FORM 10-QSB.--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 QUARTERLY OR TRANSITIONAL REPORT U.S. Securities and Exchange Commission Washington, D.C. 20549 FORM 10-QSB [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1997 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period.........to......... Commission file number 0-14099 CONSOLIDATED CAPITAL PROPERTIES VI (Exact name of small business issuer as specified in its charter) California 94-2940204 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) One Insignia Financial Plaza, P.O. Box 1089 Greenville, South Carolina 29602 (Address of principal executive offices) (864) 239-1000 (Issuer's telephone number) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS a) CONSOLIDATED CAPITAL PROPERTIES VI CONSOLIDATED BALANCE SHEET (Unaudited) (in thousands, except unit data) September 30, 1997 Assets Cash and cash equivalents: Unrestricted $ 1,210 Restricted -- tenant security deposits 79 Investments 302 Accounts receivable 20 Escrows for taxes and insurance 205 Restricted escrows 136 Other assets 120 Investment properties: Land $ 1,652 Buildings and personal property 15,124 16,776 Less accumulated depreciation (7,701) 9,075 $ 11,147 Liabilities and Partners' Capital Liabilities Accounts payable $ 110 Tenant security deposits 78 Accrued taxes 221 Other liabilities 210 Mortgage notes payable 9,900 Partners' (Deficit) Capital General partner $ (6) Special limited partner (56) Limited partners (181,808 units issued and 181,288 units outstanding) 690 628 $ 11,147 See Accompanying Notes to Consolidated Financial Statements b) CONSOLIDATED CAPITAL PROPERTIES VI CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data) Three Months Ended Nine Months Ended September 30, September 30, 1997 1996 1997 1996 Revenues: Rental income $ 752 $ 780 $ 2,246 $ 2,319 Other income 46 59 188 193 Total revenues 798 839 2,434 2,512 Expenses: Operating 369 294 967 898 General and administrative 42 40 122 136 Maintenance 122 175 272 397 Depreciation 187 179 552 528 Interest 137 228 623 670 Property tax 74 71 220 206 Total expenses 931 987 2,756 2,835 Net loss $ (133) $ (148) $ (322) $ (323) Net loss allocated to general partner (.2%) $ -- $ -- $ 1 $ 1 Net loss allocated to limited partners (99.8%) (133) (148) (321) (322) Net loss $ (133) $ (148) $ (322) $ (323) Net loss per limited partnership unit: $ (.73) $ (.82) $ (1.77) $(1.78) <FN> See Accompanying Notes to Consolidated Financial Statements </FN> CONSOLIDATED CAPITAL PROPERTIES VI CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL (Unaudited) (in thousands, except unit data) Limited Special Partnership General Limited Limited Units Partner Partner Partners Total Original capital contributions contributions 181,808 $ 1 $ -- $45,452 $45,453 Partners' (deficit) capital at December 31, 1996 181,288 $ (6) $ (61) $ 1,017 $ 950 Amortization of timing difference (Note D) -- -- 6 (6) -- Net loss for the nine months ended September 30, 1997 -- -- (1) (321) (322) Partners' (deficit) capital at September 30, 1997 181,288 $ (6) $ (56) $ 690 $ 628 <FN> See Accompanying Notes to Consolidated Financial Statements </FN> d) CONSOLIDATED CAPITAL PROPERTIES VI CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) Nine Months Ended September 30, 1997 1996 Cash flows from operating activities: Net loss $ (322) $ (323) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 552 528 Amortization of loan costs and discounts 120 172 Change in accounts: Restricted cash 9 1 Accounts receivable 9 (5) Escrows for taxes and insurance (97) (59) Other assets (8) 190 Accounts payable (93) (98) Tenant security deposit liabilities (10) (1) Accrued taxes 108 97 Other liabilities (19) (68) Net cash provided by operating activities 249 434 Cash flows from investing activities: Property improvements and replacements (112) (278) Proceeds from sale of investments -- 84 Dividends received from investments 3 -- Deposits to restricted escrows (68) (72) Receipts from restricted escrows -- 163 Net cash used in investing activities (177) (103) Cash flows used in financing activities: Payments on mortgage notes payable (340) (157) Net (decrease) increase in unrestricted cash and cash equivalents (268) 174 Unrestricted cash and cash equivalents at beginning of period 1,478 1,311 Unrestricted cash and cash equivalents at end of period $1,210 $1,485 Supplemental disclosure of cash flow information: Cash paid for interest $ 531 $ 514 See Accompanying Notes to Consolidated Financial Statements e) CONSOLIDATED CAPITAL PROPERTIES VI NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE A - BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements of Consolidated Capital Properties VI ("the Partnership or the "Registrant") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of ConCap Equities, Inc. (the "General Partner"), all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 1997, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 1997. For further information, refer to the consolidated financial statements and footnotes thereto included in the Partnership's annual report on Form 10-KSB for the fiscal year ended December 31, 1996. Certain reclassifications have been made to the 1996 balances to conform to the 1997 presentation. NOTE B - TRANSACTIONS WITH AFFILIATED PARTIES The Partnership has no employees and is dependent on the General Partner and its affiliates for the management and administration of all of the Partnership activities, as provided for in the Partnership Agreement. The Partnership has paid property management fees based upon collected gross rental revenues for property management services in each of the nine months ended September 30, 1997 and 1996. Property management fees of approximately $118,000 and $121,000 were paid to affiliates of the General Partner for the nine months ended September 30, 1997 and 1996, respectively. These property management fees are included in operating expenses. The Partnership Agreement also provides for reimbursement to the General Partner and its affiliates for costs incurred in connection with the administration of Partnership activities. Reimbursements for services of affiliates of approximately $78,000 and $88,000 were paid to the General Partner and its affiliates for the nine months ended September 30, 1997 and 1996, respectively. Included in these reimbursements is approximately $1,000 and $5,000 in construction oversight costs for the nine months ended September 30, 1997 and 1996, respectively. For the period from January 1, 1996, to August 31, 1997, the Partnership insured its properties under a master policy through an agency and insurer unaffiliated with the General Partner. An affiliate of the General Partner acquired, in the acquisition of a business, certain financial obligations from an insurance agency which was later acquired by the agent who placed the master policy. The current agent assumed the financial obligations to the affiliate of the General Partner who receives payment on these obligations from the agent. The amount of the Partnership's insurance premiums that accrued to the benefit of the affiliate of the General Partner by virtue of the agent's obligations was not significant. NOTE C - COMMITMENT The Partnership is required to maintain working capital reserves for contingencies of not less than 5% of Net Invested Capital, as defined in the Partnership Agreement. In the event expenditures are made from these reserves, operating revenue shall be allocated to such reserves to the extent necessary to maintain the foregoing level. Cash and cash equivalents, tenant security deposits and investments, totaling approximately $1,591,000 are less than the reserve requirement of approximately $2,226,000 at September 30, 1997. The Partnership intends to replenish working capital reserves from cash flow from operations after consideration of any capital improvement needs of the properties. The working capital requirement must be met prior to any consideration for distributions to the partners. NOTE D - CHANGE IN STATUS OF NON-CORPORATE GENERAL PARTNER During the year ended December 31, 1991, the Partnership Agreement was amended to convert the General Partner interests held by the non-corporate General Partner, Consolidated Capital Group II ("CCG"), to that of a special Limited Partner ("Special Limited Partner"). The Special Limited Partner does not have a vote and does not have any of the other rights of a Limited Partner except the right to inspect the Partnership's books and records; however, the Special Limited Partner will retain the economic interest in the Partnership which it previously owned as general partner. ConCap Equities, Inc. ("CEI") became the sole general partner of the Partnership effective December 31, 1991. In connection with CCG's conversion, a special allocation of gross income was made to the Special Limited Partner in order to eliminate its tax basis negative capital account. After the conversion, the various Special Limited Partners transferred portions of their interests to CEI so that CEI now holds a .2% interest in all allocable items of income, loss and distribution. The difference between the Special Limited Partner's capital accounts for financial statement and tax reporting purposes is being amortized to the Limited Partners' capital account as the components of the timing differences, which created the balance, reverse. NOTE E - SALE OF PROPERTY On October 20, 1997, the Partnership sold Celina Plaza Apartments, located in El Paso, Texas, to an unaffiliated party, The Vandenburg Organization, a Texas corporation. The sales price of the property was $6,600,000 and the sale resulted in net proceeds of approximately $6,456,000, after payment of closing costs. The net proceeds were used to pay accrued taxes and to pay-off the mortgage debt secured by this property. Excess proceeds after such payments amounted to approximately $779,000 to the Partnership. The following unaudited pro-forma information reflects the operations of the Partnership for the three and nine months ended September 30, 1997 and 1996, as if Celina Plaza Apartments had been sold January 1, 1996. Proforma Results of Operations for the Three Months Ended Nine Months Ended September 30, September 30, 1997 1996 1997 1996 Revenues 389 423 1,213 1,249 Net income (108) (84) (166) (146) Net income per Unit of Depository Receipt (.59) (.46) (.91) (.80) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION The Partnership's investment properties consist of two apartment complexes. The following table sets forth the average occupancy of the properties for the nine months ended September 30, 1997 and 1996: 1997 1996 Celina Plaza Apartments El Paso, Texas (1) 88% 91% Colony of Springdale Apartments Springdale, Ohio (2) 89% 92% (1) The General Partner attributes the decrease in occupancy to the heavily competitive market in El Paso. Subsequent to September 30, 1997, Celina Plaza Apartments was sold (See "Note E"). (2) The decline in occupancy at the Colony of Springdale Apartments property is attributable to increasing qualifying standards for residents. The Partnership realized a net loss of approximately $133,000 and $322,000 for the three and nine months ended September 30, 1997, respectively, compared to net losses of approximately $148,000 and approximately $323,000 for the three and nine months ended September 30, 1996, respectively. Although the net loss remained relatively stable for the nine months ended September 30, 1997, compared to the corresponding period of 1996, both total revenues and total expenses decreased in the three and nine months ended September 30, 1997, compared to the same periods in 1996. The decrease in revenues primarily resulted from decreased rental income due to decreased occupancy at the investment properties, as discussed above. Maintenance expense decreased due to various interior and exterior projects being completed at both investment properties in 1996. Also, increased cleaning, interior painting and contract repair costs were incurred in 1996 due to increased move-outs. Partially offsetting the decreased maintenance expenses for the three and nine months ended September 30, 1997, were increased operating costs primarily at the Colony of Springdale Apartments due to higher concessions being offered in an effort to increase occupancy. Also, maintenance salaries increased, which are included in operating expenses, due to additional personnel. Interest expense decreased as a result of reduced interest requirements on the wrap note secured by Celina Plaza Apartments. Interest payments are based on cash flow, which decreased in the first nine months of 1997, compared to the corresponding period in 1996. Included in maintenance expenses for the nine months ended September 30, 1997, is approximately $14,000 of major repairs and maintenance comprised primarily of window coverings and repairs to one unit at Celina Plaza Apartments due to minor fire damage, which was not covered by insurance. For the nine months ended September 30, 1996, approximately $47,000 of repairs and maintenance comprised primarily of major landscaping, swimming pool repairs, window coverings and exterior building improvements are included in maintenance expense. At September 30, 1997, the Partnership held unrestricted cash and cash equivalents of approximately $1,210,000 compared to approximately $1,485,000 at September 30, 1996. Net cash provided by operating activities decreased primarily due to an increase in other assets, which resulted from increases in prepaid insurance due to the down-payment that was required at the policy renewal in May 1997. This decrease was partially offset by a lesser decrease in other liabilities due to the timing of payments. Net cash used in investing activities increased due primarily to decreases in receipts from restricted escrows and due to no investment sales in 1997. These decreases in cash proceeds were partially offset by a decrease in property improvements and replacements. Net cash used in financing activities increased primarily due to an increase in payments of principal on mortgage notes. Additional principal payments totaling approximately $170,000 were paid on the mortgage note secured by Celina Plaza Apartments in order to obtain extensions on the indebtedness, which matured on July 1997 (See discussion below). As part of the ongoing business plan of the Partnership, the General Partner monitors the rental market environment of each of its investment properties to assess the feasibility of increasing rents, maintaining or increasing occupancy levels and protecting the Partnership from increases in expenses. As part of this plan, the General Partner attempts to protect the Partnership from the burden of inflation-related increases in expenses by increasing rents and maintaining a high overall occupancy level. However, due to changing market conditions, which can result in the use of rental concessions and rental reductions to offset softening market conditions, there is no guarantee that the General Partner will be able to sustain such a plan. The sufficiency of existing liquid assets to meet future liquidity and capital expenditure requirements is directly related to the level of capital expenditures required at the properties to adequately maintain the physical assets and other operating needs of the Partnership. Such assets are currently thought to be sufficient for any near-term needs of the Partnership. The mortgage indebtedness of approximately $9,900,000, net of discount, has maturity dates ranging from July 1997 to May 2001, at which time the properties will either be sold or the mortgages refinanced. The mortgage indebtedness of approximately $5,476,000, net of discount, secured by Celina Plaza Apartments, matured in July 1997. The General Partner initially obtained a sixty day extension, with the Partnership making a required payment of $113,000 towards the principal balance on this note. In addition to the sixty day extension which expired September 30, 1997, the Partnership exercised the first of two thirty day options offered, extending the note until October 30, 1997. Pursuant to the requirement of the thirty day option, the Partnership paid an additional principal payment of $57,000. Subsequent to September 30, 1997, the Partnership successfully closed on the sale of Celina Plaza Apartments. The property was sold for $6,600,000 and the sale resulted in net proceeds of approximately $6,456,000, after payment of closing costs (See "Note E"). No cash distributions were declared or paid during the first nine months of 1997 or 1996. Future cash distributions will depend on the levels of cash generated from operations, capital expenditure requirements, property sales and the availability of cash reserves. PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a)Exhibits. Exhibit 27, Financial Data Schedule is filed as an exhibit to this report. (b)Reports on Form 8-K. None filed during the three months ended September 30, 1997. Exhibit 10.19 Contract to Purchase and Sell Property made and entered into as of August 13, 1997, but effective October 20, 1997, by and between Consolidated Capital Properties VI, a California limited partnership, and The Vandenburg Organization, a Texas corporation regarding Celina Plaza Apartments. Exhibit 10.20 Assignment and assumption of Leases dated October 13, 1997, by and between Consolidated Capital Properties VI, a California limited partnership and The Vandenburg Organization, a Texas corporation, regarding Celina Plaza Apartments. Exhibit 10.21 Blanket Conveyance, Bill of Sale and Assignment dated October 13, 1997, by and between Consolidated Capital Properties VI, a California limited partnership and The Vandenburg Organization, a Texas corporation, regarding Celina Plaza Apartments. SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CONSOLIDATED CAPITAL PROPERTIES VI By: CONCAP EQUITIES, INC. General Partner By: /s/William H. Jarrard, Jr. William H. Jarrard, Jr. President By: /s/Ronald Uretta Ronald Uretta Vice President/Treasurer Date: November 3, 1997