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 September 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
- ----------------------------------------------------------------------
(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 - September 30, 1998
(unaudited) and December 31, 1997
Consolidated Statements of Operations - Three Months and
Nine Months Ended September 30, 1998 and 1997 (unaudited)
Consolidated Statements of Cash Flows - Nine Months Ended
September 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 September 30, 1998, Registrant had cash of
approximately $593,154. 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 September 30, 1998, Registrant had
restricted cash of $39,728 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 third quarter of 1998, Registrant
incurred a loss of $8,287 ($.99 per limited partnership unit) compared
to income of $37,851 ($4.52 per limited partnership unit) for the same
period in 1997. For the first nine months of 1998, the Registrant
incurred a loss of $39,704 ($4.74 per limited partnership unit)
compared to income of $41,831 ($5.00 per limited partnership unit) for
the same period in 1997.
Rental income increased $2,099 from $49,964 in the
third quarter of 1997 to $52,063 in the same period in 1998 and
increased $11,160 from $134,348 for the first nine months of 1997 to
$145,508 in the same period in 1998. The increase in rental income
for the third quarter and the first nine months of 1997 from the same
periods in 1998 is the result of an increase at the Brass Works due to
an increase in the average occupancy and the average rental rates.
Interest income decreased $57,503 from $60,836 in
the third quarter of 1997 to $3,333 in the same period in 1998 and
decreased $150,535 from $181,860 for the first nine months of 1997 to
$31,325 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 $419
from $23,495 in the third quarter of 1997 to $23,076 in the same
period in 1998 and for the first nine months of 1998 decreased by
$38,801 from $126,015 for the first nine months of 1997 to $87,214 in
the same period in 1998. The decrease from the first nine 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 and wages and salaries expense at Locke Mill due to a
higher turnover of apartment units.
Income recognized during the quarter at the
Registrant's three properties amounted to $9,000, compared to income
of approximately $69,000 for the same period in 1997. For the first
nine months of 1998, the Registrant recognized income of $32,000
compared to income of approximately $137,000 for the same period in
1997.
In the third quarter of 1998, Registrant
recognized income of $4,000 at The Henderson Apartments compared to
income of $68,000 in the third quarter of 1997 and for the first nine
months of 1998, Registrant recognized income of $26,000 compared to
income of $138,000 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 third quarter of 1998, Registrant
recognized income of $8,000 at the Brass Works, including $12,000 of
depreciation expense, compared to a loss of $3,000 including $12,000
of depreciation expense in the third quarter of 1997 and for the first
nine months of 1998, Registrant recognized income of $7,000 including
$36,000 of depreciation expense, compared to a loss of $4,000 for the
same period in 1997, including $24,000 of depreciation expense. The
increase from the third quarter and the first nine months of 1997 to
the same periods in 1998 is due to an increase in rental income. The
increase in rental income is due to an increase in the average
occupancy (88% to 97%) for the third quarter and for the first nine
months (91% to 98%) combined with an increase in the average rental
rates.
In the third quarter of 1998, Registrant incurred
a loss of $3,000 at the Locke Mill Plaza, including $7,000 of
depreciation expense, compared to income of $4,000 including $6,000 of
depreciation expense in the second quarter of 1997 and for the first
nine months of 1998, Registrant incurred a loss of $1,000 including
$20,000 of depreciation expense, compared to income of $3,000 for the
same period in 1997, including $19,000 of depreciation expense. The
increase in the loss for both the third quarter and the first nine
months of 1998 from the same periods in 1997 is the result of an
increase in maintenance and wages and salaries 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
September 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 (929,403) ( 861,579)
--------- ---------
1,415,317 1,483,141
Cash and cash equivalents 593,154 3,102,030
Restricted cash 39,728 56,685
Other assets 4,876 160,272
--------- --------
Total $2,053,075 $4,802,128
========= =========
Liabilities and Partners' Equity
Liabilities:
Accounts payable:
Trade $ 32,842 $ 213,002
Other liabilities 1,549 745
Tenant security deposits 11,195 11,655
--------- ---------
Total liabilities 45,586 225,402
--------- ---------
Partners' equity 2,007,489 4,576,726
--------- ---------
Total $2,053,075 $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 Nine Months Ended September 30, 1998 and 1997
(Unaudited)
Three months Nine months
Ended September 30, Ended September 30,
1998 1997 1998 1997
Revenues:
Rental income $ 52,063 $ 49,964 $145,508 $134,348
Interest income 3,333 60,836 31,325 181,860
------- ------- ------- -------
Total revenues 55,396 110,800 176,833 316,208
------- ------- ------- -------
Costs and expenses:
Rental operations 23,076 23,495 87,214 126,015
General and administrative 18,000 27,000 61,500 81,000
Depreciation and amortization 22,607 22,454 67,823 67,362
------- ------- ------- -------
Total costs and expenses 63,683 72,949 216,537 274,377
------- ------- ------- -------
Net (loss) income ($ 8,287) $ 37,851 ($ 39,704) $ 41,831
======= ======= ======= =======
Net (loss) income per limited
partnership unit ($ .99) $ 4.52 ($ 4.74) $ 5.00
======= ======= ======= =======
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 Nine Months Ended September 30, 1998 and 1997
(Unaudited)
Nine months ended
September 30,
1998 1997
Cash flows from operating activities:
Net (loss) income ($ 39,704) $ 41,831
Adjustments to reconcile net (loss) income to net
cash provided by (used in) operating activities:
Depreciation and amortization 67,823 67,362
Changes in assets and liabilities:
Decrease in restricted cash 16,957 32,937
Decrease (increase) in other assets 155,407 (4,079)
Decrease in accounts payable - trade (180,160) (127,173)
Decrease in accounts payable - related parties 0 (39)
Decrease in deferred income 0 (13,282)
Increase (decrease) in other liabilities 804 (716)
(Decrease) increase in tenant security deposits (470) 1,995
--------- -------
Net cash provided by (used in) operating activities 20,657 (1,164)
--------- -------
Cash flows from investing activities:
Capital expenditures 0 (6,778)
Decrease in notes receivable 0 141,392
--------- -------
Net cash provided by investing activities 0 134,614
--------- -------
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 (2,508,876) 133,450
Cash and cash equivalents at beginning of period 3,102,030 445,412
--------- -------
Cash and cash equivalents at end of period $ 593,154 $578,862
========= =======
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 September 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: November 30, 1998 DIVERSIFIED HISTORIC INVESTORS IV Income Fund
-----------------
By: Dover Historic Advisors III, General Partner
By: EPK, Inc., General Partner
By: /s/ Spencer Wertheimer
----------------------
SPENCER WERTHEIMER
President
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<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 593,154
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 2,344,720
<DEPRECIATION> 929,403
<TOTAL-ASSETS> 2,053,075
<CURRENT-LIABILITIES> 32,842
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,007,489
<TOTAL-LIABILITY-AND-EQUITY> 2,053,075
<SALES> 0
<TOTAL-REVENUES> 176,833
<CGS> 87,214
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (39,704)
<INCOME-TAX> 0
<INCOME-CONTINUING> (39,704)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (39,704)
<EPS-PRIMARY> (4.74)
<EPS-DILUTED> 0
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