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 September 30, 1996 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
8,446,611 units were outstanding as of October 31, 1996.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
NATIONAL HEALTHCARE L.P.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
1996 1995 1996 1995
(in thousands) (in thousands)
<S> <C> <C> <C> <C>
REVENUES:
Net patient revenues $ 84,388 $ 80,637 $246,073 $ 229,448
Other revenues 12,532 9,905 35,478 30,133
Net revenues 96,920 90,542 281,551 259,581
COSTS AND EXPENSES:
Salaries, wages and benefits 52,930 49,832 154,936 141,250
Other operating 29,990 27,545 88,804 80,791
Depreciation and amortization 3,625 3,708 9,795 11,021
Interest 2,305 3,853 8,474 12,157
Total costs and expenses 88,850 84,938 262,009 245,219
NET INCOME $ 8,070 $ 5,604 $ 19,542 $ 14,362
EARNINGS PER UNIT:
Primary $ .94 $ .71 $ 2.28 $ 1.83
Fully diluted $ .81 $ .62 $ 1.98 $ 1.60
WEIGHTED AVERAGE UNITS OUTSTANDING:
Primary 8,583,911 7,907,023 8,585,875 7,862,842
Fully diluted 10,515,701 9,879,908 10,520,240 9,879,294
CASH DISTRIBUTIONS PAID PER UNIT $ .52 $ .52 $ 1.56 $ 1.36
NET INCOME ALLOCABLE TO PARTNERS:
General Partners $ 81 $ 56 $ 195 $ 144
Limited Partners 7,989 5,548 19,347 14,218
$ 8,070 $ 5,604 $ 19,542 $ 14,362
</TABLE>
The accompanying notes to interim condensed consolidated financial state-
ments are an integral part of these statements.
<PAGE>
NATIONAL HEALTHCARE L.P.
CONSOLIDATED BALANCE SHEETS
(in thousands)
ASSETS
<TABLE>
<CAPTION>
Sept. 30 Dec. 31
1996 1995
(unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 3,482 $ 4,835
Cash held by trustees 2,045 1,721
Marketable securities 17,069 1,514
Accounts receivable, less allowance for
doubtful accounts of $5,214 and $4,079 46,959 47,285
Notes receivable 2,412 2,538
Loan participation agreements --- 27,579
Inventory at lower of cost (first-in,
first-out method) or market 3,780 3,075
Prepaid expenses and other assets 799 893
Total current assets 76,546 89,440
PROPERTY AND EQUIPMENT AND ASSETS UNDER
ARRANGEMENT WITH OTHER PARTIES:
Property and equipment at cost 214,293 165,265
Less accumulated depreciation and
amortization (45,537) (38,265)
Assets under arrangement with other parties 24,389 29,921
Net property, equipment and assets under
arrangement with other parties 193,145 156,921
OTHER ASSETS:
Bond reserve funds, mortgage replacement
reserves and other deposits 129 1,789
Unamortized financing costs 1,731 1,937
Notes receivable 96,399 86,178
Notes receivable from National 11,895 12,271
Minority equity investments and other 6,510 6,955
Total other assets 116,664 109,130
$386,355 $355,491
</TABLE>
The accompanying notes to consolidated financial statements are an
integral part of these consolidated balance sheets.
<PAGE>
NATIONAL HEALTHCARE L.P.
CONSOLIDATED BALANCE SHEETS
(in thousands)
LIABILITIES AND CAPITAL
<TABLE>
<CAPTION>
Sept. 30 Dec. 31
1996 1995
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Current portion of long-term debt $ 8,560 $ 8,558
Trade accounts payable 9,297 6,142
Accrued payroll 25,393 23,876
Amount due to third-party payors 9,316 9,800
Accrued interest 1,106 1,822
Other current liabilities 9,849 8,849
Total current liabilities 63,521 59,047
LONG-TERM DEBT, less current portion 119,843 100,871
DEBT SERVICED BY OTHER PARTIES, LESS
CURRENT PORTION 35,717 40,771
MINORITY INTERESTS IN CONSOLIDATED
SUBSIDIARIES 817 812
COMMITMENTS, CONTINGENCIES AND GUARANTEES
SUBORDINATED CONVERTIBLE NOTES 29,314 30,000
DEFERRED INCOME 16,186 15,091
PARTNERS' CAPITAL:
General partners 1,354 1,290
Limited partners 119,603 107,609
Total partners' capital 120,957 108,899
$386,355 $355,491
</TABLE>
The accompanying notes to consolidated financial statements are an
integral part of these consolidated balance sheets.
<PAGE>
NATIONAL HEALTHCARE L.P.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30
1996 1995
(in thousands)
<S> <C> <C>
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Net income $19,542 $ 14,362
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation 9,048 10,668
Provision for doubtful accounts 5,214 2,036
Amortization of intangibles and
deferred charges 858 671
Amortization of deferred income (227) (391)
Equity in earnings of unconsolidated
investments (279) (211)
Distributions from unconsolidated investments 195 221
Changes in assets and liabilities:
Increase in accounts receivable (4,888) (1,733)
Increase in inventory (705) (49)
Decrease in prepaid expenses
and other assets 94 246
Increase (Decrease) in trade accounts payable 3,155 (12,070)
Decrease in accrued payroll 1,517 3,898
Increase (Decrease) in amounts due to third
party payors (484) 5,371
Decrease in accrued interest payable (716) (599)
Increase in other current liabilities 1,000 5,591
33,324 28,011
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:
Additions to and acquisitions of property and
equipment, net (44,581) (11,213)
Investment in long-term notes receivable and loan
participation agreements (14,370) (24,585)
Collection of long-term notes receivable and loan
participation agreements 32,230 36,420
Decrease in minority equity investments
and other 2,431 831
(Increase) Decrease in debt & equity securities (15,555) 2,360
(39,845) 3,813
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Proceeds from debt issuance 22,266 4,609
Increase in cash held by trustee (324) (722)
Increase in minority interest in subsidiaries 5 7
Increase (Decrease) in bond reserve funds, mortgage
replacement reserves and other deposits 1,660 (51)
Issuance of partnership units 558 1
Collection of receivables 3,428 788
Payments on debt (9,245) (2,771)
Cash distributions to partners (13,087) (10,632)
Increase in financing costs (93) (373)
5,168 (9,144)
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (1,353) 22,680
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 4,835 1,442
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 3,482 $ 24,122
Supplemental Information:
Cash payments for interest expense $ 9,180 $ 12,755
</TABLE>
The accompanying notes to consolidated financial statements are an
integral part of these consolidated statements.
<PAGE>
NATIONAL HEALTHCARE L.P.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30
1996 1995
(in thousands)
<S> <C> <C>
During the nine months ended Sept. 30, 1996, NHC
was released from its liability on debt serviced
by others by the respective lenders
Debt serviced by other parties $(3,841) $ --
Assets under arrangement with other parties 3,841 --
During the nine months ended Sept. 30, 1996, $686,000
of convertible subordinated debentures were converted
into 45,112 units of NHC's partnership units:
Convertible subordinated debentures (686) --
Financing costs 1 --
Accrued interest (5) --
Partner's capital 690 --
</TABLE>
<PAGE>
NATIONAL HEALTHCARE L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(dollars in thousands)
<TABLE>
<CAPTION>
Receivables Unrealized Total
Number of From Sale Gains(Losses) General Limited Partners'
Units of Units on Securities Partners Partners Capital
_________ _________ _____________ _______ ________ ________
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT 12/31/95 8,353,114 $(26,196) $ 345 $1,290 $133,460 $108,899
Net income -- -- -- 195 19,347 19,542
Collection of
receivables -- 3,428 -- -- -- 3,428
Units sold 24,870 -- -- -- 558 558
Units in conversion of
convertible debentures
to partnership units 45,112 -- -- -- 690 690
Unrealized gains on
securities -- -- 927 -- -- 927
Cash distributions
($1.04 per unit) -- -- -- (131) (12,956) (13,087)
BALANCE AT 9/30/96 8,421,096 $(22,768) $1,272 $1,354 $141,099 $120,957
BALANCE AT 12/31/94 7,826,165 $(14,697) $ 480 $1,095 $114,128 $101,006
Net income -- -- -- 144 14,218 14,362
Collection of
receivables -- 788 -- -- -- 788
Units sold 886 -- -- -- 1 1
Unrealized losses on
securities -- -- (146) -- -- (146)
Cash distributions
($1.36 per unit) -- -- -- (106) (10,526) (10,632)
BALANCE AT 9/30/95 7,827,051 $(13,909) $ 334 $1,133 $117,821 $105,379
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these consolidated statements.
<PAGE>
NATIONAL HEALTHCARE L.P.
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(Unaudited)
Note 1 - CONSOLIDATED FINANCIAL STATEMENTS:
The financial statements for the nine months ended September
30, 1996 and 1995, 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 nine months ended
September 30, 1996 are not necessarily indicative of the results
that may be expected for the entire fiscal year ended December
31, 1996. The interim condensed balance sheet at December 31,
1995 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, 1995,
December 31, 1994, and December 31, 1993.
Note 2 - OTHER REVENUES:
Three Months Ended Nine Months Ended
September 30 September 30
1996 1995 1996 1995
(in thousands) (in thousands)
Revenue from managed centers $ 7,988 $ 6,615 $24,272 $19,505
Guarantee fees 165 183 530 630
Advisory fee from NHI 796 796 2,390 2,390
Earnings on securities 430 28 555 422
Equity in earnings of
unconsolidated investments 184 56 285 207
Interest income 859 1,561 3,581 4,975
Other 2,110 666 3,865 2,004
$12,532 $ 9,905 $35,478 $30,133
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,
<PAGE>
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
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 September 30, 1996
was increased by $927,000 and for the period ended September 30,
1995 was decreased by approximately $146,000 to reflect the net
unrealized investment gain or loss on marketable securities
without stated maturities classified as available for sale.
Proceeds from the sale of investments in debt and equity
securities during the periods ended September 30, 1996 and 1995
were $1,669,000 and $2,696,000 respectively. Gross investment
gains of $92,000 and gross investment losses of $41,000 were
realized on these sales during the period ended September 30,
1996. Gross investment gains of $336,000 were realized on these
sales during the period ended September 30, 1995. 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 $73,502,000
(net of available debt service reserves) at variable and fixed
interest rates with a weighted average of 4.8% at September 30,
1996.
Note 5 - ACQUISITIONS:
In July, 1996, NHC purchased, for total consideration of
approximately $4,680,000, a 120 bed long term health care center
located in West Plains, Missouri. NHC had managed the health
care center since its opening in 1982.
<PAGE>
Also in July, 1996, NHC purchased, for total consideration
of approximately $6,500,000, a long-term health care center with
assisted living apartments located in Naples, Florida. There are
60 long-term health care beds and 36 assisted living apartments.
Note 6 - RELATIONSHIP WITH FCC
In March 1996, Florida Convalescent Centers, Inc. (FCC), an
independent Florida corporation for whom the company manages
sixteen licensed nursing centers in Florida, gave NHC notice of
its intent not to renew a management contract. Pursuant to
written agreements between the parties, NHC valued the center,
offering to either purchase the center at the price so valued or
require FCC to pay to NHC certain deferred compensation based
upon that value. FCC responded by filing on March 26, 1996, a
Declaratory Judgment suit in the Circuit Court of the Twelfth
Judicial Circuit in and for Sarasota County, Florida, to
interpret the parties' rights under their contractual
arrangements. FCC next sued on April 18, 1996 in the Circuit
Court for Columbia County, Florida removed on May 1, 1996 to the
United States District Court, Middle District, Florida,
Jacksonville Division to obtain possession of the center for
which it alleged the management contract had been terminated.
Both suits are in the preliminary stages.
As a result of the litigation between the parties, FCC may
terminate the 16 management contracts as each mature. Five of
the sixteen are eligible for termination in 1997. The balance of
the contracts may be terminated in the years 1998-2002.
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 100 long-term health care centers with 12,810 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.
<PAGE>
Results of Operations
Three Months Ended September 30, 1996 Compared to Three Months
Ended September 30, 1995.
Results for the three month period ended September 30, 1996
include a 44% increase over the same period in 1995 in net
income, a 31% increase in fully diluted earnings per unit, and a
7% 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 6,406 beds to 6,649 beds. The number of long-term care beds
managed for others has increased from 6,087 beds to 6,161 beds.
The number of homecare locations has increased from 28 locations
to 32 locations. Also contributing to increased revenues are
improvements in both private pay and third party payor rates.
Revenues also improved during 1996 due to increased emphasis
on rehabilitative and managed care services. The Company has
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 21% in 1996
from $6.6 million to $8.0 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 1996 quarter increased $3.9
million or 4.6% to $88.9 million from $84.9 million. Salaries,
wages and benefits, the largest operating costs of this service
company, increased $3.1 million or 6.2 to $52.9 million from
$49.8 million. Other operating expenses increased $2.4 million or
8.9% to $30.0 million for the 1996 third quarter compared to
$27.5 million in the 1995 period. Depreciation and amortization
decreased 2.2% to $3.6 million. Interest costs decreased $1.8
million or 40.2% to $2.3 million from $3.9 million for last year.
<PAGE>
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 as well as adjustments in benefit programs for the
quarter.
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, and due to
the increase in rent expense as explained below.
Depreciation expense and interest expense both decreased
compared to the quarter a year ago due primarily to capital
transactions which occurred in late 1995. During December 1995,
National Health Investors ("NHI") prepaid debt on which NHC had
also been obligated in the amount of $20,544,000. In addition,
NHC was released from its obligation on approximately $25,324,000
of debt which had been transferred to NHI in 1991. Since NHC is
no longer obligated on transferred debt in the amount of
$45,868,000, debt serviced by other parties and assets under
arrangement with other parties were both reduced by $45,868,000.
The leases with NHI provide that NHC shall continue to make
non-obligated debt service rent payments equal to the debt
service including principal and interest on the obligated debt
which was prepaid and from which NHC has been released as a
direct obligor. As a result, other operating expenses are
increased by the amount of the rent payments, depreciation is
decreased by the amount of depreciation formerly charged on
assets under arrangement with other parties and interest expense
is decreased by the amount of interest expense formerly
associated with the debt serviced by other parties.
The total census at owned and leased centers for the quarter
averaged 93.4% compared to an average of 92.9% for the same
quarter a year ago.
Nine Months Ended September 30, 1996 Compared to Nine Months
Ended September 30, 1995.
Results for the nine month period ended September 30, 1996
include a 36% increase over the same period in 1995 in net
income, a 23.8% increase in fully diluted earnings per unit, and
an 8.5% increase in net revenues.
<PAGE>
The increased revenues for the nine months this year reflect
the continued growth of operations. Compared to the nine month
period a year ago, NHC has increased the number of owned, leased,
and managed long-term care beds by 317 beds from 12,493 beds to
12,810 beds. The number of homecare locations has increased from
28 locations to 32 locations and includes for the first time the
offering of services in the state of South Carolina. Also
contributing to increased revenues are improvements in both
private pay and third party payor rates.
Revenues also improved during 1996 due to increased emphasis
on rehabilitative and managed care services. 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 24% in 1996
from $19.8 million to $24.3 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 1996 nine month period
increased $16.8 million or 68% to $262.0 million from $245.2
million. Salaries, wages and benefits, the largest operating
costs of this service company, increased $13.7 million or 9.7% to
$154.9 million from $141.3 million. Other operating expenses
increased $8.0 million or 9.9% to $88.8 million for the 1996
second quarter compared to $80.8 million in the 1995 period.
Depreciation and amortization decreased 11.1% to $9.8 million.
Interest costs decreased $3.7 million or 30.3% to $8.5 million
from $12.2 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, and due to
the increase in rent expense as explained below.
<PAGE>
Depreciation expense and interest expense both decreased
compared to the six months a year ago due primarily to capital
transactions which occurred in 1995. During December 1995,
National Health Investors, ("NHI") prepaid debt on which NHC had
also been obligated in the amount of $20,544,000. In addition,
NHC was released from its obligation on approximately
$25,3234,000 of debt which had been transferred to NHI in 1991.
Since NHC is no longer obligated on transferred debt in the
amount of $45,868,000, debt serviced by other parties and assets
under arrangement with other parties was reduced by $45,868,000.
The leases with NHI provide that NHC shall continue to make
non-obligated debt service rent payments equal to the debt
service including principal and interest on the obligated debt
which was prepaid and from which NHC has been released as a
direct obligor. As a result, other operating expenses are
increased by the amount of the rent payments, depreciation is
decreased by the amount of depreciation formerly charged on
assets under arrangement with other parties and interest expense
is decreased by the amount of interest expense formerly
associated with the debt serviced by other parties.
The total census at owned and leased centers for the nine
months averaged 93.3% compared to an average of 92.9% for the
same nine months a year ago.
Liquidity and Capital Resources
During the first nine months of 1996, the Company generated
net cash of $33.3 million from operating activities, $32.2
million from the collection of long-term notes receivable, $22.3
million debt proceeds, $0.6 million from the issuance of
partnership units, and $3.4 million from the collection of
receivables. Of these funds, $44.6 million was used for
additions to and acquisitions of property and equipment; $14.4
million for investment in long-term notes receivable and loan
participation agreements; $15.6 million for investment in debt
and equity securities; $9.2 million for payments on debt; and
$13.1 million for cash distributions to partners. Cash and cash
equivalents decreased $1.4 million during the period.
At September 30, 1996, the Company's ratio of long-term
obligations to convertible debt and capital is 1.0 to 1. NHC's
convertible debt converts into units of limited partnership
interest at $15.21 per unit - the units closed at $37.375 per
unit on the American Stock Exchange the last trading day of this
quarter.
<PAGE>
The ratio of current assets to current liabilities is 1.2 to
1. Working capital is $13.0 million. The Company is currently
considering long-term and short term financing options. 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 nine months of 1996, the Company added a
net total of 118 licensed long-term care beds, all of which are
owned or leased. Additionally, 152 assisted living units in two
newly constructed projects were opened, all of which are owned by
the Company.
Currently, NHC has 1,190 long-term care beds under
development at 25 owned, leased or managed 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. In addition, NHC has 430 assisted living units at six
locations and 270 retirement apartments at three locations under
development, all of which are owned.
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.
In March 1996, Florida Convalescent Centers, Inc.
(FCC), an independent Florida corporation for whom the
company manages sixteen licensed nursing centers in
Florida, gave NHC notice of its intent not to renew a
management contract. Pursuant to written agreements
between the parties, NHC valued the center, offering to
either purchase the center at the price so valued or
require FCC to pay to NHC certain deferred compensation
based upon that value. FCC responded by filing on
Maraca 26, 1996, a Declaratory Judgment suit in the
Circuit Court of the Twelfth Judicial Circuit in and
for Sarasota County, Florida, to interpret the parties'
rights under their contractual arrangements. FCC next
sued on April 18, 1996 in the Circuit Court for
<PAGE>
Columbia County, Florida removed on May 1, 1996 to the
United States District Court, Middle District, Florida,
Jacksonville Division to obtain possession of the
center for which it alleged the management contract had
been terminated. Both suits are in the preliminary
stages.
As a result of the litigation between the parties,
FCC may terminate the 16 management contracts as each
mature. Five of the sixteen are eligible for
termination in 1997. The balance of the contracts may
be terminated in the years 1998-2002.
Item 2. Changes in Securities. Not applicable
Item 3. Defaults Upon Senior Securities. None
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 November 14, 1996 S/Richard F. LaRoche, Jr.
Richard F. LaRoche, Jr.
Secretary
Date November 14, 1996 S/Donald K. Daniel
Donald K. Daniel
Vice President and Controller
Principal Accounting
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the Interim
Condensed Consolidated Statements of Income and Consolidated Balance Sheets and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 5,527
<SECURITIES> 17,069
<RECEIVABLES> 54,585
<ALLOWANCES> (5,214)
<INVENTORY> 3,780
<CURRENT-ASSETS> 76,546
<PP&E> 214,293
<DEPRECIATION> (45,537)
<TOTAL-ASSETS> 386,355
<CURRENT-LIABILITIES> 63,521
<BONDS> 184,874
0
0
<COMMON> 0
<OTHER-SE> 120,957
<TOTAL-LIABILITY-AND-EQUITY> 386,355
<SALES> 0
<TOTAL-REVENUES> 281,551
<CGS> 0
<TOTAL-COSTS> 262,009
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,695
<INTEREST-EXPENSE> 8,474
<INCOME-PRETAX> 19,542
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,542
<EPS-PRIMARY> 2.28
<EPS-DILUTED> 1.98
</TABLE>
