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Previous: XSCRIBE CORP /CA/, 10-Q, 1996-11-14 |
Next: NEWELL CO, 10-Q, 1996-11-14 |
<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended September 30, 1996 Commission File Number 33-6122-01
MEDICAL INCOME PROPERTIES 2A LIMITED PARTNERSHIP
------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 59-2724921
-------- ----------
(State of Organization) (IRS Employer Identification Number)
7000 Central Parkway, Suite 850
-------------------------------
Atlanta, Georgia 30328
----------------------
(Address of Principal Executive Office)
(770) 668-1080
--------------
(Registrant's Telephone Number, Including Area Code)
Indicate by check 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 (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes___X___ No_______
The number of limited partnership units outstanding at September 30, 1996 was
18,639.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
PART I
<S> <C>
Item 1. Financial Information............................................. 4 - 10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations..................... 11
PART II
Signatures........................................................ 12
</TABLE>
2
<PAGE> 3
PART I
ITEM 1.
FINANCIAL INFORMATION
MEDICAL INCOME PROPERTIES 2A LIMITED PARTNERSHIP
INDEX
<TABLE>
<CAPTION>
Page No.
<S> <C>
Balance Sheets, September 30, 1996 and December 31, 1995........................ 4
Statements of Operations for the three
months ended September 30, 1996 and 1995 and the nine months
ended September 30, 1996 and 1995............................................... 5
Statements of Partners' Capital for the nine months
ended September 30, 1996 and 1995............................................... 6
Statements of Cash Flows for the nine months ended
September 30, 1996 and 1995..................................................... 7
Notes to Financial Statements................................................... 8 - 10
</TABLE>
3
<PAGE> 4
MEDICAL INCOME PROPERTIES 2A LIMITED PARTNERSHIP
Balance Sheets
September 30, 1996 and December 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
ASSETS 1996 1995
------ ---- ----
<S> <C> <C>
Current assets
Cash and equivalents $ 2,203,252 $ 889,401
Marketable securities 2,495,896 2,161,755
Accounts receivable, net of allowance
for doubtful accounts of $194,531 in 1996
and $190,934 in 1995 2,403,991 2,634,141
Estimated settlements due from third
party payors 256,318 485,609
Prepaid expenses and other assets 218,780 110,667
---------------- ----------------
Total current assets 7,578,237 6,281,573
Investments in joint ventures 4,910,598 4,718,713
Property, plant and equipment, net of
accumulated depreciation 13,079,338 13,394,031
Deferred financing costs, net of accumulated
amortization of $50,380 in 1996 and
$39,294 in 1995 26,240 37,326
Due from affiliates 382,517 754,471
---------------- ----------------
Total assets $ 25,976,930 $ 25,186,114
================ ================
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
Current liabilities
Current portion of long term debt $ 341,941 $ 337,075
Accounts payable 1,180,525 870,895
Accrued payroll and payroll taxes 368,107 259,497
Accrued vacation 230,593 207,362
Accrued insurance 145,361 65,028
Accrued management fees 82,403 79,234
Patient deposits and trust liabilities 132,652 97,569
Other accrued expenses 63,511 92,522
Estimated settlements due to third
party payors 973,248 453,166
Due to affiliates 230,760 243,814
---------------- ----------------
Total current liabilities 3,749,101 2,706,162
Bonds, notes and capital lease obligations 3,645,374 3,903,921
---------------- ----------------
Total liabilities 7,394,475 6,610,083
---------------- ----------------
Venture partners' minority interest 2,010,603 2,315,986
---------------- ----------------
Partners' capital
Limited partners 16,540,374 16,250,393
General partners 31,478 9,652
---------------- ----------------
Total partners' capital 16,571,852 16,260,045
---------------- ----------------
Total liabilities and partners' capital $ 25,976,930 $ 25,186,114
================ ================
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE> 5
MEDICAL INCOME
PROPERTIES 2A LIMITED PARTNERSHIP
Statements of Operations
For the three months ended September 30, 1996 and 1995
and the nine months ended September 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
----------------------------------- -----------------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue
Net resident service revenue $ 5,074,667 $ 4,952,906 $ 15,189,309 $ 14,660,506
Other revenue 7,643 13,446 23,956 28,384
--------------- --------------- --------------- ----------------
Total revenue 5,082,310 4,966,352 15,213,265 14,688,890
--------------- --------------- --------------- ----------------
Operating expenses:
Professional care of residents 2,615,363 2,386,476 7,522,949 6,788,561
Dietary 416,036 411,772 1,229,625 1,196,849
Household and plant 423,882 445,238 1,294,573 1,281,641
General and administrative 714,563 773,908 2,266,846 2,295,034
Employee health and welfare 207,736 229,444 699,591 678,964
Depreciation and amortization 182,278 192,170 565,194 566,920
--------------- --------------- --------------- ----------------
Total operating expenses 4,559,858 4,439,008 13,578,778 12,807,969
--------------- --------------- --------------- ----------------
Operating income 522,452 527,344 1,634,487 1,880,921
--------------- --------------- --------------- ----------------
Other income (expenses):
Interest income 55,104 52,591 143,271 119,178
Interest expense (92,182) (105,668) (285,799) (320,641)
Provider fees (137,805) (137,805) (413,056) (412,876)
Minority Interest (82,542) (43,245) (270,695) (141,956)
Partnership share of joint
venture income 192,207 108,283 409,384 362,324
--------------- --------------- --------------- ----------------
Total other
income (expenses) (65,218) (125,844) (416,895) (393,971)
--------------- --------------- --------------- ----------------
Net income $ 457,234 $ 401,500 $ 1,217,592 $ 1,486,950
=============== =============== =============== ================
Net income per weighted
average limited partnership unit
outstanding $ 22.81 $ 20.03 $ 60.75 $ 74.19
=============== =============== =============== ================
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE> 6
MEDICAL INCOME PROPERTIES 2A LIMITED PARTNERSHIP
Statements of Partners' Capital
For the Nine Months Ended September 30, 1996 and December 31, 1995
(Unaudited)
<TABLE>
Limited Partners General
Units Amount Partners Total
----- ------ -------- -----
<S> <C> <C> <C> <C>
Partners' capital,
December 31, 1995 18,639 $16,250,393 $ 9,652 $16,260,045
Distributions to partners
($45.00 per limited
partnership unit outstanding) (838,755) (63,132) (901,887)
Net income 1,132,361 85,231 1,217,592
Unrealized gain on marketable
securities available for sale (3,625) (273) (3,898)
--------- ------------ ------- ------------
Partners' capital,
September 30, 1996 18,639 $16,540,374 $31,478 $ 16,571,852
========= =========== ======= ============
</TABLE>
6
<PAGE> 7
MEDICAL INCOME
PROPERTIES 2A LIMITED PARTNERSHIP
Statements of Cash Flows
Nine months ended September 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Cash received from patient care $ 16,168,833 $ 14,276,588
Cash paid to suppliers and employees (12,590,650) (12,114,579)
Interest received 150,024 122,383
Interest paid (285,799) (320,641)
Provider fees (413,056) (412,876)
Other operating receipts 23,956 28,384
---------------- ---------------
Net cash provided by operating activities 3,053,308 1,579,259
---------------- ---------------
Cash flows from investing activities:
Purchases of marketable securities (344,796) -
Distributions from joint ventures 217,500 267,500
Acquisitions of property (239,416) (349,085)
---------------- ---------------
Net cash used by investing activities (366,712) (81,585)
---------------- ---------------
Cash flows from financing activities:
Payments of long term debt
and lease obligations (253,679) (248,898)
Net borrowings (payments) to related parties 358,900 178,944
Distributions to venture partners (576,079) (30,679)
Distributions to partners (901,886) (901,887)
---------------- ---------------
Net cash used by financing activities (1,372,744) (1,002,520)
---------------- ---------------
Net increase in cash and equivalents 1,313,852 495,154
Cash and equivalents, beginning of period 889,400 864,318
---------------- ---------------
Cash and equivalents, end of period $ 2,203,252 $ 1,359,472
================ ===============
Reconciliation of net income to net cash
provided by operating activities
Net income $ 1,217,592 $ 1,486,950
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 565,194 566,920
Minority Interest 270,695 141,956
Partnership share of joint venture (income) loss (409,384) (362,324)
Accretion of discount on marketable securities 6,753 3,204
Decrease (increase) in accounts receivable, net 230,151 (609,731)
Decrease in third party receivables 229,291 302,502
(Increase) decrease in prepaid expenses
and other assets (108,113) 41,538
Increase in accounts payable and
accrued expenses 531,047 84,932
Increase (decrease) in third party payables 520,082 (76,688)
---------------- ---------------
Net cash provided by operating activities $ 3,053,308 $ 1,579,259
================ ===============
</TABLE>
The accompanying notes are an integral part of these statements.
7
<PAGE> 8
MEDICAL INCOME
PROPERTIES 2A LIMITED PARTNERSHIP
Notes to Financial Statements
(Unaudited)
(1) Financial Statements
The financial statements have been prepared in accordance with generally
accepted accounting principles. The financial information included in
these financial statements is unaudited, however, in management's
opinion, all normal recurring adjustments necessary for a fair
presentation of the results of operations for the periods included have
been made.
Footnote disclosures which would substantially duplicate those contained
in the December 31, 1995 audited financial statements have been omitted
from this report.
(2) Property, Plant and Equipment
Property, plant, and equipment is recorded at cost and consists of the
following at September 30, 1996 and December 31, 1995:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Land $ 493,528 $ 493,528
Building 10,235,585 10,141,958
Equipment 2,222,516 2,076,727
Property under capitalized lease 6,550,539 6,550,539
------------------ ----------------
Total property, plant and equipment 19,502,168 19,262,752
Accumulated depreciation and amortization (6,422,830) (5,868,721)
------------------ ----------------
Net property, plant and equipment $ 13,079,338 $ 13,394,031
================== ================
</TABLE>
(3) Debt Obligations
Debt Obligations consisted of the following at September 30, 1996 and
December 31, 1995:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Industrial Revenue Bonds payable at a variable
rate of interest with monthly principal and
interest payments of $9,799 through April 1,
2005. The interest rate is adjusted every
May 1 and November 1. $ 805,428 $ 854,557
Mortgage note with interest at the prime rate plus
1% in 60 payments of $22,728 through
May 26, 1998; with a balloon payment due
May, 1998. 3,181,887 3,386,439
------------------ ----------------
3,987,315 4,240,996
Less amounts due in one year or less 341,941 337,075
------------------ ----------------
$ 3,645,374 $ 3,903,921
================== ================
</TABLE>
8
<PAGE> 9
The aggregate annual maturities for the next five fiscal years are as
follows:
<TABLE>
<S> <C> <C>
1996 $ 83,394
1997 342,571
1998 2,916,775
1999 82,278
2000 89,307
Thereafter 472,990
--------------
$ 3,987,315
==============
</TABLE>
(4) Investment in Joint Venture
The condensed financial information for the investments in joint
ventures as of September 30, 1996 and December 31, 1995 is as follows:
KATY (owned 50% by Partnership)
<TABLE>
<CAPTION>
1996 1995
------ ------
<S> <C> <C>
Current assets $ 2,195,080 $ 1,684,094
Long term assets 4,840,582 5,048,138
---------------- ----------------
Total assets $ 7,035,662 $ 6,732,232
================ ================
Current liabilities $ 667,220 $ 684,328
Equity 6,368,442 6,047,904
---------------- ----------------
Total liabilities and equity $ 7,035,662 $ 6,732,232
================ ================
Partnership's investment at September 30, 1996
and December 31, 1995 $ 3,184,221 $ 3,023,952
================ ================
Revenues $ 3,733,695 $ 4,985,129
Expenses 3,193,443 4,362,005
---------------- ----------------
Net income $ 540,252 $ 623,124
================ ================
</TABLE>
9
<PAGE> 10
HUMBLE (owned 50% by Partnership)
<TABLE>
<CAPTION>
1996 1995
---------------- ----------------
<S> <C> <C>
Current assets $ 1,400,594 $ 1,140,926
Long term assets 3,440,040 3,651,762
---------------- ----------------
Total assets $ 4,840,634 $ 4,792,688
================ ================
Current liabilities $ 741,481 $ 703,933
Long term liabilities 646,400 691,850
Equity 3,452,753 3,396,905
---------------- ----------------
Total liabilities and equity $ 4,840,634 $ 4,792,688
================ ================
Partnership's investment at September 30, 1996
and December 31, 1995 $ 1,726,376 $ 1,698,453
================ ================
Revenues $ 3,262,103 $ 3,664,088
Expenses 2,983,588 3,526,809
---------------- ----------------
Net income $ 278,515 $ 137,279
================ ================
</TABLE>
(5) Related Party Transactions
Through September 30, 1996 and 1995, QualiCorp, Inc., the parent of
Qualicorp Management, Inc. (the Managing General Partner of the
Partnership) charged $97,946 and $94,483, respectively, of administrative
expenses to the Partnership.
10
<PAGE> 11
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
Cash and equivalents increased during the quarter ended September 30, 1996 by
$562,814. This increase was achieved through improved patient receivables
collections and increases in payables and accrued expenses of $194,065 in the
quarter. In addition, the State of Illinois has begun to pay for the care of
Medicaid residents in a more timely fashion. Property improvements and equipment
purchases totaled $23,041 for the quarter and are projected to continue into
1997.
Due to the continued uncertainty of the Alabama Medicaid issues referred to in
prior quarterly reports, the prospective purchaser of the Partnership assets has
communicated it will not proceed with the proposed transaction. The Managing
General Partner, in conjunction with its investment bankers, has re-opened
discussions with other companies who had expressed an interest in the assets in
the hope of negotiating a sale of the assets to one of them.
The Partnership will make its regular distribution of $15.00 per unit on
November 15.
The Partnership will continue to make quarterly distributions to its limited
partners based upon cash flow generated by facility operations after considering
cash requirements for debt services, needed improvement to its property and cash
reserves. There can be no assurance the current distribution of $15.00 per unit
per quarter will be maintained into 1997.
Operations
Net income for the quarter ended September 30, 1996 was $457,234 compared to
$401,500 for the quarter ended September 30, 1995. Revenue increased between
quarters by 2.5% due to improved ancillary services and a higher routine
services rate in the Alabama facilities. Expenses were $120,850 higher than the
previous year due to higher cost of resident services, primarily salaries and
ancillary costs. In addition, Administrative and General expenses were lower due
to decreased insurance costs. Other income (expense) was affected by higher
earnings from the joint venture properties.
11
<PAGE> 12
PART II
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MEDICAL INCOME PROPERTIES 2A
LIMITED PARTNERSHIP
Registrant
By /s/ John H. Stoddard Date: October 31, 1996
------------------------------------- ----------------------
John H. Stoddard
President and Chief Financial Officer
QualiCorp Management, Inc.
Managing General Partner
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF MEDICAL INCOME PROPERTIES 2A LIMITED PARTNERSHIP FOR THE
QUARTER ENDED SEPTEMBER 30, 1996 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-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 2,203,252
<SECURITIES> 2,495,896
<RECEIVABLES> 2,598,522
<ALLOWANCES> 194,531
<INVENTORY> 0
<CURRENT-ASSETS> 7,578,237
<PP&E> 19,502,168
<DEPRECIATION> 6,422,830
<TOTAL-ASSETS> 25,976,930
<CURRENT-LIABILITIES> 3,749,101
<BONDS> 3,645,374
0
0
<COMMON> 0
<OTHER-SE> 16,571,852<F1>
<TOTAL-LIABILITY-AND-EQUITY> 25,976,930
<SALES> 15,189,309
<TOTAL-REVENUES> 15,213,265
<CGS> 0
<TOTAL-COSTS> 13,578,778
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 285,799
<INCOME-PRETAX> 1,217,592
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,217,592
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,217,592
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>REPRESENTS TOTAL PARTNERSHIP CAPITAL INCLUDING NET INCOME NET OF DISTRIBUTIONS
PAID.
</FN>
</TABLE>
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