-----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, US3B6gQBCacNfAwqRTCLCEkSAumzeQuJZqOpHJI7fnAteP/tLv+iY3496F9svlSw qrrMZEcN2afSlCRenQsfsg== 0000936392-97-001504.txt : 19971113 0000936392-97-001504.hdr.sgml : 19971113 ACCESSION NUMBER: 0000936392-97-001504 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971113 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: SEC FILE NUMBER: 000-18528 FILM NUMBER: 97716341 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 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [ ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For the quarter period ended September 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 33-0274177 (State of 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 2 INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARY (A CALIFORNIA LIMITED PARTNERSHIP) CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 1997 AND DECEMBER 31, 1996 ----------
SEPTEMBER 30, DECEMBER 31, 1997 1996 ------------- ------------ (UNAUDITED) ASSETS Rental properties: Land $ 7,778,365 $ 7,778,365 Buildings and improvements 23,571,531 23,455,047 ------------ ------------ 31,349,896 31,233,412 Less accumulated depreciation and impairments (11,183,959) (10,545,531) ------------ ------------ 20,165,937 20,687,881 Other assets: Cash and cash equivalents 240,261 244,582 Prepaid expenses and other assets 792,198 544,455 ------------ ------------ 1,032,459 789,037 ------------ ------------ $ 21,198,396 $ 21,476,918 ============ ============ LIABILITIES AND PARTNERS' CAPITAL Mortgage loans payable $ 19,640,605 $ 19,788,869 Other liabilities: Accounts payable and accrued liabilities 299,499 81,473 Accrued interest payable 119,111 123,392 Security deposits 201,952 184,355 Loan payable to affiliate 43,000 55,300 ------------ ------------ 20,304,167 20,233,389 Commitments Partners' capital 904,229 1,253,529 Note receivable from general partner (10,000) (10,000) ------------ ------------ $ 21,198,396 $ 21,476,918 ============ ============
The accompanying notes are an integral part of the financial statements. 1 3 INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARY (A CALIFORNIA LIMITED PARTNERSHIP) CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) ----------
FOR THE THREE MONTHS FOR THE NINE MONTHS ENDED SEPTEMBER 30, ENDED SEPTEMBER 30, -------------------------- -------------------------- 1997 1996 1997 1996 ----------- ----------- ----------- ----------- Revenues: Rents $ 922,233 $ 867,611 $ 2,711,423 $ 2,559,785 Other 32,774 38,025 109,512 113,438 ----------- ----------- ----------- ----------- Total revenues 955,007 905,636 2,820,935 2,673,223 ----------- ----------- ----------- ----------- Expenses: Interest 367,983 330,307 1,134,252 1,120,354 Operating expenses (excluding depreciation and amortization) 454,593 416,969 1,366,796 1,275,261 Depreciation and amortization 223,254 240,106 669,186 665,722 ----------- ----------- ----------- ----------- Total expenses 1,045,830 987,382 3,170,234 3,061,337 ----------- ----------- ----------- ----------- Net loss (90,823) $ (81,746) $ (349,299) $ (388,114) =========== =========== =========== =========== Net loss per limited partnership unit $ (3.37) $ (3.04) $ (12.97) $ (14.41) =========== =========== =========== =========== 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. 2 4 INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARY (A CALIFORNIA LIMITED PARTNERSHIP) CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996 (UNAUDITED) ----------
SEPTEMBER 30, SEPTEMBER 30, 1997 1996 ------------- ------------- Cash flows from operating activities: Net loss $(349,299) $(388,114) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 669,186 665,722 Increase in prepaid expenses and other assets (278,501) (80,491) Increase (decrease) in: Accounts payable and accrued liabilities 218,025 16,784 Security deposits 17,597 19,516 Accrued interest payable (4,281) 67,874 --------- --------- Net cash provided by operating activities 272,727 301,291 --------- --------- Cash flows from investing activities: Capital expenditures (116,484) (52,795) --------- --------- Net cash used in investing activities (116,484) (51,795) --------- --------- Cash flows from financing activities: Principal payments under mortgage debt (148,264) (129,965) Principal payments to affiliate (12,300) (46,700) --------- --------- Net cash used by financing activities (160,564) (176,665) --------- --------- Net increase (decrease) in cash and cash equivalents (4,321) 71,831 Cash and cash equivalents at beginning of period 244,582 153,735 --------- --------- Cash and cash equivalents at end of period $ 240,261 $ 225,566 ========= ========= The accompanying notes are an integral part of the financial statements.
3 5 INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARY (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ---------- 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 period 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 ("SFAS") No 128, Earnings Per Share. 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. Continued 4 6 INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARY (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED ---------- 2. RECENT ACCOUNTING PRONOUNCEMENTS, CONTINUED: 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: Since inception, the Partnership's operating and debt service obligations have been financed through the sale of Partnership Units, cash provided by operating activities, and 1995 debt restructuring activities. During the nine months ended September 30, 1997, all of the Partnership's operating and debt service cash requirements have been met through cash generated from operations. Continued 5 7 INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARY (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED ---------- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONTINUED: As of September 30, 1997, the Partnership's properties, Shadowridge Meadows and Mission Park, remain highly leveraged. The Mission Park mortgage was refinanced in December 1995 at a fixed interest rate of 7.76%. The Shadowridge Meadows mortgage was refinanced subsequent to September 30, 1997 at a fixed interest rate of 7.49%. Despite the refinancings, 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, 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 nine month period ended September 30, 1997 was $272,727 compared to net cash provided by operating activities of $301,291 for the same period in 1996. The principal reason for this difference is increased deferred expenses related to the refinancing of Shadowridge Meadows. b. Results of Operations: COMPARISON OF THREE MONTHS ENDED SEPTEMBER 30, 1997 TO THE THREE MONTHS ENDED SEPTEMBER 30, 1996. Rental revenue for the three months ended September 30, 1997 was approximately $922,000, an increase of 6% over rents of approximately $868,000 in the comparable period in 1996. The increase is primarily attributable to an increase in average occupancy from 96.5% at September 30, 1996 to 98% at September 30, 1997 and to increases in monthly tenant rental rates. Continued 6 8 INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARY (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED ---------- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONTINUED: Interest expense for the three months ended September 30, 1997 was approximately $368,000, an increase of 11% over interest expense of approximately $330,000 in the comparable period in 1996. The increase is primarily attributable to increases in the variable interest rate on the Shadowridge Meadows property. Operating expense for the three months ended September 30, 1997 were $455,000, an increase of 9% over operating expense of $417,000 in the comparable period in 1996. The increase is primarily attributable to an increase in refurbishment expenses. Depreciation and amortization expenses for the three months ended September 30, 1997 were $223,000, a decrease of 7% over depreciation and amortization expenses of $240,000 in the comparable period in 1996. The decrease is primarily attributable to non-recurring loan refinancing fee amortization recorded during the three months ended September 30, 1996. COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 1997 TO THE NINE MONTHS ENDED SEPTEMBER 30, 1996. Rental revenue for the nine months ended September 30, 1997 was approximately $2,711,000, an increase of 6% over rents of approximately $2,560,000 in the comparable period in 1996. The increase is primarily attributable to an increase in occupancy from 96.5% at September 30, 1996 to 98% at September 30, 1997 and to increases in monthly tenant rental rates. Interest expense for the nine months ended September 30, 1997 was approximately $1,134,000, an increase of 1% over interest expense of approximately $1,120,000 in the comparable period in 1996. The increase is primarily attributable to increases in the variable interest rate on the Shadowridge Meadows property. Operating expense for the nine months ended September 30, 1997 were $1,367,000, an increase of 7% over operating expense of $1,275,000 in the comparable period in 1996. The increase is primarily attributable to an increase in refurbishment expenses. Depreciation and amortization expenses for the nine months ended September 30, 1997 was approximately $669,000, an increase of 1% over depreciation and amortization expenses of approximately $666,000 in the comparable period in 1996. The increase is primarily attributable to increased loan costs and loan fees resulting from preparation of the refinancing for Shadowridge Meadows. Continued 7 9 INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARY (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED ---------- 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 8 EX-27 2 EXHIBIT 27
5 9-MOS DEC-31-1997 SEP-30-1997 240,261 0 0 0 0 1,032,459 31,349,896 (11,183,959) 21,198,396 663,562 19,640,605 0 0 0 894,229 21,198,396 0 2,820,935 0 1,366,796 669,186 0 1,134,252 (349,299) 0 0 0 0 0 (349,299) (12.97) 0
-----END PRIVACY-ENHANCED MESSAGE-----