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, 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.
3 Part I - Financial Information
Table of Contents
Item 1. Financial Statements Page
-------------------- ----
Balance Sheets as of November 30, 1999 (Unaudited) and
February 28, 1999 3
Statements of Operations for the three and nine month periods
ended November 30, 1999 and 1998 (Unaudited) 4
Statements of Cash Flows for the nine months
ended November 30, 1999 and 1998 (Unaudited) 5
Notes to Financial Statements as of November 30, 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 11
2
<PAGE>
WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
BALANCE SHEETS
November 30, 1999
(Unaudited) February 28, 1999
----------------- -----------------
ASSETS
Cash and cash equivalents $ 1,148,673 $ 663,495
Investment in operating partnerships 1,334,281 1,192,736
Note receivable 317,713
Accrued interest receivable 140,083
----------- -----------
$ 2,482,954 $ 2,314,027
=========== ===========
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Liabilities
Other liabilities $ 7,500 $ 10,000
Due to related parties 181,147 169,201
----------- -----------
188,647 179,201
----------- -----------
Partners' equity (deficit)
Limited partners 2,437,673 2,279,787
General partner (143,366) (144,961)
----------- -----------
2,294,307 2,134,826
----------- -----------
$ 2,482,954 $ 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 Nine Months Three Months Nine Months
Ended Ended Ended Ended
November 30, November 30, November 30, November 30,
1999 1999 1998 1998
-------------------- ------------------- ------------------- ---------------------
<S> <C> <C> <C> <C>
REVENUES
Interest $ 14,484 $ 38,499 $ 13,701 $ 41,979
EXPENSES
Operating 6,251 20,563 5,237 28,825
------------------ --------------- --------------- ---------------
Income from operations 8,233 17,936 8,464 13,154
Equity in income (loss) of
operating partnerships 3,787 141,545 (35,705) (211,034)
--------------- ------------- -------------- --------------
NET EARNINGS (LOSS) $ 12,020 $ 159,481 $ (27,241) $ (197,880)
=============== ============ ============= =============
NET EARNINGS (LOSS) PER UNIT
OF LIMITED PARTNERSHIP
INTEREST $ 14.87 $ 197.35 $ ( 33.71) $ (244.88)
================ ============== ============= ==============
</TABLE>
See notes to financial statements.
4
<PAGE>
WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED NOVEMBER 30, 1999 AND 1998
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss) $ 159,481 $ (197,880)
Adjustments to reconcile net earnings (loss) to
net cash provided by operating activities
Equity in loss (income) of operating partnerships (141,545) 211,034
Decrease (increase) in accrued interest receivable 140,083 (15,661)
Decrease in other liabilities (2,500)
Increase in due to related parties 11,946 11,250
----------- -----------
Net cash provided by operating activities 167,465 8,743
----------- -----------
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 485,178 8,743
Cash and cash equivalents at beginning of period 663,495 649,233
----------- -----------
Cash and cash equivalents at end of period $ 1,148,673 $ 657,976
=========== ===========
</TABLE>
See notes to financial statements.
5
<PAGE>
WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 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 nine months ended November 30, 1999 are
not necessarily indicative of the results to be expected for the entire
year.
2. The investment in Operating Partnerships as of November 30, 1999 and
February 28, 1999 is as follows:
Amount paid to investee through February 28, 1999 $ 16,388,000
Accumulated cash distributions received 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 nine
months ended November 30, 1999 141,545
--------------
Balance, November 30, 1999 $ 1,334,281
==============
6
<PAGE>
WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
NOTES TO FINANCIAL STATEMENTS - continued
NOVEMBER 30, 1999
(Unaudited)
2. (Continued)
The combined balance sheets of the Operating Partnerships as of September
30, 1999 and December 31, 1998 are as follows:
<TABLE>
<CAPTION>
September 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 $13,497,373 and 12,497,566) 39,403,185 40,402,992
Cash and cash equivalents 1,106,568 1,951,002
Tenant accounts receivable 48,080
Deferred costs 460,820 493,546
Mortgage escrow deposits 1,156,276 1,134,739
Tenant security deposits 725,172 725,172
Prepaid expenses and other assets 41,229 36,594
----------- -----------
$44,091,803 $45,894,518
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Liabilities
Mortgages payable $26,319,655 $26,522,146
Notes payable 317,713
Accounts payable and accrued expenses 80,358 676,712
Accrued interest 132,298 269,139
Tenant security deposits payable 725,172 725,172
Due to general partner and affiliates 1,273,749 2,028,955
----------- -----------
28,531,232 30,539,837
----------- -----------
Partners' equity
Wilder Richman Historic Properties II, L.P. 1,334,281 1,192,736
General partner 14,226,290 14,161,945
----------- -----------
15,560,571 15,354,681
----------- -----------
$44,091,803 $45,894,518
=========== ===========
</TABLE>
7
<PAGE>
WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
NOTES TO FINANCIAL STATEMENTS - continued
NOVEMBER 30, 1999
(Unaudited)
2. (Continued)
The unaudited statements of operations of the Operating Partnerships for
the nine months ended September 30, 1999 and 1998 are as follows:
1999 1998
----------- -----------
Revenue
Rent $ 4,903,940 $ 4,586,629
----------- -----------
4,903,940 4,586,629
----------- -----------
Expenses
Administrative 390,320 520,572
Operating 1,765,433 1,820,851
Management fees 144,171 135,967
Interest 1,365,593 1,421,745
Depreciation and amortization 1,032,533 994,453
----------- -----------
4,698,050 4,893,588
----------- -----------
Net EARNINGS (loss) $ 205,890 $ (306,959)
=========== ===========
Net EARNINGS (loss) allocated to
Wilder Richman Historic Properties II, L.P. $ 141,545 $ (211,034)
General Partner 64,345 (95,925)
----------- -----------
$ 205,890 $ (306,959)
=========== ===========
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 November 30, 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 nine months ended September 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 September 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 $827,000.
Although the Property is reporting cash flow for the nine months ended September
30, 1999 (see Results From Operations, below), the Operating Partnerships' cash
and cash equivalents as of September 30, 1999 have decreased by approximately
$844,000 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 $80,000 and accounts payable and accrued expenses decreased by
approximately $596,000.
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
9
<PAGE>
WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
Item 2 Management's Discussion and Analysis of Financial Conditions and
Results of Operations
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 nine months ended November 30, 1999, the statement of operations of the
Partnership reflects net earnings of $159,481, which includes equity in income
of operating partnerships of $141,545. Nonrecognition of income of the
Partnership's investment in Dixon Mills Phase I during the nine months ended
November 30, 1999 was approximately $62,000 in accordance with the equity method
of accounting. The Operating Partnerships reported net earnings during the nine
months ended September 30, 1999 of $205,890, inclusive of depreciation and
amortization of $1,032,533. The Operating Partnerships generated cash flow after
required debt service payments and required replacement reserve deposits during
the nine months ended September 30, 1999 of approximately $978,000, which
includes principal amortization under the mortgages (approximately $202,000) and
deposits to required escrows (approximately $58,000). The Operating Partnerships
did not utilize any replacement reserves during the nine months ended September
30, 1999.
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
planned improvements, the Operating Partnerships generated cash flow of
approximately $248,000 after required debt service payments and required
replacement reserve deposits during the nine months ended September 30, 1998,
which includes principal amortization under the mortgages (approximately
$189,000) and deposits to required escrows and interest thereon (approximately
$65,000). The Operating Partnerships did not utilize any replacement reserves
during the nine months ended September 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 has 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, 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 unfolds, certain 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. To date, Registrant is not aware of any problems caused by
Y2K. 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.
10
<PAGE>
WILDER RICHMAN HISTORIC PROPERTIES II, L.P.
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>
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, 2000 /s/ Richard Paul Richman
---------------------------------------
Richard Paul Richman
President and Chief Executive Office
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This article contains summary information extracted from the nine months ended
November 30, 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> 9-MOS
<FISCAL-YEAR-END> FEB-28-2000
<PERIOD-START> MAR-01-1999
<PERIOD-END> NOV-30-1999
<EXCHANGE-RATE> 1.00
<CASH> 1,148,673
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,482,954
<CURRENT-LIABILITIES> 188,647
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,294,307
<TOTAL-LIABILITY-AND-EQUITY> 2,482,954
<SALES> 0
<TOTAL-REVENUES> 38,499
<CGS> 0
<TOTAL-COSTS> 20,563
<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> 159,481
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
