<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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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
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (404) 607-1950
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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
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QUEST HEALTH CARE FUND VIII, L.P.
BALANCE SHEETS
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ASSETS
<TABLE>
<CAPTION>
June 30, December 31,
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1995 1994
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<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 2,908,458 $ 972,990
Accounts receivable, net of allowance
for doubtful accounts of $6,204
at December 31, 1994 795,742 1,068,921
Prepaid expenses - 272,320
----------- -----------
Total current assets $ 3,704,200 2,314,231
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PROPERTY AND EQUIPMENT, at cost
Land - 315,227
Buildings and improvements - 6,210,774
Equipment and furnishings 9,210 883,833
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9,210 7,409,834
Less accumulated depreciation 5,372 2,456,537
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Net property and equipment 3,838 4,953,297
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OTHER ASSETS - 14,652
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TOTAL ASSETS $ 3,708,038 $ 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>
June 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 24,894 23,776
----------- -----------
Total current liabilities 24,894 2,536,971
----------- -----------
LONG-TERM OBLIGATIONS, less current maturities - 1,384,107
----------- -----------
Total liabilities 24,894 3,921,078
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PARTNERS' EQUITY:
Limited Partners 3,758,854 3,440,032
General Partner (75,710) (78,930)
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Total partners' equity 3,683,144 3,361,102
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TOTAL LIABILITIES AND PARTNERS' EQUITY $ 3,708,038 $ 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 Six Months Ended
June 30, June 30,
---------------------------- -----------------------------
1995 1994 1995 1994
---------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES:
Operating revenue $ 20,000 $ 2,194,981 $ 1,516,712 $ 4,387,796
Interest income 33,066 2,202 47,930 2,627
Gain on sale 41,673 - 250,623 -
---------- ----------- ----------- -----------
Total revenues 94,739 2,197,183 1,815,265 4,390,423
---------- ----------- ----------- -----------
EXPENSES:
Wages & salaries - 935,910 648,877 1,878,399
Payroll tax & employee benefits - 175,570 138,461 340,372
Supplies - 235,813 140,404 469,480
Other operating expenses 350 201,097 157,549 407,184
Ancillary services - 192,605 83,542 366,230
Health benefits - 32,458 35,960 64,883
Management fees - 91,901 65,046 180,879
Management fees-affiliate - 21,191 14,989 42,450
Property taxes - 17,457 11,644 34,930
Interest - 93,377 59,905 181,459
Depreciation and amortization - 65,936 8,648 132,636
Partnership administration 66,276 119,540 128,198 189,691
---------- ----------- ----------- -----------
Total expenses 66,626 2,182,855 1,493,223 4,288,593
---------- ----------- ----------- -----------
Net income (loss) $ 28,113 $ 14,328 $ 322,042 $ 101,830
========== =========== =========== ===========
Net income (loss) per Limited
Partnership Unit $ .21 $ .11 $ 2.40 $ .76
========== =========== =========== ===========
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 1,018 100,812 101,830
--------- ----------- -----------
Balance at June 30, 1994 $ (75,787) $ 3,751,193 $ 3,675,406
========= =========== ===========
Balance at December 31, 1994 $ (78,930) $ 3,440,032 $ 3,361,102
Net income 3,220 318,822 322,042
--------- ----------- -----------
Balance at June 30, 1995 $ (75,710) $ 3,758,854 $ 3,683,144
========= =========== ===========
</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>
Six Months Ended
June 30,
--------------------------------
1995 1994
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from residents and
government agencies $ 1,543,911 $ 4,508,444
Cash paid to suppliers and
employees (1,746,521) (4,018,314)
Interest received 47,930 2,627
Interest paid (59,905) (181,459)
Property taxes paid (43,642) (22,115)
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Net cash provided by (used in)
operating activities (258,227) 289,183
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CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of facilities 3,863,440 -
Payment for purchases of property
and equipment (3,280) (54,073)
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Net cash provided by (used in)
investing activities 3,860,160 (54,073)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt (1,666,465) (38,141)
------------ ------------
Net cash (used in) financing
activities (1,666,465) (38,141)
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INCREASE IN CASH AND CASH EQUIVALENTS: 1,935,468 196,969
Cash and cash equivalents at beginning of
period 972,990 521,956
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Cash and cash equivalents at end of period $ 2,908,458 $ 718,925
============ ============
</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>
Six Months Ended
June 30,
------------------------------
1995 1994
---------- ---------
<S> <C> <C>
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Net income $ 322,042 $ 101,830
Adjustments to reconcile net loss to
net cash used in operating activities
Gain on sale of facilities (250,623) -
Depreciation and amortization 8,648 132,636
Changes in:
Accounts receivable 27,199 120,648
Prepaid and other current assets (12,326) 27,818
Accounts payable and accrued
liabilities (354,284) (97,357)
Payable to Quest and affiliates 1,117 3,608
---------- ---------
Net cash provided by (used in)
operating activities $ (258,227) $ 289,183
========== =========
</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
June 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
June 30, 1995, the Partnership maintained cash balances at these banks
aggregating $2,793,772 in excess of the $100,000 FDIC insured maximum.
NOTE 3
On February 28, 1995, the Partnership sold its three remaining partnership
interests in facilities to an unaffiliated third party. The contract called
for adjusting working capital, as defined, to exclude interpartnership accounts
and the current portion of long term debt and to reflect a 25% discount on
accounts receivable at closing. The contract also provided for a cash
consideration adjustment based on changes in working capital including the
change in the 25% discount proportionate to changes in accounts receivable
occurring between December 31, 1994 and the date of closing of February 28,
1995, which was finally determined subsequent to the second quarter of 1995.
At closing, the Partnership received initial consideration of $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, to be 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 second quarter of 1995, the Partnership
estimated
8
<PAGE> 9
that $731,382 additional cash is 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.
9
<PAGE> 10
QUEST HEALTH CARE FUND VIII, L.P.
NOTES TO FINANCIAL STATEMENTS
June 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 June 30, 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 called for
adjusting working capital, as defined, to exclude interpartnership accounts and
the current portion of long term debt and to reflect a 25% discount on accounts
receivable at closing. The contract also provided for a cash consideration
adjustment based on changes in working capital including the change in the 25%
discount proportionate to changes in accounts receivable occurring between
December 31, 1994 and the date of closing of February 28, 1995, which was
finally determined, subsequent to the second quarter of 1995.
At closing, the Partnership received 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. 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 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. Distribution of cash to the limited partners was made on
July 5, 1995 $2,659,900 or $20/unit was distributed to the limited partners
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 $20,000 revenue item reflects the retirement, at a discount, of an
outstanding payable due to Medicare that had been reserved in 1994. 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.
10
<PAGE> 11
Liquidity and Capital Resources:
At June 30, 1995, the Partnership held $2,908,458 in cash and cash equivalents,
an increase of $1,935,468 since December 31, 1994. The increase is the result
of the sale of the Partnership's limited partnership interests in its three
facilities and 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. A final
distribution will occur at that time. Management of the Partnership currently
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.
None
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: August 21, 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 SIX MONTHS
ENDED JUNE 30, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 2,908,458
<SECURITIES> 0
<RECEIVABLES> 795,742
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,704,200
<PP&E> 9,210
<DEPRECIATION> 5,372
<TOTAL-ASSETS> 3,708,038
<CURRENT-LIABILITIES> 24,894
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 3,683,144
<TOTAL-LIABILITY-AND-EQUITY> 3,708,038
<SALES> 0
<TOTAL-REVENUES> 1,815,265
<CGS> 0
<TOTAL-COSTS> 1,493,223
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,502
<INTEREST-EXPENSE> 59,905
<INCOME-PRETAX> 322,042
<INCOME-TAX> 0
<INCOME-CONTINUING> 322,042
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 322,042
<EPS-PRIMARY> 2.40
<EPS-DILUTED> 2.40
</TABLE>
