<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
[Fee Required]
For the fiscal year ended
December 31, 1995
or
[ ] Transition Report to Section 13 or 15(d) of the
Securities Exchange Act of 1934
[Fee Required]
For the transition period from to
Commission File Number
33-18089-A
HICKORY LENDERS, LTD.
(Exact name of Registrant as specified in its charter)
Tennessee 62-1336905
(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification Number)
One Belle Meade Place, 4400 Harding Road, Suite 500,
Nashville, Tennessee 37205
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code:
(615) 292-1040
Securities registered pursuant to Section 12(b) of the
Act:
Name of each
Title of Each Class exchange on which registered
None None
Securities registered pursuant to Section 12(g) of the
Act:
UNITS OF LIMITED PARTNERSHIP INTEREST
(Title of Class)
<PAGE>
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 at least the past 90 days.
YES X NO
Indicate by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-K (229.405
of this chapter) is not contained herein, and will not
be contained, to the best of the registrant's
knowledge, in definitive proxy of information
statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K.
[ X ]
The aggregate sales price of the Units of Limited
Partnership Interest to nonaffiliates was $4,200,000 as
of February 29, 1996. This does not reflect market
value, but is the price at which these Units of Limited
Partnership Interest were sold to the public. There is
no current market for these Units.
DOCUMENTS INCORPORATED BY REFERENCE
Documents Incorporated by Reference in Part IV:
Prospectus of Registrant, dated April 3, 1989, as filed
pursuant to Rule 424(b) of the Securities and Exchange
Commission.
<PAGE>
PART I
Item 1. Business
Hickory Lenders, Ltd. ("Registrant"), is a
Tennessee limited partnership organized on September
15, 1987 pursuant to the provisions of the Tennessee
Uniform Limited Partnership Act, Chapter 2, Title 61,
Tennessee Code Annotated, as amended. The General
Partner of Registrant is 222 Hickory, Ltd.
Registrant's primary business is to lend monies to
Hickory Hills, Ltd. which owns and operates two real
estate projects. Registrant's investment objectives
are preservation of capital and capital appreciation
through lending with a participating interest to
partnerships investing in real estate which will
appreciate through the passage of time, growth in the
surrounding areas and the development of the Properties
prior to resale.
Narrative Description of Business
The Registrant issued a $3,454,300 participating
mortgage note (the "Lender Financing") in 1988,
maturing on December 31, 1997, to Hickory Hills, Ltd.
(the "Borrower"), an affiliated Partnership sharing the
same General Partner. The proceeds of the Lender
Financing were used by the Borrower, together with the
Borrower's equity funds, to acquire the Properties and
fund reserves. The Lender Financing entitles the
Registrant to receive a priority return of interest and
principal and a 55% profit participation upon the sale
of the properties. The Registrant continues its policy
begun in 1991 of not recognizing interest income for
financial reporting purposes on the Lender Financing.
This policy was adopted because there had not been any
payments made on the Lender Financing since its inception
and there has been no independent verification of the
value of land held as collateral. Interest income of
approximately $350,000 a year will be recognized for
tax and loan payment purposes.
As of December 31, 1995, the Properties securing
the Lender Financing consisted of approximately 237
acres in Nashville, Davidson County, Tennessee (210 of
which is considered to be saleable) and a residential
subdivision in Hendersonville, Sumner County, Tennessee
on Old Hickory Lake with 243 lots of which 63 lots remain
unsold. The Nashville property was purchased partially
developed. During 1995, the Registrant did certain site
work required by the sale in 1995 and made a contribution
to the city towards the future improvements of Old Hickory
Boulevard. The land is expected to be sold for use as
industrial/office distribution and residential property.
Extensive infrastructure development has been completed
on the Hendersonville property.
<PAGE>
Competition
The Registrant has no competition because it is
under agreement with the Borrower to lend all proceeds
raised, less operating reserves, to the Borrower. A
discussion of the competition surrounding the
Properties securing the Lender Financing follows:
Nashville Property
There is a significant amount of competition for
the industrial/office distribution property in northern
Davidson County near the airport and along Brick Church
Pike, south of the Property.
Hendersonville Property
There is currently a limited amount of competition
surrounding the Harbortowne Development. The
Registrant has an exclusive contract with Phillips
Builders, Inc. to build new homes in the $110,000 -
$150,000 price range. The Property is located one mile
to the east of Highway 31-E by-pass which provides
excellent access to downtown Nashville. The
development offers landscaped yards, gas heat, and
other amenities such as a swimming pool, tennis courts,
and clubhouse. There are several developments in
Hendersonville and Nashville which serve as competition
for these lots.
The Registrant has no employees. Mortgage
services are being provided under a contractual
agreement with Landmark Realty Services Corporation, an
affiliate of the General Partner.
Item 2. Properties
The Registrant does not own any property, nor does
it intend to own any property in the future.
Item 3. Legal Proceedings
Registrant is not a party to any legal
proceedings.
Item 4. Submission of Matters to a Vote of Security
Holders
The security holders of Registrant did not vote on
any matter during the fiscal year covered by this
report.
<PAGE>
PART II
Item 5. Market for Registrant's Units of Limited
Partnership
Interest and Related Security Holder Matters
There is no established market for the Units and
it is not anticipated that any will exist in the
future. The Registrant commenced an offering to the
public on December 3, 1987 of 4,200 Units of Limited
Partnership Interests at $1,000 per Unit. The offering
of $4,200,000 was fully subscribed and closed on August
31, 1988. As of February 29, 1996, there were 365
holders of record of the Units of Limited Partnership
Interests.
Distributions of $212,121 were made to unit
holders during 1995. There are no material
restrictions upon Registrant's present or future
ability to make distributions following the provisions
of Registrant's Limited Partnership Agreement.
Item 6. Selected Financial Data
<TABLE>
For the Year Ended
<CAPTION> December 31,
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Interest Income $ 4,061 $ 5,747 $6,006 $ 1,418 $346
Net Loss (34,068) (33,134) (33,285) (49,677) (49,738)
Net Loss per Unit (8.11) (7.89) (7.93) (11.83) (11.84)
Total Assets 3,415,022 3,661,211 4,033,739 4,491,266 4,542,581
Note Receivable 3,228,601 3,454,300 3,454,300 3,454,300 3,454,300
Affiliate
Interest Receivable - 84,301 359,301 873,301 969,301
Affiliate
</TABLE>
<PAGE>
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operation
Due to the nature of the Registrant, all activity is a
result of transactions with Hickory Hills, Ltd., the
Borrower.
Sales
The Borrower sold 38, 43, and 63 lots in 1995, 1994 and
1993, respectively, of the Hendersonville property to
Phillips Builders under the terms of the exclusive option
contract negotiated in 1991. Gross sales proceeds were
$770,610, $763,000 and $1,063,345 in 1995, 1994 and 1993,
respectively. The Borrower also sold 3.86 and 1.63 acres in
1995 and 1994, respectively, of the Nashville property for
gross proceeds of $154,400 and $47,500. From these proceeds,
$310,000, $275,000 and $514,000 in 1995, 1994 and 1993,
respectively, was paid to the Registrant in interest and the
remainder was retained for operations and development. The
Applicable Principal Balance assigned to 1995, 1994 and 1993
sales is $316,860, $287,438 and $359,100, respectively. The
cumulative Applicable Principal Balance as of December 1995
is $1,247,573 and is payable from future sales after all
accrued interest is paid.
Operations
There has been very little change in the operations of
the Registrant and no significant changes are expected in the
future.
The Registrant continues its policy begun in 1991 of not
recognizing interest income for financial reporting purposes
on the Lender Financing. This policy was adopted because
there had not been any payments made on the Lender
Financing since its inception and there has been no
independent verification of the value of land held as
collateral. Interest income of approximately $350,000 a year
will be recognized for tax and loan payment purposes. The
unpaid accrued interest balance for loan payment purposes is
$1,526,399 at December 31, 1995. The Registrant received
$310,000, $275,000, and $514,000 as payments on the Lender
Financing in 1995, 1994, and 1993, respectively.
Financial Condition and Liquidity
At February 29, 1996, the Registrant had $53,414 in cash
and cash equivalents to meet its 1995 operational expenses,
which are not significant. Therefore the General Partner believes
that the present cash balance will be sufficient to cover the
operating expenses for 1996.
<PAGE>
Since 1989, the Borrower has retained a portion of the
sale proceeds for development of future phases and operations
of the properties and did not use all sale proceeds to reduce
accrued interest and applicable principal. The Registrant
and Lender's joint general partner believes that this use of
proceeds was contemplated by the loan agreement. However,
the loan agreement is ambiguous on this point; therefore,
this treatment could constitute a default on the loan
agreement. In such an event the Partnership is required to
foreclose the loan and accelerate the amounts due.
Currently, the Partnership has not foreclosed or accelerated
the amounts due under the loan agreement, nor is there any
plans to do so.
Item 8. Financial Statement and Supplementary Data
The Financial Statements required by Item 8 are filed at
the end of this report.
Item 9. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosures
None.
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
Registrant does not have any directors or officers. 222
Hickory, Ltd is the General Partner. 222 Partners, Inc. is
the general partner of the General Partner and as such has
general responsibility and ultimate authority in matters
affecting Registrant's business.
222 Partners Inc.
222 Partners, Inc. was formed in September 1986 and
serves as general partner for several other real estate
investment limited partnerships. The directors of 222
Partners, Inc. are W. Gerald Ezell, Steven D. Ezell, and
Michael A. Hartley.
W. Gerald Ezell
W. Gerald Ezell, age 65, is a director of 222 Partners,
Inc. Until November 1985, Mr. Ezell had been for over 20
years an agency manager for Fidelity Mutual Life Insurance
Company and a registered securities principal of Capital
Analysts Incorporated, a wholly owned subsidiary of Fidelity
Mutual Life Insurance Company.
Steven D. Ezell
Steven D. Ezell, age 43, is the President and sole
shareholder of 222 Partners, Inc. He has been an officer of
222 Partners, Inc. from September 17, 1986 through the
current period. Mr. Ezell is President and 50% owner of
Landmark Realty Services Corporation. He was for the prior
four years involved in property acquisitions for Dean Witter
Realty Inc. in New York City, most recently as Senior Vice
President. Steven D. Ezell is the son of W. Gerald Ezell.
Michael A. Hartley
Michael A. Hartley, age 36, serves as a
Secretary/Treasurer and Vice President of 222 Partners, Inc.
He is Vice President and 50% owner of Landmark Realty
Services Corporation. He has been an officer of 222
Partners, Inc. from September 17, 1986 through the current
period. Before joining Landmark in 1986, Mr. Hartley was
Vice President of Dean Witter Realty Inc., a New York-based
real estate investment firm.
<PAGE>
Item 11. Executive Compensation
During 1995, Registrant was not required to and did not
pay remuneration to any executives, partners of the General
Partner or any affiliates, except as set forth in Item 13 of
this report, "Certain Relationships and Related
Transactions." The General Partner does participate in the
profits, losses, and distributions of the Partnership as set
forth in the Partnership Agreement.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
As of February 29, 1996 no person or "group" (as that
term is used in Section 3 (d)(3) of the Securities Exchange
Act of 1934) was known by the Registrant to beneficially own
more than five percent of the Units of Registrant. As of the
above date, the Registrant knew of no directors of 222
Partners, Inc. that beneficially owned any of the units of
the Registrant. There are no arrangements known by the
Registrant, the operation of which may, at a subsequent date,
result in a change in control of the Registrant.
Item 13. Certain Relationships and Related Transactions
No affiliated entities have, during 1995, earned
compensation for services from the Registrant in excess of
$60,000. For a listing of miscellaneous transactions with
affiliates which were less than $60,000, refer to Note 2 of
the notes to Financial Statements in Item 8.
The Registrant loaned $3,454,300 to Hickory Hills, Ltd,
an affiliated partnership, in 1988, and the accrued interest
receivable on such loan was paid off during 1995. The
Registrant received $310,000 and $275,000 in payments on the
Lender Financing in 1995, and 1994, respectively. An
additional $1,526,399 of accrued interest is due under the
terms of the loan which has not been recognized as income by
the Registrant.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K
(a) (1) Financial Statements
Page
Number
Independent Auditors' Report F-1
Financial Statements
Balance Sheets F-2
Statements of Operations F-3
Statements of Partners' Equity F-4
Statements of Cash Flows F-5
Notes to Financial Statements F-6
(2) Financial Statement Schedules
Page
Number
Additional financial information furnished
pursuant to the requirements of Form 10-K:
Financial Statement Schedule -
Independent Auditors' Report on Schedule S-1
Schedule XII - Mortgage Loans on
Real Estate S-2
Financial Statements of Properties
Securing Mortgage Loan -
Hickory Hills, Ltd.
Financial Statements
Independent Auditors' Report M-1
Balance Sheets M-2
Statements of Operations M-3
Statements of Partners' Equity M-4
Statements of Cash Flows M-5
Notes to Financial Statements M-6
All other Schedules have been omitted because they are
inapplicable, not required or the information is
included in the Financial Statements or notes thereto.
<PAGE>
(3) Exhibits
3 Amended and Restated Certificate and
Agreement of Limited Partnership,
incorporated by reference to Exhibit A1 to
the Prospectus of Registrant dated December
3, 1987 filed pursuant to Rule 424(b) of the
Securities and Exchange Commission.
10A Loan Agreement by and among Hickory Hills,
Ltd. and the Registrant, incorporated by
reference to Exhibit 10.1 to Registrant's
Form S-18 Registration Statement as filed on
October 23, 1987.
10B Deed of Trust and Security Agreement by and
among Hickory Hills, Ltd. and the
Registrant, incorporated by reference to
Exhibit 10.2 of the Registrant's Form S-18
Registration Statement as filed on October
23, 1987.
10C Promissory Note of Hickory Hills, Ltd. to
Hickory Lenders, Ltd., incorporated by
reference to Exhibit 10.3 to Registrant's
Form S-18 Registration Statement as filed on
October 23, 1987.
22 Subsidiaries-Registrant has no subsidiaries.
27 Financial Data Schedule
(b) No reports on Form 8-K have been filed during
the last quarter of 1995.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d)
of the Securities Exchange Act of 1934, the Registrant
has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
HICKORY LENDERS, LTD.
By: 222 Hickory, Ltd.
General Partner
By: 222 Partners, Inc.
General Partner
DATE: April 1, 1996 By: Steven D. Ezell
President and Director
DATE: April 1, 1996 By: Michael A. Hartley
Vice President and
Director
<PAGE>
SIGNATURES (Cont'd)
Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below
by the following persons on behalf of the Registrant
and in the capacities and on the dates indicated.
HICKORY LENDERS, LTD.
By: 222 Hickory, Ltd.
General Partner
By: 222 Partners, Inc.
General Partner
DATE: April 1, 1996 By: Steven D. Ezell
President and Director
DATE: April 1, 1996 By: Michael A. Hartley
Vice President and
Director
Supplemental Information to be Furnished with
Reports filed Pursuant to Section 15(d) of the Act by
Registrant Which Have Not Registered Securities
Pursuant to Section 12 of the Act:
No annual report or proxy material has been sent to
security holders.
<PAGE>
Independent Auditors' Report
The Partners
Hickory Lenders, Ltd.:
We have audited the accompanying balance sheets of
Hickory Lenders, Ltd. (a limited partnership) as of
December 31, 1995 and 1994, and the related statements
of operations, partners' equity, and cash flows for
each of the years in the three-year period ended
December 31, 1995. These financial statements are the
responsibility of the Partnership's management. Our
responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require
that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are
free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements.
An audit also includes assessing the accounting
principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to
above present fairly, in all material respects, the
financial position of Hickory Lenders, Ltd. at December
31, 1995 and 1994, and the results of its operations
and its cash flows for each of the years in the three-
year period ended December 31, 1995, in conformity with
generally accepted accounting principles.
As discussed in Notes 1 and 6, the Partnership adopted
in 1995 the provisions of Statement of Financial
Accounting Standards No. 114, Accounting by Creditors
for Impairment of a Loan, as amended by Statement No.
118, Accounting by Creditors for Impairment of a Loan -
Income Recognition and Disclosure, and Statement No.
107, Disclosures about Fair Value of Financial
Instruments.
KPMG Peat Marwick LLP
Nashville, Tennessee
January 19, 1996
F-1
<PAGE>
HICKORY LENDERS, LTD.
(A Limited Partnership)
Balance Sheets
December 31, 1995 and 1994
Assets 1995 1994
_____ _____ _____
Cash and cash equivalents $ 150,582 68,851
Note receivable
from affiliate (note 3) 3,228,601 3,454,300
Interest receivable
from affiliate (note 3) - 84,301
Deferred loan costs, less accumulated
amortization of $143,361 in 1995
and $125,441 in 1994 35,839 53,759
________ ________
$ 3,415,022 3,661,211
======== ========
Partners' Equity
______________
Partners' equity 3,415,022 3,661,211
________ ________
Commitments and contingencies
(notes 2 and 4)
$ 3,415,022 3,661,211
======== ========
See accompanying notes to financial statements.
F-2
<PAGE>
HICKORY LENDERS, LTD.
(A Limited Partnership)
Statements of Operations
Years ended December 31, 1995, 1994 and 1993
1995 1994 1993
_____ _____ _____
Interest income (note 3) $ 4,061 5,747 6,006
Expenses:
Mortgage service fee
(note 2) 7,000 7,000 7,000
Legal and accounting
fees (note 2) 11,776 10,690 7,671
General & administrative 1,433 3,271 6,699
Amortization 17,920 17,920 17,921
______ ______ ______
Total expenses 38,129 38,881 39,291
______ ______ ______
Net loss (34,068) (33,134) (33,285)
====== ====== ======
Net loss per unit $(8.11) (7.89) (7.93)
====== ====== ======
See accompanying notes to financial statements.
F-3
<PAGE>
HICKORY LENDERS, LTD.
(A Limited Partnership)
Statements of Partners' Equity
Years ended December 31, 1995, 1994 and 1993
Limited General
partners partner Total
______ _____ ____
Partners' equity,
December 31, 1992 $ 4,483,485 7,781 4,491,266
Net loss (32,952) (333) (33,285)
Distributions
(note 5) (420,000) (4,242) (424,242)
________ _____ ________
Partners' equity,
December 31, 1993 4,030,533 3,206 4,033,739
Net loss (32,803) (331) (33,134)
Distributions
(note 5) (336,000) (3,394) (339,394)
________ _____ ________
Partners' equity,
December 31, 1994 3,661,730 (519) 3,661,211
Net loss (33,727) (341) (34,068)
Distributions
(note 5) (210,000) (2,121) (212,121)
________ _____ ________
Partners' equity,
December 31, 1995 $ 3,418,003 (2,981) 3,415,022
======== ===== ========
See accompanying notes to financial statements.
F-4
<PAGE>
HICKORY LENDERS, LTD.
(A Limited Partnership)
Statements of Cash Flows
Years ended December 31, 1995, 1994 and 1993
1995 1994 1993
Cash flows from operating activities:
Net loss $(34,068) (33,134) (33,285)
Adjustments to reconcile
net loss to net cash
provided by operating
activities:
Amortization 17,920 17,920 17,921
Decrease in interest
receivable from
affiliate 84,301 275,000 514,000
______ ______ ______
Total adjustments 102,221 292,920 531,921
______ ______ ______
Net cash provided by
operating activities 68,153 259,786 498,636
Cash flows from financing activities:
Distributions to partners (212,121) (339,394) (424,242)
Decrease in note receivable
from affiliate 225,699 - -
______ ______ ______
Net cash provided
(used) by financing activities 13,578 (339,394) (424,242)
______ ______ ______
Net (decrease) increase in
cash and cash equivalents 81,731 (79,608) 74,394
Cash and cash equivalents
at beginning of year 68,851 148,459 74,065
______ ______ ______
Cash and cash equivalents
at end of year $150,582 68,851 148,459
====== ====== ======
Supplemental disclosure of cash flow information:
Cash paid during the year
for state taxes $ - 2,378 5,724
====== ====== ======
See accompanying notes to financial statements.
F-5
<PAGE>
HICKORY LENDERS, LTD.
(A Limited Partnership)
Notes to Financial Statements
December 31, 1995 and 1994
(1) Summary of Significant Accounting Policies
(a) Organization
Hickory Lenders, Ltd. (the Partnership) is a Tennessee
limited partnership organized on September 15, 1987, to lend
monies to corporations, partnerships and other entities engaged
primarily in the business of owning and operating real estate.
The General Partner is 222 Hickory, Ltd., and the general partner
of 222 Hickory, Ltd. is 222 Partners, Inc. (see note 4).
(b) Income Taxes
The Partnership prepares financial statements and Federal income
tax returns on the accrual method and includes only those assets,
liabilities and results of operations which relate to the
business of the Partnership. No provision has or will be made
for Federal income taxes since such taxes are the personal
responsibility of the partners. The Partnership is subject to a
six percent state tax on certain interest income.
(c) Deferred Loan Costs
Deferred loan costs are amortized by the straight-line method
over the ten year term of the note receivable from affiliate.
(d) Partnership Allocations
Net earnings, losses, and cash flows of the Partnership are
allocated among the limited partners and general partner, in
accordance with the agreement of the limited partnership.
(e) Cash and Cash Equivalents
The Partnership considers all short-term investments with original
maturities of three months or less at the date of purchase to be
cash equivalents.
Cash belonging to the Partnership is combined in an account with
funds from other partnerships related to the general partner.
(Continued)
F-6
<PAGE>
HICKORY LENDERS, LTD.
(A Limited Partnership)
Notes to Financial Statements
(f) Note Receivable
Effective January 1, 1995, the Partnership adopted the
provisions of Statement of Financial Accounting
Standards (SFAS) No. 114, Accounting by Creditors for
Impairment of a Loan, as amended by SFAS No. 118,
Accounting by Creditors for Impairment of a Loan -
Income Recognition and Disclosure. The Partnership,
considering current information and events regarding
the borrower's ability to repay its obligations,
considers a note to be impaired when it is probable
that the Partnership will be unable to collect all
amounts due according to the contractual terms of the
note agreement. When a note is considered to be
impaired, the amount of the impairment is measured
based upon the estimated fair value of the underlying
collateral. Any cash receipts on impaired notes
receivable are applied to reduce the principal amount
of such notes until the principal has been recovered
and are recognized as interest income, thereafter.
Prior periods have not been restated.
(g) Estimates
Management of the Partnership has made estimates and
assumptions to prepare these financial statements.
Actual results could differ from those estimates.
(2) Related Party Transactions
The General Partner and its affiliates have been
actively involved in overseeing the note receivable
agreement. Affiliates of the General Partner receive
fees for performing certain services. Expenses
incurred for these services in 1995, 1994 and 1993 are
as follows:
1995 1994 1993
Mortgage service fee $7,000 7,000 7,000
Accounting fees 1,500 1,500 1,250
(Continued)
<PAGE>
HICKORY LENDERS, LTD.
(A Limited Partnership)
Notes to Financial Statements
(3) Note Receivable From Affiliate
The note receivable from affiliate represents
a $3,228,601 long-term note receivable from
Hickory Hills, Ltd., an affiliate sharing the
same General Partner. This note receivable
bears simple interest at 10% per annum plus
"additional interest" upon the sale of any
portion of the collateral equal to 55% of the
"net revenues", as defined in the
Participating Loan Agreement. The note is
secured by a mortgage on the debtor's land
held for investment in Davidson County and
Sumner County, Tennessee and by a security
interest in any cash reserves or investment
securities held by the debtor. Unpaid accrued
interest and principal payments become due
upon the sale of the property or any portion
thereof to the extent cash is available, but
no later than December 31, 1997.
Summarized financial information of Hickory
Hills, Ltd. at December 31, 1995 and 1994, and
for the years ended December 31, 1995, 1994
and 1993, are presented below.
Assets 1995 1994
Cash and cash equivalents $259,074 132,479
Restricted cash 336,112 254,851
Land and improvements
held for investment 2,740,975 3,204,826
Other assets 21,293 465
________ ________
Total assets $ 3,357,454 3,592,621
======== ========
Liabilities and Partners' Deficit
Note payable to affiliate $3,454,300 3,454,300
Accrued interest payable
to affiliate 1,526,399 1,486,171
Accrued property taxes 9,855 35,441
Other accrued expenses 47,100 36,200
________ ________
Total liabilities 5,037,654 5,012,112
Partners' deficit (1,680,200) (1,419,491)
________ ________
Total liabilities and
partners' deficit $3,357,454 3,592,621<PAGE>
(continuted)
<PAGE>
HICKORY LENDERS, LTD.
(A Limited Partnership)
Notes to Financial Statements
Operations 1995 1994 1993
Income:
Income (loss) on
sales of land
and improvements $152,469 12,801 (248,684)
Interest income 24,238 15,419 3,049
Miscellaneous income - 22 3,400
_______ _______ _______
Income (loss)
before expenses 176,707 28,242 (242,235)
Expenses:
Program management 3,000 3,000 3,000
Legal and accounting 12,925 11,682 8,342
General and
administrative 8,381 6,753 3,765
Property tax expense 39,683 35,623 45,318
Land maintenance fees 23,199 26,090 34,802
Interest expense 350,228 350,227 350,228
Amortization - - 316
_______ _______ _______
Total expenses 437,416 433,375 445,771
_______ _______ _______
Net loss $260,709 405,133 688,006
======= ======= =======
Cash Flows
Net cash provided (used)
by operating
activities $126,595 (260,946) 312,707
_______ _______ _______
Net increase (decrease)
in cash and cash
equivalents $126,595 (260,946) 312,707
======= ======= =======
(Continued)
<PAGE>
HICKORY LENDERS, LTD.
(A Limited Partnership)
Notes to Financial Statements
The affiliate has retained a portion of the net
proceeds from sales in the past and for the
year ending December 31, 1995, without paying
the applicable principal balance or accrued
interest to the Partnership. This was done to
fund anticipated future requirements for
additional development and operations. During
1995 and 1994, the affiliate received net
proceeds of $860,362 and $756,417,
respectively, from the sale of property. The
affiliate remitted interest to the Partnership
in the amount of $310,000 and $275,000 in 1995
and 1994, respectively. The cumulative
principal balance payable to the Partnership is
$1,247,573 and $930,713 at December 31, 1995
and 1994, respectively. The Partnership's and
affiliate's joint general partner believes that
retaining sales proceeds for development and
distributing only net available cash to the
Partnership was contemplated by the loan
agreement. However, the loan agreement does
not explicitly authorize this use of funds;
therefore, this treatment could constitute a
default on the loan agreement. In such an
event the Partnership is required to foreclose
the loan and accelerate the amounts due. To
date, the Partnership has not foreclosed or
accelerated the amounts due under the loan
agreement.
The Partnership did not recognize interest
income on the note receivable in any of the
years in the three year period ending December
31, 1995, due to the lack of principal
reductions as required by the loan agreement
and continued net losses by the Borrower. At
December 31, 1995, interest that was not
accrued amounted to $1,526,399. At December
31, 1995, the Partnership had no valuation
allowance for impairment as the estimated fair
value of the underlying collateral exceeded the
recorded investment of the loan.
<PAGE>
HICKORY LENDERS, LTD.
(A Limited Partnership)
Notes to Financial Statements
(4) General Partner Bankruptcy
On February 25, 1991, W. Gerald Ezell, a former
general partner of 222 Hickory, Ltd., elected
to file for reorganization under Chapter 11 of
the United States Bankruptcy Code. This
election is designed to allow Mr. Ezell to
satisfy his personal creditors in an orderly
manner. The filing has no impact on the legal
standing of the Partnership.
On April 6, 1994, Mr. Ezell sold his general
partnership interest in 222 Hickory, Ltd. in
accordance with bankruptcy court approved plan
to liquidate his assets and satisfy his
creditors. In accordance with the partnership
agreement, Mr. Ezell's interest in 222 Hickory,
Ltd. was converted into a special limited
partnership interest, and his general partner
responsibilities were transferred to 222
Partners, Inc., the remaining general partner.
W. Gerald Ezell remains on the Board of 222
Partners, Inc.
(5) Distributions
For the years ended December 31, 1995, 1994,
and 1993, the Partnership made distributions to
its partners totaling $212,121, 339,394, and
$424,244. Of these amounts, 99% was allocated
to the limited partners ($50 per unit, $80 per
unit, and $100 per unit, respectively) and 1%
was allocated to the general partner.
(6) Fair Value of Financial Instruments
At December 31, 1995, the Partnership had financial
instruments including cash and cash equivalents of
$150,582, and a note receivable of $3,228,601. The
carrying amounts of cash and cash equivalents
approximate fair value because of the short maturity of
this financial instrument.
The determination of the estimated fair value of the
note receivable was not practicable as the note
agreement does not provide for a predictable cash
payment stream.
<PAGE>
Independent Auditors' Report
The Partners
Hickory Lenders, Ltd.:
Under date of January 19, 1996, we reported on the
balance sheets of Hickory Lenders, Ltd. as of December
31, 1995 and 1994, and the related statements of
operations, partners' equity, and cash flows for each
of the years in the three-year period ended December
31, 1995. These financial statements and our report
thereon are included elsewhere herein. In connection
with our audits of the aforementioned financial
statements, we have also audited the related financial
statement schedule as listed in the accompanying index.
This financial statement schedule is the responsibility
of the Partnership's management. Our responsibility is
to express an opinion on this financial statement
schedule based on our audits.
In our opinion, such financial statement schedule, when
considered in relation to the basic financial
statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.
Nashville, Tennessee
January 19, 1996
S-1
<PAGE>
Schedule XII
HICKORY LENDERS, LTD.
(A Limited Partnership)
Mortgage Loans on Real Estate
December 31, 1995
Final Periodic
Interest maturity payment
Description rate date terms
Hickory Hills, Ltd.,
an affiliate* 10% December 3, 1997 Upon the
sale of
the property
1995 1994 1993
(1) Balance at beginning
of period $3,454,300 3,454,300 3,454,300
Deductions during period:
Collections of
principal 225,699 - -
_______ _______ _______
Balance at
end of period $3,228,601 3,454,300 3,454,300
======= ======= =======
Aggregate cost for
Federal income
income tax purposes $3,454,300 3,454,300 3,454,300
========= ========= =========
*The note receivable from affiliate represents a $3,228,601 note
receivable from Hickory Hills, Ltd., an affiliate sharing the same
General Partner. This note receivable bears interest at 10% per
annum plus "additional interest" upon the sale of any portion of
the collateral equal to 55% of the "net revenues" as defined in the
Participating Loan Agreement. The note is secured by a mortgage on
the debtor's land held for investment in Davidson County and Sumner
County, Tennessee and by a security interest in any cash reserves
or investment securities held by the debtor. Unpaid accrued
interest ($0 at December 31, 1995) and principal payments become
due upon the sale of the property or any portion thereof to the
extent cash is available, but no later than December 31, 1997. An
additional $1,526,399 of accrued interest was due at December 31,
1995 which has not been recognized in income by the Partnership.
See note 3 to the financial statements.
See accompanying independent auditors' report.
S-2
<PAGE>
Schedule XII
HICKORY LENDERS, LTD.
(A Limited Partnership)
Mortgage Loans on Real Estate
December 31, 1995
Principal amount
of loans subject
Face Carrying to delinquent
Prior amount of amount of principal or
Description liens mortgages mortgages (1) interest
Hickory Hills, Ltd.,
an affiliate* - 3,454,300 3,228,601 -
See accompanying independent auditors' report.
<PAGE>
Independent Auditors' Report
____________________________
The Partners
Hickory Hills, Ltd.:
We have audited the accompanying balance sheets of Hickory Hills, Ltd.
(a limited partnership) as of December 31, 1995 and 1994, and the related
statements of operations, partners' deficit, and cash flows for each of
the years in the three-year period ended December 31, 1995. These
financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Hickory
Hills, Ltd. at December 31, 1995 and 1994, and the results of its
operations and its cash flows for each of the years in the three-year
period ended December 31, 1995, in conformity with generally accepted
accounting principles.
As discussed in Note 7, the Partnership adopted in 1995 the provisions
of Statement of Financial Accounting Standards No. 107, Disclosures about
Fair Value of Financial Instruments.
KPMG Peat Marwick LLP
Nashville, Tennessee
January 19, 1996
M-1
<PAGE>
HICKORY HILLS, LTD.
(A Limited Partnership)
Balance Sheets
December 31, 1995 and 1994
Assets 1995 1994
______ _____ _____
Cash and cash equivalents (note 5) $259,074 132,479
Restricted cash (note 2) 336,112 254,851
Land and improvements held for
investment (notes 4 and 5) 2,740,975 3,204,826
Other assets 21,293 465
________ ________
Total assets $3,357,454 3,592,621
________ ________
________ ________
Liabilities and Partners' Deficit
_________________________________
Note payable to affiliate (note 5) 3,454,300 3,454,300
Accrued interest payable to
affiliate (note 5) 1,526,399 1,486,171
Accrued property taxes 9,855 35,441
Other accrued expenses 47,100 36,200
________ ________
Total liabilities 5,037,654 5,012,112
Partners' deficit (1,680,200) (1,419,491)
________ ________
Commitments and contingencies
(notes 5, 6 and 7)
Total liabilities
and partners' deficit $3,357,454 3,592,621
________ ________
________ ________
See accompanying notes to financial statements.
M-2
<PAGE>
HICKORY HILLS, LTD.
(A Limited Partnership)
Statements of Operations
Years ended December 31, 1995, 1994 and 1993
1995 1994 1993
____ ____ ____
Income:
Sale proceeds $925,010 810,500 1,063,345
Cost of land and
improvements sold (707,893) (743,616)(1,194,648)
Selling expenses (note 3) (64,648) (54,083) (117,381)
_______ _______ _______
Income (loss) on sales
of land and
improvements 152,469 12,801 (248,684)
Interest income 24,238 15,419 3,049
Miscellaneous income - 22 3,400
_______ _______ _______
Income (loss)
before expenses 176,707 28,242 (242,235)
_______ _______ _______
Expenses:
Program management
fee (note 3) 3,000 3,000 3,000
Legal and accounting
(note 3) 12,925 11,682 8,342
General and administrative 8,381 6,753 3,765
Property tax expense 39,683 35,623 45,318
Land maintenance fees 23,199 26,090 34,802
Interest expense
(notes 3 and 5) 350,228 350,227 350,228
Amortization - - 316
_______ _______ _______
Total expenses 437,416 433,375 445,771
_______ _______ _______
Net loss $(260,709) (405,133) (688,006)
_______ _______ _______
_______ _______ _______
Net loss per unit $(144.84) (225.07) (382.23)
_______ _______ _______
_______ _______ _______
See accompanying notes to financial statements.
M-3
<PAGE>
HICKORY HILLS, LTD.
(A Limited Partnership)
Statements of Partners' Deficit
Years ended December 31, 1995, 1994 and 1993
Limited General
partners partner Total
_______ _______ _____
Partners' deficit,
December 31, 1992 $(307,415) (18,937) (326,352)
Net loss (681,126) (6,880) (688,006)
_________ ______ ________
Partners' deficit,
December 31, 1993 (988,541) (25,817)(1,014,358)
Net loss (401,082) (4,051) (405,133)
_________ ______ _________
Partners' deficit,
December 31, 1994 (1,389,623) (29,868)(1,419,491)
Net loss (258,102) (2,607) (260,709)
_________ _______ _________
Partners' deficit,
December 31, 1995 $(1,647,725) (32,475)(1,680,200)
_________ _______ _________
_________ _______ _________
See accompanying notes to financial statements.
M-4
<PAGE>
HICKORY HILLS, LTD.
(A Limited Partnership)
Statements of Cash Flows
Years ended December 31, 1995, 1994 and 1993
1995 1994 1993
____ ____ ____
Cash flows from operating activities:
Net loss $(260,709) (405,133) (688,006)
Adjustments to reconcile net
loss to net cash (used)
provided by operating
activities:
Amortization - - 316
Cost of land sold 707,893 743,616 1,194,648
Cost of land
improvements (244,042) (400,576) (60,058)
Increase in restricted
cash (81,261) (254,851) -
(Increase) decrease in
other assets (20,828) (192) 12
Increase (decrease) in
accrued interest
payable to affiliate 40,228 75,227 (163,772)
(Decrease) increase in
accrued property
taxes (25,586) (1,862) 8,539
Increase (decrease) in
other accrued
expenses 10,900 (17,175) 21,028
_______ _______ _______
Total adjustments 387,304 144,187 1,000,713
_______ _______ _______
Net cash provided
(used) by operating
activities 126,595 (260,946) 312,707
_______ _______ _______
Net increase (decrease)
in cash and cash
equivalents 126,595 (260,946) 312,707
Cash and cash equivalents
at beginning of year 132,479 393,425 80,718
_______ _______ _______
Cash and cash equivalents
at end of year $259,074 132,479 393,425
======== ======= =======
Supplemental Disclosures of Cash Flow Information:
Cash paid during the year
for interest $310,000 275,000 514,000
======== ======= ========
See accompanying notes to financial statements.
M-5
<PAGE>
HICKORY HILLS, LTD.
(A Limited Partnership)
Notes to Financial Statements
December 31, 1995 and 1994
(1) Summary of Significant Accounting Policies
(a) Organization
____________
Hickory Hills, Ltd. (the Partnership) is a Tennessee limited
partnership organized on September 15, 1987, to acquire three
tracts of undeveloped land located in the Nashville
metropolitan and Hendersonville, Tennessee areas. The General
Partner is 222 Hickory, Ltd., and the general partner of 222
Hickory, Ltd. is 222 Partners, Inc. (see note 7).
(b) Income Taxes
____________
The Partnership prepares financial statements and Federal
income tax returns on the accrual method and includes only
those assets, liabilities and results of operations which
relate to the business of the Partnership. No provision has
or will be made for Federal or state income taxes since such
taxes are the personal responsibility of the partners.
(c) Land and Land Improvements
__________________________
Land is recorded at cost and includes two tracts of
undeveloped land representing approximately 237 and 241 acres
at December 31, 1995 and 1994, respectively. Of these
amounts, management believes that 210 and 213 acres are
sellable at December 31, 1995 and 1994, respectively. In
addition, the Partnership owns one tract of land developed
into residential lots with 63 and 102 lots remaining at
December 31, 1995 and 1994, respectively. Land costs include
amounts to acquire and hold land, including interest and
property taxes during the development period. Costs to hold
land, including interest and property taxes are charged to
expense once development is substantially complete. Land
improvement costs include development costs expended
subsequent to the acquisition of a tract.
(d) Partnership Allocations
_____________________
Net earnings, losses, and distributions of cash flow of the
Partnership are allocated among the limited and general
partners, in accordance with the agreement of the limited
partnership.
(Continued)
M-6
<PAGE>
HICKORY HILLS, LTD.
(A Limited Partnership)
Notes to Financial Statements
(e) Cash and Cash Equivalents
________________________
The Partnership considers all short-term investments with
original maturities of three months or less to be cash
equivalents. At December 31, 1995 and 1994, the management of
the Partnership has reserved cash balances of $43,750 and
$34,250, respectively, for payment of impact fees.
Cash belonging to the Partnership is combined in an account
with funds from other partnerships related to the general
partner.
(f) Estimates
_________
Management of the Partnership has made estimates and
assumptions to prepare these financial statements. Actual
results could differ from those estimates.
(g) Reclassifications
_______________
Certain prior year amounts have been reclassified to conform
with current year presentation.
(2) Restricted Cash
______________
At December 31, 1995 and 1994, the Partnership has restricted
cash balances of $336,112 and $254,851, respectively, to be
used to fund property improvements, consisting of road and
utility work.
(3) Related Party Transactions
________________________
The General Partner and its affiliates have been actively
involved in managing the property. Affiliates of the General
Partner receive fees and commissions for performing certain
services. Expenses incurred for these services during 1995,
1994 and 1993 are as follows:
1995 1994 1993
____ ____ ____
Accounting fees $1,500 1,500 1,500
Program management fee 3,000 3,000 3,000
Real estate commissions 23,694 24,315 31,891
Interest expense 350,228 350,227 350,228
______ ______ ______
______ ______ ______
(Continued)
<PAGE>
HICKORY HILLS, LTD.
(A Limited Partnership)
Notes to Financial Statements
(4) Land and Improvements Held for Investment
________________________________________
The components of land held for investment at December 31, are
as follows:
1995 1994
_____ _____
Land $1,955,823 2,271,576
Land improvements 785,152 933,250
________ ________
$2,740,975 3,204,826
========= =========
The aggregate cost for federal income tax purposes was $2,740,975 and
$3,808,688 at December 31, 1995 and 1994, respectively.
(5) Note Payable to Affiliate
______________________
The note payable to affiliate represents a $3,454,300 long-
term note payable to Hickory Lenders, Ltd. (the Lender), an
affiliate sharing the same General Partner. The note accrues
simple interest at an annual rate of 10% plus "additional
interest" upon the sale of any portion of the collateral equal
to 55% of the "net revenues", as defined in the Participating
Loan Agreement. The note is secured by a mortgage on the land
held for investment and by a security interest in any cash
reserves or investment securities held by the Partnership.
Interest and principal payments become due upon the sale of
the collateral or any portion thereof to the extent cash is
available, but no later than December 31, 1997.
The Partnership has retained a portion of the net proceeds
from sales in the past and for the year ending December 31,
1995, without paying the applicable principal balance or
accrued interest to the Lender. The cumulative principal
balance payable to the Lender is $1,247,573 and $930,713 at
December 31, 1995 and 1994, respectively. The Partnership's
and Lender's joint general partner believes that retaining
sales proceeds for development and distributing only net
available cash to the Lender was contemplated by the loan
agreement. However, the loan agreement does not explicitly
authorize this use of funds; therefore, this treatment could
constitute a default on the loan agreement. In such an event
the Lender is required to foreclose the loan and accelerate
the amounts due. To date, the Lender has not foreclosed or
accelerated the amounts due under the loan agreement.
(Continued)
<PAGE>
HICKORY HILLS, LTD.
(A Limited Partnership)
Notes to Financial Statements
(6) Commitments
____________
The Partnership has granted an exclusive option to a home
builder to purchase all remaining lots in the Harbortowne
Subdivision in accordance with a specified takedown and
pricing schedule. Through May 28, 1994, the Partnership was
committed to sell lots for $17,500 per lot. After May 28,
1994, the lot price increased to $19,500. As of May 28, 1995,
the lot price increased $1,000 to $20,500 per lot. The lot
price increased another $1,000 to $21,500 per lot on November
28, 1995. After May 28, 1996, the lot price will be increased
to $23,500, with a $2,000 increase annually thereafter.
(7) General Partner Bankruptcy
________________________
On February 25, 1991, W. Gerald Ezell, a former general
partner of 222 Hickory, Ltd., elected to file for
reorganization under Chapter 11 of the United States
Bankruptcy Code. This election is designed to allow Mr. Ezell
to satisfy his personal creditors in an orderly manner. The
filing has no impact on the legal standing of the Partnership.
On April 6, 1994, Mr. Ezell sold his general partnership
interest in 222 Hickory, Ltd. in accordance with bankruptcy
court approved plan to liquidate his assets and satisfy his
creditors. In accordance with the partnership agreement, Mr.
Ezell's interest in 222 Hickory, Ltd. was converted into a
special limited partnership interest, and his general partner
responsibilities were transferred to 222 Partners, Inc., the
remaining general partner. W. Gerald Ezell remains on the
Board of 222 Partners, Inc.
(8) Fair Value of Financial Instruments
_______________________________
At December 31, 1995, the Partnership had financial
instruments including cash and cash equivalents of $259,074,
restricted cash of $336,112, accrued interest payable of
$1,526,399, accrued liabilities of $56,955, and a note payable
of $3,454,300. The carrying amounts of cash and cash
equivalents, restricted cash, and accrued liabilities
approximate their fair values because of the short maturity of
those financial instruments.
<PAGE>
The determination of the estimated fair values of the note
payable and the related accrued interest payable was not
practicable as the note agreement does not provide for a
predictable cash payment stream.
<PAGE>
HICKORY LENDERS, LTD.
(A Tennessee Limited Partnership)
Exhibit Index
Exhibit
3 Amended and Restated Certificate and
Agreement of Limited Partnership,
incorporated by reference to Exhibit
A1 to the Prospectus of Registrant
dated December 3, 1987 filed
pursuant to Rule 424(b) of the
Securities and Exchange Commission.
10A Loan Agreement by and among Hickory
Hills, Ltd. and the Registrant,
incorporated by reference to Exhibit
10.1 to Registrant's Form S-18
Registration Statement as filed on
October 23, 1987.
10B Deed of Trust and Security Agreement
by and among Hickory Hills, Ltd. and
the Registrant, incorporated by
reference to Exhibit 10.2 of the
Registrant's Form S-18 Registration
Statement as filed on October 23,
1987.
10C Promissory Note of Hickory Hills,
Ltd. to Hickory Lenders, Ltd.,
incorporated by reference to Exhibit
10.3 to Registrant's Form S-18
Registration Statement as filed on
October 23, 1987.
22 Subsidiaries-Registrant has no
subsidiaries.
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 1995
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 150,582
<SECURITIES> 0
<RECEIVABLES> 3,228,601
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,415,022
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 3,415,022
<TOTAL-LIABILITY-AND-EQUITY> 3,415,022
<SALES> 4,061
<TOTAL-REVENUES> 4,061
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 38,129
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (34,068)
<INCOME-TAX> 0
<INCOME-CONTINUING> (34,068)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (34,068)
<EPS-PRIMARY> (8.11)
<EPS-DILUTED> (8.11)
</TABLE>
