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, 1999
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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, 1999 (unaudited)
and December 31, 1998
Consolidated Statements of Operations - Three Months and
Six Months Ended June 30, 1999 and 1998 (unaudited)
Consolidated Statements of Cash Flows - Six Months Ended
June 30, 1999 and 1998 (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, 1999, Registrant had cash of
approximately $603,883. 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
$248,571 to the limited partners in July 1999. The Registrant is not
aware of any additional sources of liquidity.
As of June 30, 1999, Registrant had restricted
cash of $23,580 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
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 1999, Registrant
incurred a loss of $19,324 ($2.30 per limited partnership unit)
compared to a loss of $13,130 ($1.57 per limited partnership unit) for
the same period in 1998. For the first six months of 1999, the
Registrant incurred a loss of $45,695 ($5.45 per limited partnership
unit) compared to $31,417 ($3.75 per limited partnership unit) for the
same period in 1998.
Rental income increased $1,027 from $47,703 in the
second quarter of 1998 to $48,730 in the same period in 1999 and
increased $3,683 from $93,445 for the first six months of 1998 to
$97,128 in the same period in 1999. The increase in rental income for
the second quarter and the first six months of 1999 from the same
periods in 1998 is the result of an increase of occupancy at Locke
Mill Plaza (92% to 100%) for the second quarter and (93% to 99%) for
the first six months and an increase in the average rental rates at
Brass Works.
Interest income decreased $1,246 from $3,640 in
the second quarter of 1998 to $2,394 in the same period in 1999 and
decreased $21,986 from $27,992 for the first six months of 1998 to
$6,006 in the same period in 1999 due to a decrease in the average
cash balances.
Expense for rental operations increased by $5,864
from $23,865 in the second quarter of 1998 to $29,729 in the same
period in 1999 and for the first six months of 1999 increased by
$3,254 from $64,138 for the first six months of 1998 to $67,392 in the
same period in 1999. The increase for the second quarter and the
first six months of 1999 from the same period in 1998 is the result of
an increase in legal fees incurred by the Registrant and an increase
in maintenance expense at Locke Mill Plaza as a result of the increase
in occupancy.
Income recognized during the quarter at the
Registrant's three properties amounted to $7,000, compared to income
of approximately $8,000 for the same period in 1998. For the first
six months of 1999, the Registrant recognized income of $2,000
compared to income of approximately $2,000 for the same period in
1998.
In the second quarter of 1999, Registrant
recognized income of $5,000 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 1998. The decrease
in income for the second quarter of 1999 from the same period in 1998
is the result of an increase in overall operating expenses partially
offset by an increase in rental income due to an increase in the
average rental rates.
For the first six months of 1999, Registrant
incurred a loss of $1,000 at Brass Works including $24,000 of
depreciation expense, compared to a loss of $1,000 for the same period
in 1998, including $24,000 of depreciation expense. Although, there
was no significant overall change there was an increase in rental
income due to an increase in the average rental rates partially offset
by an increase in the overall operating expenses.
In the second quarter of 1999, Registrant
recognized income of $2,000 at the Locke Mill Plaza, including $7,000
of depreciation expense, compared to an income of $2,000 including
$8,000 of depreciation expense in the second quarter of 1998 and for
the first six months of 1999, Registrant recognized income of $3,000
including $13,000 of depreciation expense, compared to an income of
$3,000 for the same period in 1998, including $13,000 of depreciation
expense. Although there was no significant overall change, there was
an increase in rental income due to an increase in occupancy (92% to
100%) for the second quarter and (93% to 99%) for the six months
partially offset by an increase in maintenance expense as a result of
the increase in occupancy.
<PAGE>
DIVERSIFIED HISTORIC INVESTORS IV INCOME FUND
(a Pennsylvania limited partnership)
CONSOLIDATED BALANCE SHEETS
Assets
June 30, 1999 December 31, 1998
(Unaudited)
Rental properties, at cost:
Land $ 74,324 $ 74,324
Buildings and improvements 2,246,555 2,246,555
Furniture and fixtures 26,054 26,054
--------- ---------
2,346,933 2,346,933
Less - Accumulated depreciation (997,668) (952,232)
--------- ---------
1,349,265 1,394,701
Cash and cash equivalents 603,883 603,499
Restricted cash 23,580 23,673
Other assets 6,417 7,477
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Total $ 1,983,145 $ 2,029,350
========== ==========
Liabilities and Partners' Equity
Liabilities:
Accounts payable - Trade $ 27,911 $ 30,876
Other liabilities 1,356 821
Tenant security deposits 12,385 10,465
--------- ---------
Total liabilities 41,652 42,162
--------- ---------
Partners' equity 1,941,493 1,987,188
--------- ---------
Total $ 1,983,145 $ 2,029,350
========= =========
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, 1999 and 1998
(Unaudited)
Three months Six months
Ended June 30, Ended June 30,
1999 1998 1999 1998
Revenues:
Rental income $ 48,730 $ 47,703 $ 97,128 $ 93,445
Interest income 2,394 3,640 6,006 27,992
------ ------ ------- -------
Total revenues 51,124 51,343 103,134 121,437
------ ------ ------- -------
Costs and expenses:
Rental operations 29,729 23,865 67,392 64,138
General and
Administrative 18,000 18,000 36,000 43,500
Depreciation and
Amortization 22,719 22,608 45,437 45,216
------ ------ ------- -------
Total costs and
Expenses 70,448 64,473 148,829 152,854
------ ------ ------- -------
Net loss ($ 19,324) ($ 13,130) ($ 45,695) ($ 31,417)
====== ====== ======= =======
Net loss per limited
partnership unit ($ 2.30) ($ 1.57) ($ 5.45) ($ 3.75)
====== ====== ======= =======
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, 1999 and 1998
(Unaudited)
Six months ended
June 30,
1999 1998
Cash flows from operating activities:
Net loss ($ 45,695) ($ 31,417)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 45,437 45,216
Changes in assets and liabilities:
Decrease in restricted cash 93 20,227
Decrease in other assets 1,059 150,014
Decrease in accounts payable - trade (2,965) (185,117)
Increase (decrease) in other liabilities 1,920 (195)
Increase in tenant security deposits 535 830
-------- ---------
Net cash provided by (used in) operating activities 384 (442)
-------- ---------
Cash flows from investing activities:
Capital expenditures 0 0
-------- ---------
Net cash provided by investing activities 0 0
-------- ---------
Cash flows from financing activities:
Distribution to partners 0 (2,529,533)
-------- ---------
Net cash used in financing activities 0 (2,529,533)
-------- ---------
Increase (decrease) increase in cash and cash
equivalents 384 (2,529,975)
Cash and cash equivalents at beginning of period 603,499 3,102,030
-------- ---------
Cash and cash equivalents at end of period $ 603,883 $ 572,055
======== =========
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, 1998.
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, 1999.
<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 25, 1999 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
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 603,883
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 2,346,933
<DEPRECIATION> 997,668
<TOTAL-ASSETS> 1,983,145
<CURRENT-LIABILITIES> 27,911
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,941,493
<TOTAL-LIABILITY-AND-EQUITY> 1,983,145
<SALES> 0
<TOTAL-REVENUES> 97,128
<CGS> 0
<TOTAL-COSTS> 67,392
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (45,695)
<INCOME-TAX> 0
<INCOME-CONTINUING> (45,695)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (45,695)
<EPS-BASIC> 0
<EPS-DILUTED> (5.45)
</TABLE>
