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 JUNE 30, 1998
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 2-77330
PROPERTY RESOURCES FUND VI
(Exact name of registrant as specified in its charter)
CALIFORNIA 94-2838890
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer
Identification No.)
P. O. BOX 7777, SAN MATEO, CALIFORNIA 94403-7777
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (650) 312-2000
N/A
Former name, former address and former fiscal year, if changed since last report
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 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
Limited Partnership Units Outstanding as of June 30, 1998: 21,585
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PROPERTY RESOURCES FUND VI
(A CALIFORNIA LIMITED PARTNERSHIP)
BALANCE SHEETS
JUNE 30, 1998 AND DECEMBER 31, 1997
(Unaudited)
(Dollars in thousands) 1998 1997
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ASSETS:
Real estate:
Land $999 $2,239
Land improvements 179 781
Buildings and improvements 2,286 7,347
Furnishings and equipment 413 1,050
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3,877 11,417
Less: accumulated depreciation 1,869 4,708
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Total real estate, net 2,008 6,709
Cash and cash equivalents 3,284 407
Note receivable 197 237
Other assets, net 321 308
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Total assets $5,810 $7,661
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LIABILITIES AND STOCKHOLDERS' EQUITY:
Notes payable $2,132 $6,559
Accrued interest due to General Partner 527 527
Deposits and other liabilities 158 249
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Total liabilities 2,817 7,335
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Partners' capital (deficit):
Limited partners, 21,585 units issued and 3,400 766
outstanding
General Partner (407) (440)
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Total partners' capital 2,993 326
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Total liabilities and partners' capital $5,810 $7,661
(deficit)
===============================================================================
The accompanying notes are an integral part of these financial statements.
PROPERTY RESOURCES FUND VI
(A CALIFORNIA LIMITED PARTNERSHIP)
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, June 30, JUNE 30, June 30,
(Dollars in thousands, except per 1998 1997 1998 1997
unit amounts)
- --------------------------------------------------------------------------------
REVENUE:
Rent $523 $529 $1,035 $1,036
Interest and dividends 10 8 19 18
-----------------------------------------
Total revenue 533 537 1,054 1,054
-----------------------------------------
EXPENSES:
Interest, other than related party 51 51 102 102
Depreciation 72 73 144 145
Operating 286 250 530 491
Related party 33 32 63 65
General and administrative 28 5 46 13
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Total expenses 470 411 885 816
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Operating Income before sale of 63 126 169 238
property
Gain on sale of property 2,498 - 2,498 -
NET INCOME $2,561 $126 $2,667 $238
================================================================================
Net income allocable to limited $2,533 $120 $2,634 $226
partners
================================================================================
Net income allocable to General $28 $6 $33 $12
Partner
================================================================================
Net income per $500 limited
partnership unit- $117.35 $5.56 $122.03 $10.47
based on 21,585 units outstanding
================================================================================
The accompanying notes are an integral part of these financial statements.
PROPERTY RESOURCES FUND VI
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(Unaudited)
(Dollars in thousands) 1998 1997
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Cash flows from operating activities:
Net income $2,667 $238
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Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 144 152
(Increase) decrease in other assets (13) 88
Increase in accrued Interest - 3
Gain on sale of property (2,498) -
Decrease in deposits and other liabilities (91) (57)
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(2,458) 186
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Net cash provided by operating activities 209 424
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Cash flow from investing activities:
Improvements to rental property (17) (77)
Proceeds from sale of property 6,625 -
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Principal received on note receivable 40 36
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Net cash provided by (used in) investing 6,648 (41)
activities
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Principal payments on notes payable (3,980) (213)
Principal payments to General Partner - (153)
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Net cash used in financing activities (3,980) (366)
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Net increase in cash and cash equivalents 2,877 17
Cash and cash equivalents, beginning of period 407 279
- -------------------------------------------------------------------------------
Cash and cash equivalents, end of period $3,284 $296
===============================================================================
The accompanying notes are an integral part of these financial statements.
PROPERTY RESOURCES FUND VI
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited interim financial statements of Property Resources
Fund VI (the "Partnership") have been prepared in accordance with the
instructions to Form 10-Q pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. In the opinion of management, all
appropriate adjustments necessary to a fair presentation of the results of
operations have been made for the periods shown. All adjustments are of a
normal recurring nature. Certain prior year amounts have been reclassified
to conform to current year presentations.
These financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. Management have decided to sell
the Partnership's remaining property and dissolve the Partnership. A proxy
statement announcing this intention was sent to members in April 1998 and has
since been approved. No sale of the remaining Property had occurred
at June 30, 1998, however management is currently actively seeking a buyer of
the Property. Accordingly it is possible that the Partnership will not
continue as a going concern for a reasonable period of time.
The financial statements do not include any adjustments relating to the
recoverability and classification of liabilities that might be necessary if
the Partnership will not continue as a going concern. Management believes
that the market value of the Partnership's remaining property is at least
equal to its book value. Accordingly management does not expect any material
losses to be undertaken in the event of the liquidation of the Partnership.
However, there can be no assurance that the eventual sales price of the
property will not result in a loss or that a sale will be consummated.
These financial statements should be read in conjunction with the
Partnership's audited financial statements for the year ended December 31,
1997.
NOTE 2 - SALE OF RENTAL PROPERTY
On June 30, 1998, the Partnership sold the Grouse Run Apartments property to
an unaffiliated buyer for a total sales price of $6,902,500 resulting in net
cash proceeds to the Partnership of $6,625,750. In connection with the sale,
the Partnership recognized a gain of $2,498,000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
INTRODUCTION
Management's discussion and analysis of financial condition and results of
operations should be read in conjunction with the Financial Statements and
Notes thereto.
RESULTS OF OPERATIONS
COMPARISON OF THE THREE AND SIX-MONTH PERIODS ENDED JUNE 30, 1998 AND 1997
Total revenue for the three- and six-month periods ended June 30, 1998
decreased $4,000, or 1%, and $-, respectively, when compared to the same
periods in 1997. This was in line with expectations.
Total expenses for the three and six-month period ended June 30, 1998
increased $59,000, or 14%, and $69,000, or 8%, respectively, when compared to
the same periods in 1997. The increase for both periods reported was a
result of additional operating expenses primarily related
to increased accounting, legal and payroll costs.
The increase in net income for the three and six-month periods under review
was primarily due to the gain recorded on the sale of the Grouse Run
Apartments property in June 1998 as discussed in note 2 to the financial
statements.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES
In July 1983, the Partnership completed a public offering of its limited
partnership units with total proceeds of $10,795,500 from the sale of 21,585
limited partnership units. The Partnership acquired five properties with an
aggregate cost of $23,526,000.
As of June 30, 1998 the Partnership had one operating property named
Clearlake Village Apartments. The buildings and the land upon which the
buildings are located are owned directly by the Partnership or the
Subsidiary, as herein after defined, in fee. As described in note 1 to the
financial statements Management estimates that the net realizable value of
the property approximates its carrying value.
As of June 30, 1998, cash and cash equivalents totaled $3,284,000. As of
June 30, 1998, accrued interest due to General Partner amounted to $527,000.
The General Partner presently intends to continue to make such advances to
the Partnership as necessary. Consequently, management believes that the
Partnership's current sources of funds will be adequate to meet both its
short-term and long-term capital commitments and operating
requirements.
The Partnership presently believes that funds available from operations and
from its note receivable due in 1999 will permit it to repay interest owed to
the General Partner. The Partnership successfully eliminated $4,246,000 of
notes payable during June 1998. This was financed by the proceeds from the
sale of Grouse Run Apartments as referred to in note 2 to the financial
statements.
Net cash provided by operating activities for the six-month period ended June
30, 1998 was $209,000 which was $225,000 less than the same period in 1997.
This was primarily due to the results of operations as discussed above.
The changes in net cash provided by investing and financing activities during
the six-month period ended June 30, 1998 primarily resulted from the sale of
the Grouse Run Apartments property in June 1998, as reduced by the repayment
of the related note payable.
Management believes that the Company's sources of capital as described under
Liquidity and Capital Resources are adequate to meet its liquidity needs in
the foreseeable future. As disclosed in note 1 to the financial statements
management is currently seeking to dissolve the Partnership.
IMPACT OF INFLATION
The Partnership's management believes that inflation may have a positive
effect on the Partnership's property portfolio, but this effect generally
will not be fully realized until such properties are sold or exchanged.
YEAR 2000
Management is in the process of assessing the impact of Year 2000 issues on
its computer systems and applications. At this time, management believes that
the costs associated with resolving these issues will not have a material
effect on the Company's financial statements.
PROPERTY RESOURCES FUND VI
(A CALIFORNIA LIMITED PARTNERSHIP)
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Not applicable
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Registrant during the quarter
ended June 30, 1998.
SIGNATURE
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.
PROPERTY RESOURCES FUND VI
By:
David P. Goss
Chief Executive Officer
Date: