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 March 31, 2002
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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 33-11907
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DIVERSIFIED HISTORIC INVESTORS IV
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(Exact name of registrant as specified in its charter)
Pennsylvania 23-2440837
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1521 Locust Street, Philadelphia, PA 19102
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (215) 557-9800
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N/A
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(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
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Balance Sheets - March 31, 2002 (unaudited)
and December 31, 2001
Consolidated Statements of Operations - Three Months
Ended March 31, 2002 and 2001 (unaudited)
Consolidated Statements of Cash Flows - Three Months
Ended March 31, 2002 and 2001 (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 March 31, 2002, Registrant had cash of
$332,504. The Registrant expects that those funds plus the cash
generated from operations at each property will be sufficient to
fund the operating expenses of the properties. The Registrant is
not aware of any additional sources of liquidity.
As of March 31, 2002, Registrant had restricted cash
of $18,448 consisting primarily of funds held as security
deposits 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.
(2) Capital Resources
Any capital expenditures needed are generally
replacement items and are funded out of cash from operations.
The 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 first quarter of 2002, Registrant
incurred a loss of $35,675 ($4.26 per limited partnership unit)
compared to a loss of $28,646 ($3.40 per limited partnership
unit) for the same period in 2001.
Rental income increased $1,807 from $48,242 in the
first quarter of 2001 to $50,049 in the same period in 2002. The
increase in rental income is due to an increase in average
occupancy at Locke Mill Plaza (71% to 94%), partially offset by a
decrease in average occupancy at the Brass Works (100% to 88%).
Interest income decreased $1,051 from $2,507 in the
first quarter of 2001 to $1,456 in the same period in 2002. The
decrease in interest income is due to the decrease in money
market interest rates.
Rental operations expense increased by $8,226 from
$37,820 in the first quarter of 2001 to $46,046 in the same
period in 2002. The increase is due to an increase in real estate
tax expense at the Brass Works, an increase in wages and salaries
expense at Locke Mill Plaza, and an increase in insurance expense
at both the Brass Works and Locke Mill Plaza. The increase in
rental operations expense is partially offset by a decrease in
maintenance expense at Locke Mill Plaza. The increase in real
estate tax expense is due to an increase in the appraised value
of the Brass Works building and the increase in wages and salary
expense is due to an increase in maintenance wages paid. The
increase in insurance expense is a result of premiums prepaid
through October of 2002 and the decrease in maintenance expense
is due to a decrease in apartment preparation expenses.
Losses incurred during the first quarter of 2002 at
the Registrant's two properties amounted to approximately
$15,000, compared to losses of approximately $8,000 for the same
period in 2001.
In the first quarter of 2002, Registrant incurred a
net loss of $11,000 at the Brass Works, including $12,000 of
depreciation expense, compared to a net income of $1,500
including $12,000 of depreciation expense in the first quarter of
2001. The loss incurred during the first quarter of 2002 is due
to a decrease in rental income and an increase in insurance
expense and real estate tax expense. The decrease in rental
income is due to a decrease in average occupancy (100% to 88%).
The increase in insurance expense is a result of premiums prepaid
through October of 2002. The increase in real estate tax is due
to a $120,000 increase in the market value of the building, thus
creating a $38,400 increase in the building's taxable value.
In the first quarter of 2002, the Registrant
incurred a net loss of $4,000 at Locke Mill Plaza, including
$7,000 of depreciation expense, compared to a net loss of $9,000
including $7,000 of depreciation expense during the first quarter
of 2001. The decrease in net loss from the first quarter of 2001
to the same period in 2002 is due to an increase in rental income
and a decrease in maintenance expense, partially offset by an
increase in insurance expense. Rental income increased due to an
increase in average occupancy (71% to 94%) and maintenance
expense decreased due to a decrease in apartment preparation
expenses. The increase in insurance expense is a result of
premiums prepaid through October of 2002.
DIVERSIFIED HISTORIC INVESTORS IV
(a Pennsylvania limited partnership)
CONSOLIDATED BALANCE SHEETS
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Assets
March 31, 2002 December 31, 2001
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(Unaudited)
Rental properties, at cost:
Land $ 74,324 $ 74,324
Buildings and improvements 2,246,555 2,246,555
Furniture and fixtures 44,660 44,660
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2,365,539 2,365,539
Less - accumulated depreciation (1,250,847) (1,227,712)
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1,114,692 1,137,827
Cash and cash equivalents 332,504 336,033
Restricted cash 18,448 25,042
Other assets 21,484 21,459
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Total $1,487,128 $1,520,361
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Liabilities and Partners' Equity
Liabilities:
Accounts payable - trade $ 17,088 $ 16,268
Other liabilities 28,930 28,909
Tenant security deposits 13,890 12,290
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Total liabilities 59,908 57,467
Partners' equity 1,427,220 1,462,894
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Total $1,487,128 $1,520,361
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The accompanying notes are an integral part of these financial statements.
DIVERSIFIED HISTORIC INVESTORS IV
(a Pennsylvania limited partnership)
CONSOLIDATED STATEMENTS OF OPERATIONS
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(Unaudited)
Three Months ended
March 31,
2002 2001
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Revenues:
Rental income $50,049 $48,242
Interest income 1,456 2,507
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Total revenues 51,505 50,749
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Costs and expenses:
Rental operations 46,045 37,820
General and administrative 18,000 18,811
Depreciation and amortization 23,135 22,764
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Total costs and expenses 87,180 79,395
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Net loss ($35,675) ($28,646)
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Net loss per limited partnership
unit ($ 4.26) ($ 3.40)
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The accompanying notes are an integral part of these financial statements.
DIVERSIFIED HISTORIC INVESTORS IV
(a Pennsylvania limited partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
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(Unaudited)
Three months ended
March 31,
2002 2001
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Cash flows from operating activities: ($ 35,675) ($ 28,646)
Adjustments to reconcile net loss to
net cash used in operating
activities:
Depreciation and amortization 23,135 22,764
Changes in assets and liabilities:
Decrease in restricted cash 6,594 6,899
(Increase) decrease in other assets (26) 60
Increase in accounts payable - trade 819 3,842
Increase (decrease) in other
liabilities 24 (1,559)
Increase in tenant security deposits 1,600 900
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Net cash (used in), provided by
operating activities (3,529) 4,260
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(Decrease) increase in cash and cash
equivalents (3,529) 4,260
Cash and cash equivalents at
beginning of period 336,033 330,149
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Cash and cash equivalents at end of
period $332,504 $334,409
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The accompanying notes are an integral part of these financial statements.
DIVERSIFIED HISTORIC INVESTORS IV
(a Pennsylvania limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The unaudited consolidated financial statements of Diversified
Historic Investors IV (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 of the Registrant,
and notes thereto, for the year ended December 31, 2001.
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 a
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 Number Document
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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 March 31, 2002.
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: June 2, 2003 DIVERSIFIED HISTORIC INVESTORS IV
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By: Dover Historic Advisors III,
General Partner
By: EPK, Inc., General Partner
By: /s/ Spencer Wertheimer
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SPENCER WERTHEIMER
President and Treasurer