-----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, N4Zi3+vRC8COgkj75C2VytfA3xWUSad003pPwN+Iopr0Ttpo9+IBg8sK18fGgDh7 AZrGg4Zxjzk2HRdYSNbhAQ== 0000830051-97-000008.txt : 19970818 0000830051-97-000008.hdr.sgml : 19970818 ACCESSION NUMBER: 0000830051-97-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970815 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: 97664268 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, 1997 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 July 31, 1997 was 18,826.5. The number of the registrant's Class A Units outstanding as of July 31, 1997 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, 1997 1996 ___________ ___________ (Unaudited) ASSETS Land and buildings: Land $ 7,778,365 $ 7,778,365 Buildings and improvements 23,543,612 23,455,047 ___________ ___________ 31,321,977 31,233,412 Less accumulated depreciation and impairments (10,971,150) (10,545,531) ___________ ___________ 20,350,827 20,687,881 Other assets: Cash and cash equivalents 258,240 244,582 Prepaid expenses and other assets 688,365 544,455 ___________ ___________ 946,605 789,037 ___________ ___________ $21,297,432 $21,476,918 =========== =========== LIABILITIES AND PARTNERS' CAPITAL Mortgage loans payable $19,700,126 $19,788,869 Other liabilities: Accounts payable and accrued liabilities 255,169 81,473 Accrued interest payable 119,111 123,392 Security deposits 193,890 184,355 Loan payable to affiliate 43,000 55,300 ___________ ___________ 20,311,296 20,233,389 Commitments Partners' capital 996,136 1,253,529 Note receivable from general partner (10,000) (10,000) ___________ ___________ $21,297,432 $21,476,918 =========== =========== 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, 1997 June 30, 1996 June 30, 1997 June 30, 1996 _____________ _____________ _____________ _____________ Revenues: Rents $ 902,231 $ 847,347 $1,789,190 $1,692,174 Other 37,111 40,071 76,736 75,414 _____________ _____________ _____________ _____________ Total revenues 939,342 887,418 1,865,926 1,767,588 _____________ _____________ _____________ _____________ Expenses: Interest 386,876 395,016 766,268 790,047 Operating expenses (excluding depreciation and amortization) 467,791 333,377 911,119 858,292 Depreciation and amortization 223,039 213,071 445,931 425,616 _____________ _____________ _____________ _____________ Total expenses 1,077,706 941,464 2,123,318 2,073,955 _____________ _____________ _____________ _____________ Net loss $ (138,364) $ (54,046) $ (257,392) $ (306,367) ============= ============= ============= ============= Net loss per limited partnership unit $ (5.14) $ (2.01) $ (9.56) $ (11.38) ============= ============= ============= ============= Weighted average limited partnership units outstanding 26,926 26,926 26,926 26,926 ============= ============= ============= ============= 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)
1997 1996 ___________ ___________ Cash flows from operating activities: Net loss $(257,392) $ (306,367) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 445,931 425,616 Increase in prepaid expenses and other assets (164,222) (32,788) Increase (decrease) in: Accounts payable and accrued liabilities 173,695 (24,910) Security deposits 9,535 13,493 Accrued interest payable (4,281) 64,488 ___________ ___________ Net cash provided by operating activities 203,266 139,532 ___________ ___________ Cash flows from investing activities: Capital expenditures (88,565) (9,838) ___________ ___________ Net cash used in investing activities (88,565) (9,838) ___________ ___________ Cash flows from financing activities: Principal payments under mortgage debt (88,743) (36,390) Principal payments to affiliate (12,300) (46,700) ___________ ___________ Net cash used by financing activities (101,043) (83,090) ___________ ___________ Net increase in cash and cash equivalents 13,658 46,604 Cash and cash equivalents at beginning of period 244,582 153,735 ___________ ___________ Cash and cash equivalents at end of period $ 258,240 $ 200,339 =========== =========== 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, 1997 (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, 1996 filed on Form 10K. The accompanying consolidated financial statements have not been audited by independent public accountants, but 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. 2. Recent Accounting Pronouncements In February 1997, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 128, Earnings per Share ("SFAS No. 128"). SFAS No. 128 requires dual presentation of newly defined basic and diluted earnings per share on the face of the Income statement for all entities with complex capital structures. The accounting standard is effective for fiscal years ending after December 15, 1997, including interim periods. The effect of SFAS No. 128 is not expected to have any impact on the Partnership's previously reported earnings per partnership unit. In February 1997, FASB issued SFAS No. 129, Disclosure of Information about Capital Structure. This statement establishes standards for disclosing information about an entity's capital structure. Management intends to comply with the disclosure requirements for this statement which are effective for periods ending after December 15, 1997. In June 1997, the FASB issued SFAS No. 130, Reporting Comprehensive Income. SFAS No. 130 establishes requirements for disclosure of comprehensive income and becomes effective for the Partnership for the year ending December 31, 1998. Comprehensive income includes such items as foreign currency translation adjustments and unrealized holding gains and losses on available for sale securities that are currently being presented by the Company as a component of stockholders' equity (deficit). The Partnership does not expect this pronouncement to materially impact the Partnership's results of operations. In June 1997, the FASB issued SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information. SFAS No. 131 establishes standards for disclosure about operating segments in annual financial statements and selected information in interim financial reports. It also establishes standards for related disclosures about products and services, geographic areas and major customers. This statement supersedes SFAS No. 14, Financial Reporting for Segments of a Business Enterprise. The new standard becomes effective for the Partnership for the year ending December 31, 1998, and requires that comparative information from earlier years be restated to conform to the requirements of this standard. The Partnership does not expect this pronouncement to materially change the Partnership's current reporting and disclosures. 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 operating obligations, including debt service requirements. Since 1992, however, the Limited Partnership's primary source of liquidity has been from cash generated from operations. The Partnership has been able to generate sufficient cash flow to cover its expenses and continue rebuilding cash reserves during 1997. Contributing factors were increased occupancy rates and higher average rents in 1997, as well as capital raised from the sale of Class A Units and debt restructuring activities in 1995. Although the Partnership successfully refinanced the Mission Park mortgage at a fixed annual interest rate of 7.76%, it remains sensitive to interest rates because the Shadowridge Meadows property remains highly leveraged and subject to a variable interest rate. If interest rates increase more rapidly than market rents, the Partnership may have to fund shortfalls from cash reserves. Furthermore the loan on Shadowridge Meadows matures in July 1998. The Partnership is currently exploring refinancing options for this property. If the Partnership is unable to refinance 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, which may make 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. The Partnership changed its method of reporting cash flows from the direct method to the indirect method in 1996. Prior period amounts have been reclassified to conform with the current year presentation. Net cash provided by operating activities for the six month period ended June 30, 1997 was $203,266 compared to net cash provided by operating activities of $139,532 for the same period in 1996. The principal reason for this difference is increased income due to a recovery in the rental market. b. Results of Operations On June 30, 1997 the Shadowridge Meadows Apartments and Mission Park Apartments reflected occupancy rates of 95% and 97%, respectively, compared to 94% and 99%, respectively, on June 30, 1996, and 99% and 96%, respectively, on December 31, 1996. Total revenues for the three and six month periods ended June 30, 1997 increased approximately $51,924 and $97,016, respectively, compared to the same periods in 1996 due to a recovery in the rental market. Operating expenses, excluding depreciation and amortization, for the three and six month periods ended March 31, 1997 increased approximately $134,414 and $52,827, respectively, compared to the same periods in 1996 primarily due to increased refurbishment expenses. Interest expense decreased approximately $8,140 and $23,779, respectively, for the three and six month periods ended June 30, 1997 compared to the same periods in 1996 primarily due to a decrease in the 11th District Cost of Funds index used to calculate the interest rate on the Shadowridge Meadows mortgage. Depreciation and amortization expense increased by $9,968 and $20,315, respectively, for the three and six month periods ended June 30, 1997 compared to the same periods in 1996 due to fixed asset additions. 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 14, 1997 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 ___________ ___________________________________________________ ________ 27.8 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, 1997 and is qualified in its entirety by reference to such Financial Statements. 6-MOS DEC-31-1997 JUN-30-1997 258,240 0 0 0 0 946,605 31,321,977 (10,971,150) 21,297,432 611,170 19,700,126 0 0 0 986,136 21,297,432 0 1,865,926 0 911,119 445,931 0 766,268 (257,392) 0 0 0 0 0 (257,392) (9.56) 0
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