SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549-1004
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 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
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: 30,000
Title of Each Class
Units of Limited Partnership Interest
$1,000 per unit
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. X
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
Title of Each Class at December 31, 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
None
<PAGE>
PART I
Item 1. Business
General Development of Business
The Registrant is a limited partnership (the "Partnership") composed of
Medical Investments Partners (the "General Partner") and purchasers of
Partnership units as the limited partners. The General Partner is composed
of RJ Health Properties, Inc. and RJ Medical Investors, Inc., both of which
are wholly-owned subsidiaries of Raymond James Financial, Inc. The
Partnership was formed under the laws of Delaware and commenced operations
on March 13, 1986.
Financial Information about Industry Segments
The Partnership was formed to engage in only one industry segment, the
acquisition of nursing homes subject to leases to third parties. As a
result of the bankruptcy of the original lessees of the Partnership's
nursing homes, the Partnership, on an interim basis, became the operator of
the fourteen nursing homes owned by it pending locating qualified lessees
for the nursing homes.
Narrative Description of Business
The Partnership's business is to acquire and lease nursing homes,
primarily through operating leases expected to generate cash distributions
to the Limited Partners from leasing revenues and proceeds from the sale or
other disposition of the nursing homes.
Termination and Dissolution of the Partnership
On May 8, 1996, the limited partners approved a plan of liquidation
pursuant to which the Partnership will be dissolved and its affairs wound
up pursuant to Article XIV of the Limited Partnership Agreement and its
assets be liquidated with the proceeds of such liquidation to be expended
and distributed as required by the Limited Partnership Agreement. All
operating assets of the Partnership have been liquidated, and the non-
operating assets should be converted to liquid assets during 1999. Upon
distribution of all of the assets of the Partnership, the Partnership will
be terminated.
Nursing Home Operations
The Partnership owns 99% of Cumberland Healthcare, L.P. I-C which
leased the Hillcrest Care Center to Arbor Health Care Company ("Arbor").
The General Partner owns the remaining 1% of Cumberland Healthcare, L.P. I-
C. Arbor had an option to purchase the facility which became effective
February 1, 1995, and terminated February 1, 1997, at an amount determined
according to the lease agreement. Arbor exercised its option to purchase
Hillcrest Care Center and on September 20, 1996, the purchase was closed
with the payment of $5,750,000 by Arbor to Cumberland Healthcare, L.P. I-C.
As a result of the sale of the facility to Arbor,
Cumberland Healthcare, L.P. I-C was liquidated in 1998.
The Partnership leased Bel Tooren, Imperial, La Habra, Mirada Hills,
Northwalk, Rimrock and Sun City (collectively the "LCCA Homes") to Life
Care Centers of America ("LCCA"). The Partnership entered into an agreement
with LCCA on August 4, 1995 (the "Purchase Agreement") pursuant to which
LCCA agreed to purchase the seven nursing facilities located in California
for a purchase price of $17,900,000. The Purchase Agreement required the
purchase price to be paid by LCCA as follows:
(a) LCCA would assume the indebtedness secured by a mortgage on the
Rimrock facility.
(b) LCCA would deliver a purchase money note in the amount of $1,000,000
guaranteed by its principal shareholder to the Partnership (the "LCCA
Note"). The LCCA Note matures on the fifth anniversary of its issuance but
payment may be demanded at the option of the Partnership on or anytime
after December 28, 1997. A portion of the accrued interest is payable
monthly and the balance is due on the maturity of the LCCA Note. However,
if the Partnership exercises its right to call the LCCA Note on or after
December 28, 1997, the accrued interest which would otherwise be due at
maturity will be canceled; and
(c) The balance of the purchase price would be paid in cash at closing by
federal funds wire transfer to the Partnership.
The agreement to sell the LCCA Homes to LCCA was subject to Partners'
approval. Approval by the Partners' for the sale of the LCCA Homes was
granted May 8, 1996. On May 29, 1996, the closing of the sale of the LCCA
Homes was finalized. All lease agreements previously held between the
Partnership and LCCA were terminated.
Effective September 19, 1990, the Partnership leased its Rancho Los
Padres nursing home to FHP, Inc. ("FHP"), a large California based HMO and
the principal subsidiary of FHP International Corporation, for ten years.
On October 25, 1995, a Lease Termination Agreement was signed by Cumberland
Healthcare (Cumberland) and FHP, Inc. relating to FHP - Norwalk f/k/a
Rancho Los Padres whereby Cumberland would receive an early lease
termination payment. A Management Agreement was also signed whereby
Cumberland would become the interim operator of the facility. In
January 1996, the State of California - Department of Health Services
issued a license to Cumberland to operate and maintain Pacific Palms
Skilled Nursing f/k/a FHP - Norwalk f/k/a Rancho Los Padres.
On September 30, 1997, the Partnership closed on a purchase agreement
with Premier Management Company (Premier) whereby Premier purchased Pacific
Palms (Norwalk, California) and Paramount Chateau (Paramount, California)
for $5,050,000. On December 31, 1997, the Partnership closed on a purchase
agreement with Public Hospital District No. 2 (the hospital) whereby the
hospital purchased Olympic Healthcare (Sequim, Washington) for $2,800,000.
Item 2. Properties
As a result of the two 1997 sale closings, the Partnership no longer
owns any investment properties.
Item 3. Legal Proceedings
There are no material pending legal proceedings to which the
Partnership is a party or to which its property is subject. Therefore, no
provision has been made in the accompanying financial statements.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the fourth quarter of 1998.
<PAGE>
PART II
Item 5. Market for the Registrant's Securities and Related Security Holder
Matters
(a) The Registrant's limited partnership interests are not publicly
traded. There is no market for the Registrant's limited partnership
interests and it is unlikely that any will develop.
(b) Approximate number of Equity Security Holders:
Number of Record Holders
Title of Class as of December 31, 1998
--------------- ------------------------
Units of Limited Partnership Interest 1,940
General Partner Interest 1
No Limited Partner owns more than 5% of the Units. The General Partner
Interest is owned by Medical Investments Partners, The Raymond James
Financial Center, 880 Carillon Parkway, St. Petersburg, Florida 33716.
(c) Total Units of Limited Partnership (1,000 units) 30,000
Total Units Outstanding ($1,000 per unit) 30,000
1998 1997 1996
Distributions to Limited Partners $8,850,000 None $18,150,000
Distributions to General Partner None None 37,620
The distributions for 1998 and 1996 represent return of capital on a
GAAP basis.
Item 6. Selected Financial Data
1998 1997 1996 1995 1994
Total Revenues $ 195,027 199,361 269,390 62,825 37,086
Net Income(1) $ 15,339 149,699 138,294 (57,976) (73,326)
Total Assets $ 912,473 9,770,909 9,392,809 22,181,442 22,618,448
Mortgage Notes
Payable $ 0 0 1,256,214 7,946,917 8,782,497
Distributions to
Limited Partners
Per Partnership
Unit $ 295.00 0 605.00 50.00 35.00
Net Income(1)
Per Unit $.50 $4.89 $4.52 $(1.89) $(2.40)
(1) Net Income and Net Income Per Unit does not include income from
discontinued operations.
The above selected financial data should be read in conjunction with
the financial statements and related notes appearing elsewhere in this
report. This statement is not covered by the auditors' opinion included
elsewhere in this report.
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Continuing Operations:
Interest income decreased by $4,334 (2.2%) for the year ended December
31, 1998, as compared to the same period in 1997, due to decreased average
cash balances in interest bearing accounts as a result of the distributions
issued on March 31, 1998, and October 27, 1998. Interest income decreased
by $70,029 (26%) for the year ended December 31, 1997, compared to the same
period in 1996, due to decreased average cash balances in interest bearing
accounts as a result of the distributions issued for the LCCA and Arbor
sale proceeds.
General and Administrative - Affiliate expense increased by $72,635
for the year ended December 31, 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 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 $77,818 and $99,616 for 1998 and 1997
respectively. The decrease of $21,798 is due to a decrease in personnel
and office space costs as a result of the termination of the Partnership.
General and Administrative - Affiliate expenses decreased by $54,744
(91.4%) for the year ended December 31, 1997, compared to the same period
in 1996, due to decreased senior management involvement resulting from the
1996 sale of eight of the Partnership's nursing facilities.
General and Administrative - Other expense increased by $57,391 (129%)
for the year ended December 31, 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 discontinued. General and Administrative - Other expense, before the
1997 management fee cost transfer, is $101,870 and $94,818 for 1998 and
1997 respectively. The $7,052 increase is due to an increase in legal and
accounting fees. General and Administrative - Other expenses decreased by
$26,690 (37.5%) for the year ended December 31, 1997, compared to the same
period in 1996, due to an increase in the percentage of travel and overhead
of affiliates directly related to and allocated to resident services
expenses.
As a result of the above revenue and expense items, the Partnership
had $15,339, $149,699 and $138,294 net income from continuing operations
for the years 1998, 1997 and 1996 respectively. Inflation and changing
prices have not had a material impact on net revenues and expenses from
continuing operations over the past three years.
Discontinued Operations:
Income from Real Estate Rental Operations has no activity to compare
for the year ended December 31, 1998. The decrease of $696,600 for the
year ended December 31, 1997, as compared to the same period in 1996 is due
to the May 29, 1996, sale of seven rental property nursing facilities to
LCCA, the September 20, 1996, sale of one rental property nursing facility
to Arbor and the transfer of the Norwalk, California nursing facility from
a rental operation to a health care operation.
Income from Health Care Operations has income of $315,818 for the year
ended December 31, 1998. This income, in most part, is a result of a
$146,988 Medicare cost report settlement, a $206,946 Columbia Corporation
bankruptcy note settlement, a $21,634 insurance payment and miscellaneous
prior period adjustments. The $318,556 decrease in income for December 31,
1997, as compared to the same period in 1996, is due to the 1997 sale of
the Partnership's operated nursing facilities.
Gain on Sale of Assets has no activity for the year ended December 31,
1998 due to the sale of the Partnership's last remaining nursing facility
on December 31, 1997. The December 31, 1997, gain of $2,440,210 is a
result of the September 30, 1997, sale of the Paramount and Norwalk,
California nursing facilities to Premier and the December 31, 1997, sale of
the Sequim, Washington nursing facility to the hospital. The December 31,
1996, gain of $9,732,487 is a result of the May 29, 1996, sale of seven
California nursing facilities to LCCA and the September 20, 1996, sale of
one nursing facility to Arbor.
Lease Termination Settlement has no activity for the year ended
December 31, 1998. The December 31, 1996 income of $1,293,464 is a result
of a lease termination settlement received from FHP, Inc. relative to the
nursing facility located in Norwalk, California.
As a result of the above items, the Partnership had $315,818,
$2,623,371 and $12,224,268 income from discontinued operations for the
years ended December 31, 1998, 1997 and 1996 respectively.
Net Income
As a result of the above revenue and expense items, the Partnership
had net income of $331,157, $2,773,070 and $12,362,562 for the years ended
December 31, 1998, 1997 and 1996 respectively. Inflation and changing
prices have not had a material impact on net revenues and losses from
continuing operations over the past three years.
LIQUIDITY AND CAPITAL RESOURCES
The primary sources of funds for the periods ending December 31, 1998,
1997 and 1996 were rental income, revenues from nursing home operations,
prepayment of the FHP lease and proceeds from the sale of assets. These
funds were used to pay nursing home expenses, pay recurring debt service,
make cash distributions to partners and reduce the amount of
outstanding indebtedness. Effective December 31, 1997, the Partnership has
no ownership interest in any properties.
Short-term liquidity requirements consist of funds needed to meet
commitments for administrative expenses. These short term needs will be
funded by cash at December 31, 1998, plus interest income.
In the opinion of the General Partner, the Partnership has sufficient
funds or sources of funds to remain liquid for the next 12 - 24 months.
The General Partner is not aware of any trends that may significantly
affect the Partnership's liquidity.
The cash balance at December 31, 1998, was $847,374. The Partnership
had net income of $331,157. After adjusting for changes in operating
assets and liabilities, net cash provided by operating activities was
$2,452,536. The net cash used in financing activities was $8,873,844
consisting of distributions to limited partners and minority interest.
Significant changes to the balance sheet which affected the cash flow of
the Partnership for 1998 are primarily due to the collection of the
$1,000,000 LCCA note receivable, the collection of the December 31, 1997,
sale proceeds and collection of trade accounts receivable. Payables and
accruals decreased by $370,428 primarily due to the 1997 sale of the
nursing facilities resulting in the payoff of their respective accrued
expenses.
Cash distributions to Limited Partners were discontinued during the
first quarter of 1988 and resumed in February 1992. 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). There were no distributions issued
in 1997. The 1998 distributions totaled $8,850,000 (29.5% of the original
capital of $30,000,000). The 1998 distributions were issued in two
payments. The first payment was issued March 31, 1998, for $6,750,000
(22.5% of original capital of $30,000,000). The second payment was issued
October 27, 1998, for $2,100,000 (7% of original capital of $30,000,000).
Future distributions will be issued for the liquidation of the Partnership.
<PAGE>
Item 8. Financial Statements and Supplementary Data
INDEPENDENT AUDITOR'S REPORT
To the Partners of
Cumberland Healthcare, L.P. I-A
We have audited the accompanying consolidated balance sheets of
Cumberland Healthcare, L.P. I-A (a Delaware Limited Partnership) as of
December 31, 1998 and 1997, and the related consolidated statements of
income, partners' equity, and cash flows for each of the three years in the
period ended December 31, 1998. These consolidated financial statements
are the responsibility of the Partnership's management. Our responsibility
is to express an opinion on these statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
Cumberland Healthcare, L.P. I-A as of December 31, 1998 and 1997 and the
results of its operations and its cash flows for each of the three years in
the period ended December 31, 1998, in conformity with generally accepted
accounting principles.
As more fully discussed in Note 10, the Partnership discontinued the
leasing and health care segments of its operations. Historically, assets
and operations of the leasing and health care segments have represented a
substantial portion of the Partnership's total assets and results of
operations.
As more fully disclosed in Note 11, the Partners have approved a plan
of dissolution of the Partnership.
Our audits were made for the purpose of forming an opinion on the
basic financial statements taken as a whole. The schedule listed under
Item 14 in the index is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not part of the basic
financial statements. This schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in
our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic financial
statements taken as a whole.
SPENCE, MARSTON, BUNCH, MORRIS & CO.
Certified Public Accountants
Clearwater, Florida
April 6, 1999
<PAGE>
CUMBERLAND HEALTHCARE, L.P. I-A
(a Limited Partnership)
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, DECEMBER 31,
1998 1997
------------ ------------
ASSETS
Cash and Cash Equivalents $ 847,374 $ 7,268,682
Accounts Receivable (Net of Allowance
of $0 and $306,105) 65,099 671,683
Note Receivable 0 1,000,000
Sale Proceeds Receivable 0 764,604
Prepaid Expenses 0 65,940
---------- -----------
Total Assets $ 912,473 $ 9,770,909
========== ===========
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Accounts Payable $ 63,802 $ 294,664
Accrued Payroll 0 139,566
Payable to Related Parties - Affiliates 415,829 355,829
Minority Interest 28,635 57,800
---------- -----------
Total Liabilities 508,266 847,859
---------- -----------
Partners' Equity:
Limited Partners (30,000 units outstanding
at December 31, 1998 and 1997) 419,072 8,944,538
General Partner (14,865) (21,488)
---------- -----------
Total Partners' Equity 404,207 8,923,050
---------- -----------
Total Liabilities and Partners' Equity $ 912,473 $ 9,770,909
========== ===========
The accompanying notes are an integral part
of these consolidated financial statements.
<PAGE>
CUMBERLAND HEALTHCARE, L.P. I-A
(a Limited Partnership)
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1996
----------- ----------- ------------
Revenues:
Interest Income $ 195,027 $ 199,361 $ 269,390
----------- ---------- ----------
Total Revenues 195,027 199,361 269,390
----------- ---------- ----------
Expenses:
General and Administrative
- Affiliates 77,818 5,183 59,927
- Other 101,870 44,479 71,169
----------- ---------- ----------
Total Expenses 179,688 49,662 131,096
----------- ---------- ----------
Income From Continuing Operations 15,339 149,699 138,294
----------- ---------- ----------
Discontinued Operations:
Income from Real Estate
Rental Operations 0 0 696,600
Income From Health
Care Operations 315,818 183,161 501,717
Gain on Sale of Assets 0 2,440,210 9,732,487
Lease Termination Settlement 0 0 1,293,464
----------- ----------- ---------
Income from Discontinued
Operations 315,818 2,623,371 12,224,268
----------- ----------- ----------
Net Income $ 331,157 $ 2,773,070 $12,362,562
=========== =========== ===========
Income from Continuing Operations
Per $1,000 Limited
Partnership Unit $ .50 $ 4.89 $ 4.52
Income from Discontinued
Operations Per $1,000
Limited Partnership Unit 10.32 85.70 399.32
=========== =========== ===========
Total Income Per $1,000
Limited Partnership Unit $ 10.82 $ 90.59 $ 403.84
=========== =========== ===========
Number of Limited Partnership
Units Outstanding 30,000 30,000 30,000
=========== =========== ===========
The accompanying notes are an integral part
of these consolidated financial statements.
<PAGE>
CUMBERLAND HEALTHCARE, L.P. I-A
(a Limited Partnership)
CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
Limited General Total
Partners' Partner's Partners'
Equity Deficit Equity
----------- ----------- -----------
Balance at December 31, 1995 $12,261,618 $ (286,580) $11,975,038
Net Income - 1996 12,115,311 247,251 12,362,562
Distribution (18,150,000) (37,620) (18,187,620)
----------- ----------- -----------
Balance at December 31, 1996 $ 6,226,929 $ (76,949) $ 6,149,980
Net Income - 1997 2,717,609 55,461 2,773,070
Distribution 0 0 0
----------- ------------ -----------
Balance at December 31, 1997 $ 8,944,538 $ (21,488) $ 8,923,050
Net Income - 1998 324,534 6,623 331,157
Distribution (8,850,000) 0 (8,850,000)
----------- ------------ ----------
Balance at December 31, 1998 $ 419,072 $ (14,865)$ 404,207
=========== =========== ===========
The accompanying notes are an integral part
of these consolidated financial statements.
<PAGE>
CUMBERLAND HEALTHCARE, L.P. I-A
(a Limited Partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED
December 31, December 31, December 31,
1998 1997 1996
------------ ------------ -----------
Cash Flows from Operating Activities:
Net Income $ 331,157 $ 2,773,070 $12,362,562
Adjustments to Reconcile Net
Income to Net Cash Provided
by Operating Activities:
Depreciation and Amortization 0 194,224 487,456
Minority Interest in Net Income (Loss) (5,321) 229,477 83,019
Gain on Sale of Assets 0 (2,440,210) (9,732,487)
Changes in Operating
Assets and Liabilities:
(Increase) Decrease in
Accounts Receivabl 606,584 47,089 (13,261)
(Increase) Decrease in
Prepaid Expenses 65,940 53,931 (45,190)
Increase (Decrease) in
Payable to Related Parties 60,000 16,376 (18,000)
Increase (Decrease) in
Payables and Accruals (370,428) (530,005) (262,341)
--------- --------- ---------
Net Cash Provided by (Used In)
Operating Activities 687,932 343,952 2,861,758
--------- --------- ---------
Cash Flows from Investing Activities:
(Additions) to Investment Properties 0 (27,794) (112,952)
(Increase) Decrease in
Notes Receivable 1,000,000 67,059 (7,787)
(Increase) Decrease
Sale Proceeds Receivable 764,604 (764,604) 0
Sale of Investment Properties 0 7,697,413 21,389,981
--------- --------- ----------
Net Cash Provided by (Used in)
Investing Activities 1,764,604 6,972,074 21,269,242
--------- --------- ----------
Cash Flows from Financing Activities:
Payments of Mortgage Notes Payable 0 (1,256,214) (5,430,984)
Distribution to Partners:
Limited Partners (8,850,000) 0 (18,150,000)
General Partner 0 0 (37,620)
Minority Interest (23,844) (854,604) (75,550)
--------- --------- ----------
Net Cash (Used in) Financing
Activities (8,873,844) (2,110,818)(23,694,154)
--------- --------- ----------
Increase (Decrease) in
Cash and Cash Equivalents (6,421,308) 5,205,208 436,846
Cash and Cash Equivalents
at Beginning of Year 7,268,682 2,063,474 1,626,628
--------- --------- ---------
Cash and Cash Equivalents
at End of Year $ 847,374 $7,268,682 $2,063,474
=========== ========== ==========
Supplemental Disclosure of
Cash Flow Information:
Interest Paid $ 0 $ 117,090 $ 475,402
=========== ========== ==========
See Note 7 for Non-Cash Investing and Financing Activities
The accompanying notes are an integral part
of these consolidated financial statements.
<PAGE>
CUMBERLAND HEALTHCARE, L.P. I-A
(a Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998
NOTE 1 - ORGANIZATION:
Cumberland Healthcare, L.P. I-A (the "Partnership"), a limited
partnership, was organized under the provisions of the Delaware Revised
Uniform Limited Partnership Act as amended. Operations commenced on March
13, 1986, for the purpose of acquiring and leasing nursing homes. On May
8, 1996, the limited partners approved a plan of liquidation pursuant to
which the Partnership will be dissolved and its affairs wound up pursuant
to Article XIV of the Limited Partnership Agreement.
Medical Investments Partners, the General Partner, manages and
controls the business and affairs of the Partnership. Medical Investments
Partners is a Florida general partnership whose corporate partners are RJ
Health Properties, Inc. and RJ Medical Investors, Inc., both wholly-owned
subsidiaries of Raymond James Financial, Inc.
These consolidated financial statements include the accounts of
additional limited partnerships in which the Partnership is a 99% Limited
Partner. Detailed information as to the consolidated entities is as
follows:
Net Book Value Income/Loss
of Investment Net Sharing
General Properties at Income Limited General
Partnership Name Partners 12/31/98 (Loss) Partners Partners
- ---------------- -------- ------------- ------- -------- --------
Cumberland Health-
carecare, L.P. I-A Medical
Investments $ 0 $333,737 N/A N/A
Partners
Cumberland Health-
care, L.P. I-B * Medical
Investments 0 (5,322) 99% 1%
Partners &
Olympic Health
Services, Inc.
Cumberland Health-
care, L.P. I-C Medical
Investments 0 2,742 99% 1%
Partners
---------- --------
Total $ 0 $331,157
========== ========
* A 50% interest was sold to Olympic Health Services, Inc. and William
Littlejohn effective January 1, 1993.
Allocation of Net Income and Net Losses
Net income and loss of the Partnership, other than that attributable
to a sale or other disposition of the properties, shall be allocated 98% to
the limited partners and 2% to the General Partner. Any distributions of
cash from operations for any year shall be distributed 98% to the limited
partners and 2% to the General Partner until the limited partners have
received distributions of cash from operations for such year equal to 9% of
their respective adjusted capital contribution; thereafter, any remaining
cash from operations for such calendar year shall be distributed 85% to the
limited partners and 15% to the General Partner. In no event shall such
cash from operations distributed to the General Partner for any calendar
year exceed 10% of the total distributions of cash from operations made for
such calendar year.
Net income or loss and cash distributions from the sale or other
disposition of the properties will be allocated as formulated in the
Limited Partnership Agreement.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES:
Basis of Accounting
The accompanying financial statements are prepared on the accrual
basis. Revenues are recognized when earned and expenses are recognized
as obligations when incurred. These financial statements include the
accounts of Cumberland Healthcare, L.P. I-B and Cumberland Healthcare, L.P.
I-C. In Cumberland Healthcare, L.P. I-C, the Partnership is a 99% Limited
Partner. In Cumberland Healthcare, L.P. I-B, the Partnership is a 49 1/2%
Limited Partner with William Littlejohn being a 49 1/2% Limited Partner.
The only activity of these entities is to hold title for certain of the
properties included in these financial statements. See Note 1 for further
explanation.
Cash and Cash Equivalents
It is the Partnership's policy to include all money market funds,
commercial paper and banker's acceptances with an original maturity of
three months or less in Cash and Cash Equivalents.
Concentrations of Credit Risk
Financial instruments which potentially subject the Partnership to
concentrations of credit risk consist principally of short-term investments
and receivables.
The Partnership's short-term investments are primarily in high quality
securities placed with institutions with high credit ratings. The
Partnership's investment policy limits the exposure to concentration of
credit risk.
The Partnership's receivables are related to medical services and are
primarily due from a federal agency in Washington state and are not
collateralized.
The Partnership maintains deposits in excess of federally insured
limits. Statement of Financial Accounting Standards No. 105 requires
disclosure regardless of the degree of risk.
Medicare/Medicaid Settlements
The Partnership recorded a $57,462 Medicare cost report settlement
receivable for the year ended December 31, 1998. This receivable relates to
the estimated amount due the Partnership for the Olympic Healthcare 1998
cost report settlement. The accounts payable for third party settlements
was $100,000 for the years ended December 31, 1997 and 1996.
Income Taxes
Federal and state income tax regulations provide that taxes on the
income or loss of the Partnership are reportable by the Partners in their
individual income tax returns. Accordingly, no provision for such taxes has
been made.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires the use of estimates that affect
certain reported amounts and disclosures. These estimates are based on
management's knowledge and experience. Accordingly, actual results could
differ from these estimates.
Reclassification
Certain items in the 1997 and 1996 financial statements have been
reclassified for comparative purposes to conform with the financial
statement presentation used in the 1998 statements.
NOTE 3 - RELATED PARTY TRANSACTIONS:
The General Partner manages the operations of the Partnership's
investment properties and is entitled to a property management fee equal to
1.25% of gross lease payments received by the Partnership. This amounted
to $0, $0 and $17,391 for 1998, 1997 and 1996 respectively.
The General Partner is reimbursed for general and administrative costs
on an accountable basis. The General Partner's reimbursable costs were
$6,581, $3,521 and $42,881 for 1998, 1997 and 1996 respectively.
Affiliates of the General Partner are reimbursed for direct costs incurred
on behalf of the Partnership. Direct reimbursable costs amounted to
$11,237, $704 and $7,946 for 1998, 1997 and 1996 respectively. These costs
are included in the Consolidated Statements of Income.
The General Partner is reimbursed a general and administration fee of
up to .5% of the Partnership's aggregate capital contributions on an annual
basis for certain expenses incurred on behalf of the Partnership. The
General Partner's reimbursable expenses were $60,000, $958 and $9,100 for
1998, 1997 and 1996 respectively. These expenses are accrued but not paid
and are included in the Consolidated Statements of Income.
As of December 31, 1998, 1997 and 1996, the amounts payable to the
General Partner and affiliates for the above items are $415,829, $355,829
and $336,929 respectively. The payable is non-interest bearing, unsecured
and payable on demand.
NOTE 4 -NOTES RECEIVABLE:
The notes receivable was recorded at its face value. The note was a
promissory note with a maturity date of May 29, 2001, secured by the
personal guarantee of the principal shareholder of Life Care Centers of
America, Inc. Interest accrued at the rate of 10% per annum and was
payable monthly at the rate of 5% per annum. The unpaid interest accrued.
If the Partnership exercised its right to demand payment before the
maturity date, the 5% accrued interest would be canceled. On February 28,
1998, notice for demand of payment was given to Life Care Centers of
America, Inc. Payment was received on April 24, 1998.
NOTE 5 - LEASES AND INVESTMENT PROPERTIES:
Leases
The Partnership leased Hillcrest Care Center to Arbor Health Care
Company ("Arbor"). The lessee had an option to purchase the facility which
became effective February 1, 1995 and terminated February 1, 1997, at an
amount determined according to the lease agreement. Arbor exercised its
option to purchase Hillcrest Care Center. On September 20, 1996, the
purchase was closed with the payment of $5,750,000 by Arbor to Cumberland
Healthcare I-C. As a result of the purchase by Arbor, Cumberland
Healthcare, L.P. I-C liquidated in 1998.
The Partnership leased Bel Tooren, Imperial, La Habra, Mirada Hills,
Northwalk, Rimrock and Sun City to Life Care Centers of America ("LCCA").
The Partnership entered into an agreement with LCCA on August 4, 1995 (the
"Purchase Agreement") pursuant to which LCCA agreed to purchase the seven
nursing facilities located in California for a purchase price of
$17,900,000.
The Purchase Agreement required the purchase price to be paid by LCCA as
follows:
(a) LCCA would assume the indebtedness secured by a mortgage on the
Rimrock facility.
(b) LCCA would deliver a purchase money note in the amount of $1,000,000
guaranteed by its principal shareholder to the Partnership (the "LCCA
Note"). The LCCA Note would mature on the fifth anniversary of its
issuance but could be accelerated at the option of the Partnership at the
end of 1997. A portion of the accrued interest would be payable monthly
and the balance would be due on the maturity of the LCCA Note. However, if
the Partnership exercised its right to call the LCCA Note after 1997, the
accrued interest which would otherwise be due at maturity would be
canceled; and
(c) The balance of the purchase price would be paid in cash at closing by
federal funds wire transfer to the Partnership.
Closing of the LCCA transaction was contingent upon approval of the
plan by a majority interest of the Limited Partners. Approval by the
Partners for the sale of the LCCA Homes was granted May 8, 1996. On May
29, 1996, the closing of the sale of the LCCA Homes finalized the Purchase
Agreement requirements and terminated all lease agreements previously held
between the Partnership and LCCA.
Effective September 19, 1990, the Partnership entered into a ten-year
lease with FHP, Inc. ("FHP"), the principal subsidiary of FHP International
Corporation, for Rancho Los Padres. On October 25, 1995, a Lease
Termination Agreement was signed by Cumberland Healthcare ("Cumberland")
and FHP, Inc. relating to FHP-Norwalk f/k/a Rancho Los Padres whereby
Cumberland would receive an early lease termination payment. A Management
Agreement was also signed whereby Cumberland would become the interim
operator of the facility. The Lease Termination Agreement was consummated
January 1996.
Due to the sale of the Partnership's leased properties and consummation
of the Lease Termination Agreement, there is no future rental income to
report on non-cancelable leases.
Rental Income Included in Discontinued Operations
1998 1997 1996
----------- ----------- ------------
Contingent $ 0 $ 0 $ 118,577
Guaranteed 0 0 1,311,626
----------- ----------- ------------
Total $ 0 $ 0 $ 1,430,203
=========== =========== ============
Until its sale on December 31, 1997, the Partnership continued to
operate Olympic Healthcare Center pursuant to a management contract with a
third party operator. Until its sale on September 30, 1997, Paramount
Chateau was being managed under an employment contract with a third party
operator. As a result of the FHP lease termination and until its sale on
September 30, 1997, the Partnership operated Pacific Palms Skilled Nursing
f/k/a FHP-Norwalk.
Investment Properties
The Partnership has not owned any properties or had interests in any
properties since December 31,1997.
NOTE 6 - TAXABLE INCOME:
The financial statements of the Partnership and the Partnership tax
returns are prepared on the accrual basis. The following is a
reconciliation between net income per the financial statements and
Partnership net income for tax purposes:
1998 1997 1996
----------- ---------- -----------
Net income per financial
statements $ 331,157 $2,773,070 $12,362,562
Tax depreciation and amortization
in excess of book depreciation 0 (69,140) (265,398)
Gain on sale of Assets 0 228,831 2,025,263
Bad debt deduction for tax in
excess of book (281,917) 0 0
Other Adjustments 30,105 67,965 176,393
----------- ---------- ----------
Partnership income (loss) for
tax purposes $ 79,345 $3,000,726 $14,298,820
=========== ========== ===========
NOTE 7- ADDITIONAL CASH FLOW INFORMATION:
The Partnership's non-cash investing and financing activities for the
years ended December 31, 1998, 1997 and 1996 were as follows:
December 31, 1998: None
December 31, 1997:
Intangible Asset Amortization $ 388,323
December 31, 1996:
Notes Receivable $ 1,000,000
Assumed Mortgage 1,259,719
Construction in Progress Paid in Prior Year
Transferred to Investment Property in 1996 74,324
NOTE 8 - LEGAL PROCEEDINGS:
The General Partner is not aware of any uninsured open claims that have
been filed against the Partnership. Therefore, no provision has been made
in the accompanying financial statements.
NOTE 9 - DISTRIBUTIONS:
The 1998 cash distributions to limited partners were $8,850,000 (29.5%
of capital contributions). There were no distributions made to limited
partners in 1997. The 1996 cash distributions to limited partners were
$18,150,000 (60.5% of capital contributions) and for 1995 totaled
$1,500,000 (5% of capital contributions). The 1996 distributions
represented a return of capital. Future distributions will be issued for
the liquidation of the Partnership.
Note 10 - DISCONTINUED OPERATIONS:
As a result of the Partnership's 1996 discontinuance of the leasing
segment of its operations, the real estate rental revenues from
discontinued operations were $0, $0 and $1,990,064 for the years ended
December 31, 1998, 1997 and 1996 respectively. As a result of the 1997
property sales and the Partnership's discontinuance of the health care
segment of its operations, the health care operations revenues from
discontinued operations were $315,818, $183,161 and $501,717 for the years
ended December 31, 1998, 1997 and 1996 respectively.
The income statement for the year ended December 31, 1996 has been
restated to reclassify the operating results of the leasing and health care
segments to discontinued operations.
Note 11 - TERMINATION AND DISSOLUTION OF THE PARTNERSHIP
On May 8, 1996, the limited partners approved a plan of liquidation
pursuant to which the Partnership will be dissolved and its affairs wound
up pursuant to Article XIV of the Limited Partnership Agreement and its
assets be liquidated with the proceeds of such liquidation to be expended
and distributed as required by the Limited Partnership Agreement. Upon
distribution of all of the assets of the Partnership, the Partnership will
be terminated.
Note 12 - Year 2000 Plan
The year 2000 issue will not affect the Partnership. It is the
intention of the general partner to completely liquidate and terminate this
partnership before year end 1999.
Item 9. Disagreements on Accounting and Financial Disclosures
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
The General Partner is Medical Investments Partners ("MIP"), a Florida
General Partnership with two Partners, RJ Health Properties, Inc. ("RJHP")
(99% interest in MIP) and RJ Medical Investors, Inc. ("RJMI") (1% interest
in MIP).
RJHP is the Managing General Partner of MIP, who is the General
Partner of Cumberland Healthcare. RJHP is owned 100% by Raymond James
Financial, Inc. The Board of Directors of RJHP currently has two members.
Directors hold their terms until the annual meeting of the parent company
at which time they are reaffirmed. Executive officers serve at the pleasure
of the Board.
RJ Health Properties, Inc. Board of Directors and Executive Officers:
Fred E. Whaley, age 53, has been the President and Director of RJ
Health Properties, Inc. since January, 1986. Mr. Whaley's term will expire
in 1999. He was a Managing Director for Raymond James & Associates, Inc.
from 1980 until April 1997.
J. Davenport Mosby III, age 43, has been a Vice President and Director
of RJ Health Properties, Inc. since December, 1988. Mr. Mosby's term will
expire in 1999. He is a Managing Director of Raymond James & Associates,
Inc. in the Investment Banking department, which he joined in 1982.
Richard M. Todd, age 48, has been a Vice President of RJ Health
Properties, Inc. since August 1997. He is a vice president of operations
at Smart Choice Automotive Group a division of Eckler's Quality Products.
Item 11. Executive Compensation
The directors and officers of RJ Health Properties, Inc., managing
General Partner of Medical Investments Partners the General Partner of
Cumberland Healthcare, do not receive any compensation from the Partnership
or any of its affiliates for acting in the capacity of a director or
officer of RJ Health Properties, Inc. However, Richard Todd receives
monthly compensation, payable in advance, for his services relating to the
operations of the Partnership. He also received a consulting fee relating
to the sale of the Partnership's two California facilities.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The corporate partners of Medical Investments Partners, as purchasers
of Partnership units, do not own any units of the outstanding securities of
the Partnership as of December 31, 1998. Directors and officers of the
General Partners of Medical Investments Partners do own units of the
outstanding securities of the Partnership as of December 31, 1998. In a
secondary market transaction 45 units were acquired by J. Davenport Mosby,
III, Vice President and Director. In a secondary market transaction, 18
units were acquired by Richard Todd, Vice President.
The Registrant is a Limited Partnership and therefore does not have
voting shares of stock. To the knowledge of the Partnership, no person
owns of record or beneficially more than 5% of the Partnership's
outstanding units.
Item 13. Certain Relationships and Related Transactions
The Partnership has no officers or directors. However, under the
terms of the public offering, various kinds of compensation and fees are
payable to the General Partner and its affiliates during the organization
and operations of the Partnership. The General Partner received a property
management fee of $0, $0 and $17,391 for 1998, 1997 and 1996 respectively.
Reimbursement to the General Partner for general and administrative costs
amounted to $6,581, $3,521 and $42,881 for 1998, 1997 and 1996
respectively.
Reimbursable expenses to the General Partner on behalf of the Partnership
amounted to $60,000, $958 and $9,100 for 1998, 1997 and 1996 respectively.
Direct reimbursable costs to affiliates of the General Partner amounted to
$11,237, $704 and $7,946 for 1998, 1997 and 1996 respectively. Total
payments to the General Partner and affiliates amounted to $25,720,
$114,847 and $218,368 for 1998, 1997 and 1996 respectively.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
A. (1) Financial Statements - See accompanying index to financial
statements, Item 8.
(2) Financial Statement Schedules -
Schedule VIII - Valuation and Qualifying Accounts and Reserves
Schedule X - Supplementary Income Statement Information
All other schedules for the Partnership have been omitted as not required,
not applicable, or the information required to be shown therein is included
in the financial statements and related notes.
Table Number Page
(3) Exhibit Index -
2 Plan of acquisition, organization, arrangement, liquidation or
succession *
3 Articles of Incorporation and By-laws *
3.10 Amended Certificate and Agreement of Limited Partnership of
Columbia Healthcare Partnership II-A, L.P. dated
November 19, 1986 among Columbia Healthcare Partners Inc., Medical
Investments Partners,Alfred W. Taylor, III, and Cumberland Healthcare,
L.P. I-A **
3.11 Amended Agreement of Limited Partnership of Cumberland Healthcare,
L.P. I-C dated November 19, 1986 among Medical Investments
Partners,Frank N. Fleischer, and Cumberland Healthcare, L.P. I-A**
3.12 Amended Certificate and Agreement of Limited Partnership of
Columbia Healthcare Partners III-A dated November 19, 1986 among
Columbia Healthcare Partners, Inc., Medical Investments Partners,
Alfred W. Taylor, III, and Cumberland Healthcare, L.P. I-A **
3.13 Amended Agreement of Limited Partnership of Cumberland Healthcare,
L.P. I-B dated November 19, 1986 among Medical Investments
Partners, Frank N. Fleischer, and Cumberland Healthcare,
L.P. I-A **
4 Instruments defining the rights of security holders, including
debentures *
9 Voting Trust Agreement ***
10 Material Contracts ***
10.7 Quakertown Lease Agreement dated December 1, 1986 between Columbia
Healthcare Partners, II-A, L.P. and Columbia East Corporation. **
10.8 First Amendment to Lease Agreement dated February 3, 1987 between
Columbia Healthcare Partners II-A, L.P. and Columbia East
Corporation. **
10.9 Mortgage Note for $3,500,000 dated as of December 8, 1986 between
Columbia Healthcare Partners II-A, L.P. and Rhode Island Hospital
Trust National Bank. **
10.10 Mortgage and Security Agreement dated as of December 8, 1986
between Columbia Healthcare Partners II-A, L.P. and Rhode Island
Hospital Trust National Bank. **
10.11 Subordination Agreement dated as of December 8, 1986 between
Columbia Healthcare Partners II-A, L.P., Medical Investments
Partners, Columbia East Corporation and Columbia Corporation in
favor of Rhode Island Hospital Trust National Bank. **
10.12 Conditional Assignment dated as of December 8, 1986 by Columbia
Healthcare Partners II-A, L.P. to Rhode Island Hospital Trust
National Bank. **
10.13 UCC Financing Statement dated December 8, 1986 between Columbia
Healthcare Partners II-A, L.P. and Rhode Island Hospital Trust
National Bank. **
10.14 Hillcrest Lease Agreement dated February 3, 1987 between
Cumberland Healthcare, L.P. I-C and Columbia East Corporation **
10.15 Hopkins House Lease Agreement dated February 3, 1987 between
Columbia Healthcare Partners, III-A, and Columbia East
Corporation. **
10.16 Olympic Lease Agreement dated as of February 3, 1987 between
Cumberland Healthcare, L.P. I-B and Columbia West Corporation.**
11 Computation of per-share earnings ***
12 Computation of ratios ***
13 Annual report to security holders ***
16.1 Letter regarding change in certifying accountants **
18 Letter regarding change in accounting principles ***
19 Previously unfiled documents ***
22 Subsidiaries of the Registrant ***
23 Published report regarding matters submitted to a vote
of security holders ***
24 Consents of experts and counsel ***
25 Power of Attorney ***
28 Additional Exhibits
28.01 Excerpts from Appraisal Report for Quakertown Manor Care Center
as of February 1, 1986 **
28.02 Excerpts from Appraisal Report for Hillcrest Care Center as of
September 3, 1986 **
28.03 Excerpts from Appraisal Report for Hopkins House Nursing Home as
of July 14, 1986 **
28.04 Excerpts from Appraisal Report for Olympic Health Care Center as
of August 19, 1986 **
28.05 Letter to limited partner dated June 24, 1988 **
28.06 Restructuring Agreement by and among Cumberland Healthcare,
L.P. I-A, Cumberland Healthcare, L.P. I-B, Cumberland Healthcare,
L.P. I-C, and Columbia Healthcare Partners III-A, and Carteret
Savings Bank, F.A. and The Howard Savings Bank, dated
April 6, 1989. ****
28.07 Release and Indemnification made and entered into as of the 6th
day of April, 1989, by Cumberland Healthcare, L.P. I-A, Cumberland
Healthcare, L.P. I-B, Cumberland Healthcare, L.P. I-C, and
Columbia Healthcare Partners III-A (collectively "Borrowers")
and Carteret Savings Bank, F.A., and The Howard Savings Bank
(collectively "Lenders"). ****
28.08 Assignment of Leases made as of the 6th day of April, 1989, by
and between Cumberland Healthcare, L.P. I-A ("Assignor") Carteret
Savings Bank, F.A. ("Assignee") and Life Care Centers of
America, Inc. ("Lessee"). ****
28.09 Second Amended and Restated Master Lease between Cumberland
Healthcare, L.P. I-A, Lessor, and Life Care Centers of America,
Inc., a Tennessee corporation, Lessee, dated as of March 1, 1989
(Bel Tooren Villa, La Habra, North Walk, and Rancho Los Padres
Facilities) ****
28.10 Second Amended and Restated Management Agreement made and entered
into effective as of the 1st day of March, 1989, by and between
Cumberland Healthcare, L.P. I-A ("Owner") and Life Care Centers
of America, Inc. ("Manager"). ****
28.11 Second Amended and Restated Unconditional Guaranty of Payment and
Performance dated as of the 6th day of April, 1989 by and between
Forrest L. Preston ("Guarantor"), Cumberland Healthcare, L.P. I-A
("Lessor"), and Life Care Centers of America, Inc. ("Lessee").****
28.12 Facility Lease (Hillcrest Facility) dated as of the 1st day
of February, 1989, among Cumberland Healthcare, L.P. I-C,
("Lessor") and Arbor Health Care Company ("Lessee"). ****
28.13 Open End Mortgage and Security Agreement executed on the 18th day
of April, 1989, between Cumberland Healthcare, L.P. I-C,
("Mortgagor") and Southeast Bank, N.A. ("Lender"). ****
28.14 Note dated April 18, 1989 between Cumberland Healthcare, L.P. I-C
("Maker") and Southeast Bank, N.A. ("Holder") in the amount of
$2,600,000. ****
28.15 Reimbursement, Indemnification and Security Agreement made and
entered into as of the 18th day of April, 1989 by and among Raymond
James Financial, Inc., RJ Health Properties, Inc., Raymond James
Partners, Inc., Medical Investments Partners, Inc.
(collectively the "Obligators") and Cumberland Healthcare, L.P.
I-C (the "Limited Partner"). ****
28.16 Assignment of Leases, Rents and Contract Rights made as of the
18th day of April, 1989 by Cumberland Healthcare, L.P. I-C
("Assignor") to Southeast Bank, N.A. ("Assignee"). ****
28.17 Subordination, Non-Disturbance, and Attornment Agreement made and
entered into as of the 18th day of April, 1989, by and among
Southeast Bank, N.A. ("Mortgagee") by Cumberland Healthcare,
L.P. I-C ("Landlord") and Arbor Health Care Company ("Tenant").****
28.18 Indemnity Agreement made as of the 18th day of April, 1989, from
Cumberland Healthcare, L.P. I-C ("Borrower") and Raymond James
Financial Corp. ("Indemnitor") to Southeast Bank, N.A.
("Lender"). ****
28.19 Purchase and Sale Agreement, executed August 24, 1989, by
and between Cumberland Healthcare, L.P. I-A, Columbia Healthcare
Partners II-A, L.P., Columbia Healthcare Partners III-A,
collectively, "Sellers" and Multicare Management, Inc., a New York
Corporation, Daniel E. Straus and Moshael J. Straus, "Buyers"
covering Holly Manor, Mendham, New Jersey; Quakertown Manor,
Quakertown, Pennsylvania; and Hopkins House, Wyncote,
Pennsylvania. **
28.20 Letter, dated September 13, 1989, referencing Quakertown Manor
Nursing Home, Quakertown, PA, amending certain sections of the
Purchase and Sale Agreement, dated August 24, 1989. **
28.21 Letter, dated October 4, 1989, referencing the Purchase and Sale
Agreement as of July 1, 1989, amending Section 9.4 of the Purchase
and Sale Agreement, dated August 24, 1989. **
28.22 Letter, dated October 4, 1989, referencing Quakertown Manor
Nursing Home, Quakertown, PA, amending certain segments of the Purchase
and Sale Agreement, dated August 24, 1989. **
28.23 Purchase and Sale Agreement dated March 31, 1990, by and among
Cumberland Healthcare, L.P., Columbia Healthcare Partners, II-A,
L.P., and Columbia Healthcare Partners III-A, as Sellers and
Multicare Management, Inc., Daniel E. Straus and Moshael J. Straus
as Buyers, effective as of July 1, 1989, as amended by those
certain letter agreements, dated August 24, 1989, September 7,
1989, September 13, 1989, September 14, 1989, September 15, 1989,
September 22, 1989, October 4, 1989 (three letter agreements),
October 6, 1989, October 19, 1989, October 31, 1989, November 1,
1989, and November 17, 1989 (collectively, the "Agreement"). **
28.24 Fourth Amendment to the Second Amended and Restated Master Lease
Agreement between Life Care Centers of America, Inc., a Tennessee
corporation, and Cumberland Healthcare, L.P. I-A ("Owner") a
Delaware limited partnership dated March 1, 1989. *****
28.25 Lease between Cumberland Healthcare, L.P. I-A, as lessor
("Lessor"), a limited partnership and FHP, Inc., a California corpor
ation as lessee ("Lessee") dated September 19, 1990. *****
28.26 Management Contract between Olympic Health Services, Inc., a
Washington corporation ("OHS") and Cumberland
Healthcare, L.P. I-B, a Delaware limited partnership
("Owner") dated January 1, 1993. *****
28.27 Amended and Restated Limited Partnership Agreement by and
among Medical Investments Partners, a Florida general Partnership,
("MIP"), and Olympic Health Services, Inc., a Washington
corporation ("OHS"), as General Partners, Cumberland Healthcare,
L.P. I-A, a Delaware limited partnership ("Cumberland"), and William
W. Littlejohn, a resident of the State of Washington ("Littlejohn"),
as Limited Partners dated January 1, 1993. *****
28.28 Sublease among Cumberland Healthcare, L.P. I-A, as lessor
("Sublessor"), a limited partnership and Life Care Centers of
America, Inc., a Tennessee corporation as lessee ("Sublessee")
dated March 1, 1989. *****
28.29 Deed of Trust among Cumberland Healthcare, L.P. I-B, a Delaware
Limited Partnership, ("Grantor"); U.S. Bank of Washington, National
Association, ("Lender" and sometimes "Beneficiary"); and
United States National Bank of Oregon ("Trustee") dated August 25,
1993. *****
28.30 Loan Agreement between First Union National Bank of Florida,
a national banking association ("Lender") and Cumberland
Healthcare, L.P. I-A, a Delaware limited partnership ("Borrower")
dated December 28, 1994. *****
28.31 Purchase and Sale Agreement between Cumberland Healthcare,
L.P. I-A, a Delaware limited partnership (the "Seller") and Life
Care Centers of America, Inc. and permitted assigns (the
"Purchaser"). *****
28.32 Revolving Loan Agreement between Cumberland Healthcare, L.P.
I-A, a Delaware limited partnership ("Borrower") and Raymond James
Financial, Inc., a Florida corporation ("Lender") dated December
28, 1994. *****
29 Information from reports furnished to state insurance regulatory
authorities. *****
* Included with Form S-11, Registration No. 33-4301 previously
filed with the Securities and Exchange Commission.
** Included with Forms 8-K, as amended, previously filed with the
Securities and Exchange Commission.
*** Exhibits were omitted as not required, not applicable, or the
information required to be shown therein is included elsewhere
in this report.
**** Included as exhibits to Form 10-K for year ended December 31,
1988.
***** Included as exhibits to Form 10-K for year ended December 31, 1994.
****** Included as exhibit to Form 10-Q for period ended June 30, 1995.
******* Included as exhibit to Form 10-K for year ended December 31, 1995.
B. Reports filed on Form 8-K - None.
C. Exhibits filed with this Report - None
<PAGE>
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
Balance at Additions Deductions Balance
Beginning to From at End
of Year Reserves Reserves of Year
---------- --------- ---------- -------
Reserve deducted in the
Balance Sheet from the asset
to which it applies:
Reserve for doubtful accounts:
Year Ended:
December 31,1998 306,105 53,346 359,451 0
December 31,1997 343,770 127,763 165,428 306,105
December 31,1996 73,373 318,937 48,540 343,770
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly authorized.
CUMBERLAND HEALTHCARE, L.P. I-A
By: Medical Investments Partners
By: RJ Health Properties, Inc.
Managing General Partner
ATTEST:
/s/ Fred E. Whaley /s/ J. Davenport Mosby
Fred E. Whaley By: J. Davenport Mosby, III,
President Vice President
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:
/s/ Fred E. Whaley
Date: April 14, 1999 By: Fred E. Whaley
President and Director
/s/ J. Davenport Mosby III
Date: April 14, 1999 By: J. Davenport Mosby, III
Vice President and Director
<PAGE>
<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> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 847,374
<SECURITIES> 0
<RECEIVABLES> 65,099
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 912,473
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 28,635
0
0
<COMMON> 0
<OTHER-SE> 404,207
<TOTAL-LIABILITY-AND-EQUITY> 432,842
<SALES> 0
<TOTAL-REVENUES> 195,027
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<TOTAL-COSTS> 179,688
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<NET-INCOME> 331,157
<EPS-PRIMARY> .50<F2>
<EPS-DILUTED> .50<F2>
<FN>
<F1>REGISTRANT HAS AN UNCLASSIFIED BALANCE SHEET
<F2>EPS IS NET INCOME PER $1,000 LIMITED PARTNERSHIP UNIT
</FN>
</TABLE>
