-----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, VVaF4+5cX6P90+IlZNvZQWGAB26Wl4tXu6DSAvLZjunypgQJusQki+Zq2aSoF2pt YmDF3oVJXdlmeLpyyWDruw== 0000936392-98-001455.txt : 19981105 0000936392-98-001455.hdr.sgml : 19981105 ACCESSION NUMBER: 0000936392-98-001455 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981104 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: 98737486 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 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 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 0-18528 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 registration (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 May 14, 1998 was 18,826.5. The number of the registrant's Class A Units outstanding as of May 14, 1998 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 (Unaudited)
SEPTEMBER 30, DECEMBER 31, 1998 1997 ------------ ------------ ASSETS Rental properties: Land $ 7,078,365 $ 7,078,365 Buildings and improvements 21,731,106 21,607,078 ------------ ------------ 28,809,471 28,685,443 Less accumulated depreciation (9,229,906) (8,582,492) ------------ ------------ 19,579,565 20,102,951 Other assets: Cash and cash equivalents 286,968 282,293 Deferred loan fees, net of accumulated amortization of $107,147 and $80,873, respectively 670,036 689,294 Prepaid expenses and other assets 260,531 151,181 ------------ ------------ 1,217,535 1,122,768 ------------ ------------ $ 20,797,100 $ 21,225,719 ============ ============ LIABILITIES AND PARTNERS' CAPITAL Mortgage loans payable $ 19,629,145 $ 19,765,202 Other liabilities: Loan payable to affiliate 90,449 113,000 Accounts payable and accrued liabilities 172,374 148,501 Accrued interest payable 125,699 125,623 Security deposits 202,905 201,250 ------------ ------------ 20,220,572 20,353,576 Commitments Partners' capital 586,528 882,143 Note receivable from general partner (10,000) (10,000) ------------ ------------ $ 20,797,100 $ 21,225,719 ============ ============
The accompanying notes are an integral part of the financial statements. 2 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 -------------------------- --------------------------- 1998 1997 1998 1997 ----------- ----------- ----------- ----------- Revenues: Rents $ 973,736 $ 922,233 $ 2,939,359 $ 2,711,423 Other 69,053 32,774 148,449 109,512 ----------- ----------- ----------- ----------- Total revenues 1,042,789 955,007 3,087,808 2,820,935 ----------- ----------- ----------- ----------- Expenses: Operating expenses 415,188 454,593 1,359,974 1,366,796 Depreciation 227,310 223,254 673,687 669,186 Interest 378,863 367,983 1,114,762 1,134,252 ----------- ----------- ----------- ----------- Total expenses 1,021,361 1,045,830 3,148,423 3,170,234 ----------- ----------- ----------- ----------- Net income (loss) $ 21,428 $ (90,823) $ (60,615) $ (349,299) =========== =========== =========== =========== Basic and diluted per limited partnership unit data Net loss per limited partnership unit $ .80 $ (3.37) $ (2.25) $ (12.97) =========== =========== =========== =========== 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. 3 4 INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARY (A California Limited Partnership) CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
FOR THE NINE MONTHS ENDED SEPTEMBER 30 ------------------------- 1998 1997 --------- --------- Cash flows from operating activities: Net loss $ (60,615) $(349,299) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 647,413 638,428 Amortization of loan fees 26,274 30,758 (Increase) in: Prepaid expenses and other assets (109,350) (271,566) Increase in: Accounts payable, accrued liabilities and accrued interest payable 23,949 213,744 Security deposits 1,655 17,597 --------- --------- Net cash provided by operating activities 529,326 279,662 --------- --------- Cash flows from investing activities: Capital expenditures (124,028) (116,484) --------- --------- Net cash used in investing activities (124,028) (116,484) Cash flows from financing activities: Principal payments under mortgage debt (136,057) (148,264) Loan fees and refinancing costs (7,016) (6,935) Principal payments to affiliate (22,550) (12,300) Distributions to Investors (235,000) -- --------- --------- Net cash used by financing activities (400,623) (167,499) Net increase (decrease) in cash and cash equivalents 4,675 (4,321) --------- --------- Cash and cash equivalents at beginning of period 282,293 244,582 --------- --------- Cash and cash equivalents at end of period $ 286,968 $ 240,261 ========= =========
The accompanying notes are an integral part of the financial statements. 4 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, 1997 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 the 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 AUTHORITATIVE PRONOUNCEMENTS: In September 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 periods be restated to conform to the requirements of this standard. The Partnership believes it is involved in only one segment and expects the new standard will have no impact on the Partnership's financial presentation. 5 6 INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARY (A CALIFORNIA LIMITED PARTNERSHIP) 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, 1998, all of the Partnership's operating and debt service cash requirements have been met through cash generated from operations. As of September 30, 1998, 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 in October 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. Net cash provided by operating activities for the nine months ended September 30, 1998 was approximately $529,000 compared to approximately $280,000 for the same period in 1997. The principal reason for this increase was an increase in rental revenue. There was no material change in net cash used in investing activities for the nine months ended September 30, 1998 when compared to the same period in 1997. 6 7 INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARY (A CALIFORNIA LIMITED PARTNERSHIP) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONTINUED: Net cash used in financing activities for the nine months ended September 30, 1998 was approximately $401,000 compared to approximately $168,000 for the same period in 1997. The increase is due to distributions to partners and/or investors of $235,000. There were no such distributions in the same period of 1997. b. Results of Operations: COMPARISON OF THREE MONTHS ENDED SEPTEMBER 30, 1998 TO THE THREE MONTHS ENDED SEPTEMBER 30, 1997. Rental revenue for the three months ended September 30, 1998 was approximately $974,000, an increase of 6% over rents of approximately $922,000 for the comparable period in 1997. The increase is primarily attributable to an increase in monthly tenant rental rates and steady average occupancy rates. On September 30, 1998, the Shadowridge Meadows Apartments and Mission Park Apartments reflected occupancy rates of 98% and 97%, respectively, compared to 96% and 97%, respectively, on September 30, 1997. Interest expense for the three months ended September 30, 1998 was approximately $379,000, an increase of 3% over interest expense of approximately $368,000 for the comparable period in 1997. The increase is attributable to prior year fluctuations in Shadowridge Meadows' variable interest rate loan, which was refinanced to a fixed rate during the fourth quarter of 1997. Operating expenses for the three months ended September 30, 1998 were approximately $415,000, a decrease of 9% over operating expenses of approximately $455,000 for the comparable period in 1997. The decrease is due to lower repair and maintenance expense in the current year. Depreciation and amortization expenses for the three months ended September 30, 1998 and 1997 were approximately $227,000. Depreciation and amortization expenses have remained relatively constant as there have been few material additions to buildings and improvements in the period. 7 8 INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARY (A CALIFORNIA LIMITED PARTNERSHIP) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONTINUED: COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 1998 TO THE NINE MONTHS ENDED SEPTEMBER 30, 1997. Rental revenue for the nine months ended September 30, 1998 was approximately $2,939,000, an increase of 8% over rents of approximately $2,711,000 for the comparable period in 1997. The increase is primarily attributable to an increase in monthly tenant rental rates and steady average occupancy rates. On September 30, 1998, the Shadowridge Meadows Apartments and Mission Park Apartments reflected occupancy rates of 98% and 97%, respectively, compared to 96% and 97%, respectively, on September 30, 1997. Interest expense for the nine months ended September 30, 1998 was approximately $1,115,000, a decrease of 2% over interest expense of approximately $1,134,000 for the comparable period in 1997. The decrease is attributable to the refinancing of the Shadowridge Meadows mortgage in October 1997. Operating expenses for the nine months ended September 30, 1998 were approximately $1,360,000, an decrease of less than 1% over operating expenses of approximately $1,367,000 for the comparable period in 1997. The decrease is due to lower repair and maintenance expense in the current year. Depreciation and amortization expenses for the nine months ended September 30, 1998 and 1997 were approximately $674,000. Depreciation and amortization expenses have remained relatively constant as there have been few material additions to buildings and improvements in the period. c. Year 2000 The Partnership currently uses prepackaged accounting software on a Windows NT platform. To the extent the Partnership's software applications contain source code that are unable to appropriately interpret the upcoming Year 2000, some level of modification, or even possibly replacement of such applications, may be necessary. The Partnership has made an assessment of the impact of the Year 2000 issue on its internal operations and has developed a plan to bring its computer systems into compliance before the end of 1999. The Plan addresses the modification or replacement of applications and operating systems to achieve timely Year 2000 compliance and also includes communication and analysis with outside vendors with whom the Partnership interfaces electronically. Although it is not possible to quantify the aggregate cost of such modifications, the 8 9 INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARY (A CALIFORNIA LIMITED PARTNERSHIP) Partnership does not anticipate that the cost will have a material adverse effect on its financial position or results of operations. The foregoing discussion of Year 2000 issues contains forward-looking statements and actual compliance may be affected by a number of factors which include the timing and compliance by the Partnership's outside vendors and suppliers. 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 9 10 INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARY (A CALIFORNIA LIMITED PARTNERSHIP) 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. November 2, 1998 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 10 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS FILED WITH THE REGISTRANT'S FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS DEC-31-1998 SEP-30-1998 286,968 0 0 0 0 260,531 28,809,471 9,229,906 20,797,100 298,073 19,629,145 0 0 0 576,528 20,797,100 2,939,359 3,087,808 1,359,974 1,359,974 673,687 0 1,114,762 (60,615) 0 0 0 0 0 (60,615) (2.25) (2.25)
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