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, 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
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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, 1999 (unaudited) and
December 31, 1998
Consolidated Statements of Operations - Three Months and Nine Months
Ended September 30, 1999 and 1998 (unaudited)
Consolidated Statements of Cash Flows - Nine Months Ended September
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 September 30, 1999, Registrant had cash of approximately
$316,504. 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 September 30, 1999, Registrant had restricted cash of
$26,952 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 1999, Registrant incurred
a loss of $23,124 ($2.76 per limited partnership unit) compared to a loss
of $8,287 ($.99 per limited partnership unit) for the same period in 1998.
For the first nine months of 1999, the Registrant incurred a loss of
$68,819 ($8.22 per limited partnership unit) compared a loss of $39,704
($4.74 per limited partnership unit) for the same period in 1998.
Rental income increased $2,961 from $46,063 in the third
quarter of 1998 to $49,024 in the same period in 1999 and increased $6,644
from $139,508 for the first nine months of 1998 to $146,152 in the same
period in 1999. The increase in rental income for the third quarter and
the first nine months of 1999 from the same periods in 1998 is the
result of an increase in the average occupancy and average rental
rates at the Brass Works and an increase in the average occupancy at Locke
Mill Plaza.
Interest income decreased $1,204 from $3,333 in the third
quarter of 1998 to $2,129 in the same period in 1999 and decreased $23,190
from $31,325 for the first nine months of 1998 to $8,135 in the same period
in 1999 due to the decrease in the average cash balances.
Expense for rental operations increased $10,483 from $23,076
in the third quarter of 1998 to $33,559 in the same period in 1999 and for
the first nine months of 1999 increased $13,737 from $87,214 for the first
nine months of 1998 to $100,951 in the same period in 1999. The increase for
the third quarter and the first nine months of 1999 from the same period in
1998 is the result of an increase in maintenance expense at the Brass
Works and an increase in legal fees incurred by the Registrant. The
increase in maintenance expense at the Brass Works is due to the increase
in the turnover of apartment units.
Income recognized during the quarter at the Registrant's
three properties amounted to $7,000, compared to income of approximately
$5,000 for the same period in 1998. For the first nine months of 1999, the
Registrant recognized income of $10,000 compared to income of approximately
$6,000 for the same period in 1998.
In the third quarter of 1999, Registrant recognized income of
$8,000 at the Brass Works, including $12,000 of depreciation expense, compared
to income of $8,000 including $12,000 of depreciation expense in the third
quarter of 1998. Although there was no significant overall change,
there was an increase in rental income due to an increase in the
average occupancy (97% to 99%) and an increase in the average rental rates
partially offset by an increase in maintenance expense. The increase in
maintenance expense is the result of the increase in occupancy and an
increase in the turnover of apartment units.
For the first nine months of 1999, Registrant recognized
income of $8,000 at the Brass Works including $36,000 of depreciation expense,
compared to income of $7,000 for the same period in 1998, including $36,000
of depreciation expense. The increase in net income is due to an increase in
rental income partially offset by an increase in maintenance expense. The
increase in rental income is due to an increase in the average rental rates
while the average occupancy declined slightly (98% to 96%). The increase
in the maintenance expense is due to an increase in the turnover of apartment
units.
In the third quarter of 1999, Registrant incurred a loss of
$1,000 at the Locke Mill Plaza, including $7,000 of depreciation expense,
compared to a loss of $3,000 including $7,000 of depreciation expense in the
second quarter of 1998 and for the first nine months of 1999, Registrant
recognized income of $2,000 including $20,000 of depreciation expense,
compared to a loss of $1,000 for the same period in 1998, including $20,000
of depreciation expense. The decrease in the loss for the third quarter
and the increase in income for the first nine months of 1999 from the same
periods in 1998 is mainly the result of an increase in rental income. The
increase in rental income is due to an increase in the average occupancy
(89% to 97%) for the third quarter and for the first nine months (92% to
98%) of 1999.
<PAGE>
DIVERSIFIED HISTORIC INVESTORS IV INCOME FUND
(a Pennsylvania limited partnership)
CONSOLIDATED BALANCE SHEETS
Assets
September 30, 1998 December 31, 1999
(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 (1,020,386) (952,232)
--------- ---------
1,326,547 1,394,701
Cash and cash equivalents 316,504 603,499
Restricted cash 26,952 23,673
Other assets 18,255 7,477
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Total $1,688,258 $2,029,350
========= =========
Liabilities and Partners' Equity
Liabilities:
Accounts payable:
Trade $ 33,116 $ 30,876
Other liabilities 818 821
Tenant security deposits 12,145 10,465
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Total liabilities 46,079 42,162
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Partners' equity 1,642,179 1,987,188
--------- ---------
Total $1,688,258 $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 Nine Months Ended September 30, 1999 and 1998
(Unaudited)
Three months Nine months
Ended September 30, Ended September 30,
1999 1998 1999 1998
Revenues:
Rental income $ 49,024 $ 46,063 $146,152 $139,508
Interest income 2,129 3,333 8,135 31,325
------ ------ ------- -------
Total revenues 51,153 49,396 154,287 170,833
------ ------ ------- -------
Costs and expenses:
Rental operations 33,559 23,076 100,951 87,214
General and 18,000 12,000 54,000 55,500
administrative
Depreciation and 22,718 22,607 68,155 67,823
amortization
------ ------ ------- -------
Total costs and 74,277 57,683 223,106 210,537
expenses ------ ------ ------- -------
Net loss ($23,124) ($ 8,287) ($ 68,819) ($ 39,704)
====== ====== ======= =======
Net loss per limited
partnership unit ($ 2.76) ($ .99) ($ 8.22) ($ 4.74)
====== ====== ====== =======
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, 1999 and 1998
(Unaudited)
Nine months ended
September 30,
1999 1998
Cash flows from operating activities:
Net loss ($ 68,819) ($ 39,704)
Adjustments to reconcile net loss to
net cash (used in) provided by
operating activities:
Depreciation and amortization 68,155 67,823
Changes in assets and liabilities:
(Increase) decrease in restricted cash (3,279) 16,957
(Increase) decrease in other assets (10,778) 155,407
Increase (decrease) in accounts 2,240 (180,160)
payable - trade
(Decrease) increase in other liabilities (4) 804
Increase (decrease) in tenant 1,680 (470)
security deposits
------- -------
Net cash (used in) provided by (10,805) 20,657
operating activities ------- -------
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 (276,190) (2,529,533)
------- ---------
Net cash used in financing activities (276,190) (2,529,533)
------- ---------
Decrease in cash and cash equivalents (286,995) (2,508,876)
Cash and cash equivalents at 603,499 3,102,030
beginning of period ------- ---------
Cash and cash equivalents at end of $316,504 $ 593,154
period ======= =========
<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 September 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: December 8, 1999 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
-------------------------
SPENCER WERTHEIMER
President
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 316,504
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 2,346,933
<DEPRECIATION> 1,020,386
<TOTAL-ASSETS> 1,688,258
<CURRENT-LIABILITIES> 33,116
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,642,179
<TOTAL-LIABILITY-AND-EQUITY> 1,688,258
<SALES> 0
<TOTAL-REVENUES> 146,152
<CGS> 0
<TOTAL-COSTS> 100,951
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (68,819)
<INCOME-TAX> 0
<INCOME-CONTINUING> (68,819)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (68,819)
<EPS-BASIC> 0
<EPS-DILUTED> (8.22)
</TABLE>
