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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, 1998
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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<CAPTION>
WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
Part I - Financial Information
Table of Contents
Item 1. Financial Statements Page
<S> <C>
Balance Sheets as of November 30, 1998 (Unaudited)
and February 28, 1998 3
Statements of Operations for the three and nine month periods
ended November 30, 1998 and 1997 (Unaudited) 4
Statements of Cash Flows for the nine months
ended November 30, 1998 and 1997 (Unaudited) 5
Notes to Financial Statements as of November 30,
1998 (Unaudited) 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 9
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<TABLE>
<CAPTION>
WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
BALANCE SHEETS
November 30, 1998
(Unaudited) February 28, 1998
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 657,976 $ 649,233
Investment in operating partnerships 1,489,848 1,700,882
Note receivable 317,713 317,713
Accrued interest receivable 134,921 119,260
-------------- -------------
$ 2,600,458 $ 2,787,088
=========== ===========
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities
Other liabilities $ 10,000 $ 10,000
Due to related parties 165,451 154,201
------------- -----------
175,451 164,201
------------- -----------
Partners' equity (deficit)
Limited partners 2,567,066 2,762,967
General partner (142,059) (140,080)
------------- ------------
2,425,007 2,622,887
$ 2,600,458 $ 2,787,088
=========== ===========
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See notes to financial statements.
3
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<TABLE>
<CAPTION>
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,
1998 1998 1997 1997
-------------- -------------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES
Interest $ 13,701 $ 41,979 $ 13,842 $ 41,397
EXPENSES
Operating 5,237 28,825 4,905 21,831
------------- ------------ -------------- --------
Income from operations 8,464 13,154 8,937 19,566
Equity in loss of
operating partnerships (35,705) (211,034) (49,154) (198,508)
----------------- -------------- -------------- ------------
NET LOSS $ (27,241) $ (197,880)$ (40,217)$ (178,942)
================ ============= ============= =============
NET LOSS PER UNIT OF
LIMITED PARTNERSHIP
INTEREST $ (33.71 $ (244.88)$ ( 49.77) $ (221.44)
================= =============== ============= ==============
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See notes to financial statements.
4
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<TABLE>
<CAPTION>
WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED NOVEMBER 30, 1998 AND 1997
(Unaudited)
1998 1997
---------------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (197,880) $ (178,942)
Adjustments to reconcile net loss to
net cash provided by operating activities
Equity in loss of operating partnerships 211,034 198,508
Increase in accrued interest receivable (15,661) (15,661)
Decrease in other liabilities (2,875)
Increase in due to related parties 11,250 11,250
--------------- --------------
Net cash provided by operating activities 8,743 12,280
---------------- --------------
Net increase in cash and cash equivalents 8,743 12,280
Cash and cash equivalents at beginning
of period 649,233 629,975
-------------- --------------
Cash and cash equivalents at end of period $ 657,976 $ 642,255
============= =============
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See notes to financial statements.
5
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<TABLE>
<CAPTION>
WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1998
(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, 1998 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, 1998 are
not necessarily indicative of the results to be expected for the entire
year.
2. The investment in Operating Partnerships as of November 30, 1998 and
February 28, 1998 is as follows:
<S> <C>
Amount paid to investee through February 28, 1998 $ 16,388,000
Accumulated cash distributions received from
Operating Partnerships through February 28, 1998 (3,180,441)
Equity in accumulated loss of Operating Partnerships
through February 28, 1998 (11,506,677)
Balance, February 28, 1998 1,700,882
Equity in loss of Operating Partnerships for the nine months
ended November 30, 1998 (211,034)
Balance, November 30, 1998 $ 1,489,848
==============
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6
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<CAPTION>
WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
NOTES TO FINANCIAL STATEMENTS - continued
NOVEMBER 30, 1998
(Unaudited)
2. (Continued)
The combined balance sheets of the Operating Partnerships as of September
30, 1998 and December 31, 1997 are as follows:
September 30,
1998 December 31,
(Unaudited) 1997
ASSETS
<S> <C> <C>
Land $ 1,150,473 $ 1,150,473
Buildings and equipment (net of
accumulated depreciation
of $12,159,043 and 11,164,490) 40,642,218 41,475,474
Cash and cash equivalents 1,553,658 1,159,863
Tenant accounts receivable 37,070
Deferred costs 504,454 537,180
Mortgage escrow deposits 919,928 1,067,734
Tenant security deposits 669,685 669,685
Prepaid expenses and other assets 231,001 34,043
---------- --------------
$ 45,708,487 $ 46,094,452
============ ============
LIABILITIES AND PARTNERS' EQUITY
Liabilities
Mortgages payable $ 26,587,448 $ 26,776,894
Notes payable 317,713 317,713
Accounts payable and accrued expenses 97,702 137,084
Accrued interest 265,396 249,734
Tenant security deposits payable 669,685 669,685
Due to general partner and affiliates 1,974,509 1,840,349
29,912,453 29,991,459
Partners' equity
Wilder Richman Historic Properties
II, L.P. 1,489,848 1,700,882
General partner 14,306,186 14,402,111
-------------- --------------
15,796,034 16,102,993
$ 45,708,487 $ 46,094,452
</TABLE>
7
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<TABLE>
<CAPTION>
WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
NOTES TO FINANCIAL STATEMENTS - continued
NOVEMBER 30, 1998
(Unaudited)
2. (Continued)
The unaudited statements of operations of the Operating Partnerships for
the nine months ended September 30, 1998 and 1997 are as follows:
1998 1997
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<S> <C> <C>
REVENUE
Rent $ 4,586,629 $ 4,370,722
----------- -----------
4,586,629 4,370,722
------------- ------------
EXPENSES
Administrative 520,572 463,496
Operating 1,820,851 1,636,732
Management fees 135,967 130,618
Interest 1,421,745 1,401,335
Depreciation and amortization 994,453 1,027,279
------------- ------------
4,893,588 4,659,460
------------ ------------
NET LOSS $ (306,959) $ (288,738)
=========== ===========
NET LOSS ALLOCATED TO
Wilder Richman Historic
Properties II, L.P. $ (211,034) $ (198,508)
General Partner (95,925) (90,230)
------------- ---------------
$ (306,959) $ (288,738)
=========== ===========
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3. Additional information, including the audited February 28, 1998 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, 1998 on file with the Securities
and Exchange Commission.
8
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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, 1998, Wilder Richman Historic Properties II, L.P. (the
"Partnership") experienced few changes in its financial condition as
compared to February 28, 1998, with the exception of the investment in the
Operating Partnerships resulting from the equity in loss of Operating
Partnerships for the nine months ended September 30, 1998. 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.
In addition, 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, 1998, the Partnership accrued interest of $15,661 on such advance and
has accrued aggregate interest on such advance of $134,921 as of November
30, 1998. The General Partner is reviewing the prospect of having the
Operating Partnerships repay the loan and making a distribution to the
limited partners.
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. 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 $759,000 of September 30, 1998. The
Operating Partnerships are required to deposit $5,400 per month into the
replacement reserve.
Despite the implementation of planned improvements of approximately
$300,000 (of which approximately $187,000 was capitalized), the Operating
Partnerships' liquidity as of September 30, 1998 has improved compared to
December 31, 1997, as cash and cash equivalents have increased by
approximately $394,000 and the replacement reserve has increased by
approximately $65,000. In addition, accounts payable and accrued expenses
decreased by approximately $57,000 while due to general partner and
affiliates increased by approximately $134,000 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 Partnerships 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 Partnerships 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 Operating 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, 1998, the statement of operations
of the Partnership reflects a net loss of $197,880 which includes equity
in loss of Operating Partnerships of $211,034. Nonrecognition of losses of
the Partnership's investment in Dixon Mills Phase I during the nine months
ended November 30, 1998 was approximately $94,000 in accordance with the
equity method of accounting. The Operating Partnerships reported a net
loss during the nine months ended September 30, 1998 of $306,959,
inclusive of depreciation and amortization of $994,453. Despite
expenditures incurred in connection with the planned improvements
discussed above, the Operating Partnerships generated cash flow of
approximately $379,000 after required debt service payments and required
replacement reserve deposits during the nine months ended September 30,
1998,
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
which includes principal amortization under the mortgages (approximately
$189,000) and deposits to required escrows and interest thereon
(approximately $65,000), and excludes accrued fees to affiliates of the
Operating General Partner (approximately $117,000) 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, 1998.
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 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.
Although the Operating Partnerships are operating above breakeven,
management is continuing to examine methods to maintain high occupancy
rates while steadily increasing rents and economize operating expenses.
There has been ongoing new construction of luxury multi-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. Although the Complex as not been adversely impacted by the
new competition, it cannot be readily 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 continue 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, 1998 and 1997 was approximately 98% for each period. 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 15, 1999 /s/Richard PaulRichman
---------------------------------
Richard Paul Richman
President and Chief Executive Officer
12
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<ARTICLE> 5
<LEGEND>
This article contains summary information extracted for the nine months
ended November 30, 1998 Form 10-Q Balance Sheet and
Statement of Operations as of November 30, 1998 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000827830
<NAME> Neal Ludeke
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 9-mos
<FISCAL-YEAR-END> FEB-28-1999
<PERIOD-START> MAR-01-1998
<PERIOD-END> NOV-30-1998
<EXCHANGE-RATE> 1.00
<CASH> 657,976
<SECURITIES> 0
<RECEIVABLES> 452,634
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,600,458
<CURRENT-LIABILITIES> 175,451
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,425,007
<TOTAL-LIABILITY-AND-EQUITY> 2,600,458
<SALES> 0
<TOTAL-REVENUES> 41,979
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 239,859
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (197,880)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (197,880)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
