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 September 30, 2001
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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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Item 1. Financial Statements.
Consolidated Balance Sheets - September 30, 2001 (unaudited)
and December 31, 2000
Consolidated Statements of Operations - Three Months and
Nine Months Ended September 30,2001 and 2000 (unaudited)
Consolidated Statements of Cash Flows - Nine Months
Ended September 30, 2001 and 2000 (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 September 30, 2001, Registrant had cash of
approximately $341,340. 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 September 30, 2001, Registrant had restricted
cash of $24,041 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.
(2) Capital Resources
Due to the relatively recent rehabilitations of the
properties, 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 third quarter of 2001, Registrant
incurred a loss of $27,888 ($3.33 per limited partnership unit)
compared to a loss of $18,807 ($2.25 per limited partnership
unit) for the same period in 2000. For the first nine months of
2001, the Registrant incurred a loss of $59,541 ($7.11 per
limited partnership unit) compared to a loss of $67,016 ($8.01
per limited partnership unit) for the same period in 2000.
Rental income increased $5,216 from $46,248 in the
third quarter of 2000 to $51,464 in the same period in 2001 and
increased $10,025 from $142,071 for the first nine months of 2000
to $152,096 in the same period in 2001. The increase in rental
income from the third quarter and the first nine months of 2000
to the same periods in 2001 is due to an increase in the average
occupancy at Locke Mill Plaza for the third quarter (67% to 93%)
and for the first nine months of 2001 (76% to 88%), and an
increase average occupancy at Brass Works for the third quarter
(96% to 99%) and for the first nine months of 2001 (95% to 100%).
Interest income decreased $542 from $2,651 in the
third quarter of 2000 to $2,109 in the same period in 2001 and
decreased $238 from $7,332 for the first nine months of 2000 to
$7,094 in the same period in 2001 due to changes in the average
invested cash balances at the Brass Works and Locke Mill Plaza
during both periods.
Rental operations expense increased $1,709 from
$26,176 in the third quarter of 2000 to $27,885 in the same
period in 2001 and increased $1,927 from $92,077 for the first
nine months of 2000 to $94,004 in the same period in 2001. The
increase from the third quarter of 2000 to the same period in
2001 is due to an increase in maintenance expense at the Brass
Works. The increase in maintenance expense at the Brass Works is
due to an increase in average occupancy (96% to 99%). The
increase from the first nine months of 2000 to the same period in
2001 is due to an increase in maintenance expense at both the
Brass Works and Locke Mill Plaza, partially offset by a decrease
in wages and salaries at Locke Mill Plaza. The increase in
maintenance expense at the Brass Works and Locke Mill Plaza is
due to increases in average occupancies. Wages and salaries
decreased at Locke Mill Plaza due to a decrease in payroll
related expenses.
Income recognized during the third quarter of 2001
at the Registrant's two properties was approximately $4,000,
compared to income of approximately $3,000 for the same period in
2000. For the first nine months of 2001, the Registrant
recognized income of approximately $3,000 compared to income of
approximately $7,000 for the same period in 2000.
In the third quarter of 2001, Registrant recognized
income of $5,000 at the Brass Works, including $12,000 of
depreciation expense, compared to income of 13,000 including
$12,000 of depreciation expense in the third quarter of 2000 and
for the first nine months of 2001, Registrant recognized income
of $14,000 including $36,000 of depreciation expense, compared to
income of $19,000 for the same period in 2000, including $36,000
of depreciation expense. The decrease in net income from the
third quarter and the first nine months of 2000 to the same
periods in 2001 is due to an increase in maintenance expense due
to increases in maintenance repairs.
In the third quarter of 2001, Registrant incurred a
loss of $400 at Locke Mill Plaza, including $7,000 of
depreciation expense, compared to a loss of $10,000 including
$7,000 of depreciation expense in the third quarter of 2000 and
for the first nine months of 2001, Registrant incurred a loss of
$11,000 including $20,000 of depreciation expense, compared to a
loss of $12,000 including $20,000 of depreciation expense for the
same period in 2000. The decrease in loss from the first nine
months of 2000 to the same period in 2001 is due to an increase
in rental income partially offset by an increase in maintenance
expense. The increase in rental income and the increase in
maintenance expense is due to an increase in average occupancy
for the third quarter (67% to 93%) and for the first nine months
(76% to 88%).
DIVERSIFIED HISTORIC INVESTORS IV
(a Pennsylvania limited partnership)
CONSOLIDATED BALANCE SHEETS
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Assets
September 30, December 31,
2001 2000
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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 29,814 29,814
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2,350,693 2,350,693
Less - accumulated depreciation (1,203,465) (1,135,171)
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1,147,228 1,215,522
Cash and cash equivalents 341,339 330,149
Restricted cash 24,041 22,787
Other assets 23,944 22,056
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Total $1,536,552 $1,590,514
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Liabilities and Partners' Equity
Liabilities:
Accounts payable - trade $ 45,925 $ 44,677
Accounts payable - real
estate tax 4,809 0
Other liabilities 80 1,378
Tenant security deposits 13,085 12,265
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Total liabilities 63,899 58,320
Partners' equity 1,472,653 1,532,194
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Total $1,536,552 $1,590,514
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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 Nine months
ended September 30, ended September 30,
2001 2000 2001 2000
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Revenues:
Rental income $51,464 $46,248 $152,096 $142,071
Interest income 2,109 2,651 7,094 7,332
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Total revenues 53,573 48,899 159,190 149,403
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Costs and expenses:
Rental operations 27,885 26,176 94,004 92,077
General and
administrative 30,811 18,623 56,433 55,623
Depreciation and
amortization 22,765 22,906 68,294 68,719
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Total costs and
expenses 81,461 67,705 218,731 216,419
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Net loss ($27,888) ($18,806) ($ 59,541) ($ 67,016)
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Net loss per limited
partnership unit ($ 3.33) ($ 2.25) ($ 7.11) ($ 8.01)
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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)
Nine months ended
September 30,
2001 2000
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Cash flows from operating activities:
Net loss ($ 59,541) ($67,016)
Adjustments to reconcile net loss to
net cash (used in) provided by
operating activities:
Depreciation and amortization 68,294 68,719
Changes in assets and liabilities:
Increase in restricted cash (1,254) (869)
Increase in other assets (1,888) (1,745)
Increase in accounts payable - trade 1,249 685
Increase in accounts payable - taxes 4,809 0
Decrease in other liabilities (1,298) (121)
Increase (decrease) in tenant
security deposits 820 (1,110)
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Net cash used in operating activities 11,191 (1,457)
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Cash flows from financing activities:
Net cash used in financing activities 0 0
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Decrease in cash and cash equivalents 11,191 (1,457)
Cash and cash equivalents at
beginning of period 330,149 325,890
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Cash and cash equivalents at end of
period $341,340 $324,433
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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 and notes thereto, in the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 2000.
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 September 30, 2001.
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: September 23, 2002 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