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 June 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 June 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
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
1998 1997
(Audited)
ASSETS
Cash and Cash Equivalents $ 2,712,388 $ 7,268,682
Accounts Receivable (Net of Allowance
of $268,133 and $306,105) 141,608 671,683
Note Receivable 0 1,000,000
Sale Proceeds Receivable 0 764,604
Prepaid Expenses 0 65,940
Total Assets $ 2,853,996 $ 9,770,909
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Accounts Payable $ 202,635 $ 294,664
Accrued Payroll 872 139,566
Payable to Affiliates 355,829 355,829
Minority Interest 46,084 57,800
Total Liabilities $ 605,420 $ 847,859
Partners' Equity:
Limited Partners (30,000 units outstanding
at June 30, 1998 and December 31, 1997) $ 2,268,553 $ 8,944,538
General Partner (19,977) (21,488)
Total Partners' Equity $ 2,248,576 $ 8,923,050
Total Liabilities and Partners' Equity $ 2,853,996 $ 9,770,909
The accompanying notes are an integral part
of these consolidated financial statements.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED
June 30, June 30,
1998 1997
Revenues:
Interest Income $ 138,036 $ 66,150
Total Revenues $ 138,036 $ 66,150
Expenses:
General and Administrative - Affiliates 11,182
7,785
- Other 57,263 4,190
Total Expenses $ 68,445 $ 11,975
Income from Continuing Operations $ 69,591 $ 54,175
Discontinued Operations:
Income From Health Care Operations $ 5,935 $ 536,359
Total Discontinued Operations $ 5,935 $ 536,359
Net Income $ 75,526
$ 590,534
Income from Continuing Operations
Per $1,000 Limited Partnership Unit $ 2.27 $ 1.77
Income from Discontinued Operations
Per $1,000 Limited Partnership Unit .19 17.52
Total Income Per $1,000
Limited Partnership Unit $ 2.46 $ 19.29
Number of Limited Partnership Units Outstanding 30,000
30,000
The accompanying notes are an integral part
of these consolidated financial statements.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED
June 30, June 30,
1998 1997
Revenues:
Interest Income $ 29,638 $ 32,815
Total Revenues $ 29,638 $ 32,815
Expenses:
General and Administrative - Affiliates 5,089
289
- Other 31,797 (3,304)
Total Expenses $ 36,886 $ (3,015)
Income(Loss) from Continuing Operations $ (7,248) $ 35,830
Discontinued Operations:
Income(Loss) From Health Care Operations $ (5,218) $ 427,308
Total Discontinued Operations $ (5,218) $ 427,308
Net Income(Loss) $ (12,466) $ 463,138
Income from Continuing Operations
Per $1,000 Limited Partnership Unit $ (.24) $ 1.17
Income from Discontinued Operations
Per $1,000 Limited Partnership Unit (.17) 13.96
Total Income Per $1,000
Limited Partnership Unit $ (.41) $ 15.13
Number of Limited Partnership Units Outstanding 30,000
30,000
The accompanying notes are an integral part
of these consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED
June 30, June 30,
1998 1997
Cash Flows from Operating Activities:
Net Income $ 75,526 $ 590,534
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Depreciation and Amortization 0 98,281
Minority Interest in Net Income (Loss)
of Consolidated Subsidiary 12,128 34,316
Changes in Operating Assets and Liabilities:
(Increase) Decrease in Accounts Receivable 530,075 (202,593)
(Increase) Decrease in Notes Receivable 1,000,000 0
(Increase) Decrease in Sale Proceeds Receivable 764,604 0
(Increase) Decrease in Prepaid Expenses 65,940 55,224
(Increase) Decrease in Restricted Cash 0 25,932
Increase (Decrease) in Payable to Related
Parties 0 10,076
Increase (Decrease) in Payables and Accruals (230,723) (183,018)
Net Cash Provided by Operating Activities 2,217,550 428,752
Cash Flows from Investing Activities:
(Additions) to Investment Properties 0 (19,716)
(Additions) to Construction in Progress 0 (4,307)
Net Cash Used in Investing Activities 0 (24,023)
Cash Flows from Financing Activities:
Payments of Mortgage Notes Payable 0 (16,958)
Distribution to Partners:
Limited Partners (6,750,000) 0
General Partner 0 0
Minority Interest (23,844) (30,000)
Net Cash Used in Financing Activities (6,773,844) (46,958)
Increase (Decrease) in Cash and Cash Equivalents (4,556,294) 357,771
Cash and Cash Equivalents at Beginning of Period 7,268,682 2,063,474
Cash and Cash Equivalents at End of Period $2,712,388 $2,421,245
Supplemental Disclosure of Cash Flow Information:
Interest Paid $ 0 $ 54,623
The accompanying notes are an integral part
of these consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 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 six months ended June 30, 1998.
General and Administrative Costs and Fees $11,182
Cash Distributions $ 0
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Interest income increased by $71,886 (108.7%) for the six months ended
June 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 increased by $3,397
(43.6%) for the six months ended June 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 eliminated. General and
Administrative - Affiliate expense, before the 1997 management fee cost
transfer, is $11,182 and $67,056 for 1998 and 1997 respectively. The
decrease of $55,874 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 $53,073 for
the six months ended June 30, 1998, 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 eliminated. General and Administrative - Other expense, before the 1997
management fee cost transfer, is $57,263 and $63,461 for 1998 and 1997
respectively. The $6,198 decrease is due to a decrease in audit fees.
Discontinued Operations - Income from Health Care Operations decreased
by $530,424 for the six months ended June 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.
Interest income decreased by $3,177 (9.7%) for the three months ended
June 30, 1998, as compared to the same period in 1997, due to decreased
cash balances held in interest bearing accounts resulting from the March
1998 cash distribution made to the limited partners.
General and Administrative - Affiliate expense increased by $4,800 for
the three months ended June 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 eliminated. General and Administrative -
Affiliate expense, before the 1997 management fee cost transfer, is $5,089
and $29,924 for 1998 and 1997 respectively. The decrease of $24,835 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 $35,101 for
the three months ended June 30, 1998, 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 eliminated. General and Administrative -
Other expense, before the 1997 management fee cost transfer, is $31,797 and
$26,332 for 1998 and 1997 respectively. The increase of $5,465 is due to
an increase in legal and accounting services costs.
Discontinued Operations - Income from Health Care Operations decreased
by $432,526 (101.2%) for the three months ended June 30, 1998, as compared
to the same period in 1997 due to the discontinuance of operations.
Current activity is a result of adjustments to 1997 revenue and expense
accruals.
Due to the 1997 sale of the nursing facility operations, primary
sources of funds for the period ended June 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 at June 30, 1998, plus future interest income and accounts
receivable collection.
The cash balance at June 30, 1998, was $2,712,388. The Partnership
had net income of $75,526. After adjusting for changes in operating assets
and liabilities, net cash provided by operating activities was $2,217,550.
Accounts receivable decreased by $530,075 due to continued collection
efforts. Notes receivable decreased by $1,000,000 due to the April 24,
1998, payment received from Life Care Centers of America, Inc. Accounts
Payable decreased by $230,723 due to the payment of nursing facility
obligations. Sale Proceeds Receivable decreased by $764,604 with the
January 1998 receipt of proceeds from the December 31, 1997, sale of the
Sequim, Washington nursing facility. The net cash used in financing
activities was $6,773,844 which is a result of a March 1998 distribution
paid to the limited partners and a second quarter distribution 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). With the payment of the March 1998
distribution, limited partners in the initial offering have received a
104.4% return of their initial investment. Future distributions will be at
a level that is warranted by the plan of liquidation and cash flows 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: August 13, 1998 By:/s/Fred E. Whaley
President and Director
Date: August 13, 1998 By:/s/ J. Davenport Mosby, III
Vice President and Director
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This sschedule 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 quarter ended June 30, 1998.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 2,712,388
<SECURITIES> 0
<RECEIVABLES> 409,741
<ALLOWANCES> 268,133
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,853,996
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 46,084
0
0
<COMMON> 0
<OTHER-SE> 2,248,576
<TOTAL-LIABILITY-AND-EQUITY> 2,853,996
<SALES> 0
<TOTAL-REVENUES> 138,036
<CGS> 0
<TOTAL-COSTS> 68,445
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 69,591
<INCOME-TAX> 0
<INCOME-CONTINUING> 69,591
<DISCONTINUED> 5,935
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 75,526
<EPS-PRIMARY> 2.46<F2>
<EPS-DILUTED> 2.46<F2>
<FN>
<F1>Registrant has an unclassified balance sheet
<F2>EPS is net income per $1,000 Limited Partnership Unit
</FN>
</TABLE>
