THE VILLA AT GREELEY, LLC
FINANCIAL STATEMENTS
Year Ended December 31, 1998
TABLE OF CONTENTS
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Independent Auditors' Report..................................................2
BALANCE SHEET.................................................................3
STATEMENT OF OPERATIONS AND MEMBERS' EQUITY...................................4
STATEMENT OF CASH FLOWS.......................................................5
NOTES TO FINANCIAL STATEMENTS.................................................8
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ANDERSON & WHITNEY, P.C.
Certified Public Accountants and Business advisors
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1001 Ninth Avenue
Greeley, Colorado 80631-4046
(970) 352-7990 FAX (970) 352-1855
E-mail Address: CPA@awhiteny.com
Independent Auditors' Report
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Members and Board of Mangers
The Villa at Greeley, LLC
Greeley, Colorado
We have audited the accompanying balance sheet of The Villa at Greeley,
LLC (a Colorado limited liability corporation) as of December 31, 1998, and the
related statements of operations and members' equity, and cash flows for the
year ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audits in accordance with the generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts of disclosures in the financial statements. An audit also includes
assessing the accounting principles used and the significant estimates made by
management, as well as, evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of The Villa at Greeley, LLC as
of December 31, 1998, and the results of its operations and its cash flows for
the year then ended, in conformity with the generally accepted accounting
principles.
Anderson & Whitney, P.C.
February 25, 1999
MEMBER OF
AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
SEC AND PRIVATE COMPANIES PRACTICE SECTIONS - AICPA DIVISION FOR CPA FIRMS
ACCOUNTING FIRMS ASSOCIATED, INC.
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THE VILLA AT GREELEY, LLC
BALANCE SHEET
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December 31 1998
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ASSETS
Current Assets:
Cash $ 33,627
Assets limited as to use 64,367
Accounts receivable, net of allowance for doubtful
accounts of $-0- 383,404
Prepaid expenses and other 28,342
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Total Current Assets 509,740
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Property and Equipment:
Land 317,811
Furniture and equipment 197,678
Automobiles 262,935
Leasehold improvements 558,600
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1,337,024
Less: Accumulated depreciation and amortization 587,750
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749,274
Construction in progress 3,299
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Total Property and Equipment 752,573
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TOTAL ASSETS $ 1,262,313
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LIABILITIES
Current Liabilities:
Note payable $ 150,000
Accounts payable 56,307
Accrued expenses and other 383,051
Resident and client trust funds 64,367
Current portion of long-term debt 82,639
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Total Current Liabilities 736,364
Long-Term Debt 438,052
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Total Liabilities 1,174,416
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MEMBERS' EQUITY 87,897
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TOTAL LIABILITIES AND MEMBERS' EQUITY $ 1,262,313
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See Accompanying Notes to Financial Statements.
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THE VILLA AT GREELEY, LLC
STATEMENT OF OPERATIONS AND MEMBERS' EQUITY
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Year Ended December 31 1998
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Revenue:
Restitution Center $ 2,138,026
Residential Treatment Center 1,467,830
Villa Living Center 823,644
Transitional Center for Women 121,202
Outpatient 80,181
Other revenue 129,588
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Total Operating Revenue 4,760,471
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Operating Expenses:
Restitution Center 1,894,208
Residential Treatment Center 1,477,272
Villa Living Center 1,156,435
Transitional Center for Women 104,440
Outpatient 24,249
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Total Operating Expenses 4,656,604
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Earnings from Operations 103,867
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Other Income (Expense):
Gain on sale of property and equipment 52,400
Miscellaneous income 1,702
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Total Other Income (Expense) - net 54,102
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NET EARNINGS 157,969
Members' Equity, January 1, 1998 64,140
Distributions paid (134,212)
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Members' Equity, December 31, 1998 $ 87,897
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See Accompanying Notes to Financial Statements.
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THE VILLA AT GREELEY, LLC
STATEMENT OF CASH FLOWS
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Year Ended December 31 1998
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Cash Flows from Operating Activities:
Cash received from residents, clients, and third party payors $ 4,705,428
Cash paid to suppliers and employees (4,566,575)
Interest paid (53,452)
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Net Cash Provided by Operating Activities 85,401
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Cash Flows from Investing Activities:
Purchase of property and equipment (132,771)
Proceeds from sale of property and equipment 90,742
Construction in progress (6,191)
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Net Cash Used by Investing Activities (48,220)
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Cash Flows from Financing Activities:
Proceeds from:
Note payable 518,000
Long-term debt 77,698
Principal payments on:
Note payable (430,000)
Long-term debt (90,592)
Repayment of advances from related party (10,824)
Cash distributions paid (97,938)
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Net Cash Used by Financing Activities (33,656)
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Net Increase in Cash 3,525
Cash, Beginning of Year 30,102
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Cash, End of Year $ 33,627
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Continued on next page.
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Year Ended December 31 1998
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Reconciliation of Net Earnings to Net Cash
Provided by Operating Activities:
Net earnings $ 157,969
Adjustments:
Depreciation and amortization 63,430
Gain on sale of property and equipment (52,400)
(Increase) decrease in:
Accounts receivable (56,745)
Prepaid expenses and other (23,703)
Increase (decrease) in:
Accounts payable (76,939)
Accrued expenses and other 73,789
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Net Cash Provided by Operating Activities $ 85,401
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Supplemental Disclosures of Noncash Financing
and Investing Activities:
Distributions of vehicles to members $ 36,374
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See Accompanying Notes to Financial Statements.
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THE VILLA AT GREELEY, LLC
NOTES TO FINANCIAL STATEMENTS
Note 1 - Summary of Significant Accounting Policies:
The accounting and reporting policies of The Villa at Greeley, LLC (the
Company) conform to generally accepted accounting principles. The following
summary of significant accounting policies is presented to assist the reader in
evaluating these financial statements.
Description of Business:
The Company, organized in Colorado in 1984, provides the following
services: The Villa Living Center is a 72-bed health care facility serving
persons of all ages who cannot live safely alone, but who do not need nursing
home care. The Restitution Center is a community-based correctional facility for
minimum risk offenders. The Residential Treatment Center is a drug and alcohol
treatment program for offenders.
The Transitional Center for Women is a transitional "pre-community
corrections" program for high-needs female offenders.
Resident and Client Trust Funds:
The Company receives and holds personal funds of residents and clients
residing in its facilities. Personal funds of $64,367 are reported as assets
limited as to use at December 31, 1998 with an offsetting liability entitled
resident and client trust funds.
Property and Equipment:
Property and equipment are recorded at acquisition cost. Depreciation is
computed using accelerated methods over the estimated useful lives of the
assets.
Operating Revenue:
Operating revenue is reported at amounts billed to residents, third-party
payors, and others for service rendered. Revenue under third-party payor
agreements may be subject to audit and retroactive adjustment.
Allocation of Expenses:
The Company allocates all general and administrative expenses to its
programs in order to provide management with the total costs for each program.
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Note 1 - Summary of Significant Accounting Policies - Continued:
Income Taxes:
Effective August 1, 1997, the Company converted from an S corporation to a
Colorado limited liability company (LLC). Limited liability companies are
treated like partnerships for federal income tax purposes and do not incur
income taxes. Instead, its earnings and losses are included in the personal tax
returns of the members and taxed depending on their personal tax situations.
Accordingly, the financial statements do not reflect a provision for income
taxes.
Use of Estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures. Accordingly,
actual results could differ from those estimates.
Note 2 - Note Payable:
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December 31 1998
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Revolving $150,000 line of credit with a bank maturing in March 1999
(subsequently renewed to March 2000), interest payable quarterly at 1% over the
prime rate quoted by the Wall Street Journal (actual rate of 9.5% at December
31, 1998), collateralized by accounts receivable and general intangibles,
personally guaranteed by two members $ 150,000
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Note 3 - Long-Term Debt:
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December 31 1998
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Note payable to a bank in monthly installments of $4,527, including
interest 9.5%, final payment due in August 2007, collateralized by a deed of
trust, personally guaranteed by the members $ 318,000
Various notesto financial institutions in monthly installments interest
from 8.5% to 9.5%, final payments due from 1999 to 2001, collateralized by
vehicles $ 99,185
Loan payable to the State of Colorado in monthly installments of $990,
noninterest bearing, final payment due in July 2007, collateralized by
facility improvements $ 103,006
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520,691
Less: Current Portion 82,639
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$ 438,052
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THE VILLA AT GREELEY, LLC
NOTES TO FINANCIAL STATEMENTS -- Continued
Note 3 - Long-Term Debt - Continued:
As of December 31, 1998, annual maturities of long-term debt for each of
the next five years are as follows:
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Year Ending Annual
December 31 Maturities
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1999 $ 82,639
2000 79,084
2001 56,236
2002 45,288
2003 48,603
Thereafter 208,841
Note 4 - Operating Lease:
The Company leases its facilities from a related party at $7.04 per square
foot on a month-to-month basis for $54,478 per month. The Company is responsible
for insurance, property taxes, utilities, and maintenance on the property. Total
rent expense for 1998 was $637,843.
Note 5 - Retirement Plan:
The Company has a 401(k) profit sharing plan covering substantially all
employees who are at least 21 years old and have completed six months of
service. Employee contributions must be at least 2% and no more than 15% of
eligible compensation and are matched 75% by the Company up to a maximum of 6%
of the employee's compensation per year. Employees are fully vested after five
years of service. The Company's contribution to the plan was $93,636 for 1998.
Note 6 - Concentration of Credit Risk:
Through the Restitution Center and the Residential Treatment Center, the
Company provides various services for the State of Colorado under
annually-renewable contracts. For the year ended December 31, 1998, the Company
recorded revenue of $3,020,851 under these contracts. Funding for the Villa
Living Center and other programs is provided from other sources, including
Medicaid and federal programs.
At December 31, 1998, the Company had accounts receivable of $299,740 from
the State of Colorado. The Company's policy is to not obtain collateral on
accounts receivable.
Note 7 - Interest Expenses:
The amount of interest expense incurred in 1998 was $52,641, all of which
was charged to operations.
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