-----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, Tv5dCSoq2+k14BPKO+rBOK3hM6SXXgGmaQ7RlZh/zU8EDYdyzdaCMH/uVyEeDeVi 3beZznKm2ALHLbah4hcFRg== 0000064309-99-000008.txt : 19991117 0000064309-99-000008.hdr.sgml : 19991117 ACCESSION NUMBER: 0000064309-99-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991115 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: 99752307 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 September 30, 1999 -------------------------------------------- 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)
September 30, December 31, 1999 1998 ------------- ------------ ASSETS - ------ Cash and cash equivalents ..................................... $411,860 $397,954 -------- -------- $411,860 $397,954 ======== ======== LIABILITIES AND PARTNERS' EQUITY - -------------------------------- Other accrued expenses ........................................ $ 2,820 $ 4,702 Payable to affiliates - General Partner ....................... 12,362 12,362 -------- -------- 15,182 17,064 -------- -------- Partners' equity: Limited partners - 15,000 limited partnership units authorized; 13,752.5 limited partnership units issued and outstanding at September 30, 1999 and December 31, 1998 ........................................ 396,678 380,890 General Partner ............................................ -- -- -------- -------- 396,678 380,890 -------- -------- $411,860 $397,954 ======== ========
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 CHANGES IN NET ASSETS IN LIQUIDATION (Unaudited)
Three Months Ended Nine Months Ended September 30, September 30, -------------------------- -------------------------- 1999 1998 1999 1998 --------- --------- --------- --------- Revenue: Interest .......................... $ 4,394 $ 6,032 $ 12,822 $ 14,561 Other revenue ..................... 150 -- 12,030 -- --------- --------- --------- --------- Total revenue ................... 4,544 6,032 24,852 14,561 --------- --------- --------- --------- Expenses: Personnel expenses ................ -- -- -- 73 Repair and maintenance ............ -- -- -- 8,592 Other property operating expenses ........................ -- -- -- 1,494 General and administrative ........ 3,223 3,690 9,064 40,796 General and administrative - affiliates ...................... -- -- -- (3,550) --------- --------- --------- --------- Total expenses .................. 3,223 3,690 9,064 47,405 --------- --------- --------- --------- Net increase (decrease) in net assets in liquidation ......... 1,321 2,342 15,788 (32,844) Net assets in liquidation at beginning of period ............... 395,357 379,133 380,890 414,319 --------- --------- --------- --------- Net assets in liquidation at end of period ..................... $ 396,678 $ 381,475 $ 396,678 $ 381,475 ========= ========= ========= ========= Net increase (decrease) in net assets in liquidation per limited partnership unit .......... $ .10 $ .17 $ 1.15 $ (2.39) ========= ========= ========= =========
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) September 30, 1999 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. All adjustments were of a normal recurring nature. 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 September 30, 1999 and December 31, 1998 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, 1998, 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 reimbursed McNeil Real Estate Management, Inc. ("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 three month or nine month periods ended September 30, 1999 and 1998. Compensation and reimbursements accrued for the benefit of the General Partner and its affiliates are as follows: Nine Months Ended September 30, ----------------------- 1999 1998 --------- ----------- Charged to general and administrative affiliates: Partnership administration..................... $ - $ (3,550) ======= ========= NOTE 4. - ------- During 1999, the Partnership received refunds from its general liability insurance carrier and from its workers' compensation insurance carrier. The refunds are the result of cancellation of the Partnership's insurance policies after the sale of Palm Bay Apartments, and the result of adjustments in the amount of premiums the insurance carriers charged the Partnership based on the insurance carriers' audit of Partnership operations. The refunds are included in other revenue on the Statements of Changes in Net Assets in Liquidation. 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 $411,860 of cash and cash equivalents. At September 30, 1999, the Partnership's liabilities consist of $15,182 of accrued expenses, $12,362 of which are due to affiliates of the General Partner. The Partnership has settled the litigation discussed in Part II, Item 1, Legal Proceedings. However, in connection with the litigation, the Partnership is still obligated to pay its prorata share of litigation costs. The amount of these costs have not yet been determined. The General Partner intends to use the Partnership's remaining funds for the payment of costs associated with the litigation. After all litigation and other costs have been provided for, remaining Partnership funds, if any, will be distributed to the partners. RESULTS OF OPERATIONS - --------------------- Revenues: The Partnership's interest revenue decreased $1,739 to $12,822 for the nine month period ended September 30, 1999 as compared to the same period of 1998. For the third quarter of 1999, interest revenue decreased $1,638 to $4,394 as compared to the third quarter of 1998. The varied amounts of interest revenue received are attributable to the variable amounts of Partnership cash and cash equivalents invested in interest-bearing accounts for the periods in question. The Partnership also recorded $12,030 of other revenue for the nine months ended September 30, 1999, which consists principally of refunds of general liability insurance and workers' compensation insurance premiums from the Partnership's insurance carriers. Expenses: Partnership expenses for the first nine months of 1998 include $10,159 of expenses related to prior operations at Palm Bay Apartments. The Partnership sold Palm Bay Apartments on September 30, 1997. No such expenses were incurred during 1999. General and administrative expenses for the nine month period ended September 30, 1999 decreased $31,732 to $9,064 as compared to the same period in 1998. The Partnership continues to incur costs related to the litigation discussed below. General and administrative expenses paid to affiliates for the first nine months 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 the first quarter of 1998 the Partnership received a refund from an affiliate. No such refunds were received during the first nine months of 1999. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- At September 30, 1999, the Partnership held $411,860 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 $15,182 as of September 30, 1999, to pay all remaining expenses connected with the termination of the Partnership, and to provide a contingency reserve to pay all costs associated with litigation involving the Partnership as a defendant. After all expenses have been provided for, 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: Distribution of the Partnership's remaining cash reserves will be made from remaining funds of the Partnership, if any, 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. YEAR 2000 DISCLOSURE - -------------------- State of readiness - ------------------ The year 2000 problem is the result of computer programs being written using two digits rather than four to define the applicable year. Any programs that have time-sensitive software may recognize a date using "00" as the year 1900 rather than the year 2000. This could result in major systems failure or miscalculations. Management has assessed its information technology ("IT") infrastructure to identify any systems that could be affected by the year 2000 problem. The IT used by the Partnership for financial reporting and significant accounting functions was made year 2000 compliant during recent systems conversions. The software utilized for these functions are licensed by third party vendors who have warranted that their systems are year 2000 compliant. Cost - ---- The cost of IT upgrades is not expected to be material to the Partnership. Because all the IT systems have been upgraded over the last three years, all such systems were compliant, or made compliant at no additional cost by third party vendors. Risks - ----- Ultimately, the potential impact of the year 2000 issue will depend not only on the corrective measures the Partnership undertakes, but also on the way in which the year 2000 issue is addressed by government agencies and entities that provide services or supplies to the Partnership. Management has not determined the most likely worst case scenario to the Partnership. Management believes that progress on all areas is proceeding and that the Partnership will experience no adverse effect as a result of the year 2000 issue. However, there is no assurance that this will be the case. Contingency plans - ----------------- Management is developing contingency plans to address potential year 2000 non-compliance of IT. Management believes that alternative systems are available that could be utilized to minimize such impact. Management has assessed these risks and expects to have contingency plans in place by December 31, 1999 for any material potential failures. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS - ------- ----------------- 1) 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 XXIII, 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., Hearth Hollow Associates, McNeil Midwest Properties I, L.P. and Regency North Associates, L.P., - 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 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. ("McREMI") 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. 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 was stayed pending settlement discussions. Because the settlement contemplated a transaction which included all of the Partnerships and plaintiffs claimed that an effort should be made to sell all of the Partnerships, in or around September 1998, plaintiffs filed a third consolidated and amended complaint which included allegations with respect to the Partnerships which had not been named in previously filed complaints. On September 15, 1998, the parties signed a Stipulation of Settlement. For purposes of settlement, the parties stipulated to a class comprised of all owners of limited partner units in the Partnerships during the period beginning June 21, 1991, the earliest date that proxy materials began to be issued in connection with the restructuring of the Partnerships, through September 15, 1998. As structured, the Stipulation of Settlement provided for the payment of over $35 million in distributions and the commitment to market the Partnerships for sale, together with McREMI, through a fair and impartial bidding process overseen by a national investment banking firm. To ensure the integrity of that process, defendants agreed, among other things, to involve plaintiffs' counsel in oversight of that process, and plaintiffs' counsel retained an independent advisor to represent the interests of limited partners of the Partnerships. On October 6, 1998, the court gave preliminary approval to the settlement. It granted final approval to the settlement on July 8, 1999 and entered a Final Order and Judgment dismissing the consolidated action with prejudice. As a condition of final approval, the court requested, and the parties agreed to, a slight modification of the release in the Stipulation of Settlement with respect to future claims. Plaintiffs' counsel intends to seek an order awarding attorneys' fees and reimbursing their out-of-pocket expenses in an amount which is as yet undetermined. Fees and expenses shall be allocated amongst the Partnerships on a pro rata basis, based upon tangible asset value of each such partnership, less total liabilities, calculated in accordance with the Amended Partnership Agreements for the quarter most recently ended. A Notice of Appeal was filed September 3, 1999 by High River Limited Partnership, Unicorn Associates Corporation and Longacre Corporation. 2) High River Limited Partnership, Unicorn Associates Corporation and Longacre Corporation, et al. v. McNeil Partners, L.P. ("MPLP"), McNeil Investors, Inc., McNeil Real Estate Management, Inc. (McREMI"), Robert A. McNeil and Carole J. McNeil, - Supreme Court of the State of New York, County of New York, - Index No. 99 603526. On July 23, 1999, High River and two other affiliates of Carl C. Icahn (Unicorn Associates Corporation and Longacre Corporation), filed a complaint for damages in the Supreme Court of the State of New York, County of New York. Plaintiffs allege that the defendants improperly interfered with tender offers made by High River for limited partner units in the Partnership and other affiliated partnerships in which MPLP serves as General Partner (the "McNeil Partnerships"), by, among other things, filing purportedly frivolous litigation to delay High River's offers, issuing purportedly false and misleading statements opposing the offers and purportedly forcing High River itself to file litigation to enforce its rights. High River also alleges that as a result the defendants caused High River to incur undue expense and that the defendants ultimately prevented High River from acquiring a greater number of limited partner units. Plaintiffs also allege that the defendants improperly excluded High River from participating in the auction process for the sale of the McNeil Partnerships, and otherwise took steps to prevent its participation in the auction. In addition, plaintiffs, who are limited partners in, among others, McNeil Funds IX, X, XI, XII, XIV, XV, XX, XXIV, XXV, XXVI and XXVII, have also sued the defendants based on their status as opt-outs from the Schofield settlement. Plaintiffs seek undisclosed damages and an accounting. On July 30, 1999, defendants filed an answer to the High River Complaint, denying each and every material allegation contained in the High River Complaint and asserting several affirmative defenses. Settlement negotiations are underway. 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 increase (decrease) in net assets in liquidation per limited partnership unit: Net increase (decrease) in net assets in liquidation per limited partnership unit is computed by dividing net increase (decrease) in net assets in liquidation 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 1999 and 1998. 27. Financial Data Schedule for the quarter ended September 30, 1999. (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 September 30, 1999. 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 November 15, 1999 By: /s/ Ron K. Taylor - ----------------- ----------------------------------------- Date Ron K. Taylor President and Director of McNeil Investors, Inc. (Principal Financial Officer) November 15, 1999 By: /s/ Brandon K. Flaming - ----------------- ----------------------------------------- Date Brandon K. Flaming Vice President of McNeil Investors, Inc. (Principal Accounting Officer) EX-27 2
5 9-MOS DEC-31-1999 SEP-30-1999 411,860 0 0 0 0 0 0 0 411,860 0 0 0 0 0 0 411,860 0 24,852 0 0 9,064 0 0 15,788 0 0 0 0 0 15,788 0 0
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