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
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OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from TO
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Commission file number 2-77330
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PROPERTY RESOURCES FUND VI
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(Exact name of registrant as specified in its charter)
CALIFORNIA 94-2838890
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
P. O. BOX 7777, SAN MATEO, CALIFORNIA 94403-7777
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (650) 312-2000
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N/A
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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 March 31, 1999: 21,585
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PROPERTY RESOURCES FUND VI
(A CALIFORNIA LIMITED PARTNERSHIP)
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1999 AND DECEMBER 31, 1998
UNAUDITED
MARCH 31 DECEMBER 31
(Dollars in thousands) 1999 1998
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ASSETS:
Real estate:
Land $999 $999
Land improvements 179 179
Buildings and improvements 2,295 2,286
Furnishings and equipment 418 418
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3,891 3,882
Less: accumulated depreciation 1,932 1,911
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Total real estate, net 1,959 1,971
Cash and cash equivalents 1,164 1,143
Other assets, net 227 306
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Total assets $3,350 $3,420
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LIABILITIES AND STOCKHOLDERS' EQUITY:
Notes payable $2,115 $2,121
Accrued interest due to General Partner 527 527
Deposits and other liabilities 126 214
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Total liabilities 2,768 2,862
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Partners' capital:
Limited partners, 21,585 units issued and 985 962
outstanding
General Partner (403) (404)
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Total partners' capital 582 558
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Total liabilities and partners' capital $3,350 $3,420
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The accompanying notes are an integral part of these financial statements.
PROPERTY RESOURCES FUND VI
(A CALIFORNIA LIMITED PARTNERSHIP)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(Unaudited)
(Dollars in thousands, except 1999 1998
per unit amounts)
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REVENUE:
Rent $229 $512
Interest and dividends 10 9
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Total revenue 239 521
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EXPENSES:
Interest, other than related 50 51
party
Depreciation 21 72
Property operating 124 244
Related party 15 30
General and administrative 5 18
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Total expenses 215 415
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NET INCOME $24 $106
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Net income allocable to limited $23 $101
partners
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Net income allocable to General $1 $5
Partner
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Net income per $500 limited
partnership unit- $1.07 $4.68
based on 21,585 units
outstanding
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The accompanying notes are an integral part of these financial statements.
PROPERTY RESOURCES FUND VI
(A CALIFORNIA LIMITED PARTNERSHIP)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 1999 AND 1998
(Unaudited)
(Dollars in thousands) 1999 1998
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Cash flows from operating activities:
Net income $24 $106
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Adjustments to reconcile net income to net
cash
provided by operating activities:
Depreciation and amortization 24 75
Decrease in other assets 76 44
Decrease in deposits and other (88) (33)
liabilities
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12 86
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Net cash provided by operating activities 36 192
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Cash flow from investing activities:
Improvements to rental property (9) (10)
Principal received on note receivable - 23
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Net cash (used in) provided by investing (9) 13
activities
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Cash flow from financing activities:
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Principal payments on notes payable (6) (107)
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Net increase in cash and cash equivalents 21 98
Cash and cash equivalents, beginning of 1,143 407
period
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Cash and cash equivalents, end of period $1,164 $505
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The accompanying notes are an integral part of these financial statements.
PROPERTY RESOURCES FUND VI
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999
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. These financial statements should be read in
conjunction with the Partnership's audited financial statements for the year
ended December 31, 1998.
The accompanying consolidated financial statements include the accounts of
the Partnership and its majority-owned Subsidiary. All significant
intercompany accounts and transactions have been eliminated. 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. In April 1998, a proxy statement was sent to members
contemplating the sale of the Partnership's remaining property and ultimate
dissolution of the Partnership. As a result of the approval by members,
management has commenced efforts to sell the remaining property. Although a
firm sales commitment has not been reached, management believes a sale may
occur in the foreseeable future.
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.
NOTE 2 -NEGOTIATIONS FOR PROPERTY SALE
As discussed in Note 1 above the Partnership is currently actively marketing
the sale of its remaining property. The Partnership has entered into sales
negotiations with an independent third party and has secured a non-refundable
deposit of $50,000 in this regard. Management currently expects the sale to
close by the end of June 1999. However the transaction was not closed at May
13, 1999 and no assurance can be given that a sale will occur.
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.
When used in the following discussion, the words "believes," "anticipates"
and similar expressions are intended to identify forward-looking statements.
Such statements are subject to certain risks and uncertainties which could
cause actual results to differ materially from those projected, including,
but not limited to, those set forth in the section entitled "Potential
Factors Affecting Future Operating Results," below. Readers are cautioned
not to place undue reliance on these forward-looking statements that speak
only as of the date hereof. The Partnership undertakes no obligation to
publicly release any revisions to these forward-looking statements that may
be made to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events.
RESULTS OF OPERATIONS
COMPARISON OF THE THREE-MONTH PERIODS ENDED MARCH 31, 1999 AND 1998
Net income for the three-month period ended March 31, 1999 decreased $82,000,
or 77%, when compared to 1998 primarily due to the effects of the sale of the
Grouse Run Apartments property ("Grouse Run") in June 1998.
Total revenue for the three-month period ended March 31, 1999 decreased
$282,000, or 54% when compared to 1998. This was due primarily to lower rent
revenue following the sale of the Grouse Run in June 1998.
Total expenses for the three-month periods ended March 31, 1999 decreased
$200,000, or 48%, when compared to 1998. This was caused principally by
lower operating expenses and depreciation following the sale of Grouse Run in
June 1998.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1999 the Partnership had one operating property: Clearlake
Village Apartments ("Clearlake"). The buildings and the land upon which the
buildings are located are owned by the Partnership in fee. Clearlake is
subject to a mortgage. Management is currently marketing this property, and a
sale may occur in 1999. Management estimates that the net realizable value of
Clearlake approximates its carrying value; 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.
As of March 31, 1999, cash and cash equivalents totaled $1,164,000. As of
March 31, 1999, 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
together with the sale proceeds of Clearlake will permit it to repay interest
owed to the General Partner.
Net cash provided by operating activities for the three month period ended
March 31, 1999 was $36,000, or $156,000 less than the same period in 1998.
The decrease was primarily due to a decrease in net income as described under
"Results of Operations".
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
The Partnership has evaluated whether its computer systems, including on-site
and embedded systems, and those of third parties with whom the Partnership
interacts will function properly by, at or during the year 2000. The
Partnership has determined certain of its own systems are not currently year
2000 compliant. Management has a plan to replace or upgrade these systems
within the next nine months. The Partnership does not expect that the costs
associated with these replacements or upgrades will have a materially adverse
impact on its financial position, results of operations or cash flows in
future periods. However, failure to successfully replace or upgrade these
systems could result in material disruptions to its business.
The Partnership is managed and advised by certain affiliates of Franklin
Resources, Inc. It is reliant on these entities for its basic computer
network and certain other applications. Management is monitoring the progress
of these entities in achieving year 2000 compliance and does not currently
anticipate a materially adverse impact on the Partnership's business as a
result of their non-compliance.
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 March 31, 1999.
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: /s/ David P. Goss
David P. Goss
Chief Executive Officer
Date: March 13, 1999