15
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 September
30, 1998
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 September
30, 1998
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
June 18, 1998 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 September 30, 1998 and December 31, 1997 3
Consolidated Statements of Income -
For the Nine Months Ended September 30, 1998 and 1997
4
Consolidated Statements of Income -
For the Three Months Ended September 30, 1998 and 1997
5
Consolidated Statements of Cash Flows -
For the Nine Months Ended September 30, 1998 and 1997
6
Notes to Consolidated Financial Statements 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
September 30,
December
31, 1998 1997
(Audited) ASSETS
Cash and Cash Equivalents $ 2,835,481
$ 7,268,682
Accounts Receivable (Net of Allowance
of $300,832 and $306,105) 97,815 671,683
Note Receivable 0 1,000,000
Sale Proceeds Receivable 0 764,604
Prepaid Expenses 0 65,940
Total Assets $ 2,933,296
$ 9,770,909
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Accounts Payable $ 102,739
$ 294,664
Accrued Payroll 85 139,566
Payable to Affiliates 355,829 355,829
Minority Interest 38,110 57,800
Total Liabilities $ 496,763 $ 847,859
Partners' Equity:
Limited Partners (30,000 units outstanding
at September 30, 1998 and December 31, 1997)
$ 2,452,751 $ 8,944,538
General Partner (16,218) (21,488)
Total Partners' Equity $ 2,436,533 $
8,923,050
Total Liabilities and Partners' Equity $ 2,933,296 $
9,770,909
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 NINE MONTHS ENDED
September 30,
September
30, 1998
1997
Revenues:
Interest Income $ 177,336 $
103,643
Total Revenues $ 177,336 $
103,643
Expenses:
General and Administrative - Affiliates 14,028
14,591
- Other 74,316 16,609
Total Expenses $ 88,344 $
31,200
Income from Continuing Operations $ 88,992 $ 72,443
Discontinued Operations:
Income From Health Care Operations 174,491
575,216
Gain on Sale of Assets $ 0
$2,036,848
Total Discontinued Operations $ 174,491
$2,612,064
Net Income
$ 263,483
$2,684,507
Income from Continuing Operations
Per $1,000 Limited Partnership Unit $ 2.91 $
2.37
Income from Discontinued Operations
Per $1,000 Limited Partnership Unit 5.70
85.32
Total Income Per $1,000
Limited Partnership Unit $ 8.61 $
87.69
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 INCOME
FOR THE THREE MONTHS ENDED
September 30,
September
30, 1998
1997
Revenues:
Interest Income $ 39,300 $
37,493
Total Revenues $ 39,300 $
37,493
Expenses:
General and Administrative - Affiliates
2,846 6,806
- Other 17,053
12,419
Total Expenses $ 19,899 $
19,225
Income(Loss) from Continuing Operations $ 19,401 $
18,268
Discontinued Operations:
Income(Loss) From Health Care Operations 168,556
38,857
Gain on Sale of Assets $ 0
$2,036,848
Total Discontinued Operations $ 168,556
$2,075,705
Net Income(Loss) $ 187,957
$2,093,973
Income from Continuing Operations
Per $1,000 Limited Partnership Unit $ .63 $
.60
Income from Discontinued Operations
Per $1,000 Limited Partnership Unit 5.51
67.80
Total Income Per $1,000
Limited Partnership Unit $ 6.14 $
68.40
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 NINE MONTHS ENDED
September
30, September 30,
1998
1997
Cash Flows from Operating Activities:
Net Income $ 263,483
$2,684,507
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Depreciation and Amortization 0
145,343
Gain on Sale of Assets 0
(2,036,848)
Minority Interest in Net Income (Loss)
of Consolidated Subsidiary 2,154
57,828
Changes in Operating Assets and Liabilities:
(Increase) Decrease in Accounts Receivable 573,868
(300,487)
(Increase) Decrease in Notes Receivable 1,000,000
0
(Increase) Decrease in Sale Proceeds Receivable 764,604
(4,992,507)
(Increase) Decrease in Prepaid Expenses 65,940 38,997
(Increase) Decrease in Restricted Cash 0 23,757
Increase (Decrease) in Payable to Related
Parties 0 16,376
Increase (Decrease) in Payables and Accruals (331,406) 51,316
Net Cash Provided by Operating Activities 2,338,643
(4,311,718)
Cash Flows from Investing Activities:
(Additions) to Investment Properties 0 (27,794)
(Additions) to Construction in Progress 0 (4,307)
Sale of Investment Properties 0
4,946,014
Net Cash Used in Investing Activities 0
4,913,913
Cash Flows from Financing Activities:
Payments of Mortgage Notes Payable 0
(25,718)
Distribution to Partners:
Limited Partners (6,750,000) 0
General Partner 0 0
Minority Interest (21,844) (65,000)
Net Cash Used in Financing Activities (6,771,844) (90,718)
Increase (Decrease) in Cash and Cash Equivalents (4,433,201) 511,477
Cash and Cash Equivalents at Beginning of Period 7,268,682
2,063,474 Cash and Cash Equivalents at End of Period
$2,835,481 $2,574,951 Supplemental Disclosure of Cash Flow
Information:
Interest Paid $ 0 $
81,654
Non-Cash Items:
Depreciation - Discontinued Health Care Operations
$ 0
$ 69,306
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
SEPTEMBER 30, 1998
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, 1997. 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 1997 financial statements have been
reclassified for comparative purposes to conform with
the financial statement
presentation used in the 1998 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 nine months
ended September 30, 1998.
General and Administrative Costs and Fees $14,028
Cash Distributions
$ 0
CUMBERLAND
HEALTHCARE, L.P.
I-A (a Limited
Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Interest income increased by $73,693 (71.1%) for the nine
months ended September 30, 1998, as compared to the same
period in 1997, due to increased cash balances held in
interest bearing accounts.
General and Administrative - Affiliate expense
decreased by $563 (3.9%) for the nine months ended
September 30, 1998, as compared to the same period in 1997.
In 1997, the home office charged a management fee to the
California nursing facilities it operated. This management
fee in actuality transferred costs from the General and
Administrative - Affiliate expense account to the Resident
Services Expenses expense account. In 1998, as a result of
the 1997 sale of the nursing facilities, this transfer of costs
was discontinued. General and Administrative - Affiliate
expense, before the 1997 management fee cost transfer, is
$14,028 and $99,616 for 1998 and 1997, respectively. The
decrease of $85,588 is due to a decrease in personnel and
office space costs as a result of the liquidation of the
Partnership.
General and Administrative - Other expense increased
by $57,707 (347.4%) for the nine months ended September 30,
1998, as compared to the
same period in 1997. In 1997, the home office charged a
management fee to the California nursing facilities it
operated. This management fee was calculated as a
percentage of the nursing facilities' net revenue. The
management fee in actuality transferred costs from the
General and Administrative - Other expense account to the
Resident Services Expenses expense account. In 1998, as a
result of the 1997 sale of the nursing facilities, this
transfer of costs was discontinued.
General and
Administrative - Other expense, before the 1997
management fee cost transfer, is $74,316 and $94,818 for
1998 and 1997, respectively.
The
$20,502 decrease is due to a decrease in audit, accounting and
legal fees.
Discontinued Operations - Income from Health Care
Operations decreased by $400,725 (69.6%) for the nine months
ended September 30, 1998, as compared to the same
period in 1997, due to the discontinuance of operations
in 1997. Current activity is a result of adjustments to 1997
revenue and expense accruals.
Gain on Sale of Assets decreased by $2,036,848 (100%)
for the nine months ended September 30, 1998, as compared to
the same period in 1997, due to the September 1997 sale of
the Partnership's Southern California properties.
Interest income increased by $1,807 (4.8%) for the three
months ended September 30, 1998, as compared to the same
period in 1997, due to increased cash balances held in
interest bearing accounts.
General and Administrative - Affiliate expense decreased
by $3,960 (58.1%) for the three months ended September 30,
1998, as compared to the same period in 1997. In 1997, the
home office charged a management fee to the California
nursing facilities it operated. This management fee was
calculated as a percentage of the nursing facilities' net
revenue. The management fee in actuality transferred
costs from the General and Administrative - Affiliate
expense account to the Resident Services Expenses expense
account. In 1998, as a result of the 1997 sale of the
nursing facilities, this transfer of costs was discontinued.
General and Administrative - Affiliate expense, before the
1997 management fee cost transfer, is $2,846 and $32,560
for 1998 and 1997 respectively. The
decrease of $29,714 is due to a decrease in personnel and
office space costs as a result of the liquidation of the
Partnership.
General and Administrative - Other expense increased by
$4,634 (37.3%) for the three months ended September 30, 1998,
as compared to the same period in 1997. In 1997, the home
office charged a management fee to the California nursing
facilities it operated. This management fee was
calculated as a percentage of the nursing facilities' net
revenue. The
management fee in actuality transferred costs from the
General and Administrative - Other expense account to the
Resident Services Expenses expense account. In 1998, as a
result of the 1997 sale of the nursing facilities, this
transfer of costs was discontinued.
General and
Administrative - Other expense, before the 1997
management fee cost transfer, is $17,053 and $31,357 for
1998 and 1997, respectively.
The
decrease of $14,304 is due to a decrease in auditing,
accounting and legal fees.
CUMBERLAND HEALTHCARE, L.P. I-A
(a Limited
Partnership) MANAGEMENT'S
DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
(continued)
Discontinued Operations - Income from Health Care
Operations increased
by $129,699 (333.8%) for the three months ended September
30, 1998, as compared to the same period in 1997, due to
receiving $202,643 from Columbia Corporation in July 1998
as payment in full for the interest bearing note issued to
the Partnership in 1993 which was part of Columbia
Corporation's bankruptcy settlement.
Gain on Sale of Assets decreased by $2,036,848 (100%)
for the three months ended September 30, 1998, as compared to
the same period in 1997, due to the September 1997 sale of
the Partnership's Southern California properties.
Due to the 1997 sale of the nursing facility
operations, primary sources of funds for the period ended
September 30, 1998, are from accounts receivable collection,
interest income and cash reserves.
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 months. These sources include cash from
cash reserves, accounts receivable collection and interest
income.
Short-term liquidity requirements consist of funds
needed to meet commitments for administrative expenses.
These short-term needs will be funded by cash reserves at
September 30, 1998, plus future interest income.
The cash balance at September 30, 1998, is
$2,835,481. The
Partnership had net income of $263,483. After adjusting for
changes in operating assets and liabilities, net cash provided
by operating activities is $2,338,643. Accounts receivable
decreased by $573,868 due to continued collection efforts.
Notes receivable decreased by $1,000,000 due to the April
1998, payment received from Life Care Centers of America, Inc.
Sales Proceeds Receivable decreased by $764,604 due to the
January 1998 receipt of the sale proceeds for the December
1997 sale of the Sequim, Washington facility. Accounts
Payable decreased by $331,406 due to the payment of nursing
facility obligations. The net cash used in financing
activities is $6,771,844 which is a result of the March 1998
distribution paid to the limited partners and the second
quarter distribution paid to the minority interest.
Cash distributions to limited partners were discontinued
during the first quarter of 1988 but resumed
in February 1992. The March 1998
distribution to the limited partners was $6,750,000 (22.5% of
the original capital investment of $30,000,000). On October
12, 1998, a $2,100,000 distribution was declared to be
issued to the limited partners. With the payment of this
distribution on October 27, 1998, limited partners in the
initial offering have received 111.4% return of their initial
investment. Future distributions will be at a level that is
warranted by the plan of liquidation.
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: By:
Fred E. Whaley
President and
Director
Date: By:
J. Davenport
Mosby, III
Vice President and Director
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted
from the annual report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the year ended December
31, 1998.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 2,835,481
<SECURITIES> 0
<RECEIVABLES> 398,647
<ALLOWANCES> 300,832
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,933,296
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 38,110
0
0
<COMMON> 0
<OTHER-SE> 2,436,533
<TOTAL-LIABILITY-AND-EQUITY> 2,474,643
<SALES> 0
<TOTAL-REVENUES> 177,336
<CGS> 0
<TOTAL-COSTS> 88,344
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 88,992
<INCOME-TAX> 0
<INCOME-CONTINUING> 88,992
<DISCONTINUED> 174,491
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 263,483
<EPS-PRIMARY> 2.91<F2>
<EPS-DILUTED> 2.91<F2>
<FN>
<F1>Registrant has an unclassified balance sheet
<F2>EPS is net income per $1,000 Limited Partnership Unit
</FN>
</TABLE>
