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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
For annual and transitions reports pursuant to sections 13 or 15 (d) of the
Securities Exchange Act of 1934.
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
----------------------
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 0-13415
CONSOLIDATED RESOURCES HEALTH CARE FUND II
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Georgia 58-1542125
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) identification No.)
1175 Peachtree Street, Suite 710, Atlanta, Georgia 31106
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 404-873-1919
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Limited
Partnership Units
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 [ ] No [x]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulations S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definite proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Of the registrant's 15,000 Limited Partnership Units, 14,970 are held by
non-affiliates. The aggregate market value of units held by non-affiliates is
not determinable since there is no public trading market for Limited Partnership
Units and transfers of units are subject to certain restrictions. Documents
Incorporated by Reference: See Index to Exhibits on pages 11-12.
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PART I
ITEM 1. BUSINESS
Consolidated Resources Health Care Fund II (the "Partnership") was organized on
October 31, 1983, as a Limited Partnership under the provisions of the Georgia
Uniform Limited Partnership Act.
At December 31, 1999, the Partnership had two general partners (the "General
Partners"), Consolidated Associates II ("CA-II") and WelCare Service
Corporation-II as managing general partner ("WSC-II" or the "Managing General
Partner").
On December 7, 1983, the Partnership offered for sale $15,000,000 of Limited
Partnership Units. The Limited Partnership Units represent equity interests in
the Partnership and entitle the holders thereof (the "Limited Partners") to
participate in certain allocations and distributions of the Partnership.
The Partnership's primary business and only industry segment is to own, operate
and ultimately dispose of a portfolio of health care related real properties for
the benefit of its Limited Partners. At December 31, 1999, 1998 and 1997, the
Partnership owned and operated two health care facilities, a nursing home and a
retirement center, both located in Columbus, Ohio.
Effective March 1, 1991, the Partnership's nursing home was managed by Life Care
Centers of America, Inc. ("LCCA") and the retirement center was managed by
American Lifestyles, Inc. ("ALI"), a division of LCCA. LCCA is a privately-owned
corporation which manages congregate care facilities throughout the United
States. LCCA and ALI receive a management fee equal to 5% of gross revenues of
the respective facilities. An affiliate of the Managing General Partner provides
oversight management services for these facilities and receives an oversight
management fee of 1% of gross revenues.
As of December 31, 1999, the Partnership employed approximately 143, including
administrative, nursing, dietary, social services and maintenance personnel.
The services provided at the Partnership's nursing home consist of long-term
nursing care. Nursing care consists of 24-hour medical services prescribed by
the resident's physician as well as assistance or supervision with daily
activities such as dressing, grooming, bathing, medication and dietary needs.
The retirement center owned by the Partnership provides apartment living for
ambulatory senior citizens who do not require assistance in their daily
activities.
The nursing home is certified to receive benefits under joint federal and state
funded programs administered by the State of Ohio to provide medical assistance
to the indigent, known generally as the "Medicaid" program. Benefits under the
Federal Health Insurance for the Aged Act ("Medicare") are for skilled care only
in those facilities which are certified for the program. The nursing home is
certified under the Medicare program.
Medicaid reimbursement formulas vary by state and are established in accordance
with Federal guidelines. Typically, Medicaid provides for reimbursement for
nursing home care of an all-inclusive nature up to specified limits based on
historical costs, with adjustments for inflation. Federal law requires that
Medicaid reimbursement rates be reasonable and adequate to meet the costs that
must be incurred by efficiently and economically operated facilities in order to
provide care and services in conformity with applicable laws, regulations and
quality and safety standards. Medicaid payments generally are set prospectively
for each facility.
The Medicare and Medicaid programs are subject to statutory and regulatory
changes, administrative rulings, interpretations of policy and determinations by
intermediaries, and to governmental funding restrictions. Each of these factors
may materially increase or decrease program payments to long-term care
facilities and could adversely affect the operations of the Partnership's
nursing facility. In the operation and sale of properties, the Partnership
competes with a number of individuals and entities, including large,
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national nursing home chains and small, locally owned geriatric facilities. Some
competing operators have greater financial resources than the Partnership or may
operate on a nonprofit basis or as charitable organizations. The Partnership
believes that the quality of care provided, the reputation and physical
appearance of its facilities and, in the case of private pay patients, charges
for services, are significant competitive factors which add to the success of a
facility. There is limited, if any, competition in price with respect to
Medicaid and Medicare patients since revenues for services to such patients are
strictly controlled and based on fixed rates and cost reimbursement principles.
In light of these factors, the Partnership seeks to meet competition by
continually improving the appearance of and the quality of services provided at
its facilities, establishing a reputation within the local medical communities
for providing competent care services and continually evaluating the needs of
the community and services offered by other health care providers.
All patient and resident revenue derived by the retirement facility is received
from private sources. The nursing facility, however, receives patient revenue
from both the public and private sector. The following table sets forth
information regarding the average daily census and sources of patient and
resident revenues at the Partnership's nursing facility:
Revenues for
Average Daily Census for Year Ended Percentages
Year Ended December 31, of Total
December 31, 1999 1999 Revenues
----------------------------------------- ------------ ------------
Number of Percent of Total
Patients/Residents Patients/Residents
Medicaid 53.4 56.9% 2,452,526 44.5%
Private Pay 30.0 32.0% 1,697,051 30.8%
Medicare 7.2 7.7% 1,103,451 20.0%
HMO/Other 3.2 3.4% 259,943 4.7%
Miscellaneous 0 0% (5,045)*
0%
---- ---- --------- ----
Total 93.8 100% 5,507,926 100%
*Bad debts of $35,434 minus other income of $30,389.
Because of regular changes in the census mix (i.e. private pay vs. government
reimbursed patients), the occupancy required for a nursing facility to achieve
an operating break-even point cannot be determined precisely. Generally, a
greater ratio of Medicaid patients will require a higher occupancy to reach a
break-even point. On the other hand, a high Medicare census can significantly
reduce the break-even point due to a higher reimbursement rate. The overall
occupancy rate for the nursing facility in 1999 was 93.8%. The 1999 break-even
occupancy figure for the nursing facility after depreciation and amortization is
estimated to be approximately 90%. Thus, the nursing facility met its estimated
break-even occupancy for 1999.
The retirement center is much like an apartment complex with additional services
provided to attract the elderly including limited transportation, housekeeping
and food services. The Partnership's retirement center has a net cash flow
break-even occupancy ranging from 75% to 80%. During 1999, the retirement center
had an occupancy rate of 69.2%. Therefore, it did not meet its break-even
occupancy level.
ITEM 2. PROPERTIES
The following table sets forth the investment portfolio of the Partnership at
December 31, 1999. The buildings of the projects and the land on which they are
located are beneficially owned by the Partnership in fee, subject in each case
to a first deed of trust as set forth more fully in Item 8, Note 2.
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Properties (dollars in 000's)
Property Secured Acquisition Net Occupancy Date
Debt Cost Book Rate in Acquired
Value(1) 1999
Mayfair Village $1,496 $4,774 $1,090 93.8% February 1985
Nursing Care Center
Columbus, OH
100 Licensed
Nursing Home
Beds
Mayfair Retirement $2,546 $4,824 $1,904 69.2% February 1985
Center ------ ------
Columbus, OH
91 Units
Total $4,042 $9,598 $2,994
====== ====== ======
(1) A provision was made prior to 1991 to write down each facility to its
estimated net realizable value or estimated fair value at the time of
the write-down as determined by WelCare Consolidated Resources
Corporation of America, the corporate general partner at the time of
this write-down. (See Item 8, Note 4). These values reflect this
write-down.
ITEM 3. LEGAL PROCEEDINGS
As of December 31, 1999, the Partnership did not have any pending legal
proceedings that separately, or in the aggregate, if adversely determined, would
have a material adverse effect on the Partnership. The Partnership may, from
time to time, be a party to litigation or administrative proceedings which arise
in the normal course of business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S UNITS OF LIMITED PARTNERSHIP AND SECURITY
HOLDER MATTERS
(A) No market for Limited Partnership Units exists nor is one expected to
develop.
(B) Title of Class Number of Record Unit Holders
-------------- -----------------------------
Limited Partner Units 1,258 as of 03/31/00
(C) No cash was distributed to the Limited Partners during 1999. There have
been no distributions to the General Partners. There were total
distributions of $600,000 and $200,100 paid to the Limited Partners in
1998 and 1997, respectively. Cumulative distributions paid to the
Limited Partners as of December 31, 1998 and December 31, 1999 were
$3,538,203. Future distributions are dependent on the Partnership's
ability to meet its ongoing obligations. See Liquidity and Capital
Resources section of Item 7 - "Management's Discussion and Analysis of
Financial Condition and Results of Operations," for a discussion of
distributions.
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ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth a summary of selected financial data for the
Partnership. This summary should be read in conjunction with Item 7,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Consolidated Financial Statements of the Partnership and
notes thereto appearing in Item 8.
Years Ended December 31,
(dollars in 000's, except per unit figures)
-------------------------------------------------------------------------------------
Statements of
Operations 1999 1998 1997 1996 1995
- ------------- -------- --------- --------- --------- ---------
Operating revenue $ 6,700 $ 7,495 $ 8,304 $ 7,189 $ 6,623
Income (Loss) before (245) (168) 664 279 175
extraordinary gain
Net income (Loss) (245) (168) 664 279 5,827
Income (Loss) before (15.66) (10.74) 42.50 17.84 11.21
extraordinary gain per
weighted average Limited
Partnership Unit
Net income (Loss) per (15.66) (10.74) 42.50 17.84 372.93
weighted average Limited
Partnership Unit
Distribution paid per -- 40.00 13.34 10.00 10.00
weighted average Limited
Partnership Unit
At December 31,
(dollars in 000's)
------------------------------------------------------------------------------------------
Balance Sheet 1999 1998 1997 1996 1995
------------- -------- -------- -------- -------- --------
Property and equipment, net $2,994 $3,315 $3,577 $3,440 $3,564
Total assets 4,890 5,228 6,014 5,499 5,592
Long-term debt obligations, 3,957 4,045 4,124 4,206 4,261
less current maturities
Partners' equity (deficit) (327) (82) 686 222 93
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
Certain statements contained in this Management's Discussion and Analysis are
not based on historical facts, but are forward-looking statements that are based
upon numerous assumptions about future conditions that may prove ultimately to
be inaccurate. Actual events and results may differ materially from anticipated
results described in such statements. The Partnership's ability to achieve such
results is subject to certain risks and uncertainties. Such risks and
uncertainties include, but are not limited to, changes in healthcare
reimbursement systems and rates, the availability of capital and financing, and
other factors affecting the Partnership's business that may be beyond its
control.
RESULTS OF OPERATIONS
REVENUE:
1999 compared to 1998
Operating revenues decreased $794,757 in 1999 as compared to 1998. The decrease
was attributable primarily to a decrease in occupied units and a reduction in
Medicare and Medicaid revenues. Accounts receivable, recorded at net realizable
value, due from the Ohio Medicaid Program and Medicare fell from $38,371 in 1998
to $16,769 in 1999 and from $182,739 in 1998 to $110,326 in 1999, respectively.
Medicaid and Medicare programs counted for a lower percentage of operating
revenues during 1999 than in 1998 due to significant changes in government
reimbursement programs and continued competition from a new
rehabilitation/subacute facility.
1998 compared to 1997
Operating revenues decreased $809,834 in 1998 as compared to 1997. The decrease
was attributable primarily to a decrease in occupied units and a shift in
Medicare revenues. Census at the nursing facility remained stable during the
year ended December 31, 1998; however, the nursing facility did experience a
decline in the number of Medicare patients. This decline was due primarily to a
new rehabilitation/subacute facility that directly competes with the nursing
facility for Medicare and managed care patients. There was a continuing decline
in census at the retirement facility during the last nine months of the year
ended December 31, 1998.
EXPENSES:
1999 compared to 1998
Operating expenses decreased $494,823 in 1999 as compared to 1998. The
significant decrease was attributable primarily to reductions in staffing at the
nursing center resulting from the implementation of the Medicare PPS and in
continuing response to the lower Medicare census.
1998 compared to 1997
Operating expenses decreased $30,900 in 1998 as compared to 1997. The slight
decrease was attributable primarily to reductions in staffing at the nursing
center in preparation for the implementation of the Medicare PPS on January 1,
1999 and in response to the lower Medicare census.
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NET INCOME (LOSS):
1999 compared to 1998
For the fiscal year ended December 31, 1999, the Partnership suffered a net loss
of $244,752, and for the fiscal year ended December 31, 1998, the Partnership
had a net loss of $167,821. The net loss in 1999 was attributable primarily to a
substantial decrease in operating revenue in 1999 of $794,757 despite a
significant decrease of $714,493 in operating costs and expenses from $7,697,784
as of December 31, 1998 to $6,983,291 as of December 31, 1999. This significant
decrease in operating costs and expenses was due primarily to decreases in
staffing as described above, management and oversight fees and real estate
taxes.
1998 compared to 1997
For the fiscal year ended December 31, 1998, the Partnership suffered a net loss
of $167,821, whereas for the fiscal year ended December 31, 1997, the
Partnership had a net income of $664,075. The net loss in 1998 was attributable
primarily to a decrease in operating revenue of $809,834. The total operating
costs and expenses increased slightly from $7,672,553 as of December 31, 1997 to
$7,697,784 as of December 31, 1998. This slight increase was due primarily to
increases in operating expenses, management and oversight fees, and real estate
taxes.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1999, the Partnership held cash and cash equivalents of
$1,161,934, an increase of $230,855 from the amount held at December 31, 1998.
The cash balance, which is held in accounts controlled by the General Partners
of the Partnership, will be necessary to meet the Partnership's current
obligations and for operating reserves. In addition, cash balances maintained at
the two Partnership facilities will have to be maintained in accordance with
operating reserves established by the U.S. Department of Housing and Urban
Development ("HUD"). At December 31, 1999, the balance of HUD reserved cash at
the facilities was $458,482, which is equal to the mortgage escrow and reserve
for replacement accounts.
The Partnership believes that it will produce sufficient cash flow to meet its
ongoing operations needs associated with the two facilities currently owned by
the Partnership. In addition, the Partnership's cash reserves are considered
adequate to meet contingent liabilities related to third-party reimbursements
from the operation of facilities previously owned by the Partnership in
Colorado. During 1999, the Partnership did not receive any demands for payment
of any actual or contingent liabilities related to these previously-owned
facilities. The Partnership has no existing lines of credit or assurance of
financial support from the General Partners, should the need arise. Therefore,
there can be no assurance that sufficient funds will be available.
As of December 31, 1999, the Partnership was not obligated to perform any major
capital expenditures. The Managing General Partner anticipates that any repairs,
maintenance, or capital expenditures will be financed with cash reserves, HUD
replacement reserves and cash flow from operations.
No cash was distributed to the General Partners or the Limited Partners during
the year ended December 31, 1999. Due to efforts of the Managing General
Partner, the Partnership distributed $200,100 to the Limited Partners on
February 15, 1997. On February 15, 1998, the Partnership distributed $300,000 to
the Limited Partners. On September 30, 1998, the Partnership distributed
$300,000 to the Limited Partners. No funds were distributed during 1999.
Cumulative distributions paid to the Limited Partners as of December 31, 1999
were $3,538,203. The Managing General Partner desires to make annual
distributions from operating cash flow in future periods. However, the
Partnership's ability to make distributions may be limited by HUD's requirements
for surplus cash at both the nursing facility and retirement center level.
Significant changes have and will continue to be made in government
reimbursement programs, and such changes could have a material impact on future
reimbursement formulas. The Balanced Budget Act of
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1997 (the "Act"), enacted in August, 1997, has targeted the Medicare program for
reductions in spending growth of approximately $9.5 billion for skilled nursing
facilities over four or five years, primarily through the implementation of the
Medicare prospective payment system (the "Medicare PPS") for skilled services.
The Medicare PPS per diem, which would cover routine service, ancillary and
capital-related costs, initially will be a blended rate based on (i) a
facility-specific payment rate derived from each facility's 1995 cost report,
adjusted by an inflation factor and (ii) a federal per diem rate derived from
all hospital-based and freestanding (skilled nursing facility) 1995 cost
reports, adjusted for case mix and geographic variations in labor costs. The
blended rate will be further adjusted by a facility-specific case mix (acuity)
index.
The Partnership's nursing home facility changed to the Medicare PPS on January
1, 1999. Implementation of the Medicare PPS contributed to the decrease in
revenues in 1999, even though the facility-specific Medicare rate for 1999 of
$379.77 provided the facility with approximately $260,000 in additional revenue
compared to payments based on the full federal rates. Effective October 1, 2000,
all facilities in our industry received a 4% increase in Medicare per diem
payment, and additionally, effective April 1, 2000, 15 Resource Utilization
Group ("RUG") categories, including our nursing home facility, received a 20%
increase. The 20% per diem add-on to 15 RUG categories and the 4% across the
board increase in payment, another of which will be effective on October 1,
2001, are expected to lessen the impact of the transition to the Medicare PPS.
The nursing home facility was able to reduce its expenses from 1998 to 1999. The
following table compares Medicare cost per day in 1999, the first year under
Medicare PPS, to the Medicare cost per day for 1998, the last year under
Medicare cost based reimbursement:
Category 1998 Medicare Cost 1999 Medicare Cost
Per Day Per Day Cost Decrease
------------------- -------------------- -------------
Routine Nursing $ 176.90 $ 167.76 $ 9.14
Inpatient Rehabilitation $ 213.31 $ 93.19 $ 120.12
Other Inpatient $ 76.80 $ 29.07 $ 47.73
Total $ 467.01 $ 290.02 $ 176.99
Management believes that revenues will continue to be lower under the Medicare
PPS; however, management believes that reductions in therapy costs, use of
general purchasing agents and other expense reduction measures should in part
offset the effect of any rate reductions. The Partnership can give no assurance
that payments under such program in the future will remain at a level comparable
to the present level or increase. Any decreases in the level of payments could
have a material adverse effect on the Partnership.
The nursing facility experienced a decline in the number of Medicare patients.
This decline is due primarily to a new rehabilitation/subacute facility that
directly competes with the nursing facility for Medicare and managed care
patients. The facility does not expect to have any material change in Medicare
occupancy.
IMPACT OF THE YEAR 2000 ("Y2K") ISSUE
Although much contingency planning was done for any possible Y2K issues, no
problems materialized. Therefore, there were no material costs associated with
addressing any Y2K issues.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Partnership does not engage in any transactions exposing the Partnership to
material market risk.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data begin on page F-2 of this
report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Partnership does not have officers or directors. At December 31, 1999, the
General Partners of the Partnership were Consolidated Associates II and WelCare
Service Corporation-II ("WSC-II") as Managing General Partner of the
Partnership. The executive officers and director of WSC-II who control the
affairs of the Partnership, are as follows:
Name and Position Age Other Principal Occupations and Other Directorships During the Past 5 Years
- ----------------- --- ---------------------------------------------------------------------------
Forrest L. Preston, 67 Forrest L. Preston has served as a Director and Chairman of the Board of WSC-II
Director and Chairman of since July, 1998. For more than five years prior to the date hereof, Mr.
the Board Preston has served as sole owner of Life Care Centers of America, the Manager
of the Partnership, and numerous other privately owned healthcare facilities.
Mr. Preston does not serve on the Board of Directors of any public company.
John F. McMullan, 63 John F. McMullan has served as President, Secretary and Director of WSC-II
President, Secretary and since July, 1998. For more than five years prior to the date hereof, Mr.
Director McMullan has served as a consultant to Life Care Centers of America, the
Manager of the Partnership, and numerous other healthcare facilities. Mr.
McMullan is also a certified public accountant. Mr. McMullan does not serve
on the Board of Directors of any public company.
ITEM 11. EXECUTIVE COMPENSATION
No individual principal or principals as a group received any direct
remuneration from the Partnership.
The General Partners are not compensated directly for their services as general
partners of the Partnership. See Item 13 and Note 1 to the consolidated
financial statements appearing in Item 8 for further discussion of compensation
paid to affiliates of the General Partners.
The General Partners are entitled to distributions of cash from operations and
from "other sources" (primarily from the sale or refinancing of Partnership
properties, as set forth in Item 8, Note 3).
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(A) Security ownership of certain beneficial owners.
No individual or group as defined by Section 13(d)(3) of the Securities
Exchange Act of 1934, known to the Partnership is the beneficial owner
of more than 5% of the Partnership's securities.
(B) Security ownership of management.
The General Partners and their management own less than 1%.
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Affiliates and former affiliates of the General Partners, in accordance with the
Partnership Agreement, may receive compensation for services rendered. The
following is a summary of compensation paid to or accrued for the benefit of the
General Partners and affiliates in 1999:
Oversight management and management fees $403,767
Paid at the Fund II level (1) $ 68,876
Paid by the facilities (1) $334,891
Administration of partnership activities (1) $130,617
Partnership administration costs during 1999 of $130,617 includes $72,813 paid
to affiliates, with the remainder paid to non-affiliates.
(1) For reimbursement of expenses incurred by affiliates of the Managing
General Partner in performing administrative services including
investor relations and accounting. See Note 1 to the accompanying
consolidated financial statements appearing in Item 8.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following financial statements are included in Part II, Item 8:
(1) Consolidated Financial Statements:
Report of Independent Certified Public Accountants
Consolidated Balance Sheets - as of December 31, 1999 and 1998
Consolidated Statements of Operations - for the Years Ended
December 31, 1999, 1998 and 1997
Consolidated Statements of Partners' Equity (Deficit) - for
the Years Ended December 31, 1999, 1998 and 1997
Consolidated Statements of Cash Flows - for the Years Ended
December 31, 1999, 1998 and 1997
Summary of Significant Accounting Policies
Notes to Consolidated Financial Statements
(2) The following financial statement schedule is included in this
Form 10-K Report:
Schedule II - Valuation and Qualifying Accounts for the
years ended December 31, 1999, 1998 and 1997
All other schedules are omitted since they are not required,
are not applicable, or the financial information required is
included in the financial statements or notes thereto.
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(3) The following exhibits are incorporated by reference and are
an integral part of this Form 10-K:
Exhibit Number Page
(as per Exhibit Table) Document Description Number
- ---------------------- -------------------- ------
3.1 Agreement of Limited Partnership of Consolidated Resources Health Care Fund N/A
II, incorporated by reference to Exhibit A to the Registration Statement on
Form S-1, as amended, Page A-1, File No. 2-87636, (now File No. 0-13415).
3.2 Amendment to Agreement of Limited Partnership of Consolidated Resources N/A
Health Care Fund II, incorporated by reference to Proxy Statement filed on
November 19, 1991, File No. 0-13415.
3.3 Amendment to Amended and Restated Agreement and Certificate of Limited N/A
Partnership of Consolidated Resources Health Care Fund II, incorporated by
reference to Form 10-Q filed on August 19, 1998, File No. 0-13415.
21 Subsidiaries E
27 Financial Data Schedules E
E - Submitted electronically as a separate document herewith the
Registrant's Form 10-K
(b) Reports on Form 8-K:
None.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
CONSOLIDATED RESOURCES HEALTH CARE FUND II
(Registrant)
By: WELCARE SERVICE CORPORATION-II
Managing General Partner
Date: October 25, 2000 By: /s/ John F. McMullan
-----------------------------------------
John F. McMullan, Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons, on behalf of the Registrant and
in the capacities and on the dates indicated:
Date: October 25, 2000 By: /s/ John F. McMullan
-------------------------------------------
John F. McMullan
Sole Director and Principal Executive
Officer of the Managing General Partner
Date: October 25, 2000 By: /s/ John F. McMullan
-------------------------------------------
John F. McMullan
Chief Financial Officer of the Managing
General Partner
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The Partners
Consolidated Resources Health Care Fund II and Subsidiaries
We have audited the accompanying consolidated balance sheets of Consolidated
Resources Health Care Fund II and Subsidiaries (limited partnerships) (the
"Partnership") as of December 31, 1999 and 1998, and the related consolidated
statements of operations, partners' equity (deficit) and cash flows for each of
the three years in the period ended December 31, 1999. We have also audited the
accompanying Schedule II - Valuation and Qualifying Accounts (the "schedule").
These consolidated financial statements and schedule are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these consolidated financial statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements and
schedule are free of material misstatements. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the consolidated
financial statements and schedule. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the consolidated financial statements
and schedule. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Consolidated Resources Health Care Fund II and Subsidiaries (limited
partnerships) at December 31, 1999 and 1998, and the consolidated results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1999 in conformity with generally accepted accounting
principles.
Also, in our opinion, the schedule presents fairly, in all material respects,
the information set forth therein.
BDO Seidman, LLP
Atlanta, Georgia
February 9, 2000
14
F-2
Consolidated Resources Health Care Fund II and Subsidiaries
(limited partnerships)
Consolidated Balance Sheets
December 31, 1999 1998
----------- -----------
Assets
Current
Cash and cash equivalents (Note 6) $ 1,161,934 $ 931,079
Accounts receivable, net of allowance for doubtful accounts
of $7,153 and $14,562, respectively (Note 5) 175,980 348,459
Third-party payor settlement receivable (Note 5) -- 97,501
Prepaid expenses and other 13,400 36,177
----------- -----------
Total current assets 1,351,314 1,413,216
----------- -----------
Property and equipment (Notes 2 and 4)
Land 178,609 178,609
Buildings and improvements 6,870,960 6,821,838
Equipment and furnishings 973,896 919,370
----------- -----------
8,023,465 7,919,817
Less: accumulated depreciation (5,029,530) (4,604,963)
----------- -----------
Net property and equipment 2,993,935 3,314,854
----------- -----------
Other
Restricted escrows and other deposits (Note 2) 526,931 481,088
Deferred loan costs, net of accumulated amortization
of $14,593 and $13,555, respectively 17,720 18,757
----------- -----------
Total other assets 544,651 499,845
----------- -----------
$ 4,889,900 $ 5,227,915
=========== ===========
See accompanying summary of significant accounting policies and notes to
consolidated financial statements.
15
F-3
Consolidated Resources Health Care Fund II and Subsidiaries
(limited partnerships)
Consolidated Balance Sheets
December 31, 1999 1998
----------- -----------
Liabilities and Partners' Equity (Deficit)
Current liabilities
Current maturities of long-term debt obligations (Note 2) $ 83,938 $ 78,359
Accounts payable 116,302 223,243
Accrued expenses 585,727 502,193
Accrued management fees substantially all to affiliates (Note 1) 394,918 394,918
Deposit liabilities 68,321 66,049
Due to related party (Note 1) 10,385 --
----------- -----------
Total current liabilities 1,259,591 1,264,762
Long-term debt obligations, less current maturities (Note 2) 3,957,345 4,045,437
----------- -----------
Total liabilities 5,216,936 5,310,199
----------- -----------
Commitments and Contingencies (Notes 5 and 6)
Partners' equity (deficit) (Notes 2 and 3)
Limited partners (146,387) 88,575
General partners (180,649) (170,859)
----------- -----------
Total partners' equity (deficit) (327,036) (82,284)
----------- -----------
$ 4,889,900 $ 5,227,915
=========== ===========
See accompanying summary of significant accounting policies and notes to
consolidated financial statements.
16
F-4
Consolidated Resources Health Care Fund II and Subsidiaries
(limited partnerships)
Consolidated Statements of Operations
Years ended December 31, 1999 1998 1997
----------- ----------- ----------
Revenue
Operating revenue (Note 5) $ 6,699,883 $ 7,494,640 $8,304,474
Interest income 38,656 35,323 32,154
----------- ----------- ----------
Total revenue 6,738,539 7,529,963 8,336,628
----------- ----------- ----------
Operating costs and expenses
Operating expenses 5,539,955 6,103,654 6,134,554
Depreciation and amortization 474,908 466,400 437,665
Interest (Note 2) 307,150 313,126 319,009
Management and oversight fees (Note 1) 403,767 539,483 497,528
Real estate taxes 126,894 145,621 126,169
Partnership administration costs to affiliates (Note 1) 130,617 129,500 157,628
----------- ----------- ----------
Total operating costs and expenses 6,983,291 7,697,784 7,672,553
----------- ----------- ----------
Net income/(loss) $ (244,752) $ (167,821) $ 664,075
=========== =========== ==========
Net income/(loss) per limited partnership unit(1) $ (15.66) $ (10.74) $ 42.50
=========== =========== ==========
Limited partnership units outstanding 15,000 15,000 15,000
=========== =========== ==========
See accompanying summary of significant accounting policies and notes to
consolidated financial statements.
(1) Based on the loss allocable to the limited partners, which was
$637,500, $161,108 and $234,962 for 1997, 1998 and 1999, respectively,
divided by the number of outstanding units.
17
F-5
Consolidated Resources Health Care Fund II and Subsidiaries
(limited partnerships)
Consolidated Statements of Partners' Equity (Deficit)
Years Ended December 31, 1999, 1998 and 1997
Total
Partners'
Limited General Equity (Deficit)
--------- --------- ----------------
Partners' equity (deficit), at December 31, 1997 $ 849,683 $ (164,146) $ 685,537
Net loss (161,108) (6,713) (167,821)
Distributions (Note 3) (600,000) -- (600,000)
---------- ---------- ----------
Partners' equity (deficit), at December 31, 1998 88,575 (170,859) (82,284)
Net loss (234,962) (9,790) (244,752)
---------- ---------- ----------
Partners' equity (deficit), at December 31, 1999 $(146,387) $ (180,649) $ (327,036)
========== ========== ==========
See accompanying summary of significant accounting policies and notes to
consolidated financial statements.
18
F-6
Consolidated Resources Health Care Fund II and Subsidiaries
(limited partnerships)
Consolidated Statements of Cash Flows
Years ended December 31, 1999 1998 1997
----------- --------- -----------
Operating activities
Net income/(loss) $ (244,752) $(167,821) $ 664,075
Adjustments to reconcile net income/(loss) to cash
provided by operating activities:
Depreciation and amortization 474,908 466,400 437,665
Loss on disposal of fixed assets -- -- 21,807
Changes in operating assets and liabilities:
Accounts receivable, net 172,479 (26,922) 21,884
Prepaid expenses and other 22,777 (17,213) (4,404)
Accounts payable (106,941) (19,241) 44,534
Accrued liabilities and deposit liabilities 85,806 77,651 78,361
Third-party payor settlement receivable 97,501 374,516 (446,393)
----------- --------- -----------
Cash provided by operating activities 501,778 687,370 817,529
----------- --------- -----------
Investing activities
Payments for purchases of property and equipment, net (152,952) (203,167) (595,224)
Net change in restricted escrows and other deposits (45,843) (24,096) (141,980)
----------- --------- -----------
Cash used in investing activities (198,795) (227,263) (737,204)
----------- --------- -----------
Financing activities
Principal payments on long-term debt obligations (82,513) (76,338) (72,673)
Due from related party 10,385 890,000 (890,000)
Distributions paid to limited partners -- (600,000) (200,100)
----------- --------- -----------
Cash provided by (used in) financing activities (72,128) 213,662 (1,162,773)
----------- --------- -----------
Net increase (decrease) in cash and cash equivalents 230,855 673,769 (1,082,448)
Cash and cash equivalents, beginning of year 931,079 257,310 1,339,758
----------- --------- -----------
Cash and cash equivalents, end of year $ 1,161,934 $ 931,079 $ 257,310
=========== ========= ===========
Supplemental Disclosure:
Cash paid during the year for interest $ 307,150 $ 313,126 $ 319,009
=========== ========= ===========
See accompanying summary of significant accounting policies and notes to
consolidated financial statements.
19
F-7
Consolidated Resources Health Care Fund II and Subsidiaries
(limited partnerships)
Summary Of Significant Accounting Policies
Organization
Consolidated Resources Health Care Fund II (the "Partnership") was organized on
October 31, 1983 as a limited partnership under the provisions of the Georgia
Uniform Limited Partnership Act for the purpose of acquiring, operating and
holding for investment and future capital appreciation income producing, health
care related real properties. Investments in healthcare real property consist of
a nursing home and a retirement center in Ohio. During 1999, the average
occupancy for the nursing home and retirement center was 93.8% and 69.2%,
respectively.
Prior to July 16, 1998, the General Partners of the Partnership were WelCare
Consolidated Resources Corporation of America, serving as the Corporate General
Partner, ("WCRCA" or the "Corporate General Partner"), a Nevada corporation,
WelCare Service Corporation-II, serving as Managing General Partner, ("WSC-II"
or the "Managing General Partner"), a Georgia corporation, and Consolidated
Associates II, ("CA-II"), a Georgia general partnership (collectively the
"General Partners"). On January 30, 1997, all of the stock of the Corporate
General Partner and the Managing General Partner was sold to Consolidated
Partners Corporation, which is wholly-owned by a general partner of CA-II. The
General Partners collectively hold a 4% ownership interest in the Partnership.
The limited partners hold 15,000 partnership units which comprise 96% ownership
in the Partnership.
On July 16, 1998, WCRCA assigned all of its right, title and interest in and to
its general partner interest in the Partnership to WSCII. On July 22, 1998, an
amendment to Amended and Restated Agreement and Certificate of Limited
Partnership was filed reflecting the withdrawal of WCRCA from the partnership
and certain other matters. On July 23, 1998 the sole shareholder of the Managing
General Partner sold all of its issued and outstanding shares to a third party.
The financial statements do not reflect assets the partners may have outside
their interests in the Partnership, nor any personal obligations including
income taxes, of the individual partners.
Consolidation
The consolidated financial statements include the accounts of the Partnership
and the accounts of the subsidiary partnerships in which it holds a majority
interest. All significant intercompany balances and transactions have been
eliminated. The amount of minority interest is immaterial.
Property and Equipment
Property and equipment are recorded at cost less appropriate reductions for
permanent declines in net realizable value. Property and equipment are not
adjusted for increases in net realizable value.
Long-lived assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. If the
sum of the expected future undiscounted cash flows is less than the carrying
amount of the asset, a loss is recognized for the difference between the fair
value and carrying value of the asset.
Depreciation and Amortization
Property and equipment are depreciated using the straight-line method over lives
of 5 to 30 years. Renewals and betterments are capitalized and repairs and
maintenance are charged to operations as incurred.
20
F-8
Consolidated Resources Health Care Fund II and Subsidiaries
(limited partnerships)
Summary Of Significant Accounting Policies
Deferred Loan Costs
Deferred loan costs are amortized over the terms of the respective loans using
the straight-line method which approximates the effective interest method.
Amortization of deferred loan costs is included in depreciation and amortization
expense.
Operating Revenue
Operating revenue is recorded when services are rendered and includes amounts
reimbursable by the Medicaid and Medicare programs. Revenues are recorded at the
estimated net realizable amounts from patients, third-party payors, and others
for services rendered including estimated retroactive adjustments under
reimbursement agreements with Medicare and Medicaid. Retroactive adjustments are
accrued in the period related services are rendered and adjusted in future
periods as final settlements are determined.
The Balanced Budget Act of 1997, (the "Act"), enacted in August 1997, has
targeted the Medicare program for reductions in spending growth of approximately
$9.5 billion for skilled nursing facilities over the next five years, primarily
through the implementation of a Medicare prospective payment system ("PPS") for
skilled services. The PPS per diem, which covers routine service, ancillary and
capital related costs, is initially a blended rate based on (i) a
facility-specific payment rate derived from each facility's 1995 cost report,
adjusted by an inflation factor and (ii) a federal per diem rate derived from
all hospital-based and freestanding (skilled nursing facility) 1995 cost
reports, adjusted for case mix and geographic variations in labor costs. The
blended rate will be further adjusted by a facility-specific case mix (acuity)
index.
The Partnership's nursing home changed to the PPS reimbursement system on
January 1, 1999. Management believes that revenues will continue to be lower
under PPS; however, reductions in therapy costs, use of general purchasing
agents and other expense reduction measures should in part offset the effect of
any rate reductions. The Company can give no assurance that payments under such
programs in the future will remain at a level comparable to the present level or
increase, and decreases in the level of payments could have a material adverse
effect on the Company.
Income Taxes
No provision has been made in the consolidated financial statements for Federal
income taxes because under current law, no Federal income taxes are paid
directly by the Partnership. The Partnership reports certain transactions
differently for tax and financial statement purposes.
Allocation of Net Income or Net Loss
The Partnership's net profits and net losses (other than net profits or net
losses from a sale or refinancing of Partnership property), are allocated 96% to
the Limited Partners and 4% to the General Partners. Distributions are computed
as described in Note 4.
Net losses resulting from a sale or refinancing shall be allocated 99% to the
Limited Partners and 1% to the General Partners. Net profits resulting from a
sale or refinancing shall be allocated in the following order:
(1) First, 1% to the General Partners and 99% to the Limited Partners until
the net profits allocated to the Limited Partners from such sale or
refinancing equals the excess of the greater of the following items
over their capital account immediately prior to such sale or
refinancing:
21
F-9
Consolidated Resources Health Care Fund II and Subsidiaries
(limited partnerships)
Summary Of Significant Accounting Policies
(a) zero; or
(b) the Limited Partners' invested capital immediately prior to
such sale or refinancing plus 9% per annum of the Limited
Partners' average invested capital for all fiscal years to the
extent not received through prior distributions of
distributable cash from operations or sale or refinancing
proceeds; or
(c) the amount of sale or refinancing proceeds distributable to
the Limited Partners;
(2) Second, to the General Partners until the net profits allocated to the
General Partners from such sale or refinancing equals the excess of the
greater of the following items over their capital account immediately
prior to such sale or refinancing:
(a) zero; or
(b) the amount of sale or refinancing proceeds distributable to
the General Partners from such sale or refinancing;
(3) Third, any remaining net profits shall be allocated 15% to the General
Partners and 85% to the Limited Partners.
Net Income Per Limited Partnership Unit
Net income per Limited Partnership Unit is computed by dividing net income
allocated to the Limited Partners by the number of Limited Partnership units
outstanding.
Statements of Cash Flows
For purposes of this statement, cash equivalents include U.S. government
securities, commercial paper and certificates of deposit with original
maturities of three months or less.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Reclassifications
Certain 1997 and 1998 amounts have been reclassified to conform to the 1999
presentation.
New Accounting Pronouncements
SFAS No. 131, Disclosures about Segments of an Enterprise and Related
Information, effective for fiscal years beginning after December 15, 1997,
establishes standards for reporting information about operating segments in
annual financial statements and interim financial reports issued to
shareholders. Generally, certain financial information is required to be
reported on the basis that is used internally for evaluating performance of and
allocation of resources to operating segments. The Partnership operates two
healthcare facilities consisting of a nursing home and a retirement center. The
Partnership has aggregated the operating segments of each facility due to
similar economic characteristics including the nature of services provided and
customer base. The Partnership has determined that this standard did not impact
its current practice of reporting operating segment information.
SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, is
effective for all fiscal quarters of fiscal years beginning after June 15, 1999.
SFAS No. 133 requires companies to recognize all derivatives contracts as either
assets or liabilities in the balance sheet and to measure them at fair value. If
certain conditions are met, a derivative may be specifically designated as a
hedge, the objective of which is to match the timing of gain or loss recognition
on the hedging derivative with the recognition of (i) the changes in the fair
value of the hedged asset or liability that are attributable to the hedged risk
or (ii) the earnings effect of the hedged forecasted transaction. For a
derivative not designated as a hedging instrument, the gain or loss is
recognized in income in the period of change. Historically, the Company has not
entered into derivatives contracts either to hedge existing risks or for
speculative purposes. Accordingly, the Partnership does not expect adoption of
the new standard on January 1, 2000, to affect its financial statements.
22
F-11
Consolidated Resources Health Care Fund II and Subsidiaries
(limited partnerships)
Notes to Consolidated Financial Statements
1. Management Fees and Affiliate Transitions
Two companies related to the minority interest holder manage the nursing home
and retirement center for a fee of 5% of gross operating revenues. Fees totaling
$334,891, $414,401 and $358,667 were paid to the management company for the
years ended December 31, 1999, 1998 and 1997, respectively. In addition, an
affiliate of the Managing General Partner was paid an oversight management fee
of 1% of gross operating revenue totaling $68,876, $75,423 and $83,127 in 1999,
1998 and 1997, respectively.
During 1999, 1998 and 1997, the affiliate of the Managing General Partner was
reimbursed for costs incurred in connection with the administration of
Partnership activities in the amount of $72,813 each year. These expenses are
included in Partnership administration costs on the accompanying Consolidated
Statement of Operations.
Accrued management fees consist of amounts payable to affiliates and former
affiliates and an unrelated management company and resulted from management fees
incurred prior to 1992. During 1996, these amounts were reduced by amounts due
from an affiliate of the Corporate General Partner. In 1997, the amounts due
from the affiliate of the Corporate General Partner were recovered.
2. Long-Term Debt Obligations
Long-term debt obligations consisted of:
1999 1998
---------- ----------
7.5% note related to Mayfair Village Nursing Care Center, collateralized by a
first trust deed on land, buildings and furnishing and insured by the U.S.
Department of Housing and Urban Development; payable in monthly installments of
principal and interest of $12,050, due January 1, 2020 $1,495,780 $1,530,877
7.5% note related to Mayfair Retirement Center, collateralized by a first trust
deed on land, buildings and furnishing and insured by the U.S. Department of
Housing and Urban Development; payable in monthly installments of principal and
interest of $20,023, due March 1, 2021 2,545,503 2,592,919
---------- ----------
4,041,283 4,123,796
Less current maturities 83,938 78,359
---------- ----------
$3,957,345 $4,045,437
========== ==========
23
F-12
Consolidated Resources Health Care Fund II and Subsidiaries
(limited partnerships)
Notes to Consolidated Financial Statements
Future maturities of long-term debt obligations at December 31, 1999 are as
follows:
Amount
----------
2000 $ 83,938
2001 89,924
2002 97,588
2003 105,036
2004 113,191
Thereafter 3,551,606
----------
$4,041,283
==========
Restricted escrows and other deposits include amounts held in trust for payment
of property taxes and insurance and for repairs and replacements of the property
as approved by HUD. Under covenants contained in the Regulatory Agreement with
HUD, the subsidiary partnerships are limited as to the amount of distributions
they may make to the Partnership to the extent of surplus cash, as defined in
the Regulatory Agreement with HUD. The Regulatory Agreement also imposes
restrictions regarding cash receipts and disbursements and compliance with the
Fair Housing Act.
The fair value of the Partnership's obligations are estimated on the quoted
market prices for the same or similar issues or on the current rates offered to
the Partnership for debt of the same remaining maturities. Carrying values of
the Partnerships' financial instruments approximate their fair values at
December 31, 1999.
3. Distributions
Distributions to the partners are paid from operations of the Partnership's
properties or from sales or refinancing of properties. Cash from operations is
distributed 96% to the Limited Partners and 4% to the General Partners. However,
no distributions of cash from operations shall be made to the General Partners
in any year until the Limited Partners have received distributions for such year
equal to 9% of their invested capital.
Distributions of cash from sales and refinancing are made in the following
order:
(a) First, to the Limited Partners in an amount equal to their invested
capital; then,
(b) to the Limited Partners in an amount necessary to provide the Limited
Partners with a 9% cumulative, non-compounded return on invested
capital to the extent not previously received through distributions of
distributable cash from operations; then,
(c) to the General Partners in an amount up to 3% of the sale price of all
properties on a cumulative basis; then,
(d) the balance of such proceeds shall be distributed 15% to the General
Partners and 85% to the Limited Partners.
The Partnership distributed cash of $600,000 and $200,100 to the Limited
Partners for the years ended December 31, 1998 and 1997, respectively. No cash
was distributed to Limited Partners during 1999. Cumulative distributions paid
to the Limited Partners as of December 31, 1999 are $3,538,203. No distributions
have been made to the General Partners.
24
F-13
Consolidated Resources Health Care Fund II and Subsidiaries
(limited partnerships)
Notes to Consolidated Financial Statements
4. Loss on Write-Down of Properties
Prior to 1992, the Partnership recorded write-downs to reduce the carrying value
of certain properties to their estimated net realizable value as determined by
the Managing General Partner.
The balance of these write-downs and the carrying values of the property and
equipment were as follows as of December 31, 1999.
Write Down Carrying Values
----------- ----------------
Mayfair Village Nursing Care Center $ 1,441,848 $ 1,090,222
Mayfair Retirement Center 440,602 1,903,713
----------- -----------
$ 1,882,450 $ 2,993,935
=========== ===========
5. Cost Reimbursements
Accounts receivable and operating revenue include amounts estimated by
management to be reimbursable by Medicaid and Medicare under the provisions of
cost reimbursement formulas in effect. Final determination of amounts earned is
subject to audit by the intermediaries. In the opinion of management, adequate
provision has been made for any adjustments that may result from such audits.
Differences between estimated provisions and final settlement are reflected as
charges or credits to operating revenue in the year finalized. Significant
changes have and will continue to be made in government reimbursement programs,
and such changes could have a material impact on future reimbursement formulas.
At December 31, 1998, estimated third-party payor settlement receivables were
$97,501. The amount of $97,501 was collected during 1999.
Medicaid and Medicare programs accounted for approximately 46%, 63% and 61% of
operating revenue during 1999, 1998 and 1997, respectively.
Accounts receivable, recorded at net realizable value, relate principally to
amounts due from both the Ohio Medicaid program and Medicare are as follows:
1999 1998
--------- ---------
Ohio Medicaid Program $ 16,769 $ 38,371
Medicare $ 110,326 $ 182,739
Amounts due from the Ohio Medicaid program are paid on an interim and final
basis generally within 30 to 60 days from date of billing. Amounts due from the
Medicare program are generally received within 30 days.
25
F-14
6. Concentrations of Credit Risk
At December 31, 1999, the Partnership had cash on deposit at two banks which
exceeded the Federal Deposit Insurance Corporation limit in the aggregate by
approximately $909,000.
Schedule II - Valuation and Qualifying Accounts
Years Ended December 31, 1999, 1998 and 1997
Additions charged
to
Balance at costs and Balance at
beginning of year expenses Deductions(1) end of year
----------------- ----------------- ------------ -------------
1999
Allowance for
doubtful accounts $14,562 $37,165 $ 44,574 $ 7,153
1998
Allowance for
doubtful accounts $19,035 $ 9,856 $(14,329) $14,562
1997
Allowance for
doubtful accounts $53,554 $ 6,671 $(41,190) $19,035
(1) Represents direct write-offs of receivables and recoveries of
previously written off receivables.