UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1999
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
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Commission file number 0-11126
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BALCOR EQUITY PROPERTIES-XII
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Illinois 36-3169763
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2355 Waukegan Road
Bannockburn, Illinois 60015
- ---------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 267-1600
--------------
Securities registered pursuant to Section 12(b) of the Act: None
----
Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Interests
-----------------------------
(Title of class)
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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ X ]
PART I
Item 1. Business
- ----------------
Balcor Equity Properties-XII (the "Registrant") is a limited partnership formed
in 1981 under the laws of the State of Illinois. The Registrant raised
$37,447,000 from sales of Limited Partnership Interests. The Registrant has
retained cash reserves from the sale of its real estate investments for
contingencies which exist or may arise. The Registrant's operations currently
consist of interest income earned on short-term investments and the payment of
administrative expenses.
The Registrant utilized the net offering proceeds to acquire seven real
property investments and a minority joint venture interest in one additional
real property, and has since disposed of all of these investments. The
Partnership Agreement generally provides that the proceeds of any sale or
refinancing of the Registrant's properties will not be reinvested in new
acquisitions.
The Partnership Agreement provides for the dissolution of the Registrant upon
the occurrence of certain events, including the disposition of all its
interests in real estate. The Registrant sold its final real estate investment
in December 1996. The Registrant has retained a portion of the cash from the
property sales to satisfy obligations of the Registrant as well as to establish
a reserve for contingencies. The timing of the termination of the Registrant
and final distribution of cash will depend upon the nature and extent of
liabilities and contingencies which exist or may arise. Such contingencies may
include legal and other fees and costs stemming from litigation involving the
Registrant including, but not limited to, the Masri lawsuit discussed in "Item
3. Legal Proceedings". Due to this litigation, the Registrant will not be
dissolved and the reserves will be held by the Registrant until the conclusion
of such contingencies. There can be no assurances as to the time frame for the
conclusion of all contingencies.
The Registrant no longer has an ownership interest in any real estate
investment. The General Partner is not aware of any material potential
liability relating to environmental issues or conditions affecting real estate
formerly owned by the Registrant.
The officers and employees of Balcor Partners-XII, the General Partner of the
Registrant, and its affiliates perform services for the Registrant. The
Registrant currently has no employees engaged in its operations.
Item 2. Properties
- ------------------
As of December 31, 1999, the Registrant did not own any properties.
In the opinion of the General Partner, the Registrant has obtained adequate
insurance coverage for property liability and property damage matters.
See Notes to Financial Statements for other information regarding former real
estate property investments.
Item 3. Legal Proceedings
- -------------------------
Raymond Masri vs. Lehman Brothers, Inc., et al.
- -----------------------------------------------
On February 29, 1996, a proposed class action complaint was filed, Raymond
Masri vs. Lehman Brothers, Inc., et al., Case No. 96/103727 (Supreme Court of
the State of New York, County of New York). The Partnership, twelve additional
limited partnerships which were sponsored by The Balcor Company, three limited
partnerships sponsored by the predecessor of Lehman Brothers, Inc., (together
with the Partnership, the "Defendant Partnerships"), Lehman Brothers, Inc. and
Smith Barney, Inc. are defendants. The complaint alleges, among other things,
common law fraud and deceit, negligent misrepresentation and breach of
fiduciary duty relating to the disclosure of information in the offering of
limited partnership interests in the Defendant Partnerships. The complaint
seeks judgment for compensatory damages equal to the amount invested in the
Defendant Partnerships by the proposed class plus interest accrued thereon;
general damages for injuries arising from the defendants' alleged actions;
recovery from the defendants of all profits received by them as a result of
their alleged actions relating to the Defendant Partnerships; exemplary
damages; attorneys' fees and other costs. No activity occurred on this matter
during 1999.
The defendants intend to vigorously contest this action. No class has been
certified as of this date. Management of each of the defendants believes they
have meritorious defenses to contest the claims.
Madison Partnership Liquidity Investors XX, et al. vs. The Balcor Company, et
- -----------------------------------------------------------------------------
al.
- ---
Sandra Dee vs. The Balcor Company, et al.
- -----------------------------------------
On May 7, 1999, a proposed class action complaint was filed and on May 13, 1999
was served on the defendants, Madison Partnership Liquidity Investors XX, et
al. vs. The Balcor Company, et al. (Circuit Court, Chancery Division, Cook
County, Illinois, Docket No. 99CH 08972). The General Partner of the
Partnership, the general partners of twenty-one additional limited partnerships
which were sponsored by The Balcor Company, The Balcor Company and one
individual are named as defendants in this action. The Partnership and the
twenty-one additional limited partnerships are referred to herein as the
"Affiliated Partnerships". Plaintiffs are entities that initiated tender offers
to purchase units and, in fact, purchased units in eleven of the Affiliated
Partnerships.
On June 1, 1999, a proposed class action complaint was filed and on August 16,
1999 was served on the defendants, Sandra Dee vs. The Balcor Company, et al.
(Circuit Court, Chancery Division, Cook County, Illinois, Docket No. 99CH
08123). This complaint is identical in all material respects to the Madison
Partnership Liquidity Investors XX, et al. vs. The Balcor Company et al.
complaint filed in May 1999. The defendants filed on September 15, 1999 a
motion to consolidate the Dee case with the Madison Partnership case. On
September 20, 1999, the motion was granted and this case was consolidated with
the Madison Partnership case.
The complaints allege breach of fiduciary duties and breach of contract under
the partnership agreements for each of the Affiliated Partnerships. The
complaints seek the winding up of the affairs of the Affiliated Partnerships,
the establishment of a liquidating trust for each of the Affiliated
Partnerships until a resolution of all contingencies occurs, the appointment of
an independent trustee for each such liquidating trust and the distribution of
a portion of the cash reserves to limited partners. The complaints also seek
compensatory damages, punitive and exemplary damages, and costs and expenses in
pursuing the litigation.
The defendants filed motions to dismiss the complaints on July 14, 1999 and on
September 15, 1999. On January 19, 2000 a hearing on the motions was held and
the class allegations in the complaints were struck regarding the Partnership
and ten of the Affiliated Partnerships in which plaintiffs do not own
interests. In all other respects, the motions to dismiss were denied. While the
court directed the plaintiffs to file an amended complaint by February 18,
2000, as of this date they have yet to do so.
The defendants intend to vigorously contest this action. No class has been
certified as of this date.
Item 4. Submission of Matters to a Vote of Security Holders
- -----------------------------------------------------------
No matters were submitted to a vote of the Limited Partners of the Registrant
during 1999.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
- -------------------------------------------------------------------------------
There has not been an established public market for Limited Partnership
Interests and it is not anticipated that one will develop. For information
regarding distributions, see "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital
Resources".
As of December 31, 1999, the number of record holders of Limited Partnership
Interests of the Registrant was 3,205.
Item 6. Selected Financial Data
- -------------------------------
Year ended December 31,
----------------------------------------------------------
1999 1998 1997 1996 1995
--------- --------- ---------- ---------- ------------
Total income $94,261 $78,405 $316,105 $ 8,278,842 $ 9,271,354
(Loss) income before
gain on sales of
properties and
extraordinary
items (7,093) (140,399) 22,677 (109,614) (547,006)
Net (loss) income (7,093) (140,399) 22,677 26,597,761 (547,006)
Net (loss) income
per Limited Part-
nership Interest -
Basic and Diluted (.19) (3.42) .61 695.36 (14.46)
Total assets 1,400,738 1,413,764 1,828,319 20,139,284 25,940,108
Mortgage notes
payable None None None None 30,082,916
Distributions per
Limited Partner-
ship Interest (A) None 8.28 482.85 15.00 None
(A) These amounts represent distributions of original capital.
Item 7. Management's Discussion and Analysis of Financial Condition and
- -----------------------------------------------------------------------
Results of Operations
- ---------------------
Operations
- ----------
Summary of Operations
- ---------------------
The operations of Balcor Equity Properties - XII (the "Partnership") in 1999,
1998 and 1997 consisted primarily of administrative expenses which were
partially offset by interest income earned on short-term investments. During
1999, the Partnership received a partial real estate tax refund relating to the
DeFoors Creek Apartments and during 1998, the Partnership paid real estate
taxes related to the property. As a result of these events and lower
administrative expenses during 1999, the Partnership's net loss decreased
during 1999 as compared to 1998. During 1997, the Partnership also received
partial refunds of prior years' insurance premiums and refunds of real estate
taxes relating to DeFoors Creek Apartments and paid operating expenses related
to properties sold in 1996. As a result, the Partnership recognized net income
during 1997 as compared to a net loss during 1998. Further discussion of the
Partnership's operations is summarized below.
1999 Compared to 1998
- ---------------------
As a result of lower interest rates in 1999 and higher average cash balances
prior to a distribution to Limited Partners in January 1998, interest income on
short-term investments decreased during 1999 as compared to 1998.
During 1999, the Partnership received a partial refund of real estate taxes
paid during 1998 on the DeFoors Creek Apartments. This amount has been
recognized as other income for financial statement purposes.
Primarily due to a decrease in accounting and legal fees, administrative
expenses decreased during 1999 as compared to 1998.
1998 Compared to 1997
- ---------------------
Due to higher average cash balances in 1997 as a result of the investment of
proceeds received in connection with the 1996 property sales prior to
distributions to Limited Partners in 1997 and January 1998, interest income on
short term investments was higher during 1997 as compared to 1998.
The Partnership recognized other income in 1997 primarily in connection with
partial refunds of prior years' insurance premiums and refunds of real estate
taxes relating to the Partnership's properties.
During 1997, the Partnership paid additional expenditures related to certain of
the properties sold during 1996. As a result, the Partnership recognized
property operating expense during 1997.
During 1997 and 1998, the Partnership paid additional real estate taxes related
to the DeFoors Creek Apartments, which was sold in 1996. The Partnership had
filed an appeal against an increase in the assessed value of the property in
prior years. The Partnership did not win the appeal and consequently, paid the
taxes due for prior years.
Liquidity and Capital Resources
- -------------------------------
The cash position of the Partnership decreased by approximately $14,000 as of
December 31, 1999 as compared to December 31, 1998 primarily due to cash used
in operating activities for the payment of administrative expenses, which was
partially offset by interest income earned on short-term investments and the
receipt of a partial real estate tax refund related to the DeFoors Creek
Apartments.
The Partnership Agreement provides for the dissolution of the Partnership upon
the occurrence of certain events, including the disposition of all its
interests in real estate. The Partnership sold its final real estate investment
in December 1996. The Partnership has retained a portion of the cash from the
property sales to satisfy obligations of the Partnership as well as to
establish a reserve for contingencies. The timing of the termination of the
Partnership and final distribution of cash will depend upon the nature and
extent of liabilities and contingencies which exist or may arise. Such
contingencies include legal and other fees and costs stemming from litigation
involving the Partnership including, but not limited to, the Masri lawsuit
discussed in "Item 3. Legal Proceedings". Due to this litigation, the
Partnership will not be dissolved and the reserves will be held by the
Partnership until the conclusion of such contingencies. There can be no
assurances as to the time frame for the conclusion of all contingencies.
The Partnership made distributions from Net Cash Proceeds totaling $8.28 and
$482.85 per Interest in 1998 and 1997, respectively. The Partnership made no
distributions in 1999. See Statements of Partners' Capital (Deficit) for
additional information.
Limited Partners have received cumulative distributions of $636.63 per $1,000
Interest, as well as certain tax benefits. Of this amount, $70.00 has been from
Net Cash Receipts and $566.63 has been from Net Cash Proceeds. No additional
distributions are anticipated to be made prior to the termination of the
Partnership. However, after paying final partnership expenses, any remaining
cash reserves will be distributed. Limited Partners will not recover all of
their original investment.
The Partnership believes that its key vendors were Year 2000 compliant with
respect to the Partnership's operations as of December 31, 1999 and that there
was no material effect on the business, financial position or results of
operations of the Partnership related to Year 2000 issues.
Certain statements in this report constitute "forward looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended. These
statements may include statements regarding income or losses as well as
assumptions relating to the foregoing.
The forward-looking statements made by the Partnership are subject to known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Partnership to differ from any
future results, performance or achievements expressed or implied by the
forward-looking statements.
Item 7a. Quantitative and Qualitative Disclosure About Market Risk
- ------------------------------------------------------------------
The supplemental financial information specified by Item 305 of Regulation S-K
is not applicable.
Item 8. Financial Statements and Financial Statement Supplementary Data
- -----------------------------------------------------------------------
See Index to Financial Statements in this Form 10-K.
The supplemental financial information specified by Item 302 of Regulation S-K
is not applicable.
The net effect of the differences between the financial statements and the tax
returns is summarized as follows:
December 31, 1999 December 31, 1998
----------------------- -------------------------
Financial Tax Financial Tax
Statements Returns Statements Returns
---------- --------- ---------- ----------
Total assets $1,400,738 $5,951,220 $1,413,764 $5,965,140
Partners' capital
(deficit) accounts:
General Partner (54,412) (54,412) (54,412) (54,412)
Limited Partners 1,387,963 5,938,441 1,395,056 5,946,428
Net (loss) income
General Partner None None (12,412) 3,132
Limited Partners (7,093) (7,987) (127,987) (136,498)
Per Limited Part-
nership Interest (.19)(A) (.21) (3.42)(A) (3.65)
(A) Amount represents basic and diluted net loss per Limited Partnership
Interest.
Item 9. Changes in and Disagreements with Accountants on Accounting and
- -----------------------------------------------------------------------
Financial Disclosure
- --------------------
There have been no changes in or disagreements with accountants on any matter
of accounting principles, practices or financial statement disclosure.
PART III
Item 10. Directors and Executive Officers of the Registrant
- -----------------------------------------------------------
(a) Neither the Registrant nor Balcor Partners-XII, its General Partner, has a
Board of Directors.
(b, c & e) The names, ages and business experiences of the executive officers
and significant employees of the General Partner of the Registrant are as
follows:
TITLE OFFICERS
Chairman, President and Chief Thomas E. Meador
Executive Officer
Senior Managing Director, Chief Jayne A. Kosik
Financial Officer, Treasurer
and Assistant Secretary
Thomas E. Meador (age 52) joined Balcor in July 1979. He is Chairman, President
and Chief Executive Officer and has responsibility for all ongoing day-to-day
activities at Balcor. He is a member of the board of directors of The Balcor
Company. He is also Senior Vice President of American Express Company and is
responsible for its real estate operations worldwide. Prior to joining Balcor,
Mr. Meador was employed at the Harris Trust and Savings Bank in the commercial
real estate division where he was involved in various lending activities. Mr.
Meador received his M.B.A. degree from the Indiana University Graduate School
of Business.
Mr. Meador is on the Board of Directors of AMLI Commercial Properties Trust, a
private real estate investment trust that owns office and industrial buildings
in the Chicago, Illinois area. Mr. Meador was elected to the Board of AMLI
Commercial Properties Trust in August 1998.
Jayne A. Kosik (age 42) joined Balcor in August 1982 and, as Chief Financial
Officer, is responsible for Balcor's financial, human resources and treasury
functions. Ms. Kosik is also a member of the board of directors of The Balcor
Company. From June 1989 until October 1996, Ms. Kosik had supervisory
responsibility for accounting functions relating to Balcor's public and private
partnerships. She is also Treasurer and a Senior Managing Director of The
Balcor Company. Ms. Kosik is a Certified Public Accountant.
(d) There is no family relationship between any of the foregoing officers.
(e) None of the foregoing officers or employees are currently involved in any
material legal proceedings nor were any such proceedings terminated during the
fourth quarter of 1999 except that Mr. Meador is named, in his capacity as an
officer of Balcor, as a defendant in the Madison/Dee lawsuit described in "Item
3. Legal Proceedings".
Item 11. Executive Compensation
- -------------------------------
The Registrant has not paid and does not propose to pay any remuneration to the
executive officers and directors of the General Partner. The executive officers
receive compensation from The Balcor Company but not from the Registrant for
services performed for various affiliated entities, which may include services
performed for the Registrant. However, the General Partner believes that any
such compensation attributable to services performed for the Registrant is
immaterial to the Registrant. See Note 6 of Notes to Financial Statements for
information relating to transactions with affiliates.
Item 12. Security Ownership of Certain Beneficial Owners and Management
- -----------------------------------------------------------------------
(a) The following entities are the sole Limited Partners which own beneficially
more than 5% of the outstanding Limited Partnership Interests of the
Registrant:
Name and Amount and
Address of Nature of Percent
Beneficial Beneficial of
Title of Class Owner Ownership Class
- -------------------------------------------------------------------------------
Limited WIG XII 4,166.90 11.13%
Partnership Partners Limited
Interests Chicago, Partnership
Illinois Interests
Limited Metropolitan 3,351.50 8.95%
Partnership Acquisition VII Limited
Interests Greenville, Partnership
South Carolina Interests
For purposes of this Item 12, WIG XII Partners is an affiliate of Metropolitan
Acquisition VII and, collectively, they own 20.08% of the Interests.
(b) Balcor Partners-XII and its officers and partners own as a group the
following Limited Partnership Interests in the Registrant:
Amount
Beneficially
Title of Class Owned Percent of Class
-------------- --------------- ----------------
Limited Partnership
Interests 70 Interests Less than 1%
Relatives of the officers and affiliates of the General Partner do not own any
Limited Partnership Interests.
In addition, Balcor LP Corp., an affiliate of the General Partner, holds title
to 28 Limited Partnership Interests in the Partnership due exclusively to
instances in which Limited Partners abandoned title to their Limited
Partnership Interests. Balcor LP Corp. is a nominee holder only of such
Interests and has disclaimed any economic or beneficial ownership in said
Interests. All distributions of cash payable with respect to such Interests
held by Balcor LP Corp. are returned to the Partnership for distribution to
other Limited Partners in accordance with the Partnership Agreement.
(c) The Registrant is not aware of any arrangements, the operation of which may
result in a change of control of the Registrant.
Item 13. Certain Relationships and Related Transactions
- -------------------------------------------------------
(a & b) See Note 6 of Notes to Financial Statements for additional information
relating to transactions with affiliates.
See Note 4 of Notes to Financial Statements for information relating to the
Partnership Agreement and the allocation of distributions and profits and
losses.
(c) No management person is indebted to the Registrant.
(d) The Registrant has no outstanding agreements with any promoters.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
- ------------------------------------------------------------------------
(a)
(1 & 2) See Index to Financial Statements in this Form 10-K.
(3) Exhibits:
(3) The Amended and Restated Agreement of Limited Partnership set forth as
Exhibit 3 to the Registrant's Post-Effective Amendment No. 1 to the
Registration Statement on Form S-11 dated June 28, 1983 (Registration
No. 2-76947) is incorporated herein by reference.
(4) Certificate of Limited Partnership set forth as Exhibit 4.1 to the
Registrant's Registration Statement on Form S-11 dated July 2, 1982
(Registration No. 2-76947) and Form of Confirmation regarding Interests in the
Registrant set forth as Exhibit 4.2 to the Registrant's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1992 are hereby incorporated herein by
reference.
(27) Financial Data Schedule of the Registrant for 1999 is attached hereto.
(b) Reports on Form 8-K: No reports on Form 8-K were filed during the quarter
ended December 31, 1999.
(c) Exhibits: See Item 14(a)(3) above.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
BALCOR EQUITY PROPERTIES-XII
By: /s/Jayne A. Kosik
--------------------------------
Jayne A. Kosik
Senior Managing Director and Chief
Financial Officer (Principal
Accounting and Financial Officer)
of Balcor Partners-XII, the
General Partner
Date: March 28, 2000
--------------
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
---------------------- ---------------------------- ------------
President and Chief Executive
Officer (Principal Executive
Officer) of Balcor Partners-XII,
the General Partner
/s/Thomas E. Meador March 28, 2000
- ------------------- --------------
Thomas E. Meador
Senior Managing Director and Chief
Financial Officer (Principal
Accounting and Financial Officer) of
Balcor Partners-XII, the General
Partner
/s/Jayne A. Kosik March 28, 2000
- ----------------- --------------
Jayne A. Kosik
INDEX TO FINANCIAL STATEMENTS
Report of Independent Accountants
Financial Statements:
Balance Sheets, December 31, 1999 and 1998
Statements of Partners' Capital (Deficit), for the years ended December 31,
1999, 1998 and 1997
Statements of Income and Expenses, for the years ended December 31, 1999, 1998
and 1997
Statements of Cash Flows, for the years ended December 31, 1999, 1998 and 1997
Notes to Financial Statements
Financial Statement Schedules are omitted for the reason that they are
inapplicable or equivalent information has been included elsewhere herein.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners of
Balcor Equity Properties-XII:
In our opinion, the accompanying balance sheets and the related statements of
partners' capital (deficit), of income and expenses and of cash flows present
fairly, in all material respects, the financial position of Balcor Equity
Properties-XII An Illinois Limited Partnership (the "Partnership") at December
31, 1999 and 1998, and the results of its operations and its cash flows for
each of the three years in the period ended December 31, 1999, in conformity
with accounting principles generally accepted in the United States. These
financial statements are the responsibility of the Partnership's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States, which require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above.
As described in Note 2 to the financial statements, the partnership agreement
provides for the dissolution of the Partnership upon the occurrence of certain
events, including the disposition of all its interests in real estate. The
Partnership no longer has an ownership interest in any real estate investment.
As described in Note 8, the Partnership has contingencies related to litigation.
Upon resolution of the litigation contingency matters, the Partnership intends
to cease operations and dissolve.
PricewaterhouseCoopers LLP
Chicago, Illinois
March 28 , 2000
BALCOR EQUITY PROPERTIES - XII
(An Illinois Limited Partnership)
BALANCE SHEETS
December 31, 1999 and 1998
ASSETS
1999 1998
--------------- -----------------
Cash and cash equivalents $ 1,393,754 $ 1,407,779
Accounts and accrued interest receivable 6,984 5,985
--------------- -----------------
$ 1,400,738 $ 1,413,764
=============== =================
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 38,155 $ 54,683
Due to affiliates 29,032 18,437
--------------- -----------------
Total liabilities 67,187 73,120
--------------- -----------------
Commitments and contingencies
Limited Partners' capital (37,447
Interests issued and outstanding) 1,387,963 1,395,056
General Partner's deficit (54,412) (54,412)
---------------- ----------------
Total partners' capital 1,333,551 1,340,644
---------------- ----------------
$ 1,400,738 $ 1,413,764
================ ================
The accompanying notes are an integral part of the financial statements.
BALCOR EQUITY PROPERTIES - XII
(An Illinois Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
for the years ended December 31, 1999, 1998 and 1997
Partners' Capital (Deficit) Accounts
--------------------------------------------
General Limited
Total Partner Partners (A)
-------------- -------------- --------------
Balance at December 31, 1996 $ 19,849,539 $ (42,000) $ 19,891,539
Cash Distribution to Limited
Partners (B) (18,081,284) (18,081,284)
Net income for the year
ended December 31, 1997 22,677 None 22,677
-------------- -------------- --------------
Balance at December 31, 1997 1,790,932 (42,000) 1,832,932
Cash Distribution to Limited
Partners (B) (309,889) (309,889)
Net loss for the year
ended December 31, 1998 (140,399) (12,412) (127,987)
-------------- -------------- --------------
Balance at December 31, 1998 1,340,644 (54,412) 1,395,056
Net loss for the year
ended December 31, 1999 (7,093) None (7,093)
-------------- -------------- --------------
Balance at December 31, 1999 $ 1,333,551 $ (54,412) $ 1,387,963
============== ============== ==============
(A) Includes a $70,000 investment by the General Partner.
(B) Summary of distributions per Limited Partnership Interest:
1999 1998 1997
-------------- -------------- --------------
First Quarter None $ 8.28 $ 225.00
Second Quarter None None 257.85
Third Quarter None None None
Fourth Quarter None None None
The accompanying notes are an integral part of the financial statements.
BALCOR EQUITY PROPERTIES - XII
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the years ended December 31, 1999, 1998 and 1997
1999 1998 1997
-------------- -------------- ----------------
Income:
Interest on short-term
investments $ 68,220 $ 78,405 $ 267,421
Other 26,041 48,684
-------------- -------------- ----------------
Total income 94,261 78,405 316,105
-------------- -------------- ----------------
Expenses:
Property operating 77,742
Real estate taxes 53,417 42,742
Administrative 101,354 165,387 172,944
-------------- -------------- ----------------
Total expenses 101,354 218,804 293,428
-------------- -------------- ----------------
Net (loss) income $ (7,093) $ (140,399) $ 22,677
============== ============== ================
Net (loss) income allocated
to General Partner None $ (12,412) None
============== ============== ================
Net (loss) income allocated
to Limited Partners $ (7,093) $ (127,987) $ 22,677
============== ============== ================
Net (loss) income per Limited
Partnership Interest (37,447
issued and outstanding)
- Basic and Diluted $ (0.19) $ (3.42) $ 0.61
============== ============== ================
The accompanying notes are an integral part of the financial statements.
BALCOR EQUITY PROPERTIES - XII
(An Illinois Limited Partnership)
STATEMENTS OF CASH FLOWS
for the years ended December 31, 1999, 1998 and 1997
1999 1998 1997
-------------- -------------- --------------
Operating activities:
Net (loss) income $ (7,093) $ (140,399) $ 22,677
Adjustments to reconcile
net (loss) income to
net cash (used in) or
provided by operating
activities:
Net change in:
Accounts and accrued
interest receivable (999) 20,586 288,617
Accounts payable (16,528) 40,978 (201,114)
Due to affiliates 10,595 (5,245) (51,244)
-------------- --------------- ---------------
Net cash (used in) or
provided by operating
activities (14,025) (84,080) 58,936
-------------- --------------- ---------------
Financing activities:
Distributions to Limited
Partners (309,889) (18,081,284)
--------------- --------------
Net cash used in financing
activities (309,889) (18,081,284)
--------------- --------------
Net change in cash and cash
equivalents (14,025) (393,969) (18,022,348)
Cash and cash equivalents at
beginning of year 1,407,779 1,801,748 19,824,096
-------------- --------------- ---------------
Cash and cash equivalents at
end of year $ 1,393,754 $ 1,407,779 $ 1,801,748
============== =============== ===============
The accompanying notes are an integral part of the financial statements.
BALCOR EQUITY PROPERTIES-XII
(An Illinois Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
1. Nature of the Partnership's Business:
Balcor Equity Properties-XII (the "Partnership") has retained cash reserves
from the sale of its real estate investments for contingencies which exist or
may arise. The Partnership's operations currently consist of interest income
earned on short-term investments and the payment of administrative expenses.
2. Partnership Termination:
The Partnership Agreement provides for the dissolution of the Partnership upon
the occurrence of certain events, including the disposition of all its
interests in real estate. The Partnership sold its final real estate investment
in December 1996. The Partnership has retained a portion of the cash from the
property sales to satisfy obligations of the Partnership as well as to
establish a reserve for contingencies. The timing of the termination of the
Partnership and the final distribution of cash will depend upon the nature and
extent of liabilities and contingencies which exist or may arise. Such
contingencies may include legal and other fees and costs stemming from
litigation involving the Partnership, including but not limited to, the Masri
lawsuit discussed in Note 8 of Notes to Financial Statements. Due to this
litigation, the Partnership will not be dissolved and the reserves will be held
by the Partnership until the conclusion of such contingencies. There can be no
assurances as to the time frame for the conclusion of all contingencies.
3. Accounting Policies:
(a) The preparation of the financial statements in conformity with generally
accepted accounting principles requires the General Partner to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could vary from those estimates.
(b) The Partnership calculates the fair value of its financial instruments
based on estimates using present value techniques. The Partnership includes
this additional information in the notes to the financial statements when the
fair value is different than the carrying value of those financial instruments.
When the fair value reasonably approximates the carrying value, no additional
disclosure is made.
(c) In order for the capital account balances to appropriately reflect the
partners' remaining economic interests in the Partnership, the income (loss)
allocations have been adjusted.
(d) Cash and cash equivalents include all unrestricted, highly liquid
investments with an original maturity of three months or less. Cash is held or
invested in one financial institution.
(e) The Partnership is not liable for Federal income taxes and each partner
recognizes his proportionate share of the Partnership loss or income in his tax
return; therefore, no provision for income taxes is made in the financial
statements of the Partnership.
(f) Revenue is recognized on an accrual basis in accordance with generally
accepted accounting principles.
(g) Statement of Financial Accounting Standards, No. 128, "Earnings per Share"
was adopted by the Partnership effective for the year-ended December 31, 1997.
The Partnership has no dilutive securities.
4. Partnership Agreement:
The Partnership was organized on December 23, 1981; however, operations did not
commence until 1982. The Partnership Agreement provides for Balcor Partners-XII
to be the General Partner and for the admission of Limited Partners through the
sale of up to 40,000 Limited Partnership Interests at $1,000 per Interest,
37,447 of which were sold through November 30, 1982, the termination date of
the offering.
The Partnership Agreement provides that the General Partner will be allocated
1% of all profits and losses and the Limited Partners will be allocated 99% of
the profits and losses. In order for the capital account balances to
appropriately reflect the partners' remaining economic interests in the
Partnership, the (loss) income allocations have been adjusted.
One hundred percent of Net Cash Receipts available for distribution was
distributed to the holders of Interests in proportion to their participating
percentages as of the record date for such distributions. Under certain
circumstances, the General Partner would have participated in the Net Cash
Proceeds from the sale or refinancing of Partnership properties. The General
Partner's participation was limited to 20% of excess Net Cash Proceeds and was
subordinated to the return of Original Capital plus certain levels of return to
the holders of Interests, as defined in the Partnership Agreement. Since the
required subordination levels were not met, the General Partner has not
received any distributions of Net Cash Receipts or Net Cash Proceeds during the
lifetime of the Partnership.
5. Tax Accounting:
The Partnership keeps its books in accordance with the Internal Revenue Code,
rules and regulations promulgated thereunder, and existing interpretations
thereof. The accompanying financial statements, which are prepared in
accordance with generally accepted accounting principles, will differ from the
tax returns due to the different treatment of various items as specified in the
Internal Revenue Code. The net effect of these accounting differences is that
the net loss for 1999 in the financial statements is $894 lower than the tax
loss of the Partnership for the same period.
6. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates are:
Year Ended Year Ended Year Ended
12/31/99 12/31/98 12/31/97
-------------- --------------- --------------
Paid Payable Paid Payable Paid Payable
------ ------- ----- -------- ------ -------
Reimbursement of
expenses to the
General Partner, at
cost:
Accounting $7,726 $8,197 $4,128 $2,979 $17,030 $5,166
Data processing 4,798 4,502 2,119 872 1,951 None
Legal 3,191 3,513 3,313 2,401 10,472 3,009
Portfolio management 11,690 12,820 16,423 12,185 42,839 13,824
Property sales admin-
istration None None 1,683 None 9,006 1,683
Subject to the provisions of the partnership agreement, the Partnership has
agreed to advance the legal fees incurred by the General Partner in defending
the Madison Partnership lawsuit discussed in Note 8 of Notes to Financial
Statements.
7. Other Income:
(a) During 1999, the Partnership received a partial refund of real estate taxes
paid during 1998 on the DeFoors Creek Apartments. This amount has been
recognized as other income for financial statement purposes.
(b) During 1997, the Partnership recognized other income primarily in
connection with refunds of prior years' insurance premiums and real estate
taxes relating to the Partnership's sold properties.
8. Contingencies:
(a) The Partnership is currently involved in a lawsuit, Masri vs. Lehman
Brothers, Inc., et al., whereby the Partnership and certain affiliates have
been named as defendants alleging claims involving certain state securities and
common law violations with regard to the property acquisition process of the
Partnership, and to the adequacy and accuracy of disclosures of information
concerning, as well as marketing efforts related to, the offering of the
Limited Partnership Interests of the Partnership. The defendants continue to
vigorously contest this action. A plaintiff class has not been certified in
this action. No determinations upon any significant issues have been made. The
Partnership believes it has meritorious defenses to contest this claim. It is
not determinable at this time how the outcome of this action will impact the
remaining cash reserves of the Partnership.
(b) In May 1999, a lawsuit was filed, Madison Partnership Liquidity Investors
XX, et al. vs. The Balcor Company, et al. whereby the General Partner and
certain affiliates have been named as defendants. The plaintiffs are entities
that initiated tender offers to purchase and, in fact, purchased units in
eleven affiliated partnerships. The complaint alleges breach of fiduciary
duties and breach of contract under the partnership agreement and seeks the
winding up of the affairs of the Partnership, the establishment of a
liquidating trust, the appointment of an independent trustee for the trust and
the distribution of a portion of the cash reserves to limited partners. On June
1, 1999 a second lawsuit was filed and was served on August 16, 1999, Sandra
Dee vs. The Balcor Company, et al. The Dee complaint is virtually identical to
the Madison Partnership complaint and on September 20, 1999 was consolidated
into the Madison Partnership case. On January 19, 2000, a hearing was held on
the defendants' motion to dismiss; the motion to dismiss was denied as to the
Partnership. The defendants intend to vigorously contest these actions. It is
not determinable at this time how the outcome of these actions will impact the
remaining cash reserves of the Partnership.
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<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 1394
<SECURITIES> 0
<RECEIVABLES> 7
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1401
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1401
<CURRENT-LIABILITIES> 67
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1334
<TOTAL-LIABILITY-AND-EQUITY> 1401
<SALES> 0
<TOTAL-REVENUES> 94
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 101
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (7)
<INCOME-TAX> 0
<INCOME-CONTINUING> (7)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7)
<EPS-BASIC> (0.19)
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