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 May 31, 1999
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 |_|
<PAGE>
WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
Part I - Financial Information
Table of Contents
Item 1. Financial Statements Page
----
Balance Sheets as of May 31, 1999 (Unaudited) and
February 28, 1999 3
Statements of Operations for the three months
ended May 31, 1999 and 1998 (Unaudited) 4
Statements of Cash Flows for the three months
ended May 31, 1999 and 1998 (Unaudited) 5
Notes to Financial Statements as of May 31, 1999 (Unaudited) 6
Item 2. Management's Discussion and Analysis of Financial
and Results of Operations 9
Item 3. Quantitative and Qualitative Disclosure about Market Risk 11
<PAGE>
WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
BALANCE SHEETS
May 31, 1999
(Unaudited) February 28, 1999
ASSETS
Cash and cash equivalents $ 1,129,090 $ 663,495
Investments in operating partnerships 1,278,907 1,192,736
Note receivable 317,713
Accrued interest receivable 140,083
$ 2,407,997 $ 2,314,027
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Liabilities
Other liabilities $ 10,000 $ 10,000
Due to related parties 173,647 169,201
----------- -----------
183,647 179,201
----------- -----------
Partners' equity (deficit)
Limited partners 2,368,416 2,279,787
General partner (144,066) (144,961)
----------- -----------
2,224,350 2,134,826
----------- -----------
$ 2,407,997 $ 2,314,027
=========== ===========
See notes to financial statements.
3
<PAGE>
WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MAY 31, 1999 AND 1998
(Unaudited)
1999 1998
--------- ---------
Revenue
Interest $ 10,365 $ 14,093
Expenses
Operating 7,012 7,669
--------- ---------
Income from operations 3,353 6,424
Equity in income (loss) of operating partnerships 86,171 (119,052)
--------- ---------
Net EARNINGS (loss) $ 89,524 $(112,628)
========= =========
Net EARNINGS (loss) per unit of limited
partnership interest
(800 units of limited partnership) $ 110.79 $ (139.38)
========= =========
See notes to financial statements.
4
<PAGE>
WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MAY 31, 1999 AND 1998
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss) $ 89,524 $ (112,628)
Adjustments to reconcile net earnings (loss) to
net cash provided by operating activities
Equity in loss (income) of operating partnerships (86,171) 119,052
Decrease (increase) in accrued interest receivable 140,083 (5,163)
Increase in due to related parties 4,446 3,750
----------- -----------
Net cash provided by operating activities 147,882 5,011
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Receipt on note receivable 317,713
Net cash provided by investing activities 317,713
-----------
Net increase in cash and cash equivalents 465,595 5,011
Cash and cash equivalents at beginning of period 663,495 649,233
----------- -----------
Cash and cash equivalents at end of period $ 1,129,090 $ 654,244
=========== ===========
</TABLE>
See notes to financial statements.
5
<PAGE>
WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1999
(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, 1999 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 three months ended May 31, 1999 are not
necessarily indicative of the results to be expected for the entire year.
2. The investments in Operating Partnerships as of May 31, 1999 and February
28, 1999 are as follows:
Amount paid to investee through February 28, 1999 $ 16,388,000
Accumulated cash distributions from Operating Partnerships
through February 28, 1999 (3,180,441)
Equity in accumulated loss of Operating Partnerships
through February 28, 1999 (12,014,823)
-------------
Balance, February 28, 1999 1,192,736
Equity in income of operating partnerships for
the three months ended May 31, 1999 86,171
-------------
Balance, May 31, 1999 $ 1,278,907
=============
6
<PAGE>
WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
NOTES TO FINANCIAL STATEMENTS - continued
MAY 31, 1999
(Unaudited)
Note 2 - continued
The combined balance sheets of the Operating Partnerships as of March 31,
1999 and December 31, 1998 are as follows:
<TABLE>
<CAPTION>
March 31, 1999
(Unaudited) December 31, 1998
<S> <C> <C>
ASSETS
Land $ 1,150,473 $ 1,150,473
Buildings and equipment (net of accumulated depreciation
of $12,830,835 and 12,497,566, respectively) 40,069,723 40,402,992
Cash and cash equivalents 1,568,109 1,951,002
Deferred costs 482,637 493,546
Mortgage escrow deposits 1,099,937 1,134,739
Tenant security deposits 725,172 725,172
Other assets 119,835 36,594
----------- -----------
$45,215,886 $45,894,518
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Liabilities
Mortgages payable $26,455,739 $26,522,146
Notes payable 317,713
Accounts payable and accrued expenses 620,267 676,712
Accrued interest 132,298 269,139
Tenant security deposits payable 725,172 725,172
Due to general partner and affiliates 1,802,389 2,028,955
----------- -----------
29,735,865 30,539,837
----------- -----------
Partners' equity
Wilder Richman Historic Properties II, L.P. 1,278,907 1,192,736
General partner 14,201,114 14,161,945
----------- -----------
15,480,021 15,354,681
----------- -----------
$45,215,886 $45,894,518
=========== ===========
</TABLE>
7
<PAGE>
WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
NOTES TO FINANCIAL STATEMENTS - continued
MAY 31, 1999
(Unaudited)
Note 2 - Continued
The unaudited statements of the operations of the Operating
Partnerships for the three months ended March 31, 1999 and 1998 are as
follows:
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Revenue
Rent $ 1,605,824 $ 1,494,786
----------- -----------
1,605,824 1,494,786
----------- -----------
Expenses
Administrative 134,782 160,305
Operating 494,511 656,782
Management fees 47,236 44,432
Interest 459,777 464,007
Depreciation and amortization 344,178 342,427
----------- -----------
1,480,484 1,667,953
----------- -----------
Net EARNINGS (loss) $ 125,340 $ (173,167)
=========== ===========
Net EARNINGS (loss) allocated to
Wilder Richman Historic Properties II, L.P. $ 86,171 $ (119,052)
General partner 39,169 (54,115)
----------- -----------
$ 125,340 $ (173,167)
=========== ===========
</TABLE>
3. Additional information, including the audited February 28, 1999
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, 1999 on file with the Securities
and Exchange Commission.
8
<PAGE>
WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
Item 2 Management's Discussion and Analysis of Financial Conditions
and Results of Operations
Liquidity and Capital Resources
As of May 31, 1999, Wilder Richman Historic Properties II, L.P. (the
"Partnership") experienced few changes in its financial condition as
compared to February 28, 1999, with the exception of the investment in
the Operating Partnerships resulting from the equity in income of
operating partnerships for the three months ended March 31, 1999 and the
repayment of the note receivable from the Operating Partnerships. 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) and approximately $460,000 (which represents the payment
of the outstanding advance owed to the Partnership by the Operating
Partnerships of $317,713) and accrued interest thereon (of approximately
$142,000) which was repaid during the three months ended May 31, 1999.
Pursuant to the Partnership Agreement, such funds may be held or
utilized for other Partnership purposes in the discretion of the General
Partner. The General Partner is planning to make a distribution to
Limited Partners of record as of December 31, 1999 of approximately
$964,000 ($1,205 per Unit) in the first quarter of 2000.
Because the outstanding advance owed to the Partnership was repaid, the
Operating Partnerships are no longer subject to restrictions concerning
cash flow distributions and the payment of certain fees to affiliates.
To the extent cash flow is generated by the Operating Partnerships, such
cash flow may be retained by the Operating Partnerships or may be
distributed at the discretion of management, pursuant to the terms of
the limited partnership agreements of the Operating Partnerships. To the
extent there are proceeds from a future sale or refinancing of the
Complex, the Partnership will receive 100% of any such proceeds
available for distribution until the 7% cumulative preferred
distribution has been achieved. Through December 1998, the cumulative
preferred distribution is approximately $10,813,000. Although recent
rental market conditions have been strong, management has been building
up its cash balance to protect against potential adverse changes in
market conditions and unanticipated expenses. In addition, because the
property has been in operation for approximately ten years, management
is addressing the potential need for extensive capital improvements that
may be necessary in the near future. The General Partner and the
Operating General Partner are contemplating the economic benefits of a
refinancing of the Property in order to enhance cash flow. Until such
time as the Property is refinanced at a lower annual debt service, the
Partnership does not anticipate making annual cash flow distributions to
Limited Partners (except as discussed below). If a refinancing is
ultimately achieved, the resumption of cash flow distributions will be
assessed on an ongoing basis, based on the results of operations, the
physical condition of the property and the local market conditions,
among other things. As of March 31, 1999, the Operating Partnerships'
balance in the replacement reserves account, which is controlled by the
Lender to be used for certain repairs or capital improvements, was
approximately $788,000.
Although the Property is reporting cash flow for the three months ended
March 31, 1999 (see Results From Operations, below), the Operating
Partnerships' cash and cash equivalents as of March 31, 1999 have
decreased by approximately $383,000 compared to December 31, 1998 due to
the payment of the advance and accrued interest thereon by the Operating
Partnerships (of approximately $460,000) and the payment of accrued
management fees (of approximately $226,000). The replacement reserve has
increased by approximately $19,000 and accounts payable and accrued
expenses decreased by approximately $68,000.
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 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
9
<PAGE>
WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
Item 2 Management's Discussion and Analysis of Financial Conditions
and Results of Operations
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.
Results of Operations
For the three months ended May 31, 1999, the statement of operations of
the Partnership reflects net earnings of $89,524, which includes equity
in income of operating partnerships of $86,171. Nonrecognition of income
of the Partnership's investment in Dixon Mills Phase I during the three
months ended May 31, 1999 was approximately $38,000 in accordance with
the equity method of accounting. The Operating Partnerships reported net
earnings during the three months ended March 31, 1999 of $125,340,
inclusive of depreciation and amortization of $344,178. The Operating
Partnerships generated cash flow after required debt service payments
and required replacement reserve deposits during the three months ended
March 31, 1999 of approximately $382,000, which includes principal
amortization under the mortgages (approximately $66,000) and deposits to
required escrows (approximately $22,000) . The Operating Partnerships
did not utilize any replacement reserves during the three months ended
March 31, 1999.
For the three months ended May 31, 1998, the statement of operations of
the Partnership reflects a net loss of $112,628, which includes equity
in loss of operating partnerships of $119,052. Nonrecognition of losses
of the Partnership's investment in Dixon Mills Phase I during the three
months ended May 31, 1998 was approximately $52,000 in accordance with
the equity method of accounting. The Operating Partnerships reported a
net loss during the three months ended March 31, 1998 of $173,167,
inclusive of depreciation and amortization of $342,427. Due to planned
improvements, the Operating Partnerships operated at a minor deficit
after required debt service payments and required replacement reserve
deposits during the three months ended March 31, 1998 of approximately
$20,000, which includes principal amortization under the mortgages
(approximately $62,000) and deposits to required escrows (approximately
$22,000). The Operating Partnerships did not utilize any replacement
reserves during the three months ended March 31, 1998.
Although the Operating Partnerships are operating above breakeven,
management is continuing to examine methods to maintain high occupancy
rates while steadily increasing rents and economizing operations. 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 three months ended March 31, 1999 and 1998 was
approximately 98%. The future operating results of the Complex will be
extremely dependent on competition and market conditions and therefore
may be subject to significant volatility.
Year 2000 Compliance
The inability of computers, software and other equipment utilizing
microprocessors to recognize and properly process data fields containing
a two digit year is commonly referred to as the year 2000 compliance
("Y2K") issue. As the year 2000 approaches, such systems may be unable
to accurately process certain data-based information. Many businesses
may need to upgrade existing systems or purchase new ones to correct the
Y2K issue. Registrant has performed an assessment of its computer
software and hardware and believes it has made the necessary upgrades in
an effort to ensure compliance. However, there can be no assurance that
the systems of other entities on which Registrant relies will be timely
converted. The total cost associated with Y2K
10
<PAGE>
WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
Item 2 Management's Discussion and Analysis of Financial Conditions
and Results of Operations
implementation is not expected to materially impact Registrant's
financial position or results of operations in any given year. However,
there can be no assurance that a failure to convert by Registrant or
another entity would not have a material adverse impact on Registrant.
Item 3 Quantitative and Qualitative Disclosure About Market Risk
Because of the Property's proximity to New York City and the strong
local rental market, there is a significant likelihood that other
multi-family residential complexes will continue to be developed in the
general vicinity of the Property. Such development activity could
adversely affect the Property's ability to maintain its high occupancy
levels or its ability to maintain or increase rents.
11
<PAGE>
WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
Part II - Other Information
Item 1. Legal Proceedings
None
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
12
<PAGE>
Wilder Richman Historic Properties II, L.P.
Form 10-Q
May 31, 1999
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on it behalf by the
undersigned thereunto duly authorized.
WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
By: Wilder Richman Historic Corporation
General Partner
Dated: December 29, 1999 /s/ Richard Paul Richman
--------------------------------------
Richard Paul Richman
President and Chief Executive Officer
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This article contains summary information extracted from the three months ended
May 31, 1999 Form 10-Q 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> 3-MOS
<FISCAL-YEAR-END> FEB-28-2000
<PERIOD-START> MAR-01-1999
<PERIOD-END> MAY-31-1999
<EXCHANGE-RATE> 1.00
<CASH> 1,129,090
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,407,997
<CURRENT-LIABILITIES> 183,647
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,224,350
<TOTAL-LIABILITY-AND-EQUITY> 2,407,997
<SALES> 0
<TOTAL-REVENUES> 10,365
<CGS> 0
<TOTAL-COSTS> 7,012
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 89,524
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
