UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
------------------------------------------
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 0-7162
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McNeil PACIFIC INVESTORS FUND 1972
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 94-6279375
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
13760 Noel Road, Suite 600, LB70, Dallas, Texas 75240
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (972) 448-5800
-----------------------------
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 and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
- ------- --------------------
McNEIL PACIFIC INVESTORS FUND 1972
(a California limited partnership in the process of liquidation)
STATEMENTS OF NET ASSETS IN LIQUIDATION
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
--------- ------------
ASSETS
- ------
<S> <C> <C>
Cash and cash equivalents ..................................... $408,174 $397,954
-------- --------
$408,174 $397,954
======== ========
LIABILITIES AND PARTNERS' EQUITY
- ---------------------------------
Other accrued expenses ........................................ $ 195 $ 4,702
Payable to affiliates - General Partner ....................... 12,362 12,362
-------- --------
12,557 17,064
-------- --------
Partners' equity:
Limited partners - 15,000 limited partnership units
authorized; 13,752.5 limited partnership units
issued and outstanding at March 31, 1999 and
December 31, 1998 ........................................ 395,617 380,890
General Partner ............................................ -- --
-------- --------
395,617 380,890
-------- --------
$408,174 $397,954
======== ========
</TABLE>
The financial information included herein has been prepared by management
without audit by independent public accountants.
See accompanying notes to financial statements.
<PAGE>
McNEIL PACIFIC INVESTORS FUND 1972
(a California limited partnership in the process of liquidation)
STATEMENTS OF CHANGES IN NET ASSETS IN LIQUIDATION
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------------
1999 1998
--------- ---------
Revenue:
<S> <C> <C>
Interest ............................................ $ 4,204 $ 4,910
Other revenue ....................................... 11,615 --
--------- ---------
Total revenue ..................................... 15,819 4,910
--------- ---------
Expenses:
Personnel expenses .................................. -- 73
Repair and maintenance .............................. -- 8,592
Other property operating expenses ................... -- 1,494
General and administrative .......................... 1,092 15,568
General and administrative - affiliates ............. -- (3,550)
--------- ---------
Total expenses .................................... 1,092 22,177
--------- ---------
Net increase (decrease) in net assets
in liquidation ...................................... 14,727 (17,267)
Net assets in liquidation at beginning of period........ 380,890 414,319
--------- ---------
Net assets in liquidation at end of period ............. $ 395,617 $ 397,052
========= =========
Net increase (decrease) in net assets in
liquidation per limited partnership unit ............... $ 1.07 $ (1.26)
========= =========
</TABLE>
The financial information included herein has been prepared by management
without audit by independent public accountants.
See accompanying notes to financial statements.
<PAGE>
McNEIL PACIFIC INVESTORS FUND 1972
(a California limited partnership in the process of liquidation)
Notes To Financial Statements
(Unaudited)
March 31, 1999
NOTE 1.
- -------
McNeil Pacific Investors Fund 1972 (the "Partnership") is a limited partnership
organized under the laws of the State of California to invest in real property.
The general partner of the Partnership is McNeil Partners, L.P. (the "General
Partner"), a Delaware limited partnership, an affiliate of Robert A. McNeil. The
principal place of business for the Partnership and the General Partner is 13760
Noel Road, Suite 600, LB70, Dallas, Texas 75240.
In the opinion of management, the financial statements reflect all adjustments
necessary for a fair presentation of the Partnership's financial position and
results of operations. All adjustments were of a normal recurring nature.
However, the results of operations for the three months ended March 31, 1999,
are not necessarily indicative of the results to be expected for the year ending
December 31, 1999.
At a meeting of the limited partners on August 12, 1997, the limited partners
approved the sale of Palm Bay Apartments and the dissolution of the Partnership.
After the September 30, 1997 sale of Palm Bay Apartments, the General Partner
commenced the dissolution and termination of the Partnership. The assets and
liabilities in the accompanying statements of net assets in liquidation at March
31, 1999 and December 31, 1998 are valued at their estimated realizable values
and estimated settlement amounts, respectively. The Partnership is in the
process of liquidating its assets, satisfying all creditors and claims against
the Partnership, distributing its remaining assets to its partners, and
terminating its existence.
NOTE 2.
- -------
The financial statements should be read in conjunction with the financial
statements contained in the Partnership's Annual Report on Form 10-K for the
year ended December 31, 1998, and the notes thereto, as filed with the
Securities and Exchange Commission, which is available upon request by writing
to McNeil Pacific Investors Fund 1972, 13760 Noel Road, Suite 600, LB70, Dallas,
Texas 75240.
NOTE 3.
- -------
The Partnership reimbursed McREMI for its costs, including overhead, of
administering the Partnership's affairs.
The General Partner is entitled to receive a partnership management fee equal to
9.5% of distributions of cash from operations when distributable cash from
operations is distributed to the limited partners. No partnership management
fees were incurred or paid during the three month periods ended March 31, 1999
and 1998.
<PAGE>
Compensation and reimbursements accrued for the benefit of the General Partner
and its affiliates are as follows:
Three Months Ended
March 31,
-----------------------
1999 1998
-------- ----------
Charged to general and administrative affiliates:
Partnership administration....................... $ - $ (3,550)
======= ========
NOTE 4.
- -------
The Partnership received refunds from its general liability insurance carrier
and from its workers' compensation insurance carrier. The refunds are the result
of cancellation of the Partnership's insurance policies after the sale of Palm
Bay Apartments, and the result of adjustments in the amount of premiums the
insurance carriers charged the Partnership based on the insurance carriers'
audit of Partnership operations. The refunds are included in other revenue on
the Statements of Changes in Net Assets in Liquidation.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- ------- ---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
FINANCIAL CONDITION
- -------------------
On September 30, 1997, the Partnership sold its last real estate asset, Palm Bay
Apartments. Proceeds from the sale were distributed to the partners in December
1997. The Partnership's sole remaining asset consists of $408,174 of cash and
cash equivalents. At March 31, 1999, the Partnership's liabilities consist of
$12,557 of accrued expenses, $12,362 of which are due to affiliates of the
General Partner.
The Partnership remains subject to litigation as discussed in Part II, Item 1,
Legal Proceedings. The General Partner intends to use the Partnership's
remaining funds for the payment of costs associated with the litigation. After
the litigation is either adjudicated or otherwise settled, and all legal and
other costs have been provided for, remaining Partnership funds, if any, will be
distributed to the partners.
RESULTS OF OPERATIONS
- ---------------------
Revenues:
The Partnership's interest revenue decreased $706 to $4,204 for the first
quarter of 1999 due to a decreased level of cash and cash equivalents invested
in interest bearing accounts.
<PAGE>
The Partnership also recorded $11,615 of other revenue for the first quarter of
1999 which consists principally of refunds of general liability insurance and
workers' compensation insurance premiums from the Partnership's insurance
carriers.
Expenses:
Partnership expenses for the first quarter of 1998 include $10,159 of expenses
related to operations at Palm Bay Apartments. The Partnership sold Palm Bay
Apartments on September 30, 1997. No such expenses were incurred during the
first quarter of 1999.
General and administrative expenses for the first quarter of 1998 decreased
$14,476 to $1,092. The Partnership continues to incur costs related to the
litigation discussed below. However, the amount of litigation-related costs
decreased for the first quarter of 1999 as compared to the first quarter of
1998.
General and administrative expenses paid to affiliates for the first three
months of 1998 reflects a $3,550 credit or refund from affiliates. General and
administrative expenses for 1997 exceeded the limit equal to 2% of the
Partnership's assets established by the Amended Partnership Agreement.
Consequently, in the first quarter of 1998 the Partnership received a refund
from an affiliate. No such expenses were incurred during the first quarter of
1999.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
At March 31, 1999, the Partnership held $408,174 of cash and cash equivalents.
The Partnership owns no other assets. The Partnership intends to use its
remaining funds to pay the accrued expenses owed by the Partnership, in the
amount of $12,557 as of March 31, 1999, to pay all remaining expenses connected
with the termination of the Partnership, and to provide a contingency reserve to
pay all costs associated with ongoing litigation involving the Partnership as a
defendant. After all expenses have been provided for, and the litigation is
resolved through either adjudication or settlement, all remaining Partnership
funds will be distributed to the partners in accordance with terms of the
Partnership Agreement. The General Partner considers the current balance of cash
and cash equivalents adequate for all of these purposes.
Distributions:
Distribution of the Partnership's remaining cash reserves will be made from
remaining funds of the Partnership, if any, after all liabilities of the
Partnership have been paid, including costs associated with terminating the
Partnership's affairs, and costs associated with adjudicating or settling
litigation in which the Partnership is involved.
<PAGE>
Forward-Looking Information:
Within this document, certain statements are made as to expected Partnership
developments, including the ultimate termination of the Partnership's business,
satisfaction of the Partnership's creditors, and distributions to limited
partners. All of these statements are forward-looking statements made pursuant
to the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. These statements are not historical and involve risks and uncertainties.
The Partnership's actual financial condition, results of operations, and cash
flows for future periods may differ materially due to several factors. These
factors include, but are not limited to, the outcome of litigation in which the
Partnership is a defendant.
YEAR 2000 DISCLOSURE
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State of readiness
- ------------------
The year 2000 problem is the result of computer programs being written using two
digits rather than four to define the applicable year. Any programs that have
time-sensitive software may recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in major systems failure or
miscalculations.
Management has assessed its information technology ("IT") infrastructure to
identify any systems that could be affected by the year 2000 problem. The IT
used by the Partnership for financial reporting and significant accounting
functions was made year 2000 compliant during recent systems conversions. The
software utilized for these functions are licensed by third party vendors who
have warranted that their systems are year 2000 compliant.
Cost
- ----
The cost of IT upgrades is not expected to be material to the Partnership.
Because all the IT systems have been upgraded over the last three years, all
such systems were compliant, or made compliant at no additional cost by third
party vendors.
Risks
- -----
Ultimately, the potential impact of the year 2000 issue will depend not only on
the corrective measures the Partnership undertakes, but also on the way in which
the year 2000 issue is addressed by government agencies and entities that
provide services or supplies to the Partnership. Management has not determined
the most likely worst case scenario to the Partnership. Management believes that
progress on all areas is proceeding and that the Partnership will experience no
adverse effect as a result of the year 2000 issue. However, there is no
assurance that this will be the case.
<PAGE>
Contingency plans
- -----------------
Management is developing contingency plans to address potential year 2000
non-compliance of IT. Management believes that alternative systems are available
that could be utilized to minimize such impact. Management will assess these
risks and develop plans to mitigate possible failures by July 1999.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
- ------- -----------------
James F. Schofield, Gerald C. Gillett, Donna S. Gillett, Jeffrey Homburger,
Elizabeth Jung, Robert Lewis, and Warren Heller et al. v. McNeil Partners L.P.,
McNeil Investors, Inc., McNeil Real Estate Management, Inc., Robert A. McNeil,
Carole J. McNeil, McNeil Pacific Investors Fund 1972, Ltd., McNeil Real Estate
Fund IX, Ltd., McNeil Real Estate Fund X, Ltd., McNeil Real Estate Fund XI,
Ltd., McNeil Real Estate Fund XII, Ltd., McNeil Real Estate Fund XIV, Ltd.,
McNeil Real Estate Fund XV, Ltd., McNeil Real Estate Fund XX, L.P., McNeil Real
Estate Fund XXI, L.P., McNeil Real Estate Fund XXII, L.P., McNeil Real Estate
Fund XXIII, L.P., McNeil Real Estate Fund XXIV, L.P., McNeil Real Estate Fund
XXV, L.P., McNeil Real Estate Fund XXVI, L.P., and McNeil Real Estate Fund
XXVII, L.P., Hearth Hollow Associates, McNeil Midwest Properties I, L.P. and
Regency North Associates, L.P., - Superior Court of the State of California for
the County of Los Angeles, Case No. BC133799 (Class and Derivative Action
Complaint).
The action involves purported class and derivative actions brought by limited
partners of each of the limited partnerships that were named as nominal
defendants as listed above (the "Partnerships"). Plaintiffs allege that McNeil
Investors, Inc., its affiliate McNeil Real Estate Management, Inc. and three of
their senior officers and/or directors (collectively, the "Defendants") breached
their fiduciary duties and certain obligations under the respective Amended
Partnership Agreement. Plaintiffs allege that Defendants have rendered such
Units highly illiquid and artificially depressed the prices that are available
for Units on the resale market. Plaintiffs also allege that Defendants engaged
in a course of conduct to prevent the acquisition of Units by an affiliate of
Carl Icahn by disseminating purportedly false, misleading and inadequate
information. Plaintiffs further allege that Defendants acted to advance their
own personal interests at the expense of the Partnerships' public unit holders
by failing to sell Partnership properties and failing to make distributions to
unitholders.
On December 16, 1996, the Plaintiffs filed a consolidated and amended complaint.
Plaintiffs are suing for breach of fiduciary duty, breach of contract and an
accounting, alleging, among other things, that the management fees paid to the
McNeil affiliates over the last six years are excessive, that these fees should
be reduced retroactively and that the respective Amended Partnership Agreements
governing the Partnerships are invalid.
<PAGE>
Defendants filed a demurrer to the consolidated and amended complaint and a
motion to strike on February 14, 1997, seeking to dismiss the consolidated and
amended complaint in all respects. A hearing on Defendant's demurrer and motion
to strike was held on May 5, 1997. The Court granted Defendants' demurrer,
dismissing the consolidated and amended complaint with leave to amend. On
October 31, 1997, the Plaintiffs filed a second consolidated and amended
complaint. The case was stayed pending settlement discussions. A Stipulation of
Settlement dated September 15, 1998 has been signed by the parties. Preliminary
Court approval was received on October 6, 1998. A hearing for Final Approval of
Settlement, initially scheduled for December 17, 1998, has been continued to
July 2, 1999.
Because McNeil Real Estate Fund XXIII, L.P., Hearth Hollow Associates, McNeil
Midwest Properties I, L.P. and Regency North Associates, L.P. would be part of
the transaction contemplated in the settlement and Plaintiffs claim that an
effort should be made to sell the McNeil Partnerships, Plaintiffs have included
allegations with respect to McNeil Real Estate Fund XXIII, L.P., Hearth Hollow
Associates, McNeil Midwest Properties I, L.P. and Regency North Associates, L.P.
in the third consolidated and amended complaint.
Plaintiff's counsel intends to seek an order awarding attorney's fees and
reimbursements of their out-of-pocket expenses. The amount of such award is
undeterminable until final approval is received from the court. Fees and
expenses shall be allocated amongst the Partnerships on a pro rata basis, based
upon tangible asset value of each such partnership, less total liabilities,
calculated in accordance with the Amended Partnership Agreements for the quarter
most recently ended.
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- ------- --------------------------------
(a) Exhibits.
Exhibit
Number Description
------- -----------
3. Restated Certificate and Agreement of
Limited Partnership dated of March 8,
1972. (1)
4. Amendment to Restated Certificate and Agree-
ment of Limited Partnership dated March 30,
1992. (2)
11. Statement regarding computation of net
income per limited partnership unit: Net
income per limited partnership unit is
computed by dividing net income allocated to
the limited partners by the number of
limited partnership units outstanding. Per
unit information has been computed based on
13,752.5 limited partnership units
outstanding in 1999 and 1998.
27. Financial Data Schedule for the quarter
ended March 31, 1999.
(1) Incorporated by reference to the Annual Report of Registrant on Form
10-K for the period ended December 31, 1990, as filed on March 29,
1991.
(2) Incorporated by reference to the Current Report on Form 8-K filed by
the Registrant with the Securities and Exchange Commission on April
10, 1992.
(b) Reports on Form 8-K. There were no reports on Form 8-K filed during the
quarter ended March 31, 1999.
<PAGE>
McNEIL PACIFIC INVESTORS FUND 1972
(a California limited partnership in the process of liquidation)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized:
McNEIL PACIFIC INVESTORS FUND 1972
By: McNeil Partners, L.P., General Partner
By: McNeil Investors, Inc., General Partner
May 18, 1999 By: /s/ Ron K. Taylor
- -------------- ---------------------------------------------
Date Ron K. Taylor
President and Director of McNeil
Investors, Inc.
(Principal Financial Officer)
May 18, 1999 By: /s/ Brandon K. Flaming
- -------------- ---------------------------------------------
Date Brandon K. Flaming
Vice President of McNeil Investors, Inc.
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 408,174
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 408,174
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 408,174
<SALES> 0
<TOTAL-REVENUES> 15,819
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,092
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 14,727
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,727
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
