UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1996 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 0-18498 Krupp Cash Plus-V Limited Partnership Massachusetts 04-3021560 (State or other jurisdiction of (IRS employer incorporation or organization) identification no.) 470 Atlantic Avenue, Boston, Massachusetts 02210 (Address of principal executive offices) (Zip Code) (617) 423-2233 (Registrant's telephone number, including area code) 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 This Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Actual results could differ materially from those projected in the forward-looking statements as a result of a number of factors, including those identified herein. KRUPP CASH PLUS-V LIMITED PARTNERSHIP BALANCE SHEETS ASSETS September 30, December 31, 1996 1995 Real estate assets: Investment in Joint Venture, net of accumulated amortization of acquisition costs of $78,439 and $0, respectively (Note 2) $22,775,784 $23,187,379 Mortgage-backed securities ("MBS"), net of accumulated amortization (Note 3) 652,726 915,554 Total real estate assets 23,428,510 24,102,933 Cash and cash equivalents 1,840,671 2,101,121 Other assets 19,102 36,190 Total assets $25,288,283 $26,240,244 LIABILITIES AND PARTNERS' EQUITY Accrued audit liability $ 10,125 $ 9,729 Due to affiliate 152 - Total liabilities 10,277 9,729 Partners' equity (Note 4): Unitholders (2,060,350 Units outstanding) 25,326,389 26,273,929 Corporate Limited Partner (100 Units outstanding) (581) (535) General Partners (47,802) (42,879) Total Partners' equity 25,278,006 26,230,515 Total liabilities and Partners' equity $25,288,283 $26,240,244 The accompanying notes are an integral part of the financial statements. KRUPP CASH PLUS-V LIMITED PARTNERSHIP STATEMENTS OF INCOME For the Three Months For the Nine Months Ended September 30, Ended September 30, 1996 1995 1996 1995 Revenue: Partnership's share of Joint Venture net income (Note 2) $321,642 $219,288 $719,734 $715,394 Interest income - MBS (Note 3) 17,391 21,629 57,968 65,788 Interest income - other 24,313 34,108 74,338 102,598 Total revenue 363,346 275,025 852,040 883,780 Expenses: General and administrative (Note 5) 23,508 31,134 62,576 88,084 Asset management fees (Note 5) 35,984 36,310 107,235 107,794 Amortization of acquisition costs (Note 2) 26,146 - 78,439 - Total expenses 85,638 67,444 248,250 195,878 Net income $277,708 $207,581 $603,790 $687,902 Allocation of net income (Note 4): Unitholders (2,060,350 Units outstanding) $274,918 $205,495 $597,723 $680,990 Net income per Unit of Depositary Receipt $ .13 $ .10 $ .29 $ .33 Corporate Limited Partner (100 Units outstanding) $ 13 $ 10 $ 29 $ 33 General Partners $ 2,777 $ 2,076 $ 6,038 $ 6,879 The accompanying notes are an integral part of the financial statements. KRUPP CASH PLUS-V LIMITED PARTNERSHIP STATEMENTS OF CASH FLOWS For the Nine Months Ended September 30, 1996 1995 Operating activities: Net income $ 603,790 $ 687,902 Adjustments to reconcile net income to net cash provided by operating activities: Amortization of acquisition costs 78,439 - Amortization of MBS discount (4,850) (583) Distributions from Joint Venture 719,734 715,394 Partnership's share of Joint Venture net income (719,734) (715,394) Decrease in other assets 17,088 10,778 Increase in audit liability 396 4,509 Increase in due to affiliate 152 36,326 Net cash provided by operating activities 695,015 738,932 Investing activities: Distributions from Joint Venture in excess of net income 333,156 313,544 Principal collections on MBS 267,678 56,715 Net cash provided by investing activities 600,834 370,259 Financing activity: Distributions (1,556,299) (1,558,175) Net decrease in cash and cash equivalents (260,450) (448,984) Cash and cash equivalents, beginning of period 2,101,121 2,665,531 Cash and cash equivalents, end of period $ 1,840,671 $ 2,216,547 The accompanying notes are an integral part of the financial statements. KRUPP CASH PLUS-V LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS (1) Accounting Policies Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted in this report on Form 10-Q pursuant to the Rules and Regulations of the Securities and Exchange Commission. In the opinion of the General Partners of Krupp Cash Plus-V Limited Partnership (the "Partnership"), the disclosures contained in this report are adequate to make the information presented not misleading. See Notes to Financial Statements included in the Partnership's Annual Report on Form 10-K for the year ended December 31, 1995 for additional information relevant to significant accounting policies followed by the Partnership. In the opinion of the General Partners of the Partnership, the accompanying unaudited financial statements reflect all adjustments (consisting only of normal recurring accruals) necessary to present fairly the Partnership's financial position as of September 30, 1996, its results of operations for the three and nine months ended September 30, 1996 and 1995 and cash flows for the nine months ended September 30, 1996 and 1995. The results of operations for the three and nine months ended September 30, 1996 are not necessarily indicative of the results which may be expected for the full year. See Management's Discussion and Analysis of Financial Condition and Results of Operations included in this report. (2) Investment in Joint Venture The Partnership and an affiliate of the Partnership own a 49.9% and 50.1% interest in Spring Valley Marketplace Joint Venture (the "Joint Venture"), respectively. The express purpose of entering into the Joint Venture was to acquire and operate Spring Valley Marketplace (the "Marketplace"). The Marketplace is a shopping center containing 320,684 net leasable square feet located in Spring Valley, Rockland County, New York. The investment balance reflects the original cost of the investment, acquisition costs of $1,882,546 which are being amortized over the remaining life of the underlying asset, allocations of net income earned by the Joint Venture and distributions received by the Joint Venture. Condensed financial statements of the Joint Venture are as follows: Spring Valley Partnership Condensed Balance Sheets ASSETS September 30, December 31, 1996 1995 Property, at cost $ 53,789,298 $ 53,409,298 Accumulated depreciation (13,489,679) (12,084,310) 40,299,619 41,324,988 Other assets 1,834,421 1,491,737 Total assets $ 42,134,040 $ 42,816,725 LIABILITIES AND PARTNERS' EQUITY Total liabilities $ 218,471 $ 233,513 Partners' equity: The Partnership 20,971,677 21,304,833 Joint Venture partner 20,943,892 21,278,379 Total Partners' equity 41,915,569 42,583,212 Total liabilities and Partners' equity $ 42,134,040 $ 42,816,725 Spring Valley Partnership Condensed Statements of Operations For the Three Months For the Nine Months Ended September 30, Ended September 30, 1996 1995 1996 1995 Revenue $1,826,598 $1,702,500 $ 5,265,675 $ 4,906,370 Property operating expenses (704,553) (797,736) (2,417,953) (2,099,774) Depreciation (477,473) (465,310) (1,405,369) (1,372,941) Net income $ 644,572 $ 439,454 $ 1,442,353 $ 1,433,655 (3) Mortgage Backed Securities The MBS held by the Partnership are issued by the Federal Home Loan Mortgage Corporation. The following is additional information on the MBS held: September 30, December 31, 1996 1995 Face Value $ 663,519 $ 931,197 Amortized Cost $ 652,726 $ 915,554 Estimated Market Value $ 694,000 $ 940,000 Coupon rates of the MBS range from 9.0% to 9.5% per annum and mature in the years 2016 and 2017. The Partnership's MBS portfolio had gross unrealized gains of approximately $41,000 and $24,000 at September 30, 1996 and December 31, 1995, respectively. The Partnership does not expect to realize these gains as it has the intention and ability to hold the MBS until maturity. (4) Changes in Partners' Equity A summary of changes in Partners' Equity for the nine months ended September 30, 1996 is as follows: Corporate Total Limited General Partners' Unitholders Partner Partners Equity Balance at December 31, 1995 $26,273,929 $ (535) $(42,879) $26,230,515 Net income 597,723 29 6,038 603,790 Distributions (1,545,263) (75) (10,961) (1,556,299) Balance at September 30, 1996 $25,326,389 $ (581) $(47,802) $25,278,006 (5) Related Party Transactions Under the terms of the Partnership Agreement, the General Partners or their affiliates are entitled to an Asset Management Fee for the management of the Partnership's business equal to .5% per annum of the Total Invested Assets of the Partnership (as defined in the prospectus), payable quarterly. The Partnership also reimburses affiliates of the General Partners for certain expenses incurred in connection with the preparation and mailing of reports and other communications to the Unitholders. Amounts paid or accrued to the General Partners or their affiliates are as follows: For the Three Months For the Nine Months Ended September 30, Ended September 30, 1996 1995 1996 1995 Asset management fees $35,984 $36,310 $107,235 $107,794 Expense reimbursements 12,294 14,646 30,744 43,937 Charged to operations $48,278 $50,956 $137,979 $151,731 KRUPP CASH PLUS-V LIMITED PARTNERSHIP ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements including those concerning Management's expectations regarding the future financial performance and future events. These forward-looking statements involve significant risk and uncertainties, including those described herein. Actual results may differ materially from those anticipated by such forward-looking statements. Liquidity and Capital Resources The Partnership's sources of liquidity are derived from the distributions it receives from its interest in the Joint Venture, earnings and collections on its MBS, and interest earned on its short-term investments. The Marketplace is currently occupied at a rate of 98%. In order to retain or increase this level of occupancy and to remain competitive within its immediate market, the Marketplace is expected to spend approximately $630,000 for capital improvements in 1996, most of which are tenant buildouts to attract and retain quality tenants at the shopping center. Major capital improvements performed in 1996 include the expansion of T.J. Maxx and parking lot paving with additional improvements expected to continue throughout the remainder of the year. Liquidity provided by the MBS is derived primarily from interest income and principal repayments and prepayments of the portfolio. The level of prepayments are contingent upon the interest rate environment, which in turn, affects the Partnership's liquidity. The liquidity provided by the principal prepayments has been used to fund distributions, which has resulted in a reduction of the Partnership's capital resources. The Partnership holds MBS that are guaranteed by the Federal Home Loan Mortgage Corporation ("FHLMC"). The principal risks with respect to MBS are the credit worthiness of FHLMC and the risk that the current value of any MBS may decline as a result of changes in market interest rates. The General Partners believe that this risk is minimal due to the fact that the Partnership has the ability to hold these securities to maturity. The most significant demands on the Partnership's liquidity are the quarterly distributions. Distributions are funded by MBS principal prepayments, distributions received from the Marketplace and working capital reserves. Due to fluctuations in MBS principal prepayments and its effect on the Partnership's liquidity, the Partnership may need to periodically adjust the distribution rate. Therefore, sustaining the distribution rate is mainly dependent upon the future performance of the Marketplace. Distributable Cash Flow and Net Proceeds from Capital Transactions Shown below is the calculation of Distributable Cash Flow and Net Proceeds from Capital Transactions as defined by Section 17 of the Partnership Agreement for the nine months ended September 30, 1996 and the period from inception to September 30, 1996. The General Partners provide certain of the information below to meet requirements of the Partnership Agreement and because they believe that is an appropriate supplemental measure of operating performance. However, Distributable Cash Flow and Net Proceeds from Capital Transactions should not be considered by the reader as a substitute to net income, as an indicator of the Partnership's operating performance or to cash flow as a measure of liquidity. (In $1,000's except per Unit amounts) For the Nine Months Inception to Ended September 30, September 30, 1996 1996 Distributable Cash Flow: Net income for tax purposes $ 835 $ 7,226 Items providing / not requiring or (not providing) the use of operating funds: Amortization of acquisition costs 78 78 Amortization of organization costs - 50 Distributions from Joint Venture 1,053 10,519 Partnership's share of Joint Venture taxable net income (951) (7,178) Total Distributable Cash Flow ("DCF") $1,015 $10,695 Unitholders' Share of DCF $1,005 $10,589 Unitholders' Share of DCF per Unit $ .49 $ 5.15(c) General Partners' Share of DCF $ 10 $ 106 Net Proceeds from Capital Transactions: Principal collections on MBS, net $ 263 $ 4,716 Distributions: Unitholders $1,545(a) $17,041(b) Unitholders' Average per Unit .75(a) $ 8.27(b)(c) General Partners $ 10(a) $ 109(b) Total Distributions $1,555(a) $17,150(b) (a) Represents distributions paid in 1996, except the February, 1996 distribution, which relates to 1995 cash flow and includes an estimate of the distribution to be paid in November, 1996. (b) Includes an estimate of the distribution to be paid in November, 1996. (c) Unitholders average per Unit return of capital as of November, 1996 is $3.12 ($8.27 - $5.15). Operations Partnership Distributable Cash Flow, increased during the nine months ended September 30, 1996, as compared to the nine months ended September 30, 1995. This increase is primarily due to an increase in distributions received from the Joint Venture. Total revenue for the three months ended September 30, 1996, increased as compared to the three months ended September 30, 1995, as a result of an increase in net income generated by the Partnership's Joint Venture investment in the Marketplace, as discussed below. For the nine months ended September 30, 1996, total revenue decreased as compared to the same time period in 1995, primarily due to a decrease in interest income earned on the Partnership's investments. MBS interest income decreased due to repayment and prepayments of principal which occur on the MBS portfolio. Interest income on other investments also decreased as a result of lower cash and cash equivalent balances available for investment. Total expenses increased for the three and nine month periods ended September 30, 1996, as compared to the same periods in 1995, as a result of the amortization of costs relating to the investment in the Marketplace which will continue to be amortized over the remaining life of the Marketplace. This increase was partially offset by a decrease in general and administrative expenses incurred with the preparation and mailing of reports and other investor communications. Joint Venture Overall, net income increased for the three and nine months ended September 30, 1996, as compared to the three and nine months ended September 30, 1995. Revenue increased during the same periods, due to higher tenant billings at the Marketplace based upon greater reimbursable operating expenses, including snow removal costs from the stormy winter season, and real estate taxes. Property operating expenses for the three months ended September 30, 1996, as compared to the three months ended 1995, decreased as a result of a refund received in the third quarter of 1996, relating to a prior year real estate tax appeal. For the nine months ended September 30, 1996 property operating expenses increased, as compared to the nine months ended September 30, 1995, due to increased real estate tax and maintenance expenses. Real estate taxes increased due to both a rise in the assessed value of the Marketplace and an increase in the school tax rate by the local taxing authority. The increase in maintenance expense was due to snow removal expenditures as result of adverse winter weather conditions. Depreciation expense increased for the three and nine month periods ended September 30, 1996, as compared to the three and nine month periods ended September 30, 1995, as a result of continued capital improvement expenditures. General In accordance with Financial Accounting Standard No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of", which is effective for fiscal years beginning after December 15, 1995, the Partnership has implemented policies and practices for assessing impairment of its real estate assets. In assessing the impairment of the underlying real estate owned by the Joint Venture, the General Partners routinely perform market and growth studies combined with periodic appraisals of the underlying property. If the General Partners believe that there is a significant impairment in value, a provision to write down the investment to fair value will be charged against income. At this time, the General Partners do not believe that any asset of the Partnership is significantly impaired. KRUPP CASH PLUS-V LIMITED PARTNERSHIP PART II - OTHER INFORMATION Item 1. Legal Proceedings Response: None Item 2. Changes in Securities Response: None Item 3. Defaults upon Senior Securities Response: None Item 4. Submission of Matters to a Vote of Security Holders Response: None Item 5. Other Information Response: None Item 6. Exhibits and Reports on Form 8-K Response: None SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant had duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Krupp Cash Plus-V Limited Partnership (Registrant) BY: /s/Robert A. Barrows Robert A. Barrows Treasurer and Chief Accounting Officer of Krupp Plus-II Corporation, the General Partner of Krupp Company Limited Partnership-VI DATE: October 30,1996