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 June 30, 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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BALCOR PENSION INVESTORS-VI
(An Illinois Limited Partnership)
BALANCE SHEETS
June 30, 1999 and December 31, 1998
(Unaudited)
ASSETS
1999 1998
--------------- ---------------
Cash and cash equivalents $ 3,265,262 $ 3,392,806
Escrow deposits - restricted 235,000 235,000
Accrued interest receivable 14,534 10,380
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$ 3,514,796 $ 3,638,186
=============== ===============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 34,806 $ 50,187
Due to affiliates 94,404 88,560
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Total liabilities 129,210 138,747
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Commitments and contingencies
Limited Partners' capital (1,382,562
Interests issued and outstanding) 3,897,346 4,011,199
General Partner's deficit (511,760) (511,760)
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Total partners' capital 3,385,586 3,499,439
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$ 3,514,796 $ 3,638,186
=============== ===============
The accompanying notes are an integral part of the financial statements.
BALCOR PENSION INVESTORS-VI
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the six months ended June 30, 1999 and 1998
(Unaudited)
1999 1998
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Income:
Interest on short-term investments $ 83,308 $ 124,206
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Total income 83,308 124,206
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Expenses:
Loss from operations of real
estate held for sale 5,028
Other expenses 78,437
Administrative 197,161 323,036
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Total expenses 197,161 406,501
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Net loss $ (113,853) $ (282,295)
=============== ===============
Net loss allocated to General Partner None None
=============== ===============
Net loss allocated to Limited Partners $ (113,853) $ (282,295)
=============== ===============
Net loss per Limited Partnership Interest
(1,382,562 issued and outstanding)
- Basic and Diluted $ (0.08) $ (0.20)
=============== ===============
Distribution to Limited Partners None $ 1,935,587
=============== ===============
Distribution per Limited Partnership
Interest None $ 1.40
=============== ===============
The accompanying notes are an integral part of the financial statements.
BALCOR PENSION INVESTORS-VI
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the quarters ended June 30, 1999 and 1998
(Unaudited)
1999 1998
--------------- ---------------
Income:
Interest on short-term investments $ 40,428 $ 49,828
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Total income 40,428 49,828
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Expenses:
Loss from operations of real
estate held for sale 664
Administrative 129,998 142,689
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Total expenses 129,998 143,353
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Net loss $ (89,570) $ (93,525)
=============== ===============
Net loss allocated to General Partner None None
=============== ===============
Net loss allocated to Limited Partners $ (89,570) $ (93,525)
=============== ===============
Net loss per Limited Partnership Interest
(1,382,562 issued and outstanding)
- Basic and Diluted $ (0.06) $ (0.07)
=============== ===============
Distribution to Limited Partners None $ 1,935,587
=============== ===============
Distribution per Limited Partnership
Interest None $ 1.40
=============== ===============
The accompanying notes are an integral part of the financial statements.
BALCOR PENSION INVESTORS-VI
(An Illinois Limited Partnership)
STATEMENTS OF CASH FLOWS
for the six months ended June 30, 1999 and 1998
(Unaudited)
1999 1998
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Operating activities:
Net loss $ (113,853) $ (282,295)
Adjustments to reconcile net loss
to net cash (used in) or provided by
operating activities:
Net change in:
Accounts and accrued interest
receivable (4,154) 336,052
Accounts payable (15,381) (36,468)
Due to affiliates 5,844 51,673
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Net cash (used in) or provided by
operating activities (127,544) 68,962
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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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Financing activity:
Distribution to Limited Partners (1,935,587)
---------------
Cash used in financing activity (1,935,587)
---------------
Net change in cash and cash equivalents (127,544) (1,791,625)
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 $ 3,265,262 $ 3,498,835
=============== ===============
The accompanying notes are an integral part of the financial statements.
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 six months and quarter
ended June 30, 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 property sales to
satisfy obligations of the Partnership as well as to establish a reserve for
contingencies. As previously reported, the Sandra Dee case was dismissed by the
Illinois Supreme Court in April 1999. The Madison Avenue litigation was filed
in May 1999. See Note 4 of Notes to Financial Statements for additional
information regarding the Madison Avenue litigation. Despite the existence of
the Madison Avenue litigation, the Partnership currently plans to dissolve in
December 1999 and distribute remaining cash reserves to the partners in
accordance with the partnership agreement. In the event that a new contingency
(such as a lawsuit) arises during 1999, the Partnership may not be dissolved
and may continue in existence until such new contingency is resolved. The
Partnership does not consider the Madison Avenue case to be a matter that would
preclude the dissolution of the Partnership in 1999.
3. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates during the
six months and quarter ended June 30, 1999 are:
Paid
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Six Months Quarter Payable
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Reimbursement of expenses to
the General Partner, at cost $ 18,669 $ 9,487 $ 94,404
4. Contingency:
In May 1999, a lawsuit was filed against the Partnership, Madison Partnership
Liquidity Investors XX, et al. vs. The Balcor Company, et al. whereby the
Partnership 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. The
defendants intend to vigorously contest this action. The Partnership believes
that it has meritorious defenses to contest the claims. It is not determinable
at this time how the outcome of this action will impact the remaining cash
reserves of the Partnership.
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 June 30, 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 the six months and quarter ended
June 30, 1999 as compared to the same periods in 1998. Further discussion of
the Partnership's operations is summarized below.
1999 Compared to 1998
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Unless otherwise noted, discussions of fluctuations between 1999 and 1998 refer
to the six months and quarters ended June 30, 1999 and 1998.
As a result of lower interest rates and 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 sold
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 the first quarter of 1998, the Partnership paid $78,437 in settlement of
claims presented by the purchaser of the Hammond Aire Plaza Shopping Center for
certain tenant 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
- -------------------------------
The cash position of the Partnership decreased by approximately $128,000 as of
June 30, 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 property sales to
satisfy obligations of the Partnership as well as to establish a reserve for
contingencies. As previously reported, the Sandra Dee case was dismissed by the
Illinois Supreme Court in April 1999. The Madison Avenue litigation, described
in Part II, Item 1, of this report, was filed in May 1999. Despite the
existence of the Madison Avenue litigation, the Partnership currently plans to
dissolve in December 1999 and distribute remaining cash reserves to the
partners in accordance with the partnership agreement. In the event that a new
contingency (such as a lawsuit) arises during 1999, the Partnership may not be
dissolved and may continue in existence until such new contingency is resolved.
The Partnership does not consider the Madison Avenue case to be a matter that
would preclude the dissolution of the Partnership in 1999. As a result of the
pending dissolution of the Partnership, the general partner has suspended
transfer of limited partnership interests in the Partnership. Certain transfers
which are not for value (such as death, divorce, change of custodian or other
estate planning) will continue to be permitted. Limited Partners should contact
the Partnership if the suspension of transfers causes any extraordinary
hardships. In the event that dissolution of the Partnership does not occur
during 1999, the Partnership will allow transfers of limited partnership
interests to occur commencing in January 2000.
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.
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 June 30, 1999, there were 70,711 Interests and cash of
$5,461,510 in the Early Investment Incentive Fund.
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
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 soliciting information from these vendors through the use of
surveys, follow-up discussions and review of data where needed. The Partnership
has received the surveys from these vendors. 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,
these surveys and discussions with the key vendors performing services for the
Partnership indicate that the key vendors are substantially Year 2000 compliant
as of June 30, 1999. The Partnership will continue to monitor the Year 2000
compliance of its key vendors during the third quarter of 1999. In addition,
the Partnership has developed a contingency plan in the event of non-compliance
by these key vendors in the Year 2000 which will be updated by September 30,
1999 based on the results of further surveys, discussions and testing of
systems, where applicable. 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.
BALCOR PENSION INVESTORS-VI
(An Illinois Limited Partnership)
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
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Madison Partnership Liquidity Investors XX, et al. vs. The Balcor
- -----------------------------------------------------------------
Company, et al.
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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. 99CH08972). The Partnership, twenty-one additional
limited partnerships which were sponsored by The Balcor Company (together with
the Partnership, the "Affiliated Partnerships"), The Balcor Company, other
affiliated entities and one individual are named defendants in this action.
Plaintiffs are entities that initiated tender offers to purchase units and, in
fact, purchased units in eleven of the Affiliated Partnerships. The complaint
alleges breach of fiduciary duties and breach of contract under the partnership
agreements for each of the Affiliated Partnerships. The complaint seeks 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 complaint also seeks compensatory damages, punitive
and exemplary damages, and costs and expenses in pursuing the litigation. On
July 14, 1999, the defendants filed a Motion to Dismiss the complaint. A
briefing schedule on this motion has not yet been set.
The defendants intend to vigorously contest this action. No class has been
certified as of this date. The Partnership believes it has meritorious defenses
to contest the claims. It is not determinable at this time how the outcome of
this action will impact the remaining cash reserves 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.
(27) Financial Data Schedule of the Registrant for the six months ended June
30, 1999 is attached hereto.
(b) Reports on Form 8-K: No reports were filed on Form 8-K during the quarter
ended June 30, 1999.
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
-----------------------------
Thomas E. Meador
President and Chief Executive Officer
(Principal Executive Officer) of Balcor
Mortgage Advisors-VI, 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 Mortgage Advisors-VI, the
General Partner
Date: August 9, 1999
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