SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549-1004
FORM 10-Q
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 1997
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 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 shares outstanding of each of Registrant's classes of securities:
Number of Units at
Title of Each Class March 31, 1997
Units of Limited Partnership
Interest: $1,000 per unit 30,000
There is no public market for the trading of partnership units and
therefore no market value can be determined.
DOCUMENTS INCORPORATED BY REFERENCE
Parts I and II, 1996 Form 10-K, filed with the
Securities and Exchange Commission on April 14, 1997,
Parts III and IV - Form S-11 Registration Statement
and all amendments and supplements thereto
File No 33-4301
CUMBERLAND HEALTHCARE, L.P. I-A
(a Limited Partnership)
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page Number
Part I.Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets -
As of March 31, 1997 and December 31, 1996 3
Consolidated Statements of Income -
For the Three Months Ended March 31, 1997 and 1996 4
Consolidated Statements of Cash Flows -
For the Three Months Ended March 31, 1997 and 1996 5
Notes to Consolidated Financial Statements 6-7
Item 2.Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-9
Part II.Other Information
Item 6.Exhibits and Reports of Form 8-K 9
CUMBERLAND HEALTHCARE, L.P. I-A
(a Limited Partnership)
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
1997 1996
(Audited)
ASSETS
Cash and Cash Equivalents $2,107,465 $2,063,474
Restricted Cash 70,456 67,059
Accounts Receivable (Net of Allowance
of $343,771 and $343,770) 904,742 718,772
Loan Receivable 1,000,000 1,000,000
Prepaid Expenses 98,710 119,871
Deferred Debt Costs (Net of Accumulated
Amortization of $11,638 and $10,826) 20,840 21,652
Intangible Assets (Net of Accumulated
Amortization of $47,153 and $44,380) 396,645 399,418
Investment Properties, at Cost (Net of
Accumulated Depreciation and Amortization
of $2,461,869 and $2,416,187) 4,963,445 5,002,563
Construction in Progress 4,307 0
Total Assets $9,566,610 $9,392,809
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Accounts Payable $ 754,583 $ 687,968
Accrued Payroll 267,215 276,267
Payable to Related Parties
- General Partner 0 2,524
- Affiliates 343,229 336,929
Mortgage Notes Payable 1,247,828 1,256,214
Minority Interest 676,379 682,927
Total Liabilities 3,289,234 3,242,829
Partners' Equity:
Limited Partners (30,000 units outstanding
at March 31, 1997 and December 31, 1996) 6,351,777 6,226,929
General Partner (74,401) (76,949)
Total Partners' Equity 6,277,376 6,149,980
Total Liabilities and Partners' Equity $9,566,610 $9,392,809
The accompanying notes are an integral part
of these consolidated financial statements.
CUMBERLAND HEALTHCARE, L.P. I-A
(a Limited Partnership)
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED
March 31, March 31,
1997 1996
Revenues:
Net Resident Service Revenues $1,954,117 $1,808,083
Interest Income 33,335 45,728
Total Revenues 1,987,452 1,853,811
Expenses:
Resident Service Expenses 1,759,943 1,621,232
Interest Expense - Other 27,404 28,104
General and Administrative
- Affiliates 7,496 23,054
- Other 7,494 41,134
Depreciation and Amortization 49,267 51,355
Total Expenses 1,851,604 1,764,879
Operating Income 135,848 88,932
Minority Interest in Net (Income)/Loss
of Consolidated Subsidiary (8,452) 9,304
Income from Continuing Operations 127,396 98,236
Discontinued Operations:
Income from Operations of Leased Homes 0 394,389
Lease Termination Settlement 0 1,293,464
Income from Discontinued Operations 0 1,687,853
Net Income $ 127,396 $1,786,089
Income from Continuing Operations
Per $1,000 Limited Partnership Unit $ 4.16 $ 3.21
Income from Discontinued Operations
Per $1,000 Limited Partnership Unit 0 55.14
Total Income Per $1,000
Limited Partnership Unit $ 4.16 $ 58.35
Number of Limited Partnership Units
Outstanding 30,000 30,000
The accompanying notes are an integral part
of these consolidated financial statements.
CUMBERLAND HEALTHCARE, L.P. I-A
(a Limited Partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED
March 31, March 31,
1997 1996
Cash Flows from Operating Activities:
Net Income $ 127,396 $1,786,089
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Depreciation and Amortization 49,267 187,957
Minority Interest in Net Income (Loss)
of Consolidated Subsidiary 8,452 (9,304)
Changes in Operating Assets and Liabilities:
(Increase) Decrease in Accounts Receivable (185,970) (291,240)
(Increase) Decrease in Prepaid Expenses 21,161 8,745
(Increase) Decrease in Restricted Cash (3,397) 26,076
Increase (Decrease) in Payable to Related
Parties 3,776 7,499
Increase (Decrease) in Payables and Accruals 57,563 304,079
Net Cash Provided by Operating
Activities 78,248 2,019,901
Cash Flows from Investing Activities:
(Additions) to Investment Properties (6,564) (31,285)
(Additions) to Construction in Progress (4,307) (7,722)
Net Cash Provided by (Used in)
Investing Activities (10,871) (39,007)
Cash Flows from Financing Activities:
Payments of Mortgage Notes Payable (8,386) (77,615)
Distribution to Partners:
Limited Partners 0 (750,000)
General Partner 0 (15,305)
Minority Interest (15,000) (10,550)
Net Cash (Used in) Financing
Activities (23,386) (853,470)
Increase (Decrease) in Cash and Cash Equivalents 43,991 1,127,424
Cash and Cash Equivalents at Beginning of Period 2,063,474 1,626,628
Cash and Cash Equivalents at End of Period $2,107,465 $2,754,052
Supplemental Disclosure of Cash Flow Information:
Interest Paid $ 27,404 180,370
The accompanying notes are an integral part
of these consolidated financial statements.
CUMBERLAND HEALTHCARE, L.P. I-A
(a Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
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, 1996. In the opinion of
management, these 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 1996 financial statements have been reclassified
for comparative purposes to conform with the financial statement
presentation used in the 1997 statements.
Consolidation
The accompanying consolidated 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 three months ended March 31, 1997.
General and Administrative Costs and Fees $ 7,496
Cash Distributions $ 0
NOTE 3 - INVESTMENT PROPERTIES
As of March 31, 1997, the Partnership owned, directly or through
limited partnership investments, an interest in three nursing home
properties.
A summary of the Partnership's investment properties is as follows:
Operated
Land $1,534,105
Buildings 4,555,358
Furniture and Fixtures 1,335,851
Investment Properties, at Cost 7,425,314
Less: Accumulated Depreciation
and Amortization 2,461,869
Net Book Value $4,963,445
The Partnership, directly or through a manager, operates three skilled
nursing facilities. Paramount Chateau, a 99-bed facility located in
Paramount, California, for the three months ended March 31, 1997, had an
average occupancy rate of 86.2% that was comprised of 9.8% private, 12.5%
Medicare, 74.3% Medicaid and 3.4% HMO. The average reimbursement rates
were $96, $265, $73 and $161 per day for private, Medicare, Medicaid, and
HMO, respectively. The average monthly revenue was $268,806. Pacific
Palms, a 99-bed facility located in Norwalk, California, for the three
months ended March 31, 1997 had an average occupancy rate of 51.4% that was
comprised of 4.7% private, 5.7% Medicare, 76.6% Medicaid and 13% HMO. The
average reimbursement rates were $109, $300, $73 and $197 per
day for private, Medicare, Medicaid and HMO, respectively. The average
monthly revenue was $161,965. Olympic Healthcare, a 60-bed skilled nursing
facility with a 24-bed assisted living wing located in Sequim, Washington,
for the three months ended March 31, 1997, had an average occupancy in the
skilled nursing facility of 86.4% that was comprised of 32.8% private, 7.8%
Medicare and 59.4% Medicaid. The average reimbursement rates in the
skilled nursing facility were $110, $202 and $101 per day for private,
Medicare and Medicaid, respectively. The average monthly revenue was
$182,375. The 24-bed assisted living wing maintained an average occupancy
of 87.5% that was comprised of 22.2% private and 77.8% Medicaid. The
average reimbursement rates were $59 and $55 per day for private and
Medicaid, respectively. The average monthly revenue was $36,861.
CUMBERLAND HEALTHCARE, L.P. I-A
(a Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Net resident service revenues increased by $146,034 (8.1%) for the
three months ended March 31, 1997, as compared to the same period in 1996
due to a 9.8% census increase and an increase in the Medicare and Medicaid
reimbursement rates. Resident services expenses increased $138,711 (8.6%)
for the three months ended March 31, 1997, as compared to the same period
in 1996 due to an increase in nursing expenses from the use of additional
ancillary services and an increase in labor costs needed to accommodate the
higher resident census and acuity level.
Interest income decreased by $12,393 (27.1%) for the three months
ended March 31, 1997, as compared to the same period in 1996 due to
decreased cash balances in interest bearing accounts. The decreased
average cash balances are a result of the 1996 cash distributions to
limited partners and final mortgage payments made after March 31, 1996.
General and Administrative - Other expense decreased by $33,640
(81.8%) for the three months ended March 31, 1997, as compared to the same
period in 1996 due to an increase in the percentage of overhead costs of
the affiliates directly relating to and allocated to resident services
expenses.
General and Administrative - Affiliates expense decreased by $15,558
(67.5%) for the three months ended March 31, 1997, compared to the same
period in 1996, due to the decreased need for senior management involvement
resulting from the 1996 sale of eight of the eleven nursing homes.
The primary sources of funds for the period ended March 31, 1997, were
revenues from nursing home operations and collection of accounts
receivable. These funds were used to pay nursing home expenses. As of
March 31, 1997, the Partnership has an interest in three nursing homes that
have a combined net book value of $4,963,445. Net book value is not
necessarily representative of market value.
In the opinion of the General Partner, there are no material trends,
favorable or unfavorable, in the Partnership's capital resources. The
resources will be sufficient to meet the Partnership's needs for the next
12 to 24 months. These sources include cash flows from operations and
current cash reserves.
Short-term liquidity requirements consist of funds needed to meet
commitments for debt service, administrative expense and operations. These
short term needs will be funded by cash at March 31, 1997, plus 1997
interest income and cash flows from operations. However, if future changes
in the health care market require extensive capital expenditures by the
Partnership in order for its facilities to meet new licensure and/or
marketplace standards, the Partnership may be required to seek additional
capital sources or increase its long term debt in order to meet potential
future expenditure requirements. The General Partner is unable at this time
to predict the extent of future capital expenditure needs of the facilities
resulting from future changes in the nursing home industry.
The cash balance, not including restricted cash, at March 31, 1997,
was $2,107,465. The Partnership had net income of $127,396. After
adjusting for depreciation, amortization, and changes in operating assets
and liabilities, net cash provided by operating activities was $78,248.
The net cash used in financing activities was $23,386 and consisted of
principal payments on notes payable and distributions to the minority
interest. Accounts Receivable increased $185,970 primarily from the start
up of the Norwalk, California facility and a delay in collections at both
the Norwalk and Paramount, California facilities due to a change in office
personnel. Restricted cash increased by $3,397 due to an increase in the
resident trust accounts. Investment properties increased primarily from
additions to furniture and fixtures at the Paramount, California nursing
facility. Mortgage Notes Payable decreased by $8,386 due to payments made
to U. S. Bank for application to the Sequim, Washington nursing facility
mortgage.
Cash distributions to Limited Partners were discontinued during the
first quarter of 1988 and resumed in February 1992. The 1995 distribution
to Limited Partners totaled $1,500,000 (5% of the original capital of
$30,000,000). The February 1996 distribution to the Limited Partners was
$750,000 (2.5% of the original capital of $30,000,000). The July
1996 distribution to the Limited Partners was $13,200,000 (44% of the
original capital of $30,000,000). The December 1996 distribution to the
Limited Partners was $4,200,000 (14%) of the original capital of
$30,000,000). Future distributions will be at a level that is warranted by
the cash flow and profits of the Partnership.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits filed with this Report - None
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 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
ATTEST:
Date: June 12, 1997 By: \s\Fred E. Whaley
President and Director
Date: June 12, 1997 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 PERIOD ENDED MARCH 31, 1997.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 2,107,465
<SECURITIES> 0
<RECEIVABLES> 1,248,513
<ALLOWANCES> 343,771
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 7,425,314
<DEPRECIATION> 2,461,869
<TOTAL-ASSETS> 9,566,610
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 1,924,207
0
0
<COMMON> 0
<OTHER-SE> 6,277,376
<TOTAL-LIABILITY-AND-EQUITY> 9,566,610
<SALES> 0
<TOTAL-REVENUES> 1,987,452
<CGS> 0
<TOTAL-COSTS> 1,851,604
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 27,404
<INCOME-PRETAX> 127,396
<INCOME-TAX> 0
<INCOME-CONTINUING> 127,396
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 127,396
<EPS-PRIMARY> 4.16<F2>
<EPS-DILUTED> 4.16<F2>
<FN>
<F1>REGISTRANT HAS AN UNCLASSIFIED BALANCE SHEET
<F2>EPS IS NET INCOME PER $1,000 LIMITED PARTNERSHIP UNIT
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