<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, 1996
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)
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
<PAGE>
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 28, 1997.
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.
With the loan due date approaching at year end, the General
Partner plans to negotiate an extension of the loan term. The
General Partner does not expect the Borrower to have the liquidity
to retire the debt in full on December 31, 1997. Because the
Borrower and the Registrant share the same general partner, it may
be necessary to appoint an independent party to represent the
general partner for the Registrant, the Borrower or both during the
loan negotiations. However, if the loan term is not extended, the
lack of payment would constitute a default on the loan agreement.
In such an event the Registrant is required to foreclose the loan.
Currently, the Registrant has not foreclosed or accelerated the
amounts due under the loan agreement.
As of December 31, 1996, the Properties securing the Lender
Financing consisted of approximately 235 acres in Nashville,
Davidson County, Tennessee (208 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 24
lots remain unsold. The Nashville property was purchased partially
developed. During 1996 and 1995, the Registrant did certain site
work required by sales 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.
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. As competitive sites nearer the City are absorbed, the
Borrower's site should experience more activity. The Borrower's
prices are comparable to its competition.
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
$140,000 - $180,000 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 Interest at $1,000 per Unit. The
offering of $4,200,000 was fully subscribed and closed on August
31, 1988. As of February 28, 1997, there were 366 holders of
record of the Units of Limited Partnership Interests.
Distributions of $509,091 were made to unit holders during
1996. There were 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,
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Interest
income $ 4,449 4,061 5,747 6,006 1,418
Net loss (35,323) (34,068) (33,134) (33,285) (49,677)
Net loss per limited
partner unit (8.41) (8.11) (7.89) (7.93) (11.83)
Distributions per
limited partner
unit 120 50 80 100 -
Total assets 2,870,608 3,415,022 3,661,211 4,033,739 4,491,266
Note receivable
affiliate 2,478,601 3,228,601 3,454,300 3,454,300 3,454,300
Interest receivable
affiliate - - 84,301 359,301 873,301
</TABLE>
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 39, 38, and 43 lots in 1996, 1995 and 1994,
respectively, of the Hendersonville property to Phillips Builders
under the terms of the exclusive option contract negotiated in
1991. Gross sales proceeds were $992,000, $770,610, and $763,000 in
1996, 1995 and 1994, respectively. The Borrower also sold 2.5,
3.86 and 1.63 acres in 1996, 1995 and 1994, respectively, of the
Nashville property for gross proceeds of $188,250, $154,400 and
$47,500. From the proceeds of all sales, $750,000, $310,000, and
$275,000 in 1996, 1995 and 1994, respectively, was paid to the
Lender in interest and the remainder was retained for operations
and development. The Applicable Principal Balance assigned to
1996, 1995 and 1994 sales is $343,731, $316,860, and $287,438,
respectively. The cumulative Applicable Principal Balance as of
December 1996 is $1,562,428 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
$1,126,627 at December 31, 1996. The Registrant received $750,000,
$310,000, and $275,000 payments on the Lender Financing in 1996,
1995, and 1994, respectively.
Financial Condition and Liquidity
At January 31, 1997, the Registrant had $492,321 in cash and
cash equivalents to meet its 1997 operating expenses, which are not
significant. Therefore the General Partner believes that the
present cash balance will be sufficient to cover the operating
expenses for 1997.
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 Lenders'
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.
Item 8. Financial Statements 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 Disclosure.
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 the
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 66, 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 44, 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 37, serves as a Secretary/Treasurer
and Vice President of 222 Partners, Inc. He has been an officer of
222 Partners, Inc. from September 17, 1986 through the current
period. He is Vice President and 50% owner of Landmark Realty
Services Corporation. Prior to joining Landmark, Mr. Hartley was
Vice President of Dean Witter Realty Inc., a New York-based real
estate investment firm.
Item 11. Executive Compensation
During 1996, 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.
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and
Management
As of February 28, 1997 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 officers or 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, for the year ending December 31,
1996, 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 $750,000, $310,000 and $275,000 in payments on the Lender
Financing in 1996, 1995 and 1994, respectively. An additional
$1,126,627 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
Additional financial information furnished
pursuant to the requirements of Form 10-K:
Financial Statement Schedule -
Independent Auditors' Report S-1
Schedule IV - 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' Deficit 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 of
the 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>
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, 1996 and 1995, and
the related statements of operations, partners' equity, and cash
flows for each of the years in the three-year period ended December
31, 1996. 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, 1996 and 1995, and the results of its
operations and its cash flows for each of the years in the three-
year period ended December 31, 1996, in conformity with generally
accepted accounting principles.
As discussed in Note 1, 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",in 1995.
KPMG Peat Marwick LLP
Nashville, Tennessee
January 20, 1997
F-1
<PAGE>
HICKORY LENDERS, LTD.
(A Limited Partnership)
Balance Sheets
December 31, 1996 and 1995
Assets 1996 1995
Cash and cash equivalents $ 374,088 150,582
Note receivable from affiliate(note 3) 2,478,601 3,228,601
Deferred loan costs, less accumulated
amortization of $ 161,281 in 1996
and $143,361 in 1995 17,919 35,839
$ 2,870,608 3,415,022
Partners' Equity
Limited Partners (4,200 units
outstanding) (note 4) 2,870,608 3,415,022
General Partners (note 4) - -
Commitments and contingencies
(notes 2 and 3)
Total partners' equity $ 2,870,608 3,415,022
See accompanying notes to financial statements.
F-2
<PAGE>
HICKORY LENDERS, LTD.
(A Limited Partnership)
Statements of Operations
Years ended December 31, 1996, 1995 and 1994
1996 1995 1994
Interest income (note 3) $ 4,449 4,061 5,747
Expenses:
Mortgage service fee (note 2) 7,000 7,000 7,000
Legal and accounting fees
(note 2) 13,067 11,776 10,690
General & administrative 1,785 1,433 3,271
Amortization 17,920 17,920 17,920
Total expenses 39,772 38,129 38,881
Net loss $ (35,323) (34,068) (33,134)
Net loss allocated to:
Limited partners $ (40,414) (36,189) (36,528)
General partner 5,091 2,121 3,394
Net loss per
limited partner unit $ (8.41) (8.11) (7.89)
Weighted average units
outstanding 4,200 4,200 4,200
See accompanying notes to financial statements.
F-3
<PAGE>
HICKORY LENDERS, LTD.
(A Limited Partnership)
Statements of Partners' Equity
Years ended December 31, 1996, 1995 and 1994
Limited General
partners partner Total
Units Amounts
Balance at
December 31, 1993 4,200 $ 4,033,739 - 4,033,739
Net loss - (36,528) 3,394 (33,134)
Distributions
(note 4) - (336,000) (3,394) (339,394)
_______ _______ _______ _______
Balance at
December 31, 1994 4,200 3,661,211 - 3,661,211
Net loss - (36,189) 2,121 (34,068)
Distributions
(note 4) - (210,000) (2,121) (212,121)
_______ _______ _______ _______
Balance at
December 31, 1995 4,200 3,415,022 - 3,415,022
Net loss - (40,414) 5,091 (35,323)
Distributions
(note 4) - (504,000) (5,091) (509,091)
_______ _______ _______ _______
Balance at
December 31, 1996 4,200 $2,870,608 - 2,870,608
See accompanying notes to financial statements.
F-4
<PAGE>
HICKORY LENDERS, LTD.
(A Limited Partnership)
Statements of Cash Flows
Years ended December 31, 1996, 1995 and 1994
1996 1995 1994
Cash flows from operating
activities:
Net loss $ (35,323) (34,068) (33,134)
Adjustments to reconcile
net loss to net cash (used)
provided by operating
activities:
Amortization 17,920 17,920 17,920
Decrease in interest
receivable from
affiliate - 84,301 275,000
Net cash (used in) provided by
operating activities (17,403) 68,153 259,786
Cash flows from financing activities:
Distributions (509,091) (212,121) (339,394)
Decrease in note receivable
from affiliate 750,000 225,699 -
Net cash provided by (used in)
financing activities 240,909 13,578 (339,394)
Increase (decrease) in net
cash and cash equivalents 233,506 81,731 (79,608)
Cash and cash equivalents
at beginning of year 150,582 68,851 148,459
Cash and cash equivalents
at end of year $ 374,088 150,582 68,851
Supplemental disclosure of cash flows information:
Cash paid during the year
for state income taxes $ 1,121 - 2,378
See accompanying notes to financial statements.
F-5
<PAGE>
HICKORY LENDERS, LTD.
(A Limited Partnership)
Notes to Financial Statements
December 31, 1996 and 1995
(1) Summary of Significant Accounting Policies
(a) Organization
Hickory Lenders, Ltd. (the Partnership), a Tennessee limited
partnership, was 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. The Partnership prepares financial statements and
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.
(b) Estimates
Management of the Partnership has made estimates and
assumptions to prepare these financial statements in
accordance with generally accepted accounting principles.
Actual results could differ from those estimates.
(c) 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.
(d) Note Receivable from Affiliate
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.
The Partnership will establish an impairment allowance for
the amount that the recorded value of the note exceeds its
estimated fair value. The impairment allowance is
established by a charge to earnings. Any cash receipts on
F-6
<PAGE>
HICKORY LENDERS, LTD.
(A Limited Partnership)
Notes to Financial Statements
(1) Summary of Significant Accounting Policies, continued
impaired notes receivable are applied to reduce the
principal amount and are recognized as interest income,
thereafter.
(e) Deferred Loan Costs
Deferred loan costs are being amortized by the straight-line
method over the ten year term of the note receivable from
the affiliate.
(f) Income Taxes
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.
Annually, the partners receive from the Partnership, IRS
Form K-1's, which provide them with their respective share
of taxable income or losses, deductions, and other tax
related information. The only difference between the tax
basis and reported amounts of the Partnership's assets and
liabilities relates to the recognition of interest income.
For income tax purposes, the outstanding note receivable
principal balance accrues interest at a compounded interest
rate of 7.2% per annum. This results in a book basis of the
note receivable of $2,478,601 and interest receivable of $0
at December 31, 1996 compared to a tax basis of $3,454,300
and $696,008, respectively.
(g) Partnership Allocations
Net profits, losses and distributions of cash flow of the
Partnership are allocated to the partners in accordance with
the Partnership agreement as follows:
Partnership net profits are allocated first to any partner
with a negative balance in their capital account, determined
at the end of the taxable year as if the Partnership had
distributed cash flow, in proportion to the negative capital
balance account of all partners until no partner's capital
account is negative. Net profit allocations are then made
to the limited partners up to the difference between their
capital account balances and the sum of their adjusted
capital contributions (capital balance, net of cumulative
F-7
<PAGE>
HICKORY LENDERS
(A Limited Partnership)
Notes to Financial Statements
December 31, 1996 and 1995
(1) Summary of Significant Accounting Policies, continued
cash distributions in excess of preferred returns - 12%
annual cumulative return on capital contributed). Any
remaining net profit allocations are then made to the
limited partners until the taxable year in which cumulative
profits to the limited partners equal their adjusted capital
contribution plus an unpaid preferred return (12% annual
cumulative return on capital contributed). Net profits are
then allocated to the general partner until the ration of
the general partner's capital account balance to the capital
account balances, in excess of adjusted capital
contributions and unpaid preferred return, of all limited
partners is 27 to 73. Thereafter, profits are generally
allocated 27% to the general partner and 73% to the limited
partners. Net losses are allocated to the partners in
proportion to their positive capital accounts.
Partnership distributions are allocated 99% to the limited
partners and 1% to the general partner in an amount equal to
their preferred return (12% annual cumulative return on
capital contributed), 99% to the limited partners and 1% to
the general partner until the limited partners have received
an amount equal to their adjusted capital contributions, and
then 73% to the limited partners and 27% to the general
partner.
(h) Reclassifications
Certain prior year amounts have been reclassified to conform
with the current year presentation.
(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 during 1996, 1995, and 1994 are as follows:
1996 1995 1994
Mortgage service fee $ 7,000 7,000 7,000
Accounting fees 2,100 1,500 1,500
F-8
<PAGE>
HICKORY LENDERS
(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 and improvements
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, 1996 and 1995, and for the years ended December 31,
1996, 1995 and 1994, are presented below.
Assets 1996 1995
Cash and cash equivalents $ 142,345 259,074
Restricted cash 258,676 336,112
Land and improvements held for investment 2,473,839 2,740,975
Other assets 280 21,293
Total assets $ 2,875,140 3,357,454
Liabilities and Partners' Deficit
Liabilities:
Note payable to affiliate $ 3,454,300 3,454,300
Accrued interest payable to affiliate 1,126,627 1,526,399
Accrued property taxes 10,635 9,855
Other accrued expenses 81,902 47,100
Total liabilities 4,673,464 5,037,654
Partners' deficit: (1,798,324) (1,680,200)
Total liabilities and
partners' deficit $ 2,875,140 3,357,454
F-9
<PAGE>
HICKORY LENDERS, LTD.
(A Limited Partnership)
Notes to Financial Statements
(3) Note Receivable From Affiliate (continued)
Operations
1996 1995 1994
Revenues:
Income on sales of land
and improvements held for
investment $ 324,085 152,469 12,801
Interest income 31,331 24,238 15,419
Miscellaneous income - - 22
Total revenues 355,416 176,707 28,242
Expenses:
Program management fee 3,000 3,000 3,000
Legal and accounting 13,782 12,925 11,682
General and administrative 8,270 8,381 6,753
Property taxes 35,058 39,683 35,623
Land maintenance fees 63,202 23,199 26,090
Interest 350,228 350,228 350,227
Total expenses 473,540 437,416 433,375
Net loss $ 118,124 260,709 405,133
Cash flows
Net cash (used) provided by operating
activities $ (116,729) 126,595 (260,946)
During 1996 and prior years, the affiliate retained portions
of the net proceeds from sales 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 1996 and 1995, the affiliate
received net proceeds of $ 1,098,590 and $860,362, respectively,
from the sale of property. The affiliate remitted interest to the
Partnership in the amount of $750,000 and $310,000 in 1996 and
1995, respectively. The cumulative principal balance payable to
the Partnership is $ 1,562,478 and $1,247,573 at December 31, 1996
and 1995, respectively. The general partner believes that
retaining sales proceeds for development and distributing only net
available cash to the Partnership was contemplated by the note
agreement. However, the note agreement does not explicitly
authorize this use of funds; therefore, this treatment could
constitute a default on the note and accelerate the amounts due or
foreclose upon the note.To date, the Partnership has not foreclosed
or accelerated the amounts due under the note agreement.
F-10
<PAGE>
HICKORY LENDERS, LTD.
(A Limited Partnership)
Notes to Financial Statements
(3) Note Receivable From Affiliate (continued)
The Partnership has determined that the note receivable from
the affiliates is impaired. At December 31, 1996 and 1995,
interest that was not accrued amounted to $1,126,627. At December
31, 1996, the Partnership had no valuation allowance for impairment
as the estimated fair value of the underlying collateral exceeded
the recorded investment of the note. The average recorded
investment in the impaired note receivable during 1996 and 1995 was
$2,881,101 and $3,391,450 respectively. The Partnership did not
recognize interest income on the note receivable in any of the
years in the three year period ending December 31, 1996, due to the
lack of principal reductions as required by the loan agreement and
continued net losses by the Borrower.
(4) Distributions
For the years ended December 31, 1996, 1995 and 1994, the
Partnership made distributions to its partners totaling $509,091,
$212,121, and $339,394, respectively. Of these amounts, 99% was
allocated to the limited partners ($120 per unit, $50 per unit, and
$80 per unit, respectively) and 1% was allocated to the general
partner.
(5) Fair Value of Financial Instruments
At December 31, 1996 and 1995, 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.
F-11
<PAGE>
Independent Auditors' Report
The Partners
Hickory Lenders, Ltd.:
Under date of January 20, 1997, we reported on the balance sheets
of Hickory Lenders, Ltd. as of December 31, 1996 and 1995, and the
related statements of operations, partners' equity, and cash flows
for each of the years in the three-year period ended December 31,
1996. 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.
As discussed in Note 1 to the financial statements, the Partnership
adopted the provisions of statement of Financial Accounting
Standards (SFAS) No. 114, "Accounting by Creditor for Impairment of
a Loan", as amended by SFAS No. 118, "Accounting by Creditor for
Impairment of a Loan - Income Recognition and Disclosure", in 1995.
KPMG Peat Marwick LLP
Nashville, Tennessee
January 20, 1997
S-1
<PAGE>
Schedule IV
HICKORY LENDERS, LTD.
(A Limited Partnership)
Mortgage Loans on Real Estate
December 31, 1996
<TABLE> Principal
amount of
loan
subject to
Carrying delin-
<CAPTION> Face amount quent
Final Periodic amount of principal
Interest maturity payment Prior of mortgage or
Description rate date terms liens mortgage (1)(2) interest
<S> <C> <C> <C> <C> <C> <C> <C>
Hickory Hills,
Ltd., a
affiliate 10% December Upon the $ - 3,454,300 2,478,601 -
31, 1997 sale of
property
</TABLE>
1996 1995 1994
____ ____ ____
(1) Balance at beginning
of period $ 3,228,601 3,454,300 -
Deductions -
Collections of principal 750,000 225,699 -
Balance at close of period 2,478,601 3,228,601 3,454,300
(2) Aggregate cost for
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 and improvements 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 $1,126,627 of interest was due at December
31, 1996 which has not been recognized in income by the
Partnership. See Note 3 to the financial statements.
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, 1996 and 1995, and
the related statements of operations, partners' deficit, and cash
flows for each of the years in the three-year period ended December
31, 1996. 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 make 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, 1996 and 1995, and the results of its
operations and its cash flows for each of the years in the three-
year period ended December 31, 1996, in conformity with generally
accepted accounting principles.
As discussed in Note 1, the Partnership adopted the provisions of
Statement of Financial Accounting Standards (SFAS) No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-
Lived to be Disposed Of" on January 1, 1996.
The accompanying financial statements have been prepared assuming
that the Partnership will continue as a going concern. As
discussed in Note 8 to the financial statements, the Partnership
has suffered recurring losses from operations and has a net capital
deficiency, a note due in full on December 31, 1997 which the
Partnership will be unable to repay, that raise substantial doubt
about its ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 8. The
financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
KPMG Peat Marwick LLP
Nashville, Tennessee
January 20, 1997
M-1
<PAGE>
HICKORY HILLS, LTD.
(A Limited Partnership)
Balance Sheets
December 31, 1996 and 1995
Assets 1996 1995
Cash and cash equivalents (note 5) $ 142,345 259,074
Restricted cash (note 2) 258,676 336,112
Land and improvements held for
investment (notes 4 and 5) 2,473,839 2,740,975
Other assets 280 21,293
Total assets $ 2,875,140 3,357,454
Liabilities and Partners' Deficit
Liabilities:
Note payable to affiliate (note 5) $ 3,454,300 3,454,300
Accrued interest payable to
affiliate (note 5) 1,126,627 1,526,399
Accrued property taxes 10,635 9,855
Other accrued expenses 81,902 47,100
Total liabilities 4,673,464 5,037,654
Partners' deficit:
Limited partners (1,800 units
outstanding) (1,798,424) (1,680,300)
General partner 100 100
Total Partners' deficit (1,798,324) (1,680,200)
Commitments and contingencies
(notes 5, 6, and 8)
Total liabilities
and partners' deficit $ 2,875,140 3,357,454
See accompanying notes to financial statements.
M-2
<PAGE>
HICKORY HILLS, LTD.
(A Limited Partnership)
Statements of Operations
Years ended December 31, 1996, 1995, and 1994
1996 1995 1994
Revenues:
Sales of land
and improvements $1,180,250 925,010 810,500
Cost of land and
improvements sold (774,505) (707,893) (743,616)
Selling expenses (note 3) (81,660) (64,648) (54,083)
Income on sales of
land and improvements
held for investment 324,085 152,469 12,801
Interest income 31,331 24,238 15,419
Miscellaneous income - - 22
Total revenues 355,416 176,707 28,242
Expenses:
Program management
fee (note 3) 3,000 3,000 3,000
Legal and accounting
(note 3) 13,782 12,925 11,682
General and administrative 8,270 8,381 6,753
Property taxes 35,058 39,683 35,623
Land maintenance fees 63,202 23,199 26,090
Interest (notes 3 and 5) 350,228 350,288 350,227
Total expenses 473,540 437,416 433,375
Net loss $ (118,124) (260,709) (405,133)
Net loss allocated to:
Limited partners $ (118,124) (260,709) (405,133)
General Partner $ - - -
Net loss per limited
partner unit $ (65.62) (144.84) (225.07)
Weighted average units
outstanding 1,800 1,800 1,800
See accompanying notes to financial statements.
M-3
<PAGE>
HICKORY HILLS, LTD.
(A Limited Partnership)
Statements of Partners' Deficit
Years ended December 31, 1996, 1995, and 1994
Limited General
partners partner Total
Units Amount
Balance at
December 31, 1993 1,800 $ (1,014,458) 100 (1,014,358)
Net loss - (405,133) - (405,133)
------- -------- -------- --------
Balance at
December 31, 1994 1,800 (1,419,591) 100 (1,419,491)
Net loss - (260,709) - (260,709)
------- -------- -------- ---------
Balance at
December 31, 1995 1,800 (1,608,300) 100 (1,680,200)
Net loss - (118,124) - (1,798,324)
_______ _______ _______ _______
Balance at
December 31, 1996 1,800 $ (1,798,424) 100 (1,798,324)
See accompanying notes to financial statements.
M-4
<PAGE>
HICKORY HILLS, LTD.
(A Limited Partnership)
Statements of Cash Flows
Years ended December 31, 1996, 1995, and 1994
1996 1995 1994
____ ____ ____
Cash flows from operating
activities:
Net loss $ (118,124) (260,709) (405,133)
Adjustments to reconcile net
loss to net cash (used)
provided by operating
activities:
Cost of land and
improvements sold 774,505 707,893 743,616
Cost of land
improvements (507,369) (244,042) (400,576)
(Decrease) increase
in restricted cash 77,436 (81,261) (254,851)
(Decrease) increase
other assets 21,013 (20,828) (192)
(Decrease) increase
in accrued interest
payable to affiliate (399,772) 40,228 75,227
Increase (decrease)
in accrued property taxes 780 (25,586) (1,862)
Increase (decrease)
in other accrued expenses 34,802 10,900 (17,175)
------- ------- --------
Total adjustments 1,395 387,304 144,187
Net cash provided
(used) by operating
activities (116,729) 126,595 (260,946)
Net change in cash and
cash equivalents (116,729) 126,595 (260,946)
Cash and cash equivalents
at beginning of year 259,074 132,479 393,425
Cash and cash equivalents
at end of year $ 142,345 259,074 132,479
Supplemental Disclosures of
Cash Flow Information:
Cash paid during the year
for interest $ 750,000 310,000 275,000
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), a Tennessee limited
partnership, was 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. The
Partnership prepares financial statements and 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.
(b) Estimates
Management of the Partnership has made estimates and
assumptions to prepare these financial statements in
accordance with generally accepted accounting principles.
These estimates include the determination of the estimated
fair value of the land held for investment in accordance
with the provisions of SFAS No. 121. Actual results could
differ from those estimates.
(c) Cash and Cash Equivalents
The Partnership considers all short-term investments with
original maturities of three months or less at the time of
purchase to be cash equivalents. At December 31, 1996 and
1995, the management of the Partnership has reserved cash
balances of $53,500 and $43,750, 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.
(d) Land and Improvements Held for Investments
Land is recorded at cost and includes two tracts of
undeveloped land representing approximately 235 and 237
acres at December 31, 1996 and 1995, respectively. Of these
amounts, management believes that 208 and 210 acres are
M-6
<PAGE>
HICKORY HILLS, LTD.
(A Limited Partnership)
Notes to Financial Statements
December 31, 1995 and 1994
(1) Summary of Significant Accounting Policies (continued)
sellable at December 31, 1996 and 1995, respectively. In
addition, the Partnership owns one tract of land developed
into residential lots with 24 and 63 lots remaining at
December 31, 1996 and 1995, 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.
The Partnership adopted the provisions of Statement of
Financial Accounting Standards (SFAS) NO. 121, Accounting
for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of on January 1, 1996. SFAS No. 121
requires that long-lived assets to be disposed of be
reported at the lower of the carrying amount or fair value
less estimated costs to sell. The fair value of the assets
can be determined externally, using appraisals, or
internally using discounted future net cash flows. If such
assets are considered impaired, the impairment to be
recognized is measured by the amount by which the carrying
amount of the assets exceeds the fair value of the assets
less estimated costs to sell. Impairment is recognized
through the establishment of an allowance for impairment
with a corresponding charge to operations. Losses upon the
sale of the assets are charged to the allowance. Based upon
management's analysis of discounted future net cash flows,
the Partnership's land and improvements held for investment
does not meet definitions of impairment under SFAS No. 121.
Accordingly, land held for investment is recorded at cost
with no allowance for impairment necessary. The adoption of
SFAS No. 121 did not have an impact on the Partnership's
financial position, result of operations, or liquidity.
(e) Income Recognition
Income from sales of land and improvements held for
investment is generally recorded on the accrual basis when
the buyer's financial commitment is sufficient to provide
economic substance to the transaction, and when other
M-7
<PAGE>
HICKORY HILLS, LTD.
(A Limited Partnership)
Notes to Financial Statements
December 31, 1995 and 1994
(1) Summary of Significant Accounting Policies (continued)
criteria of SFAS No. 66 "Accounting for Sales of Real
Estate" are satisfied. For sales of real estate where both
cost recovery is reasonably certain and the collectibility
of the contract price is reasonably assured, but the
transaction does not meet the remaining requirements to be
recorded on the accrual basis, profit is deferred and
recognized under the installment method, which recognizes
profit as collections of principal are received. If
developments subsequent to the adoption of the installment
method occur which cause the transaction to meet the
requirements of the full accrual method, the remaining
deferred profit is recognized at that time. Any losses on
sales of real estate are recognized at the time of the sale.
(f) Income Taxes
No provision has or will be made for Federal or state income
taxes since such taxes are the responsibility of the
partners.
Annually, the partners receive, from the Partnership, IRS
Form K-1's which provides them with their respective share
of taxable income or losses, deductions, and other tax
related information. The only difference between the tax
basis and reported amounts of the Partnership's assets and
liabilities relates to the valuation of land and
improvements held for investment. For income tax purposes
certain costs were capitalized as additional land
improvement costs.
(g) Partnership Allocations
Net profits, losses and distribution of cash flow of the
Partnership are allocated to the Partners in accordance with
the Partnership agreement as follows:
Partnership net profits are allocated first to any
partner with a negative balance in their capital account,
determined at the end of the taxable year as if the
Partnership has distributed cash flow, in proportion to the
negative capital balance account of all partners until no
partner's capital account is negative. Net profit
allocations are then made to the limited partners up to the
M-8
<PAGE>
HICKORY HILLS, LTD.
(A Limited Partnership)
Notes to Financial Statements
December 31, 1995 and 1994
(1) Summary of Significant Accounting Policies (continued)
difference between their capital account balances and the
sum of their adjusted capital contributions (capital
balance, net of cumulative cash distributions in excess of
preferred returns - 12% annual cumulative return on capital
contributed). Any remaining net profit allocations are then
made to the limited partners until the taxable year in which
cumulative profits to the limited partners equal their
adjusted capital contribution plus an unpaid preferred
return (12% annual cumulative return on capital
contributed). Net profits are then allocated to the general
partner until the ratio of the general partner's capital
account balance to the capital account balances, in excess
of adjusted capital contributions and unpaid preferred
return, of all limited partners is 27 to 73. Thereafter,
profits are generally allocated 27% to the general partner
and 73% to the limited partners. Net losses are allocated
to the partners in proportion to their positive capital
accounts.
Partnership distributions are allocated 99% to the limited
partners and 1% to the general partner in an amount equal to
their preferred return (12% annual, cumulative return on
capital contributed), 99% to the limited partners and 1% to
the general partner until the limited partners have received
an amount equal to their adjusted capital contributions, and
then 73% to the limited partners and 27% to the general
partner.
(h) Reclassifications
Certain prior year amounts have been reclassified to conform
with the current year presentation.
(2) Restricted Cash
At December 31, 1996 and 1995, the Partnership has
restricted cash balances of $258,676 and $336,112,
respectively, to be used to fund property improvements,
consisting of road and utility work.
M-9
<PAGE>
HICKORY HILLS, LTD.
(A Limited Partnership)
Notes to Financial Statements
(3) Related Party Transactions
The general partner and its affiliates have been actively
involved in managing the Partnership. Affiliates of the
general partner receive fees and commissions for performing
certain services. Expenses incurred for these services
during 1996, 1995, and 1994 are as follows:
1996 1995 1994
Accounting fees $ 2,100 1,500 1,500
Program management fee 3,000 3,000 3,000
Engineering fees 24,765 - -
Real estate commissions 37,290 23,694 24,315
Interest expense $ 350,228 350,228 350,227
(4) Land and Improvements Held for Investment
The components of land and improvements held for investment
at December 31, are as follows:
1996 1995
Land $1,538,626 1,955,823
Land Improvements 935,213 785,152
--------- ----------
$2,473,839 2,740,975
The aggregate cost for federal income tax purposes was $
3,378,273 and $ 2,940,975 at December 31, 1996 and 1995,
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 and improvements held for investment
and by a security interest in any unrestricted cash 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.
During 1996 and prior years, the Partnership retained
portions of the net proceeds from sales without paying the
applicable principal balance or accrued interest to the
Lender. The cumulative principal balance currently payable
to the Lender is $1,562,428 and 1,247,573 and $930,713 at
December 31, 1996 and 1995, respectively.
M-10
<PAGE>
HICKORY HILLS, LTD.
(A Limited Partnership)
Notes to Financial Statements
(5) Note Payable to Affiliate - continued
General Partner believes that retaining sales proceeds for
development and distributing only net available cash to the
Lender was contemplated by the note agreement. However, the
note agreement does no explicitly authorize the retention of
these funds; therefore, this treatment could constitute a
default on the note agreement. In such an event the Lender
is required to foreclose the loan and accelerate the amounts
due or foreclose upon the note. To date, the Lender has not
foreclosed or accelerated the amounts due under the loan
agreement.
(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. The per lot price will increase to
$23,500, and will increase $2,000 annually thereafter.
(7) Fair Value of Financial Instruments
At December 31, 1996 and 1995, 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.
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.
(8) Going Concern
The accompanying financial statements have been prepared
assuming that the Partnership will continue as a going
concern. The Partnership has a note due on December 31,
1997 which the General Partner does not expect the
Partnership to have the liquidity to retire the debt in
full. The General Partner of the Borrower plans to
negotiate an extension of the loan term. If an extension is
not received and the Partnership does not repay the Note,
the Lender would foreclose and take the Property. The
Registrant would then be dissolved.
This uncertainty raises substantial doubt about its ability
to continue as a going concern. The financial statements do
not include any adjustments that might result from the
outcome of this uncertainty.
M-11
<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
Hickory Lenders, Ltd., 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 10.1 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
<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: March 27, 1997 By: /s/Steven D. Ezell
President and Director
DATE: March 27, 1997 By: /s/Michael A. Hartley
Vice-President and Director
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: March 27, 1997 By: /s/Steven D. Ezell
President and Director
DATE: March 27, 1997 By: /s/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>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000824482
<NAME> HICKORY LENDERS, LTD.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 374,088
<SECURITIES> 0
<RECEIVABLES> 2,478,601
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,870,608
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,870,608
<TOTAL-LIABILITY-AND-EQUITY> 2,870,608
<SALES> 0
<TOTAL-REVENUES> 4,449
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 39,772
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (35,323)
<INCOME-TAX> 0
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</TABLE>
