Back to GetFilings.com
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark one)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD
ENDED JUNE 30, 2000
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD
FROM ___________ TO ___________
COMMISSION FILE NUMBER 0-13415
CONSOLIDATED RESOURCES HEALTH CARE FUND II
(Exact name of registrant as specified in its charter)
Georgia 58-1542125
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1175 Peachtree Street, Suite 850, Atlanta, GA 31106
(Address of principal executive offices) (Zip Code)
(404) 873-1919
(Registrant's telephone number, including area code)
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]
Part I. Financial Information
Consolidated Resources Health Care Fund II
Condensed Consolidated Balance Sheets
June 30,
2000 December 31,
(Unaudited) 1999
------------------- -----------------
ASSETS
Current assets:
Cash and cash equivalents $ 994,792 $ 1,161,934
Accounts receivable, net of allowance for doubtful accounts
of $10,398 and $7,153, respectively 231,516 175,980
Prepaid expenses and other 2,796 13,400
------------------- -----------------
Total current assets 1,229,104 1,351,314
Property and equipment
Land 178,609 178,609
Buildings and improvements 6,871,992 6,870,960
Equipment and furnishings 1,022,025 973,896
------------------- -----------------
8,072,626 8,023,465
Accumulated depreciation and amortization (5,268,377) (5,029,530)
------------------- -----------------
Net property and equipment 2,804,249 2,993,935
------------------- -----------------
Other
Restricted escrows and other deposits 665,900 526,931
Deferred loan costs, net of accumulated amortization of
$15,111and $14,593 respectively 17,202 17,720
------------------- -----------------
Total other assets 683,102 544,651
------------------- -----------------
$ 4,716,455 $ 4,889,900
=================== =================
See accompanying notes to condensed consolidated financial statements.
Page 2
June 30,
2000 December 31,
(Unaudited) 1999
------------------- ------------------
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Current liabilities:
Current maturities of long-term debt $ 86,931 $ 83,938
Accounts payable 172,416 116,302
Accrued expenses 366,477 585,727
Accrued management fees 394,918 394,918
Due to related party 9,791 10,385
Deposit liabilities 79,153 68,321
------------------- ------------------
Total current liabilities 1,109,686 1,259,591
------------------- ------------------
Long-term obligations, less current maturities 3,912,817 3,957,345
------------------- ------------------
Total liabilities 5,022,503 5,216,936
------------------- ------------------
Partners' equity (deficit):
Limited partners (126,239) (146,387)
General partners (179,809) (180,649)
------------------- ------------------
Total partners' equity (deficit) (306,048) (327,036)
------------------- ------------------
$ 4,716,455 $ 4,889,900
=================== ==================
See accompanying notes to condensed consolidated financial statements.
Page 3
Consolidated Resources Health Care Fund II
Condensed Consolidated Statements of Operations
(Unaudited)
Three months ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
------------------ ---------------- --------------- ----------------
Revenue:
Operating revenues $ 1,732,734 $ 1,698,697 $ 3,514,404 $ 3,379,762
Interest income 13,247 5,634 26,166 11,985
------------------ ---------------- --------------- ----------------
Total revenue 1,745,981 1,704,313 3,540,570 3,391,747
------------------ ---------------- --------------- ----------------
Expenses:
Operating expenses 1,580,678 1,519,581 3,070,768 3,077,325
Depreciation & amortization 119,936 114,309 239,365 228,618
Interest 75,471 76,926 151,234 154,292
Partnership administration costs 29,177 31,515 58,214 82,284
------------------ ---------------- --------------- ----------------
Total expenses 1,805,262 1,742,331 3,519,581 3,542,519
------------------ ---------------- --------------- ----------------
Net income (loss) $ (59,281) $ (38,018) $ 20,989 $ (150,772)
================== ================ =============== ================
Net income (loss) per L.P. unit $ (3.79) $ (2.43) $ 1.34 $ (9.65)
================== ================ =============== ================
L.P. units outstanding 15,000 15,000 15,000 15,000
================== ================ =============== ================
See accompanying notes to condensed consolidated financial statements.
Page 4
Consolidated Resources Health Care Fund II
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Six months ended June 30,
2000 1999
---------------- ---------------
Operating Activities:
Cash received from residents and government agencies 3,458,868 3,195,182
Cash paid to suppliers and employees (3,373,663) (2,724,488)
Interest received 26,166 11,985
Interest paid (151,234) (154,292)
Property taxes paid (35,989) (87,320)
---------------- ---------------
Cash provided by (used in) operating activities (75,852) 241,067
---------------- ---------------
Investing Activities:
Additions to property and equipment (49,161) (101,802)
---------------- ---------------
Financing Activities:
Principal payments on long-term debt (41,535) (42,503)
Due to related party (594) -
---------------- ---------------
Cash used in financing activities (42,129) (42,503)
---------------- ---------------
Net increase (decrease) in cash and cash equivalents (167,142) 96,762
Cash and cash equivalents, beginning of period 1,161,934 931,079
---------------- ---------------
Cash and cash equivalents, end of period $ 994,792 $ 1,027,841
================ ===============
See accompanying notes to condensed consolidated financial statements.
Page 5
Consolidated Resources Health Care Fund II
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Six months ended June 30,
2000 1999
---- ----
Reconciliation of Net Income (Loss) to cash
Provided by Operating Activities:
Net income (loss) $ 20,989 $ (150,772)
Depreciation and amortization 239,365 228,618
Changes in assets and liabilities:
Accounts receivable (55,536) (194,372)
Restricted escrows (138,969) 9,792
Other current assets 10,603 (17,741)
Accounts payable and accrued liabilities (152,304) 365,542
-------------- ----------------
Cash used in operating activities $ (75,852) $ 241,067
============== ================
See accompanying notes to condensed consolidated financial statements.
Page 6
CONSOLIDATED RESOURCES HEALTH CARE FUND II
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000
NOTE 1.
The financial statements are unaudited and reflect all adjustments (consisting
only of normal recurring adjustments) which are, in the opinion of management,
necessary for a fair presentation of the financial position and operating
results of Consolidated Resources Health Care Fund II (the "Partnership") for
the interim periods. The results of operations for the six months ended June 30,
2000, are not necessarily indicative of the results to be expected for the year
ending December 31, 2000.
NOTE 2.
The consolidated financial statements should be read in conjunction with the
consolidated financial statements and the notes thereto contained in the
Partnership's Annual Report on Form 10-K for the year ended December 31, 1999,
as filed with the Securities and Exchange Commission, a copy of which is
available upon request by writing to WelCare Service Corporation-II at Post
Office Box 8779, Atlanta, Georgia 31106.
NOTE 3.
A summary of compensation paid to or accrued for the benefit of the
Partnership's general partners and their affiliates and amounts reimbursed for
costs incurred by these parties on the behalf of the Partnership are as follows:
Six months ended June 30,
2000 1999
---- ----
Charged to costs and expenses:
Property management and oversight
management fees............................................ $33,730 $34,826
Financial accounting, data processing,
tax reporting, legal and compliance,
investor relations and supervision
of outside services........................................ $58,214 $36,406
Page 7
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Certain statements contained in this Management 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 ultimately prove to
be inaccurate. Actual events and results may materially differ 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, additional changes in healthcare
reimbursement systems and rates, the availability of capital and financing,
changes to amounts recorded as revenues due to final resolution of amounts due
to and from third-party payors, and other factors affecting the Partnership's
business that may be beyond its control.
At June 30, 2000, 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").
Results of Operations
Revenues:
- --------
Operating revenue increased by $34,055 for the quarter ended June 30, 2000 as
compared to the same period for the prior year and by $134,642 for the six
months ended June 30, 2000 as compared to the same period for the prior year.
This increase is primarily attributable to slight increases in occupancy for the
number of units at the retirement facility and an increase in the number of
Medicare patients at the nursing facility offset in part by a decrease in
Medicaid patients at the nursing facility. Occupancy levels at the retirement
facility gradually increased as compared to last year despite continued heavy
competition in the market. Census at the nursing facility remained stable during
the current period; however, the nursing facility experienced a continued
decline in the number of Medicaid and managed care patients as a result of
competition.
Expenses:
- --------
Operating expenses increased by $61,097 for the quarter ended June 30, 2000 as
compared to the same period for the prior year and decreased by $6,557 for the
six months ended June 20, 2000 as compared to the same period for the prior
year. The increase for the quarter is primarily due to extra staffing expense at
the nursing facility, increases in supplies expenses at the nursing facility and
increases in salary expenses, contract services and management fees at the
retirement facility resulting from occupancy increases.
Liquidity and Capital Resources:
- -------------------------------
At June 30, 2000, the Partnership held cash and cash equivalents of $994,792, a
decrease of $44,312 from March 31, 2000. The current cash balance will be
necessary to meet the Partnership's current obligations and for operating
reserves. In addition, cash balances maintained at the Partnership's two
facilities must be maintained in accordance with operating reserves established
by HUD.
Page 8
The Partnership's two facilities produced sufficient revenues to meet their
operating and debt service obligations. Management believes that these
facilities will produce positive cash flow in 2000; however, no assurance can be
given that the facilities will produce positive cash flow if revenues decline.
As of June 30, 2000, the Partnership was not obligated to perform any major
capital expenditures or renovations. 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.
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 Balance Budget Act of 1997 has targeted the Medicare
program for reductions in spending growth for skilled nursing facilities over
the next five years, primarily through the implementation of the prospective
payment system ("PPS") reimbursement system. The Partnership's nursing facility
changed to the PPS reimbursement system on January 1, 1999. Management believes
that continued and increased reductions in therapy costs, the use of general
purchasing agents and other expense reduction measures should in part offset the
effect of any rate reductions arising from the PPS reimbursement system. 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, and
decreases in the level of payments could have a material adverse effect on the
Partnership.
ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Partnership has not entered into any transactions using derivative financial
instruments or other market risk sensitive instruments and believes that its
exposure to market risk associated with other financial instruments (such as
investments and borrowings) and interest rate risk is not material.
Part II - Other Information
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
Exhibit 99.1 Certification Pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
Page 9
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.
CONSOLIDATED RESOURCES HEALTH CARE FUND II
By: WELCARE SERVICE CORPORATION - II
Managing General Partner
Date:August 26, 2002 By:/s/ John F. McMulLan
--------------------------
John F. McMullan
Chief Financial Officer
Date:August 26, 2002 By:/s/ Marilyn McMullan
--------------------------
Marilyn McMullan
Assistant Secretary
Page 10