<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 March 31, 1995
-------------------------------------
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-18159
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QUEST HEALTH CARE FUND VIII, L.P.
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Formerly: Southmark/CRCA Health Care Fund VIII, L.P.
Delaware 75-2160136
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(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 12 PAGES
1
<PAGE> 2
QUEST HEALTH CARE FUND VIII, L.P.
BALANCE SHEETS
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
------------ ------------
1995 1994
------------ ------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 3,004,632 $ 972,990
Accounts receivable, net of allowance
for doubtful accounts of $6,784
at December 31, 1994 758,784 1,068,921
Prepaid expenses - 272,320
----------- -----------
Total current assets $ 3,763,416 2,314,231
----------- -----------
PROPERTY AND EQUIPMENT, at cost
Land - 315,227
Buildings and improvements - 6,210,774
Equipment and furnishings 9,210 883,833
----------- -----------
9,210 7,409,834
Less accumulated depreciation 5,372 2,456,537
----------- -----------
Net property and equipment 3,838 4,953,297
----------- -----------
OTHER ASSETS - 14,652
----------- -----------
TOTAL ASSETS $ 3,767,254 $ 7,282,180
=========== ===========
</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 FUND VIII, L.P.
BALANCE SHEETS
LIABILITIES AND PARTNERS' EQUITY
<TABLE>
<CAPTION>
March 31, December 31,
------------- ------------
1995 1994
------------- ------------
<S> <C> <C>
CURRENT LIABILITIES:
Current maturities of long-term debt $ - $ 1,689,750
Trade accounts payable - 114,247
Accrued compensation - 285,993
Other 100,000 423,205
Payable to Quest and affiliates 12,223 23,776
---------- -----------
Total current liabilities 112,223 2,536,971
---------- -----------
LONG-TERM OBLIGATIONS, less current maturities - 1,384,107
---------- -----------
Total liabilities 112,223 3,921,078
---------- -----------
PARTNERS' EQUITY:
Limited Partners 3,731,022 3,440,032
General Partner (75,991) (78,930)
---------- -----------
Total partners' equity 3,655,031 3,361,102
---------- -----------
TOTAL LIABILITIES AND PARTNERS' EQUITY $3,767,254 $ 7,282,180
========== ===========
</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 FUND VIII, L.P.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------------
1995 1994
----------- -----------
<S> <C> <C>
REVENUES:
Operating revenue $1,496,712 $2,192,815
Interest income 14,864 425
Gain on sale 193,676 -
---------- ----------
Total revenues 1,705,252 2,193,240
---------- ----------
EXPENSES:
Wages & salaries 648,877 942,489
Payroll tax & employees benefits 138,461 164,802
Supplies 140,404 233,667
Other Operating expenses 157,199 206,087
Ancillary services 83,542 173,625
Health benefits 35,960 32,425
Management fees 65,046 88,978
Management fees-affiliate 14,989 21,259
Property taxes 11,644 17,473
Interest 44,631 88,082
Depreciation and amortization 8,648 66,700
Partnership administration costs 61,922 70,151
---------- ----------
Total expenses 1,411,323 2,105,738
---------- ----------
Net income $ 293,929 $ 87,502
========== ==========
Net income per Limited Partnership
Unit $ 2.19 $ .65
========== ==========
Weighted average Limited Partnership
Units outstanding 132,995 132,995
========== ==========
</TABLE>
The financial information included herein has been prepared by management
without audit by independent public accountants. See notes to financial
statements.
4
<PAGE> 5
QUEST HEALTH CARE FUND VIII, L.P.
STATEMENTS OF PARTNERS' EQUITY
<TABLE>
<CAPTION>
Total
General Limited Partners'
Partner Partners Equity
--------- ---------- ----------
<S> <C> <C> <C>
Balance at December 31, 1993 $(76,805) $3,650,381 $3,573,576
Net income 875 86,627 87,502
-------- ---------- ----------
Balance at March 31, 1994 $(75,930) $3,737,008 $3,661,078
======== ========== ==========
Balance at December 31, 1994 $(78,930) $3,440,032 $3,361,102
Net income 2,939 290,990 293,929
-------- ---------- ----------
Balance at March 31, 1995 $(75,991) $3,731,022 $3,655,031
======== ========== ==========
</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 FUND VIII, L.P.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------------
1995 1994
--------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from residents and
government agencies $1,503,941 $2,150,177
Cash paid to suppliers and
employees (1,592,585) (2,097,418)
Interest received 14,864 425
Interest paid (44,631) (88,082)
Property taxes paid (43,642) (22,115)
---------- ----------
Net cash used in operating activities (162,053) (57,013)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of facilities 3,863,440 -
Payment for purchases of property
and equipment (3,280) (43,647)
---------- ----------
Net cash used in investing activities 3,860,160 (43,647)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt (1,666,465) (27,876)
---------- ----------
Net cash provided by (used in) financing
activities (1,666,465) (27,876)
---------- ----------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS: 2,031,642 (128,536)
Cash and cash equivalents at beginning of
period 972,990 521,956
---------- ----------
Cash and cash equivalents at end of period $3,004,632 $ 393,420
========== ==========
</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 FUND VIII, L.P.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------
1995 1994
--------- ---------
<S> <C> <C>
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Net income $ 293,929 $ 87,502
Adjustments to reconcile net income to
net cash used in operating activities:
Gain on sale of facilities (193,676) -
Depreciation and amortization 8,648 66,700
Changes in:
Accounts receivable 7,230 (42,638)
Other current assets - 16,674
Accounts payable and accrued
liabilities (266,631) (172,157)
Payable to Quest and affiliates (11,553) (13,094)
---------- ----------
Net cash used in operating activities $ (162,053) $ (57,013)
========== ==========
</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 FUND VIII, L.P.
NOTES TO FINANCIAL STATEMENTS
March 31, 1995
NOTE 1
During interim periods, Quest Health Care Fund VIII, 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 interim financial statements,
prepared in accordance with the instructions for Form 10-Q, are unaudited and
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
March 31, 1995, the Partnership maintained cash balances at these banks
aggregating $2,894,662 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 by 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 $35,960 was accrued under this
arrangement in the first three 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 payments to QASLP for
the first quarter ended March 31, 1995 were $14,989.
NOTE 4
On February 20, 1992, the Partnership refinanced the $1,650,000 note related to
Edgefield Health Care Center through a new third party lender. The note was
payable in full in March, 1995. The note was retired on February 28, 1995, with
proceeds for the sale of this facility. See Note 6.
8
<PAGE> 9
QUEST HEALTH CARE FUND VIII, L.P.
NOTES TO FINANCIAL STATEMENTS
March 31, 1995
On May 10, 1993, the Partnership refinanced the $210,527 and the $845,248 notes
secured by the Vicksburg facility, through two new notes totaling $1,400,000.
The 10.5% notes call for monthly payments of $13,218.54. The notes are due June
2003 and are secured by the facility's property and equipment. The Partnership
was relieved of its obligation as regards to these notes as a result of the
sale of the Partnership's interests in the Vicksburg facility. See Note 6.
NOTE 5
The Partnership settled its claims against Healthcare Service Group, Inc. in
the third quarter of 1994, which was described in detail in the Partnership's
1994 Annual Report on Form 10-K.
NOTE 6
On February 28, 1995, the Partnership sold its three remaining Partnership
interests in facilities 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 provides 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 will be
calculated subsequent to the first quarter of 1995.
At closing, the Partnership received consideration of $5,694,648 consisting of
cash of $3,863,440, relief of liability relating to the Vicksburg facility
mortgage of $1,381,208 and $450,000, which is held as a reserve pending
determination of post closing adjustments. Of the cash received $1,666,465 was
used to retire the Partnership's liability relating to the mortgage on the
Edgefield facility. Subsequent to the end of the first quarter of 1995, the
Partnership estimated that $731,382 additional cash is due the Partnership.
Total consideration from this sale is, therefore, expected to be $5,976,030.
The Partnership will make a final determination when the Partnership's
accountants have completed certain special procedures to enable the Partnership
to make its final determination. Distribution of cash to the limited partners
is expected to commence as soon as practicable, 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 three facilities.
NOTE 7
The Partnership's financial statements are presented on a liquidation
accounting basis. The statements of operations include operations for only two
months ending February 28, 1995, the date the Partnership sold its interests in
the remaining facilities.
9
<PAGE> 10
QUEST HEALTH CARE FUND VIII, L.P.
NOTES TO FINANCIAL STATEMENTS
March 31, 1995
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS:
Result of Operations:
Revenues and expenses for the quarter ended March 31, 1995 are not comparable
to the comparable prior year period.
On February 28, 1995, the Partnership sold its remaining Partnership interests
in three facilities 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 provides 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 will be
calculated subsequent to the first quarter of 1995.
At closing, the Partnership received consideration of $5,694,648 consisting of
cash of $3,863,440, relief of liability relating to the Vicksburg facility
mortgage of $1,381,208 and $450,000, which is held as a reserve pending
determination of post closing adjustments. Of the cash received $1,666,465 was
used to retire the Partnership's liability relating to the mortgage on the
Edgefield facility. Subsequent to the end of the first quarter of 1995, the
Partnership estimated that $731,382 additional cash is due the Partnership.
Total consideration from this sale is, therefore, expected to be $5,976,030.
The Partnership will make a final determination when the Partnership's
accountants have completed certain special procedures to enable the Partnership
to make its final determination. Distribution of cash to the limited partners
is expected to commence as soon as practicable, subject to establishing
adequate reserves to retire the final obligations of the Partnership as part of
the winding down process, which could take up to 6 months. The balance sheet
of the Partnership reflects the effects of the sale of the Partnership's
interests in the three facilities.
The Partnership's financial statements are presented on a liquidation
accounting basis.
Liquidity and Capital Resources:
At March 31, 1995, the Partnership held $3,004,632 in cash and cash
equivalents, an increase of $2,031,642 over prior comparable period. The
increase is the result of the sale of the Partnership's interests in its three
facilities. The accounts receivable for the current period reflect the reserve
held pending post closing adjustments related to the sale.
10
<PAGE> 11
The "other" liability relates to an obligation due to the Health Care Finance
Administration which was retired, in full, subsequent to March 31, 1995.
Distributions of a majority of the proceeds will commence as soon as
practicable, subject to the creation of adequate reserves to retire the final
obligations of the Partnership. Such liabilities include the costs of: a final
independent audit, filing final tax returns, distributing K-1 forms to the
limited partners, printing, mailing and clearing distribution checks, legal and
other incidental costs associated with the winding down of the Partnership.
Management of the Partnership believes that this process could take as long as
six months.
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.
The Partnership filed the following report on Form 8-K during the
first quarter of 1995.
<TABLE>
<CAPTION>
Date Items Reported
---- --------------
<S> <C>
February 28, 1995 2,7
</TABLE>
11
<PAGE> 12
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
FUND VIII, L.P.
(Registrant)
By: QUEST RESCUE PARTNERS - 8, L.P.
General Partner
By: QUEST RESCUE PARTNERS - 8, CORP,
Date: May 19, 1995 By:/s/ Stuart C. Berry
--------------- -----------------------------
Executive Vice-President/CFO
By:/s/ Michael G. Hunter
-----------------------------
President
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF QUEST HEALTH CARE FUND VIII, L.P. FOR THE THREE MONTHS
ENDED MARCH 31, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-01-1995
<EXCHANGE-RATE> 1
<CASH> 3,004,632
<SECURITIES> 0
<RECEIVABLES> 758,784
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,763,416
<PP&E> 9,210
<DEPRECIATION> 5,372
<TOTAL-ASSETS> 3,767,254
<CURRENT-LIABILITIES> 112,223
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 3,655,031
<TOTAL-LIABILITY-AND-EQUITY> 3,767,254
<SALES> 0
<TOTAL-REVENUES> 1,705,252
<CGS> 0
<TOTAL-COSTS> 1,365,190<F1>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,502
<INTEREST-EXPENSE> 44,631
<INCOME-PRETAX> 293,929
<INCOME-TAX> 0
<INCOME-CONTINUING> 293,929
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 293,929
<EPS-PRIMARY> 2.19
<EPS-DILUTED> 2.19
<FN>
<F1>Excludes Loss on Sale, Prov. B Debts, & Interest
</FN>
</TABLE>
