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, 1998
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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.)
1609 Walnut Street, Philadelphia, PA 19103
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (215) 557-9800
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, 1998 (unaudited)
and December 31, 1997
Consolidated Statements of Operations - Three Months and
Six Months Ended June 30, 1998 and 1997 (unaudited)
Consolidated Statements of Cash Flows - Six Months Ended
June 30, 1998 and 1997 (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, 1998, Registrant had cash of
approximately $572,055. The Registrant expects that the funds plus
the cash generated from operations at each property will be sufficient
to fund the operating expenses of the properties. In addition to the
operating expenses of the properties, the Registrant distributed
$2,276,586 to the limited partners in April 1998. The Registrant is
not aware of any additional sources of liquidity.
As of June 30, 1998, Registrant had restricted
cash of $36,458 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. 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 1998, Registrant
incurred a loss of $13,130 ($1.57 per limited partnership unit)
compared to a loss of $5,050 ($.60 per limited partnership unit) for
the same period in 1997. For the first six months of 1998, the
Registrant incurred a loss of $31,417 ($3.75 per limited partnership
unit) compared to income of $3,980 ($.48 per limited partnership unit)
for the same period in 1997.
Rental income increased $5,530 from $42,173 in the
second quarter of 1997 to $47,703 in the same period in 1998 and
increased $9,061 from $84,384 for the first six months of 1997 to
$93,445 in the same period in 1998. The increase in rental income for
the second quarter and the first six months of 1997 from the same
periods in 1998 is the result of an increase at the Brass Works and
Locke Mill due to increases in the average occupancy.
Interest income decreased $56,931 from $60,571 in
the second quarter of 1997 to $3,640 in the same period in 1998 and
decreased $93,032 from $121,024 for the first six months of 1997 to
$27,992 in the same period in 1998. The decrease is the result of the
sale of the notes receivable relating to the Henderson property on
December 30, 1997.
Expense for rental operations decreased by $34,475
from $58,340 in the second quarter of 1997 to $23,864 in the same
period in 1998 and for the first six months of 1998 decreased by
$38,382 from $102,520 for the first six months of 1997 to $64,138 in
the same period in 1998. The decrease for the second quarter and the
first six months of 1998 from the same period in 1997 is the result of
a decrease at Henderson due to the sale of units partially offset with
an increase in maintenance expense at both Locke Mill and Brass Works
due to a higher turnover of apartment units.
Income recognized during the quarter at the
Registrant's three properties amounted to $11,000, compared to income
of approximately $26,000 for the same period in 1996. For the first
six months of 1998, the Registrant recognized income of $24,000
compared to income of approximately $68,000 for the same period in
1996.
In the second quarter of 1998, Registrant
recognized income of $3,000 at The Henderson Apartments compared to
income of $22,000 in the second quarter of 1997 and for the first six
months of 1998, Registrant recognized income of $22,000 compared to
income of $70,000 for the same period of 1997. The decrease in net
income is a result of a decrease in interest earned on the notes
receivable due to the sale of the notes receivable on December 31,
1997 partially offset by a decrease in expenses.
In the second quarter of 1998, Registrant
recognized income of $6,000 at the Brass Works, including $12,000 of
depreciation expense, compared to income of $6,000 including $12,000
of depreciation expense in the second quarter of 1997 and for the
first six months of 1998, Registrant incurred a loss of $1,000
including $24,000 of depreciation expense, compared to a loss of
$1,000 for the same period in 1997, including $24,000 of depreciation
expense. Although there was no significant change, there was an
increase in rental income offset by an increase in maintenance
expense. The increase in rental income is due to an increase in the
average occupancy (92% to 99%) for the second quarter and for the
first six months (92% to 98%) and an increase in maintenance expense
due to an increase in the turnover of apartment units.
In the second quarter of 1998, Registrant
recognized income of $2,000 at the Locke Mill Plaza, including $8,000
of depreciation expense, compared to a loss of $2,000 including $8,000
of depreciation expense in the second quarter of 1997. The increase
in income for the second quarter of 1998 from the same period in 1997
is the result of an increase in rental income due to an increase in
the average occupancy (79% to 92%).
For the first six months of 1998, Registrant
recognized income of $3,000 at the Locke Mill Plaza including $13,000
of depreciation expense, compared to a loss of $1,000 for the same
period in 1997, including $13,000 of depreciation expense. The
increase in income for the first six months in 1998 from the same
period in 1998 is the result of an increase in rental income due to an
increase in the average occupancy (86% to 93%) partially offset by an
increase in maintenance expense due to an increase in the turnover of
apartment units.
<PAGE>
DIVERSIFIED HISTORIC INVESTORS IV INCOME FUND
(a Pennsylvania limited partnership)
CONSOLIDATED BALANCE SHEETS
Assets
June 30, 1998 December 31, 1997
(Unaudited)
Rental properties, at cost:
Land $ 74,324 $ 74,324
Buildings and improvements 2,246,555 2,246,555
Furniture and fixtures 23,841 23,841
--------- ---------
2,344,720 2,344,720
Less - Accumulated depreciation (906,795) (861,579)
--------- ---------
1,437,925 1,483,141
Cash and cash equivalents 572,055 3,102,030
Restricted cash 36,458 56,685
Other assets 10,271 160,272
--------- ---------
Total $2,056,709 $4,802,128
========= =========
Liabilities and Partners' Equity
Liabilities:
Accounts payable:
Trade $ 27,885 $ 213,002
Other liabilities 1,578 745
Tenant security deposits 11,470 11,655
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Total liabilities 40,933 225,402
--------- ---------
Partners' equity 2,015,776 4,576,726
--------- ---------
Total $2,056,709 $4,802,128
========= =========
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, 1998 and 1997
(Unaudited)
Three months Six months
Ended June 30, Ended June 30,
1998 1997 1998 1997
Revenues:
Rental income $ 47,703 $ 42,173 $ 93,445 $ 84,384
Interest income 3,640 60,571 27,992 121,024
------- ------- ------- -------
Total revenues 51,343 102,744 121,437 205,408
------- ------- ------- -------
Costs and expenses:
Rental operations 23,865 58,340 64,138 102,520
General and
Administrative 18,000 27,000 43,500 54,000
Depreciation and
Amortization 22,608 22,454 45,216 44,908
------- ------- ------- -------
Total costs and
Expenses 64,473 107,794 152,854 201,428
------- ------- ------- -------
Net (loss) income ($ 13,130) ($ 5,050) ($ 31,417) $ 3,980
======= ======= ======= =======
Net (loss) income per
limited partnership unit ($ 1.57) ($ .60) ($ 3.75) $ .48
======= ======= ======= =======
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 Six Months Ended June 30, 1998 and 1997
(Unaudited)
Six months ended
June 30,
1998 1997
Cash flows from operating activities:
Net (loss) income ($ 31,417) $ 3,980
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 45,216 44,908
Changes in assets and liabilities:
Decrease in restricted cash 20,227 37,651
Decrease (increase) in other assets 150,014 (292)
Decrease in accounts payable - trade (185,117) (115,836)
Decrease in accounts payable - related parties 0 (39)
Decrease in deferred income 0 (13,282)
Decrease in other liabilities (195) (581)
Increase in tenant security deposits 830 1,665
--------- -------
Net cash used in operating activities (442) (41,826)
--------- -------
Cash flows from investing activities:
Capital expenditures 0 (4,049)
Decrease in notes receivable 0 127,817
--------- -------
Net cash provided by investing activities 0 123,768
--------- -------
Cash flows from financing activities:
Distribution to partners (2,529,533) 0
--------- -------
Net cash used in financing activities (2,529,533) 0
--------- -------
(Decrease) increase in cash and cash equivalents (2,529,975) 81,942
Cash and cash equivalents at beginning of period 3,102,030 445,412
--------- -------
Cash and cash equivalents at end of period $ 572,055 $527,354
========= =======
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, 1997.
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 June 30, 1998.
<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 20, 1998 DIVERSIFIED HISTORIC INVESTORS IV Income Fund
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By: Dover Historic Advisors III, General Partner
By: EPK, Inc., General Partner
By: /s/ Spencer Wertheimer
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SPENCER WERTHEIMER
President and Treasurer
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<ARTICLE> 5
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<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 572,055
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 2,344,720
<DEPRECIATION> 906,795
<TOTAL-ASSETS> 2,056,709
<CURRENT-LIABILITIES> 27,885
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,015,776
<TOTAL-LIABILITY-AND-EQUITY> 2,056,709
<SALES> 0
<TOTAL-REVENUES> 121,437
<CGS> 0
<TOTAL-COSTS> 64,138
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (31,417)
<INCOME-TAX> 0
<INCOME-CONTINUING> (31,417)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (31,417)
<EPS-PRIMARY> (3.75)
<EPS-DILUTED> 0
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