UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
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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 33-33093
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DIVERSIFIED HISTORIC INVESTORS 1990
- ----------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2604695
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
1609 Walnut Street, Philadelphia, PA 19103
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (215) 735-5001
N/A
- ----------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since
last report)
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 such filing requirements for the past 90
days. Yes X No
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Balance Sheets - June 30, 1999 (unaudited)
and December 31, 1998
Consolidated Statements of Operations - Three Months and
Six Months Ended June 30, 1999 and 1998 (unaudited)
Consolidated Statements of Cash Flows - Six Months Ended
June 30, 1999 and 1998 (unaudited)
Notes to Consolidated Financial Statements (unaudited)
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
(1) Liquidity
As of June 30, 1999, Registrant had cash of
$104,102. Such funds are expected to be used to pay liabilities of
Registrant and to fund cash deficits of the properties. Cash
generated from operations is used primarily to fund operating expenses
and debt service. If cash flow proves to be insufficient, the
Registrant will attempt to negotiate loan modifications with the
various lenders in order to remain current on all obligations. The
Registrant is not aware of any additional sources of liquidity.
As of June 30, 1999, Registrant had restricted
cash of $128,506 consisting primarily of funds held as security
deposits, replacement reserves and escrows for taxes and insurance.
As a consequence of the restrictions as to use, Registrant does not
deem these funds to be a source of liquidity.
At the present time, all three properties are able
to pay their operating expenses and debt service, but it is unlikely
that any cash will be available to the Registrant to pay its general
and administrative expenses. It is the Registrant's intention to
continue to hold the properties until they can no longer meet the debt
service requirements and the properties are foreclosed, or the market
value of the properties increases to a point where they can be sold at
a price which is sufficient to repay the underlying indebtedness
(principal plus accrued interest).
(2) Capital Resources
Any capital expenditures needed are generally
replacement items and are funded out of cash from operations or
replacement reserves, if any. Registrant is not aware of any factors
which would cause historical capital expenditure levels not to be
indicative of capital requirements in the future and accordingly, does
not believe that it will have to commit material resources to capital
investment for the foreseeable future.
(3) Results of Operations
During the second quarter of 1999, Registrant
incurred a net loss of $83,539 ($16.56 per limited partnership unit)
compared to a net loss of $87,777 ($17.27 per limited partnership
unit) for the same period in 1998. For the first six months of 1999,
the Registrant incurred a net loss of $153,804 ($30.43 per limited
partnership unit) compared to a net loss of $195,149 ($38.39 per
limited partnership unit) for the same period in 1998.
Rental income increased $6,619 from $267,086 in
the second quarter of 1998 to $273,705 in the same period in 1999 due
to an increase in rental income at the Bakery Apartments and Shockoe
Hearth due to increases in the average rental rates.
Rental income increased $4,490 from $545,177 for
the first six months of 1998 to $549,667 for the same period in 1999
due to an increase in rental income at Jefferson Seymour and Shockoe
Hearth due to increases in the average rental rates, partially offset
by a decrease at the Bakery Apartments due to a decrease in the rental
of corporate apartments.
Expenses for rental operations increased by
$16,412 from $117,237 in the second quarter of 1998 to $133,649 in the
same period in 1999 due to an increase in maintenance expense at the
Bakery and Jefferson Seymour and an increase in utilities expense at
Jefferson Seymour partially offset by a decrease in wages and salaries
expense at the Bakery. The increase in maintenance expense at both
the Bakery and Jefferson Seymour is due to painting and repair
expenses incurred as a result of turnover of apartment units. The
increase in utilities expense at Jefferson Seymour is due to an
increase in the average rates. Wages and salaries expense decreased
at the Bakery due to the replacement of employees with a contracted
security service.
Expenses for rental operations decreased $12,006
from $258,922 for the first six months of 1998 to $246,916 for the
same period in 1999 is due to a decrease in wages and salaries expense
at the Bakery Apartments partially offset by an increase in utility
and maintenance expense at Jefferson Seymour. The decrease in wages
and salaries expense at the Bakery Apartments is due to the
replacement of employees with a contracted security service. The
increase in the utility expense at Jefferson Seymour is due to an
increase in the average rates and the increase in maintenance expense
is due to painting and recarpeting expenses incurred as a result of
turnover of apartment units.
Interest expense decreased $16,546 from $120,112
in second quarter of 1998 to $103,566 in the same period of 1999 and
decreased $30,559 from $246,468 in the first six months of 1998 to
$215,909 in the same period of 1999 due to refinancings of the first
mortgages at Shockoe Hearth Apartments in May 1998 and the Bakery
Apartments in December 1998 which lowered the interest rates.
Depreciation and amortization expense decreased
from $117,029 in the second quarter of 1998 to $113,697 in the same
period in 1999 and decreased $7,315 from $234,708 for the first six
months of 1998 to $227,393 in the same period in 1999 due to loan
costs becoming fully amortized at the Bakery Apartments, partially
offset by an increase at Shockoe Hearth due to loan costs incurred in
connection with the refinancing of the first mortgage.
Losses incurred during the second quarter at the
Registrant's three properties amounted to $70,000, compared to a loss
of approximately $81,000 for the same period in 1998. For the first
six months of 1999, the Registrant's properties recognized a loss of
$128,000, compared to approximately $182,000 for the same period in
1998.
In the second quarter of 1999, Registrant incurred
a loss of $18,000 at Jefferson Seymour, including $30,000 of
depreciation and amortization expense, compared to a loss of $8,000 in
the second quarter of 1999, including $30,000 of depreciation and
amortization. The increase in the loss is due to an increase in
utilities expense due to an increase in the average rates and an
increase in maintenance expense due to the painting and recarpeting of
several units in connection with the turnover of those apartment
units.
For the first six months of 1999, Jefferson
Seymour incurred a loss of $62,000 including $60,000 of depreciation
and amortization expense, compared to a loss of $61,000, including
$61,000 of depreciation and amortization expense for the first six
months of 1998. The increase in the loss is due to an increase in
utility expense due to an increase in the average rates and an
increase in maintenance expense due to the painting and recarpeting of
several units in connection with the turnover of those apartment units
partially offset by an increase in rental income due to an increase in
the average rental rates.
In the second quarter of 1999, Registrant incurred
a loss of $33,000 at Shockoe Hearth, including $27,000 of depreciation
and amortization expense compared to a loss of $33,000 including
$25,000 of depreciation and amortization expense in the second quarter
of 1998 and for the first six months of 1999, incurred a loss of
$30,000 including $54,000 of depreciation and amortization expense,
compared to a loss of $40,000, including $50,000 of depreciation and
amortization expense for the first six months of 1998. The decrease
in the loss from the second quarter and first six months of 1998 to
the same periods in 1999 is due to an increase in rental income due to
an increase in the average rental rates of the residential units
combined with a decrease in interest expense partially offset by an
increase in amortization. The decrease in interest expense is due to
a refinancing of the first mortgage in May 1998 which lowered the
interest rate from 10% to 8%. The increase in amortization expense is
due to the amortization of loan costs incurred in connection with the
refinancing of the first mortgage.
In the second quarter of 1999, the Bakery
Apartments incurred a loss of $19,000 including $50,000 of
depreciation and amortization expense compared to a loss of $40,000
including $55,000 of depreciation and amortization expense for the
same period in 1998. The decrease in the loss was due to an increase
in rental income due to an increase in average rental rates, combined
with a decrease in interest, amortization and wages and salaries
expense partially offset by an increase in maintenance expense.
Interest expense decreased due to a reduction in the interest rate due
to the refinancing of the first mortgage in December of 1998.
Amortization expense decreased due to loan costs becoming fully
amortized. Wages and salaries expense decreased due to the
replacement of employees with a contracted security service.
Maintenance expense increased due to the painting and recarpeting of
several apartment units.
For the first six months of 1999, the Bakery
incurred a loss of $36,000, including $101,000 of depreciation and
amortization expense compared to a loss of $81,000, including $111,000
of depreciation and amortization expense for the same period in 1998.
The decrease in the loss from the first six months of 1998 to the same
period in 1999 is due to a decrease in interest, amortization, and
wages and salaries expense partially offset by a decrease in rental
income. Interest expense decreased due to a reduction in the interest
rate due to the refinancing of the first mortgage in December of 1998.
Amortization expense decreased due to loan costs becoming fully
amortized. Wages and salaries expense decreased due to the
replacement of employees with a contracted security service. Rental
income decreased due to a decrease in the rental of corporate
apartments.
<PAGE>
DIVERSIFIED HISTORIC INVESTORS 1990
(a Pennsylvania limited partnership)
CONSOLIDATED BALANCE SHEETS
Assets
June 30, 1999 December 31, 1998
(Unaudited)
Rental properties, at cost:
Land $ 248,856 $ 248,856
Buildings and improvements 10,935,417 10,928,637
Furniture and fixtures 155,592 155,592
---------- ----------
11,339,865 11,333,085
Less - Accumulated depreciation (3,856,828) (3,636,531)
---------- ----------
7,483,037 7,696,554
Cash and cash equivalents 104,102 59,236
Restricted cash 128,506 152,762
Accounts receivable 34,286 26,700
Other assets (net of amortization of
$321,407 and $314,312 at June 30, 1999
and December 31, 1998, respectively) 175,043 181,392
---------- ----------
Total $ 7,924,974 $ 8,116,644
========== ==========
Liabilities and Partners' Equity
Liabilities:
Debt obligations $ 6,314,029 $ 6,340,936
Accounts payable:
Trade 555,229 547,097
Related parties 166,699 166,699
Interest payable 185,323 221,346
Tenant security deposits 58,066 62,196
Other liabilities 36,867 5,151
---------- ----------
Total liabilities 7,316,213 7,343,425
---------- ----------
Minority interests 379,689 390,343
Partners' equity 229,072 382,876
---------- ----------
Total $ 7,924,974 $ 8,116,644
========== ==========
The accompanying notes are an integral part of these financial statements.
<PAGE>
DIVERSIFIED HISTORIC INVESTORS 1990
(a Pennsylvania limited partnership)
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months and Six Months Ended June 30, 1999 and 1998
(Unaudited)
Three months Six months
Ended June 30, Ended June 30,
1999 1998 1999 1998
Revenues:
Rental income $273,705 $267,086 $549,667 $545,177
Interest income 35 17 93 17
------- ------- ------- -------
Total revenues 273,740 267,103 549,760 545,194
------- ------- ------- -------
Costs and expenses:
Rental operations 133,649 117,237 246,916 258,922
General and administrative 12,000 12,000 24,000 24,000
Interest 103,566 120,112 215,909 246,468
Depreciation and amortization 113,697 117,029 227,393 234,708
------- ------- ------- -------
Total costs and expenses 362,912 366,378 714,218 764,098
------- ------- ------- -------
Loss before minority interests (89,172) (99,275) (164,458) (218,904)
Minority interests' portion of loss 5,633 11,498 10,654 23,755
------- ------- ------- -------
Net loss ($ 83,539) ($ 87,777) ($153,804) ($195,149)
======= ======= ======= =======
Net loss per limited partnership unit:
Loss before minority interests ($ 18.59) ($ 19.53) ($ 33.94) ($ 43.06)
Minority interests 2.03 2.26 3.51 4.67
------- ------- ------- -------
($ 16.56) ($ 17.27) ($ 30.43) ($ 38.39)
======= ======= ======= =======
The accompanying notes are an integral part of these financial statements.
<PAGE>
DIVERSIFIED HISTORIC INVESTORS 1990
(a Pennsylvania limited partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 1999 and 1998
(Unaudited)
Six months ended
June 30,
1999 1998
Cash flows from operating activities:
Net loss ($153,804) ($195,149)
Adjustments to reconcile net loss to net cash provided
by (used in) operating activities:
Depreciation and amortization 227,393 234,708
Minority interest (10,654) (23,755)
Changes in assets and liabilities:
Decrease in restricted cash 24,256 312
Increase in accounts receivable (7,585) (2,681)
Increase in other assets (745) (56,750)
Increase (decrease) in accounts payable - trade 8,132 (31,181)
(Decrease) increase in interest payable (36,023) 10,316
(Decrease) increase in other liabilities (4,131) 2,790
Increase (decrease) in security deposits 31,716 (5,833)
------- -------
Net cash provided by (used in) operating activities 78,555 (67,223)
------- -------
Cash flows from investing activities:
Capital expenditures (6,780) (5,965)
------- -------
Net cash used in investing activities (6,780) (5,965)
------- -------
Cash flows from financing activities:
Proceeds from debt financing 0 168,699
Principal payments (26,907) (45,508)
------- -------
Net cash (used in) provided by financing activities (26,907) 123,191
------- -------
Increase in cash and cash equivalents 44,868 50,003
Cash and cash equivalents at beginning of period 59,236 28,549
------- -------
Cash and cash equivalents at end of period $104,104 $ 78,552
======= =======
The accompanying notes are an integral part of these financial statements.
<PAGE>
DIVERSIFIED HISTORIC INVESTORS 1990
(a Pennsylvania limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The unaudited consolidated financial statements of Diversified
Historic Investors 1990 (the "Registrant") and related notes have been
prepared pursuant to the rules and regulations of the Securities and
Exchange Commission. Accordingly, certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
omitted pursuant to such rules and regulations. The accompanying
consolidated financial statements and related notes should be read in
conjunction with the audited financial statements in Form 10-K and
notes thereto, in the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1998.
The information furnished reflects, in the opinion of management, all
adjustments, consisting of normal recurring accruals, necessary for a
fair presentation of the results of the interim periods presented.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
To the best of its knowledge, Registrant is not party
to, nor is any of its property the subject of, any pending material
legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted during the quarter covered by
this report to a vote of security holders.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit Document
3 Registrant's Amended and Restated Certificate
of Limited Partnership and Agreement of
Limited Partnership, previously filed as part
of Amendment No. 2 of Registrant's
Registration Statement on Form S-11, are
incorporated herein by reference.
21 Subsidiaries of the Registrant are listed in
Item 2. Properties on Form 10-K, previously
filed and incorporated herein by reference.
(b) Reports on Form 8-K:
No reports were filed on Form 8-K during the
quarter ended June 30, 1999.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Date: August 26, 1999 DIVERSIFIED HISTORIC INVESTORS 1990
---------------
By: Dover Historic Advisors 1990, General Partner
By: EPK, Inc., Partner
By: /s/ Spencer Wertheimer
----------------------
SPENCER WERTHEIMER
President
and
Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 104,102
<SECURITIES> 0
<RECEIVABLES> 34,286
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 11,339,865
<DEPRECIATION> 3,856,828
<TOTAL-ASSETS> 7,924,974
<CURRENT-LIABILITIES> 555,229
<BONDS> 6,314,029
0
0
<COMMON> 0
<OTHER-SE> 229,072
<TOTAL-LIABILITY-AND-EQUITY> 7,924,974
<SALES> 0
<TOTAL-REVENUES> 549,760
<CGS> 0
<TOTAL-COSTS> 246,916
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 215,909
<INCOME-PRETAX> (153,804)
<INCOME-TAX> 0
<INCOME-CONTINUING> (153,804)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (153,804)
<EPS-BASIC> 0
<EPS-DILUTED> (30.43)
</TABLE>
