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, 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 incorporation or organization) (I.R.S.
Employer Identification No.)
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 June 30, 1999: 21,585
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PROPERTY RESOURCES FUND VI
(A CALIFORNIA LIMITED PARTNERSHIP)
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1999 AND DECEMBER 31, 1998
1999 1998
(LIQUIDATION (GOING
BASIS - CONCERN
UNAUDITED) BASIS)
(Dollars in thousands)
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ASSETS:
Real estate:
Land - $999
Land improvements - 179
Buildings and improvements - 2,286
Furnishings and equipment - 418
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- 3,882
Less: accumulated depreciation - 1,911
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Total real estate, net - 1,971
Cash and cash equivalents $2,555 1,143
Other assets, net 3 306
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Total assets $2,558 $3,420
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LIABILITIES AND STOCKHOLDERS' EQUITY:
Notes payable - $2,121
Accrued interest due to General Partner $527 527
Deposits and other liabilities 76 214
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Total liabilities 603 2,862
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Partners' capital:
Limited partners, 21,585 units issued and 2,346 962
outstanding
General Partner (391) (404)
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Total partners' capital 1,955 558
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Total liabilities and partners' capital $2,558 $3,420
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The accompanying notes are an integral part of these financial statements.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
(Dollars in 1999 1998 1999 1998
thousands, except
per unit amounts)
(Liquidation (Going (Liquidation (Going
Basis) Concern Basis) Basis) Concern Basis)
Revenue:
Rent $160 $523 $389 $1,035
Interest and $11 10 21 19
dividends
Total revenue 171 533 410 1,054
Expenses:
Interest, other 35 51 85 102
than related party
Depreciation 14 72 35 144
Operating 119 286 244 530
Related party 14 33 29 63
General and 43 28 47 46
administrative
Total expenses 225 470 440 885
Operating (loss) (54) 63 (30) 169
income before sale
of property
Gain on sale of 1,426 2,498 1,426 2,498
property
Net income $1,372 $2,561 $1,396 $2,667
Net income $1,361 $2,533 $1,384 $2,634
allocable to
limited partners
Net income $11 $28 $12 $33
allocable to
General Partner
Net income per
$500 limited $63.05 $117.35 $64.12 $122.03
partnership unit-
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, 1999 AND 1998
(Unaudited)
(Dollars in thousands) 1999 1998
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Cash flows from operating activities:
Net income $1,396 $2,667
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Adjustments to reconcile net income to net
cash
provided by operating activities:
Depreciation and amortization 42 144
Decrease (increase) in other assets 200 (13)
Gain on sale of property (1,426) (2,498)
Decrease in deposits and other (138) (91)
liabilities
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Net cash provided by operating activities 74 209
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Cash flow from investing activities:
Improvements to rental property (9) (17)
Proceeds from sale of property 3,468 6,625
Principal received on note receivable - 40
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Net cash provided by investing activities 3,459 6,648
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Cash flow from financing activities:
Principal payments on notes payable (2,121) (3,980)
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Net cash used in financing activities (2,121) (3,980)
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Net increase in cash and cash equivalents 1,412 2,877
Cash and cash equivalents, beginning of 1,143 407
period
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Cash and cash equivalents, end of period $2,555 $3,284
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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
JUNE 30, 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. 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 sold the remaining
property in June 1999.
The going concern basis contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. Liquidation
basis accounting requires management to estimate and record the value of all
transactions up until the date of liquidation, including any adjustments
relating to the recoverability and classification of assets and liabilities.
Liquidation accounting is only used when it is reasonably certain that a
business will terminate. Management now considers it likely that liquidation
of the Partnership will occur in 1999. Accordingly the Partnership has
adopted the liquidation basis of accounting with effect from June 2, 1999.
The financial statements for the period ended June 30, 1999 have been
prepared on a liquidation basis. No adjustment has been made to the prior
period financial statements, which were prepared on a going concern basis, as
was appropriate at the time that they were presented.
NOTE 2 -PROPERTY SALE
In June 1999 the Partnership sold its remaining property, Clearlake Village
Apartments ("Clearlake") to an unaffiliated buyer for net sale proceeds of
$3,468,000. In connection with the sale the Partnership recognized a gain on
sale of $1,426,000.
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.
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- AND SIX-MONTH PERIODS ENDED JUNE 30, 1999 AND 1998
Total revenue for the three- and six-month periods ended June 30, 1999
decreased $362,000, or 68%, and $644,000, or 61%, respectively, when compared
to the same periods in 1998. This was due primarily to lower rent revenue
following the sales of the Grouse Run in June 1998 and Clearlake in June 1999
("the property sales").
Total expenses for the three- and six-month period ended June 30, 1999
decreased $245,000, or 52%, and $445,000, or 50%, respectively, when compared
to the same periods in 1998. This was caused principally by lower operating
expenses and depreciation following the property sales.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1999, cash and cash equivalents totaled $2,555,000. As of
June 30, 1999, accrued interest due to General Partner amounted to $527,000.
The Partnership presently believes that funds available will be sufficient to
repay interest owed to the General Partner and to meet its obligations until
dissolution.
Net cash provided by operating activities for the six month period ended June
30, 1999 was $74,000, or $135,000 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. However given the pending dissolution of the Partnership
management does not expect any material losses to arise from this
non-compliance.
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
The Partnership filed form 8-K on June 2, 1999 (Date of earliest event
reported) relating to the sale of the Clearlake Village Apartments,
located in Houston, Texas.
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: August 13, 1999