<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 September 30, 1996
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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
--------------------------------------------------
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
- ------------------------------------------------------- --------------
(Address of principal executive offices) (Zip Code)
(312) 207-0020
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(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 Certificate and 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>
September 30,
1996 December 31,
(Unaudited) 1995
- -----------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investment in commercial rental properties:
Land $12,472,900 $ 12,472,900
Buildings and improvements 59,280,400 58,832,000
- -----------------------------------------------------------------------------
71,753,300 71,304,900
Accumulated depreciation and amortization (18,834,900) (17,073,500)
- -----------------------------------------------------------------------------
Total investment properties, net of accumulated
depreciation and amortization 52,918,400 54,231,400
Cash and cash equivalents 9,207,300 15,524,300
Investments in debt securities 6,923,900
Rents receivable 701,700 708,300
Escrow deposits 62,300 71,200
Other assets (including loan acquisition costs,
net of accumulated amortization of $144,500 and
$115,000, respectively) 280,000 358,900
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$70,093,600 $ 70,894,100
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LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgage loan payable $ 7,513,600 $ 8,039,400
Accounts payable and accrued expenses 1,401,800 1,034,800
Due to Affiliates 101,800 17,200
Distributions payable 1,166,600 1,055,600
Security deposits 142,800 147,200
Other liabilities 4,700 145,100
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10,331,300 10,439,300
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Partners' capital:
General Partners (deficit) (90,000) (90,000)
Limited Partners (100,000 units issued and
outstanding) 59,852,300 60,544,800
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59,762,300 60,454,800
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$70,093,600 $ 70,894,100
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</TABLE>
STATEMENTS OF PARTNERS' CAPITAL
For the nine months ended September 30, 1996 (Unaudited) and the year ended
December 31, 1995
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Partners' capital, January 1, 1995 $ 0 $69,952,300 $69,952,300
Net income (loss) for the year ended
December 31, 1995 298,900 (5,907,500) (5,608,600)
Distributions for the year ended
December 31, 1995 (388,900) (3,500,000) (3,888,900)
- -----------------------------------------------------------------------------
Partners' (deficit) capital,
December 31, 1995 (90,000) 60,544,800 60,454,800
Net income for the nine months ended
September 30, 1996 344,400 2,407,500 2,751,900
Distributions for the nine months ended
September 30, 1996 (344,400) (3,100,000) (3,444,400)
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Partners' (deficit) capital,
September 30, 1996 $ (90,000) $59,852,300 $59,762,300
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</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
STATEMENTS OF INCOME AND EXPENSES
For the quarters ended September 30, 1996 and 1995
(Unaudited)
(All dollars rounded to nearest 00s
except per Unit amounts)
<TABLE>
<CAPTION>
1996 1995
- ------------------------------------------------------------------------
<S> <C> <C>
Income:
Rental $2,765,200 $2,726,600
Interest 218,300 234,800
- ------------------------------------------------------------------------
2,983,500 2,961,400
- ------------------------------------------------------------------------
Expenses:
Interest 192,700 219,800
Depreciation and amortization 601,600 639,300
Property operating:
Affiliates 199,400 140,900
Nonaffiliates 495,300 480,600
Real estate taxes 250,500 252,400
Insurance--Affiliate 30,700 25,100
Repairs and maintenance 273,500 300,500
General and administrative:
Affiliates 13,900 30,000
Nonaffiliates 30,600 145,200
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2,088,200 2,233,800
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Net income $ 895,300 $ 727,600
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Net income allocated to General Partners $ 116,600 $ 100,000
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Net income allocated to Limited Partners $ 778,700 $ 627,600
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Net income allocated to Limited Partners per Unit
(100,000 Units outstanding) $ 7.79 $ 6.28
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</TABLE>
STATEMENTS OF INCOME AND EXPENSES
For the nine months ended September 30, 1996 and 1995
(Unaudited)
(All dollars rounded to nearest 00s
except per Unit amounts)
<TABLE>
<CAPTION>
1996 1995
- ------------------------------------------------------------------------
<S> <C> <C>
Income:
Rental $8,497,400 $8,061,700
Interest 630,500 724,500
- ------------------------------------------------------------------------
9,127,900 8,786,200
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Expenses:
Interest 588,000 676,000
Depreciation and amortization 1,790,900 1,787,100
Property operating:
Affiliates 601,600 495,900
Nonaffiliates 1,400,800 1,447,200
Real estate taxes 766,100 737,100
Insurance--Affiliate 92,200 78,500
Repairs and maintenance 870,900 884,300
General and administrative:
Affiliates 48,000 64,800
Nonaffiliates 217,500 319,500
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6,376,000 6,490,400
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Net income $2,751,900 $2,295,800
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Net income allocated to General Partners $ 344,400 $ 283,300
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Net income allocated to Limited Partners $2,407,500 $2,012,500
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Net income allocated to Limited Partners per Unit
(100,000 Units outstanding) $ 24.08 $ 20.13
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</TABLE>
STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 1996 and 1995
(Unaudited)
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
1996 1995
- -------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,751,900 $ 2,295,800
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,790,900 1,787,100
Changes in assets and liabilities:
Decrease in rents receivable 6,600 151,600
Decrease (increase) in other assets 49,400 (93,300)
Increase in accounts payable and accrued expenses 367,000 34,400
Increase (decrease) in due to Affiliates 84,600 (49,400)
(Decrease) in other liabilities (140,400) (109,000)
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Net cash provided by operating activities 4,910,000 4,017,200
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Cash flows from investing activities:
Payments for capital and tenant improvements (448,400) (2,079,500)
(Increase) in investments in debt securities (6,923,900)
Decrease (increase) in escrow deposits 8,900 (53,400)
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Net cash (used for) investing activities (7,363,400) (2,132,900)
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Cash flows from financing activities:
Proceeds from issuance of mortgage loan payable 8,500,000
Repayment of mortgage loan payable (6,650,000)
Principal payments on mortgage loan payable (525,800) (341,300)
Distributions paid to Partners (3,333,400) (2,555,500)
Loan acquisition costs incurred (69,900)
(Decrease) increase in security deposits (4,400) 7,000
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Net cash (used for) financing activities (3,863,600) (1,109,700)
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Net (decrease) increase in cash and cash equivalents (6,317,000) 774,600
Cash and cash equivalents at the beginning of the
period 15,524,300 15,085,400
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Cash and cash equivalents at the end of the period $ 9,207,300 $15,860,000
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Supplemental information:
Interest paid during the period $ 525,600 $ 726,000
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</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
September 30, 1996
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 filed with the Securities and
Exchange Commission on Form S-11. Definitions of these terms are contained in
Article III of the First Amended and Restated Certificate and Agreement of
Limited Partnership, which is included in the Registration Statement and
incorporated herein by reference.
ACCOUNTING POLICIES:
The financial statements have been prepared in accordance with generally
accepted accounting principles ("GAAP"). Under this method of accounting,
revenues are recorded when earned and expenses are recorded when incurred.
Preparation of the Partnership's financial statements in conformity with GAAP
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 the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
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 nine months ended September 30, 1996 are not necessarily
indicative of the operating results for the year ending December 31, 1996.
The financial statements include the Partnership's 50% interest in a joint
venture with an Affiliated partnership. This joint venture was formed for the
purpose of acquiring a 100% interest in certain real property and is operated
under the common control of the Managing General Partner. Accordingly, the
Partnership's pro rata share of the joint venture's revenues, expenses, assets,
liabilities and Partners' capital was included in the financial statements.
Commercial rental properties held for investment are recorded at cost, net of
any provisions for value impairment, and depreciated (exclusive of amounts, if
any, allocated to land and value impairments) on the straight-line method over
their estimated useful lives. Upon classifying a commercial rental property as
held for disposition, no depreciation or amortization of such property is
provided in the financial statements. Lease acquisition fees are recorded at
cost and amortized on the straight-line method over the life of the respective
lease. Maintenance and repair costs are expensed against operations as
incurred; expenditures for improvements are capitalized to the appropriate
property accounts and depreciated on the straight-line method over the
estimated life of such improvements.
Loan acquisition costs are amortized over the term of the mortgage loan made in
connection with the acquisition of Partnership properties or refinancing of
Partnership loans. When a property is disposed of or a loan is refinanced, the
related loan acquisition costs and accumulated amortization are removed from
the respective accounts and any unamortized balance is expensed.
During the first quarter of 1996, the Partnership adopted Financial Accounting
Standards Board Statement No. 121 "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of" (the "Standard"). The
Standard established guidance for determining if the value of defined assets is
impaired, and if so, how impairment losses should be measured and reported in
the financial statements. The Standard also addressed the accounting for long-
lived assets that are expected to be disposed of. The adoption of the Standard
did not have a material effect on the Partnership's financial statements.
Evaluation of the potential impairment of the value of the Partnership's assets
is performed on an individual property basis.
Cash equivalents are considered all highly liquid investments with maturity of
three months or less when purchased.
Investments in debt securities at September 30, 1996 are comprised of corporate
debt securities of $6,923,900 and are classified as held-to-maturity. These
investments are carried at their amortized cost basis in the financial
statements, which approximated fair market value. All of these securities had
maturities of less than one year when purchased.
Certain reclassifications have been made to the previously reported 1995
statements in order to provide comparability with the 1996 statements. These
reclassifications have no effect on net income or Partners' (deficit) capital.
Reference is made to the Partnership's annual report for the year ended
December 31, 1995 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:
In accordance with the Partnership Agreement, subsequent to October 31, 1983,
the Termination of the Offering, the General Partners are entitled to 10% of
distributable Cash Flow (as defined in the Partnership Agreement), as a
Partnership Management Fee. In addition, Net Profits (exclusive of Net Profits
from the sale or disposition of Partnership properties) are allocated: first,
to the General Partners, in an amount equal to the greater of: (A) the General
Partners' Partnership Management Fee for such fiscal year; or (B) 1% of such
Net Profits; and second, the balance, if any, to the Limited Partners. Net
Profits from the sale or disposition of a Partnership property are allocated:
first, to the General Partners and the Limited Partners with negative balances
in their capital accounts, pro rata in proportion to such respective negative
balances, to the extent of the total of such negative balances; second, to the
General Partners, in an amount necessary to make the aggregate amount of their
capital accounts equal to the greater of: (A) the Sale or Refinancing Proceeds
to be distributed to the General Partners with respect to the sale or
disposition for such property; or (B) 1% of such Net Profits; and third, the
balance, if any, to the Limited Partners. Net Losses (exclusive of Net Losses
from the sale, disposition or provision for value impairment of Partnership
properties) are allocated 1% to the General Partners and 99% to the Limited
Partners. Net Losses from the sale, disposition or provision for value
impairment of Partnership properties are allocated: first, to the General
Partners to the extent of the aggregate
4
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
balance in their capital accounts; second, to the Limited Partners and among
them (in the ratio which their respective capital account balances bear to the
aggregate of all capital account balances of the Limited Partners) until the
balance in their capital accounts shall be reduced to zero; third, the balance,
if any, 99% to the Limited Partners and 1% to the General Partners. In all
events there shall be allocated to the General Partners not less than 1% of Net
Profits and Net Losses from the sale, disposition or provision for value
impairment of a Partnership property. For the quarter and nine months ended
September 30, 1996, the General Partners were entitled to a Partnership
Management Fee, and accordingly, allocated Net Profits from operations, of
$116,600 and $344,400, respectively.
Fees and reimbursements paid and payable by the Partnership to Affiliates
during the quarter and nine months ended September 30, 1996 were as follows:
<TABLE>
<CAPTION>
Paid
--------------------
Quarter Nine Months Payable
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Property management and leasing fees $189,500 $471,900 $ 41,300
Reimbursement of property insurance premiums, at
cost 30,700 92,200 None
Real estate commission (a) None None 48,500
Reimbursement of expenses, at cost
--Accounting 5,200 23,900 8,800
--Investor communications 1,800 9,000 3,200
--Legal 26,000 58,900 None
--Other 200 8,800 None
- -------------------------------------------------------------------------------
$253,400 $664,700 $101,800
- -------------------------------------------------------------------------------
</TABLE>
(a) As of September 30, 1996, 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. In accordance with the Partnership Agreement, the Partnership will
not pay the General Partners or any Affiliates a real estate commission
from the sale of a Partnership property until 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 (as defined in the Partnership Agreement) which
has been distributed to the Limited Partners from the initial date of
investment) of 6% simple interest per annum on their Capital 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 Citrus Center. The lease expires in February, 2002. For the quarter and nine
months ended September 30, 1996, Firstate paid $62,300 and $186,900,
respectively, in total rents. The rent paid by Firstate is comparable to that
paid by other tenants at Citrus Center.
3. MORTGAGE LOAN PAYABLE:
Mortgage loan payable at September 30, 1996 and December 31, 1995 consisted of
the following non-recourse loan:
<TABLE>
<CAPTION>
Partnership's Share
of Principal Balance
at Average
Property Pledged as --------------------- Interest Maturity
Collateral 9/30/96 12/31/95 Rate (a) Date
- --------------------------------------------------------------
<S> <C> <C> <C> <C>
Glendale Center
Shopping Mall (50%) $7,513,600 $8,039,400 9.98% 1/1/99
- --------------------------------------------------------------
</TABLE>
(a) This interest rate represents the weighted average for the nine months
ended September 30, 1996. This interest rate is subject to change on a
monthly basis in accordance with the provisions of the loan agreement. As
of September 30, 1996, the interest rate on this loan was 9.97%.
For additional information regarding the mortgage loan payable, see Notes to
the Financial Statements in the Partnership's annual report for the year ended
December 31, 1995.
5
<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, 1995 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 nine months ended September 30,
1996 and 1995. 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 For the Nine Months
Ended Ended
9/30/96 9/30/95 9/30/96 9/30/95
- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
CITRUS CENTER
Rental Revenues $1,223,400 $1,186,500 $3,705,900 $3,482,700
- ----------------------------------------------------------------
Property net income $ 284,700 $ 287,500 $ 842,200 $ 842,900
- ----------------------------------------------------------------
Average Occupancy 97% 98% 98% 97%
- ----------------------------------------------------------------
GLENDALE CENTER SHOPPING MALL (50%)
Rental Revenues $ 893,700 $ 875,000 $2,736,700 $2,584,500
- ----------------------------------------------------------------
Property net income $ 78,100 $ 15,300 $ 357,900 $ 6,600
- ----------------------------------------------------------------
Average Occupancy 92% 92% 92% 92%
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SHOPPES OF WEST MELBOURNE
Rental Revenues $ 327,200 $ 340,600 $1,006,100 $ 991,400
- ----------------------------------------------------------------
Property net income $ 200,400 $ 192,700 $ 629,700 $ 545,600
- ----------------------------------------------------------------
Average Occupancy 97% 98% 95% 96%
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RICHMOND PLAZA SHOPPING CENTER
Rental Revenues $ 320,700 $ 329,300 $1,048,600 $1,002,200
- ----------------------------------------------------------------
Property net income $ 159,000 $ 177,200 $ 549,100 $ 539,100
- ----------------------------------------------------------------
Average Occupancy 91% 94% 93% 92%
- ----------------------------------------------------------------
</TABLE>
(a) Excludes certain income and expense items which are not directly related to
individual property operating results such as interest income and general
and administrative expenses or are related to properties sold by the
Partnership prior to the periods under comparison.
Unless otherwise disclosed, discussions of fluctuations between 1996 and 1995
refer to both the quarters and nine months ended September 30, 1996 and 1995.
Net income for the Partnership for the quarter and nine months ended September
30, 1996 increased by $167,700 and $456,100, respectively, when compared to the
quarter and nine months ended September 30, 1995. The increases were primarily
due to improved operating results at Glendale Center Shopping Mall
("Glendale"), Citrus Center and Shoppes of West Melbourne ("Shoppes") and
decreased general & administrative expenses. The decrease in general &
administrative expenses was primarily due to reduced expenditures for taxes at
the state and county level and to a lesser extent legal and printing and
mailing costs. The increases in net income were partially offset by decreased
interest income due to a decrease in rates available on the Partnership's
short-term investments.
Rental revenues increased by $38,600 or 1.2% and $435,700 or 5.4% for the
quarter and nine months ended September 30, 1996, respectively, when compared
to the quarter and nine months ended September 30, 1995. The primary factors
which caused the increases were: 1) increased base rental income at Citrus
Center as a result of an increase in rental rates charged to new and renewing
tenants; 2) increased tenant expense reimbursements for real estate tax expense
at Glendale and Citrus Center and 3) the 1996 receipt of payments as
consideration for the early termination of tenants' leases at Glendale and
Richmond Plaza Shopping Center ("Richmond"). These increases were partially
offset by a decrease in percentage rent billings and an increase in bad debt
expense at Glendale.
Interest expense decreased by $27,100 and $88,000 for the quarterly and nine-
month periods under comparison, respectively. These decreases were primarily
due to a slight reduction in the variable interest rate as well as the effects
of principal payments made during the last 21 months on the mortgage loan
collateralized by Glendale.
Real estate tax expense increased by $29,000 for the nine months ended
September 30, 1996 when compared to the nine months ended September 30, 1995.
The primary reason for the increase was that the expense in 1995 was net of the
receipt of refunds for previously sold properties. The increase was also due to
an increase in the tax rate imposed by the taxing authority at Richmond. Real
estate tax expense remained relatively unchanged for the quarterly periods
under comparison.
Property operating expenses increased by $73,200 and $59,300 for the quarterly
and nine-month comparable periods, respectively. The increases in property
operating expenses were primarily due to increased property management fees at
Citrus Center as a result of increased rental revenues and increased
professional services, utilities and security costs at Glendale, partially
offset by decreases in advertising costs at Citrus Center
Repairs and maintenance expense decreased by $27,000 and $13,400 for the
quarter and nine months ended September 30, 1996, respectively, when compared
to the quarter and nine months ended September 30, 1995. The primary factors
which caused the decreases were: 1) decreased costs associated with the
purchase of signs and the maintenance of the energy plant at Glendale, 2)
decreased rubbish removal costs at Shoppes and 3) a decrease in the purchase of
garage equipment at Citrus Center. The decreases were partially offset by
increases in salaries at Glendale and Citrus Center.
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 following actions: 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' leases
and
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
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 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 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 in 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 in 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 Statements of
Cash Flow.
<TABLE>
<CAPTION>
Comparative Cash Flow Results
For the Nine Months Ended
9/30/96 9/30/95
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash Flow (as defined in the Partnership
Agreement) $ 4,017,000 $ 3,741,600
Items of reconciliation:
Principal payments on mortgage loan 525,800 341,300
Decrease in current assets 56,000 58,300
Increase (decrease) in current
liabilities 311,200 (124,000)
- ---------------------------------------------------------------------------
Net cash provided by operating
activities $ 4,910,000 $ 4,017,200
- ---------------------------------------------------------------------------
Net cash (used for) investing activities $(7,363,400) $(2,132,900)
- ---------------------------------------------------------------------------
Net cash (used for) financing activities $(3,863,600) $(1,109,700)
- ---------------------------------------------------------------------------
</TABLE>
The increase in Cash Flow (as defined in the Partnership Agreement) of $275,400
for the nine months ended September 30, 1996 when compared to nine months ended
September 30, 1995 was primarily due to increased operating results at Glendale
and Citrus Center, exclusive of depreciation and amortization, as previously
discussed, partially offset by increased principal payments on the mortgage
loan collateralized by Glendale.
The decrease of $6,317,000 in the Partnership's cash position during the nine
months ended September 30, 1996 was primarily the result of investments in debt
securities, payments made for capital and tenant improvements and leasing
costs, principal payments on the mortgage loan payable and distributions paid
to Partners exceeding net cash provided by operating activities. Liquid assets
(including cash, cash equivalents and investments in debt securities) of the
Partnership as of September 30, 1996 were comprised of amounts held for working
capital purposes.
The increase in net cash provided by operating activities of $892,800 for the
nine months ended September 30, 1996 when compared to the nine months ended
September 30, 1995 was primarily due to an increase in net income, exclusive of
depreciation and amortization, as previously discussed, the timing of the
payments of expenses at Richmond and interest on the mortgage loan
collateralized by Glendale, partially offset by the timing of the collection of
tenant rental payments at Glendale.
Net cash used for investing activities increased $5,230,500 for the nine months
ended September 30, 1996 when compared to the nine months ended September 30,
1995. This increase was primarily due to the increase in investments in debt
securities, partially offset by a decrease in payments for capital and tenant
improvements and leasing costs. The increase in investment securities is a
result of the extension of the maturities of certain of the Partnership's
short-term investments in an effort to maximize the return on these amounts as
they are held for working capital purposes. These investments are of
investment-grade and generally mature less than one year from their date of
purchase. The Partnership maintains working capital reserves to pay for capital
expenditures. During the nine months ended September 30, 1996, the Partnership
spent $448,400 for capital and tenant improvements and leasing costs and has
projected to spend an additional $300,000 during the remainder of 1996. Of the
projected amount, approximately $150,000, $75,000 and $50,000 relates to
anticipated improvement and leasing costs expected to be incurred at Glendale,
Citrus Center and Shoppes, respectively. Actual amounts expended may vary
depending on a number of factors including actual leasing activity and other
market conditions throughout the year. The Managing General Partner believes
these improvements and leasing costs are necessary in order to increase and/or
maintain occupancy levels in very competitive markets, maximize rental rates
charged to new and renewing tenants and to prepare the remaining properties for
eventual disposition.
The increase in net cash used for financing activities of $2,753,900 for the
nine months ended September 30, 1996 when compared to the nine months ended
September 30, 1995 was primarily due to: 1) the net proceeds received from the
refinancing of the mortgage loan collateralized by Glendale in 1995; 2)
increased distributions paid to Partners in 1996 and 3) increased principal
payments on the mortgage loan collateralized by Glendale.
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 and leasing
costs necessary to be made at the Partnership's properties during the next
several years. The Managing General Partner believes that Cash Flow (as defined
in the Partnership Agreement) is one of the best and least expensive sources of
cash. As a result, cash continues to be retained to supplement working capital
reserves. For the nine months ended September 30, 1996, Cash Flow (as defined
in the
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Partnership Agreement) retained to supplement working capital reserves amounted
to $572,600.
Distributions to Limited Partners for the quarter ended September 30, 1996 were
declared in the amount of $1,050,000, or $10.50 per Unit. Cash distributions
are made 60 days after the last day of each fiscal quarter. The amount of
future distributions to Partners will ultimately be dependent upon the
performance of the Partnership's investments as well as the Managing General
Partner's determination of the amount of cash necessary to supplement working
capital reserves to meet future liquidity requirements of the Partnership.
Accordingly, there can be no assurance as to the amounts of cash for future
distributions to Partners.
8
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits: None
(b) Reports on Form 8-K:
There were no reports filed on Form 8-K during the quarter ended
September 30, 1996.
<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: November 13, 1996 By: /s/ DOUGLAS CROCKER II
----------------- --------------------------------------
DOUGLAS CROCKER II
President and Chief Executive Officer
Date: November 13, 1996 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
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JUN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 9,207,300
<SECURITIES> 6,923,900
<RECEIVABLES> 701,700
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 16,895,200
<PP&E> 71,753,300
<DEPRECIATION> 18,834,900
<TOTAL-ASSETS> 70,093,600
<CURRENT-LIABILITIES> 2,764,500
<BONDS> 7,513,600
<COMMON> 0
0
0
<OTHER-SE> 59,762,300
<TOTAL-LIABILITY-AND-EQUITY> 70,093,600
<SALES> 0
<TOTAL-REVENUES> 9,127,900
<CGS> 0
<TOTAL-COSTS> 3,731,600
<OTHER-EXPENSES> 265,500
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 588,000
<INCOME-PRETAX> 2,751,900
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,751,900
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,751,900
<EPS-PRIMARY> 24.08
<EPS-DILUTED> 24.08
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