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
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EXCHANGE ACT OF 1934.
For the quarterly period ended March 31, 1999
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
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EXCHANGE ACT OF 1934.
For the transition period from to
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Commission file number 0-14332
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BALCOR PENSION INVESTORS-VI
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(Exact name of registrant as specified in its charter)
Illinois 36-3319330
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2355 Waukegan Road, Suite A200
Bannockburn, Illinois 60015
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 267-1600
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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
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<PAGE>
BALCOR PENSION INVESTORS-VI
(An Illinois Limited Partnership)
BALANCE SHEETS
March 31, 1999 and December 31, 1998
(Unaudited)
ASSETS
1999 1998
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Cash and cash equivalents $ 3,346,189 $ 3,392,806
Escrow deposits - restricted 235,000 235,000
Accrued interest receivable 14,331 10,380
Prepaid expense 1,896
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$ 3,597,416 $ 3,638,186
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LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 30,515 $ 50,187
Due to affiliates 91,745 88,560
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Total liabilities 122,260 138,747
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Commitments and contingencies
Limited Partners' capital (1,382,562
Interests issued and outstanding) 3,986,916 4,011,199
General Partner's deficit (511,760) (511,760)
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Total partners' capital 3,475,156 3,499,439
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$ 3,597,416 $ 3,638,186
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The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR PENSION INVESTORS-VI
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the quarters ended March 31, 1999 and 1998
(Unaudited)
1999 1998
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Income:
Interest on short-term investments $ 42,880 $ 74,378
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Total income 42,880 74,378
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Expenses:
Loss from operations of real estate
held for sale 4,364
Other expense 78,437
Administrative 67,163 180,347
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Total expenses 67,163 263,148
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Net loss $ (24,283) $ (188,770)
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Net loss allocated to General Partner None None
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Net loss allocated to Limited Partners $ (24,283) $ (188,770)
================ ================
Net loss per Limited Partnership
Interest (1,382,562 issued and
outstanding) - Basic and Diluted $ (0.02) $ (0.14)
================ ================
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR PENSION INVESTORS-VI
(An Illinois Limited Partnership)
STATEMENTS OF CASH FLOWS
for the quarters ended March 31, 1999 and 1998
(Unaudited)
1999 1998
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Operating activities:
Net loss $ (24,283) $ (188,770)
Adjustments to reconcile net loss to
net cash (used in) or provided by
operating activities:
Net change in:
Accounts and accrued interest
receivable (3,951) 310,279
Prepaid expenses (1,896) (2,630)
Accounts payable (19,672) 17,683
Due to affiliates 3,185 15,953
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Net cash (used in) or provided by
operating activities (46,617) 152,515
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Investing activity:
Escrow deposits - restricted 75,000
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Cash provided by investing activity 75,000
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Net change in cash and cash equivalents (46,617) 227,515
Cash and cash equivalents at beginning
of period 3,392,806 5,290,460
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Cash and cash equivalents at end of
period $ 3,346,189 $ 5,517,975
================ ================
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR PENSION INVESTORS-VI
(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 August
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 for the
quarter ended March 31, 1999 are:
Paid Payable
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Reimbursement of expenses to
the General Partner, at cost $ 9,182 $ 91,745
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 PENSION INVESTORS-VI
(An Illinois Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS
Balcor Pension Investors - VI (the "Partnership") is a limited partnership
formed in 1984 to invest in first mortgage loans and, to a lesser extent,
wrap-around loans and junior mortgage loans. The Partnership raised
$345,640,500 through the sale of Limited Partnership Interests and utilized
these proceeds to fund thirty-one loans, and subsequently acquired thirteen
properties and three investments in joint ventures-affiliates through
foreclosure. As of March 31, 1999, the Partnership has no loans or real estate
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
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Summary of Operations
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The operations of the Partnership in 1999 and 1998 consisted primarily of
administrative expenses which were partially offset by interest income earned
on short-term investments. In addition, the Partnership made a payment to the
purchaser of the Hammond Aire Shopping Center in 1998 pursuant to the sale
agreement. As a result of lower administrative expenses in 1999 and the payment
made to the purchaser of the Hammond Aire Plaza Shopping Center in 1998, the
Partnership's net loss decreased during 1999 as compared to 1998. The decrease
was partially offset by a decrease in interest income earned on short-term
investments. Further discussion of the Partnership's operations is summarized
below.
1999 Compared to 1998
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Discussions of fluctuations between 1999 and 1998 refer to the quarters ended
March 31, 1999 and 1998.
As a result of lower average cash balances due to the distribution to Limited
Partners in April 1998 of Mortgage Reductions from the release of holdbacks and
escrows on several of the Partnership's properties, interest income on
short-term investments decreased during 1999 when compared to 1998.
During 1998, the Partnership paid additional expenditures related to one of the
properties sold in 1997. As a result, the Partnership recognized a loss from
operations of real estate held for sale during 1998.
During 1998, the Partnership paid $78,437 in settlement of claims presented by
the purchaser of the Hammond Aire Plaza Shopping Center for certain tenant
<PAGE>
improvements, leasing, survey and escrow costs pursuant to the sale agreement.
The property was sold in 1997. This amount was recognized as other expense for
financial statement purposes during 1998.
Primarily due to a decrease in accounting, portfolio management and investor
processing fees, administrative expenses decreased during 1999 when compared to
1998.
Liquidity and Capital Resources
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The cash position of the Partnership decreased by approximately $47,000 as of
March 31, 1999 when 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 August
1997. The Partnership has retained a portion of the cash from the sale of its
real estate investments 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. See "Item
1. Legal Proceedings" for additional information.
Pursuant to the sale agreement for the Hammond Aire Plaza Shopping Center,
$310,000 of the sale proceeds was placed in escrow at closing. In 1998, $50,000
of the escrow was disbursed to the Partnership and $25,000 was disbursed to the
purchaser. The remaining sale proceeds of $235,000 remains in escrow pending
resolution of certain tenant issues. The Partnership expects to receive the
sales proceeds remaining in the escrow.
In 1997, the Partnership discontinued the repurchase of Interests from Limited
Partners. As of March 31, 1999, there were 70,711 Interests and cash of
$5,461,510 in the Early Investment Incentive Fund.
Limited Partners have received cash distributions totaling $320.76 per $250
Interest. Of this amount, $142.21 represents Cash Flow from operations and
$178.55 represents a return of Original Capital. 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. Amounts allocated to the Early Investment Incentive 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 to Limited Partners 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
<PAGE>
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
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 PENSION INVESTORS-VI
(An Illinois Limited Partnership)
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
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Dee vs. Walton Street Capital Acquisition II, LLC
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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
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(a) Exhibits:
(4) Form of Subscription Agreement previously filed as Exhibit 4.1 to Amendment
No. 1 to the Registrant's Registration Statement on Form S-11 dated January 14,
1985 (Registration No. 2-93840) 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. 0-14332) are
incorporated herein by reference.
(10) Material Contracts:
(i) Agreement of Sale and attachment thereto relating to the sale of the 420
North Wabash Office Building, Chicago, Illinois, as previously filed as Exhibit
(2)(ii) to the Registrant's Current Report on Form 8-K dated June 16, 1997, is
incorporated herein by reference.
(ii) First Amendment to Agreement of Sale relating to the sale of the 420 North
Wabash Office Building, Chicago, Illinois, previously filed as Exhibit
(2)(e)(ii) to the Registrant's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1997 is incorporated herein by reference.
(27) Financial Data Schedule of the Registrant for the quarter ended 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 PENSION INVESTORS-VI
By: /s/Thomas E. Meador
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Thomas E. Meador
President and Chief Executive Officer
(Principal Executive Officer) of Balcor
Mortgage Advisors-VI, the General Partner
By: /s/Jayne A. Kosik
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Jayne A. Kosik
Senior Managing Director and Chief Financial
Officer (Principal Accounting and Financial
Officer) of Balcor Mortgage Advisors-VI, the
General Partner
Date: May 12, 1999
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<PAGE>
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