<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 of 15(d)
of the Securities Exchange Act of 1934
For quarter ended June 30, 1995 Commission file number 33-9881
---------------------- -------------
NATIONAL HEALTHCARE L.P.
--------------------------------------------------------------------------------
(Exact name of registrant as specified in its Charter)
Delaware 62-1292855
---------------------------------- -------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
100 Vine Street
Murfreesboro, TN 37130
------------------------------------------- -------------------------
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code (615) 890-2020
-----------------------------
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.
Yes x No
----- ------
(2) Has been subject to such filing requirements for the past 90
days.
Yes x No
----- ------
7,826,901 units were outstanding as of July 31, 1995.
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
NATIONAL HEALTHCARE L.P.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
------------------ ----------------
1995 1994 1995 1994
---- ---- ---- ----
(in thousands) (in thousands)
<S> <C> <C> <C> <C>
REVENUES:
Net patient revenues . . . . . . . . . . . . . . . . . . . . $ 75,489 $ 64,426 $ 148,811 $ 126,484
Other revenues . . . . . . . . . . . . . . . . . . . . . . . 9,794 6,702 20,228 13,242
---------- ---------- ---------- ----------
Net revenues . . . . . . . . . . . . . . . . . . . . . . 85,283 71,128 169,039 139,726
---------- ---------- ---------- ----------
COSTS AND EXPENSES:
Salaries, wages and benefits . . . . . . . . . . . . . . . . 46,652 39,347 91,418 76,692
Other operating . . . . . . . . . . . . . . . . . . . . . . . 26,413 21,940 53,246 44,015
Depreciation and amortization . . . . . . . . . . . . . . . . 3,679 3,462 7,313 6,713
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 3,953 2,932 8,304 5,633
---------- ---------- ---------- ----------
Total costs and expenses . . . . . . . . . . . . . . . . 80,697 67,681 160,281 133,053
---------- ---------- ---------- ----------
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,586 $ 3,447 $ 8,758 $ 6,673
========== ========== ========== ==========
EARNINGS PER UNIT:
Primary . . . . . . . . . . . . . . . . . . . . . . . . . . . $ .58 $ .44 $ 1.12 $ .85
========== ========== ========== ==========
Fully diluted . . . . . . . . . . . . . . . . . . . . . . . . $ .51 $ .40 $ .98 $ .77
========== ========== ========== ==========
WEIGHTED AVERAGE UNITS OUTSTANDING:
Primary . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,853,833 7,821,833 7,836,131 7,826,093
Fully diluted . . . . . . . . . . . . . . . . . . . . . . . . 9,852,988 9,816,634 9,853,724 9,816,559
CASH DISTRIBUTIONS PAID PER UNIT . . . . . . . . . . . . . . . $ .42 $ .31 $ .84 $ .55
========== ========== ========== ==========
NET INCOME ALLOCABLE TO PARTNERS:
General Partners . . . . . . . . . . . . . . . . . . . . . . $ 46 $ 34 $ 88 $ 67
Limited Partners . . . . . . . . . . . . . . . . . . . . . . 4,540 3,413 8,670 6,606
---------- ---------- ---------- ----------
$ 4,586 $ 3,447 $ 8,758 $ 6,673
========== ---------- ========== ==========
</TABLE>
The accompanying notes to interim condensed consolidated financial statements
are an integral part of these statements.
2
<PAGE> 3
NATIONAL HEALTHCARE L.P.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
June 30 December 31
1995 1994
----------- -----------
(unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,560 $ 1,442
Cash held by trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,529 1,604
Marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,482 4,010
Accounts receivable, less allowance for
doubtful accounts of $4,079 and $3,367 . . . . . . . . . . . . . . . . . . 47,736 48,372
Notes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,309 4,922
Note receivable from NHI . . . . . . . . . . . . . . . . . . . . . . . . . . -- 22,847
Loan participation agreements . . . . . . . . . . . . . . . . . . . . . . . . -- 9,784
Inventory at lower of cost (first-in,
first-out method) or market . . . . . . . . . . . . . . . . . . . . . . . . 3,101 2,952
Prepaid expenses and other assets . . . . . . . . . . . . . . . . . . . . . . 765 1,573
-------- --------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . 96,482 97,506
-------- --------
PROPERTY AND EQUIPMENT AND ASSETS UNDER
ARRANGEMENT WITH OTHER PARTIES:
Property and equipment at cost . . . . . . . . . . . . . . . . . . . . . . . 147,423 136,757
Less accumulated depreciation and
amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (35,064) (31,094)
Assets under arrangement with other parties . . . . . . . . . . . . . . . . . 78,762 81,746
-------- --------
Net property, equipment and assets under
arrangement with other parties . . . . . . . . . . . . . . . . . . . 191,121 187,409
-------- --------
OTHER ASSETS:
Bond reserve funds, mortgage replacement
reserves and other deposits . . . . . . . . . . . . . . . . . . . . . . . . 1,753 1,720
Unamortized financing costs . . . . . . . . . . . . . . . . . . . . . . . . . 3,011 2,811
Notes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,148 87,180
Notes receivable from National . . . . . . . . . . . . . . . . . . . . . . . 12,252 12,296
Minority equity investments and other . . . . . . . . . . . . . . . . . . . . 6,936 7,211
-------- --------
Total other assets . . . . . . . . . . . . . . . . . . . . . . . . . . 104,100 111,218
-------- --------
$391,703 $396,133
======== ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these consolidated balance sheets.
3
<PAGE> 4
NATIONAL HEALTHCARE L.P.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
LIABILITIES AND CAPITAL
<TABLE>
<CAPTION>
June 30 December 31
1995 1994
------------ -----------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Current portion of long-term debt . . . . . . . . . $ 9,668 $ 6,330
Trade accounts payable . . . . . . . . . . . . . . 4,601 17,688
Accrued payroll . . . . . . . . . . . . . . . . . . 17,025 18,644
Accrued interest . . . . . . . . . . . . . . . . . 1,721 2,223
Other current liabilities . . . . . . . . . . . . . 13,106 10,153
-------- ---------
Total current liabilities . . . . . . . . . 46,121 55,038
-------- ---------
LONG-TERM DEBT, less current portion . . . . . . . . 108,405 104,243
DEBT SERVICED BY OTHER PARTIES, LESS
CURRENT PORTION . . . . . . . . . . . . . . . . . 86,133 89,764
MINORITY INTERESTS IN CONSOLIDATED SUBSIDIARIES . . . 813 802
COMMITMENTS, CONTINGENCIES AND GUARANTEES
SUBORDINATED CONVERTIBLE NOTES . . . . . . . . . . . 30,000 30,000
DEFERRED INCOME . . . . . . . . . . . . . . . . . . . 16,443 15,280
PARTNERS' CAPITAL:
General partners . . . . . . . . . . . . . . . . . 1,118 1,095
Limited partners . . . . . . . . . . . . . . . . . 102,670 99,911
-------- --------
Total partners' capital . . . . . . . . . . 103,788 101,006
-------- --------
$391,703 $396,133
======== ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these consolidated balance sheets.
4
<PAGE> 5
NATIONAL HEALTHCARE L.P.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
June 30
------------------
1995 1994
---- ----
(in thousands)
<S> <C> <C>
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,758 $ 6,673
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,075 6,520
Provision for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,320 1,138
Amortization of intangibles and deferred charges . . . . . . . . . . . . . . . . . . . 435 376
Amortization of deferred income . . . . . . . . . . . . . . . . . . . . . . . . . . . . (255) (191)
Equity in earnings of unconsolidated investments . . . . . . . . . . . . . . . . . . . (154) (116)
Distributions from unconsolidated investments . . . . . . . . . . . . . . . . . . . . . 205 123
Changes in assets and liabilities:
Increase in accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . (684) (8,130)
(Increase) Decrease in inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . (149) 189
(Increase) Decrease in prepaid expenses
and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 808 (784)
Decrease in trade accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . (13,087) (80)
Decrease in accrued payroll . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,619) (380)
Increase (Decrease) in accrued interest payable . . . . . . . . . . . . . . . . . . . . (502) 361
Increase in other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 2,953 4,000
-------- --------
5,104 9,699
-------- --------
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:
Additions to and acquisitions of property and
equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10,772) (18,338)
Decrease in long-term notes receivable . . . . . . . . . . . . . . . . . . . . . . . . . 12,320 33,338
(Increase) Decrease in minority equity investments
and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,405 (4,748)
(Increase) Decrease in debt and equity securities . . . . . . . . . . . . . . . . . . . . 2,361 (6,718)
-------- --------
5,314 3,534
-------- --------
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Proceeds from debt issuance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,699 2,020
Decrease (Increase) in cash held by trustee . . . . . . . . . . . . . . . . . . . . . . . 75 (150)
Increase in minority interest in subsidiaries . . . . . . . . . . . . . . . . . . . . . . 11 12
Increase in bond reserve funds, mortgage
replacement reserves and other deposits . . . . . . . . . . . . . . . . . . . . . . . . (33) (20)
Collection of receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 753 103
Payments on debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,888) (2,427)
Cash distributions to partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,562) (12,806)
Increase in financing costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (355) 0
-------- --------
(2,300) (13,268)
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS . . . . . . . . . . . . . . . . . . . 8,118 (35)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD . . . . . . . . . . . . . . . . . . . . . . 1,442 145
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,560 $ 110
======== ========
Supplemental Information:
Cash payments for interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,805 $ 5,272
======== ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these consolidated statements.
5
<PAGE> 6
NATIONAL HEALTHCARE L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
RECEIVABLES UNREALIZED TOTAL
NUMBER OF FROM SALE OF GAINS(LOSSES) GENERAL LIMITED PARTNERS'
UNITS UNITS ON SECURITIES PARTNERS PARTNERS CAPITAL
----- ----- ------------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT 12/31/94 7,826,165 $(14,697) $ 480 $1,095 $114,128 $101,006
Net income -- -- -- 88 8,670 8,758
Collection of
receivables -- 753 -- -- 753
Units issued 736 -- -- -- -- --
Unrealized losses on
securities -- -- (167) -- -- (167)
Cash distributions
($.84 per unit) -- -- -- (65) (6,497) (6,562)
--------- -------- ----- ------ -------- --------
BALANCE AT 6/30/95 7,826,901 $(13,944) $ 313 $1,118 $116,301 $103,788
========= ======== ===== ====== ======== ========
BALANCE AT 12/31/93 7,796,433 $(15,134) $ -- $1,027 $106,633 $ 92,526
Net income -- -- -- 67 6,606 6,673
Collection of
receivables -- 103 -- -- -- 103
Other 100 -- -- 1 2 3
Unrealized losses on
securities -- -- (430) -- -- (430)
Cash distributions
($.55 per unit) -- -- -- (42) (4,188) (4,230)
--------- -------- ----- ------ -------- --------
BALANCE AT 6/30/94 7,796,533 $(15,031) $(430) $1,053 $109,053 $ 94,645
========= ======== ===== ====== ======== ========
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these consolidated statements.
6
<PAGE> 7
NATIONAL HEALTHCARE L.P.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(Unaudited)
Note 1 - CONSOLIDATED FINANCIAL STATEMENTS:
The financial statements for the six months ended June 30, 1995 and
1994, which have not been examined by independent public accountants, reflect,
in the opinion of management, all adjustments necessary to present fairly the
data for such periods. The results of the operations for the six months ended
June 30, 1995 are not necessarily indicative of the results that may be
expected for the entire fiscal year ended December 31, 1995. The interim
condensed balance sheet at December 31, 1994 is taken from the audited
financial statements at that date. The interim condensed financial statements
should be read in conjunction with the consolidated financial statements,
including the notes thereto, for the periods ended December 31, 1994, December
31, 1993, and December 31, 1992.
Note 2 - OTHER REVENUES:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
------------------ ------------------
1995 1994 1995 1994
---- ---- ---- ----
(in thousands) (in thousands)
<S> <C> <C> <C> <C>
Revenue from managed centers $ 5,926 $ 4,116 $11,937 $ 8,085
Guarantee fees 212 242 447 492
Advisory fee from NHI 797 456 1,594 912
Earnings on securities 28 344 394 399
Equity in earnings of unconsolidated
investments 61 40 151 117
Interest income 1,889 1,197 3,414 2,639
Other 881 307 2,291 598
------- ------- ------- -------
$ 9,794 $ 6,702 $20,228 $13,242
======= ======= ======= =======
</TABLE>
Revenues from managed centers include management fees and interest
income on notes receivable from the managed centers. "Other" revenues include
non-health care related earnings.
Note 3 - INVESTMENT IN MARKETABLE SECURITIES:
Statement of Financial Accounting Standards ("SFAS") No. 115
"Accounting for Certain Investments in Debt and Equity Securities" was issued
by the Financial Accounting Standards Board effective for fiscal years
beginning after December 15, 1993. As required by SFAS 115, securities are
classified as trading, held-to-maturity or available for sale. Trading
securities are bought and held principally for the purpose of selling them in
the near term. Securities are classified as held-to-maturity when the Company
has both the positive intent and ability to hold them to maturity. All other
securities are
7
<PAGE> 8
NATIONAL HEALTHCARE L.P.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(Unaudited)
classified as available for sale. NHC considers its investments in marketable
securities as available for sale securities and unrealized gains and losses are
recorded in partners' capital in accordance with SFAS 115.
Partners' capital for the period ended June 30, 1995 was decreased by
approximately $167,000 to reflect the net unrealized investment loss on
marketable securities without stated maturities classified as available for
sale.
Proceeds from the sale of investments in debt and equity securities
for the period ended June 30, 1995 were $2,696,000, resulting in gross
investment gains of $336,000 realized on these sales. Realized gains and
losses from securities sales are determined on the specific identification of
the securities. The adoption of SFAS 115 did not have a material effect on
NHC's financial position or results of operations.
Note 4 - GUARANTEES:
In order to obtain management agreements and to facilitate the
construction or acquisition of certain health care centers which NHC manages
for others, NHC has guaranteed some or all of the debt (principal and interest)
on those centers. For this service NHC charges an annual guarantee fee of 1%
to 2% of the outstanding principal balance guaranteed, which fee is in addition
to NHC's management fee. The principal amounts outstanding under the
guarantees is approximately $82,388,000 (net of available debt service
reserves) at variable and fixed interest rates with a weighted average of 5.1%
at June 30, 1995. In addition, NHC has guaranteed a letter of credit in the
amount of approximately $8,200,000 for which an annual fee of 2% is charged.
Item 2. Management's Discussion and Analysis of Financial Conditions and
Results of Operations
Overview
National HealthCare L.P. (NHC, or the Company) operates and manages 96
long-term health care centers with 12,450 beds in nine states. NHC provides
nursing care as well as ancillary therapy services to patients in a variety of
settings including long-term care nursing centers, managed care specialty
units, subacute care units, Alzheimer's care units, homecare programs, and
facilities for assisted living. NHC also operates retirement centers. (Prior
to January 1, 1995, the name of NHC was National HealthCorp L.P.)
8
<PAGE> 9
NATIONAL HEALTHCARE L.P.
FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(Unaudited)
Item 2. Management's Discussion and Analysis of Financial Conditions and
Results of Operations (Continued)
Results of Operations
Three Months Ended June 30, 1995 Compared to Three Months Ended June 30, 1994.
Results for the three month period ended June 30, 1995 include a 33%
increase over the same period in 1994 in net income, a 28% increase in fully
diluted earnings per unit, and a 20% increase in net revenues.
The increased revenues for the quarter reflect the continued growth of
operations. Compared to the quarter a year ago, NHC has increased the number
of owned or leased long-term care beds from 6,246 beds to 6,406 beds. The
number of long-term care beds managed for others has increased from 6,028 beds
to 6,044 beds. Also contributing to increased revenues are improvements in
both private pay and third party payor rates.
Revenues also improved during 1995 due to increased emphasis on
rehabilitative and managed care services. To boost the ability to offer
physical, speech and occupational therapy to greater numbers of patients, the
Company is continuing to increase the size of its staff of professionally
licensed therapists. The Company has also signed managed care contracts with
private insurance companies to provide subacute care to their insurees,
offering a less expensive alternative to acute care and rehabilitative
hospitals. NHC also now has a network of case managers to assure appropriate
placement and payment for subacute patients in the NHC system.
Revenues from management services, which are included in the
Statements of Income in Other Revenues, increased 44% in 1995 from $4.1 million
to $5.9 million due to the increased number of beds being managed for others,
increased management fees, and increased interest income from higher principal
amounts and interest rates on floating rate and fixed rate loans to managed
centers. Management fees are generally based upon a percentage of net revenues
of the managed center and therefore tend to increase as a facility matures and
as prices rise in general.
Total costs and expenses for the 1995 quarter increased $13.0 million
or 19% to $80.7 million from $67.7 million. Salaries, wages and benefits, the
largest operating costs of this service company, increased $7.3 million or 19%
to $46.7 million from $39.3 million. Other operating expenses increased $4.5
million or 20% to $26.4 million for the 1995 second quarter compared to $21.9
million in the 1994 period. Depreciation and amortization increased 6% to $3.7
million. Interest costs increased $1.1 million or 35% to $4.0 million from
$2.9 million for last year.
9
<PAGE> 10
NATIONAL HEALTHCARE L.P.
FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(Unaudited)
Item 2. Management's Discussion and Analysis of Financial Conditions and
Results of Operations (Continued)
Increases in salaries, wages and benefits are attributable to the
increase in staffing levels due to long-term care bed additions, homecare
expansions, and the increased emphasis on rehabilitative services. Also
contributing to higher costs of labor are inflationary increases for salaries
and the associated benefits.
Operating costs have increased due to the increased number of beds in
operation, the expansion of homecare services, the expansion of rehabilitative
and managed care services, and due to the growth in management services
provided to others.
Depreciation and amortization increased as a result of the Company's
placing of newly constructed or purchased assets in service and due to capital
improvements at existing properties.
Interest expense increased due to additional borrowing for newly
purchased or constructed long-term care beds and due to increased interest
rates of floating rate debt. Approximately 32% of the Company's long-term debt
is at floating rates.
The total census at owned and leased centers for the quarter averaged
91.9% compared to an average of 93.0% for the same quarter a year ago.
Six Months Ended June 30, 1995 Compared to Six Months Ended June 30, 1994.
Results for the six month period ended June 30, 1995 include a 31%
increase over the same period in 1994 in net income, a 27% increase in fully
diluted earnings per unit, and a 21% increase in net revenues.
The increased revenues for the six months this year reflect the
continued growth of operations. Compared to the six month period a year ago,
NHC has increased the number of owned, leased, and managed long-term care beds
by 176 beds from 12,274 beds to 12,450 beds. Also contributing to increased
revenues are improvements in both private pay and third party payor rates.
Revenues also improved during 1995 due to increased emphasis on
rehabilitative and managed care services. To boost the ability to offer
physical, speech and occupational therapy to greater numbers of patients, the
Company is continuing to increase the size of its staff of professionally
licensed therapists. The Company has also signed managed care contracts with
private insurance companies to provide subacute care to their insurees,
offering a less expensive alternative to acute care and rehabilitative
hospitals. NHC also now has a network of case managers to assure appropriate
placement and payment for subacute patients in the NHC system.
10
<PAGE> 11
NATIONAL HEALTHCARE L.P.
FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(Unaudited)
Item 2. Management's Discussion and Analysis of Financial Conditions and
Results of Operations (Continued)
Revenues from management services, which are included in the
Statements of Income in Other Revenues, increased 48% in 1995 from $8.1 million
to $11.9 million due to the increased number of beds being managed for others,
increased management fees, and increased interest income from higher principal
amounts and interest rates on floating rate and fixed rate loans to managed
centers. Management fees are generally based upon a percentage of net revenues
of the managed center and therefore tend to increase as a facility matures and
as prices rise in general.
Total costs and expenses for the 1995 six month period increased $27.2
million or 20% to $160.3 million from $133.1 million. Salaries, wages and
benefits, the largest operating costs of this service company, increased $14.7
million or 19% to $91.4 million from $76.7 million. Other operating expenses
increased $9.2 million or 21% to $53.2 million for the 1995 second quarter
compared to $44.0 million in the 1994 period. Depreciation and amortization
increased 9% to $7.3 million. Interest costs increased $2.7 million or 47% to
$8.3 million from $5.6 million for last year.
Increases in salaries, wages and benefits are attributable to the
increase in staffing levels due to long-term care bed additions, homecare
expansions, and the increased emphasis on rehabilitative services. Also
contributing to higher costs of labor are inflationary increases for salaries
and the associated benefits.
Operating costs have increased due to the increased number of beds in
operation, the expansion of homecare services, the expansion of rehabilitative
and managed care services, and due to the growth in management services
provided to others.
Depreciation and amortization increased as a result of the Company's
placing of newly constructed or purchased assets in service and due to capital
improvements at existing properties.
Interest expense increased due to additional borrowing for newly
purchased or constructed long-term care beds and due to increased interest
rates of floating rate debt. Approximately 40% of the Company's long-term debt
is at floating rates.
The total census at owned and leased centers for the six months
averaged 93.0% compared to an average of 92.9% for the same six months a year
ago.
11
<PAGE> 12
NATIONAL HEALTHCARE L.P.
FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(Unaudited)
Item 2. Management's Discussion and Analysis of Financial Conditions and
Results of Operations (Continued)
Liquidity and Capital Resources
During the first six months of 1995, the Company generated net cash of
$5.1 million from operating activities, $12.3 million from the collection of
long-term notes receivable, $2.4 million from the decrease in debt or equity
securities, $1.4 million from the decrease in minority equity investments and
$5.7 million in debt proceeds. Of these funds, $10.8 million was used for
additions to and acquisitions of property and equipment, $1.9 million for
payments on debt, and $6.6 million for cash distributions to partners. Cash
and cash equivalents increased $8.1 million during the quarter.
At June 30, 1995, the Company's ratio of long-term obligations to
convertible debt and capital is 1.5 to 1.
The ratio of current assets to current liabilities is 2.1 to 1.
Working capital is $50.4 million. These financial resources with anticipated
funds from future operations are expected to be adequate to enable the
Partnership to meet its working capital requirements and expansion goals.
Development
During the first six months of 1995, the Company added a net total of
142 licensed long-term care beds, of which 111 beds are owned or leased and 31
beds are managed.
Currently, NHC has 1,034 beds under development at 19 health care
centers in various locations. These beds are either under construction or a
Certificate of Need has been received from the appropriate state agency
authorizing the construction of additional centers or beds.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
The Company is subject to claims and suits in the ordinary
course of business. While there are several worker's compensation
and personal liability claims and other suits presently in the court
system, management believes that the ultimate resolution of all
pending proceedings will not have any material adverse effect on the
Company or its operations.
Item 2. Changes in Securities. Not applicable
Item 3. Defaults Upon Senior Securities. None
12
<PAGE> 13
NATIONAL HEALTHCARE L.P.
FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(Unaudited)
Item 4. Submission of Matters to Vote of Security Holders. None
Item 5. Other Information. None
Item 6. Exhibits and Reports on Form 8-K.
(a) List of exhibits - Exhibit 27 - Financial Data
Schedule (for SEC purposes only)
(b) Reports on Form 8-K - none required
SIGNATURES
Pursuant to the requirements of the Security Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NATIONAL HEALTHCARE L.P.
---------------------------------
(Registrant)
Date August 4, 1995 /s/ Richard F. LaRoche, Jr.
---------------------- ---------------------------------
Richard F. LaRoche, Jr.
Secretary
Date August 4, 1995 /s/ Donald K. Daniel
---------------------- ---------------------------------
Donald K. Daniel
Vice President and Controller
Principal Accounting Officer
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE INTERIM
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND THE CONSOLIDATED BALANCE SHEETS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 11,089,000
<SECURITIES> 1,482,000
<RECEIVABLES> 84,124,000
<ALLOWANCES> 4,079,000
<INVENTORY> 3,101,000
<CURRENT-ASSETS> 96,482,000
<PP&E> 226,185,000
<DEPRECIATION> (35,064,000)
<TOTAL-ASSETS> 391,703,000
<CURRENT-LIABILITIES> 46,121,000
<BONDS> 224,538,000
<COMMON> 0
0
0
<OTHER-SE> 103,788,000
<TOTAL-LIABILITY-AND-EQUITY> 391,703,000
<SALES> 0
<TOTAL-REVENUES> 169,039,000
<CGS> 0
<TOTAL-COSTS> 160,281,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,320,000
<INTEREST-EXPENSE> 8,304,000
<INCOME-PRETAX> 8,758,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,758,000
<EPS-PRIMARY> 1.12
<EPS-DILUTED> .98
</TABLE>
