<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
---------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
---------------- -------------------
Commission file number 0-18158
-----------
QUEST HEALTH CARE INCOME FUND I, L.P.
--------------------------------------------------------------------------------
Formerly: Southmark/CRCA Health Care Income Fund I, L.P.
--------------------------------------------------------
Delaware 58-1697906
--------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1355 Peachtree St., Suite 1900, Atlanta, GA 30309
--------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (404) 607-1950
-----------------------------
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, and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
----- -----
There are no exhibits.
TOTAL OF 15 PAGES
1
<PAGE> 2
QUEST HEALTH CARE INCOME FUND I, L.P.
BALANCE SHEETS
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ASSETS
<TABLE>
<CAPTION>
June 30, December 31,
----------- ------------
1995 1994
----------- ------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 2,083,696 $ 270,593
Accounts receivable, net of allowance
for doubtful accounts of $58,449 and
$125,085 at June 30, 1995 and
December 31, 1994, respectively 1,127,526 1,667,857
Prepaid expenses 162,881 839,830
----------- -----------
Total current assets 3,374,103 2,778,280
----------- -----------
PROPERTY AND EQUIPMENT, at cost
Land 240,617 495,915
Buildings and improvements 1,872,215 7,037,234
Equipment and furnishings 859,379 2,153,529
----------- -----------
2,972,211 9,686,678
Less accumulated depreciation and amortization 2,198,967 5,219,535
----------- -----------
Net property and equipment 773,244 4,467,143
----------- -----------
TOTAL ASSETS $ 4,147,347 $ 7,245,423
=========== ===========
</TABLE>
The financial information included herein has been prepared by management
without audit by independent public accountants. See notes to financial
statements.
2
<PAGE> 3
QUEST HEALTH CARE INCOME FUND I, L.P.
BALANCE SHEETS
LIABILITIES AND PARTNERS' EQUITY
<TABLE>
<CAPTION>
June 30, December 31,
----------- ------------
1995 1994
----------- ------------
<S> <C> <C>
CURRENT LIABILITIES:
Note Payable $ - $ 600,000
Current maturities of long-term debt 9,620 40,840
Trade accounts payable 262,816 857,666
Accrued compensation 234,292 636,853
Accrued insurance 2,628 655,540
Estimated third party settlements 52,473 206,525
Other 85,737 568,918
Payable to Quest and affiliates 41,973 62,735
----------- ------------
Total current liabilities 689,539 3,629,077
LONG-TERM DEBT, less current maturities 12,437 91,095
----------- ------------
Total liabilities 701,976 3,720,172
----------- ------------
PARTNERS' EQUITY:
Limited Partners 3,609,926 3,689,007
General Partner (164,555) (163,756)
----------- ------------
Total partners' equity 3,445,371 3,525,251
----------- ------------
TOTAL LIABILITIES AND PARTNERS' EQUITY $ 4,147,347 $ 7,245,423
=========== ===========
</TABLE>
The financial information included herein has been prepared by management
without audit by independent public accountants. See notes to financial
statements.
3
<PAGE> 4
QUEST HEALTH CARE INCOME FUND I, L.P.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the For the
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------- --------------------------
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
REVENUES:
Operating revenue $1,783,232 $5,261,651 $ 5,970,999 $10,341,086
Interest income 19,334 3,667 28,428 6,792
Gain on sale - - 103,988 -
---------- ---------- ----------- -----------
Total revenues 1,802,566 5,265,318 6,103,415 10,347,878
---------- ---------- ----------- -----------
EXPENSES:
Wages & salaries 928,588 2,652,014 3,074,764 5,302,271
Payroll tax & employee benefits 240,624 523,049 718,561 1,054,808
Supplies 213,076 509,102 606,120 976,126
Other operating expenses 136,208 529,891 552,381 1,038,760
Ancillary services 158,736 287,289 412,660 539,463
Health benefits 29,800 68,017 114,951 140,580
Management fees 90,729 280,311 295,233 517,008
Management fees-affiliate 18,145 53,880 57,425 102,817
Property taxes 17,216 40,797 50,450 82,878
Interest 560 22,410 15,830 45,476
Depreciation and amortization 14,294 151,457 32,792 301,598
Partnership administration 131,151 129,057 252,128 258,854
---------- ---------- ----------- -----------
Total expenses 1,979,127 5,247,274 6,183,295 10,360,639
---------- ---------- ----------- -----------
Net income (loss) $ (176,561) $ 18,044 $ (79,880) $ (12,761)
========== ========== ========== ==========
Net income (loss) per Limited
Partnership Unit $ ( .67) $ .07 $ ( .30) $ ( .05)
========== ========== ========== ==========
Weighted average Limited Partnership
Units outstanding 262,183 262,183 262,183 262,183
========== ========== ========== ==========
</TABLE>
The financial information included herein has been prepared by management
without audit by independent public accountants.
4
<PAGE> 5
QUEST HEALTH CARE INCOME FUND I, L.P.
STATEMENTS OF PARTNERS' EQUITY
<TABLE>
<CAPTION>
Total
General Limited Partners'
Partner Partners Equity
--------- ---------- ----------
<S> <C> <C> <C>
Balance at December 31, 1993 $(105,947) $9,412,115 $9,306,168
Net loss (128) (12,633) (12,761)
--------- ---------- ----------
Balance at June 30, 1994 $(106,075) $9,399,482 $9,293,407
========= ========== ==========
Balance at December 31, 1994 $(163,756) $3,689,007 $3,525,251
Net loss (799) (79,081) (79,880)
--------- ---------- ----------
Balance at June 30, 1995 $(164,555) $3,609,926 $3,445,371
========= ========== ==========
</TABLE>
The financial information included herein has been prepared by management
without audit by independent public accountants. See notes to financial
statements.
5
<PAGE> 6
QUEST HEALTH CARE INCOME FUND I, L.P.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------------
1995 1994
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from residents and
government agencies $ 5,891,358 $10,214,337
Cash paid to suppliers and
employees (6,136,719) (9,848,956)
Interest received 28,428 6,792
Interest paid (15,830) (45,476)
Property taxes paid (76,835) (76,738)
----------- -----------
Net cash provided by (used in)
operating activities (309,598) 249,959
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of facilities 2,734,651 -
Additions/retirements to property
and equipment (3,755) (66,600)
----------- -----------
Net cash used in investing activities 2,730,896 (66,600)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt (608,195) (25,655)
----------- -----------
Net cash provided by financing
activities (608,195) (25,655)
----------- -----------
INCREASE IN CASH AND CASH EQUIVALENTS 1,813,103 157,704
Cash and cash equivalents at beginning of
period 270,593 540,727
----------- -----------
Cash and cash equivalents at end of period $ 2,083,696 $ 698,431
=========== ===========
</TABLE>
The financial information included herein has been prepared by management
without audit by independent public accountants. See notes to financial
statements.
6
<PAGE> 7
QUEST HEALTH CARE INCOME FUND I, L.P.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended
June 30,
---------------------------
1995 1994
-------- --------
<S> <C> <C>
RECONCILIATION OF NET LOSS TO NET CASH
PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Net loss $ (79,880) $ (12,761)
Adjustments to reconcile net loss to
net cash provided by (used in)
operating activities
Gain on sale of facilities (103,988) -
Depreciation and amortization 32,792 301,598
Cash provided (used) by changes in
assets and liabilities:
Accounts receivable (79,641) (126,749)
Prepaid expenses 371,389 145,057
Accounts payable and accrued
liabilities (429,508) (60,735)
Payable to Quest and affiliates (20,762) 3,549
---------- ----------
Net cash provided by (used in)
operating activities $ (309,598) $ 249,959
========== ==========
</TABLE>
The financial information included herein has been prepared by management
without audit by independent public accountants. See notes to financial
statements.
7
<PAGE> 8
QUEST HEALTH CARE INCOME FUND I, L.P.
NOTES TO FINANCIAL STATEMENTS
June 30, 1995
NOTE 1
During interim periods, Quest Health Care Income Fund I, L.P. (the
"Partnership") follows the accounting policies set forth in its Annual Report
on Form 10-K filed with the Securities and Exchange Commission. Users of
financial information provided for interim periods should refer to the annual
financial information and footnotes contained in the Annual Report on Form 10-K
when reviewing the interim financial results presented herein.
In the opinion of management, the accompanying unaudited interim financial
statements, prepared in accordance with the instructions for Form 10-Q, contain
all material adjustments, consisting only of normal recurring adjustments
necessary to present fairly the financial condition, results of operations,
changes in partners' equity and cash flows of the Partnership for the
respective interim periods presented. The results of operations for such
interim periods are not necessarily indicative of results of operations for a
full year.
NOTE 2
The Partnership maintains cash accounts with a variety of unrelated banks, all
of which are insured by the Federal Deposit Insurance Corporation (FDIC). At
June 30, 1995, the Partnership maintained cash balances at these banks
aggregating $1,917,537 in excess of the $100,000 FDIC insured maximum.
NOTE 3
Quest, in an effort to continue certain health benefits for facility employees,
created an employee benefit trust (the "Trust") in compliance with the
guidelines promulgated pursuant to VEBA and ERISA. Amounts contributed under
the Trust plan by Partnership employees and the Partnership are strictly for
the benefit of employees of the participating employers, payment of excess loss
reinsurance, life insurance and accidental death and dismemberment and claims
and plan administration and employee medical claims. Quest has engaged a
claims precertification organization to review all claims made by the
Partnership's employees. Approximately $114,951 was accrued under this
arrangement in the first six months of 1995. The Trust is administered by an
affiliate of Quest; however, no profits accrue to the benefit of either the
affiliate or Quest.
Quest Administrative Services, L.P. (QASLP), an affiliate of Quest, provides
management services to the Partnership facilities. Total accruals to QASLP for
the first six months of 1995 were $57,425.
NOTE 4
In February 1992, the Partnership obtained an $800,000 loan collateralized by
the Parkway North facility. The loan proceeds were used to fund capital
improvements during 1992 and 1993. In September 1993, the Partnership paid the
note down to a balance of $600,000. In February 1995, the loan was paid off
with proceeds from the sale of the facility (See Note 6).
8
<PAGE> 9
QUEST HEALTH CARE INCOME FUND I, L.P.
NOTES TO FINANCIAL STATEMENTS
June 30, 1995
NOTE 5
In December 1994, the Partnership received a Notice and Demand for Payment from
the Idaho State Tax Commission for approximately $90,000 resulting from sales
tax audits of three facilities. Of this amount, approximately $54,000 of gross
liability was assumed by the purchaser of the two sold facilities, which
facilities were sold in February 1995 (see Note 6). The Company is discussing
a settlement of this matter and has recorded a provision of approximately
$27,000, attributable to the remaining facility, in the Partnership's Financial
Statements. Management is of the opinion that the final resolution will not
have a material adverse effect on the Partnership's financial position.
NOTE 6
On February 28, 1995, the Partnership sold seven of its partnership interests
to an unaffiliated third party. The contract calls for adjusting working
capital, as defined, to exclude interpartnership accounts and the current
portion of long term debt and to reflect a 25% discount on accounts receivable
at closing. The contract also provided for a cash consideration adjustment
based on changes in working capital including the change in the 25% discount
proportionate to changes in accounts receivable occurring between December 31,
1994 and the date of closing of February 28, 1995, which was finally determined
subsequent to the second quarter of 1995.
At closing, the Partnership received initial consideration of $2,734,651,
consisting of cash of $2,133,359 and debt retired from sales proceeds of
$601,292. Subsequently, the Partnership estimated that $417,254 of additional
cash was due to the Partnership from post closing adjustments. In addition the
purchaser assumed debt related to equipment of approximately $103,000. Total
consideration was therefore $3,258,905. The Partnership made a final
determination of adjusted working capital when the Partnership's accountants
completed certain special procedures, subsequent to the end of the second
quarter. Distributions of cash to the limited partners has commenced, subject
to establishing adequate reserves for the continued operation of the
Partnership. The balance sheet of the Partnership reflects the effects of the
sale of the Partnership's interests in the seven facilities. The remaining
facilities are reflected at estimated net realizable value. The Partnership is
seeking to liquidate the Partnership's interests in its remaining facilities,
subject to the restrictions set forth in the Partnership governing documents.
NOTE 7
Due to the impact of the partnership selling its interests in seven facilities
in February 1995, as described in Note 6, historical financial position and
results of operations may not be indicative of future financial position and
results of operations and net income (loss) per limited partnership unit. The
following unaudited pro forma condensed statement of operations is presented as
if the transactions previously described in Note 6 occurred as of January 1,
1995. In the opinion of the Partnership's management, all adjustments
necessary to reflect the effects of the sale have been made.
9
<PAGE> 10
The pro forma condensed financial information does not purport to present what
actual results of operations would have been if the transactions previously
described had occurred on such dates or to project results for any future
period.
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 1995
(Unaudited in thousands)
<TABLE>
<CAPTION>
Historical Adjustments Pro Forma
------------- --------------- ------------
<S> <C> <C> <C>
Revenues: $ 5,999 $ (2,346)(A) $ 3,653
------------- ----------- ------------
Expenses:
Wages and salaries $ 3,075 $ (1,225)(A) $ 1,850
Operating expenses 2,405 (894)(A) 1,511
Management fees 295 (116)(A) 179
Management fees-affiliate 57 (22)(A) 35
Property taxes and interest 66 (31)(A) 35
Depreciation and amortization 33 (1)(A) 32
Partnership administration 252 - 252
------------- ----------- ------------
6,183 (2,289) 3,894
------------- ----------- ------------
Net income (loss) (B) $ (184) $ (57) $ (241)
============= =========== ============
</TABLE>
Per Unit
(A) The pro forma adjustments remove revenues and expenses directly related to
the interests in seven nursing homes sold to an unaffiliated third party on
February 28, 1995.
(B) The historical statement of operations for the period ended June 30, 1995
includes a gain from the sale of a facility of $104, in thousands. This amount
is not included in the above pro forma condensed statement of operations due to
the non recurring nature.
NOTE 8
The Partnership's financial statements have been presented on the basis that it
is a going concern, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The sale of the
Partnership's interests in seven nursing homes and possible future sales of its
remaining interests will have an effect on cash flow from operations in the
future.
Management of the Partnership believes that successful control of facility and
Partnership expenses and establishing adequate reserves from the sales of
facilities should enable the Partnership to meet its obligations and upon final
sale of its assets, liquidate in orderly fashion.
NOTE 9
In March 1995, the Financial Accounting Standards Board issued Statement of
Accounting Standard No. 121 - "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of.", which is effective for
fiscal years beginning after December 15, 1995. Since the Partnership has
recognized impairment losses and the losses were discussed in the 1993 and 1994
Annual Reports on Form 10-K, effectively adjusting the carrying value of its
long-lived assets to estimated net realizable value, no significant adjustment
from net realizable value to fair value is expected.
10
<PAGE> 11
PART 1
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS:
Results of Operations:
In February 1995, the Partnership sold its partnership interests in seven of
its properties to an unaffiliated third party. Initial distributions of
$786,489 or $3/unit to the limited partners of the Partnership occurred
subsequent to the end of the second quarter. After adequate reserves were
established for the Partnership's continued operation, the proceeds from the
sale were subject to adjustment reflecting changes in elements of working
capital between December 31, 1994 and February 28, 1995.
Neither the general partner of the Partnership nor its affiliates will receive
any remuneration or distributions of sales proceeds.
Revenue:
In February 1995, the Partnership's interest in seven facilities were sold.
Therefore, the revenues and expenses for the six months ended June 30, 1995 are
not directly comparable to the same period in 1994. On a pro forma basis, for
the three remaining facilities, Burley, Hearthside and South Salem revenues
increased $116,227 and $433,756, respectively for the three and six month
periods ended June 30, 1995. Over $390,000 of this increase is related to
Medicare utilization at Hearthside. In 1994, Hearthside was experiencing the
effects of a survey related ban on admissions, which was lifted in December
1993. The remaining increase relates to increased ancillary utilization and
changes in patient mix. Revenue in 1994 included $6,803,618 for the six month
period related to the interests in seven facilities sold by the Partnership in
1995 and $351,300 related to Comanche View, closed in May 1994.
All resident receivables are recorded at their original face amount and are due
and payable under "normal" market terms and conditions. In the event of
non-collection, the ultimate loss to the Partnership would be limited to the
recorded balance of the receivables as shown in the balance sheet.
The significant components of accounts receivable at June 30, 1995 and December
31, 1994 are:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Medicaid 27% 52%
Private Pay 7% 11%
VA, Medicare and Other 66% 37%
--- ---
100% 100%
=== ===
</TABLE>
Payments by both the state and federal governments are normally received within
60-90 days. The sources of patient revenues for periods ended June 30, 1995 and
1994 are:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Medicaid 59% 62%
Private Pay 18% 21%
VA, Medicare and Other 23% 17%
--- ---
100% 100%
=== ===
</TABLE>
Expenses:
On a pro forma basis expenses for the three month and six month periods ended
June 30, 1995 increased $200,300 and $310,422; respectively. The primary
reasons for these increases were increased ancillary utilization of $176,935,
salary, workers compensation rate increases, and employee health benefit costs
of $219,735. Savings in other areas of operations of $86,248 helped to offset
these increases. Partnership administration expense was comparable to the
comparable period in 1994 due to legal and accounting costs associated with the
facility sales.
11
<PAGE> 12
Expenses in 1994 included $6,577,658 related to the seven facilities whose
interests were sold by the Partnership and $478,940 related to Comanche View.
Hearthside is located in the town of Coos Bay in a remote part of Oregon. Coos
Bay was dominated by the lumber industry which has been decimated by various
government regulations. In view of the depressed occupancy at Hearthside and
the limited potential for growth in the area, management of the Partnership
reviewed the expected undiscounted cash flows over the remaining life of the
property and compared the same to the current carrying value. After reviewing
alternative uses, such as participating in Oregon's new, but unfunded, crisis
intervention program, management determined that it was probable that the
carrying value of Hearthside would not be fully recovered through operations
over its remaining estimated useful life. The financial statements recognize a
write down to its estimated net realizable value of $150,000 in December 1994.
Occupancy and Medicare utilization have improved during 1995. It cannot
currently be determined by management of the Partnership if such improvement
will continue.
In addition, Comanche View, a facility two hours south of Odessa, located in
the far west Texas town of Fort Stockton, has confronted several serious
challenges. First, despite state controls over construction of nursing
facilities and a limited marketplace, a new 120 bed nursing facility was built
near the Comanche facility. In addition, two physicians closed their practices
and moved to Alpine 100 miles southwest leaving three physicians in town.
Alternative uses for the facility such as adult day care or a rural health
clinic are of low probability because of design constraints of the physical
plant. In light of these factors and the limited population of the area the
facility was closed in May 1994. The facility was written down to its
estimated net realizable value of $100,000 at December 31, 1993.
On February 25, 1995, the Partnership sold its interests in seven facilities to
an unaffiliated third party. The contract called for adjusting working
capital, as defined, to exclude interpartnership accounts and the current
portion of long term debt and to reflect a 25% discount on accounts receivable
at closing. The contract also provided for a cash consideration adjustment
based on changes in working capital including the change in the 25% discount
proportionate to changes in accounts receivable occurring between December 31,
1994 and the date of closing of February 28, 1995, which was finally determined
subsequent to the second quarter of 1995.
At closing, the Partnership received initial consideration of $2,734,651,
consisting of cash of $2,133,359 and debt retired from sales proceeds of
$601,292. Subsequently, the Partnership estimated that $417,254 additional
cash was due to the Partnership from post closing adjustments, In addition,
the Purchaser assumed debt related to equipment of approximately $103,000.
Total consideration was therefore $3,258,905. The Partnership made a final
determination of adjusted working capital when the Partnership's accountants
completed certain special procedures. Distributions of cash to the limited
partners commenced subsequent to the end of the second quarter, after
establishing adequate reserves for the continued operation of the Partnership.
The balance sheet of the Partnership reflects the effects of the sale of the
Partnership's interests in the seven facilities. The Partnership may also seek
to liquidate the Partnership's interests in its remaining facilities.
Liquidity and Capital Resources:
At June 30, 1995, the Partnership held cash and cash equivalents of $2,083,696
which represents an increase of $1,813,103 since December 31, 1994. The cash
increase is due primarily to the sale of the Partnership's interests in seven
facilities. The cash position of the Partnership remains highly variable.
While the Partnership's remaining facilities have shown improvement, cash is
being conserved wherever possible to be used for Partnership obligations,
payment of property taxes, and any potential paybacks to Medicare and Medicaid
that may arise.
Medicare is a federal entitlement program and Medicaid (the source of the
majority of the Partnership's revenue) represents an entitlement program
administered differently by each state which is partially funded by the Federal
government. In August 1993, Congress enacted Title XIII of OBRA 93. This act,
12
<PAGE> 13
among other things, taxed social security benefits received by the elderly and
further limited payments under state Medicaid programs for which federal
matching would be permitted. In October 1993, the Health Care Financial
Administration (HCFA) implemented a freeze on Medicare reimbursement, for at
least two years, on routine cost limits, certain Part B ancillaries and
prospective payment system rates. In addition, HCFA eliminated the return on
equity component of the reimbursement rate. Further, by the end of 1993,
several states, because of federal actions and/or budgetary difficulties, had
either taken action to curtail the growth in entitlement programs and/or had
indicated that future action was possible. In 1995, the latest concept appears
to be "block grants" to the states. What this means to nursing facilities
cannot currently be determined by management.
Despite the fact that national health care reform proposals are dead,
activities at the state level continue and are encouraged by HCFA. An example
of state level action is Oregon's plan, the location of the Partnership's
Hearthside and South Salem facilities, to convert its Medicaid reimbursement
system to a managed care program administered by third parties such as Blue
Cross/Blue Shield. The effect on reimbursement cannot currently be determined
by management of the Partnership.
The Partnership has no established credit lines with outside lending sources
and relies solely on cash flow and cash reserves to conduct Partnership
business. There are no material commitments for capital improvements at the
remaining facilities.
The Partnership's continued existence is dependent upon its ability to: (i)
generate sufficient cash flow to meet its obligations on a timely basis; and
(ii) obtain additional sources of funding as may be required. In February
1995, the Partnership sold its interests in seven of its properties to an
unaffiliated third party. Distributions were made to each of the limited
partners after establishing adequate reserves.
Neither the general partner nor its affiliates will receive any remuneration or
distributions of sales proceeds. The Partnership will seek to liquidate the
remaining Partnership interests in the Partnership's remaining facilities.
The Partnership's June 30, 1995 Balance Sheet reflects the estimated net
realizable value of remaining facilities. The significant writedown of property
and equipment in 1994 is based on the Partnership's future plans for its
interests in the nursing facilities and the attendant accounting policies.
In March 1995, the Financial Accounting Standards Board issued Statement of
Accounting Standard No. 121 - "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of.", which is effective for
fiscal years beginning after December 15, 1995. Since the Partnership has
recognized impairment losses and were discussed in the 1993 and 1994 Annual
Reports on Form 10-K, effectively adjusting the carrying value of its
long-lived assets to estimated net realizable value, no significant adjustment
from net realizable value to fair value is expected.
13
<PAGE> 14
PART II. OTHER INFORMATION
ITEMS 1-5
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits.
Exhibit 27 - Financial Data Schedule (for SEC use only)
(B) Reports on Form 8-K.
None during the second quarter
14
<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Registrant
has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
QUEST HEALTH CARE INCOME
FUND I, L.P.
(Registrant)
By: QUEST RESCUE PARTNERS I-1, L.P.
General Partner
By: QUEST RESCUE PARTNERS I-1 CORP,
Date: August 21, 1995 By: /s/ Stuart C. Berry
------------------ -----------------------------
Executive Vice President/CFO
By: /s/ Michael G. Hunter
-----------------------------
President
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF QUEST HEALTH CARE FUND I, L.P. FOR THE SIX MONTHS ENDED
JUNE 1, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-01-1995
<CASH> 2,083,696
<SECURITIES> 0
<RECEIVABLES> 1,185,975
<ALLOWANCES> 58,449
<INVENTORY> 0
<CURRENT-ASSETS> 3,374,103
<PP&E> 2,972,211
<DEPRECIATION> 2,198,967
<TOTAL-ASSETS> 4,147,347
<CURRENT-LIABILITIES> 689,539
<BONDS> 12,437
<COMMON> 0
0
0
<OTHER-SE> 3,445,371
<TOTAL-LIABILITY-AND-EQUITY> 4,147,347
<SALES> 0
<TOTAL-REVENUES> 6,103,415
<CGS> 0
<TOTAL-COSTS> 6,183,295
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 8,002
<INTEREST-EXPENSE> 15,830
<INCOME-PRETAX> (79,880)
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (79,880)
<EPS-PRIMARY> (.30)
<EPS-DILUTED> (.30)
</TABLE>
