,306) (9,185)
Net Cash Provided by (Used in)
Financing Activities (1,451,942) (2,922,990)
Increase (Decrease) in Cash and Cash Equivalents 356,524(1,878,055)
Cash and Cash Equivalents at Beginning of Period 1,202,175 3,011,916
Cash and Cash Equivalents at End of Period $ 1,558,699 $ 1,133,861
Supplemental Disclosure of Cash Flow Information:
Interest Paid $ 363,146 $ 443,702
CUMBERLAND HEALTHCARE, L.P. I-A
(a Limited Partnership)
NOTES TO COMBINED FINANCIAL STATEMENTS
(Unaudited)
JUNE 30, 1995
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES:
Basis of Preparation
The unaudited financial statements presented herein have been prepared in
accordance with the instructions to Form 10-Q and do not include all of the
information and note disclosures required by generally accepted accounting
principles. These statements should be read in conjunction with the financial
statements and notes thereto included in the Partnership's Form 10-K for the
year ended December 31, 1994. In the opinion of management, such financial
statements include all adjustments, consisting only of normal recurring
adjustments, necessary to summarize fairly the Partnership's financial position
and results of operations. The results of operations for the period may not be
indicative of results to be expected for the year.
Reclassification
Certain items in the 1994 financial statements have been reclassified for
comparative purposes to conform with the financial statement presentation used
in the 1995 statements.
Combination
The accompanying combined financial statements include the accounts of the
company and all of its subsidiaries. Intercompany transactions and balances
have been eliminated. Minority interest is accounted for by using the equity
method.
NOTE 2 - COMPENSATION, REIMBURSEMENTS, AND ACCRUALS FOR GENERAL PARTNERS AND
AFFILIATES:
The General Partner and affiliates are entitled to the following types of
compensation and reimbursement for costs and expenses incurred for the
Partnership for the six months ended June 30, 1995:
Property Management Fees $ 20,112
General and Administrative Costs and Fees 14,118
Cash Distributions 15,306
Interest Expense 637
CUMBERLAND HEALTHCARE, L.P. I-A
(a Limited Partnership)
NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)
(Unaudited)
JUNE 30, 1995
NOTE 3 - INVESTMENT PROPERTIES
As of June 30, 1995, the Partnership owned, directly or through limited
partnership investments, an interest in eleven nursing home properties.
A summary of the Partnership's investment properties is as follows:
June 30,
1995
Land $ 4,682,743
Buildings 19,606,940
Personal Property 5,235,318
Leasehold Interest 849,658
Investment Properties, at Cost 30,374,659
Less: Accumulated Depreciation
and Amortization (11,230,176)
$ 19,144,483
NOTE 4 - COMMITMENTS AND CONTINGENCIES
Cumberland Healthcare, L.P. I-A ("Cumberland") and Life Care Centers of
America, Inc. ("LCCA"), effective August 4, 1995, have entered into a Purchase
and Sale Agreement pursuant to which LCCA has agreed to acquire seven nursing
homes from Cumberland for an aggregate purchase price of $17,900,000 subject to
certain pro rations and adjustments. Cumberland owns six of these homes and
leases the seventh from an independent owner.
The purchase price consists of approximately $15,600,000 in cash at
closing, the issuance by LCCA of a $1,000,000 promissory note made payable to
Cumberland due on the fifth anniversary of its issuance, and the balance in
the form of assumption of approximately $1,300,000 long term debt. The
partnership would anticipate using $3,300,000 of the cash to pay off existing
debt. The nursing homes being purchased by LCCA are all located in Southern
California and are currently leased from Cumberland and operated by LCCA.
LCCA has deposited $100,000 earnest money with an escrow agent. Closing of
the transaction is subject to certain conditions, including approval of the
transaction by Cumberland's limited partners and LCCA obtaining financing
necessary to consummate the transaction upon terms satisfactory to LCCA. In
addition regulatory and other consents and approvals must be obtained.
<PAGE>
CUMBERLAND HEALTHCARE, L.P. I-A
(a Limited Partnership)
NOTES TO COMBINED FINANCIAL STATEMENTS (Continued)
(Unaudited)
JUNE 30, 1995
NOTE 4 - COMMITMENTS AND CONTINGENCIES (Continued)
The sale is scheduled for late 1995. However, due to the time which may be
necessary to obtain approval from Cumberland's limited partners, the sale may
occur as late as Spring, 1996. Because of the conditions to closing neither
Cumberland nor LCCA are able to give any assurances that the sale will occur.
If the sale is consummated this would leave Cumberland with two ninety-nine
bed facilities in Southern California, a one hundred bed facility in Ohio and a
sixty bed facility in Washington, which also has a twenty-four bed assisted
living wing.
<PAGE>
CUMBERLAND HEALTHCARE, L.P. I-A
(a Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Resident service revenues increased by $419,502 (17.6%) for the six months
ended June 30, 1995, as compared to the same period in 1994. This increase is
primarily due to an increase in census with the opening of the assisted living
units at the Sequim, Washington facility. Resident services expenses increased
$272,271 (13%) for the six months ended June 30, 1995, as compared to the same
period in 1994. This increase is due to an increase in nursing expenses from
the use of additional ancillary services needed to accommodate the higher
resident census and acuity level, along with increased labor costs from the
operation of the assisted living units at the Sequim, Washington facility.
Rental income increased by $54,381 (3.5%) for the six months ended June 30,
1995, as compared to the same period in 1994. This increase is due to the
annual increase in rental rates per the lease agreements.
Interest income increased $12,522 (81.3%) for the six months ended June 30,
1995, as compared to the same period in 1994. This increase is due to increased
average cash balances in interest bearing accounts.
Interest expense decreased by $57,666 (13.9%) for the six months ended June
30, 1995, as compared to the same period in 1994. This decrease resulted from
a reduction of the average level of debt and a reduction of interest rates.
Depreciation and amortization expense decreased by $254,579 (40.7%) for the
six months ended June 30, 1995, as compared to the same period in 1994. This
decrease is primarily due to certain furniture and fixture items reaching their
fully depreciated life.
Resident service revenues increased by $261,282 (21.4%) for the three months
ended June 30, 1995, as compared to the same period in 1994. This increase is
primarily due to an increase in census with the opening of the assisted living
units at the Sequim, Washington facility. Resident services expenses increased
$159,585 (15.2%) for the three months ended June 30, 1995, as compared to the
same period in 1994. This increase is due to an increase in nursing expenses
from the use of additional ancillary services needed to accommodate the higher
resident acuity level and increase labor costs due to the opening of the
assisted living units at the Sequim, Washington facility.
Rental income increased by $25,680 (3.3%) for the three months ended June
30, 1995, as compared to the same period in 1994. This increase is due to the
annual increase in rental rates per the lease agreements.
Interest income increased by $7,915 (141.7%) for the three months ended June
30, 1995, as compared to the same period in 1994. This increase is due to
increased cash balances in interest bearing accounts.
Interest expense decreased by $38,470 (19.9%) for the three months ended
June 30, 1995, as compared to the same period in 1994. This decrease resulted
from a reduction of the average level of debt and a reduction of interest
rates.
CUMBERLAND HEALTHCARE, L.P. I-A
(a Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Depreciation and amortization expense decreased by $126,974 (40.6%) for the
three months ended June 30, 1995, as compared to the same period in 1994. This
decrease is primarily due to certain furniture and fixture items reaching their
fully depreciated life.
As a result of the above items, the Partnership's net income for the six
months and three months ended June 30, 1995, is $1,066,162 and $589,357,
respectively, as compared to $623,999 and $335,069 for the same periods in 1994,
representing increases of 70.9% and 75.9%.
In the opinion of the General Partner, the Partnership has sufficient funds
or sources of funds to meet its expected needs for liquidity. The General
Partner is not aware of any trends that significantly affect the Partnership's
liquidity.
Cash distributions to Limited Partners were discontinued during the first
quarter of 1988 and resumed in February 1992. The 1993 distribution to Limited
Partners totaled $600,000 (2%). The 1994 distribution to the Limited Partners
totaled $1,050,000 (3.5%). The February 1995 semi-annual distribution to the
Limited Partners was $750,000 (2.5%). Future distributions will be at a level
that is warranted by the cash flow and profits of the Partnership.
CUMBERLAND HEALTHCARE, L.P. I-A
(a Limited Partnership)
Item 5. Other Information
Cumberland Healthcare, L.P. I-A ("Cumberland") and Life Care Centers of
America, Inc. ("LCCA"), effective August 4, 1995, have entered into a Purchase
and Sale Agreement pursuant to which LCCA has agreed to acquire seven nursing
homes from Cumberland for an aggregate purchase price of $17,900,000 subject to
certain pro rations and adjustments. Cumberland owns six of these homes and
leases the seventh from an independent owner.
The purchase price consists of approximately $15,600,000 in cash at closing,
the issuance by LCCA of a $1,000,000 promissory note made payable to Cumberland
due on the fifth anniversary of its issuance, and the balance in the form of
assumption of approximately $1,300,000 long term debt. The partnership would
anticipate using $3,300,000 of the cash to pay off existing debt. The nursing
homes being purchased by LCCA are all located in Southern California and are
currently leased from Cumberland and operated by LCCA.
LCCA has deposited $100,000 earnest money with an escrow agent. Closing of
the transaction is subject to certain conditions, including approval of the
transaction by Cumberland's limited partners and LCCA obtaining financing
necessary to consummate the transaction upon terms satisfactory to LCCA. In
addition regulatory and other consents and approvals must be obtained.
The sale is scheduled for late 1995. However, due to the time which may be
necessary to obtain approval from Cumberland's limited partners, the sale may
occur as late as Spring, 1996. Because of the conditions to closing neither
Cumberland nor LCCA are able to give any assurances that the sale will occur.
If the sale is consummated this would leave Cumberland with two ninety-nine
bed facilities in Southern California, a one hundred bed facility in Ohio and a
sixty bed facility in Washington, which also has a twenty-four bed assisted
living wing.
<PAGE>
CUMBERLAND HEALTHCARE, L.P. I-A
(a Limited Partnership)
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits filed with this Report -
Exhibit: 28.31 Date of Event: August 4, 1995
Purchase and Sale Agreement dated August 4, 1995
by and between Cumberland Healthcare, L.P. I-A and
Life Care Centers of America, Inc.
(b) Reports on Form 8-K - None.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, this report has been signed by the following persons on
behalf of the Registrant and in the capacities and on the dates indicated.
CUMBERLAND HEALTHCARE, L.P. I-A
By: Medical Investments Partners
By: RJ Health Properties, Inc.
Managing General Partner
Date: 8/15/95 By: /s/Fred E. Whaley
President and Director
Date: 8/15/95 By: /s/J. Davenport Mosby, III
Vice President and Director
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended June 30, 1995.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1994 DEC-31-1994
<PERIOD-END> JUN-30-1995 JUN-30-1995
<CASH> 1,619,789 1,619,789
<SECURITIES> 0 0
<RECEIVABLES> 676,896 676,896
<ALLOWANCES> 63,886 63,886
<INVENTORY> 0 0
<CURRENT-ASSETS> 0<F1> 0<F1>
<PP&E> 30,374,659 30,374,659
<DEPRECIATION> 11,230,176 11,230,176
<TOTAL-ASSETS> 22,005,780 22,005,780
<CURRENT-LIABILITIES> 0<F1> 0<F1>
<BONDS> 8,773,355 8,773,355
<COMMON> 0 0
0 0
0 0
<OTHER-SE> 11,525,171 11,525,171
<TOTAL-LIABILITY-AND-EQUITY> 22,005,780 22,005,780
<SALES> 0 0
<TOTAL-REVENUES> 2,306,830 4,455,538
<CGS> 0 0
<TOTAL-COSTS> 1,285,962 2,522,099
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 154,800 358,601
<INCOME-PRETAX> 589,357 1,066,162
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 589,357 1,066,162
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 589,357 1,066,162
<EPS-PRIMARY> 19.25<F2> 34.83<F2>
<EPS-DILUTED> 19.25<F2> 34.83<F2>
<FN>
<F1>Registrant has an unclassified balance sheet
<F2>EPS - Net income per $1,000 limited partnership unit
</FN>
</TABLE>
