<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
/X/ Annual report pursuant to Section 15(d) of the Securities Exchange Act
of 1934
For the fiscal year ended December 31, 1998 Commission file number
------
BURNHAM PACIFIC OPERATING PARTNERSHIP, L.P.
401(K) RETIREMENT SAVINGS PLAN
------------------------------------------------------
(FULL TITLE OF THE PLAN)
Burnham Pacific Properties, Inc.
(Name of issuer of the securities held pursuant to the plan)
610 W. Ash Street, San Diego, California 92101
(address of principal executive offices)
(619) 652-4700
(Telephone No.)
<PAGE>
REQUIRED INFORMATION
Financial statements and exhibit
(a) Financial statements
These documents are listed in the Index to Financial Statements
(b) Exhibit
Independent Auditors' Consent
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
the administrators of the Plan have duly caused this annual report to be signed
by the undersigned thereunto duly authorized.
BURNHAM PACIFIC
OPERATING PARTNERSHIP, L.P.
401(K) RETIREMENT SAVINGS PLAN
By: Burnham Pacific Operating
Partnership, L.P.
By: Burnham Pacific
Properties, Inc.,
General Partner
Date: June 29, 1999 By: /s/ J. David Martin
------------------------------ ----------------------------------------
J. David Martin, Chief Executive Officer
Date: June 29, 1999 By: /s/ Daniel B. Platt
------------------------------ ----------------------------------------
Daniel B. Platt, Chief Financial Officer
<PAGE>
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BURNHAM PACIFIC
OPERATING PARTNERSHIP,
L.P. 401(k) RETIREMENT
SAVINGS PLAN
FINANCIAL STATEMENTS AND
SUPPLEMENTAL SCHEDULES AS OF AND
FOR THE YEAR ENDED DECEMBER 31,
1998 AND INDEPENDENT AUDITORS'
REPORT AND STATEMENT OF ASSETS
AVAILABLE FOR BENEFITS AS OF
DECEMBER 31, 1997 (UNAUDITED)
<PAGE>
BURNHAM PACIFIC OPERATING PARTNERSHIP, L.P.
401(k) RETIREMENT SAVINGS PLAN
TABLE OF CONTENTS
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<TABLE>
<CAPTION>
PAGE
<S> <C>
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS:
Statements of Assets Available for Benefits as of
December 31, 1998 and 1997 2
Statement of Changes in Assets Available for Benefits for the
Year Ended December 31, 1998 3
Notes to Financial Statements 4-9
SUPPLEMENTAL SCHEDULES:
Item 27a - Schedule of Assets Held for Investment Purposes as of
December 31, 1998 10
Item 27d - Schedule of Reportable Transactions for the Year Ended
December 31, 1998 11
</TABLE>
NOTE: All other schedules required by Department of Labor Rules and
Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974 are omitted because of the
absence of conditions under which they are required.
<PAGE>
INDEPENDENT AUDITORS' REPORT
Burnham Pacific Operating Partnership, L.P.
401(k) Retirement Savings Plan:
We have audited the accompanying statement of assets available for benefits of
Burnham Pacific Operating Partnership, L.P. 401(k) Retirement Savings Plan (the
"Plan") as of December 31, 1998, and the related statement of changes in assets
available for benefits for the year then ended. These financial statements are
the responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the assets available for benefits of the Plan as of December 31, 1998,
and the changes in assets available for benefits for the year then ended in
conformity with generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic 1998
financial statements taken as a whole. The supplemental schedule of assets held
for investment purposes and schedule of reportable transactions are presented
for the purpose of additional analysis and are not a required part of the basic
1998 financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. The supplemental schedules
are the responsibility of the Plan's management. Such supplemental schedules
have been subjected to the auditing procedures applied in our audit of the basic
1998 financial statements and, in our opinion, are fairly stated in all material
respects when considered in relation to the basic 1998 financial statements
taken as a whole.
The statement of assets available for benefits of the Plan as of December 31,
1997, was compiled by us and our report thereon, dated May 14, 1999, stated that
we did not audit or review that financial statement and, accordingly, we express
no opinion or other form of assurance on the statement.
/s/ Deloitte & Touche LLP
June 11, 1999
San Diego, California
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<PAGE>
BURNHAM PACIFIC OPERATING PARTNERSHIP, L.P.
401(k) RETIREMENT SAVINGS PLAN
STATEMENTS OF ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1998 AND 1997
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<TABLE>
<CAPTION>
ASSETS 1998 1997
(UNAUDITED)
----------- -----------
<S> <C> <C>
Investments:
Cash and cash equivalents $ 180,385 $ 115,511
Corporate equity securities 326,500 347,231
Common collective fund 322,832 191,029
Mutual funds 614,836 328,260
Participant loans 26,318 38,522
---------- ----------
Total investments 1,470,871 1,020,553
---------- ----------
Receivables:
Employer contributions 2,937 3,845
Participant contributions 7,758 10,467
Investment income receivable 7,969
---------- ----------
Total receivables 18,664 14,312
---------- ----------
Assets available for benefits $1,489,535 $1,034,865
========== ==========
</TABLE>
See accompanying notes to financial statements.
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<PAGE>
BURNHAM PACIFIC OPERATING PARTNERSHIP, L.P.
401(k) RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED DECEMBER 31, 1998
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<TABLE>
<CAPTION>
<S> <C>
ADDITIONS:
Contributions:
Participant $ 266,988
Employer 71,900
----------
Total contributions 338,888
----------
Investment income:
Net appreciation in fair value of investments 66,410
Dividends and interest 75,105
----------
Total investment income 141,515
----------
Total additions 480,403
----------
DEDUCTIONS:
Benefits paid to participants 25,733
----------
Total deductions 25,733
----------
NET INCREASE 454,670
----------
ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 1,034,865
----------
End of year $1,489,535
==========
</TABLE>
See accompanying notes to financial statements.
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<PAGE>
BURNHAM PACIFIC OPERATING PARTNERSHIP, L.P.
401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
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1. PLAN DESCRIPTION
The following description of Burnham Pacific Operating Partnership, L.P.
401(k) Retirement Savings Plan (the "Plan") is provided for general
information purposes only. Participants should refer to the Plan document
for a more complete description of the Plan's provisions.
UNAUDITED INFORMATION - The financial information included in the
statement of assets available for benefits as of December 31, 1997 and the
notes thereto is unaudited and has been included in accordance with the
provisions of the Employee Retirement Income Security Act of 1974
("ERISA").
GENERAL - The Plan is a defined contribution plan covering all full-time
employees of Burnham Pacific Operating Partnership, L.P. (the "Operating
Partnership"). The Plan provides participants with salary deferral options
pursuant to Section 401(a) of the Internal Revenue Code (the "Code"). The
Plan is administered by the Operating Partnership. Plan assets are held by
Wells Fargo Bank, N.A. (the "Trustee"). The Plan is subject to the
provisions of ERISA and the rules and regulations of the Securities
and Exchange Commission. Prior to January 1, 1998, the Plan name was
Burnham Pacific Properties, Inc. 401(k) Retirement Savings Plan. In
addition, prior to January 1, 1998, the Plan employer name was Burnham
Pacific Properties, Inc.
ELIGIBILITY - Generally, employees who have completed six months of
service are eligible to join the Plan. Participants may join on January 1
or July 1.
CONTRIBUTIONS - Active participants may contribute up to 15% of
pre-tax, eligible compensation as defined in the Plan, subject to
limitations imposed by the Code. The Plan also allows active
participants to make non-deductible voluntary contributions to the
Plan. The Operating Partnership matches 50% of each participant's
pre-tax contributions made by active participants who are officers, and
75% of the contributions made by active participants who are
non-officers of the Operating Partnership, up to 4% of the
participant's pre-tax annual pay. In addition to the matching
contribution, the Operating Partnership may make a discretionary
contribution to the Plan out of its current earnings. During the fiscal
year ended December 31, 1998, there was no discretionary contribution
made to the Plan.
PARTICIPANT ACCOUNTS - Each participant's account is credited with the
participant's contribution, the employer's contribution and an allocated
share of the Plan's earnings. Allocations of earnings are made by the
Trustee in a non-discriminatory manner and are based on each participant's
investment selection and account balance. The benefit to which a
participant is entitled to is the benefit that can be provided from the
participant's vested account.
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<PAGE>
VESTING - Participants are immediately vested in their contributions plus
actual earnings thereon. Participants vest in employer matching and
discretionary contributions plus actual earnings thereon at 20% after one
year of full-time service and 20% for each additional year of service. A
participant is normally 100% vested after five years of credited service.
In addition, a participant is 100% vested upon termination of employment
after attaining normal retirement age and upon death or disability while
employed by the Operating Partnership.
INVESTMENT OPTIONS - A participant may direct contributions in any of the
following investment options offered by the Trustee:
STAGECOACH PRIME MONEY MARKET FUND - Invests in high-quality money
market instruments.
PIMCO TOTAL RETURN FUND II - Invests primarily in investment-grade,
fixed income securities with an average duration between three and six
years.
COLUMBIA BALANCED FUND - Invests primarily in common stocks and
investment-grade fixed income securities.
WELLS FARGO S&P 500 STOCK FUND - Invests in the S&P 500 Stock Index
stocks in substantially the same percentages as the S&P 500 Index.
JANUS FUND - Invests primarily in common stock of companies of any
size.
Plan participants may also elect to invest in the common stock of Burnham
Pacific Properties, Inc. ("Burnham Pacific") which are readily tradable on
the New York Stock Exchange. Employee contributions designated to be
invested in Burnham Pacific common stock are held in the Burnham Pacific
Liquidity Fund until the last day of each quarter when the Trustee has
been instructed to purchase the Burnham Pacific common stock. Funds
held in the Burnham Pacific Liquidity Fund are invested in high-quality
money market instruments.
PARTICIPANT LOANS - Participants may borrow from their accounts at a
minimum of $1,000 up to $50,000 but not to exceed 50% of the vested
account balance. Loan repayment terms cannot exceed five years unless
the proceeds are used to construct or purchase the participant's
primary residence. Loans are secured by the participant's account
balance and bear interest at the prime interest rate as of the date of the
loan application. Principal and interest is repaid ratably through payroll
deductions. During the fiscal year ended December 31, 1998, interest rates
on outstanding loans ranged from 8.25% to 9.75%.
PAYMENT OF BENEFITS - Participants are entitled to a distribution of their
vested benefits in the event of retirement, death, disability, termination
of employment or termination of the Plan. Participants may elect to
receive benefit payments in a single lump sum, in monthly installments
over a specified period of time, or in the form of an annuity. Effective
July 1, 1998, the Plan was amended to allow participants to request a
distribution in the form of full shares of Burnham Pacific stock to the
extent of the stock included in the participant's account balance.
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<PAGE>
FORFEITURES - The non-vested balance of a terminated participant's account
is forfeited when a distribution of vested benefits is made. Prior to
January 1, 1998, forfeitures available for allocation during the Plan year
were allocated to active participants' accounts as of the end of the Plan
year. Effective January 1, 1998, the Plan was amended to apply forfeitures
to reduce employer contributions unless the Operating Partnership directs
the Trustee to use all or a portion of the total forfeitures to pay for
Plan expenses.
PLAN EXPENSES - Administrative expenses, investment management fees and
trustee fees are paid by the Operating Partnership unless specified to be
paid by the Plan as described above. Under this arrangement, total fees
paid by the Operating Partnership to the Trustee were $4,686 for the year
ended December 31, 1998.
PLAN TERMINATION - Although it has not expressed any intent to do so, the
Operating Partnership has the right to discontinue contributions and
terminate the Plan at any time subject to the provisions of ERISA. In the
event of Plan termination, participants become fully vested in their
accounts.
INCOME TAX STATUS - The Internal Revenue Service has issued a
determination letter dated January 7, 1993 stating that the Plan, as then
designed, was in compliance with the applicable requirements of the Code
and was exempt from Federal income taxes. The Plan has been amended since
receipt of the letter; however, the Operating Partnership believes that
the Plan is currently designed and being operated in compliance with
applicable requirements of the Code.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION - The financial statements of the Plan are presented
on the accrual basis of accounting.
ACCOUNTING ESTIMATES - The preparation of the financial statements in
conformity with generally accepted accounting principles requires Plan
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements
and the reported amounts of additions and deductions during the reporting
period. Actual results may differ from those estimates.
PAYMENT OF BENEFITS - Benefit payments to participants are recorded upon
distribution.
INVESTMENT VALUATION AND INCOME RECOGNITION - The Plan's investments in
corporate equity securities and mutual funds are stated at fair value
based on quoted market prices. The investment in common collective fund is
stated at the fair value, based on quoted market prices, of the underlying
investments.
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<PAGE>
3. INVESTMENTS
The following table summarizes the Plan's investments at December 31, 1998
and 1997. Investments which represent 5% or more of the Plan's net assets
are separately identified.
<TABLE>
<CAPTION>
1998 1997
(UNAUDITED)
----------- -----------
<S> <C> <C>
Investments at fair value:
Cash and cash equivalents:
Stagecoach Prime Money Market Fund $ 163,064 $ 106,507
Burnham Pacific Liquidity Fund 17,321 9,004
---------- ----------
Total Cash and Cash Equivalents 180,385 115,511
Corporate Equity Securities:
Burnham Pacific Properties, Inc. Common Stock 326,500 347,231
Common Collective Fund:
Wells Fargo S&P 500 Stock Fund 322,832 191,029
Mutual Funds:
Columbia Balanced Fund 212,236 124,399
Janus Fund 349,242 184,053
PIMCO Total Return Fund II 53,358 19,808
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Total Mutual Funds 614,836 328,260
Participant Loans 26,318 38,522
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Total Investments $1,470,871 $1,020,553
========== ==========
</TABLE>
During the year ended December 31, 1998, the Plan's investments
appreciated by a net amount of $66,410. This appreciation in fair
value of the Plan's investments is comprised of $87,647 of appreciation
in the mutual funds, $62,610 of appreciation in the common collective
fund, less a decrease in value of $83,847 in corporate equity securities.
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<PAGE>
4. FUND INFORMATION
Participant contributions, employer contributions, investment income, and
benefits paid to participants by fund option are as follows for the year
ended December 31, 1998:
<TABLE>
<CAPTION>
BENEFITS
PARTICIPANT EMPLOYER INVESTMENT PAID TO
CONTRIBUTIONS CONTRIBUTIONS INCOME PARTICIPANTS
------------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
Stagecoach Prime Money Market Fund $ 31,244 $ 6,158 $ 6,684 $ 2,132
Burnham Pacific Liquidity Fund 35,624 12,522 1,873 246
Burnham Pacific Properties Common Stock (52,472) 3,645
Wells Fargo S&P 500 Stock Fund 66,858 21,084 62,776 13,428
Columbia Balanced Fund 45,501 11,006 29,810 271
Janus Fund 59,906 15,123 87,087 1,050
PIMCO Total Return Fund II 27,855 6,007 2,869 4,961
Participant Loans 2,888
-------- ------- -------- -------
$266,988 $71,900 $141,515 $25,733
======== ======= ======== =======
</TABLE>
5. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of assets available for benefits per the
financial statements to the Form 5500:
<TABLE>
<CAPTION>
DECEMBER
1998 1997
(UNAUDITED)
------------ -----------
<S> <C> <C>
Assets available for benefits per the
financial statements $1,489,535 $1,034,865
Less: participant contributions receivable (7,758) (10,467)
Less: employer contributions receivable (2,937) (3,845)
Less: investment income receivable (7,969)
---------- ----------
Assets available for benefits per the Form 5500 $1,470,871 $1,020,553
========== ==========
</TABLE>
-8-
<PAGE>
The following is a reconciliation of participant and employer
contributions per the financial statements to the Form 5500:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1998
-----------------
<S> <C>
Participant contributions per the financial statements $ 266,988
Less: participant contributions receivable at December 31, 1998 (7,758)
Plus: participant contributions receivable at December 31, 1997 10,467
Less: rollover contributions per the Form 5500 (61,900)
---------
Participant contributions per the Form 5500 $ 207,797
=========
Employer contributions per the financial statements $ 71,900
Less: employer contributions receivable at December 31, 1998 (2,937)
Plus: employer contributions receivable at December 31, 1997 3,845
---------
Employer contributions per the Form 5500 $ 72,808
=========
</TABLE>
The following is a reconciliation of earnings from investments per the
financial statements to the Form 5500:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1998
-----------------
<S> <C>
Dividends and interest per the financial statements $75,105
Less: investment income receivable at December 31, 1998 (7,969)
-------
Earnings from investment per the Form 5500 $67,136
=======
</TABLE>
* * * * * *
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<PAGE>
BURNHAM PACIFIC OPERATING PARTNERSHIP, L.P.
401(k) RETIREMENT SAVINGS PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1998
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<TABLE>
<CAPTION>
DESCRIPTION FAIR
IDENTITY OF ISSUE OF INVESTMENT COST VALUE
------------ ------------
<S> <C> <C> <C>
Stagecoach Prime Money Market Fund Cash and Cash Equivalent $ 163,064 $ 163,064
* Burnham Pacific Liquidity Fund Cash and Cash Equivalent 17,321 17,321
* Burnham Pacific Properties, Inc.
Common Stock Corporate Equity Securities 388,603 326,500
* Wells Fargo S&P 500 Stock Fund Common Collective Fund 273,035 322,832
Columbia Balanced Fund Mutual Fund 198,900 212,236
Janus Fund Mutual Fund 269,483 349,242
PIMCO Total Return Fund II Mutual Fund 53,305 53,358
Participant Loans Loans-interest rates between
8.25% and 9.75%,
maturities through March
2001 26,318 26,318
---------- ----------
$ 1,390,029 $1,470,871
=========== ==========
</TABLE>
*Party-in-interest
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<PAGE>
BURNHAM PACIFIC OPERATING PARTNERSHIP, L.P.
401(k) RETIREMENT SAVINGS PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 1998
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<TABLE>
<CAPTION>
PURCHASES SALES
----------------------------- ----------------------------------------------------------
NET
PURCHASE SELLING COST GAIN
DESCRIPTION OF ASSET NUMBER PRICE NUMBER PRICE OF ASSET (LOSS)
- ----------------------------------- ------------ -------------- ----------- ----------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
SERIES OF TRANSACTIONS
INVOLVING SECURITIES OF
THE SAME ISSUE:
Stagecoach Prime Money
Market Fund 68 $64,988 10 $ 8,431 $ 8,431
* Burnham Pacific Properties, Inc.
Common Stock 14 326,230 11 272,093 235,888 $ 36,205
* Wells Fargo S&P 500 Stock Fund 49 91,643 6 22,451 18,835 3,616
Columbia Balanced Fund 52 78,598 2 359 382 (23)
Janus Fund 51 88,259 7 1,361 1,526 (165)
* Burnham Pacific Liquidity Fund 58 51,852 8 43,535 43,535
</TABLE>
*Party-in-interest
NOTE: The transactions included in this schedule meet the definition of
reportable transactions under Section 103 of the Employee Retirement
Income Security Act of 1974 and consist of series of transactions
during the year involving investment assets of an amount in excess of
5% of the fair value of beginning Plan assets.
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<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
Burnham Pacific Properties, Inc.:
We consent to the incorporation by reference in Registration Statement Nos.
333-10559 and 333-58347 on Form S-8 and 33-56555 and 333-31591 on Form S-3 of
Burnham Pacific Properties, Inc. of our report dated May 14, 1999 appearing
in this Annual Report on Form 11-K of Burnham Pacific Operating Partnership,
L.P. 401(k) Retirement Savings Plan for the year ended December 31, 1998.
/s/ Deloitte & Touche LLP
June 25, 1999
San Diego, California
