UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
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or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________________ to ______________
Commission file number 33-11907
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DIVERSIFIED HISTORIC INVESTORS IV
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(Exact name of registrant as specified in its charter)
Pennsylvania 23-2440837
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
Suite 500, 1521 Locust Street, Philadelphia, PA 19102
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (215) 735-5001
N/A
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(Former name, former address and former fiscal year, if changed since
last report)
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 (or for such shorter period
that the Registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes X No
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Balance Sheets - June 30, 1997 (unaudited)
and December 31, 1996
Consolidated Statements of Operations - Three Months and
Six Months Ended June 30, 1997 and 1996 (unaudited)
Consolidated Statements of Cash Flows - Six Months Ended
June 30, 1997 and 1996 (unaudited)
Notes to Consolidated Financial Statements (unaudited)
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
(1) Liquidity
As of June 30, 1997, Registrant had total
unrestricted cash of $527,354. Such funds are expected to be used to
pay liabilities of Registrant. The Registrant expects that the
$527,354 plus the cash generated from operations at each property will
be sufficient to fund the operating expenses of the properties. The
Registrant is not aware of any additional sources of liquidity.
As of June 30, 1997, Registrant had restricted cash
of $69,785 consisting primarily of funds held as security deposits,
replacement reserves and escrows for taxes and insurance. As a
consequence of the restrictions as to use, Registrant does not deem
these funds to be a source of liquidity.
(2) Capital Resources
Due to the relatively recent rehabilitations of the
properties, any capital expenditures needed are generally replacement
items and are funded out of cash from operations or replacement
reserves, if any. The Registrant is not aware of any factors which
would cause historical capital expenditure levels not to be indicative
of capital requirements in the future and accordingly, does not believe
that it will have to commit material resources to capital investment
for the foreseeable future.
(3) Results of Operations
During the second quarter of 1997, Registrant
incurred a loss of $5,050 ($.60 per limited partnership unit) compared
to a loss of $9,206 ($1.10 per limited partnership unit) for the same
period in 1996. For the first six months of 1997, the Registrant
recognized income of $3,980 ($.48 per limited partnership unit)
compared to a loss of $3,214 ($.38 per limited partnership unit) for
the same period in 1996.
Rental income decreased $11,690 from $53,863 in the
second quarter of 1996 to $42,173 in the same period in 1997 and
decreased $34,961 from $119,345 for the first six months 1996 to
$84,384 in the same period in 1997. The decrease in rental income for
the second quarter and the first six months of 1997 from the same
periods in 1996 is the result of a decrease in rental income at
Henderson due to the sale of units, partially offset by an increase at
the Brass Works due to an increase in the average rental rates. The
decrease in rental income for the second quarter of 1997 from the same
period in 1996 is also the result of a decrease in the average
occupancy (98% to 79%) at Locke Mill.
Interest income increased $27,451 from $33,120 in
the second quarter of 1996 to $60,571 in the same period in 1997 and
increased $32,254 from $88,770 for the first six months of 1996 to
$121,024 in the same period in 1997. The increase for both the second
quarter and the first six months of 1997 from the same periods in 1996
is the result of an increase in interest earned on notes receivable
resulting from the sale of units at the Henderson.
Expense for rental operations decreased by $48,496
from $106,836 in the second quarter of 1996 to $58,340 in the same
period in 1997. The decrease for the second quarter of 1997 from the
same period in 1996 is the result of a decrease at Henderson due to the
sale of units combined with a decrease in commissions expense at Brass
Works due to lower turnover of apartment units.
Expense for rental operations decreased by $94,056
from $196,576 for the first six months of 1996 to $102,520 in the same
period in 1997. The decrease for the first six months of 1997 from the
same period in 1996 is the result of a decrease at Henderson due to the
sale of units combined with a decrease in commissions expense at Brass
Works due to lower turnover of apartment units, partially offset by a
slight overall increase in operating expenses at Locke Mill.
Expense for general and administrative decreased
$20,000 from $74,000 for the first six months of 1996 to $54,000 in the
same period in 1997. The decrease is due to fees paid in the first
quarter of 1996 to reimburse the General Partner for certain goods and
services rendered which did not recur in 1997.
Depreciation and amortization expense decreased
$11,830 from $34,284 in the second quarter of 1996 to $22,454 in the
same period in 1997 and decreased $26,597 from $71,505 for the first
six months of 1996 to $44,908 in the same period in 1997. The decrease
for the second quarter and the first six months of 1997 from the same
periods in 1996 is due to the sale of units at the Henderson Apartments
resulting in a lower balance on which depreciation is calculated.
Income recognized during the quarter at the
Registrant's three properties amounted to $26,000, compared to income
of approximately $22,000 for the same period in 1996. Included in
income in the second quarter of 1996 is a gain of $72,000 related to
the sale of units at the Henderson. For the first six months of 1997,
the Registrant recognized income of $68,000 compared to approximately
$60,000 for the same period in 1996. Included in income in the first
six months of 1996 is a gain of $131,000 related to the sale of units
at the Henderson.
In the second quarter of 1997, Registrant
recognized income of $22,000 at The Henderson Apartments compared to
income of $22,000 in the second quarter of 1996, including $12,000 of
depreciation expense. Included in income in the second quarter of 1996
is a gain of $72,000 related to the sale of Units. Overall, exclusive
of the gain resulting from the sale of Units, the property would have
recognized a loss of $50,000 in the second quarter of 1996. For the
first six months of 1997, Registrant recognized income of $70,000,
including $0 of depreciation expense compared to income of $73,000 for
the same period of 1996, including $27,000 of depreciation expense.
Included in income for the first six months of 1996 is a gain of
$131,000 related to the sale of Units. Overall, exclusive of the gain
resulting from the sale of Units, the property would have recognized a
loss of $58,000 for the first six months of 1996. The increase in
income is a result of an increase in interest earned on the notes
receivable and a decrease in operating expenses and marketing expenses
partially offset by a decrease in rental income due to the fact that
all of the Units were sold in 1996.
In the second quarter of 1997, Registrant
recognized income of $6,000 at the Brass Works, including $12,000 of
depreciation expense, compared to income of $1,000 including $12,000 of
depreciation expense in the second quarter of 1996 and for the first
six months of 1997, Registrant incurred a loss of $1,000 including
$24,000 of depreciation expense, compared to a loss of $11,000 for the
same period in 1996, including $24,000 of depreciation expense. The
increases for the second quarter and the first six months of 1997 from
the same periods in 1996 is due to an increase in rental income due to
an increase in the average rental rates and a decrease in commissions
expense due to lower turnover of the apartment units.
In the second quarter of 1997, Registrant incurred
a loss of $2,000 at the Locke Mill Plaza, including $6,000 of
depreciation expense, compared to a loss of $1,000 including $6,000 of
depreciation expense in the second quarter of 1996. The increase in
the loss for the second quarter of 1997 from the same period in 1996 is
the result of a decrease in rental income due to a decrease in the
average occupancy (98% to 79%).
For the first six months of 1997, Registrant
incurred a loss of $1,000 at the Locke Mill Plaza including $13,000 of
depreciation expense, compared to a loss of $2,000 for the same period
in 1996, including $13,000 of depreciation expense. The decrease in
the loss for the first six months in 1997 from the same period in 1996
is the result of a overall decrease in operating expenses.
<PAGE>
DIVERSIFIED HISTORIC INVESTORS IV INCOME FUND
(a Pennsylvania limited partnership)
CONSOLIDATED BALANCE SHEETS
Assets
June 30, 1997 December 31, 1996
------------- -----------------
(Unaudited)
Rental properties, at cost:
Land $ 74,324 $ 74,324
Buildings and improvements 2,249,454 2,245,405
Furniture and fixtures 21,000 21,000
--------- ---------
2,344,778 2,340,729
Less - Accumulated depreciation (815,516) ( 770,607)
--------- ---------
1,529,262 1,570,122
Cash and cash equivalents 527,354 445,412
Restricted cash 69,785 107,436
Notes receivable 3,321,201 3,449,018
Other assets 2,869 2,576
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Total $ 5,450,471 $ 5,574,564
========= =========
Liabilities and Partners' Equity
Liabilities:
Accounts payable:
Trade 39,627 155,463
Related parties 0 39
Deferred income 0 13,282
Other liabilities 815 1,396
Tenant security deposits 11,550 9,885
--------- ---------
Total liabilities 51,992 180,065
--------- ---------
Partners' equity 5,398,479 5,394,499
--------- ---------
Total $ 5,450,471 $ 5,574,564
========= =========
The accompanying notes are an integral part of these financial statements.
<PAGE>
DIVERSIFIED HISTORIC INVESTORS IV
(a Pennsylvania limited partnership)
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months and Six Months Ended June 30, 1997 and 1996
(Unaudited)
Three months Six months
ended June 30, ended June 30,
1997 1996 1997 1996
------ ------ ------ ------
Revenues:
Rental income $ 42,173 $ 53,863 $ 84,384 $ 119,345
Gain on sale of units 0 71,931 0 130,752
Interest income 60,571 33,120 121,024 88,770
------- ------- ------- -------
Total revenues 102,744 158,914 205,408 338,867
------- ------- ------- -------
Costs and expenses:
Rental operations 58,340 106,836 102,520 196,576
General and administrative 27,000 27,000 54,000 74,000
Depreciation and amortization 22,454 34,284 44,908 71,505
------- ------- ------- -------
Total costs and expenses 107,794 168,120 201,428 342,081
------- ------- ------- -------
Net (loss) income ($ 5,050) ($ 9,206) $ 3,980 ($ 3,214)
======= ======= ======= =======
Net (loss) income per
limited partnership unit ($ .60) ($ 1.10) $ .48 ($ .38)
======= ======= ======= =======
The accompanying notes are an integral part of these financial statements.
DIVERSIFIED HISTORIC INVESTORS IV INCOME FUND
(a Pennsylvania limited partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 1997 and 1996
(Unaudited)
Six months ended
June 30,
1997 1996
Cash flows from operating activities:
Net income (loss) $ 3,980 ($ 3,214)
Adjustments to reconcile net loss to net
cash used in operating activities:
Gain on sale of units 0 (130,752)
Depreciation and amortization 44,908 71,505
Changes in assets and liabilities:
Decrease in restricted cash 37,651 18,496
Increase in other assets (292) (107,107)
Decrease in accounts payable - trade (115,836) (193,436)
(Decrease) increase in accounts payable -
related parties (39) 7,191
Decrease in deferred income (13,282) (26,109)
Decrease in other liabilities (581) 0
Increase (decrease) in tenant security deposits 1,665 (3,509)
------- -------
Net cash used in operating activities (41,826) (366,935)
------- -------
Cash flows from investing activities:
Capital expenditures (4,049) (81,396)
Decrease in notes receivable 127,817 183,637
Proceed from sale of units 0 50,088
------- -------
Net cash provided by investing activities 123,768 152,329
------- -------
Increase (decrease) in cash and cash equivalents 81,942 (214,606)
Cash and cash equivalents at beginning of period 445,412 346,511
------- -------
Cash and cash equivalents at end of period $ 527,354 $ 131,905
======= =======
The accompanying notes are an integral part of these financial statements.
<PAGE>
DIVERSIFIED HISTORIC INVESTORS IV INCOME FUND
(a Pennsylvania limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The unaudited consolidated financial statements of Diversified Historic
Investors IV Income Fund (the "Registrant") and related notes have been
prepared pursuant to the rules and regulations of the Securities and
Exchange Commission. Accordingly, certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
omitted pursuant to such rules and regulations. The accompanying
consolidated financial statements and related notes should be read in
conjunction with the audited financial statements and notes thereto, in
the Registrant's Annual Report on Form 10-K for the year ended December
31, 1996.
The information furnished reflects, in the opinion of management, all
adjustments, consisting of normal recurring accruals, necessary for a
fair presentation of the results of the interim periods presented.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
To the best of its knowledge, Registrant is not party
to, nor is any of its property the subject of, any pending material
legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted during the quarter covered by
this report to a vote of security holders.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit
Number Document
3 Registrant's Amended and Restated Certificate
of Limited Partnership and Agreement of
Limited Partnership, previously filed as part
of Amendment No. 2 of Registrant's
Registration Statement on Form S-11, are
incorporated herein by reference.
21 Subsidiaries of the Registrant are listed in
Item 2. Properties on Form 10-K, previously
filed and incorporated herein by reference.
(b) Reports on Form 8-K:
No reports were filed on Form 8-K during the quarter
ended June 30, 1997.
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
Date: August 22, 1997 DIVERSIFIED HISTORIC INVESTORS IV Income Fund
---------------
By: Dover Historic Advisors III, General Partner
By: SWDHA, Inc., General Partner
By: /s/ Spencer Wertheimer
----------------------
SPENCER WERTHEIMER
President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 527,354
<SECURITIES> 0
<RECEIVABLES> 3,321,201
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,869
<PP&E> 2,344,778
<DEPRECIATION> 815,516
<TOTAL-ASSETS> 5,450,471
<CURRENT-LIABILITIES> 39,627
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 5,398,479
<TOTAL-LIABILITY-AND-EQUITY> 5,450,471
<SALES> 0
<TOTAL-REVENUES> 205,408
<CGS> 0
<TOTAL-COSTS> 102,520
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,980
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,980
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,980
<EPS-PRIMARY> .48
<EPS-DILUTED> 0
</TABLE>
