-----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, LYq9cjZo6gQEQJHqN4S3xtd35SN32u9LR6hWJUXb1+j0He3FXh7eQkWT06LD4Ehl DfoFP0vnsodvM7p5IZMcOg== 0000830051-96-000010.txt : 19960816 0000830051-96-000010.hdr.sgml : 19960816 ACCESSION NUMBER: 0000830051-96-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: INCOME GROWTH PARTNERS LTD X CENTRAL INDEX KEY: 0000830051 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 330294177 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-18528 FILM NUMBER: 96614609 BUSINESS ADDRESS: STREET 1: 11300 SORRENTO VALLEY RD STE 108 CITY: SAN DIEGO STATE: CA ZIP: 92121 BUSINESS PHONE: 6194572750 MAIL ADDRESS: STREET 1: 11300 SORRENTO VALLEY ROAD STREET 2: SUITE 108 CITY: SAN DIEGO STATE: CA ZIP: 92121 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (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, 1996 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 0-18528 INCOME GROWTH PARTNERS, LTD. X (Exact name of registrant as specified in its charter) CALIFORNIA 33-0294177 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 11300 Sorrento Valley Road, Suite 108, San Diego, California 92121 (Address of principal executive offices) (Zip Code) (619) 457-2750 (Registrant's telephone number, including area code) (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 for such shorter period that the registrant was required to file such reports), and (2) has been subject to filing requirements for the past 90 days. Yes [X] No [ ] The number of the registrant's Original Limited Partnership Units outstanding as of August 1, 1996 was 18,826.5. The number of the registrant's Class A Units outstanding as of August 1, 1996 was 8,100. PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARY (A California Limited Partnership) CONSOLIDATED BALANCE SHEETS
June 30, December 31, 1996 1995 ___________ ___________ (Unaudited) ASSETS Land and buildings: Land $ 7,778,365 $ 7,778,365 Buildings and improvements 23,420,501 23,410,664 ___________ ___________ 31,198,866 31,189,029 Less accumulated depreciation and impairments (10,161,106) (9,735,490) ___________ ___________ 21,037,760 21,453,539 Other assets: Cash and cash equivalents 200,339 153,735 Prepaid expenses and other assets 579,381 546,594 ___________ ___________ 779,720 700,329 ___________ ___________ $21,817,480 $22,153,868 =========== =========== LIABILITIES AND PARTNERS' CAPITAL Mortgage loans payable $19,930,545 $19,966,935 Other liabilities: Accounts payable and accrued liabilities 106,259 131,169 Accrued interest payable 122,994 58,506 Security deposits 178,694 165,201 Loan payable to affiliate 55,300 102,000 ___________ ___________ 20,393,792 20,423,811 Commitments Partners' capital 1,433,688 1,740,057 Note receivable from general partner (10,000) (10,000) ___________ ___________ $21,817,480 $22,153,868 =========== =========== The accompanying notes are an integral part of the financial statements.
INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARY (A California Limited Partnership) CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For the three months ended: For the six months ended: June 30, 1996 June 30, 1995 June 30, 1996 June 30, 1995 _____________ _____________ _____________ _____________ Revenues: Rents 847,347 $1,051,859 $1,692,174 $2,064,079 Other 40,071 61,720 75,414 126,296 _____________ _____________ _____________ _____________ Total revenues 887,418 1,113,579 1,767,588 2,190,375 _____________ _____________ _____________ _____________ Expenses: Interest 395,016 474,463 790,047 1,000,864 Operating expenses (excluding depreciation and amortization) 333,377 560,462 858,292 1,105,122 Depreciation and amortization 213,071 296,230 425,616 592,461 _____________ _____________ _____________ _____________ Total expenses 941,464 1,331,155 2,073,955 2,698,447 _____________ _____________ _____________ _____________ Loss before extraordinary item (54,046) (217,576) (306,367) (508,072) _____________ _____________ _____________ _____________ Extraordinary gain on disqualified interest - 1,472,841 - 1,472,841 Net (loss) income (54,046) $1,255,265 $ (306,367) $ 964,769 ============= ============= ============= ============= Net loss per limited partnership unit before extraordinary gain (2.01) $ (10.16) $ (11.38) $ (23.73) _____________ _____________ _____________ _____________ Income per limited partnership unit from extraordinary gain - $ 68.80 $ - $ 68.80 _____________ _____________ _____________ _____________ Net (loss) income per limited partnership unit (2.01) $ 58.63 $ (11.38) $ 45.06 ============= ============= ============= ============= Weighted average limited partnership units outstanding 26,926 21,409 26,926 21,409 ============= ============= ============= ============= The accompanying notes are an integral part of the financial statements.
INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARY (A California Limited Partnership) CONSOLIDATED STATEMENTS OF CASH FLOWS For the Six Months Ended June 30 (UNAUDITED)
1996 1995 ___________ ___________ Cash flows from operating activities: Net tenant revenues $1,764,274 $2,190,375 Security deposits retained (refunded) 13,493 (6,881) Cash paid to suppliers and employees (915,989) (1,809,940) Interest received 3,314 - Interest paid (725,560) (1,252,959) ___________ ___________ Net cash provided by (used in) operating activities 139,532 (879,405) ___________ ___________ Cash flows from investing activities: Purchase of land, buildings, and equipment (9,838) - ___________ ___________ Net cash used in investing activities (9,838) - ___________ ___________ Cash flows from financing activities: Sale of Partnership Class A Units - 2,039,123 Principal payments under mortgage debt (36,390) (383,052) Amounts due to affiliates, net (46,700) (17,028) ___________ ___________ Net cash (used in) provided by financing activities (83,090) 1,639,043 ___________ ___________ Net increase in cash 46,604 759,638 Cash and cash equivalents at beginning of period 153,735 180,696 ___________ ___________ Cash and cash equivalents at end of period $ 200,339 $ 940,334 =========== =========== Reconciliation of net (loss) income to net cash provided by operating activities: Net (loss) income $ (306,367) $ 964,769 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation and amortization 425,616 592,461 Extraordinary gain (1,472,841) Other, primarily changes in other assets and liabilities 20,283 (963,794) ___________ ___________ Net cash provided by (used in) operating activities $ 139,532 $ (879,405) =========== =========== The accompanying notes are an integral part of the financial statements.
INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARY (A California Limited Partnership) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 1996 (UNAUDITED) 1. Basis of Financial Statement Presentation The accompanying unaudited consolidated financial statements of Income Growth Partners, Ltd. X, a California Limited Partnership, and Subsidiary (the "Partnership") have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although the Partnership believes that the disclosures made are adequate to make the information presented not misleading. These consolidated financial statements should be read in conjunction with the financial statements and the notes thereto included in the Partnership's latest audited financial statements for the year ended December 31, 1995 filed on Form 10K. The accompanying consolidated financial statements include all adjustments (consisting of normal recurring adjustments) which are, in the opinion of the general partners, necessary for a fair presentation of the financial condition, results of operations and cash flows for periods presented. However, these results are not necessarily indicative of results for a full year. Certain prior period amounts have been reclassified to conform with the current period presentation. The accompanying financial statements have been prepared on a going concern basis which assumes continuity of operations and realization of assets and liquidation of liabilities in the ordinary course of business. As a result of the Partnership's continuing high levels of mortgage indebtedness, there are significant uncertainties relating to the ability of the Partnership to continue as a going concern. The financial statements do not include any adjustments that might be necessary as a result of the outcome of the uncertainties discussed herein. 2. Activities of the Partnership The Partnership continued operations pursuant to its Plan of Reorganization during the second quarter of 1996. As discussed previously, the Partnership emerged from its Chapter 11 Reorganization in May 1995, having raised sufficient additional capital to retain two of its three original properties. The third property was foreclosed on by its lender in August 1995. In December 1995 the Partnership refinanced its Mission Park property, taking advantage of an opportunity to reduce the principal balance of the loan and lower monthly debt service payments. 3. Contingencies Activities of the General Partners One of the general partners of the Partnership also serves as the general partner in several other real estate partnerships. To the extent that the operation of these partnerships requires significant financial resources of the general partner or adversely affects the liquidity of the general partner, the general partner's ability to operate and/or manage the affairs of the Partnership could be impaired. Property Leverage Levels A certain provision of the Partnership Agreement stipulates that indebtedness not exceed 40% of a property's purchase price as of the completion of the initial offering. However, the foregoing limit on indebtedness does not apply in the case of refinancing where up to 80% of the value of the property may be encumbered by indebtedness. The aggregate indebtedness on the Partnership's properties equaled approximately 64% of the purchase prices as of June 30, 1996. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Financial Statements and Notes thereto filed herewith. a. Liquidity and Capital Resources Historically, the Limited Partnership was dependent upon proceeds from the sale of Original Units to meet its obligations, including debt service requirements. In 1992 the Limited Partnership discontinued sales of Original Units, and since then the Limited Partnership's primary source of liquidity has been from cash generated from operations. On May 2, 1995, the Limited Partnership's Plan of Reorganization became effective and after all fundraising efforts were complete, the Limited Partnership had received approximately $2,025,000 in additional capital from Class A Unit sales to fund the Plan. Although the Partnership successfully refinanced its Mission Park property at a fixed annual interest rate of 7.76%, it remains sensitive to interest rates because the Shadowridge Meadows property remains highly leveraged. The interest rate on the Shadowridge Meadows mortgage adjusts monthly with the 11th District Cost of Funds Index. Between May 1994 and August 1996, increases in the 11th District Cost of Funds Index totaling 1.146% have been announced. If the 11th District Cost of Funds index continues to increase more rapidly than projected, and the Partnership is unable to raise rents at Shadowridge Meadows to cover the increased debt service payments, the Partnership may have to fund shortfalls from reserves. Furthermore the existing loan on Shadowridge Meadows is currently scheduled to expire in July 1998. If the real estate and financing markets have not improved sufficiently for the Partnership to refinance this property by that time, the Partnership may have to restructure the existing loan, file another bankruptcy petition, sell the property, or risk losing the property to foreclosure. Mortgage indebtedness on the properties remains high, despite the Partnership's success at curing and reinstating the loans, disqualifying penalty interest and fees, making principal reduction payments, and obtaining debt forgiveness from refinancing. This mortgage indebtedness makes it difficult for the properties to service their debt through Partnership operations. In the event that one or more of the properties is unable to support its debt service and the Partnership is unable to cover operational shortfalls from cash reserves, the Partnership may have to take one or more alternative courses of action. The general partners would then determine, based on their analysis of relevant economic conditions and the status of the properties, a course of action intended to be consistent with the best interests of the Partnership. Possible courses of action might include, the sacrifice of one or more of the properties to reduce negative cash flow, the sale or refinancing of one or more of the properties, the entry into one or more joint venture partnerships with other entities, or the filing of another bankruptcy petition. b. Results of Operations The Partnership had been operating the Shadowridge Meadows Apartments and Mission Park Apartments for approximately 91 months and 82 months respectively at June 30, 1996. The Shadowridge Meadows Apartments and Mission Park Apartments reflected occupancy rates of 94% and 99% respectively as of June 30, 1996, compared to 91% and 93% respectively as of June 30, 1995. This is consistent with a recent general increase in occupancy rates throughout the county. Total revenues for the three and six month periods ended June 30, 1996 decreased approximately $226,161 and $422,787 respectively, compared to the same periods in 1995 due to the foreclosure of the Margarita Summit property in the third quarter of 1995. Operating expenses, excluding depreciation and amortization, for the three and six month periods ended June 30, 1996 decreased approximately $227,085 and $246,830 respectively, compared to the same periods in 1995. This was the combined result of the foreclosure of the Margarita Summit property and the elimination of related operating expenses, and increased refurbishment expenses during the first two quarters of 1996. Interest expense decreased approximately $79,447 and $210,817 respectively, and Depreciation and amortization expense decreased approximately $83,159 and $166,845 respectively, for the three and six month periods ended June 30, 1996 compared to the same periods in 1995, primarily due to the foreclosure of Margarita Summit. In the past the Partnership experienced losses from operations primarily due to the high degree of debt service on its mortgage loans. Management estimates that the Partnership may experience continued operating losses in the future from its Shadowridge Meadows property unless debt service can be restructured or reduced. PART II - OTHER INFORMATION Item 1. Legal Proceedings There are no pending legal proceedings which may have a material adverse effect on the Partnership. However, the Partnership is involved in small claims court proceedings against certain present or former tenants of its apartment complexes with regard to landlord-tenant matters, all of which are considered to be in the ordinary course of its business. Item 2. Changes in Securities None Item 3. Defaults Upon Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders None Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K None INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARY 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. Date: August 13, 1996 INCOME GROWTH PARTNERS, LTD. X, a California Limited Partnership By: Income Growth Management, Inc. General Partner By: /s/ Timothy C. Maurer _______________________________ Timothy C. Maurer Principal Financial Officer AND Duly Authorized Officer of the Registrant EXHIBIT INDEX Exhibit No. Description Location ___________ ___________________________________________________ ________ 27.4 Financial Data Schedule Attached EX-27 2
5 This schedule contains summary financial information extracted from the Financial Statements filed with the Registrant's Form 10-Q for the quarter ended June 30, 1996 and is qualified in its entirety by reference to such Financial Statements. 6-MOS DEC-31-1996 JUN-30-1996 200,339 0 0 0 0 779,720 31,198,866 (10,161,106) 21,817,480 463,247 19,930,545 0 0 0 1,423,688 21,817,480 0 1,767,588 0 858,292 425,616 0 790,047 (306,367) 0 0 0 0 0 (306,367) (11.38) 0
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