-----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, MCgFIFiAYJAZo91oYpPvOJh0Oe7Lm7629McwdKcQDftJqfLKXEofkBNDK8FzyvMr 1c/Dyl3ZhYyJCl7DeEAZlg== 0000936392-99-000337.txt : 19990330 0000936392-99-000337.hdr.sgml : 19990330 ACCESSION NUMBER: 0000936392-99-000337 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990329 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-K405 SEC ACT: SEC FILE NUMBER: 000-18528 FILM NUMBER: 99576087 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-K405 1 FORM 10-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended December 31, 1998 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from ____ to ____ Commission File Number 0-18528 INCOME GROWTH PARTNERS, LTD. X, A CALIFORNIA LIMITED PARTNERSHIP (Exact name of registrant as specified in its charter) CALIFORNIA 33-0294177 (State of other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1300 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) Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: LIMITED PARTNERSHIP INTERESTS 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 [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the Registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes[X] No [ ] 2 TABLE OF CONTENTS
PAGE ---- PART I Item 1. Business........................................................................1 Item 2. Properties......................................................................3 Item 3. Legal Proceedings...............................................................3 Item 4. Submission of Matters to a Vote of Security Holders.............................3 PART II Item 5. Market for the Registrant's Units and Related Security Holder Matters...........4 Item 6. Selected Financial Data.........................................................5 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.......................................................5 Item 7A. Quantitative and Qualitative Disclosures About Market Risk......................9 Item 8. Financial Statements and Supplementary Data.....................................9 Item 9. Disagreements on Accounting and Financial Disclosures...........................9 PART III Item 10. Directors and Executive Officers of the Registrant..............................9 Item 11. Executive Compensation.........................................................10 Item 12. Security Ownership of Certain Beneficial Owners and Management.................10 Item 13. Certain Relationships and Related Transactions.................................11 PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K................11 Signatures ...............................................................................14
3 PART I ITEM 1. BUSINESS GENERAL Income Growth Partners, Ltd. X, a California limited partnership (the "Limited Partnership") and subsidiaries (collectively, the "Partnership"), was formed in February 1988, to acquire, operate and hold for investment one or more parcels of income-producing, multi-family residential real property. Currently, the Limited Partnership operates two separate apartment complexes in Southern California: 1) Mission Park and 2) Shadowridge Meadows. The limited partnership agreement provides that the Partnership shall continue through February 2021, unless terminated sooner. Income Growth Management, Inc. ("IGM") is the sole general partner. The general partner has made no cash capital contributions to date. As of December 31, 1998, there were approximately 2,082 limited partners in the Partnership. The Partnership has no full-time employees. Employees of corporations affiliated with the general partner perform certain administrative and other services on behalf of the Partnership (see Item 13). The Partnership's executive offices are located at 11300 Sorrento Valley Road, Suite 108, San Diego, California 92121 and the Partnership's telephone number is (619) 457-2750. FINANCING STRATEGY The Partnership seeks to minimize the cost of financing its properties and will refinance existing loans from time to time to take advantage of prevailing market conditions. The Mission Park and Shadowridge Meadows properties were refinanced to prevailing rates during 1995 and 1997, respectively. COMPETITIVE CONDITIONS Changes in the national and regional economic climates, changes in local real estate conditions such as the oversupply of apartments or a reduction in demand for apartments, competition from single-family housing, apartment properties and other forms of multifamily residential housing, the inability to provide adequate maintenance and to obtain adequate insurance, increased operating costs, changes in zoning, building, environmental, rent control and other laws and regulations, the costs of compliance with current and future laws, changes in real property taxes and unusual occurrences (such as earthquakes and floods) and other factors beyond the control of the Partnership may adversely affect the income from, and value of, the Partnership's properties. 1 4 ITEM 1. BUSINESS, CONTINUED LEASES AND INFLATION Substantially all of the leases at the Partnership's apartment properties are for a period of six months or less, allowing, at the time of renewal, for adjustments in the rental rate and the opportunity to release the apartment unit at the prevailing market rate. The short-term nature of these leases generally serves to minimize the risk to the Partnership of the adverse effect of inflation and the Partnership does not believe that inflation has had a material adverse impact on its revenues. RESTRICTIONS IMPOSED BY LAWS BENEFITING DISABLED PERSONS Under the Americans with Disabilities Act of 1990 (the "ADA"), all places of public accommodation are required to meet certain federal requirements related to access and use by disabled persons. These requirements became effective in 1992. A number of additional federal, state and local laws exist which also may require modifications to the properties, or restrict certain further renovations thereof, with respect to access thereto by disabled persons. For example, the Fair Housing Amendments Act of 1988 (the "FHAA") requires apartment properties first occupied after March 13, 1990 to be accessible to the handicapped. Noncompliance with the ADA or the FHAA could result in an order to correct any noncomplying feature, which could result in substantial capital expenditures. Although management of the Partnership believes that the properties are substantially in compliance with present requirements, if the properties are not in compliance, the Partnership is likely to incur additional costs to comply with the ADA and the FHAA. During 1995, on a tax free basis, the Limited Partnership exchanged the Mission Park property for a 99% interest in IGP X Mission Park Associates, L.P., a newly formed California limited partnership (the "Mission Park Subsidiary"). The Mission Park Subsidiary is separate and distinct from the Partnership, having separate assets, liabilities and business operations. During 1997, on a tax free basis, the Limited Partnership exchanged the Shadowridge Meadows property for a 99% interest in IGP X Shadowridge Meadows, Ltd., a newly formed California limited partnership (the "Shadowridge Meadows Subsidiary"). The Shadowridge Meadows Subsidiary is also separate and distinct from the Partnership, having separate assets, liabilities and business operations. Formation of the Mission Park Subsidiary and the Shadowridge Subsidiary had no impact on the Partnership's overall financial condition, results of operations, allocation of net income/loss, cash distributions or Partnership assets. 2 5 ITEM 2. PROPERTIES The Partnership, through its subsidiaries, presently owns two properties, as follows: MISSION PARK: Date of purchase: August 1989 Purchase price: $17,100,000 Property Description: A 264-unit apartment complex located in San Marcos, California. The property includes two full-size recreation rooms, two heated swimming pools and spas, night-lighted tennis courts, a satellite cable TV system and covered parking. The building is approximately eight years old. The property contains 215,292 square feet. SHADOWRIDGE MEADOWS: Date of purchase: November 1988 Purchase price: $12,700,000 Property Description: A 184-unit apartment complex located in Vista, California. The property includes a large recreation center, a heated swimming pool and spa, five laundry facilities, a satellite cable TV system and covered parking. The building is approximately eleven years old. The property contains 127,197 square feet. ITEM 3. LEGAL PROCEEDINGS The Partnership is not a party to any legal proceedings other than various claims and lawsuits arising in the normal course of its business which, in the opinion of the Partnership's management, are not individually or in the aggregate material to its business. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None 3 6 PART II ITEM 5. MARKET FOR REGISTRANT'S UNITS AND RELATED SECURITY HOLDER MATTERS (a) Market Information As of December 31, 1998, the outstanding securities of the Partnership included the Original Units and Class A Units held by the limited partners. The Partnership's Amended and Restated Agreement of Partnership substantially restricts transfers of all units and no public trading market for the units exists or is intended or expected to develop. (b) Holders As of December 31, 1998, the Partnership's 18,826.5 outstanding Original Units and 8,100 Class A Units were held by an aggregate of 2,082 Limited Partners. (c) Dividends As a limited partnership, the Partnership does not pay dividends. The amended partnership agreement provides that any distributions of cash from operations will be made in the following order of priority: First, each Class A Unit receives a 12% cumulative noncompounded annual return on the balance of actual funds invested in Class A Units ("Class A Preferred Return"). Second, each Class A Unit receives a total return of original invested capital. Third, each Class A Unit receives a $500 bonus. Fourth, each Original Unit holder receives a 10% noncumulative return on the adjusted balance of original invested capital. Thereafter, 90% of distributions on cash from operations will be made to the Original Unit holders and 10% to the general partner. The Partnership distributed approximately $312,000 to the holders of the Class A Units during 1998. Cumulative unpaid distributions on the Class A Preferred Return were approximately $559,000 as of December 31, 1998. Cash distributions are determined at the discretion of the general partner. Any future distributions are largely dependent on future income, expenses, debt service and operating reserves and there can be no assurance that future distributions will be paid. 4 7 ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA The following selected consolidated financial data should be read in conjunction with the financial statements and the related notes described in Item 8 herein:
1998 1997 1996 1995 1994 ------------ ------------ ------------ ------------ ------------ Total assets $ 20,513,980 $ 21,225,719 $ 21,476,918 $ 22,153,868 $ 28,945,057 Long-term obligations 19,579,523 19,765,202 19,788,869 19,966,935 29,426,708 Total revenue 4,148,324 3,791,975 3,576,981 3,896,384 4,344,717 Total expenses (4,331,753) (4,163,361) (4,063,509) (4,584,674) (9,413,282) Write-down of land and building -- -- -- -- 3,900,000 Loss before extraordinary item (183,429) (371,386) (486,528) 3,757,729 (5,322,740) Extraordinary item: gain on -- -- -- 4,446,019 -- forgiveness of debt Net income (loss) (183,429) (371,386) (486,528) 3,757,729 (5,322,740) Net loss per partnership unit (6.81) (13.79) (18.06) (28.48) (282.73) before extraordinary gain Extraordinary gain per partnership unit -- -- -- 184.01 -- Basic and diluted net income (loss) per partnership unit (6.81) (13.79) (18.06) 155.53 (282.73) Weighted average limited partnership units 26,926 26,926 26,926 24,161 18,826
There had been no cash distributions to partners up until December 31, 1997. The Partnership distributed approximately $312,000 to the holders of the Class A Units during 1998. ITEM 7. 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. Historical results and percentage relationships set forth in the consolidated statement of operations in the financial statements, including trends which might appear, should not be taken as indicative of future operations. (a) Liquidity and Capital Resources In January 1994, the Limited Partnership filed a voluntary petition for relief under Chapter 11 of the federal bankruptcy laws in the United States Bankruptcy Court for the Southern District of California. Under the provisions of the Plan of Reorganization (the "Plan"), the Limited Partnership was allowed to retain ownership of the Mission Park and Shadowridge Meadows properties. Despite $2,025,000 in additional capital from existing investors in the form of Class A Units, the Limited Partnership was unable to raise the necessary capital to retain ownership of its third property, Margarita Summit. 5 8 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONTINUED: The Limited Partnership emerged from Chapter 11 effective in May 1995 having fully satisfied all claims in accordance with the Plan. Prior to 1996, 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 1996 through 1998, all of the Partnership's operating and debt service cash requirements have been met through cash generated from operations. 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. Prior period amounts have been reclassified to conform with the current year presentation. COMPARISON OF YEAR ENDED DECEMBER 31, 1998 TO THE YEAR ENDED DECEMBER 31, 1997. Net cash provided by operating activities for the year ended December 31, 1998 was $871,000 compared to $594,000 for the same period in 1997. The principal reason for this difference is a decrease in net loss of approximately $188,000, a decrease in prepaid expenses and other assets and an increase in accounts payable resulting from the timing of payments. Net cash used in investing activities for the year ended December 31, 1998 was $156,000 compared to $252,000 for the same period in 1997. The decrease in cash used in investing activities is due primarily to decreases in improvements as compared to the prior year. 6 9 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONTINUED: Net cash used in financing activities for the year ended December 31, 1998 was $555,000 compared to $305,000 for the same period in 1997. The increase is primarily due to an increase in the principal payments under mortgage debt of approximately $162,000, distributions paid of approximately $312,000 during 1998, the decrease of loan fees of approximately $338,000 from the refinance of the Shadowridge Meadows Property in 1997, and a decrease in the proceeds received from an affiliate of approximately $62,000. COMPARISON OF YEAR ENDED DECEMBER 31, 1997 TO THE YEAR ENDED DECEMBER 31, 1996. Net cash provided by operating activities for the year ended December 31, 1997 was $594,000 compared to $360,000 for the same period in 1996. The principal reason for this difference is a decrease in net loss of approximately $115,000 and an increase in accounts payable resulting from the timing of payments. Net cash used in investing activities for the year ended December 31, 1997 was $252,000 compared to $44,000 for the same period in 1996. The increase in cash used in investing activities is due primarily to increases in improvements made possible by increased rental revenues. Net cash used in financing activities for the year ended December 31, 1997 was $305,000 compared to $225,000 for the same period in 1996. The increase is primarily due to debt issue costs related to the refinancing of the Shadowridge Meadows property. (b) Results of Operations COMPARISON OF YEAR ENDED DECEMBER 31, 1998 TO THE YEAR ENDED DECEMBER 31, 1997. Rental revenue for the year ended December 31, 1998 was $3,944,000, an increase of 8% over rents of $3,656,000 in the comparable period in 1997. The increase is primarily attributable to an increase in monthly tenant rental rates and occupancy rates. Interest expense for the year ended December 31, 1998 was $1,489,000, a decrease of 4% over interest expense of $1,544,000 in the comparable period in 1997. The decrease is primarily attributable to the refinancing on the Shadowridge Meadows Property, as well as the increase in the principal payments on the existing mortgage loans. The increase is also attributable to amortization of loan fees related to the refinancing of the Shadowridge Meadows Property. Operating expense for the year ended December 31, 1998 was $1,929,000, an increase of 8% over operating expense of $1,782,000 in the comparable period in 1997. The increase is primarily attributable to higher management fees related to the increase in rental revenue. Depreciation expense for the year ended December 31, 1998 was $914,000, an increase of 9% over depreciation expense of $837,000 in the comparable period in 1997. The increase is primarily attributable to consistent yearly increases in total capitalized fixed asset expenditures. 7 10 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONTINUED: COMPARISON OF YEAR ENDED DECEMBER 31, 1997 TO THE YEAR ENDED DECEMBER 31, 1996. Rental revenue for the year ended December 31, 1997 was $3,656,000, an increase of 7% over rents of $3,430,000 in the comparable period in 1996. The increase is primarily attributable to an increase in monthly tenant rental rates and occupancy rates. Interest expense for the year ended December 31, 1997 was $1,544,000, an increase of 1% over interest expense of $1,527,000 in the comparable period in 1996. The increase is primarily attributable to the variable interest rate on the Shadowridge Meadows Property. The increase is also attributable to amortization of loan fees related to the refinancing of the Shadowridge Meadows Property. Operating expense for the year ended December 31, 1997 was $1,782,000, an increase of 3% over operating expense of $1,726,000 in the comparable period in 1996. The increase is primarily attributable to an increase in refurbishment expenses in 1997 over 1996. The increase is also attributable to higher expenses related to increases in occupancy rates. Depreciation expense for the year ended December 31, 1997 was $837,000, an increase of 3% over depreciation expense of $810,000 in the comparable period in 1996. The increase is primarily attributable to an increase in capitalized fixed asset expenditures in 1997 over 1996. (c) Year 2000 The Partnership is currently addressing a universal situation commonly referred to as the "Year 2000 Problem." The year 2000 problem relates to the inability of certain computer software programs and computer hardware to properly recognize and process data-sensitive information relative to the Year 2000 and beyond. During fiscal 1998, the Partnership developed a plan to devote the necessary resources to identify and modify internal systems impacted by the Year 2000 Problem, or implement new systems to become Year 2000 compliant in a timely manner. This compliance plan consists of two major areas of focus: software systems and hardware. An area of lessor focus has been supplier management. The total cost of executing this plan is estimated to be $10,000. The Partnership has substantially completed the initial phases of the software systems portion of the compliance plan. The initial phases include completing an inventory of all software programs operating on Partnership systems, identifying year 2000 problems and developing contingency pans. Subsequent phases of the systems portion of the compliance plan involve execution of testing and the installation of Year 2000 compliant software into the operating environment, which will be complete as of the end of the second quarter of fiscal 1999. 8 11 The Partnership has conducted an inventory of all hardware. All desktop systems critical to the Partnership's overall business are being evaluated under the method described above. As of March 1, 1999, this process was approximately 10% complete. The Partnership expects the execution of this portion of the plan to be substantially complete by the end of the second quarter of fiscal 1999. Desktop infrastructure is also being tested. The Company expects the testing of desktop infrastructure to be substantially complete during the second quarter of fiscal 1999. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK The Company has no market-risk sensitive financial instruments. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The consolidated financial statements and supplementary data required by this Item are set forth at the pages indicated in Item 14(a). ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None PART III ITEM 10. GENERAL PARTNER AND EXECUTIVE OFFICERS OF THE PARTNERSHIP The general partner of the Partnership is Income Growth Management, Inc. ("IGM"), a California corporation. The executive officers of IGM do not receive compensation from the Partnership. The names, ages and positions of responsibility held by the executive officers and directors of IGM are as follows:
NAME AGE POSITION ---- --- -------- David Maurer 46 President and Director Timothy Maurer 49 Secretary and Director Robert Green 41 Vice President of Operations and Director
FAMILY RELATIONSHIPS David Maurer and Timothy Maurer are brothers. 9 12 BUSINESS EXPERIENCE The following is a brief background of the directors and executive officers of IGM: DAVID MAURER has served as President and Director of IGM since 1992, and as President and Director of ENA Corporation ("ENA"), an affiliate of IGM, since 1979. He has been involved in real estate syndication and property management since 1980, and in real estate development and construction since 1974. David was educated at the University of California, San Diego (B.A. 1974). TIMOTHY MAURER has served as Chief Financial Officer, Secretary and Director of IGM since 1979. He has been involved in real estate syndication, development, design and construction since 1975. Timothy was educated at the California College of Arts and Crafts, Oakland (B.F.A. 1972). ROBERT GREEN has served as Vice President of Operations and Director since 1988. He has also been the Director of Property Management of ENA since 1988. He has been directly involved in property management since 1980. Robert worked for four years with Coldwell Banker Real Estate Management Services in San Diego managing both commercial and residential property. He also worked for four years with C&R Realty Company managing over 75 residential properties in Oregon and Washington. Robert was educated at Pacific University in Forest Grove, Oregon (B.A. 1980). ITEM 11. EXECUTIVE COMPENSATION The Partnership has no executive officers and has not paid nor proposes to pay any compensation or retirement benefits to the directors or executive officers of Income Growth Management, Inc., the general partner. See Item 13 for compensation to the general partner. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT (a) Security Ownership of Certain Beneficial Owners
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT TITLE OF CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS -------------- ---------------- -------------------- -------- Class A Units John W. Baer 609.0000 7.5% 1091 Valley View Court Los Altos, CA 94024
No other person or group is known by the Partnership to own beneficially more than 5% of the outstanding Original Units or Class A Units. 10 13 (b) Security Ownership of Management None of the officers and directors of the Partnership's corporate general partners are the beneficial owners of any Original Units or Class A Units. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The Partnership is entitled to engage in various transactions involving its general partners and its affiliates as described in the Partnership Agreement. The table below reflects amounts paid to the general partner or its affiliates during the following years:
1998 1997 1996 -------- -------- -------- Management fees $207,300 $179,000 $167,000 Administrative fees -- 113,000 68,600 Loan origination fees 10,000 97,500 --
PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) Documents filed as part of this report: (1) Financial Statements The following financial statements of the Partnership and related notes to financial statements and accountants' report are filed herewith: Report of Independent Accountants Consolidated Balance Sheets as of December 31, 1998 and 1997 Consolidated Statements of Operations for the years ended December 31, 1998, 1997 and 1996 Consolidated Statements of Partners' Capital (Deficit) for the years ended December 31, 1998, 1997 and 1996 Consolidated Statements of Cash Flows for the years ended December 31, 1998, 1997 and 1996 Notes to Consolidated Financial Statements (2) Financial Statement Schedule 11 14 Schedule III - Real Estate and Accumulated Depreciation Schedule IV - Mortgage Loans on Real Estate All other schedules are either not required, or the information therein is included in the notes to the audited financial statements. (b) Reports on Form 8-K No reports on Form 8-K were filed during the last quarter of the fiscal year covered by this report. (c) Exhibits The following Exhibit Index lists the exhibits that are either filed as part of this report or incorporated herein by reference from a prior filing. 12 15 EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION LOCATION - ----------- ----------- -------- 2.2 Second Amended Disclosure Statement to Debtor's Second (1) Amended Plan of Reorganization, As Revised (with Second Amended Plan of Reorganization attached as Exhibit 1) filed with the Bankruptcy Court on October 25, 1994; Order Approving Second Amended Disclosure Statement to Debtor's Second Amended Plan of Reorganization, Approving Ballots and Fixing Dates for Filing Acceptances or Rejections of Plan and for Confirmation Hearing, Combined with Notice Thereof; Equity Interest Holder Ballot for Accepting or Rejecting Debtor's Second Amended Plan of Reorganization; Offering Memorandum for Income Growth Partners, Ltd. X Class A Units dated October 27, 1994 (with Amended and Restated Agreement of Limited Partnership attached as Exhibit B). 3.1 Articles of Incorporation of IGP X Mission Park, Inc. (2) 4.2 Amended and Restated Agreement of Limited Partnership (3) 4.3 Agreement of Limited Partnership of IGP X Mission Park (2) Associates, L.P., A California Limited Partnership 4.4 Agreement of Limited Partnership of IGP X Shadowridge (6) Meadows, Ltd., A California Limited Partnership 27.6 Financial Data Schedule (7) 28.1 Prospectus dated January 3, 1991 (4) 28.4 Letter regarding resignation of General Partner (5)
- ---------------- (1) Incorporated by reference from the Partnership's Quarterly Report on Form 10-Q for the third quarter ended September 30, 1994 (Commission File Number 0-18528). (2) Incorporated by reference from the Partnership's Current Report on Form 8-K dated December 27, 1995 (Commission File Number 0-18528). 13 16 (3) Included as Exhibit "B" to the Partnership's Offering Memorandum for Income Growth Partners, Ltd. X Class A Units dated October 27, 1994, included in Exhibit 2.2 incorporated by reference from the Partnership's Quarterly Report on Form 10-Q for the third quarter ended September 30, 1994 (Commission File Number 0-18528). (4) Incorporated by reference from the Partnership's Annual Report on Form 10-K for the Fiscal Year ended December 31, 1992 (Commission File Number 0-18528). (5) Incorporated by reference from the Partnership's Annual Report on Form 10-K for the Fiscal Year ended December 31, 1993 (Commission File Number 0-18528). (6) Incorporated by reference from the Partnership's Annual Report on Form 10-K for the Fiscal Year ended December 21, 1997 (Commission File Number 0-18528). (7) Filed herewith SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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: March 29, 1999 INCOME GROWTH PARTNERS, LTD. X (a California Limited Partnership) By: Income Growth Management, Inc. General Partner By: /s/ David W. Maurer ------------------------------- David W. Maurer, President Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signatures Title and Capacity Date ---------- ------------------ ---- ------------------------- -------------------- ------- ------------------------- -------------------- -------
14 17 Appendix Financial Statements 18 INDEX TO FINANCIAL STATEMENTS - ITEM 14 OF FORM 10-K
PAGE ---- Report of Independent Accountants.........................................................F-2 Consolidated Financial Statements and Notes: Balance Sheets as of December 31, 1998 and 1997......................................F-3 Statements of Operations for the Years Ended December 31, 1998, 1997 and 1996.....................................................F-4 Statements of Partners' Capital for the Years Ended December 31, 1998, 1997 and 1996.....................................................F-5 Statements of Cash Flows for the Years Ended December 31, 1998, 1997 and 1996.....................................................F-6 Notes to Financial Statements........................................................F-7 Schedule III - Real Estate and Accumulated Depreciation..............................F-14
19 REPORT OF INDEPENDENT ACCOUNTANTS Income Growth Partners, Ltd. X, a California limited partnership In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of Income Growth Partners, Ltd. X, as of December 31, 1998 and 1997, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1998, in conformity with generally accepted accounting principles. In addition, in our opinion, the financial statement schedules listed in the accompanying index present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedules are the responsibility of the Partnership's management; our responsibility is to express an opinion on these financial statements and financial statement schedules based on our audits. We conducted our audits of these financial statements and financial statement schedules in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. PricewaterhouseCoopers LLP San Diego, California February 13, 1999 F-2 20 INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARIES A CALIFORNIA LIMITED PARTNERSHIP CONSOLIDATED BALANCE SHEETS DECEMBER 31, 1998 AND 1997 - --------------------------------------------------------------------------------
1998 1997 ------------ ------------ ASSETS Rental properties: Land $ 7,078,365 $ 7,078,365 Buildings and improvements 21,763,241 21,607,078 ------------ ------------ 28,841,606 28,685,443 Less accumulated depreciation (9,445,320) (8,582,492) ------------ ------------ 19,396,286 20,102,951 Cash and cash equivalents 441,909 282,293 Deferred loan fees, net of accumulated amortization of $132,140 and $80,873, respectively 645,044 689,294 Prepaids and other assets 30,742 151,181 ------------ ------------ Total assets $ 20,513,981 $ 21,225,719 ------------ ------------ LIABILITIES AND PARTNERS' CAPITAL Mortgage loans payable $ 19,579,523 $ 19,765,202 Other liabilities: Loan payable to affiliates 72,640 113,000 Accounts payable and accrued liabilities 170,177 148,501 Accrued interest payable 125,699 125,623 Security deposits 199,177 201,250 ------------ ------------ 20,147,216 20,353,576 Commitments and contingencies Partners' capital 376,765 882,143 Note receivable from general partner (10,000) (10,000) ------------ ------------ Total liabilities and parter's capital $ 20,513,981 $ 21,225,719 ============ ============
The accompanying notes are an integral part of these financial statements. F-3 21 INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARIES A CALIFORNIA LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 - --------------------------------------------------------------------------------
1998 1997 1996 ----------- ----------- ----------- REVENUES: Rents $ 3,943,519 $ 3,655,595 $ 3,429,751 Interest 6,710 8,925 6,887 Other 198,095 127,455 140,343 ----------- ----------- ----------- Total revenues 4,148,324 3,791,975 3,576,981 EXPENSES: Operating expenses 1,928,765 1,782,364 1,726,424 Depreciation/amortization 914,095 836,962 810,220 Interest and penalties 1,488,893 1,544,035 1,526,865 ----------- ----------- ----------- Total expenses 4,331,753 4,163,361 4,063,509 ----------- ----------- ----------- Net loss $ (183,429) $ (371,386) $ (486,528) =========== =========== =========== BASIC AND DILUTED PER LIMITED PARTNERSHIP UNIT DATA: Net loss $ (6.81) $ (13.79) $ (18.06) =========== =========== =========== Weighted average limited partnership units 26,926 26,926 26,926 =========== =========== ===========
The accompanying notes are an integral part of these financial statements. F-4 22 INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARIES A CALIFORNIA LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 - --------------------------------------------------------------------------------
LIMITED PARTNERS ------------------------ GENERAL ORIGINAL CLASS A PARTNER PARTNERS PARTNERS TOTAL ------------ ------ ----------- ----------- Balance, December 31, 1996 $ (287,663) $ -- $1,541,192 $1,253,529 Net loss (55,708) -- (315,678) (371,386) ----------- ---- ---------- ---------- Balance, December 31, 1997 (343,371) -- 1,225,514 882,143 Distributions -- -- (321,949) (321,949) Net loss (27,514) -- (155,915) (183,429) ----------- ---- ---------- ---------- Balance, December 31, 1998 $ (370,885) $ -- $ 747,650 $ 376,765 =========== ==== ========== ==========
The accompanying notes are an integral part of these financial statements. F-5 23 INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARIES A CALIFORNIA LIMITED PARTNERSHIP CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 - --------------------------------------------------------------------------------
1998 1997 1996 ----------- ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (183,429) $ (371,386) $ (486,528) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 862,828 836,961 810,220 Amortization of loan fees 51,267 20,103 27,543 Decrease (increase) in prepaid expenses and other assets 120,439 22,454 (25,584) Increase (decrease) in: Accounts payable and accrued liabilities 21,676 67,028 (49,695) Security deposits (2,073) 16,895 19,154 Accrued interest payable 76 2,231 64,886 ----------- ----------- ----------- Net cash provided by operating activities 870,784 594,286 359,996 ----------- ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (156,164) (252,031) (44,383) ----------- ----------- ----------- Net cash used in investing activities (156,164) (252,031) (44,383) ----------- ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments under mortgage debt (185,679) (23,667) (178,066) Loan fees and refinancing costs (7,016) (338,577) -- Principal payments to affiliate (60,360) (14,800) (46,700) Proceeds from affiliate loan 10,000 72,500 -- Distributions (321,949) -- -- ----------- ----------- ----------- Net cash used by financing activities (565,004) (304,544) (224,766) ----------- ----------- ----------- Net increase in cash and cash equivalents 149,616 37,711 90,847 Cash and cash equivalents at beginning of year 282,293 244,582 153,735 ----------- ----------- ----------- Cash and cash equivalents at end of year $ 441,909 $ 282,293 $ 244,582 =========== =========== =========== SUPPLEMENTAL CASH FLOWS INFORMATION: Cash paid for interest $ 1,448,893 $ 1,337,417 $ 1,434,436 =========== =========== ===========
The accompanying notes are an integral part of these financial statements. F-6 24 INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARIES A CALIFORNIA LIMITED PARTNERSHIP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1998 AND 1997 - -------------------------------------------------------------------------------- 1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION: Income Growth Partners, Ltd. X (a California limited partnership) (the "Limited Partnership") and subsidiaries (collectively, the "Partnership") was formed in February 1988, to acquire, operate and hold for investment one or more parcels of income-producing, multi-family residential real property. Currently, the Partnership owns a 264 unit building in San Marcos, California ("Mission Park") and a 184 unit building in Vista, California ("Shadowridge Meadows"). Income Growth Management, Inc. is the sole general partner. The general partner has made no cash capital contributions to date. As of December 31, 1998, there were approximately 2,082 limited partners in the Partnership. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of the Limited Partnership and its subsidiaries. Subsidiaries consist primarily of California limited partnerships formed to hold and operate the Partnership's properties. All significant intercompany balances and transactions have been eliminated. CASH AND CASH EQUIVALENTS Cash and cash equivalents consist of cash and short-term investments with original maturities at the date of purchase of 90 days or less. LAND, BUILDINGS AND IMPROVEMENTS Land, buildings and improvements are recorded at cost. Buildings and improvements are depreciated using the straight-line method over the estimated useful lives of 27.5 and 5 to 15 years, respectively. Expenditures for maintenance and repairs are charged to expense as incurred. Significant renovations are capitalized and depreciated over the remaining life of the property. The Partnership assesses its property for impairment whenever events or changes in circumstances indicate that the carrying amount of the property may not be recoverable. Recoverability of property to be held and used is measured by a comparison of the carrying amount of the property to future undiscounted net cash flows expected to be generated by the property. If the property is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the property exceeds the fair value of the property. F-7 25 INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARIES A CALIFORNIA LIMITED PARTNERSHIP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1998 AND 1997 - -------------------------------------------------------------------------------- The cost and related accumulated depreciation of real estate are removed from the accounts upon disposition. Gains and losses arising from the dispositions are reported as income or expense. DEFERRED LOAN FEES Deferred loan fees represent expenses incurred in obtaining the Partnership's mortgage loans payable. These fees are being amortized to interest expense over the initial term of the loan using the straight-line method which approximates the effective interest method. REVENUE RECOGNITION Rental revenues are recognized at the beginning of each month based on the current occupancy of the apartments. Tenant leases are generally for a term of six months with an option to renew for an additional six months or to rent on a month-to-month basis. ADVERTISING COSTS Advertising costs are expensed as incurred. Total advertising expense was approximately $58,000, $52,000 and $56,000 for the years ended December 31, 1998, 1997 and 1996, respectively. INCOME TAXES No provision has been made for federal or state income taxes on the operations of the Partnership. Such taxes are imposed on the individual partners for their respective shares of Partnership income or loss. The tax returns and amounts of allocable Partnership income or loss of the Partnership are subject to examination by federal and state taxing authorities. If such examinations result in a change in the Partnership status, or in changes to allocable Partnership income or loss, the tax liability of the partners could be changed accordingly. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of financial statements, and the reported amounts of revenue and expense during the reporting period. Actual results could differ from estimates. RECLASSIFICATIONS Certain prior year amounts have been reclassified to conform with the current year presentation. COMPREHENSIVE INCOME Statement of Financial Accounting Standards No. 130, Comprehensive Income ("SFAS 130") requires the Company to report comprehensive income and its components in the financial statements. For the periods ending December 31, 1998, 1997, and 1996, the Partnership's comprehensive income was equal to the Partnership's net income. F-8 26 INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARIES A CALIFORNIA LIMITED PARTNERSHIP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1998 AND 1997 - -------------------------------------------------------------------------------- RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS The Partnership adopted Statement of Financial Accounting Standards ("SFAS") No. 131 Disclosures about Segments of an Enterprise and Related Information during the year ended December 31, 1998. This Statement supercedes substantially all the reporting requirements previously required under SFAS No. 14 Financial Reporting for Business Segments of an Enterprise and establishes standards for reporting information about operating segments and requires certain disclosures about products and services, geographic areas and major customers. Under SFAS 131, the determination of segments to be reported in the financial statements is to be consistent with the manner in which management organizes and evaluates the internal organization to make operating decisions and assess performance. This Statement also allows a Partnership to aggregate similar segments for reporting purposes. Management has determined that all of its operating units can be aggregated into one segment. Therefore, no segment disclosures have been included in the accompanying notes to the consolidated financial statements. There are no other recently issued pronouncements for which the Partnership does not expect a material impact on the Partnership's results of operations. Disclosures About Fair Value of Financial Instruments CASH AND SHORT-TERM INVESTMENTS: The carrying amount approximates fair value because of the short maturity of those instruments. LONG-TERM DEBT: The fair value of the Partnership's long-term debt is estimated based on the quoted market prices for the same or similar issues or on the current rates offered to the Partnership for debt of the same remaining maturities. The carrying values of the mortgage loans on both the Mission Park and Shadowridge Meadows properties approximates their respective fair values. 3. CONCENTRATION OF CREDIT RISK: UNINSURED CASH The Partnership maintains cash accounts which may exceed FDIC insured levels at one financial institution. All of the Partnership's cash equivalents are held in a U.S. Treasury Money Fund which invests in short-term U.S. Treasury securities. The Partnership has not experienced any losses to date on its cash or cash equivalents. NATURE OF BUSINESS The properties are located in San Diego County. Changes in the regional economic climates, local real estate conditions such as the oversupply of apartments or a reduction in demand for apartments, competition from single-family housing, apartment properties and other forms of multifamily residential housing, the inability to provide adequate maintenance and to obtain adequate insurance, increased operating costs, changes in zoning, building, environmental, rent control and other laws and regulations, the costs of compliance with current and future laws, changes in F-9 27 INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARIES A CALIFORNIA LIMITED PARTNERSHIP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1998 AND 1997 - -------------------------------------------------------------------------------- real property taxes and unusual occurrences (such as earthquakes and floods) and other factors beyond the control of the Partnership may adversely affect the income from, and value of, the Partnership's properties. 4. ACTIVITIES OF THE PARTNERSHIP: The general partner or its affiliates manage and control the affairs of the Partnership and have general responsibility for supervising the Partnership's properties and operations. The general partner and affiliates are compensated for these efforts as explained in Note 7. The original partnership agreement was amended in October 1994 and provides that cash distributions from operations are to be determined at the discretion of the general partner. After adequate working capital reserves have been met, cash distributions deemed appropriate by the general partner will be made as set forth, therein. DISTRIBUTION OF CASH FROM OPERATIONS The amended partnership agreement provides that any distributions of cash from operations will be made in the following order of priority: First, each Class A Unit receives a 12% cumulative noncompounded annual return on the balance of actual funds invested in Class A Units ("Class A Preferred Return"). Second, each Class A Unit receives a total return of original invested capital. Third, each Class A Unit receives a $500 bonus. Fourth, each Original Unit holder receives a 10% noncumulative return on the adjusted balance of original invested capital. Thereafter, 90% of distributions on cash from operations will be made to the Original Unit holders and 10% to the general partner. The Partnership distributed approximately $312,000 to the holders of the Class A Units during 1998. Cumulative unpaid distributions on the Class A Preferred Return were approximately $559,000 as of December 31, 1998. DISTRIBUTION OF CASH FROM SALE OR REFINANCING The amended partnership agreement provides that any distributions of sale or refinancing will be made in the following order of priority: First, each Class A Unit receives a 12% cumulative noncompounded annual return on the balance of actual funds invested in Class A Units. Second, each Class A Unit receives a total return of original invested capital. Third, each Class A Unit receives a $500 bonus. Fourth, each Original Unit holder receives an amount equal to the adjusted balance of original invested capital. Fifth, each Original Unit holder receives a 10% F-10 28 INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARIES A CALIFORNIA LIMITED PARTNERSHIP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1998 AND 1997 - -------------------------------------------------------------------------------- cumulative return on the adjusted balance of original invested ("the Preferred Return"). Thereafter, 85% of distributions of cash from operations will be made to the Original Unit holders and 15% to the general partner. ALLOCATION OF NET INCOME/LOSS Net losses are allocated 85% to the limited partners and 15% to the general partner. Losses in excess of the limited partners' capital balances are allocated 100% to the general partner. Net income will be allocated 100% to the general partner until the aggregate net income allocated is equal to the aggregate net losses allocated to the general partner in all previous years. The balance of net income after the initial allocation to the general partner, shall be allocated 85% to the limited partners and 15% to the general partner. 6. MORTGAGE LOANS AND LOAN PAYABLE TO AFFILIATE: At December 31, 1998 and 1997, mortgage loans and loan payable to affiliate consisted of the following:
1998 1997 ----------- ----------- Mission Park - Note dated December 27, 1995, collateralized by first trust deed on land and buildings and a guarantee by officers of the general partner, interest and principal of $73,144 payable monthly based on 7.76% annual fixed interest rate, amortized over 30 years, balloon payment of approximately $8,918,000 due in January 2006 $ 9,917,901 $10,022,451 Shadowridge Meadows - Note dated October 27, 1997, collateralized by first trust deed on land and buildings, interest and principal of $68,106 payable monthly based on 7.49% annual fixed interest rate, amortized over 30 years, balloon payment of approximately $8,475,000 due in November 2007 9,661,622 9,742,751 ----------- ----------- 19,579,523 19,765,202 Note payable to ENA, affiliate of general partner promissory note dated December 27, 1995, with simple interest and principal payable from time to time at the published prime rate, stated as 8.5% and 7.75% at December 31, 1997, and 1998 respectively, due upon demand 28,593 40,500 Note payable to Income Growth Property Management, affiliate of the general partner - promissory note dated October 23, 1997, with simple interest and principal payable from time to time at the published prime rate, stated as 8.5% at December 31, 1997, and due upon demand 44,047 72,500 ----------- ----------- $19,652,163 $19,878,202 =========== ===========
F-11 29 INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARIES A CALIFORNIA LIMITED PARTNERSHIP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1998 AND 1997 - -------------------------------------------------------------------------------- Future minimum annual principal payments are summarized as follows: 1999 $ 282,242 2000 226,176 2001 244,060 2002 263,360 2003 284,186 Thereafter 18,352,139 ---------- $19,652,163 ==========
7. RELATED PARTY TRANSACTIONS: Following is a description of related party transactions for the three years ended December 31, 1998 that have not otherwise been disclosed: MANAGEMENT FEES The Partnership's properties are managed by an affiliate of the general partner who receives a management fee. The fee for Mission Park is equal to 5% of the operating revenues generated by that property. The fee for Shadowridge Meadows was equal to 4% of the operating revenues generated by that property through October 1997 and 5% thereafter. Management fees aggregated approximately $207,300, $179,000 and $167,000 in 1998, 1997 and 1996, respectively. ADMINISTRATIVE COSTS The Partnership has an agreement with an affiliate of the general partner (the "Affiliate") who furnishes certain administrative services and facilities to the Partnership, including accounting, data processing, duplication and transfer agent expenses, professional (including, but not limited to, regulatory reporting and legal services) and recording and partner communication expenses. The agreement provides for reimbursement to the affiliate for actual costs incurred. Reimbursements paid to the Affiliate under the provisions of this agreement aggregated approximately $99,000, $113,000 and $68,600 in 1998, 1997 and 1996, respectively. NOTE RECEIVABLE FROM GENERAL PARTNER At December 31, 1998 and 1997, a non-interest bearing note receivable of $10,000 was due from the general partner for their initial partnership capital contribution. DEBT PLACEMENT FEES During 1997 and 1995, the Partnership issued notes payable to an affiliate of the general partner for payment of debt placement fees of $97,500 and $102,000, respectively. Debt placement fees were equal to 1% of the principal amounts of the new third party financing. F-12 30 INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARIES A CALIFORNIA LIMITED PARTNERSHIP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1998 AND 1997 - -------------------------------------------------------------------------------- At December 31, 1998 and 1997, the aggregate balances of these notes were $72,640 and $113,000, respectively (See Note 6). SUBORDINATED REAL ESTATE BROKERAGE COMMISSIONS If the general partner, or any of its affiliates, render services in negotiating and implementing the sale of Partnership properties, the general partner or such affiliates will be paid a real estate brokerage commission in an amount up to one-half of the commission customarily charged in arm's-length transactions but not in excess of 3% of the contract price for the property. Payment of such commission (other than payments in the form of promissory notes that are subordinated to the return of capital contributions to limited partners) shall be deferred until the limited partners have received distributions equal to their total original invested capital, plus the 10% Preferred Return described in Note 5. No properties were sold in 1998, 1997 or 1996 and, accordingly, no brokerage commissions were paid by the Partnership. 8. LOSS PER LIMITED PARTNERSHIP UNIT DISCLOSURES: In accordance with the disclosure requirements of SFAS 128, a reconciliation of the numerator and denominator of basic and diluted EPS is provided as follows:
YEAR ENDED DECEMBER 31, --------------------------------------------- 1997 1997 1996 --------- --------- --------- Numerator - basic and diluted EPS: Net loss $(183,428) $(371,386) $(486,528) Denominator - basic and diluted EPS: Weighted average limited partnership units 26,926 26,926 26,926 --------- --------- --------- Basic and diluted loss per limited Partnership unit $ (6.81) $ (13.79) $ (18.06) ========= ========= =========
F-13 31 SCHEDULE III INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARIES A CALIFORNIA LIMITED PARTNERSHIP SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION FOR THE YEAR ENDED DECEMBER 31, 1998 - --------------------------------------------------------------------------------
NET CHANGE GROSS AMOUNT AT WHICH INITIAL COST SUBSEQUENT TO ACQUISITION CARRIED AT CLOSE OF PERIOD ---------------------------- ------------------------------ ----------------------------- BUILDINGS AND BUILDINGS AND BUILDINGS AND ENCUMBRANCES LAND IMPROVEMENTS LAND IMPROVEMENTS LAND IMPROVEMENTS ------------ ------------ ------------- ------------ ------------- ------------ ------------- Shadowridge Meadows $ 9,742,751 $ 3,294,260 $ 9,821,589 $ (400,000) $ (951,815) $ 2,894,260 $ 8,869,774 Mission Park 10,022,451 4,484,105 13,490,802 (300,000) (597,335) 4,184,105 12,893,467 ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ 19,765,202 $ 7,778,36 $ 23,312,391 $ (700,000) $ (1,549,150) $ 7,078,365 $ 21,763,241 ============ =========== ============ ============ ============ ============ ============
LIFE ON WHICH DEPRECIATION IN ACCUMULATED DATE OF DATE LATEST STATEMENTS TOTAL DEPRECIATION CONSTRUCTION ACQUIRED IS COMPUTED ------------ ------------ ------------ --------- ----------------- Shadowridge Meadows $ 11,764,034 $ 3,566,541 Jan. 1988 Nov. 1988 27.5 years Mission Park 17,077,572 5,878,779 May 1989 Aug. 1989 27.5 years ------------ ------------ $ 28,841,606 $ 9,445,320 ============ ============
(a) Reconciliation of total real estate carrying value for the three years ended December 31, 1998:
1998 1997 1996 ----------- ----------- ----------- Balance at beginning of year $28,685,443 $28,433,411 $28,389,029 Acquisitions 156,163 252,032 44,382 ----------- ----------- ----------- Balance at end of year $28,841,606 $28,685,443 $28,433,411 =========== =========== ===========
(b) Reconciliation of accumulated depreciation for the three years ended December 31, 1998:
1998 1997 1996 ---------- ---------- ---------- Balance at beginning of year $8,582,492 $7,745,530 $6,935,310 Expense 862,828 836,962 810,220 ---------- ---------- ---------- Balance at end of year $9,445,320 $8,582,492 $7,745,530 ========== ========== ==========
F-14 EX-27.6 2 EXHIBIT 27.6
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS FILED WITH THE REGISTRANT'S FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. YEAR DEC-31-1998 DEC-31-1998 449,909 0 0 0 0 472,651 28,841,606 (9,445,320) 20,513,981 567,693 19,579,523 0 0 0 366,765 20,513,981 0 4,148,324 0 1,928,765 914,095 0 1,488,893 (183,429) 0 0 0 0 0 (183,429) (6.81) (6.81)
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