<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, 1997
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, 1998.
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. The note due date was extended
from December 31, 1997 to December 31, 1998 in 1997.
As of December 31, 1997, the Properties securing the Lender
Financing consisted of approximately 230 acres in Nashville,
Davidson County, Tennessee and a residential subdivision in
Hendersonville, Sumner County, Tennessee on Old Hickory Lake with
243 lots of which 7 lots remain unsold. The Nashville property was
purchased partially developed. During 1997 and 1996, 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 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, 1998, there were 369 holders of
record of the Units of Limited Partnership Interests.
Distributions of $672,000 were made to unit holders during
1997. 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,
1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Interest
income $ 5,269 4,449 4,061 5,747 6,006
Net loss (35,478) (35,323) (34,068) (33,134) (33,285)
Net loss per limited
partner unit (10.06) (9.62) (8.62) (7.89) (7.93)
Distributions per
limited partner
unit 160 120 50 80 100
Total assets 2,156,342 2,870,608 3,415,022 3,661,211 4,033,739
Note receivable
affiliate 1,833,601 2,478,601 3,228,601 3,454,300 3,454,300
Interest receivable
affiliate - - - 84,301 359,301
</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 17, 39, and 38 lots in 1997, 1996, and 1995
respectively, on the Hendersonville property to Phillips Builders under the
terms of the exclusive option contract negotiated in 1991. Gross sales
proceeds were $ 436,000, $992,000, and $770,610 in 1997, 1996, and 1995
respectively. Of the lots sold, one of 17 in 1997 and three of the 39 in
1996 were lake front lots which sold for significantly higher prices and
carried a higher applicable principal balance. The Borrower also sold 6.14,
2.5, and 3.86 acres in 1997, 1996, and 1995, respectively, of the Nashville
property for gross proceeds of $ 500,050, $188,250, and $154,400,
respectively. From the proceeds of all sales, $ 645,000, $750,000, and
$310,000 in 1997, 1996, and 1995, respectively, was paid to the Registrant in
interest and the remainder was retained for operations and development. The
Applicable Principal Balance assigned to 1997, 1996, and 1995 sales is
$275,212, $314,855, and $316,860, respectively. The cumulative Applicable
Principal Balance as of December 31, 1997 is $1,866,516 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
$831,855 at December 31, 1997. The Registrant received $645,000,
$750,000,and $310,000 payments on the Lender Financing in 1997, 1996,
and 1995, respectively.
Financial Condition and Liquidity
At February 28,1998, the Registrant had $59,753 in cash and
cash equivalents to meet its 1998 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 1998.
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.
We have considered the impact of the Year 2000 issues on our computer systems
and applications and developed a remediation plan. We expect the cost of
upgrading computers and software to be immaterial to the Partnership.
Item 8. Financial Statements and Supplementary Data
The Financial Statements required by Item 8 are filed at the
end of this report.
<PAGE>
Item 9. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure.
None.
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 67, 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 45, 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 38, 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 1997, 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, 1998 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,
1997, 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. The Registrant received $645,000, $750,000,
and $310,000 on the Lender Financing in 1997, 1996 and 1995, respectively.
An additional $831,855 of accrued interest is due under the terms of the
loan which has not been recognized as income by the Registrant. The note was
due on December 31, 1997 but was extended for one year. The General Partner
does not expect the Partnership to have the liquidity to retire the debt in
full at December 31, 1998. The General Partner of the Borrower plans to
negotiate an extension of the loan term. If an extension is not received and
the Borrower does not repay the Note, the Registrant could foreclose and take
the Property.
<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 1997.
<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, 1997 and 1996, and
the related statements of operations, partners' equity, and cash
flows for each of the years in the three-year period ended December
31, 1997. 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, 1997 and 1996, and the results of its
operations and its cash flows for each of the years in the three-
year period ended December 31, 1997, in conformity with generally
accepted accounting principles.
KPMG Peat Marwick LLP
Nashville, Tennessee
January 30, 1998
F-1
<PAGE>
HICKORY LENDERS, LTD.
(A Limited Partnership)
Balance Sheets
December 31, 1997 and 1996
Assets 1997 1996
Cash and cash equivalents $ 322,741 374,088
Note receivable from affiliate(note 3) 1,833,601 2,478,601
Deferred loan costs, less accumulated
amortization of $179,200 in 1997 and
$161,281 in 1996 - 17,919
$ 2,156,342 2,870,608
Partners' Equity
Limited Partners (4,200 units
outstanding) $ 2,156,342 2,870,608
General Partners - -
Commitments and contingencies
(notes 2 and 3)
Total partners' equity $ 2,156,342 2,870,608
See accompanying notes to financial statements.
F-2
<PAGE>
HICKORY LENDERS, LTD.
(A Limited Partnership)
Statements of Operations
Years ended December 31, 1997, 1996 and 1995
1997 1996 1995
Interest income $ 5,269 4,449 4,061
Expenses:
Mortgage service fee (note 2) 7,000 7,000 7,000
Legal and accounting fees
(note 2) 11,972 13,067 11,776
General and administrative 3,856 1,785 1,433
Amortization 17,919 17,920 17,920
Total expenses 40,747 39,772 38,129
Net loss $ (35,478) (35,323) (34,068)
Net loss allocated to:
Limited partners $ (42,266) (40,414) (36,189)
General partner 6,788 5,091 2,121
Net loss per
limited partner unit $ (10.06) (9.62) (8.62)
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, 1997, 1996 and 1995
Limited General
partners partner Total
Units Amounts
Balance at
December 31, 1994 4,200 $ 3,661,211 - 3,661,211
Net loss - (36,189) 2,121 (34,068)
Distributions to
partners (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 to
partners (note 4) - (504,000) (5,091) (509,091)
_______ _______ _______ _______
Balance at
December 31, 1996 4,200 2,870,608 - 2,870,608
Net loss - (42,266) 6,788 (35,478)
Distributions to - (672,000) (6,788) (678,788)
partners (note 4)------ ------- -------- -------
Balance at
December 31, 1997 4,200 $2,156,342 - 2,156,342
See accompanying notes to financial statements.
F-4
<PAGE>
HICKORY LENDERS, LTD.
(A Limited Partnership)
Statements of Cash Flows
Years ended December 31, 1997, 1996 and 1995
1997 1996 1995
Cash flows from operating
activities:
Net loss $ (35,478) (35,323) (34,068)
Adjustments to reconcile
net loss to net cash (used in)
provided by operating
activities:
Amortization 17,919 17,920 17,920
Decrease in interest
receivable from
affiliate - - 84,301
Net cash (used in) provided by
operating activities (17,559) (17,403) 68,153
Cash flows from financing activities:
Distributions to partners (678,788) (509,091) (212,121)
Decrease in note receivable
from affiliate 645,000 750,000 225,699
Net cash (used in) provided by
financing activities (33,788) 240,909 13,578
(Decrease) increase in net
cash and cash equivalents (51,347) 223,506 81,731
Cash and cash equivalents
at beginning of year 374,088 150,582 68,851
Cash and cash equivalents
at end of year $ 322,741 374,088 150,582
Supplemental disclosure of cash flows information:
Cash paid during the year
for state income taxes $ 2,968 1,121 -
See accompanying notes to financial statements.
F-5
<PAGE>
HICKORY LENDERS, LTD.
(A Limited Partnership)
Notes to Financial Statements
December 31, 1997 and 1996
(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
amounts 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
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 were 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 $1,833,601 and interest receivable of $0
at December 31, 1997 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
(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 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.
Cumulative unpaid preferred returns are $2,806,348 and
$2,974,348 at December 31, 1997 and 1996, respectively.
(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 1997, 1996, and 1995 are as follows:
1997 1996 1995
Mortgage service fee $ 7,000 7,000 7,000
Accounting fees 1,850 2,100 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 $3,454,300
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, 1998. In 1997, the note due date was extended from December 31,
1997 to December 31, 1998.
Summarized financial information of Hickory Hills, Ltd. at
December 31, 1997 and 1996, and for the years ended December 31,
1997, 1996 and 1995, are presented below.
Assets 1997 1996
Cash and cash equivalents $ 180,308 142,345
Restricted cash 167,859 258,676
Land and improvements held for investment 2,071,767 2,473,839
Other assets 280 280
Total assets $ 2,420,214 2,875,140
Liabilities and Partners' Deficit
Liabilities:
Note payable to affiliate $ 3,454,300 3,454,300
Accrued interest payable to affiliate 831,855 1,126,627
Accrued property taxes 8,852 10,635
Other accrued expenses 101,270 81,902
Total liabilities 4,396,277 4,673,464
Partners' deficit: (1,976,063) (1,798,324)
Total liabilities and
partners' deficit $ 2,420,214 2,875,140
F-9
<PAGE>
HICKORY LENDERS, LTD.
(A Limited Partnership)
Notes to Financial Statements
(3) Note Receivable From Affiliate (continued)
Operations
1997 1996 1995
Revenues:
Income on sales of land
and improvements held for
investment $ 270,274 324,085 152,469
Interest income 12,200 31,331 24,238
Miscellaneous income 1,377 - -
Total revenues 283,851 355,416 176,707
Expenses:
Property management fee 3,000 3,000 3,000
Legal and accounting 13,070 13,782 12,925
General and administrative 4,101 8,270 8,381
Property taxes 27,816 35,058 39,683
Land maintenance fees 63,375 63,202 23,199
Interest 350,228 350,228 350,228
Total expenses 461,590 473,540 437,416
Net loss $ 177,739 118,124 260,709
Cash flows
Net cash provided by (used in)
operating activities $ 37,963 (116,729) 126,595
During 1997 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 1997 and 1996, the affiliate
received net proceeds of $ 857,961 and $ 1,098,590, respectively,
from the sale of property. The affiliate remitted interest to the
Partnership in the amount of $645,000 and $750,000 in 1997 and 1996,
respectively. The cumulative past-due principal balance payable to the
Partnership is $1,866,516 and $1,591,304 at December 31, 1997
and 1996, 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, 1997 and 1996,
interest that was not accrued amounted to $1,126,627. At December
31, 1997, 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 1997 and 1996 was
$2,156,101 and $2,881,101 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, 1997, 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, 1997, 1996 and 1995, the
Partnership made distributions to its partners totaling $678,788 and
$509,091,and $212,121, respectively. Of these amounts, 99% was
allocated to the limited partners ($160 per unit, $120 per unit, and
$50 per unit, respectively) and 1% was allocated to the general
partner.
(5) Fair Value of Financial Instruments
At December 31, 1997 and 1996, 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 30, 1998, we reported on the balance sheets
of Hickory Lenders, Ltd. as of December 31, 1997 and 1996, and the
related statements of operations, partners' equity, and cash flows
for each of the years in the three-year period ended December 31,
1997. 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.
KPMG Peat Marwick LLP
Nashville, Tennessee
January 30, 1998
S-1
<PAGE>
Schedule IV
HICKORY LENDERS, LTD.
(A Limited Partnership)
Mortgage Loans on Real Estate
December 31, 1997
<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 1,833,601 -
31, 1998 sale of
property
</TABLE>
<PAGE>
Schedule IV
HICKORY LENDERS, LTD.
(A Limited Partnership)
Mortgage Loans on Real Estate
December 31, 1997
(continued)
1997 1996 1995
____ ____ ____
(1) Balance at beginning
of period $ 2,478,601 3,228,601 3,454,300
Deductions -
Collections of principal 645,000 750,000 225,699
Balance at close of period 1,833,601 2,478,601 3,228,601
(2) Aggregate cost for
tax purposes 3,454,300 3,454,300 3,454,300
*The note receivable from affiliate represents a $1,833,601 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 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, 1998. In 1997, the note terms
were extended from December 31, 1997 to December 31, 1998. An additional
$831,855 of interest was due at December 31, 1997 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, 1997 and 1996, and the related
statements of operations, partners' deficit, and cash flows for each of the
years in the three-year period ended December 31, 1997. 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, 1997 and 1996, and the results of its operations and its cash
flows for each of the years in the three-year period ended December 31, 1997,
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 Assets 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, resulting in a net capital deficiency, and a note due in full on
December 31, 1998 which the Partnership will be unable to repay, that raise
substantial doubt about the Partnership's 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 30, 1998
M-1
<PAGE>
HICKORY HILLS, LTD.
(A Limited Partnership)
Balance Sheets
December 31, 1997 and 1996
Assets 1997 1996
Cash and cash equivalents (note 5) $ 180,308 142,345
Restricted cash (note 2) 167,859 258,676
Land and improvements held for
investment (notes 4 and 5) 2,071,767 2,473,839
Other assets 280 280
Total assets $ 2,420,214 2,875,140
Liabilities and Partners' Deficit
Liabilities:
Note payable to affiliate (note 5) $ 3,454,300 3,454,300
Accrued interest payable to
affiliate (note 5) 831,855 1,126,627
Accrued property taxes 8,852 10,635
Other accrued expenses 101,270 81,902
Total liabilities 4,396,277 4,673,464
Partners' deficit:
Limited partners (1,800 units
outstanding) (1,976,163) (1,798,424)
General partner 100 100
Total partners' deficit (1,976,063) (1,798,324)
Commitments and contingencies
(notes 5, 6, and 8)
Total liabilities
and partners' deficit $ 2,420,214 2,875,140
See accompanying notes to financial statements.
M-2
<PAGE>
HICKORY HILLS, LTD.
(A Limited Partnership)
Statements of Operations
Years ended December 31, 1997, 1996, and 1995
1997 1996 1995
Revenues:
Sales of land
and improvements $ 936,050 1,180,250 925,010
Cost of sales of land and
improvements held for (587,687) (774,505) (707,893)
investment
Selling expenses(note 3) (78,089) (81,660) (64,648)
Income on sales of
land and improvements
held for investment 270,274 324,085 152,469
Interest income 12,200 31,331 24,238
Miscellaneous income 1,377 - -
Total revenues 283,851 355,416 176,707
Expenses:
Property management
fee (note 3) 3,000 3,000 3,000
Legal and accounting
(note 3) 13,070 13,782 12,925
General and administrative 4,101 8,270 8,381
Property taxes 27,816 35,058 39,683
Land maintenance fees 63,375 63,202 23,199
Interest (notes 3 and 5) 350,228 350,228 350,228
Total expenses 461,590 473,540 437,416
Net loss $ (177,739) (118,124) (260,709)
Net loss allocated to:
Limited partners $ (177,739) (118,124) (260,709)
General partner $ - - -
Net loss per limited
partner unit $ (98.74) (65.62) (144.84)
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, 1997, 1996, and 1995
Limited General
partners partner Total
Units Amount
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) - (118,124)
------- -------- -------- --------
Balance at
December 31, 1996 1,800 (1,798,424) 100 (1,798,324)
Net loss - (177,739) - (177,739)
------- -------- -------- ---------
Balance at
December 31, 1997
1,800 $(1,976,163) 100 (1,976,063)
------- -------- -------- --------
See accompanying notes to financial statements.
M-4
<PAGE>
HICKORY HILLS, LTD.
(A Limited Partnership)
Statements of Cash Flows
Years ended December 31, 1997, 1996, and 1995
1997 1996 1995
____ ____ ____
Cash flows from operating
activities:
Net loss $ (177,739) (118,124) (260,709)
Adjustments to reconcile net
loss to net cash provided
(used) by operating
activities:
Cost of sales of land and
improvements held for
investments 587,687 774,505 707,893
Cost of land and
improvements held for
investment (185,615) (507,369) (244,042)
Decrease (increase)
in restricted cash 90,817 77,436 (81,261)
Decrease (increase) in
other assets - 21,013 (20,828)
(Decrease) increase
in accrued interest
payable to affiliate (294,772) (399,772) 40,228
(Decrease) increase
in accrued property taxes (1,783) 780 (25,586)
Increase in other
accrued expenses 19,368 34,802 10,900
------- ------- --------
Net cash provided by/
(used in) operating
activities 37,963 (116,729) 126,595
------- ------- --------
Net change in cash and
cash equivalents 37,963 (116,729) 126,595
Cash and cash equivalents
at beginning of year 142,345 259,074 132,479
Cash and cash equivalents
at end of year $ 180,308 142,345 259,074
Supplemental Disclosures of
Cash Flow Information:
Cash paid during the year
for interest $ 645,000 750,000 310,000
See accompanying notes to financial statements.
M-5
<PAGE>
HICKORY HILLS, LTD.
(A Limited Partnership)
Notes to Financial Statements
December 31, 1997 and 1996
(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. In the event that the Partnership has
short-term cash deficiencies, the General Partner can defer the
collection of fees for certain related party expenses or grant
interest-free loans from related parties until cash becomes
available.
(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 and
improvements held for investment in accordance with 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". 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, 1997 and
1996, the management of the Partnership has reserved cash
balances of $55,250 and $53,500, 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 230 and 235
acres at December 31, 1997 and 1996, respectively. In
addition, the Partnership owns one tract of land developed
into residential lots with 7 and 24 lots remaining at
December 31, 1997 and 1996, 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.
M-6
<PAGE>
HICKORY HILLS, LTD.
(A Limited Partnership)
Notes to Financial Statements
(1) Summary of Significant Accounting Policies (continued)
Land improvement costs include development costs expended
subsequent to the acquisition of a tract.
The Partnership adopted the provisions of 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
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.
M-7<PAGE>
HICKORY HILLS, LTD.
(A Limited Partnership)
Notes to Financial Statements
(1) Summary of Significant Accounting Policies (continued)
(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 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
M-8
<PAGE>
HICKORY HILLS, LTD.
(A Limited Partnership)
Notes to Financial Statements
(1) Summary of Significant Accounting Policies (continued)
an amount equal to their adjusted capital contributions,
and then 73% to the limited partners and 27% to the
general partner.
Cumulative unpaid preferred returns are $2,214,000 and $1,998,000
at December 31, 1997 and 1996, respectively.
(h) Reclassifications
Certain prior year amounts have been reclassified to conform
with the current year presentation.
(2) Restricted Cash
At December 31, 1997 and 1996, the Partnership has
restricted cash balances of $167,859 and $258,676,
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 Partnership. Affiliates of the
general partner receive fees and commissions for performing
certain services. Expenses incurred for these services
during 1997, 1996, and 1995 are as follows:
1997 1996 1995
Accounting fees $ 2,100 2,100 1,500
Property management fee 3,000 3,000 3,000
Engineering fees 9,025 24,765 -
Real estate commissions 42,034 37,290 23,694
Interest expense $350,228 350,228 350,228
(4) Land and Improvements Held for Investment
The components of land and improvements held for investment
at December 31, are as follows:
1997 1996
Land $1,180,334 1,538,626
Land Improvements 891,433 935,213
--------- ----------
$2,071,767 2,473,839
The aggregate cost of land and improvements held for
investment for Federal income tax purposes was $2,850,629
and $ 3,378,273 at December 31, 1997 and 1996, respectively.
M-9
<PAGE>
HICKORY HILLS, LTD.
(A Limited Partnership)
Notes to Financial Statements
(5) Note Payable to Affiliate
The note payable to affiliate represents a $3,454,300 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. The note
maturity date was extended by one year to December 1998.
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, 1998.
During 1997 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 $1,866,516 and $1,591,304 at
December 31, 1997 and 1996, respectively. The 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 not 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
$25,500, in May 1998 and will increase $2,000 annually
thereafter.
M-10
<PAGE>
HICKORY HILLS, LTD.
(A Limited Partnership)
Notes to Financial Statements
(7) Fair Value of Financial Instruments
At December 31, 1997 and 1996, 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 had a note due on December 31,
1997 and was unable to repay the note. The Lender has
extended the due date to December 31, 1998. However, the
General Partner does not expect the Partnership to have
the liquidity to retire the debt in full. The General
Partner plans to negotiate another extension of the loan
term. If an extension is not received and the Partnership
does not repay the Note, the Lender could foreclose and take
the Partnership's assets. The partnership would then be dissolved.
This uncertainty raises substantial doubt about the Partnership's
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 31, 1998 By: /s/Steven D. Ezell
President and Director
DATE: March 31, 1998 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 31, 1998 By: /s/Steven D. Ezell
President and Director
DATE: March 31, 1998 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-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 322,741
<SECURITIES> 0
<RECEIVABLES> 1,833,601
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,156,342
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,156,342
<TOTAL-LIABILITY-AND-EQUITY> 3,156,342
<SALES> 0
<TOTAL-REVENUES> 5,269
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 40,747
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (35,478)
<INCOME-TAX> 0
<INCOME-CONTINUING> (35,478)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (35,478)
<EPS-PRIMARY> (10.06)
<EPS-DILUTED> (10.06)
</TABLE>
