<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 2)
DIVALL INSURED INCOME FUND
LIMITED PARTNERSHIP
(Name of Subject Company)
DIVALL INSURED INCOME FUND
LIMITED PARTNERSHIP
(Name of Person(s) Filing Statement)
UNITS OF INTEREST
(Title of Class of Securities)
255016107
(CUSIP Number of Class of Securities)
Bruce A. Provo
The Provo Group, Inc.
101 W. 11th St., Ste. 1110
Kansas City, MO 64105
(816) 421-7444
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications on Behalf of the Person(s) Filing this Statement)
Copy to:
Robert T. Schendel, Esq.
Shughart Thomson & Kilroy, P.C.
12 Wyandotte Plaza
120 W. 12th Street, Suite 1800
Kansas City, Missouri 64105
(816) 421-3355
<PAGE>
Amendment No. 2 to Schedule 14D-9
This Amendment No. 2 to Schedule 14D-9 amends the Schedule 14D-9 (the
"Schedule 14D-9") originally filed by DiVall Insured Income Fund Limited
Partnership, a Wisconsin limited partnership (the "Partnership"), with the
Securities and Exchange Commission ("Commission") on March 31, 1998, as amended
by Amendment No. 1 to Schedule 14D-9 on April 24, 1998.
ITEM 4. THE SOLICITATION AND RECOMMENDATION
Item 4 is hereby amended to include the following documents filed by the
Partnership with the Commission:
DiVall Insured Income Fund, L.P. Quarterly Newsletter for First Quarter
1998; and
Form of letter to limited partners of the Partnership, dated May 18, 1998.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
Item 9 is hereby amended to include the following exhibits:
(a)(1) DiVall Insured Income Fund, L.P. Quarterly Newsletter for First
Quarter 1998.
(a)(2) Form of letter to limited partners of the Partnership, dated May 18,
1998.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
DIVALL INSURED INCOME FUND
LIMITED PARTNERSHIP
By: The Provo Group, Inc.
General Partner
By:______________________________
Bruce A. Provo
President
Dated: May __, 1998
<PAGE>
May 18, 1998
Re: DiVall Insured Income Fund, L.P.
Dear Limited Partner:
The Provo Group, Inc. is pleased to announce that effective May 13, 1998,
ReSource Phoenix (the partnership's independent tabulation firm) reported to us
that the Partnership has received favorable consents from a majority of limited
partners to sell the Partnership's remaining properties and to liquidate the
Partnership. Thanks to all of you who returned your consents.
As we indicated to you in the Consent Statement, we intend to sell the
properties under a sealed bid process. While such a process may encounter
various delays, we hope to complete the sale and liquidation by November 15,
1998. In any event, we will use every effort to distribute your proceeds to you
in a timely manner.
Beyond our substantial mailing list, we intend to advertise the portfolio's sale
in the Wall Street Journal. Interested purchasers ("bidders") are welcome to
visit our specifically designed due-diligence website at www.tpgdivall.com.
If you have any questions or comments you may call Investor Relations at 1-800-
547-7686 or 1-608-244-7661.
We appreciate your continuing support, and we will continue to work for the best
interests of the limited partners.
Sincerely,
The Provo Group, Inc.
By:_______________________________
Bruce A. Provo
<PAGE>
DiVall Insured Income Fund, L.P.
QUARTERLY NEWS
================================================================================
A publication of The Provo Group, Inc. FIRST QUARTER 1998
WHY ALL THE INTEREST ... IN MY INTERESTS?
Madison, Wisconsin
Recently you may have been subject to the "feeding" frenzy occurring for your
interests in the Partnership. A common question we are hearing is "why all the
interest in my interests?"
As we have communicated to you before, it's really quite simple -- the interests
you own in the Partnership offer immediate value to recent third-party tenderers
such as U.S. Restaurant Properties, Inc., Smithtown Bay, LLC, and Whitney Year
2030.
Should you be tendering your interests to any of these parties? As your General
Partner, we don't think so, particularly if you want to be the recipient of
"full" value. We believe you should be the one receiving the final return on
your long-term investment NOT someone who buys your interests at a discount for
future profit opportunities.
In accordance with the Agreement of Limited Partnership, we have requested your
consent to sell the properties in the Partnership -- which means that the
Partnership will be dissolved following the sale of the assets and final
distribution of the proceeds to you.
If a majority of Limited Partners are in agreement that the market conditions
are favorable for producing maximized value on your interests through
liquidation now, we will proceed with the sale of the properties and make a
final distribution to you.
Although the strong interest in your interests may be causing you concern or
confusion -- think of it this way, you have something they want, and you have
control over whether they can have it or not.
-----------------------
OTHER NEWS INSIDE...
. Distributions More Than Budgeted......Distribution Highlights, pg 2
. New Tenant for Popeye's...................Property Highlights, pg 3
<PAGE>
Page 2 DiVall 1 1 Q 98
-------------------------
Distribution Highlights
. 7.6% (approx.) annualized return . $17.40 per unit (approx.) for the
from operations and other First Quarter 1998.
sources based on $23,000,000
("net" remaining initial . $909.00 to $806.00 range of
investment). distributions per unit from the first
unit sold to the last unit sold
. $435,000 "total" amount before the offering closed (March
distributed for the First 1988), respectively.
Quarter 1998 which was $55,000
more than budgeted. [NOTE: Distributions are from both
cash flow from operations and "net"
The "higher" than projected cash activity from financing and
distribution is primarily due investing activities.]
to unbudgeted rental income
received during the quarter.
(Original units were purchased for $1,000/unit.)
-------------------------
Statements of Income and Cash Flow Highlights
. 12% increase in . 22% increase in . 5% increase in net
"total" operating "total" expenses income from
revenues from from projections. projections.
projections.
. $52,000 unbudgeted rental income . Property appraisals in the amount of
was received during the quarter. $46,000 were accrued at the quarter's
The "multiple" Popeye's (Chicago, end in connection with the proposed
IL) budgeted decreased rent did liquidation of the partnership.
not occur and the tenant of the
"vacant" Hardee's (Beaver Dam,
WI) remained current on its rent.
<PAGE>
[LOGO]
Page 3 DiVall 1 1 Q98
==============================
Property Highlights
Vacancies
---------
. Denny's restaurant (Beaver Dam, WI) was vacant at March 31, 1998. Management
is currently working with the tenant to relet this property. (NOTE:
This tenant continues to make rental payments.)
Rents Receivable
----------------
There were no rental delinquencies at March 31, 1998.
Other Property Matters
----------------------
. THG Restaurant Group assumed the leases of the multiple Popeye's restaurants
located in Chicago, Illinois. The new lease terms are favorable for the
Partnership.
==============================
Return of Capital
The following table has been updated to present the breakdown of distributions
since the Partnership's first quarterly distribution, for the period ended
December 31, 1986 through March 31, 1998.
<TABLE>
<CAPTION>
================================================================================
Distribution Capital
------------- ------------
Analysis Balance
------------- ------------
<S> <C> <C>
Original Capital Balance - $25,000,000
Cash Flow From Operations Since Inception $ 19,616,789 -
Total Distributions Since Inception (21,577,732) -
------------
(Return) of Capital ($1,960,943) (1,960,943)
============ -----------
"Net" Remaining Initial Investment
by Original Partners - $23,039,057
===========
================================================================================
</TABLE>
(NOTE: For a more individualized discussion of return of capital contact
Investor Relations.)
<PAGE>
Page 4 DiVall 1 1 Q 98
---------------------
Questions & Answers
. When can I expect my next distribution mailing?
Your distribution correspondence for the Second Quarter of 1998 is scheduled to
be mailed on August 14, 1998.
* * *
================================================================================
For questions or additional information, please contact Investor Relations at:
1-800-547-7686 or 1-608-244-7661
All written inquiries may be mailed or faxed to:
The Provo Group, Inc.
Post Office Box 8673 1410 Northport Drive
Madison, Wisconsin 53708-8673 Madison, Wisconsin 53704
(FAX 608-244-7663)
================================================================================
<PAGE>
[THE PROVO GROUP LOGO]
<TABLE>
<CAPTION>
DIVALL INSURED INCOME FUND L.P.
STATEMENTS OF INCOME AND CASH FLOW CHANGES
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 1998
-------------------------------------------------------------------------------------------------------
PROJECTED ACTUAL VARIANCE
-------------------------------------
<S> <C> <C> <C>
1ST 1ST CASH
QUARTER QUARTER BETTER
OPERATING REVENUES 3/31/98 3/31/98 (WORSE)
----------- ----------- ------------
Rental income $472,868 $524,548 $51,680
Direct financing interest 1,677 1,677 0
Interest income 11,200 10,080 (1,120)
Gain on sale of assets 33,752 33,752 0
Other income 0 9,772 9,772
----------- ----------- ------------
TOTAL OPERATING REVENUES $519,497 $579,829 $60,332
----------- ----------- ------------
OPERATING EXPENSES
Insurance $4,296 $3,722 $574
Management fees 23,755 23,645 110
Commissions 14,100 14,100 0
Overhead allowance 1,915 1,908 7
Advisory Board 3,320 3,218 102
Administrative 16,274 17,081 (807)
Professional services 3,670 4,499 (829)
Appraisal fees 0 45,640 (45,640)
Auditing 15,755 14,655 1,100
Legal 7,500 7,073 427
Real estate taxes 101 142 (41)
Defaulted tenants 8,249 3,368 4,881
----------- ----------- ------------
TOTAL OPERATING EXPENSES $98,935 $139,051 ($40,116)
----------- ----------- ------------
INTEREST EXPENSE $6,658 $7,238 ($580)
----------- ----------- ------------
INVESTIGATION AND RESTORATION EXPENSES $150 $132 $18
----------- ----------- ------------
NON-OPERATING EXPENSES
Depreciation $87,591 $87,591 $0
Amortization 2,031 4,549 (2,518)
----------- ----------- ------------
TOTAL NON-OPERATING EXPENSES $89,622 $92,140 ($2,518)
----------- ----------- ------------
TOTAL EXPENSES $195,365 $238,561 ($43,196)
----------- ----------- ------------
NET INCOME $324,132 $341,268 $17,136
OPERATING CASH RECONCILIATION: VARIANCE
------------
Depreciation and amortization 89,622 92,140 2,518
Gain on sale of assets (33,752) (33,752) 0
(Increase) Decrease in current assets 36,603 77,457 40,854
Increase (Decrease) in current liabilities (42,115) 43,175 85,290
G.P. distribution (1,297) (1,366) (69)
Cash reserved for payables 42,115 (42,800) (84,915)
Advance from (to) future cash flows for current distributions (26,500) (26,500) 0
----------- ----------- ------------
Net Cash Provided From Operating Activities $388,808 $449,622 $60,814
----------- ----------- ------------
CASH FLOWS FROM (USED IN) INVESTING
AND FINANCING ACTIVITIES
Recoveries from former G.P. affiliates 0 0 0
Principal received on equipment leases 7,788 6,688 (1,100)
Proceeds from sale of assets 233,752 233,752 0
Decrease in mortgage notes payable (253,478) (252,444) 1,034
----------- ----------- ------------
Net Cash Provided from Investing And Financing
Activities ($11,938) ($12,004) ($66)
----------- ----------- ------------
Total Cash Flow For Quarter $376,870 $437,618 $60,748
Cash Balance Beginning of Period 561,056 644,274 83,218
Less 1st quarter distributions paid 2/98 (375,000) (375,000) 0
Less cash reserved above for payables and future distributions (15,615) 69,300 84,915
----------- ----------- ------------
Cash Balance End of Period $547,311 $776,192 $228,881
Cash reserved for 1st quarter L.P. distributions (380,000) (435,000) (55,000)
Cash reserved for payment of payables and future distributions (126,500) (191,500) (65,000)
----------- ----------- ------------
Unrestricted Cash Balance End of Period $40,811 $149,692 $108,881
=========== =========== ============
--------------------------------------------------------------------------------------------------------
PROJECTED ACTUAL VARIANCE
-------------------------------------
* Quarterly Distribution $380,000 $435,000 $55,000
Mailing Date 5/15/98 (enclosed) -
--------------------------------------------------------------------------------------------------------
</TABLE>
* Refer to distribution letter for detail of quarterly
distribution.
<PAGE>
<TABLE>
<CAPTION>
PROJECTIONS FOR DIVALL INSURED INCOME FUND L.P.
DISCUSSION PURPOSES 1998 PROPERTY SUMMARY
AND RELATED ESTIMATED RECEIPTS
PORTFOLIO
------------------------------- -------------------------------------------
REAL ESTATE EQUIPMENT
------------------------------- -------------------------------------------
- ------------------------------------------- BASE % LEASE LEASE * % *
CONCEPT LOCATION COST RENT YIELD EXPIRATION COST RECEIPTS RETURN
- ------------------------------------------- ------------------------------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
RIO BRAVO GRAND FORKS, ND 984,801 100,000 10.15%
CHI CHI'S EAU CLAIRE, WI 1,042,730 136,260 13.07%
DENNY'S ** GLENDALE, AZ 1,105,926 90,000 8.14% 68,744 0 0.00%
DENNY'S SCOTTSDALE, AZ 1,051,157 90,000 8.56% 40,553 0 0.00%
DENNY'S MESA, AZ 1,028,036 65,000 6.32% 39,218 0 0.00%
DENNY'S ** PEORIA, AZ 1,105,926 90,000 8.14% 58,781 0 0.00%
BW-III HOPKINS, MN 795,050 66,000 8.30% 1/15/2000 190,000 37,860 19.93%
DENNY'S BEAVER DAM, WI 659,299 66,000 10.01% 3/31/2000 190,000 37,860 19.93%
FAZOLI'S DES MOINES, IA 565,476 45,500 8.05% 39,600 0 0.00%
HARDEE'S FOND DU LAC, WI 1,026,931 72,000 7.01%
POPEYE'S CHICAGO, IL 473,968 65,652 13.85%
POPEYE'S CHICAGO, IL 610,893 84,612 13.85%
POPEYE'S CHICAGO, IL 484,501 67,152 13.86%
POPEYE'S CHICAGO, IL 610,893 84,612 13.85%
POPEYE'S CHICAGO, IL 437,105 60,540 13.85%
POPEYE'S CHICAGO, IL 631,958 87,480 13.84%
POPEYE'S CHICAGO, IL 579,295 80,304 13.86%
BJ's MARKET CHICAGO, IL 905,807 60,000 6.62%
TACO CABANA ARLINGTON, TX 1,474,569 132,000 8.95%
TACO CABANA DALLAS, TX 1,369,243 132,000 9.64%
TACO CABANA DALLAS, TX 1,257,596 132,000 10.50%
TACO CABANA DALLAS, TX 1,308,153 132,000 10.09%
- ------------------------------------------- ------------------------------- -------------------------------------------
- ------------------------------------------- ------------------------------- ------------------------------
PORTFOLIO TOTALS (22 Properties) 19,509,313 1,939,112 9.94% 626,896 75,720 12.08%
- ------------------------------------------- ------------------------------- ------------------------------
OUTSTANDING DEBT
------------------------------- ------------------------------
AMOUNT ANNUAL CURRENT AMOUNT ANNUAL CURRENT
- ------------------------------------------- OWED DEBT INTEREST OWED DEBT INTEREST
MORTGAGED PROPERTIES 3/31/98 SERVICE RATE 3/31/98 SERVICE RATE
- ------------------------------------------- ------------------------------- ------------------------------
- -------------------------------------------
DENNY'S BEAVER DAM, WI 221,952 73,517 8.50%
- ------------------------------------------- ------------------------------- ------------------------------
- ------------------------------------------- ------------------------------- ------------------------------
TOTALS 221,952 73,517 - 0 0 -
- ------------------------------------------- ------------------------------- ------------------------------
- ------------------------------------------- ------------------------------- ------------------------------
NET AFTER DEBT 19,287,361 1,865,595 9.67% 626,896 75,720 12.08%
- ------------------------------------------- ------------------------------- ------------------------------
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------------------
PROJECTIONS FOR ORIGINAL EQUITY $25,000,000
DISCUSSION PURPOSES NET DISTRIBUTION OF CAPITAL
SINCE INCEPTION $1,960,943
------------
CURRENT EQUITY $23,039,057
--------------------------------------===========
PORTFOLIO
---------------------------------- ------------
TOTALS TOTAL %
---------------------------------- ON 23,039,057
EQUITY
CONCEPT LOCATION INVESTED RECEIPTS * RETURN * RAISE
- -------------- --------------------- ---------------------------------- -------------
<S> <C> <C> <C> <C> <C>
RIO BRAVO GRAND FORKS, ND 984,801 100,000 10.15%
CHI CHI'S EAU CLAIRE, WI 1,042,730 136,260 13.07%
DENNY'S ** GLENDALE, AZ 1,174,670 90,000 7.66%
DENNY'S SCOTTSDALE, AZ 1,091,710 90,000 8.24%
DENNY'S MESA, AZ 1,067,254 65,000 6.09%
DENNY'S ** PEORIA, AZ 1,164,707 90,000 7.73%
BW-III HOPKINS, MN 985,050 103,860 10.54%
DENNY'S BEAVER DAM, WI 849,299 103,860 12.23%
FAZOLI'S DES MOINES, IA 605,076 45,500 7.52%
HARDEE'S FOND DU LAC, WI 1,026,931 72,000 7.01%
POPEYE'S CHICAGO, IL 473,968 65,652 13.85%
POPEYE'S CHICAGO, IL 610,893 84,612 13.85%
POPEYE'S CHICAGO, IL 484,501 67,152 13.86%
POPEYE'S CHICAGO, IL 610,893 84,612 13.85%
POPEYE'S CHICAGO, IL 437,105 60,540 13.85%
POPEYE'S CHICAGO, IL 631,958 87,480 13.84%
POPEYE'S CHICAGO, IL 579,295 80,304 13.86%
BJ's MARKET CHICAGO, IL 905,807 60,000 6.62%
TACO CABANA ARLINGTON, TX 1,474,569 132,000 8.95%
TACO CABANA DALLAS, TX 1,369,243 132,000 9.64%
TACO CABANA DALLAS, TX 1,257,596 132,000 10.50%
TACO CABANA DALLAS, TX 1,308,153 132,000 10.09%
- -------------- --------------------- ---------------------------------- -------------
- ------------------------------------------- ---------------------------------- -------------
PORTFOLIO TOTALS (22 Properties) 20,136,209 2,014,832 10.01% 8.75%
- ------------------------------------------- ---------------------------------- -------------
OUTSTANDING DEBT
-----------------------
AMOUNT ANNUAL
- ----------------------------------- OWED DEBT
MORTGAGED PROPERTIES 3/31/98 SERVICE
- ----------------------------------- -----------------------
- -----------------------------------
DENNY'S BEAVER DAM, WI 221,952 73,517
- ----------------------------------- -----------------------
- ----------------------------------- -----------------------
TOTALS 221,952 73,517
- ----------------------------------- -----------------------
- ----------------------------------- ---------------------------------- -------------
NET AFTER DEBT 19,914,257 1,941,315 9.75% 8.43%
- ----------------------------------- ---------------------------------- -------------
</TABLE>
* A portion of the amounts disclosed include a return of principal.
** Rent is based on 12.5% of monthly sales. Rent projected for 1998 is
based on 1997 sales levels.
