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 March 31, 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 - March 31, 1997 (unaudited)
and December 31, 1996
Consolidated Statements of Operations - Three Months
Ended March 31, 1997 and 1996 (unaudited)
Consolidated Statements of Cash Flows - Three Months
Ended March 31, 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 March 31, 1997, Registrant had total
unrestricted cash of $418,499. This balance is comprised of $6,020
held by the Registrant and $412,479 which is held by the properties in
which the Registrant holds a majority interest. The Registrant
expects that the $418,499 plus the cash generated from operations at
each property to fund the operating expenses of the properties. The
Registrant is not aware of any additional sources of liquidity.
As of March 31, 1997, Registrant had restricted
cash of $64,925 consisting primarily of funds held as security
deposits 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.
During 1994, the Registrant converted the property
(Henderson Riverfront Apartments) owned by 700 Commerce Mall General
Partnership, a Louisiana general partnership in which the Registrant
owns a 95% interest, into condominiums ("the Units") and began
offering the Units for sale. As of December 31, 1996, all of the 61
units had been sold.
(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. 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 first quarter of 1997, Registrant
recognized income of $9,030 ($1.02 per limited partnership unit)
compared to income of $5,992 ($.72 per limited partnership unit) for
the same period in 1996.
Rental income decreased $23,271 from $65,482 in
the first quarter of 1996 to $42,211 in the same period in 1997. The
decrease in rental income 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.
Interest income increased $4,803 from $55,650 in
the first quarter of 1996 to $60,453 in the same period in 1997. The
increase is the result of increase in interest earned on notes
receivable.
Expense for rental operations decreased by $45,560
from $89,740 in the first quarter of 1996 to $44,180 in the same
period in 1997. The decrease is the result of a decrease at Henderson
due to the sale of Units partially offset by a slight overall increase
in operating expenses at Locke Mill.
General and administrative expenses decreased by
$20,000 from $47,000 in the first quarter of 1996 to $27,000 in the
same period in 1997. The decrease is due to General Partner fees paid
in the first quarter of 1996. None were paid in the first quarter of
1997.
Depreciation and amortization expense decreased
$14,767 from $37,221 in the first quarter of 1996 to $22,454 in the
same period in 1997. The decrease is due to the sale of Units at
Henderson resulting in a lower balance on which depreciation is
calculated.
Income recognized during the quarter at the
Registrant's three properties amounted to $42,000, compared to income
of approximately $41,000 for the same period in 1996. Included in
income in the first quarter of 1996 is an extraordinary gain of
$59,000 related to the sale of Units.
In the first quarter of 1997, Registrant
recognized income of $48,000 at The Henderson Apartments including $0
of depreciation expense, compared to income of $51,000 in the first
quarter of 1996, including $15,000 of depreciation expense. Included
in income in the first quarter of 1996 is an extraordinary gain of
$59,000 related to the sale of Units. Overall, exclusive of the gain
resulting from the sale of Units, the property would have recognized
income of $48,000 in the first quarter of 1997 compared to a loss of
$8,000 in the same period of 1996. The increase in net 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 first quarter of 1997, Registrant incurred
a loss of $7,000 at the Brass Works, including $12,000 of depreciation
expense, compared to a loss of $12,000 including $12,000 of
depreciation expense in the first quarter of 1996. The decrease in
the loss is due to an increase in the average rental rates.
Registrant anticipates that operating results in the following
quarters will be similar to those experienced in the first quarter of
1997.
In the first quarter of 1997, Registrant
recognized income of $1,000 at the Locke Mill Plaza, including $6,000
of depreciation expense, compared to income of $2,000 including $6,000
of depreciation expense in the first quarter of 1996. The decrease in
net income is the result of a slight overall increase in operating
expenses. Registrant anticipates that operating results in the
following quarters will be comparable to those experienced in the
first quarter of 1997.
<PAGE>
DIVERSIFIED HISTORIC INVESTORS IV INCOME FUND
(a Pennsylvania limited partnership)
CONSOLIDATED BALANCE SHEETS
Assets
March 31, 1997 December 31, 1996
(Unaudited)
Rental properties, at cost:
Land $ 74,324 $ 74,324
Buildings and improvements 2,246,305 2,245,405
Furniture and fixtures 21,000 21,000
--------- ---------
2,341,629 2,340,729
Less - Accumulated depreciation ( 793,062) ( 770,607)
--------- ---------
1,548,567 1,570,122
Cash and cash equivalents 418,499 445,412
Restricted cash 64,925 107,436
Notes receivable 3,423,690 3,449,018
Other assets 1,457 2,576
--------- ---------
Total $5,457,138 $5,574,564
========= =========
Liabilities and Partners' Equity
Liabilities:
Accounts payable:
Trade 41,019 155,463
Related parties 0 39
Deferred income 0 13,282
Other liabilities 2,640 1,396
Tenant security deposits 9,950 9,885
--------- ---------
Total liabilities 53,609 180,065
--------- ---------
Partners' equity 5,403,529 5,394,499
--------- ---------
Total $5,457,138 $5,574,564
========= =========
The accompanying notes are an integral part of these financial statements.
<PAGE>
DIVERSIFIED HISTORIC INVESTORS IV INCOME FUND
(a Pennsylvania limited partnership)
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 1997 and 1996
(Unaudited)
Three months Three months
ended ended
March 31, 1997 March 31, 1996
-------------- --------------
Revenues:
Rental income $ 42,211 $ 65,482
Gain on sale of units 0 58,821
Interest income 60,453 55,650
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Total revenues 102,664 179,953
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Costs and expenses:
Rental operations 44,180 89,740
General and administrative 27,000 47,000
Depreciation and amortization 22,454 37,221
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Total costs and expenses 93,634 173,961
------- -------
Net income $ 9,030 $ 5,992
======= =======
Net income per limited partnership unit $ 1.02 $ .72
======= =======
The accompanying notes are an integral part of these financial statements.
<PAGE>
DIVERSIFIED HISTORIC INVESTORS IV INCOME FUND
(a Pennsylvania limited partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 1996 and 1995
(Unaudited)
Three months ended
March 31,
1997 1996
Cash flows from operating activities:
Net income $ 9,030 $ 5,992
Adjustments to reconcile net loss to net
cash used in operating activities:
Gain on sale of units 0 (58,821)
Depreciation and amortization 22,454 37,221
Changes in assets and liabilities:
Decrease in restricted cash 42,511 103,741
Decrease (increase) in other assets 1,119 (191,392)
Decrease in accounts payable - trade (114,444) (220,377)
Decrease in accounts payable - related parties (39) (12,900)
Decrease in deferred income (13,282) 0
Increase in other liabilities 1,245 0
Increase (decrease) in tenant security deposits 65 (3,010)
-------- --------
Net cash used in operating activities (51,341) (339,546)
-------- --------
Cash flows from investing activities:
Capital expenditures (900) (25,983)
Decrease in notes receivable 25,328 93,376
Proceeds from sale of units 0 95,104
-------- --------
Net cash provided by investing activities 24,428 162,497
-------- --------
Decrease in cash and cash equivalents (26,913) (177,049)
Cash and cash equivalents at beginning of period 445,412 346,511
-------- --------
Cash and cash equivalents at end of period $ 418,499 $ 169,462
======== ========
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 in
Form 10-K of the Registrant, and notes thereto, 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 Document
Number
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 March 31, 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: July 30, 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
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 418,499
<SECURITIES> 0
<RECEIVABLES> 3,423,690
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,457
<PP&E> 2,341,629
<DEPRECIATION> 793,062
<TOTAL-ASSETS> 5,457,138
<CURRENT-LIABILITIES> 41,019
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 5,403,529
<TOTAL-LIABILITY-AND-EQUITY> 5,457,138
<SALES> 0
<TOTAL-REVENUES> 102,664
<CGS> 0
<TOTAL-COSTS> 44,180
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 9,030
<INCOME-TAX> 0
<INCOME-CONTINUING> 9,030
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,030
<EPS-PRIMARY> 1.02
<EPS-DILUTED> 0
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