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 August 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 August 31, 1999 (Unaudited) and
February 28, 1999 3
Statements of Operations for the three and six month periods
ended August 31, 1999 and 1998 (Unaudited) 4
Statements of Cash Flows for the six months
ended August 31, 1999 and 1998 (Unaudited) 5
Notes to Financial Statements as of August 31, 1999 (Unaudited) 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations9
Item 3. Quantitative and Qualitative Disclosure about Market Risk 10
2
<PAGE>
WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
BALANCE SHEETS
August 31, 1999
(Unaudited) February 28, 1999
----------- -----------------
ASSETS
Cash and cash equivalents $ 1,134,190 $ 663,495
Investments in operating partnerships 1,330,494 1,192,736
Note receivable 317,713
Accrued interest receivable 140,083
----------- -----------
$ 2,464,684 $ 2,314,027
=========== ===========
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities
Other liabilities $ 5,000 $ 10,000
Due to related parties 177,397 169,201
----------- -----------
182,397 179,201
----------- -----------
Partners' equity (deficit)
Limited partners 2,425,773 2,279,787
General partner (143,486) (144,961)
----------- -----------
2,282,287 2,134,826
----------- -----------
$ 2,464,684 $ 2,314,027
=========== ===========
See notes to financial statements.
3
<PAGE>
WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Six Months Three Months Six Months
Ended Ended Ended Ended
August 31, 1999 August 31, 1999 August 31, 1998 August 31, 1998
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
REVENUES
Interest $ 13,650 $ 24,015 $ 14,185 $ 28,278
EXPENSES
Operating 7,300 14,312 15,919 23,588
--------- --------- --------- ---------
Income (loss) from operations 6,350 9,703 (1,734) 4,690
Equity in income (loss) of
operating partnerships 51,587 137,758 (56,277) (175,329)
--------- --------- --------- ---------
NET EARNINGS (LOSS) $ 57,937 $ 147,461 $ (58,011) $(170,639)
========= ========= ========= =========
NET EARNINGS (LOSS) PER UNIT
OF LIMITED PARTNERSHIP
INTEREST $ 71.69 $ 182.48 $ (71.79) $ (211.17)
========= ========= ========= =========
</TABLE>
See notes to financial statements.
4
<PAGE>
WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED AUGUST 31, 1999 AND 1998
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss) $ 147,461 $ (170,639)
Adjustments to reconcile net earnings (loss) to
net cash provided by operating activities
Equity in loss (income) of operating partnerships (137,758) 175,329
Decrease (increase) in accrued interest receivable 140,083 (10,440)
Decrease in other liabilities (5,000)
Increase in due to related parties 8,196 7,500
----------- -----------
Net cash provided by operating activities 152,982 1,750
----------- -----------
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 470,695 1,750
Cash and cash equivalents at beginning of period 663,495 649,233
----------- -----------
Cash and cash equivalents at end of period $ 1,134,190 $ 650,983
=========== ===========
</TABLE>
See notes to financial statements.
5
<PAGE>
WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
NOTES TO FINANCIAL STATEMENTS
AUGUST 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 six months ended August 31, 1999 are
not necessarily indicative of the results to be expected for the entire
year.
2. The investments in Operating Partnerships as of August 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
six months ended August 31, 1999 137,758
-------------
Balance, August 31, 1999 $ 1,330,494
=============
6
<PAGE>
WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
NOTES TO FINANCIAL STATEMENTS - continued
AUGUST 31, 1999
(Unaudited)
Note 2 - Continued
The combined balance sheets of the Operating Partnerships as of June
30, 1999 and December 31, 1998 are as follows:
<TABLE>
<CAPTION>
June 30, 1999
(Unaudited) December 31, 1998
----------- -----------------
<S> <C> <C>
ASSETS
Land $ 1,150,473 $ 1,150,473
Buildings and equipment (net of accumulated depreciation
of $13,164,104 and 12,497,566, respectively) 39,736,454 40,402,992
Cash and cash equivalents 1,478,346 1,951,002
Deferred costs 471,729 493,546
Mortgage escrow deposits 1,114,310 1,134,739
Tenant security deposits 725,172 725,172
Other assets 119,367 36,594
----------- -----------
$44,795,851 $45,894,518
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Liabilities
Mortgages payable $26,388,332 $26,522,146
Notes payable 317,713
Accounts payable and accrued expenses 142,381 676,712
Accrued interest 132,298 269,139
Tenant security deposits payable 725,172 725,172
Due to general partner and affiliates 1,852,611 2,028,955
----------- -----------
29,240,794 30,539,837
----------- -----------
Partners' equity
Wilder Richman Historic Properties II, L.P. 1,330,494 1,192,736
General partner 14,224,563 14,161,945
----------- -----------
15,555,057 15,354,681
----------- -----------
$44,795,851 $45,894,518
=========== ===========
</TABLE>
7
<PAGE>
WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
NOTES TO FINANCIAL STATEMENTS - continued
AUGUST 31, 1999
(Unaudited)
Note 2 - Continued
The unaudited statements of the operations of the Operating
Partnerships for the six months ended June 30, 1999 and 1998 are as
follows:
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Revenue
Rent $ 3,244,944 $ 3,031,089
----------- -----------
3,244,944 3,031,089
----------- -----------
Expenses
Administrative 278,794 311,779
Operating 1,069,067 1,272,335
Management fees 95,011 90,071
Interest 913,341 927,076
Depreciation and amortization 688,355 684,852
----------- -----------
3,044,568 3,286,113
----------- -----------
Net EARNINGS (loss) $ 200,376 $ (255,024)
=========== ===========
Net EARNINGS (loss) allocated to
Wilder Richman Historic Properties II, L.P. $ 137,758 $ (175,329)
General partner 62,618 (79,695)
----------- -----------
$ 200,376 $ (255,024)
=========== ===========
</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 August 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 six months ended June 30, 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 first fiscal quarter of the current year.
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 June 30, 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 $807,000.
Although the Property is reporting cash flow for the six months ended June 30,
1999 (see Results From Operations, below), the Operating Partnerships' cash and
cash equivalents as of June 30, 1999 have decreased by approximately $473,000
compared to December 31, 1998, due to the payment of the advance and accrued
interest thereon by the Operating Partnerships (of approximately $460,000), the
payment of accrued management fees (of approximately $226,000) and the payment
associated with the accrued litigation settlement (see the annual report dated
February 28, 1999). The replacement reserve has increased by approximately
$45,000 and accounts payable and accrued expenses decreased by approximately
$34,000.
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 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.
9
<PAGE>
WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
Item 2 Management's Discussion and Analysis of Financial Conditions and
Results of Operations
Results of Operations
For the six months ended August 31, 1999, the statement of operations of the
Partnership reflects net earnings of $147,461, which includes equity in income
of operating partnerships of $137,758. Nonrecognition of income of the
Partnership's investment in Dixon Mills Phase I during the six months ended
August 31, 1999 was approximately $61,000 in accordance with the equity method
of accounting. The Operating Partnerships reported net earnings during the six
months ended June 30, 1999 of $200,376, inclusive of depreciation and
amortization of $688,355. The Operating Partnerships generated cash flow after
required debt service payments and required replacement reserve deposits during
the six months ended June 30, 1999 of approximately $717,000, which includes
principal amortization under the mortgages (approximately $134,000) and deposits
to required escrows (approximately $38,000). The Operating Partnerships did not
utilize any replacement reserves during the six months ended June 30, 1999.
For the six months ended August 31, 1998, the statement of operations of the
Partnership reflects a net loss of $170,639, which includes equity in loss of
operating partnerships of $175,329. Nonrecognition of losses of the
Partnership's investment in Dixon Mills Phase I during the six months ended
August 31, 1998 was approximately $78,000 in accordance with the equity method
of accounting. The Operating Partnerships reported a net loss during the six
months ended June 30, 1998 of $255,024, inclusive of depreciation and
amortization of $684,852. Despite expenditures incurred in connection with
planned improvements, the Operating Partnerships generated cash flow of
approximately $83,000 after required debt service payments and required
replacement reserve deposits during the six months ended June 30, 1998, which
includes principal amortization under the mortgages (approximately $125,000) and
deposits to required escrows (approximately $45,000). The Operating Partnerships
did not utilize any replacement reserves during the six months ended June 30,
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 six months ended June 30,
1999 and 1998 was approximately 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.
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 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.
10
<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
11
<PAGE>
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: December 29, 1999 /s/ Richard Paul Richman
--------------------------------------
Richard Paul Richman
President and Chief Executive Officer
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This article contains summary information extracted from the six months ended
August 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> 6-MOS
<FISCAL-YEAR-END> FEB-28-2000
<PERIOD-START> MAR-01-1999
<PERIOD-END> AUG-31-1999
<EXCHANGE-RATE> 1.00
<CASH> 1,134,190
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,464,684
<CURRENT-LIABILITIES> 182,397
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,282,287
<TOTAL-LIABILITY-AND-EQUITY> 2,464,684
<SALES> 0
<TOTAL-REVENUES> 24,015
<CGS> 0
<TOTAL-COSTS> 14,312
<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> 147,461
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>