<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the period ended June 30, 1995
---------------------------------------------------------
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: 0-12946
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First Capital Income Properties, Ltd. - Series IX
--------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 59-2255857
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Two North Riverside Plaza, Suite 950, Chicago, Illinois 60606-2607
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(Address of principal executive offices) (Zip Code)
(312) 207-0020
--------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Not applicable
--------------------------------------------------------------------------------
(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 such filing
requirements for the past 90 days. Yes X No
--- ---
Documents incorporated by reference:
The First Amended and Restated Agreement of Limited Partnership filed as Exhibit
A to the Partnership's Prospectus dated May 24, 1983, included in the
Partnership's Registration Statement on Form S-11, is incorporated herein by
reference in Part I of this report.
<PAGE>
BALANCE SHEETS
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
June 30,
1995 December 31,
(Unaudited) 1994
-------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investment in commercial rental properties:
Land $ 15,722,900 $ 15,722,900
Buildings and improvements 63,041,400 61,904,700
-------------------------------------------------------------------------------
78,764,300 77,627,600
Accumulated depreciation and amortization (15,826,200) (14,695,200)
-------------------------------------------------------------------------------
Total investment properties, net of accumulated
depreciation and amortization 62,938,100 62,932,400
Cash and cash equivalents 16,529,700 15,085,400
Rents receivable 612,300 671,600
Escrow deposits 34,800
Other assets (primarily loan acquisition costs net
of accumulated amortization of $95,200 and
$78,400, respectively) 409,000 249,400
-------------------------------------------------------------------------------
$ 80,523,900 $ 78,938,800
-------------------------------------------------------------------------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgage loans payable $ 8,275,200 $ 6,650,000
Accounts payable and accrued expenses 1,228,300 1,213,300
Distributions payable 944,400 722,200
Due to Affiliates 114,900 125,200
Security deposits 137,900 128,800
Other liabilities 136,000 147,000
-------------------------------------------------------------------------------
10,836,700 8,986,500
-------------------------------------------------------------------------------
Partners' (deficit) capital:
General Partner
Limited Partners (100,000 Units authorized, issued
and outstanding) 69,687,200 69,952,300
-------------------------------------------------------------------------------
69,687,200 69,952,300
-------------------------------------------------------------------------------
$ 80,523,900 $ 78,938,800
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</TABLE>
STATEMENTS OF PARTNERS' CAPITAL
For the six months ended June 30, 1995
and the year ended December 31, 1994
(Unaudited)
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Partners' (deficit) capital, January 1,
1994 $ (41,300) $ 60,842,000 $ 60,800,700
Net income for the year ended
December 31, 1994 269,100 19,160,300 19,429,400
Distributions for the year ended
December 31, 1994 (227,800) (10,050,000) (10,277,800)
-------------------------------------------------------------------------------
Partners' capital, December 31, 1994 0 69,952,300 69,952,300
Net income for the six months ended
June 30, 1995 183,300 1,384,900 1,568,200
Distributions for the six months ended
June 30, 1995 (183,300) (1,650,000) (1,833,300)
-------------------------------------------------------------------------------
Partners' capital, June 30, 1995 $ 0 $ 69,687,200 $ 69,687,200
-------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
STATEMENTS OF INCOME AND EXPENSES
For the quarters ended June 30, 1995 and 1994
(Unaudited)
(All dollars rounded to nearest 00s
except per Unit amounts)
<TABLE>
<CAPTION>
1995 1994
------------------------------------------------------------------------------
<S> <C> <C>
Income:
Rental $2,680,900 $ 3,178,200
Interest 255,200 405,700
Gain on sale of property 18,028,700
------------------------------------------------------------------------------
2,936,100 21,612,600
------------------------------------------------------------------------------
Expenses:
Interest 223,400 611,000
Depreciation and amortization 574,600 717,500
Property operating:
Affiliates 170,200 210,900
Nonaffiliates 565,300 641,400
Real estate taxes 224,100 485,300
Insurance--Affiliate 13,000 47,900
Repairs and maintenance 291,800 346,700
General and administrative:
Affiliates 10,700 14,600
Nonaffiliates 87,500 69,100
------------------------------------------------------------------------------
2,160,600 3,144,400
------------------------------------------------------------------------------
Net Income before extraordinary (loss) on early
extinguishments of debt 775,500 18,468,200
Extraordinary (loss) on early extinguishments of debt (1,151,600)
------------------------------------------------------------------------------
Net income $ 775,500 $17,316,600
------------------------------------------------------------------------------
Net income allocated to General Partners $ 94,400 $ 74,600
------------------------------------------------------------------------------
Net income allocated to Limited Partners $ 681,100 $17,242,000
------------------------------------------------------------------------------
Net Income before extraordinary (loss) on early
extinguishments of debt allocated to Limited
Partners per Unit (100,000 Units authorized, issued
and outstanding) $ 7.76 $ 183.58
------------------------------------------------------------------------------
Net income allocated to Limited Partners per Unit
(100,000 Units authorized, issued and outstanding) $ 6.81 $ 172.42
------------------------------------------------------------------------------
</TABLE>
STATEMENTS OF INCOME AND EXPENSES
For the six months ended June 30, 1995 and 1994
(Unaudited)
(All dollars rounded to nearest 00s
except per Unit amounts)
<TABLE>
<CAPTION>
1995 1994
------------------------------------------------------------------------------
<S> <C> <C>
Income:
Rental $5,335,100 $ 7,536,700
Interest 489,700 463,800
Gain on sale of property 18,028,700
------------------------------------------------------------------------------
5,824,800 26,029,200
------------------------------------------------------------------------------
Expenses:
Interest 456,200 1,629,200
Depreciation and amortization 1,147,800 1,615,700
Property operating:
Affiliates 355,000 373,700
Nonaffiliates 966,600 1,311,200
Real estate taxes 484,700 954,800
Insurance--Affiliate 53,400 95,800
Repairs and maintenance 583,800 754,700
General and administrative:
Affiliates 34,800 21,700
Nonaffiliates 174,300 136,600
------------------------------------------------------------------------------
4,256,600 6,893,400
------------------------------------------------------------------------------
Net Income before extraordinary (loss) on early
extinguishments of debt 1,568,200 19,135,800
Extraordinary (loss) on early extinguishments of debt (1,151,600)
------------------------------------------------------------------------------
Net income $1,568,200 $17,984,200
------------------------------------------------------------------------------
Net income allocated to General Partners $ 183,300 $ 141,400
------------------------------------------------------------------------------
Net income allocated to Limited Partners $1,384,900 $17,842,800
------------------------------------------------------------------------------
Net Income before extraordinary (loss) on early
extinguishments of debt allocated to Limited
Partners per Unit (100,000 Units authorized, issued
and outstanding) $ 15.68 $ 189.91
------------------------------------------------------------------------------
Net income allocated to Limited Partners per Unit
(100,000 Units authorized, issued and outstanding) $ 13.85 $ 178.43
------------------------------------------------------------------------------
</TABLE>
STATEMENTS OF CASH FLOWS
For the six months ended June 30, 1995 and 1994
(Unaudited)
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
1995 1994
------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,568,200 $17,984,200
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,147,800 1,615,700
Extraordinary loss on early extinguishments of
debt 1,151,600
Gain on sale of property (18,028,700)
Changes in assets and liabilities:
Decrease in rents receivable 59,300 219,700
(Increase) in restricted cash (60,400)
(Increase) in other assets (106,500) (4,400)
Increase in accounts payable and accrued expenses 15,000 512,200
(Decrease) in due to Affiliates (10,300) (89,900)
(Decrease) in other liabilities (11,000) (181,800)
------------------------------------------------------------------------------
Net cash provided by operating activities 2,662,500 3,118,200
------------------------------------------------------------------------------
Cash flows from investing activities:
Proceeds from sale of commercial rental property 46,646,000
Payments for capital and tenant improvements (1,136,700) (1,052,600)
(Increase) decrease in escrow deposits (34,800) 94,300
Maturity of restricted certificate of deposit 75,000
------------------------------------------------------------------------------
Net cash (used for) provided by investing
activities (1,171,500) 45,762,700
------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from issuance of mortgage loan 8,500,000
Principal payments on mortgage loans payable (6,874,800) (37,450,100)
Distributions paid to Partners (1,611,100) (8,444,500)
Loan acquisition costs incurred (69,900)
Prepayment costs on mortgage loans (1,151,600)
Decrease (increase) in security deposits 9,100 (5,000)
------------------------------------------------------------------------------
Net cash (used for) financing activities (46,700) (47,051,200)
------------------------------------------------------------------------------
Net increase in cash and cash equivalents 1,444,300 1,829,700
Cash and cash equivalents at the beginning of the
period 15,085,400 19,160,900
------------------------------------------------------------------------------
Cash and cash equivalents at the end of the period $16,529,700 $20,990,600
------------------------------------------------------------------------------
Supplemental information:
Interest paid during the period $ 506,200 $ 1,706,100
------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
DEFINITION OF SPECIAL TERMS:
Capitalized terms used in this report have the same meaning as those terms have
in the Partnership's Registration Statement on Form S-11, filed with the
Securities and Exchange Commission. Definitions of these terms are contained in
Article III of the First Amended and Restated Certificate and Agreement of
Limited Partnership, which is incorporated herein by reference.
ACCOUNTING POLICIES:
The financial statements have been prepared in accordance with generally
accepted accounting principles. Under this method of accounting, revenues are
recorded when earned and expenses are recorded when incurred.
The financial information included in these financial statements is unaudited;
however, in management's opinion, all adjustments (consisting of only normal,
recurring accruals) necessary for a fair presentation of the results of
operations for the periods included have been made. Results of operations for
the quarter and six months ended June 30, 1995, are not necessarily indicative
of the operating results for the year ending December 31, 1995.
The 1994 financial statements include the Partnership's 50% ownership interest
in three joint ventures, one of which owned the El Paso Natural Gas Building
("El Paso"), prior to its sale on April 6, 1994. The Financial Statements also
include the Partnership's ownership interest in the Triangle Building
("Triangle"), prior to its sale on June 10, 1994. The joint ventures are
operated under the common control of the Managing General Partner. Accordingly,
the Partnership's pro rata share of the ventures' revenues, expenses, assets
and liabilities is included in the financial statements.
Property sales are recorded when title transfers and sufficient consideration
has been received by the Partnership. Upon disposition, the related costs and
accumulated depreciation are removed from the respective accounts. Any gain or
loss is recognized in accordance with generally accepted accounting principles.
Cash equivalents are defined as all highly liquid investments purchased with a
maturity of three months or less.
Certain reclassifications have been made to the previously reported 1994
statements in order to provide comparability with the 1995 statements. These
reclassifications have no effect on net income or Partners' capital.
Reference is made to the Partnership's annual report for the year ended
December 31, 1994, for a description of other accounting policies and
additional details of the Partnership's financial condition, results of
operations, changes in Partners' capital and changes in cash balances for the
year then ended. The details provided in the notes thereto have not changed
except as a result of normal transactions in the interim or as otherwise
disclosed herein.
2. RELATED PARTY TRANSACTIONS:
Subsequent to October 31, 1983, the Termination of the Offering, the General
Partners are entitled to 10% of Cash Flow (as defined by the Partnership
Agreement) as a Partnership Management Fee. In accordance with the Partnership
Agreement, Net Profits (exclusive of Net Profits from the sale or disposition
of a Partnership property) shall be allocated to the General Partners in an
amount equal to the greater of the General Partners' Partnership Management Fee
or 1% of such Net Profits and the balance, if any, to the Unit Holders.
Notwithstanding, in all events there shall be allocated to the General Partners
not less than 1% of Net Profits and Net Losses from the sale or disposition of
a Partnership property. For the quarter and six months ended June 30, 1995, the
General Partners were allocated distributable Cash Flow (as defined by the
Partnership Agreement) and, accordingly, Net Profits from operations of
approximately $94,400 and $183,300, respectively.
Fees and reimbursement paid and payable by the Partnership to Affiliates during
the quarter and six months ended June 30, 1995 were as follows:
<TABLE>
<CAPTION>
Paid
-------------------
Quarter Six Months Payable
------------------------------------------------------------------------------
<S> <C> <C> <C>
Property management and leasing fees $191,500 $332,100 $ 60,600
Reimbursement of property insurance premiums, at
cost 53,400 53,400 None
Real estate commissions (a) None None 48,500
Reimbursement of expenses, at cost:
(1) Accounting 5,500 13,900 4,200
(2) Investor communication 2,300 6,500 1,600
(3) Legal 58,400 85,600 None
------------------------------------------------------------------------------
$311,100 $491,500 $114,900
------------------------------------------------------------------------------
</TABLE>
(a) As of June 30, 1995, the Partnership owed $48,500 to the Managing General
Partner for a real estate commission earned in connection with the sale of
a Partnership property. This commission has been accrued but not paid.
Under the terms of the Partnership Agreement, this fee will not be paid
until the Limited Partners have received cumulative distributions of Sale
or Refinancing Proceeds equal to 100% of their Original Capital
Contribution, plus a cumulative return (including all Cash Flow which has
been distributed to the Unit Holders) of 6% simple interest per annum on
their Capital Investment from the initial date of investment.
Firstate Financial A Savings Bank, ("Firstate") an Affiliate of the Managing
General Partner, is obligated to the Partnership under a lease of office space
at the Citrus Center. The lease expires in February, 2002. For the quarter and
six months ended June 30, 1995, Firstate paid approximately $58,400 and
$116,900 in total rents, respectively.
3. MORTGAGE LOAN PAYABLE:
On January 6, 1995, Indianapolis Mall Associates, the joint venture which owns
Glendale Center Shopping Mall, obtained a new mortgage loan in the amount of
$17,000,000 secured by this property. The Partnership's share of the new loan
amount was $8,500,000. The existing loan was paid off in full with the proceeds
from the new loan. The interest rate on the new loan is variable at Libor plus
4.5% with interest payable monthly. The maturity date of the new loan is
January 1, 1999. Monthly payments of principal are to be made based on an 11-
year amortization and an interest rate of 9.5%. In addition, the joint venture
must pay annually additional principal amortization equal to 50% of all cash
flow from the property for each prior calender year. As of June 30, 1995 the
Partnership's share of the outstanding mortgage loan balance was $8,275,200.
4
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Reference is made to the Partnership's annual report for the year ended
December 31, 1994, for a discussion of the Partnership's business.
OPERATIONS
The table below is a recap of certain operating results of each of the
Partnership's properties for the quarters and six months ended June 30, 1995
and 1994. The discussion following the table should be read in conjunction with
the Financial Statements and Notes thereto appearing in this report.
<TABLE>
<CAPTION>
Comparative Operating Results (a)
For the Quarters
Ended For the Six Months Ended
6/30/95 6/30/94 6/30/95 6/30/94
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CITRUS CENTER
Rental revenues $1,142,200 $1,057,200 $ 2,296,200 $ 2,200,600
-------------------------------------------------------------------------------
Property net income (b) $ 218,400 $ 117,200 $ 555,400 $ 239,300
-------------------------------------------------------------------------------
Average occupancy 97.4% 84.7% 96.5% 83.8%
-------------------------------------------------------------------------------
GLENDALE CENTER SHOPPING MALL
Rental revenues $ 846,400 $ 849,100 $ 1,709,500 $ 1,737,100
-------------------------------------------------------------------------------
Property net (loss) income $ (10,400) $ 81,500 $ (8,700) $ 204,400
-------------------------------------------------------------------------------
Average occupancy 91.9% 85.8% 92.1% 85.6%
-------------------------------------------------------------------------------
SHOPPES OF WEST MELBOURNE
Rental revenues $ 342,200 $ 314,200 $ 650,800 $ 643,300
-------------------------------------------------------------------------------
Property net income $ 195,500 $ 120,100 $ 353,000 $ 247,500
-------------------------------------------------------------------------------
Average occupancy 95.5% 93.0% 94.2% 93.5%
-------------------------------------------------------------------------------
RICHMOND PLAZA SHOPPING CENTER
Rental revenues $ 344,400 $ 314,100 $ 672,900 $ 590,500
-------------------------------------------------------------------------------
Property net income $ 188,400 $ 168,200 $ 361,900 $ 308,000
-------------------------------------------------------------------------------
Average occupancy 97.4% 90.7% 96.5% 90.7%
-------------------------------------------------------------------------------
EL PASO NATURAL GAS BUILDING (C)
Rental revenues $ 62,700 $ 1,003,400
-------------------------------------------------------------------------------
Property net income $ 19,900 $ 325,500
-------------------------------------------------------------------------------
Average occupancy 100.0% 100.0%
-------------------------------------------------------------------------------
TRIANGLE BUILDING (D)
Rental revenues $ 136,400 $ 368,500
-------------------------------------------------------------------------------
Property net (loss) $ (53,400) $ (60,600)
-------------------------------------------------------------------------------
Average occupancy 86.3% 86.6%
-------------------------------------------------------------------------------
FASHION ATRIUM BUILDING (E)
Rental revenues $ 444,500 $ 993,300
-------------------------------------------------------------------------------
Property net (loss) $ (335,600) $ (440,400)
-------------------------------------------------------------------------------
Average occupancy 72.0% 70.9%
-------------------------------------------------------------------------------
</TABLE>
(a) The above table excludes certain income and expense items which are either
not directly related to individual property operating results such as
interest income and general and administrative expenses or are related to
properties previously owned by the Partnership.
(b) Excludes an extraordinary loss on early extinguishment of debt of
approximately $237,300 for the quarter and six months ended June 30, 1994.
(c) El Paso Natural Gas Building was sold on April 6, 1994. The property net
income excludes gain on sale of approximately $18,964,600 and prepayment
penalty of approximately ($914,300) which was included as an extraordinary
loss on early extinguishments of debt on the Statements of Income and
Expenses for the quarter and six months ended June 30, 1994.
(d) Triangle Building was sold on June 10, 1994. The property net (loss)
excludes a loss on the sale of the property of ($935,900) which was
included in the Statements of Income and Expenses for the quarter and six
months ended June 30, 1994.
(e) On December 9, 1994 the Fashion Atrium Building was disposed of through the
orderly conveyance of title to the mortgage holder.
Net income for the Partnership for the quarter and six months ended June 30,
1995 decreased $16,541,100 and $16,416,000, respectively, when compared to the
quarter and six months ended June 30, 1994. The decreases are primarily due to
the sales of El Paso Natural Gas Building ("El Paso") on April 6, 1994 and
Triangle Building ("Triangle") on June 10, 1994, the extraordinary loss on
early extinguishments of debt for Citrus Center and El Paso, and the
disposition of the Fashion Atrium Building ("Fashion Atrium") on December 9,
1994. For further discussion regarding the gain, loss and early extinguishments
of debt see notes (c) and (d) to the above table. The sales and disposition of
these properties accounted for the significant decreases in rental income,
interest expense, property operating expenses, depreciation and amortization
expense, real estate tax expense, insurance expense and repairs and
maintenance, accordingly, the comparison of operating results between periods
is complicated.
Net income, exclusive of all sold and disposed of properties, increased
$204,800 or 36.6% and $522,900 or 50%, respectively, for the quarter and six
month periods under comparison. The increase in net income was primarily due
to: 1) improved operating results at Citrus Center, Shoppes of West Melbourne
("Shoppes") and Richmond Plaza Shopping Center ("Richmond") totaling
approximately $196,900 and $475,400, respectively, for the quarter and six
month ended June 30, 1995 when compared to 1994; 2) increased interest income
of $27,600 for the six months ended June 30, 1995 when compared to the six
months ended June 30, 1994 and 3) the fact that 1994 net income included an
extraordinary loss on early extinguishment of debt of $237,300 related to the
mortgage previously collateralizing Citrus Center. Partially offsetting the
increase in net income was: 1) decreased operating results at Glendale Center
Shopping Mall ("Glendale") of $91,900 and $213,100, respectively, for the
quarter and six month periods under comparison; 2) decreased interest income of
$148,800 for the quarter ended June 30, 1995 when compared to the quarter ended
June 30, 1994; and 3) increased general and administrative expenses of $14,300
and $51,100, respectively, for the quarterly and six month periods under
comparison due to an increase in professional fees and printing and mailing
costs.
For purposes of the following comparative discussion, the operating results of
Fashion Atrium, El Paso and Triangle have been excluded.
Rental revenues increased by approximately $146,200 or 5.8% and $163,600 or
3.2%, respectively, for the quarter and six months ended June 30, 1995 when
compared to the quarter and six months ended June 30, 1994. The primary factor
which caused the increase in rental revenues was an increase in the average
occupancy at Citrus Center, Richmond and Shoppes. Partially offsetting the
increase was a decrease in rental revenues at Glendale primarily due to a
decrease in tenant expense reimbursements for common area costs and real estate
tax escalations and a decrease in other rental income, slightly offset by an
increase in percentage rents.
The increase in interest income of $27,600 or 5.6% for the six months ended
June 30, 1995 when compared to the six months ended June 30, 1994 was primarily
due to an increase in rates available on the Partnership's short-term
investments. Although the rates available for the Partnership were also greater
for the quarter ended June 30, 1995 when compared to the quarter ended June 30,
1994, the interest income decreased $148,800 or 37.1%. This decrease was due to
the fact that the Partnership had a significant amount of cash available for
investment for the quarter ended June 30, 1994 prior to the distribution of a
portion of the Sales Proceeds from El Paso and the repayment of the mortgage
loans collateralized by Citrus Center and Shoppes.
Interest expense decreased by approximately $105,500 or 32.1% and $286,200 or
38.6%, respectively, for the comparable periods. The decrease in interest
expense was primarily the result of the payoffs in 1994 of the mortgage loans
collateralized by Citrus Center and Shoppes, partially offset by the increase
in interest expense at Glendale. Although the average outstanding principal
balance on the Glendale mortgage is lower in 1995 when compared to 1994, the
interest expense increased due to an increase in the interest rate.
Property operating expenses increased by approximately $107,300 or 17.1% and
$88,200 or 7.1%, respectively, for the comparable periods. The increase in
property operating expenses was primarily due to: 1) increased professional
fees at Richmond, Shoppes and Citrus; 2) increased utilities at Citrus Center
and 3) increased management fees (computed at a rate not to exceed 6% of the
gross receipts of the property) and salaries at Richmond. Partially offsetting
the increases were decreases in utilities, management and leasing fees and
professional fees at Glendale.
Insurance expense decreased by approximately $26,900 or 67.4% and $26,300 or
33%, respectively, for the quarter and six months ended June 30, 1995, when
compared to the prior year periods. These decreases were primarily due to lower
group rates on the Partnership's combined insurance coverage as a result of a
minimal amount of claims made over the past several years, which provided a
good loss experience relative to the Partnership's properties.
5
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Repairs and maintenance expense increased approximately $27,400 or 10.30% and
$17,000 or 3%, respectively, for the quarter and six months ended June 30,
1995 when compared to the quarter and six months ended June 30, 1994. The
primary factors which caused the increase were increased personnel costs at
Glendale and Citrus Center and increased professional fees at Richmond
associated with space planning for potential new and renewing tenants.
To increase and or maintain occupancy levels at the Partnership's properties,
the Managing General Partner, through its Affiliated asset and property
management groups, continues to take the necessary actions deemed appropriate
for the properties discussed above. Some of these actions include: 1)
implementation of marketing programs, including hiring of third-party leasing
agents or providing on-site leasing personnel, advertising, direct mail
campaigns and development of building brochures; 2) early renewal of existing
tenants and addressing any expansion needs these tenants may have; 3)
promotion of local broker events and networking with local brokers; 4)
networking with national level retailers; 5) cold-calling other businesses and
tenants in the market area and 6) providing rental concessions or
competitively pricing rental rates depending on market conditions.
LIQUIDITY AND CAPITAL RESOURCES
One of the Partnership's objectives is to dispose of its properties when
market conditions allow for the achievement of the maximum possible sales
price. In the interim, the Partnership continues to manage and maintain its
four remaining properties. Notwithstanding the Partnership's intention
relative to property sales, another primary objective of the Partnership is to
provide cash distributions to Limited Partners from Partnership operations. To
the extent cumulative cash distributions exceed net income, such excess
distributions will be treated as a return of capital. Cash Flow (as defined in
the Partnership Agreement) is generally not equal to Partnership net income or
cash flows as defined by generally accepted accounting principles ("GAAP"),
since certain items are treated differently under the Partnership Agreement
than under GAAP. Management believes that to facilitate a clear understanding
of the Partnership's operations, an analysis of Cash Flow (as defined by the
Partnership Agreement) should be examined in conjunction with an analysis of
net income or cash flows as defined by GAAP. The following table includes a
reconciliation of Cash Flow (as defined by the Partnership Agreement) to cash
flow provided by operating activities as determined by GAAP and are not
indicative of actual distributions to Partners and should not necessarily be
considered as an alternative to the results disclosed in the Statements of
Income and Expenses and Cash Flow.
<TABLE>
<CAPTION>
Comparative Cash Flow Results
For the Six Months Ended
6/30/95 6/30/94
----------------------------------------------------------------------------
<S> <C> <C>
Amount of Cash Flow (as defined in the
Partnership Agreement) $ 2,491,200 $ 2,363,700
Items of reconciliation:
Principal payments on mortgage loans 224,800 359,100
(Increase) decrease in current assets (47,200) 154,900
(Decrease) increase in current liabilities (6,300) 240,500
----------------------------------------------------------------------------
Net cash provided by operating activities $ 2,662,500 $ 3,118,200
----------------------------------------------------------------------------
Net cash (used for) provided by investing
activities $ (1,171,500) $ 45,762,700
----------------------------------------------------------------------------
Net cash (used for) financing activities $ (46,700) $ (47,051,200)
----------------------------------------------------------------------------
</TABLE>
The increase in Cash Flow (as defined by the Partnership Agreement) of
approximately $127,500 for the six months ended June 30, 1995 when compared to
six months ended June 30, 1994 was primarily due to the increase in net
income, as previously discussed, exclusive of depreciation and amortization,
and decreased principal payments due to the absence in 1995 of principal
payments on the mortgage loans previously collateralized by El Paso and Citrus
Center.
The increase in the Partnership's cash position as of June 30, 1995 when
compared to December 31, 1994 was primarily the result of cash provided by
operating activities and net refinancing proceeds exceeding payments made for
capital and tenant improvements and distributions paid to Partners. Liquid
assets of the Partnership as of June 30, 1995 are comprised of amounts held
for working capital purposes.
The decrease in net cash provided by operating activities for the six months
ended June 30, 1995 when compared to the six months ended June 30, 1994 was
primarily due to the increase in other assets resulting from an increase in
tenant loans receivable at Citrus Center.
Net cash provided by (used for) investing activities changed from $45,762,700
for the six months ended June 30, 1994 to ($1,171,500) for the six months
ended June 30, 1995. This change was primarily due to proceeds received of
$46,646,000 from the sale of El Paso and the release of the restricted
certificate of deposit established in connection with the El Paso refinancing
completed in 1993, partially offset by an increase in payments for capital and
tenant improvements and to a lesser extent to an increase in escrow deposits.
During the six months ended June 30, 1995, the Partnership spent $1,136,700
for building and tenant improvements and has budgeted to spend an additional
$1,960,000 during the remainder of 1995. Of the remaining budgeted amount,
approximately $880,000, $560,000 and $500,000 relates to anticipated capital
and tenant improvements and leasing costs expected to be incurred at Glendale,
Citrus Center and Shoppes, respectively. The Managing General Partner believes
these expenditures are necessary to maintain occupancy levels in very
competitive markets and ready the remaining properties for ultimate
disposition.
The decrease in net cash (used for) financing activities for the six months
ended June 30, 1995 when compared to the six months ended June 30, 1994 was
due primarily the 1994: 1) payoff of mortgage loans collateralized by El Paso,
Citrus Center and Shoppes, including prepayment penalties; 2) the partial
principal paydowns on the mortgage loan collateralized by Glendale and 3)
distribution of Sale Proceeds to Partners from El Paso. Partially offsetting
the decrease was the refinancing of the mortgage loan collateralized by
Glendale and to a lesser extent an increase in security deposits. On January
6, 1995, Indianapolis Mall Associates, the joint venture which owns Glendale,
obtained a new mortgage loan in the amount of $17,000,000 secured by Glendale.
The Partnership's share of the new loan amount was $8,500,000. The existing
loan was paid off in full with the proceeds from the new loan. The total cash
received by the Partnership in connection with this new loan was $1,780,100,
which was net of $69,900 in loan acquisition costs, and was added to the
Partnership's working capital.
The Managing General Partner continues to take a conservative approach to
projections of future rental income and to maintain higher levels of cash
reserves due to the anticipated capital and tenant improvements necessary to
be made at the Partnership's properties during the next several years. As a
result of this, cash continues to be retained to supplement working capital
reserves. Cash Flow (as defined by the Partnership Agreement) retained to
supplement working capital reserves approximated $657,900 for the six months
ended June 30, 1995.
Distributions to Limited Partners for the quarter ended June 30, 1995 were
declared in the amount of $8.50 per Unit. Cash distributions are made 60 days
after quarter end. The amount of future distributions to Limited Partners will
ultimately be dependent upon the performance of the Partnership's investments,
as well as the amount of cash retained in the future to supplement working
capital reserves. Accordingly, there can be no assurance of the availability
of cash for distribution to Partners.
6
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: Financial Data Schedule
(b) Reports on Form 8-K:
There were no reports filed on Form 8-K during the quarter ended June
30, 1995.
<PAGE>
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.
FIRST CAPITAL INCOME PROPERTIES, LTD. - SERIES IX
BY: FIRST CAPITAL FINANCIAL CORPORATION
MANAGING GENERAL PARTNER
Date: August 14, 1995 By: /s/ DOUGLAS CROCKER II
--------------------------------------
DOUGLAS CROCKER II
President and Chief Executive Officer
Date: August 14, 1995 By: /s/ NORMAN M. FIELD
--------------------------------------
NORMAN M. FIELD
Vice President - Finance and Treasurer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0000716297
<NAME> First Capital Income Properties - Series IX
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 16,529,700
<SECURITIES> 0
<RECEIVABLES> 612,300
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 17,142,000
<PP&E> 78,764,300
<DEPRECIATION> 15,826,200
<TOTAL-ASSETS> 80,523,900
<CURRENT-LIABILITIES> 2,239,100
<BONDS> 8,275,200
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0
0
<OTHER-SE> 69,687,200
<TOTAL-LIABILITY-AND-EQUITY> 80,523,900
<SALES> 0
<TOTAL-REVENUES> 5,824,800
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<TOTAL-COSTS> 2,443,500
<OTHER-EXPENSES> 209,100
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<INCOME-PRETAX> 1,568,200
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<NET-INCOME> 1,568,200
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