-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Kki6yaWQnJOuNMmVF7D4avfYZrf63mVMqWtKfqu5pxwqP+35Wlqmf0Hxroj8wF36 VDEd5s7c0a/BBW8RIkQ1hA== 0000064309-98-000006.txt : 19980817 0000064309-98-000006.hdr.sgml : 19980817 ACCESSION NUMBER: 0000064309-98-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980814 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MCNEIL PACIFIC INVESTORS FUND 1972 CENTRAL INDEX KEY: 0000064309 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF NONRESIDENTIAL BUILDINGS [6512] IRS NUMBER: 946279375 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-07162 FILM NUMBER: 98688064 BUSINESS ADDRESS: STREET 1: 13760 NOEL RD STE 700 LB70 CITY: DALLAS STATE: TX ZIP: 75240 BUSINESS PHONE: 9724485800 MAIL ADDRESS: STREET 1: 13760 NOEL ROAD SUITE 700 LB 70 CITY: DALLAS STATE: TX ZIP: 75240 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [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 0-7162 -------- McNeil PACIFIC INVESTORS FUND 1972 - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) California 94-6279375 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 13760 Noel Road, Suite 600, LB70, Dallas, Texas 75240 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code (972) 448-5800 ----------------------------- 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 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 - ------- -------------------- McNEIL PACIFIC INVESTORS FUND 1972 (a California limited partnership in the process of liquidation) STATEMENTS OF NET ASSETS IN LIQUIDATION (Unaudited)
June 30, December 31, 1998 1997 --------------- -------------- ASSETS - ------ Cash and cash equivalents................................... $ 396,372 $ 451,506 -------------- ------------- $ 396,372 $ 451,506 ============== ============= LIABILITIES AND PARTNERS' EQUITY - -------------------------------- Other accrued expenses...................................... $ 4,877 $ 19,702 Payable to affiliates - General Partner..................... 12,362 17,485 -------------- ------------- 17,239 37,187 -------------- ------------- Partners' equity: Limited partners - 15,000 limited partnership units authorized; 13,752.5 limited partnership units issued and outstanding at June 30, 1998 and December 31, 1997. 379,133 414,319 General Partner.......................................... - - -------------- ------------- 379,133 414,319 -------------- ------------- $ 396,372 $ 451,506 ============== =============
The financial information included herein has been prepared by management without audit by independent public accountants. See accompanying notes to financial statements. McNEIL PACIFIC INVESTORS FUND 1972 (a California limited partnership in the process of liquidation) STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, --------------------------------- --------------------------------- 1998 1997 1998 1997 -------------- --------------- -------------- -------------- Revenue: Rental revenue................ $ - $ 452,128 $ - $ 898,707 Interest...................... 3,619 7,570 8,529 15,087 ------------- ------------- ------------- ------------- Total revenue............... 3,619 459,698 8,529 913,794 ------------- ------------- ------------- ------------- Expenses: Interest...................... - 46,162 - 92,496 Property taxes................ - 28,974 - 58,736 Personnel expenses............ - 57,735 73 145,518 Utilities..................... - 15,822 - 34,089 Repair and maintenance........ - 99,930 8,592 192,459 Property management fees - affiliates........... - 26,671 - 53,358 Other property operating expenses.................... - 22,490 1,494 63,132 General and administrative.... 21,538 15,336 37,106 25,425 General and administrative - affiliates.................. - 20,869 (3,550) 33,628 ------------- ------------- ------------- ------------- Total expenses.............. 21,538 333,989 43,715 698,841 ------------- ------------- ------------- ------------- Net income (loss)................ $ (17,919) $ 125,709 $ (35,186) $ 214,953 ============= ============= ============= ============= Net income (loss) allocated to limited partners........... $ (17,919) $ 125,709 $ (35,186) $ 214,953 Net income (loss) allocated to General Partner............ - - - - ------------- ------------- ------------- ------------- Net income (loss)................ $ (17,919) $ 125,709 $ (35,186) $ 214,953 ============= ============= ============ ============= Net income (loss) per limited partnership unit.............. $ (1.30) $ 9.14 $ (2.56) $ 15.63 ============= ============= ============= =============
The financial information included herein has been prepared by management without audit by independent public accountants. See accompanying notes to financial statements. McNEIL PACIFIC INVESTORS FUND 1972 (a California limited partnership in the process of liquidation) STATEMENTS OF PARTNERS' EQUITY (Unaudited) For the Six Months Ended June 30, 1998 and 1997
Total General Limited Partners' Partner Partners Equity -------------- --------------- -------------- Balance at December 31, 1996.............. $ 309,944 $ 4,509,477 $ 4,819,521 Net income................................ - 214,953 214,953 ------------- ------------- ------------- Balance at June 30, 1997.................. $ 309,944 $ 4,724,530 $ 5,034,474 ============= ============= ============= Balance at December 31, 1997.............. $ - $ 414,319 $ 414,319 Net loss.................................. - (35,186) (35,186) ------------- ------------- ------------- Balance at June 30, 1998.................. $ - $ 379,133 $ 379,133 ============= ============= =============
The financial information included herein has been prepared by management without audit by independent public accountants. See accompanying notes to financial statements. McNEIL PACIFIC INVESTORS FUND 1972 (a California limited partnership in the process of liquidation) STATEMENTS OF CASH FLOWS (Unaudited) Increase (Decrease) in Cash and Cash Equivalents
Six Months Ended June 30, ---------------------------- 1998 1997 --------- ----------- Cash flows from operating activities: Cash received from tenants ............ $ - $ 901,228 Cash paid to suppliers ................ (62,090) (485,509) Cash paid to affiliates ............... (1,573) (90,233) Interest received ..................... 8,529 15,087 Interest paid ......................... - (88,704) Property taxes paid and escrowed ...... - (57,001) --------- --------- Net cash provided by (used in) operating activities ............................ (55,134) 194,868 --------- --------- Cash flows from investing activities: Additions to real estate investments .. - (64,217) --------- --------- Cash flows from financing activities: Principal payments on mortgage notes payable ............................. - (73,446) --------- --------- Net increase (decrease) in cash and cash equivalents ...................... (55,134) 57,205 Cash and cash equivalents at beginning of period ............................. 451,506 581,031 --------- --------- Cash and cash equivalents at end of period $ 396,372 $ 638,236 ========= =========
The financial information included herein has been prepared by management without audit by independent public accountants. See accompanying notes to financialstatements. MCNEIL PACIFIC INVESTORS FUND 1972 (a California limited partnership in the process of liquidation) STATEMENTS OF CASH FLOWS (Unaudited) Reconciliation of Net Income (Loss) to Net Cash Provided by (Used in) Operating Activities
Six Months Ended June 30, --------------------------- 1998 1997 ---------- --------- Net income (loss) ............................. $ (35,186) $ 214,953 --------- --------- Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Amortization of deferred borrowing costs ... - 4,327 Changes in assets and liabilities: Cash segregated for security deposits .... - (625) Accounts receivable ...................... - 3,516 Prepaid expenses and other assets ........ - (6,467) Escrow deposits .......................... - (57,001) Accrued interest ......................... - (535) Accrued property taxes ................... - 58,736 Other accrued expenses ................... (14,825) (19,499) Payable to affiliates - General Partner .. (5,123) (3,247) Security deposits and deferred rental revenue ................................ - 710 --------- --------- Total adjustments ...................... (19,948) (20,085) --------- --------- Net cash provided by (used in) operating activities ................................. $ (55,134) $ 194,868 ========= =========
The financial information included herein has been prepared by management without audit by independent public accountants. See accompanying notes to financial statements. McNEIL PACIFIC INVESTORS FUND 1972 (a California limited partnership in the process of liquidation) Notes To Financial Statements (Unaudited) June 30, 1998 NOTE 1. - ------- McNeil Pacific Investors Fund 1972 (the "Partnership") is a limited partnership organized under the laws of the State of California to invest in real property. The general partner of the Partnership is McNeil Partners, L.P. (the "General Partner"), a Delaware limited partnership, an affiliate of Robert A. McNeil. The principal place of business for the Partnership and the General Partner is 13760 Noel Road, Suite 600, LB70, Dallas, Texas 75240. In the opinion of management, the financial statements reflect all adjustments necessary for a fair presentation of the Partnership's financial position and results of operations. All adjustments were of a normal recurring nature. However, the results of operations for the six months ended June 30, 1998, are not necessarily indicative of the results to be expected for the year ending December 31, 1998. At a meeting of the limited partners on August 12, 1997, the limited partners approved the sale of Palm Bay Apartments and the dissolution of the Partnership. After the September 30, 1997 sale of Palm Bay Apartments, the General Partner commenced the dissolution and termination of the Partnership. The assets and liabilities in the accompanying statements of net assets in liquidation at June 30, 1998 and December 31, 1997 are valued at their estimated realizable values and estimated settlement amounts, respectively. The Partnership is in the process of liquidating its assets, satisfying all creditors and claims against the Partnership, distributing its remaining assets to its partners, and terminating its existence. NOTE 2. - ------- The financial statements should be read in conjunction with the financial statements contained in the Partnership's Annual Report on Form 10-K for the year ended December 31, 1997, and the notes thereto, as filed with the Securities and Exchange Commission, which is available upon request by writing to McNeil Pacific Investors Fund 1972, 13760 Noel Road, Suite 600, LB70, Dallas, Texas 75240. NOTE 3. - ------- The Partnership paid property management fees equal to 6% of the gross rental receipts of the Partnership's property to McNeil Real Estate Management, Inc. ("McREMI"), an affiliate of the General Partner, for providing property management and leasing services for the Partnership's property. The Partnership reimbursed McREMI for its costs, including overhead, of administering the Partnership's affairs. The General Partner is entitled to receive a partnership management fee equal to 9.5% of distributions of cash from operations when distributable cash from operations is distributed to the limited partners. No partnership management fees were incurred or paid during the six month periods ended June 30, 1998 and 1997. The General Partner was entitled to receive a sales commission as compensation for selling Partnership property equal to the lesser of 4% of the sales price of the property sold or the customary fee charged by independent real estate brokers in the area where the property was located. The General Partner was also entitled to a distribution of cash from sales and refinancings and cash from working capital reserves equal to 9.5% of such distributions. Compensation and reimbursements accrued for the benefit of the General Partner and its affiliates are as follows: Six Months Ended June 30, ---------------------- 1998 1997 ------- ---------- Property management fees - affiliates............... $ - $ 53,358 Charged to general and administrative - affiliates: Partnership administration....................... (3,550) 33,628 ------- ---------- $(3,550) $ 86,986 ======= ========== NOTE 4. - ------- On September 30, 1997, the Partnership sold Palm Bay Apartments to an unaffiliated purchaser for a cash sales price of $6,849,500. Cash proceeds from the transaction, as well as the gain on sale, are detailed below.
Gain on Sale Cash Proceeds --------------- --------------- Sales price......................................... $ 6,849,500 $ 6,849,500 Selling costs....................................... (374,785) (374,785) Basis of real estate sold........................... (6,323,574) ------------- Gain on sale........................................ $ 151,141 ============= ------------- Proceeds from sale of real estate................... 6,474,715 Retirement of mortgage note......................... (1,924,929) ------------- Net cash proceeds................................... $ 4,549,786 ============
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND - ------- --------------------------------------------------------------- RESULTS OF OPERATIONS --------------------- FINANCIAL CONDITION - ------------------- On September 30, 1997, the Partnership sold its last real estate asset, Palm Bay Apartments. Proceeds from the sale were distributed to the partners in December 1997. The Partnership's sole remaining asset consists of its $396,372 balance of cash and cash equivalents. At June 30, 1998, the Partnership's liabilities consist of $17,239 of accrued expenses, $12,362 of which are due to affiliates of the General Partner. The Partnership remains subject to litigation as discussed in Part II, Item 1, Legal Proceedings. The General Partner intends to use the Partnership's remaining funds for the payment of costs associated with the litigation. After the litigation is either adjudicated or otherwise settled, and all legal and other costs have been provided for, remaining Partnership funds, if any, will be distributed to the partners. RESULTS OF OPERATIONS - --------------------- Results of operations for the first two quarters of 1998 are not comparable to results reported for the first two quarters of 1997 due to the sale of Palm Bay Apartments, and the subsequent distribution of sales proceeds to the partners. Revenues: Revenues for the first six months of 1998 consist solely of $8,529 of interest earned on the Partnership's funds invested in money market accounts. Expenses: Partnership expenses include $10,159 of expenses related to operations at Palm Bay Apartments, all of which were incurred during the first quarter of 1998. The Partnership believes that all expenses arising from operations at Palm Bay Apartments are accrued or have been paid. General and administrative expenses for the first six months of 1998 increased $11,681 or 46% over general and administrative expenses incurred during the first six months of 1997. The Partnership has incurred increased legal costs associated with the litigation discussed below. General and administrative expenses paid to affiliates for the first quarter of 1998 reflects a $3,550 credit or refund from affiliates. General and administrative expenses for 1997 exceeded the limit equal to 2% of the Partnership's assets established by the Amended Partnership Agreement. Consequently, in early 1998 the Partnership received a refund from an affiliate. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- At June 30, 1998, the Partnership held $396,372 of cash and cash equivalents. The Partnership owns no other assets. The Partnership intends to use its remaining funds to pay the accrued expenses owed by the Partnership, in the amount of $17,239 as of June 30, 1998, to pay all remaining expenses connected with the termination of the Partnership, and to provide a contingency reserve to pay all costs associated with ongoing litigation involving the Partnership as a defendant. After all expenses have been provided for, and the litigation is resolved through either adjudication or settlement, all remaining Partnership funds will be distributed to the partners in accordance with terms of the Partnership Agreement. The General Partner considers the current balance of cash and cash equivalents adequate for all of these purposes. Distributions: In December 1997, the Partnership distributed $4,772,400 to its partners. This distribution includes $4,549,786 of net cash proceeds from the sale of Palm Bay Apartments, as well as $222,614 of cash reserves of the Partnership. Distribution of the remaining cash reserves of the Partnership will be made from any remaining funds of the Partnership after all liabilities of the Partnership have been paid, including costs associated with terminating the Partnership's affairs, and costs associated with adjudicating or settling litigation in which the Partnership is involved. Forward-Looking Information: Within this document, certain statements are made as to expected Partnership developments, including the ultimate termination of the Partnership's business, satisfaction of the Partnership's creditors, and distributions to limited partners. All of these statements are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are not historical and involve risks and uncertainties. The Partnership's actual financial condition, results of operations, and cash flows for future periods may differ materially due to several factors. These factors include, but are not limited to, the outcome of litigation in which the Partnership is a defendant. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS - ------- ----------------- James F. Schofield, Gerald C. Gillett, Donna S. Gillett, Jeffrey Homburger, Elizabeth Jung, Robert Lewis, and Warren Heller et al. v. McNeil Partners L.P., McNeil Investors, Inc., McNeil Real Estate Management, Inc., Robert A. McNeil, Carole J. McNeil, McNeil Pacific Investors Fund 1972, Ltd., McNeil Real Estate Fund IX, Ltd., McNeil Real Estate Fund X, Ltd., McNeil Real Estate Fund XI, Ltd., McNeil Real Estate Fund XII, Ltd., McNeil Real Estate Fund XIV, Ltd., McNeil Real Estate Fund XV, Ltd., McNeil Real Estate Fund XX, L.P., McNeil Real Estate Fund XXI, L.P., McNeil Real Estate Fund XXII, L.P., McNeil Real Estate Fund XXIV, L.P., McNeil Real Estate Fund XXV, L.P., McNeil Real Estate Fund XXVI, L.P., and McNeil Real Estate Fund XXVII, L.P., et al. - Superior Court of the State of California for the County of Los Angeles, Case No. BC133799 (Class and Derivative Action Complaint). The action involves purported class and derivative actions brought by limited partners of each of the fourteen limited partnerships that were named as nominal defendants as listed above (the "Partnerships"). Plaintiffs allege that McNeil Investors, Inc., its affiliate McNeil Real Estate Management, Inc. and three of their senior officers and/or directors (collectively, the "Defendants") breached their fiduciary duties and certain obligations under the respective Amended Partnership Agreement. Plaintiffs allege that Defendants have rendered such Units highly illiquid and artificially depressed the prices that are available for Units on the resale market. Plaintiffs also allege that Defendants engaged in a course of conduct to prevent the acquisition of Units by an affiliate of Carl Icahn by disseminating purportedly false, misleading and inadequate information. Plaintiffs further allege that Defendants acted to advance their own personal interests at the expense of the Partnerships' public unit holders by failing to sell Partnership properties and failing to make distributions to unitholders. On December 16, 1996, the Plaintiffs filed a consolidated and amended complaint. Plaintiffs are suing for breach of fiduciary duty, breach of contract and an accounting, alleging, among other things, that the management fees paid to the McNeil affiliates over the last six years are excessive, that these fees should be reduced retroactively and that the respective Amended Partnership Agreements governing the Partnerships are invalid. Defendants filed a demurrer to the consolidated and amended complaint and a motion to strike on February 14, 1997, seeking to dismiss the consolidated and amended complaint in all respects. A hearing on Defendant's demurrer and motion to strike was held on May 5, 1997. The Court granted Defendants' demurrer, dismissing the consolidated and amended complaint with leave to amend. On October 31, 1997, the Plaintiffs filed a second consolidated and amended complaint. The case has been stayed pending settlement discussions. While actively working toward a final resolution, there can be no assurances regarding settlement. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K - ------- --------------------------------- (a) Exhibits. Exhibit Number Description ------- ------------ 3. Restated Certificate and Agreement of Limited Partnership dated of March 8, 1972. (1) 4. Amendment to Restated Certificate and Agreement of Limited Partnership dated March 30, 1992. (2) 11. Statement regarding computation of net income per limited partnership unit: Net income per limited partnership unit is computed by dividing net income allocated to the limited partners by the number of limited partnership units outstanding. Per unit information has been computed based on 13,752.5 limited partnership units outstanding in 1998 and 1997. 27. Financial Data Schedule for the quarter ended June 30, 1998. (1) Incorporated by reference to the Annual Report of Registrant on Form 10-K for the period ended December 31, 1990, as filed on March 29, 1991. (2) Incorporated by reference to the Current Report on Form 8-K filed by the Registrant with the Securities and Exchange Commission on April 10, 1992. (b) Reports on Form 8-K. There were no reports on Form 8-K filed during the quarter ended June 30, 1998. McNEIL PACIFIC INVESTORS FUND 1972 (a California limited partnership in the process of liquidation) SIGNATURES 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: McNEIL PACIFIC INVESTORS FUND 1972 By: McNeil Partners, L.P., General Partner By: McNeil Investors, Inc., General Partner August 14, 1998 By: /s/ Ron K. Taylor - --------------- ----------------------------------------- Date Ron K. Taylor President and Director of McNeil Investors, Inc. (Principal Financial Officer) August 14, 1998 By: /s/ Brandon K. Flaming - --------------- ----------------------------------------- Date Brandon K. Flaming Vice President of McNeil Investors, Inc. (Principal Accounting Officer) EX-27 2
5 6-MOS DEC-31-1998 JUN-30-1998 396,372 0 0 0 0 0 0 0 396,372 0 0 0 0 0 0 396,372 0 8,529 0 0 43,715 0 0 (35,186) 0 0 0 0 0 (35,186) 0 0
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