SECURITIES AND EXCHANGE COMMISSION
Washington, DC
-------------------------
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- - -----
EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
Commission file number 0-17793
Wilder Richman Historic Properties II, L.P.
(Exact name of Registrant as specified in its charter)
Delaware 13-3481443
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
599 W. Putnam Avenue
Greenwich, Connecticut 06830
(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code: (203) 869-0900
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 filing requirements
for the past 90 days.
Yes X No
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WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
Part I - Financial Information
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Table of Contents
Item 1. Financial Statements Page
Balance Sheets as of November 30, 1997 (Unaudited)
and February 28, 1997 3
Statements of Operations for the three and nine
month periods ended November 30, 1997 and 1996 (Unaudited) 4
Statements of Cash Flows for the nine months ended November
30, 1997 and 1996 (Unaudited) 5
Notes to Financial Statements as of November 30, 1997
(Unaudited) 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
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WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
BALANCE SHEETS
November 30, 1997
(Unaudited) February 28, 1997
ASSETS
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Cash and cash equivalents $ 642,255 $ 629,975
Investment in operating partnerships 1,861,249 2,059,757
Note receivable 317,713 317,713
Accrued interest receivable 114,097 98,436
-------------- --------------
$ 2,935,314 $ 3,105,881
=========== ===========
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities
Other liabilities $ 7,125 $ 10,000
Due to related parties 150,451 139,201
------------- -----------
157,576 149,201
------------- -----------
Partners' equity (deficit)
Limited partners 2,916,270 3,093,422
General partner (138,532) (136,742)
------------- ------------
2,777,738 2,956,680
$ 2,935,314 $ 3,105,881
=========== ===========
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See notes to financial statements.
3
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WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Nine Months Three Months Nine Months
Ended Ended Ended Ended
November 30, November 30, November 30, November 30,
1997 1997 1996 1996
------------ ------------- ----------- ------------
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REVENUES
Interest $ 13,842 $ 41,397 $ 10,451 $ 34,994
EXPENSES
Operating 4,905 21,831 4,528 25,616
----------- ------------- ---------- -------
Income from operations 8,937 19,566 5,923 9,378
Equity in loss of operating
partnerships (49,154) (198,508) (152,547) (601,005)
----------------- ---------------- ------------- --------------
NET LOSS $ (40,217) $ (178,942) $ (146,624) $ (591,627)
================ =============== ============ =============
NET LOSS PER UNIT OF
LIMITED PARTNERSHIP
INTEREST $ (49.77)$ (221.44)$ (181.45) $ (732.14)
============== ============ =========== ============
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See notes to financial statements.
4
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WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED NOVEMBER 30, 1997 AND 1996
(Unaudited)
1997 1996
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CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (178,942) $ (591,627)
Adjustments to reconcile net loss to
net cash provided by operating activities
Equity in loss of operating partnerships 198,508 601,005
Increase in accrued interest receivable (15,661) (15,775)
Decrease in other liabilities (2,875)
Increase in due to related parties 11,250 11,250
--------------- --------------
Net cash provided by operating activities 12,280 4,853
--------------- ---------------
Net increase in cash and cash equivalents 12,280 4,853
Cash and cash equivalents at beginning of period 629,975 615,815
-------------- --------------
Cash and cash equivalents at end of period $ 642,255 $ 620,668
============= =============
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See notes to financial statements.
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WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1997
(Unaudited)
1. The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information. They do not include all information and
footnotes required by generally accepted accounting principles for
complete financial statements. The results of operations are impacted
significantly by the results of operations of the Operating
Partnerships, which are provided on an unaudited basis during interim
periods. Accordingly, the accompanying financial statements are
dependent on such unaudited information. In the opinion of the General
Partner, the financial statements include all adjustments necessary to
reflect fairly the results of the interim periods presented. All
adjustments are of a normal recurring nature. No significant events
have occurred subsequent to February 28, 1997 and no material
contingencies exist which would require additional disclosures in the
report under Regulation S-X, Rule 10-01 paragraph A-5.
The results of operations for the nine months ended November 30, 1997 are
not necessarily indicative of the results to be expected for the entire
year.
2. The investment in Operating Partnerships as of November 30, 1997 and
February 28, 1997 is as follows:
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Amount paid to investee through February 28, 1997 $ 16,388,000
Accumulated cash distributions received from Operating
Partnerships through February 28, 1997 (3,180,441)
Equity in accumulated loss of Operating Partnerships
through February 28, 1997 (11,147,802)
Balance, February 28, 1997 2,059,757
Equity in loss of Operating Partnerships for the nine months
ended November 30, 1997 (198,508)
Balance, November 30, 1997 $ 1,861,249
==============
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WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
NOTES TO FINANCIAL STATEMENTS - continued
NOVEMBER 30, 1997
(Unaudited)
2. (Continued)
The combined balance sheets of the Operating Partnerships as of September
30, 1997 and December 31, 1996 are as follows:
September 30, 1997
(Unaudited) December 31, 1996
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ASSETS
Land $ 1,150,473 $ 1,150,473
Buildings and equipment (net of
accumulated depreciation of
$10,863,926 and 9,869,372) 41,745,200 42,739,754
Cash and cash equivalents 1,033,898 563,084
Tenant accounts receivable 59,911
Deferred costs 548,088 580,814
Mortgage escrow deposits 1,015,323 902,221
Tenant security deposits 630,000 630,000
Other assets 26,542 1,935
-------- -------
$ 46,209,435 $ 46,568,281
============ ============
LIABILITIES AND PARTNERS' EQUITY
Liabilities
Mortgages payable $ 26,837,996 $ 27,015,128
Notes payable 317,713 317,713
Accounts payable and accrued expenses 82,471 118,418
Accrued interest 245,949 230,288
Tenant security deposits payable 630,000 630,000
Due to general partner and affiliates 1,787,876 1,660,566
29,902,005 29,972,113
Partners' equity
Wilder Richman Historic Properties
II, L.P. 1,861,249 2,059,757
General partner 14,446,181 14,536,411
-------------- --------------
16,307,430 16,596,168
$ 46,209,435 $ 46,568,281
============= ============
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WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
NOTES TO FINANCIAL STATEMENTS - continued
NOVEMBER 30, 1997
(Unaudited)
2. (Continued)
The unaudited statements of operations of the Operating Partnerships for
the nine months ended September 30, 1997 and 1996 are as follows:
1997 1996
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REVENUE
Rent $ 4,370,722 $ 4,109,651
----------- -----------
4,370,722 4,109,651
------------ ------------
EXPENSES
Administrative 463,496 485,522
Operating 1,636,732 1,664,699
Management fees 130,618 123,236
Interest 1,401,335 1,415,991
Depreciation and amortization 1,027,279 1,027,279
------------ ------------
4,659,460 4,716,727
------------ ------------
NET LOSS $ (288,738) $ (607,076)
=========== ===========
NET LOSS ALLOCATED TO
Wilder Richman Historic Properties
II, L.P. $ (198,508) $ (601,005)
General Partner (90,230) (6,071)
------------- --------------
$ (288,738) $ (607,076)
=========== ===========
3. Additional information, including the audited February 28, 1997 Financial
Statements and the Summary of Significant Accounting Policies, is included
in the Partnership's Annual Report on Form 10-K for the fiscal year ended
February 28, 1997 on file with the Securities
and Exchange Commission.
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WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
Item 2. Management's Discussion and Analysis of Financial Conditions and
Results of Operations
As of November 30, 1997, Wilder Richman Historic Properties II, L.P. (the
"Partnership") experienced few changes in its financial condition as
compared to February 28, 1997, with the exception of the investment in the
Operating Partnerships resulting from the equity in loss of Operating
Partnerships for the nine months ended November 30, 1997. Cash and cash
equivalents of the Partnership includes approximately $582,000 which was
previously held in an operating deficit escrow established in connection
with the refinancing of the mortgages of the Operating Partnerships.
Pursuant to the Partnership Agreement, such funds may be held or utilized
for other Partnership purposes in the discretion of the General Partner.
Presently, the General Partner intends for the Partnership to continue to
hold such funds. The Partnership's advance to the Operating Partnerships
in the amount of $317,713 in connection with the refinancing of the
mortgages remains outstanding. For the nine months ended November 30,
1997, the Partnership accrued interest of $15,661 on such advance and has
accrued aggregate interest on such advance of $114,097 as of November 30,
1997.
Because of the outstanding advance, the Operating Partnerships are subject
to restrictions concerning cash flow distributions. Cash flow, if any,
generated subsequent to 1995 may be retained by the Operating Partnerships
or may be distributed at the discretion of management. If distributed,
such cash flow distributions must follow the priority of (i) accrued
interest owing to the Partnership, (ii) principal owing to the Partnership
and (iii) thereafter, pursuant to the terms of the limited partnership
agreements of the Operating Partnerships. Although recent rental market
conditions have been strong, management has been accumulating reserves to
protect against potential adverse changes in market conditions and
unanticipated expenses. Accordingly, the Partnership does not anticipate
making significant cash flow distributions in the near future and cannot
determine the extent of cash flow distributions over the long term. In
addition to its cash balances, the Operating Partnerships' balance in the
replacement reserve account, which is controlled by the lender to be used
for certain repairs or capital improvements, was approximately $673,000 as
of September 30, 1997. For 1997, the Operating Partnerships are required
to deposit $16,667 per month into the replacement reserve through June
1997 and $5,400 per month thereafter.
As of September 30, 1997, the Operating Partnerships' liquidity is
improved compared to December 31, 1996, with cash and cash equivalents
having increased by approximately $471,000 and the replacement reserve
having increased by approximately $121,000 while accounts payable and
accrued expenses have decreased by approximately $36,000. However, due to
general partner and affiliates increased by approximately $127,000 due to
the accrual of management fees and investor service fees.
The Partnership's operating results are dependent upon the operating
results of the Operating Partnership and are significantly impacted by the
Operating Partnerships' policies. The Partnership accounts for its
investment in the Operating Partnerships in accordance with the equity
method of accounting, under which the investment is carried at cost and is
adjusted for the Partnership's share of the Operating Partnerships'
results of operations and by any cash distributions received. Equity in
loss of each investment in Operating Partnership allocated to the
Partnership is recognized to the extent of the Partnership's investment
balance in each Operating Partnership. Any equity in loss in excess of the
Partnership's investment balance in an Operating Partnership is allocated
to other partners' capital in any Operating Partnership. As a result, the
equity in loss of investment in Local Partnerships is expected to decrease
as the Partnership's investment balances in the respective Operating
Partnerships become zero. However, the combined statements of operations
of the Operating Partnerships reflected in Note 2 to the Partnership's
financial statements include the operating results of all Operating
Partnerships, regardless of the Partnership's investment balances.
For the nine months ended November 30, 1997, the statement of operations
of the Partnership reflects a net loss of $178,942, which includes equity
in loss of Operating Partnerships of $198,508. Nonrecognition of losses of
the Partnership's investment in Dixon Mills Phase I during the nine months
ended November 30, 1997 was approximately $88,000 in accordance with the
equity method of accounting. The Operating Partnerships reported a net
loss during the nine months ended September 30, 1997 of $288,738,
inclusive of depreciation and
9
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WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
Item 2. Management's Discussion and Analysis of Financial Conditions and
Results of Operations (continued)
amortization of $1,027,279. However, the operating Partnerships generated
cash flow after required debt service payments and required replacement
reserve deposits of approximately $568,000 during the nine months ended
September 30, 1997, which includes principal amortization under the
mortgages (approximately $177,000) and deposits to required escrows
(approximately $121,000), and excludes accrued fees to affiliates of the
Operating General Partner and the General Partner (approximately $112,000)
and accrued interest to the Partnership (approximately $15,000). The
Operating Partnerships did not utilize any replacement reserves during the
nine months ended September 30, 1997.
For the nine months ended November 30, 1996, the statement of operations
of the Partnership reflects a net loss of $591,627, which includes equity
in loss of Operating Partnerships of $601,005. The Operating Partnerships
reported a net loss during the nine months ended September 30, 1996 of
$607,076, inclusive of depreciation and amortization of $663,035. However,
the Operating Partnerships generated cash flow for the nine months ended
September 30, 1996 of approximately $240,000, which includes principal
amortization under the mortgages (approximately $165,000) and deposits to
required escrows (approximately $135,000), and excludes accrued fees to
affiliates of the Operating General Partner and the General Partner
(approximately $104,000) and accrued interest to the Partnership
(approximately $15,000).
Although the Operating Partnerships are operating above breakeven,
management is continuing to examine methods to maintain high occupancy
rates and economize operating expenses. Recently, there has been new
construction of luxury multi-family housing in the vicinity of the Dixon
Mill Complex (the "Complex"). Such housing includes asking rents that are
comparable and higher than rents currently charged by the Complex. It has
not been determined whether such new housing will have a positive or
negative impact on the Complex or its cash flow in the future. The ability
to perform at recent levels will be dependent on the ability to lease
units as lease terms expire on a month to month basis. The average
occupancy for the nine months ended September 30, 1997 and 1996 was
approximately 98% and 98%, respectively. The future operating results of
the Complex will be extremely dependent on competition and market
conditions and therefore may be subject to significant volatility.
10
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WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
Part II - Other Information
Item 1. Legal Proceedings.
As of November 30, 1997, there were no material pending legal
proceedings to which Registrant or any of its affiliates was a
party or to which any of their property was subject except for
the following:
The Operating Partnerships have been named as a third-party defendant in a
lawsuit between The Dixon Venture, the party who sold the Complex to
the Operating Partnerships, and the former owner, Joseph Dixon Crucible
Company, for indemnification for cost clean-up under the Comprehensive
Environmental Response Compensation and Liability Act of 1980. The
Operating General Partner believes that the Operating Partnerships have
no liability or no liability that is not adequately covered by an
indemnification from The Dixon Venture.
A former employee of the Operating Partnerships filed a complaint through
the Equal Employment Opportunity Commission ("EEOC") claiming sexual
harassment. The Operating General Partner has reported that such
claim was dismissed by the EEOC.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
11
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SIGNATURES
Pursuant to the requirements 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.
WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
By:Wilder Richman Historic Corporation
General Partner
Dated: January 14, 1998 /s/ Richard Paul Richman
---------------------------------
Richard Paul Richman
President and Chief Executive
Officer
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<LEGEND>
This schedule contains summary finanical information extracted for the
quarter ended November 30, 1997 Form 10-Q consolidated Balance Sheets and
consolidated Statements of Operations as of November 30, 1997
</LEGEND>
<CIK> 0000827830
<NAME> Wilder Richman Historic Properties II L.P.
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> Feb-28-1998
<PERIOD-START> Mar-1-1997
<PERIOD-END> Nov-30-1997
<EXCHANGE-RATE> 1.00
<CASH> 642,225
<SECURITIES> 0
<RECEIVABLES> 114,097
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,935,314
<CURRENT-LIABILITIES> 157,576
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,777,738
<TOTAL-LIABILITY-AND-EQUITY> 2,935,314
<SALES> 0
<TOTAL-REVENUES> 41,397
<CGS> 0
<TOTAL-COSTS> 21,831
<OTHER-EXPENSES> 198,508
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<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (178,942)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
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