SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- -----
EXCHANGE ACT OF 1934.
For the quarterly period ended March 31, 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 2-85270
-------
BALCOR EQUITY PENSION INVESTORS-I
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Illinois 36-3240345
- ------------------------------- -------------------
(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
--------------
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
----- -----
<PAGE>
BALCOR EQUITY PENSION INVESTORS-I
(An Illinois Limited Partnership)
BALANCE SHEETS
March 31, 1999 and December 31, 1998
(UNAUDITED)
ASSETS
1999 1998
--------------- -------------
Cash and cash equivalents $ 2,790,284 $ 2,815,211
Accrued interest receivable 11,830 7,626
Prepaid expense 1,896
-------------- ------------
$ 2,804,010 $ 2,822,837
=============== =============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 29,101 $ 35,887
Due to affiliates 48,868 46,413
--------------- -------------
Total liabilities 77,969 82,300
--------------- -------------
Commitments and contingencies
Limited Partners' capital (359,229
Partnership Interests issued and
outstanding) 3,220,874 3,235,370
General Partner's deficit (494,833) (494,833)
--------------- -------------
Total partners' capital 2,726,041 2,740,537
--------------- -------------
$ 2,804,010 $ 2,822,837
=============== =============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR EQUITY PENSION INVESTORS-I
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the quarters ended March 31, 1999 and 1998
(UNAUDITED)
1999 1998
--------------- -------------
Income:
Interest on short-term investments $ 35,468 $ 39,022
Settlement income 396,697
--------------- -------------
Total income 35,468 435,719
--------------- -------------
Expenses:
Administrative 49,964 106,510
--------------- -------------
Total expenses 49,964 106,510
--------------- -------------
Net (loss) income $ (14,496) $ 329,209
=============== =============
Net loss allocated to General Partner None None
=============== =============
Net (loss) income allocated to
Limited Partners $ (14,496) $ 329,209
=============== =============
Net (loss) income per Limited Partnership
Interest (359,229 issued and
outstanding) - Basic and Diluted $ (0.04) $ 0.92
=============== =============
Distribution to Limited Partners None $ 2,367,752
=============== =============
Distribution per Limited Partnership
Interest:
Taxable None None
=============== =============
Tax-exempt None $ 7.58
=============== =============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR EQUITY PENSION INVESTORS-I
(An Illinois Limited Partnership)
STATEMENTS OF CASH FLOWS
for the quarters ended March 31, 1999 and 1998
(UNAUDITED)
1999 1998
--------------- -------------
Operating activities:
Net (loss) income $ (14,496) $ 329,209
Adjustments to reconcile net (loss)
income to net cash used in
operating activities:
Net change in:
Accounts and accrued interest
receivable (4,204) (358,566)
Prepaid expenses (1,896) (2,373)
Accounts payable (6,786) 11,239
Due to affiliates 2,455 9,479
--------------- -------------
Net cash used in operating
activities (24,927) (11,012)
--------------- -------------
Financing activity:
Distribution to Limited Partners (2,367,752)
-------------
Cash used in financing activity (2,367,752)
-------------
Net change in cash and cash
equivalents (24,927) (2,378,764)
Cash and cash equivalents at
beginning of year 2,815,211 4,805,720
--------------- -------------
Cash and cash equivalents at
end of period $ 2,790,284 $ 2,426,956
=============== =============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR EQUITY PENSION INVESTORS-I
(An Illinois Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
1. Accounting Policy:
In the opinion of management, all adjustments necessary for a fair presentation
have been made to the accompanying statements for the quarter ended March 31,
1999, and all such adjustments are of a normal and recurring nature.
2. Partnership Termination:
The Partnership Agreement provides for the dissolution of the Partnership upon
the occurrence of certain events, including the disposition of all interests in
real estate. The Partnership sold its final real estate investment in March
1997. 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 may
include legal and other fees and costs stemming from litigation involving the
Partnership. There can be no assurances as to the time frame for the conclusion
of contingencies which exist or may arise.
3. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates during the
quarter ended March 31, 1999 are:
Paid Payable
------------ ---------
Reimbursement of expenses to
the General Partner, at cost $ 11,628 $ 48,868
4. Contingency:
The Partnership was involved in a lawsuit, Dee vs. Walton Street Capital
Acquisition II, LLC, whereby the Partnership, the General Partner and certain
third parties were named as defendants seeking damages relating to tender
offers to purchase interests in the Partnership and nine affiliated
partnerships initiated by the third party defendants in 1996. The action has
been dismissed with prejudice, which dismissal was affirmed by the Appellate
Court of Illinois. Plaintiffs filed a further appeal to the Illinois Supreme
Court. The Illinois Supreme Court has issued a ruling in which it has declined
to hear the appeal. As a result, the Appellate Court of Illinois dismissed the
case on April 22, 1999.
<PAGE>
BALCOR EQUITY PENSION INVESTORS-I
(An Illinois Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS
Balcor Equity Pension Investors-I (the "Partnership") is a limited partnership
formed in 1983 to make first mortgage loans and to invest in and operate
income-producing real property. The Partnership raised $179,614,500 from sales
of Limited Partnership Interests and utilized these proceeds to fund six loans
and acquire three real property investments. As of March 31, 1999, the
Partnership has no loans or properties remaining in its portfolio.
Inasmuch as the management's discussion and analysis below relates primarily to
the time period since the end of the last fiscal year, investors are encouraged
to review the financial statements and the management's discussion and analysis
contained in the annual report for 1998 for a more complete understanding of
the Partnership's financial position.
Operations
- ----------
Summary of Operations
- ---------------------
Administrative expenses were higher than interest income earned on short-term
investments during the quarters ended March 31, 1999 and 1998. However, the
Partnership recognized income related to a settlement with a former tenant at
the Pacific Center Office Buildings during the quarter ended March 31, 1998.
This was the primary reason the Partnership recognized net income for the
quarter ended March 31, 1998 as compared to a net loss for the quarter ended
March 31, 1999. Further discussion of the Partnership's operations is
summarized below.
1999 Compared to 1998
- ---------------------
Discussions of fluctuations between 1999 and 1998 refer to the quarters ended
March 31, 1999 and 1998.
As a result of lower interest rates and lower average cash balances primarily
due to a distribution to Tax-exempt Limited Partners in January 1998, interest
income on short-term investments decreased during 1999 as compared to 1998.
The Pacific Center Office Buildings, which were owned by a joint venture
consisting of the Partnership and an affiliate, were sold during December 1996.
During 1998, the Partnership received $396,697 as its share of a settlement
related to a dispute with a former tenant at the property. This amount was
recognized as settlement income for financial statement purposes during 1998.
As a result of lower accounting, portfolio management and investor processing
fees, administrative expenses decreased in 1999 as compared to 1998.
<PAGE>
Liquidity and Capital Resources
- -------------------------------
The cash position of the Partnership decreased by approximately $25,000 as of
March 31, 1999 as compared to December 31, 1998 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.
The Partnership Agreement provides for the dissolution of the Partnership upon
the occurrence of certain events, including the disposition of all interests in
real estate. The Partnership sold its final real estate investment in March
1997. The Partnership has retained a portion of the cash from property sales to
satisfy obligations of the Partnership as well as 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 may include legal
and other fees and costs stemming from litigation involving the Partnership.
There can be no assurances as to the time frame for the conclusion of
contingencies which exist or may arise. See "Item 1. Legal Proceedings" for
additional information.
In 1997, the Partnership discontinued the repurchase of Interests from Limited
Partners. As of March 31, 1999, there were 11,294 Interests and cash of
$3,472,751 in the Repurchase Fund.
Limited Partners have received distributions totaling $244.35 per $500 Taxable
Interest (of which $231.36 represents Net Cash Receipts and $12.99 represents
Net Cash Proceeds) and $680.35 per $500 Tax-exempt Interest (of which $307.78
represents Net Cash Receipts and $372.57 represents Net Cash Proceeds). Taxable
Limited Partners will not receive aggregate distributions from the Partnership
equal to their original investment. However, Taxable Limited Partners will
receive a distribution from amounts allocated to the Repurchase Fund. 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 in accordance with the Partnership
Agreement. Amounts allocated to the Repurchase Fund will also be distributed at
that time.
The Partnership sold all of its remaining real property investments and
distributed a majority of the proceeds from these sales in 1996 and 1997. Since
the Partnership no longer has any operating assets, the number of computer
systems and programs necessary to operate the Partnership has been
significantly reduced. The Partnership relies on third party vendors to perform
most of its functions and has implemented a plan to determine the Year 2000
compliance status of these key vendors. The Partnership is within its timeline
for having these plans completed prior to the year 2000.
The Partnership's plan to determine the Year 2000 compliance status of its key
vendors involves the solicitation of information from these vendors through the
use of surveys, follow-up discussions and review of data where needed. The
Partnership has sent out surveys to these vendors and received back a majority
of these surveys. While the Partnership cannot guarantee Year 2000 compliance
by its key vendors, and in many cases will be relying on statements from these
<PAGE>
vendors without independent verification, preliminary surveys indicate that the
key vendors performing services for the Partnership are aware of the issues and
are working on a solution to achieve compliance before the year 2000. The
Partnership is in the process of developing a contingency plan in the event any
of its key vendors are not Year 2000 compliant prior to the year 2000. As part
of its contingency plan, the Partnership will identify replacement vendors in
the event that current vendors are not substantially Year 2000 compliant by
June 30, 1999. The Partnership does not believe that failure by any of its key
vendors to be Year 2000 compliant by the year 2000 would have a material effect
on the business, financial position or results of operations of the
Partnership.
<PAGE>
BALCOR EQUITY PENSION INVESTORS-I
(An Illinois Limited Partnership)
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
- ------------------------
Dee vs. Walton Street Capital Acquisition II, LLC
- -------------------------------------------------
The Illinois Supreme Court has issued a ruling in which it has declined to hear
the appeal filed by the plaintiffs in the Dee vs. Walton Street Capital
Acquisition II, LLC case. As a result, the Appellate Court of Illinois
dismissed the case on April 22, 1999. This case will be deleted from all future
reports of the Partnership.
Item 6. Exhibits and Reports on Form 8-K
- ------------------------------------------
(a) Exhibits:
(4) Certificate of Limited Partnership set forth as Exhibit 4.1 to Amendment
No. 2 to the Registrant's Registration Statement on Form S-11 dated October 4,
1983 (Registration No. 2-85270) and Form of Confirmation regarding Interests in
the Registrant set forth as Exhibit 4.2 to the Registrant's Report on Form 10-Q
for the quarter ended June 30, 1992 (Commission File No. 2-85270) are
incorporated herein by reference.
(27) Financial Data Schedule of the Registrant for the quarter ending March 31,
1999, is attached hereto.
(b) Reports on Form 8-K: No reports were filed on Form 8-K during the quarter
ended March 31, 1999.
<PAGE>
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.
BALCOR EQUITY PENSION INVESTORS-I
By: /s/Thomas E. Meador
-----------------------------
Thomas E. Meador
President and Chief Executive
Officer (Principal Executive
Officer) of Balcor Equity Partners-I,
the General Partner
By: /s/Jayne A. Kosik
------------------------------
Jayne A. Kosik
Senior Managing Director and Chief
Financial Officer (Principal Accounting
and Financial Officer) of Balcor Equity
Partners-I, the General Partner
Date: May 7, 1999
-----------
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 2790
<SECURITIES> 0
<RECEIVABLES> 12
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2804
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2804
<CURRENT-LIABILITIES> 78
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2726
<TOTAL-LIABILITY-AND-EQUITY> 2804
<SALES> 0
<TOTAL-REVENUES> 35
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 50
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (15)
<INCOME-TAX> 0
<INCOME-CONTINUING> (15)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (15)
<EPS-PRIMARY> (0.04)
<EPS-DILUTED> (0.04)
</TABLE>
