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, 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 - March 31, 1998 (unaudited)
and December 31, 1997
Consolidated Statements of Operations - Three Months
Ended March 31, 1998 and 1997 (unaudited)
Consolidated Statements of Cash Flows - Three Months
Ended March 31, 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 March 31, 1998, Registrant had cash of
$2,843,602. The Registrant expects that the funds plus the cash
generated from operations at each property (less amounts distributed
to the partners of the Partnership referred to in the next sentence)
will be sufficient to fund the operating expenses of the properties.
Subsequent to the end of the quarter, in April 1998, the Registrant
distributed $2,276,586 to the partners. The Registrant is not aware
of any additional sources of liquidity.
As of March 31, 1998, Registrant had restricted
cash of $32,400 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.
(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 1998, Registrant
incurred a loss of $18,285 ($2.19 per limited partnership unit)
compared to income of $9,030 ($1.02 per limited partnership unit) for
the same period in 1997.
Rental income increased $3,531 from $42,211 in the
first quarter of 1997 to $45,742 in the same period in 1998. The
increase in rental income is the result of an increase in rental
income at Brass Works due to an increase in the average occupancy (93%
to 97%) and an increase at Locke Mill due to an increase in the
average occupancy.
Interest income decreased $36,101 from $60,453 in
the first quarter of 1997 to $24,352 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 $3,909
from $44,180 in the first quarter of 1997 to $40,271 in the same
period in 1998. The decrease is the result of a decrease in expenses
at Henderson partially offset by a slight overall increase in
operating expenses at Brass Works and an increase in maintenance
expense at Locke Mill due to the cleaning of the carpets in several of
the apartment units.
Income recognized during the quarter at the
Registrant's three properties amounted to $13,000, compared to income
of approximately $42,000 for the same period in 1997.
In the first quarter of 1998, Registrant
recognized income of $19,000 at The Henderson Apartments, compared to
income of $48,000 in the first quarter 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 receivables on December 31,
1997 partially offset by a decrease in expenses. As a result of the
sale of the notes receivable, income will be significantly reduced in
future quarters.
In the first quarter of 1998, Registrant incurred
a loss of $7,000 at the Brass Works, including $12,000 of depreciation
expense, compared to a loss of $7,000 including $12,000 of
depreciation expense in the first quarter of 1997. Although there was
no overall change in the loss from the first quarter of 1997 to the
same period in 1998 there was an increase in rental income due to an
increase in the average occupancy (93% to 97%) offset by an overall
increase in operating expenses due to the increase in occupancy.
In the first quarter of 1998, Registrant
recognized income of $1,000 at the Locke Mill Plaza, including $7,000
of depreciation expense, compared to income of $1,000 including $6,000
of depreciation expense in the first quarter of 1997. Although there
was no overall change in income from the first quarter of 1997 to the
same period in 1998 there was an increase in rental income due to an
increase in the average rental rates offset by an increase in
maintenance expense due to the cleaning of the carpets in several of
the apartment units in January and an increase in depreciation expense
due to the depreciation of capital improvements.
<PAGE>
DIVERSIFIED HISTORIC INVESTORS IV INCOME FUND
(a Pennsylvania limited partnership)
CONSOLIDATED BALANCE SHEETS
Assets
March 31, 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 ( 884,187) ( 861,579)
--------- ---------
1,460,533 1,483,141
Cash and cash equivalents 2,843,602 3,102,030
Restricted cash 32,400 56,685
Other assets 8,563 160,272
--------- ---------
Total $4,345,098 $4,802,128
========= =========
Liabilities and Partners' Equity
Liabilities:
Accounts payable:
Trade $ 28,181 $ 213,002
Other liabilities 30 745
Tenant security deposits 11,400 11,655
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Total liabilities 39,611 225,402
--------- ---------
Partners' equity 4,305,487 4,576,726
--------- ---------
Total $4,345,098 $4,802,128
========= =========
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, 1998 and 1997
(Unaudited)
Three months Three months
ended ended
March 31, March 31,
1998 1997
Revenues:
Rental income $ 45,742 $ 42,211
Interest income 24,352 60,453
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Total revenues 70,094 102,664
Costs and expenses:
Rental operations 40,271 44,180
General and administrative 25,500 27,000
Depreciation and amortization 22,608 22,454
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Total costs and expenses 88,379 93,634
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Net (loss) income ($ 18,285) $ 9,030
======= =======
Net (loss) income per limited partnership unit($ 2.19) $ 1.02
======= =======
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, 1998 and 1997
(Unaudited)
Three months ended
March 31,
1998 1997
Cash flows from operating activities:
Net (loss) income ($ 18,285) $ 9,030
Adjustments to reconcile net (loss) income to
net cash used in operating activities:
Depreciation and amortization 22,608 22,454
Changes in assets and liabilities:
Decrease in restricted cash 24,285 42,511
Decrease in other assets 151,719 1,119
Decrease in accounts payable - trade (184,821) (114,444)
Decrease in accounts payable - related parties 0 (39)
Decrease in deferred income 0 (13,282)
(Decrease) increase in other liabilities (715) 1,245
(Decrease) increase in tenant security deposits (265) 65
--------- ---------
Net cash used in operating activities (5,474) (51,341)
--------- ---------
Cash flows from investing activities:
Capital expenditures 0 (900)
Distributions (252,954) 0
Decrease in notes receivable 0 25,328
--------- ---------
Net cash (used in) provided by investing activities (252,954) 24,428
--------- ---------
Decrease in cash and cash equivalents (258,428) (26,913)
Cash and cash equivalents at beginning of period 3,102,030 445,412
--------- ---------
Cash and cash equivalents at end of period $2,843,602 $ 418,499
========= =========
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, 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
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, 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: May 29, 1998 DIVERSIFIED HISTORIC INVESTORS IV Income Fund
------------
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
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 2,843,602
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 2,344,720
<DEPRECIATION> 884,187
<TOTAL-ASSETS> 4,345,098
<CURRENT-LIABILITIES> 28,181
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 4,305,487
<TOTAL-LIABILITY-AND-EQUITY> 4,345,098
<SALES> 0
<TOTAL-REVENUES> 70,094
<CGS> 0
<TOTAL-COSTS> 40,271
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (18,285)
<INCOME-TAX> 0
<INCOME-CONTINUING> (18,285)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (18,285)
<EPS-PRIMARY> 0
<EPS-DILUTED> (2.19)
</TABLE>
