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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, 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
- -----------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2479468
- -------------- -----------------
(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
------ ------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
DIVERSIFIED HISTORIC INVESTORS V
(a Pennsylvania limited partnership)
CONSOLIDATED BALANCE SHEETS
---------------------------
Assets
September 30, 2003 December 31, 2002
------------------ -----------------
(Unaudited)
Rental properties, at cost:
Land $0 $ 61,046
Buildings and improvements 0 1,445,431
Furniture and fixtures 0 94,975
-- ----------
0 1,601,452
Less - accumulated depreciation 0 (888,440)
-- ----------
0 713,012
Cash and cash equivalents 0 4,623
Restricted cash 0 124,401
Accounts and notes receivable 0 10,753
-- ----------
Total $0 $ 852,789
== ==========
Liabilities and Partners' Equity
Liabilities:
Debt obligations $0 $ 482,329
Accounts payable:
Trade 0 135,357
Related parties 0 33,656
Accrued liabilities 0 13,714
Tenant security deposits 0 8,980
-- ----------
Total liabilities 0 674,036
Partners' equity 0 178,753
-- ----------
Total $0 $ 852,789
== ==========
The accompanying notes are an integral part of these financial statements.
DIVERSIFIED HISTORIC INVESTORS V
(a Pennsylvania limited partnership)
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
(Unaudited)
Three months Nine months
ended September 30, ended September 30,
2003 2002 2003 2002
---- ---- ---- ----
Revenues:
Rental income $ 24,986 $30,574 $ 89,214 $ 96,271
Interest income 280 320 581 1,076
Other income 46,547 7,299 46,547 7,299
Gain on sale of assets (15,464) 0 (15,464) 0
-------- ------- -------- --------
Total revenues 56,349 38,193 120,878 104,646
-------- ------- -------- --------
Costs and expenses:
Rental operations 69,863 29,694 109,434 72,062
Interest 35,947 17,139 75,072 49,834
Bad debt 12,196 0 12,196 3,202
Administrative fees 62,958 0 62,958 0
Depreciation and
amortization 10,110 30,773 39,971 92,320
-------- ------- -------- --------
Total costs and
expenses 191,074 77,606 299,631 217,418
-------- ------- -------- --------
Net loss ($134,725) ($39,413) ($178,753) ($112,772)
======== ======= ======== ========
Net loss per limited
partnership unit: ($ 11.97) ($ 3.50) ($ 15.88) ($ 10.02)
======== ======= ======== ========
The accompanying notes are an integral part of these financial statements.
DIVERSIFIED HISTORIC INVESTORS V
(a Pennsylvania limited partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(Unaudited)
Nine months ended
September 30,
2003 2002
---- ----
Cash flows from operating activities:
Net loss ($178,753) ($112,772)
Adjustments to reconcile net loss to
net cash used in operating activities:
Loss on liquidation of St. Mary's 67,312 0
Gain on sale of Lofts at Red Hill (51,848) 0
Depreciation and amortization 39,971 92,320
Changes in assets and liabilities:
Decrease (increase) in restricted cash 124,401 (3,530)
Decrease in accounts receivable 10,753 4,528
(Decrease) increase in accounts
payable - trade (135,357) 1,947
Decrease in accounts payable - related (33,656) 0
(Decrease) increase in tenant
security deposits (8,980) 270
Decrease in note payable (10,309) 0
Decrease in other liabilities (3,405) (1,008)
-------- --------
Net cash used in operating activities: (179,871) (18,245)
-------- --------
Cash flows from investing activities:
Proceeds from the sale of fixed assets 661,170 0
Purchase of fixed assets (3,593) 0
-------- --------
Net cash provided by investing activities 657,577 0
-------- --------
Cash flows from financing activities:
Proceeds from debt obligations 43,072 17,634
Principal payments (525,400) 0
-------- --------
Net cash (used in) provided by
financing activities (482,328) 17,634
-------- --------
Decrease in cash and cash equivalents (4,622) (611)
Cash and cash equivalents at
beginning of period 4,622 4,974
-------- --------
Cash and cash equivalents at end of
period $ 0 $ 4,363
======== ========
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") 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, 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 - LIQUIDATION OF REGISTRANT
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 expenses of the Registrant.
No funds remained for distribution to unit holders. The Registrant
liquidated thereafter.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
(1) Liquidity
As of September 30, 2003, Registrant had cash of $0.
As of September 30, 2003, Registrant had restricted
cash of $0.
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) Results of Operations
During the third quarter of 2003, Registrant incurred a
net loss of $134,725 ($11.97 per limited partnership unit) compared to
a net loss of $39,413 ($3.50 per limited partnership unit) for the
same period in 2002. For the first nine months of 2003, Registrant
incurred a loss of $178,753 ($15.88 per limited partnership unit)
compared to a net loss of $112,772 ($10.02 per limited partnership
unit) for the same period in 2002.
Rental income decreased $5,588 from $30,574 in the third
quarter of 2002 to $24,986 in the same period of 2003 and decreased
$7,057 from $96,271 for the first nine months of 2002 to $89,214 for
the same period in 2003. The decrease in rental income from both the
third quarter and first nine months of 2002, compared to the same
periods in 2003, is due to a decrease in average occupancy (81% to 68%
and 82% to 74%, respectively) and the sale of the property on
September 10, 2003.
Rental operations expense increased $40,169 from $29,694
in the third quarter of 2002 to $69,863 in the same period in 2003 and
increased $37,372 from $72,062 in the first nine months of 2002 to
$109,434 for the same period in 2003. The increase in rental
operations expense for the third quarter and the first nine months of
2002 to the same period in 2003 is due to an increase in accounting
fees, partially offset by a decrease in real estate taxes. The
increase in accounting fees is due to the payment of previously
unaccrued accounting fees. These fees were paid from the net proceeds
from the sale of the Lofts at Red Hill. The decrease in real estate
taxes is due to the sale of the Lofts of Red Hill.
General and administrative expenses increased $62,958 from
$0 in the third quarter and the first nine months of 2002 to $62,958
in same periods of 2003. The increase is due to the payment of
previously unaccrued administrative fees. The Registrant ceased
accruing administrative fees in 2000 because its lack of liquidity
made payment of these fees unlikely. However, the Registrant remained
liable for these fees. The fees were paid from the net proceeds from
the sale of the Lofts at Red Hill.
Interest expense increased $18,808 from $17,139 in the
third quarter of 2002 to $35,947 in the same period in 2003 and
increased $25,238 from $49,834 for the first nine months of 2002 to
$75,072 for the same period in 2003. The increase from both the third
quarter and the first nine months of 2002, compared to the same
periods in 2003, is due to additional interest payments to the first
mortgage made at the time of the sale of the Lofts at Red Hill.
In the third quarter of 2003, Registrant recognized income
of approximately $7,000 at the Lofts at Red Hill, including $10,000 of
depreciation and amortization expense, compared to a loss of
approximately $24,000 including $15,000 of depreciation expense in the
third quarter of 2002. The increase in income from the third quarter
of 2002, compared to the same period in 2003, is due the gain on the
sale of the building and a decrease in real estate tax, partially
offset by a decrease in rental income and an increase in accounting
fees. The decrease in real estate tax is due to the sale of the
building, partially offset by a decrease in rental income due to a
decrease in average occupancy (81% to 68%) and the sale of the
property on September 10, 2003. The increase in accounting fees is
due to the payment of previously unaccrued accounting fees.
In the first nine months of 2003, Registrant incurred a
loss of approximately $38,000 at the Lofts at Red Hill, including
$40,000 of depreciation expense compared to a loss of approximately
$67,000 including depreciation expense of $46,000 for the first nine
months of 2002. The decrease in loss from the first nine months of
2002, compared to the same period in 2003, is due to the gain on the
sale of the building and a decrease in real estate tax, partially
offset by a decrease in rental income and the increase in accounting
fees. The decrease in real estate tax is due to the sale of the
building. The decrease in rental income is due to a decrease in
average occupancy (82% to 74%) and the sale of the property on
September 10, 2003. The increase in accounting fees is from the
payment of previously unaccrued accounting fees.
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. A loss of $67,312 was incurred
on the transaction.
On September 10, 2003, the Lofts at Red Hill was sold. A
gain of $51,848 was realized on the sale. 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.
Item 3. Quantitative and Qualitative Disclosures
About Market Risk
All of our assets and liabilities are denominated in U.S.
dollars, and as a result, we do not have exposure to currency exchange
risks.
We do not engage in any interest rate, foreign currency
exchange rate or commodity price-hedging transactions, and as a
result, we do not have exposure to derivatives risk.
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.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
To the best of its knowledge, Registrant is not a 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
-------------- --------
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.
31 General Partners Opinion
Certification
32 Certification Pursuant to 18
U.S.C. Section 1350, As Adopted
Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K:
No reports were filed on Form 8-K during the quarter
ended September 30, 2003.
SIGNATURES
Pursuant to the requirements of the Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
DIVERSIFIED HISTORIC INVESTORS V
By: Dover Historic Advisors V, its general
partner
By: EPK, Inc., managing partner
Date: August 11, 2004 By: /s/ Spencer Wertheimer
--------------- ----------------------
SPENCER WERTHEIMER
President (principal executive
officer, principal financial
officer)
Exhibit 31
CERTIFICATION
I, Spencer Wertheimer, certify that:
1. I have reviewed this quarterly report on Form 10-Q for the
quarterly period ended September 30, 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: August 11, 2004 /s/ Spencer Wertheimer
--------------- ----------------------
Name: Spencer Wertheimer
Title: President
(principal executive
officer, 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 September 30,
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: August 11, 2004 /s/ Spencer Wertheimer
--------------- ----------------------
Name: Spencer Wertheimer
Title: President
(principal executive
officer, principal
financial officer) of
the registrant's
managing partner, EPK,
Inc.