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, 2003
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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 33-15597
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DIVERSIFIED HISTORIC INVESTORS V
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(Exact name of registrant as specified in its charter)
Pennsylvania 23-2479468
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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, 2003 (unaudited) and
December 31, 2002
Consolidated Statements of Operations - Three Months Ended
March 31, 2003 and 2002 (unaudited)
Consolidated Statements of Cash Flows - Three Months Ended
March 31, 2003 and 2002 (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, 2003, Registrant had cash of $4,091. Such
funds are expected to be used to pay liabilities and general and
administrative expenses of Registrant, and to fund cash deficits of
the property. 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 lender in order to remain current on all
obligations. The Registrant is not aware of any additional sources of
liquidity.
As of March 31, 2003, Registrant had restricted cash of
$125,705, consisting primarily of funds held as security deposits and
escrows for taxes. As a consequence of the restrictions as to use,
Registrant does not deem these funds to be a source of liquidity.
On October 1, 2002, the mortgage note secured by the
Lofts at Red Hill matured and was declared in default by the lender.
On September 10, 2003, the Lofts at Red Hill was sold.
The net proceeds of the sale were used to pay the mortgage note
secured by the property and accrued expenses of the Registrant. No
funds remained for distribution to unit holders. The Registrant
liquidated thereafter.
(2) Capital Resources
Any capital expenditures needed are generally replacement
items and are funded out of cash from operations or replacement
reserves, if any. 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 2003, Registrant incurred a
net loss of $22,019 ($1.96 per limited partnership unit) compared to
net loss of $34,913 ($3.10 per limited partnership unit) for the same
period in 2002.
Rental income decreased $2,957 from $32,491 in the first
quarter of 2002 to $29,534 in the same period in 2003. The decrease in
rental income from the first quarter of 2002, compared to the same
period in 2003, is due to a decrease in average occupancy (87% to
76%).
Rental operations expense decreased $955 from $20,810 in
the first quarter of 2002 to $19,855 in the same period in 2003. The
decrease in rental operations expense from the first quarter of 2002,
compared to the same period in 2003, is due to a decrease in
maintenance expense partially offset by an increase in utilities
expense. The decrease in maintenance expense is due to a decrease in
apartment preparation and contract cleaning services. The increase in
utilities expense is due to an increase in water and electric charges.
Interest expense increased $801 from $16,137 during the
first quarter of 2002 to $16,938 in the same period in 2003. The
increase in interest expense is due to an increase in the principal
balance of the mortgage upon which the interest is calculated.
Depreciation and amortization expense decrease $15,964
from $30,895 in the first quarter of 2002 to $14,931 in the same
period in 2003. The decrease from the first quarter of 2002 to the
same period in 2003 is due to a decrease in amortization expense. A
deferred expense incurred in a prior year became fully amortized
during 2002.
During the first quarter of 2003, the Registrant incurred
a loss of approximately $22,000 at the Lofts at Red Hill, including
$15,000 of depreciation and amortization expense, compared to a loss
of $20,000, including $15,000 of depreciation expense, in the first
quarter of 2002. The increase in loss from the first quarter of 2002,
compared to the same period in 2003, is due to a decrease in rental
income and an increase in utilities expense, partially offset by a
decrease in maintenance expense. The decrease in rental income is due
to a decrease in average occupancy (87% to 76%). The increase in
utilities expense is due to an increase in water and electric charges.
The decrease in maintenance expense is due to a decrease in apartment
preparation and contract cleaning service due to a decrease in the
turnover of apartment units.
On October 1, 2002, the mortgage note secured by the
Lofts at Red Hill matured and was declared in default by the lender.
On September 10, 2003, the Lofts at Red Hill were sold.
The net proceeds of the sale were used to pay the note and accrued
expenses of the Registrant. No funds remained for distribution to unit
holders. The Registrant liquidated thereafter.
Item 4. Controls and Procedures
We maintain disclosure controls and procedures that are
designed to ensure that information required to be disclosed in our
Securities Exchange Act of 1934 reports is recorded, processed,
summarized and reported within the time periods specified in the SEC's
rules and forms, and that such information is accumulated and
communicated to our management, including our managing partner's
principal executive officer and principal financial officer, as
appropriate, to allow timely decisions regarding required disclosure.
In designing and evaluating the disclosure controls and procedures,
our management recognized that any controls and procedures, no matter
how well designed and operated, can provide only reasonable assurance
of achieving the desired control objectives, and our management
necessarily was required to apply its judgment in evaluating the cost-
benefit relationship of possible controls and procedures.
Under the supervision of our managing partner's principal
executive officer and principal financial officer we have carried out
an evaluation of the effectiveness of our adopted disclosure controls
and procedures as of the end of the period covered by this report.
Based upon that evaluation, our managing partner's president and
treasurer concluded that our disclosure controls and procedures are
effective.
There have been no significant changes in our internal
controls over financial reporting that has materially affected, or is
reasonably likely to materially affect, our internal control over
financial reporting during our most recent fiscal quarter.
DIVERSIFIED HISTORIC INVESTORS V
(a Pennsylvania limited partnership)
CONSOLIDATED BALANCE SHEETS
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Assets
March 31, 2003 December 31, 2002
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(Unaudited)
Rental properties, at cost:
Land $ 61,046 $ 61,046
Buildings and improvements 1,445,431 1,445,431
Furniture and fixtures 94,974 94,974
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1,601,451 1,601,451
Less - accumulated depreciaton (903,371) (888,440)
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698,080 713,011
Cash and cash equivalents 4,092 4,623
Restricted cash 125,705 124,401
Accounts and notes receivable 10,056 10,754
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Total $ 837,933 $ 852,789
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Liabilities and Partners' Equity
Liabilities:
Debt obligations $ 487,267 $ 482,328
Accounts payable:
Trade 135,435 135,358
Related parties 33,656 33,656
Taxes 3,178 0
Accrued liabilities 12,648 13,714
Tenant security deposits 9,015 8,980
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Total liabilities 681,199 674,036
Partners' equity 156,734 178,753
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Total $ 837,933 $ 852,789
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The accompanying notes are an integral part of these financial statements.
DIVERSIFIED HISTORIC INVESTORS V
(a Pennsylvania limited partnership)
CONSOLIDATED STATEMENTS OF OPERATIONS
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(Unaudited)
Three months ended
March 31,
2003 2002
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Revenues:
Rental income $29,534 $32,491
Interest income 171 438
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Total revenues 29,705 32,929
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Costs and expenses:
Rental operations 19,855 20,810
Interest 16,938 16,137
Depreciation and amortization 14,931 30,895
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Total costs and expenses 51,724 67,842
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Net loss ($22,019) ($34,913)
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Net loss per limited
partnership unit:
Net loss ($ 1.96) ($ 3.10)
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The accompanying notes are an integral part of these financial statements.
DIVERSIFIED HISTORIC INVESTORS V
(a Pennsylvania limited partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
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(Unaudited)
Three months ended
March 31,
2003 2002
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Cash flows from operating activities:
Net loss ($22,019) ($34,913)
Adjustments to reconcile net loss to
net cash used in operating
activities:
Depreciation and amortization 14,931 30,895
Changes in assets and liabilities:
Increase in restricted cash (1,304) (4,154)
Decrease in accounts receivable 698 776
Increase in accounts payable - trade 78 1,631
Increase in accounts payable - taxes 3,178 3,178
(Decrease) increase in accrued
liabilities (1,067) 889
Increase in tenant security deposits 35 1,280
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Net cash used in operating activities (5,470) (418)
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Cash flows from financing activities:
Proceeds from debt financings 4,938 4,137
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Net cash provided by financing
activities 4,938 4,137
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(Decrease) increase in cash
and cash equivalents (532) 3,719
Cash and cash equivalents at
beginning of period 4,623 4,974
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Cash and cash equivalents at
end of period $ 4,091 $ 8,693
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The accompanying notes are an integral part of these financial statements.
DIVERSIFIED HISTORIC INVESTORS V
(a Pennsylvania limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The unaudited consolidated financial statements of Diversified
Historic Investors V (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 on
Form 10-K of the Registrant for the year ended December 31, 2002.
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.
NOTE 2 - SUBSEQUENT EVENTS
The personal property in New Orleans, Louisiana was conveyed to the
owners of the building in which it is located in exchange for the
release of an escrow account, which was used to pay accrued expenses
of the partnership.
On September 10, 2003, the Lofts at Red Hill was sold. The net
proceeds of the sale were used to pay the mortgage note secured by the
property and accrued expenses of the Registrant.
No funds remained for distribution to unit holders. The Registrant
liquidated thereafter.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
To the best of its knowledge, Registrant is not party to,
nor is 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.
(b) Reports on Form 8-K:
No reports were filed on Form 8-K during the quarter
ended March 31, 2003.
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: January 20, 2004 DIVERSIFIED HISTORIC INVESTORS V
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By: Dover Historic Advisors V,
General Partner
By: EPK, Inc., Partner
By: /s/ Spencer Wertheimer
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SPENCER WERTHEIMER
President and Treasurer
Exhibit 31
CERTIFICATION
I, Spencer Wertheimer, certify that:
1. I have reviewed this quarterly report on Form 10-Q for the
quarterly period ended March 31, 2003 of Diversified Historic
Investors V;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect
to the period covered by this report;
3. Based on my knowledge, the financial statements, and other
financial information included in this report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented
in this report;
4. I am responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) [Omission in accordance with SEC Release Nos. 33-
8238, 34-47986 and IC-26068 (June 5, 2003)] for the registrant and
have:
(a) Designed such disclosure controls and procedures, or caused
such disclosure controls and procedures to be designed under my
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made
known to me by others within those entities, particularly during
the period in which this report is being prepared;
(b) [Omitted in accordance with SEC Release Nos. 33-8238, 34-
47986 and IC-26068 (June 5, 2003)];
(c) Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report my
conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this
report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's
internal control over financial reporting that occurred during
the registrant's most recent fiscal quarter (the registrant's
fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially
affect, the registrant's internal control over financial
reporting; and
5. I have disclosed, based on my most recent evaluation of
internal control over financial reporting, to the registrant's
auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant's
ability to record, process, summarize and report financial
information; and
(b) Any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal control over financial reporting.
Date: January 20, 2004 /s/ Spencer Wertheimer
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Name: Spencer Wertheimer
Title: President (principal
executive officer) of the
registrant's managing
partner, EPK, Inc.
Date: January 20, 2004 /s/ Spencer Wertheimer
---------------- ----------------------
Name: Spencer Wertheimer
Title: Treasurer (principal
financial officer) of the
registrant's managing
partner, EPK, Inc.
Exhibit 32
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Diversified Historic
Investors V on Form 10-Q for the quarterly period ended March 31, 2003
as filed with the Securities and Exchange Commission on the date
hereof (the "Report"), I, Spencer Wertheimer, President and Treasurer
of the Company's managing partner, EPK, Inc., certify, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a)
or 15(d) of the Securities Exchange Act of 1934, and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Company.
Date: January 20, 2004 /s/ Spencer Wertheimer
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Name: Spencer Wertheimer
Title: President (principal
executive officer) of the
registrant's managing
partner, EPK, Inc.
Date: January 20, 2004 /s/ Spencer Wertheimer
---------------- ----------------------
Name: Spencer Wertheimer
Title: Treasurer (principal
financial officer) of the
registrant's managing
partner, EPK, Inc.