<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 September 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
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Commission file number 0-18159
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QUEST HEALTH CARE FUND VIII, L.P.
- --------------------------------------------------------------------------------
Formerly: Southmark/CRCA Health Care Fund VIII, L.P.
<TABLE>
<S> <C>
Delaware 75-2160136
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
1117 Perimeter Center West E-210 Atlanta, GA 30338
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (770) 671-1014
------------------------------
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 11 PAGES
1
<PAGE> 2
QUEST HEALTH CARE FUND VIII, L.P.
BALANCE SHEETS
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ASSETS
<TABLE>
<CAPTION>
Sept. 30, December 31,
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1995 1994
------------ ------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 973,357 $ 972,990
Accounts receivable, net of allowance
for doubtful accounts of $6,204
at December 31, 1994 22,062 1,068,921
Prepaid expenses - 272,320
--------- ----------
Total current assets $ 995,419 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 5,628 2,456,537
---------- ----------
Net property and equipment 3,582 4,953,297
---------- ----------
OTHER ASSETS - 14,652
---------- ----------
TOTAL ASSETS $ 999,001 $ 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>
Sept. 30, December 31,
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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 - 423,205
Payable to Quest and affiliates 5,479 23,776
---------- ----------
Total current liabilities 5,479 2,536,971
---------- ----------
LONG-TERM OBLIGATIONS, less current maturities - 1,384,107
---------- ----------
Total liabilities 5,479 3,921,078
---------- ----------
PARTNERS' EQUITY:
Limited Partners 1,069,529 3,440,032
General Partner (76,007) (78,930)
---------- ----------
Total partners' equity 993,522 3,361,102
---------- ----------
TOTAL LIABILITIES AND PARTNERS' EQUITY $ 999,001 $ 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>
For the For the
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------- -----------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUES:
Operating revenue $ - $2,369,653 $1,516,712 $6,757,449
Interest income 7,308 4,211 55,238 6,838
Gain on sale - - 250,623 -
--------- --------- --------- ---------
Total revenues 7,308 2,373,864 1,822,573 6,764,287
--------- --------- --------- ---------
EXPENSES:
Wages & salaries - 980,010 648,877 2,858,409
Payroll tax & employee benefits - 169,993 138,461 510,365
Supplies - 268,757 140,404 738,237
Other operating expenses - 260,639 157,549 667,823
Ancillary services - 142,514 83,542 508,744
Health benefits - 34,430 35,960 99,313
Management fees - 95,696 65,046 276,575
Management fees-affiliate - 21,566 14,989 64,016
Property taxes - 17,457 11,644 52,387
Interest - 87,839 59,905 269,298
Depreciation and amortization 256 66,069 8,904 198,705
Partnership administration 36,774 55,984 164,972 245,675
--------- --------- --------- ---------
Total expenses 37,030 2,200,954 1,530,253 6,489,547
Net income (loss) $ (29,722) $ 172,910 $ 292,320 $ 274,740
========= ========= ========= =========
Net income (loss) per limited
partnership unit $ (.22) $ 1.29 $ 2.18 $ 2.05
========= ========= ========= =========
Weighted average Limited Partnership
Units outstanding 132,995 132,995 132,995 132,995
========= ========= ========= =========
</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 2,747 271,993 274,740
------- --------- ---------
Balance at September 30, 1994 $(74,058) $3,922,374 $3,848,316
======= ========= =========
Balance at December 31, 1994 $(78,930) $3,440,032 $3,361,102
Net income 2,923 289,397 292,320
Distributions - (2,659,900) (2,659,900)
------- ---------- ----------
Balance at September 30, 1995 $(76,007) $1,069,529 $ 993,522
======= ========= =========
</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>
Nine Months Ended
Sept. 30,
---------------------------
1995 1994
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from residents and
government agencies $ 2,317,591 $ 6,907,735
Cash paid to suppliers and
employees (1,802,710) (6,235,113)
Interest received 55,238 6,838
Interest paid (59,905) (269,298)
Property taxes paid (43,642) (33,642)
---------- ----------
Net cash provided by
operating activities 466,572 376,520
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of facilities 3,863,440 -
Payment for purchases of property
and equipment (3,280) (60,342)
---------- ----------
Net cash provided by (used in)
investing activities 3,860,160 (60,342)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distribution to partners (2,659,900) -
Principal payments on long-term debt (1,666,465) (48,638)
---------- ----------
Net cash (used in) financing
activities (4,326,365) (48,638)
---------- ----------
INCREASE IN CASH AND CASH EQUIVALENTS: 367 267,540
Cash and cash equivalents at beginning of
period 972,990 521,956
---------- ----------
Cash and cash equivalents at end of period $ 973,357 $ 789,496
========== ==========
</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>
Nine Months Ended
Sept. 30,
-----------------------------
1995 1994
---------- ----------
<S> <C> <C>
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Net income $ 292,320 $ 274,740
Adjustments to reconcile net loss to
net cash used in operating activities
Gain on sale of facilities (250,623) -
Depreciation and amortization 8,903 198,705
Changes in:
Accounts receivable 800,879 150,287
Prepaid and other current assets (12,326) (8,219)
Accounts payable and accrued
liabilities (354,284) (255,889)
Payable to Quest and affiliates (18,297) 16,896
--------- ---------
Net cash provided by
operating activities $ 466,572 $ 376,520
========= =========
</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
September 30, 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
September 30, 1995, the Partnership maintained cash balances at these banks
aggregating $858,074 in excess of the $100,000 FDIC insured maximum.
NOTE 3
On February 28, 1995, the Partnership sold its interests in its three remaining
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
determined and collected during the third quarter of 1995.
At closing, the Partnership received initial 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, held as a reserve pending
determination of the 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. During the third quarter of 1995, the
Partnership collected $731,382 additional cash due the Partnership resulting in
total consideration from the sale of $5,976,030. The Partnership made a final
determination of the change in working capital when the Partnership's
accountants completed certain special procedures. An initial distribution of
cash to the limited partners, in the amount of $2,659,900 or $20/unit was made
on July 5, 1995, after the establishment of adequate reserves for the wind down
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 4
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
its remaining facilities.
8
<PAGE> 9
QUEST HEALTH CARE FUND VIII, L.P.
NOTES TO FINANCIAL STATEMENTS
September 30, 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 September 30, 1995 are not
comparable to the comparable prior year period.
On February 28, 1995, the Partnership sold its partnership interests in its
three 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
determined and collected during the third quarter of 1995.
At closing, the Partnership received initial 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 was 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. During the third quarter of 1995, the
Partnership collected $731,382 additional cash due the Partnership. Total
consideration from this sale was, therefore, $5,976,030. The Partnership made
a final determination of the change in working capital after the end of the
second quarter, when the Partnership's accountants completed certain special
procedures. An initial distribution of $2,659,900 or $20/unit was made on July
5, 1995, after the establishment of adequate reserves for the winding down of
the Partnership. Nothing was distributed to the General Partner. A final
distribution will be made to the limited partners when all obligations of the
Partnership are retired.
The item "Gain on Sale" recognizes recoveries of certain payables that occurred
in the second quarter and were not considered in the post closing adjustments.
Partnership administration consists primarily of legal and accounting expense
associated with the sale of the partnership's interests in the three facilities
and the special procedures undertaken to calculate the final purchase price.
The Partnership's financial statements are presented on a liquidation
accounting basis.
9
<PAGE> 10
Liquidity and Capital Resources:
At September 30, 1995, the Partnership held $973,357 in cash and cash
equivalents, an increase of $367 since December 31, 1994. The increase is the
result of the sale of the Partnership's limited partnership interests in its
three remaining facilities less the subsequent distributions to the limited
partners. The accounts receivable for the current period reflect the reserve
held pending post closing adjustments related to the sale.
Distributions of a majority of the proceeds were made on July 5, 1995 after 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. Fixed price bids
are being obtained from the independent accounting and legal firms, which will
enable the Partnership to terminate its affairs and to make a final
distribution. Management of the Partnership currently believes that this
process will occur prior to year end.
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
10
<PAGE> 11
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: November 15, 1995 By: /s/ Stuart C. Berry
------------------ -----------------------------
Executive Vice-President/CFO
By: /s/ Michael G. Hunter
-----------------------------
President
11
<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 NINE MONTHS
ENDED SEPTEMBER 30, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<EXCHANGE-RATE> 1
<CASH> 973,357
<SECURITIES> 0
<RECEIVABLES> 22,062
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 995,419
<PP&E> 9,210
<DEPRECIATION> 5,628
<TOTAL-ASSETS> 999,001
<CURRENT-LIABILITIES> 5,479
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 993,522
<TOTAL-LIABILITY-AND-EQUITY> 999,001
<SALES> 0
<TOTAL-REVENUES> 1,822,573
<CGS> 0
<TOTAL-COSTS> 1,468,846
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,502
<INTEREST-EXPENSE> 59,905
<INCOME-PRETAX> 292,320
<INCOME-TAX> 0
<INCOME-CONTINUING> 292,320
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 292,320
<EPS-PRIMARY> 2.18
<EPS-DILUTED> 2.18
</TABLE>
