<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 March 31, 1997
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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
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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 1100, 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
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(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>
March 31,
1997 December 31,
(Unaudited) 1996
- ----------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investment in commercial rental properties:
Land $ 12,472,900 $ 12,472,900
Buildings and improvements 56,756,200 56,754,100
- ----------------------------------------------------------------------------
69,229,100 69,227,000
Accumulated depreciation and amortization (20,043,100) (19,444,900)
- ----------------------------------------------------------------------------
Total investment properties, net of accumulated
depreciation and amortization 49,186,000 49,782,100
Cash and cash equivalents 10,437,800 15,693,500
Investments in debt securities 5,784,900
Rents receivable 600,000 606,800
Escrow deposits 41,600 19,600
Other assets (including loan acquisition costs,
net of accumulated amortization of $85,900 and
$76,000, respectively) 225,800 287,400
- ----------------------------------------------------------------------------
$ 66,276,100 $ 66,389,400
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LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgage loan payable $ 7,079,800 $ 7,339,500
Accounts payable and accrued expenses 1,155,600 883,100
Due to Affiliates 90,000 123,800
Distributions payable 1,166,700 1,166,700
Security deposits 146,700 144,600
Other liabilities 251,900 58,500
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9,890,700 9,716,200
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Partners' capital:
General Partners (deficit) (117,000) (117,000)
Limited Partners (100,000 Units issued and
outstanding) 56,502,400 56,790,200
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56,385,400 56,673,200
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$ 66,276,100 $ 66,389,400
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</TABLE>
STATEMENTS OF PARTNERS' CAPITAL
For the quarter ended March 31, 1997 (Unaudited)
and the year ended December 31, 1996
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Partners' (deficit) capital,
January 1, 1996 $ (90,000) $60,544,800 $60,454,800
Net income for the year ended
December 31, 1996 434,100 395,400 829,500
Distributions for the year ended
December 31, 1996 (461,100) (4,150,000) (4,611,100)
- ----------------------------------------------------------------------------
Partners' (deficit) capital,
December 31, 1996 (117,000) 56,790,200 56,673,200
Net income for the quarter ended March
31, 1997 116,700 762,200 878,900
Distributions for the quarter ended
March 31, 1997 (116,700) (1,050,000) (1,166,700)
- ----------------------------------------------------------------------------
Partners' (deficit) capital,
March 31, 1997 $(117,000) $56,502,400 $56,385,400
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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 March 31, 1997 and 1996
(Unaudited)
(All dollars rounded to nearest 00s
except per Unit amounts)
<TABLE>
<CAPTION>
1997 1996
- ------------------------------------------------------------------------
<S> <C> <C>
Income:
Rental $2,793,000 $2,835,900
Interest 204,000 203,900
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2,997,000 3,039,800
- ------------------------------------------------------------------------
Expenses:
Interest 182,100 202,200
Depreciation and amortization 608,100 592,200
Property operating:
Affiliates 112,700 205,100
Nonaffiliates 552,000 451,800
Real estate taxes 261,000 247,300
Insurance--Affiliate 31,700 30,800
Repairs and maintenance 296,400 309,400
General and administrative:
Affiliates 10,300 30,700
Nonaffiliates 63,800 77,600
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2,118,100 2,147,100
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Net income $ 878,900 $ 892,700
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Net income allocated to General Partners $ 116,700 $ 111,100
- ------------------------------------------------------------------------
Net income allocated to Limited Partners $ 762,200 $ 781,600
- ------------------------------------------------------------------------
Net income allocated to Limited Partners per Unit
(100,000 Units outstanding) $ 7.62 $ 7.82
- ------------------------------------------------------------------------
</TABLE>
STATEMENTS OF CASH FLOWS
For the quarters ended March 31, 1997 and 1996
(Unaudited)
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
1997 1996
- -----------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 878,900 $ 892,700
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 608,100 592,200
Changes in assets and liabilities:
Decrease (increase) in rents receivable 6,800 (12,100)
Decrease in other assets 51,700 16,700
Increase (decrease) in accounts payable and
accrued expenses 272,500 (3,000)
(Decrease) increase in due to Affiliates (33,800) 127,600
Increase (decrease) in other liabilities 193,400 (55,100)
- -----------------------------------------------------------------------------
Net cash provided by operating activities 1,977,600 1,559,000
- -----------------------------------------------------------------------------
Cash flows from investing activities:
Payments for capital and tenant improvements (2,100) (275,700)
(Increase) in investments in debt securities (5,784,900)
(Increase) decrease in escrow deposits (22,000) 35,100
- -----------------------------------------------------------------------------
Net cash (used for) investing activities (5,809,000) (240,600)
- -----------------------------------------------------------------------------
Cash flows from financing activities:
Principal payments on mortgage loan payable (259,700) (315,800)
Distributions paid to Partners (1,166,700) (1,055,600)
Increase (decrease) in security deposits 2,100 (900)
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Net cash (used for) financing activities (1,424,300) (1,372,300)
- -----------------------------------------------------------------------------
Net (decrease) in cash and cash equivalents (5,255,700) (53,900)
Cash and cash equivalents at the beginning of the
period 15,693,500 15,524,300
- -----------------------------------------------------------------------------
Cash and cash equivalents at the end of the period $10,437,800 $15,470,400
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Supplemental information:
Interest paid during the period $ 182,100 $ 202,200
- -----------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
March 31, 1997
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 three months ended March 31, 1997 are not necessarily indicative of the
operating results for the year ending December 31, 1997.
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 are recorded at cost, net of any provisions for
value impairment, and depreciated (exclusive of amounts allocated to land) on
the straight-line method over their estimated useful lives. 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.
The Partnership evaluates its rental properties when conditions exist which may
indicate that it is possible that the sum of expected future cash flows
(undiscounted) from a property is less than its estimated carrying value. Upon
determination that an impairment has occurred, the carrying basis in the rental
property is reduced to fair value. Management was not aware of any indicator
that would result in a significant impairment loss during the periods reported.
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.
Cash equivalents are considered all highly liquid investments with maturity of
three months or less when purchased.
Investments in debt securities are comprised of obligations of the United
States government totaling $5,784,900 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 a
maturity of less than one year when purchased.
Certain reclassifications have been made to the previously reported 1996
statements in order to provide comparability with the 1997 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, 1996 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. 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 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 three months ended March 31, 1997 and 1996, the General Partners were
entitled to a Partnership Management Fee, and accordingly, allocated Net
Profits from operations, of $116,700 and $111,100, respectively.
Fees and reimbursements paid and payable/(receivable) by the Partnership
to/(from) Affiliates during the quarter ended March 31, 1997 were as follows:
<TABLE>
<CAPTION>
Payable
Paid (Receivable)
- ----------------------------------------------------------------------------
<S> <C> <C>
Property management and leasing fees (b) $168,500 $(6,000)
Reimbursement of property insurance premiums, at cost None 31,700
Real estate commission (a) None 48,500
Reimbursement of expenses, at cost:
--Accounting 3,000 5,000
--Investor communications 1,000 1,500
--Legal 16,000 9,300
- ----------------------------------------------------------------------------
$188,500 $90,000
- ----------------------------------------------------------------------------
</TABLE>
(a) As of March 31, 1997, 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.
(b) Effective on December 31, 1996, the Affiliate providing property management
and certain leasing services to the Partnership's shopping centers, sold its
interest in the property management agreements to an unrelated party. The
payments included in the above table relate to asset management services and
prior period's property management fees.
Firstate Financial A Savings Bank ("Firstate"), owned by 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
three months ended March 31, 1997, Firstate paid $79,300 in total rents. The
per square foot rent paid by Firstate is comparable to that paid by other
tenants at Citrus Center. In April 1997, Firstate was sold by the Affiliate of
the Managing General Partner to an unaffiliated party. The terms of Firstate's
lease remain unchanged.
3. MORTGAGE LOAN PAYABLE:
Mortgage loan payable at March 31, 1997 and December 31, 1996 consisted of the
following nonrecourse loan:
<TABLE>
<CAPTION>
Partnership's Share Average
of Principal Balance at Interest Maturity
Property Pledged as Collateral 3/31/97 12/31/96 Rate (a) Date
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Glendale Center Shopping Mall (50%) $ 7,079,800 $ 7,339,500 9.98% 1/1/99
- ------------------------------------------------------------------------------
</TABLE>
(a) This interest rate represents the weighted average for the three months
ended March 31, 1997. The interest rate is subject to change on a monthly
basis in accordance with the provisions of the loan agreement. As of March 31,
1997, the interest rate on this loan was 9.94%.
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, 1996.
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, 1996 for a discussion of the Partnership's business.
OPERATIONS
The table below is a recap of the Partnership's share of certain operating
results of each of its remaining properties for the quarters ended March 31,
1997 and 1996. 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
3/31/97 3/31/96
- ------------------------------------------
<S> <C> <C>
CITRUS CENTER
Rental revenues $1,242,200 $1,263,100
- ------------------------------------------
Property net income $ 346,900 $ 296,200
- ------------------------------------------
Average occupancy 97% 99%
- ------------------------------------------
GLENDALE CENTER SHOPPING MALL (50%)
Rental revenues $ 869,000 $ 895,400
- ------------------------------------------
Property net income $ 22,100 $ 109,500
- ------------------------------------------
Average occupancy 91% 91%
- ------------------------------------------
SHOPPES OF WEST MELBOURNE
Rental revenues $ 357,200 $ 350,600
- ------------------------------------------
Property net income $ 225,600 $ 230,200
- ------------------------------------------
Average occupancy 97% 96%
- ------------------------------------------
RICHMOND PLAZA SHOPPING CENTER
Rental revenues $ 324,600 $ 326,800
- ------------------------------------------
Property net income $ 154,900 $ 161,800
- ------------------------------------------
Average occupancy 92% 93%
- ------------------------------------------
</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.
Net income for the Partnership for the three months ended March 31, 1997
decreased by $13,800 when compared to the three months ended March 31, 1996.
The decrease was primarily due to diminished operating results at Glendale
Center Shopping Mall ("Glendale") and to a lesser extent at Shoppes of West
Melbourne ("Shoppes") and Richmond Plaza Shopping Center ("Richmond"). The
decrease was partially offset by improved operating results at Citrus Center
and decreased general & administrative expenses. The decrease in general &
administrative expenses was primarily due to reduced expenditures for
accounting services, personnel costs and legal fees.
Rental revenues decreased by $42,900 or 1.5% for the three months ended March
31, 1997 when compared to the three months ended March 31, 1996. The decrease
was primarily the result of a decrease in percentage rent at Glendale which is
the result of lower tenant sales at the mall and in tenant reimbursements for
real estate taxes at Citrus Center as a result of a 1997 adjustment for
overbillings in 1996. The decrease was partially offset by an increase in base
rental income at Citrus Center which was due to an increase in the average base
rental rate.
Real estate tax expense increased by $13,700 for the three months ended March
31, 1997 when compared to the three months ended March 31, 1996. The increase
was primarily the result of a budgeted increase in real estate taxes at
Glendale.
Repairs and maintenance expense decreased by $13,000 for the three months ended
March 31, 1997 when compared to the three months ended March 31, 1996. The
decrease was primarily due to decreases in repairs to the parking lot and
elevator at Citrus Center along with decreases in repairs to the roof at
Richmond. Partially offsetting the decrease was an increase in snow removal and
energy plant expenses at Glendale, HVAC expenses at Citrus Center and parking
lot repairs at Shoppes.
Interest expense decreased by $20,100 for the three-month periods under
comparison. The decrease was primarily due to the effects of principal payments
made during the past 15 months on the mortgage loan collateralized by Glendale.
To increase and/or maintain occupancy levels at the Partnership's properties,
the Managing General Partner, through its 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 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 determined 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 determined 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.
5
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
<TABLE>
<CAPTION>
Comparative
Cash Flow Results
For the Quarters Ended
3/31/97 3/31/96
- ------------------------------------------------------------------------------
<S> <C> <C>
Cash Flow (as defined in the Partnership Agreement) $ 1,227,300 $ 1,169,100
Items of reconciliation:
Principal payments on mortgage loan 259,700 315,800
Decrease in current assets 58,500 4,600
Increase in current liabilities 432,100 69,500
- ------------------------------------------------------------------------------
Net cash provided by operating activities $ 1,977,600 $ 1,559,000
- ------------------------------------------------------------------------------
Net cash (used for) investing activities $(5,809,000) $ (240,600)
- ------------------------------------------------------------------------------
Net cash (used for) financing activities $(1,424,300) $(1,372,300)
- ------------------------------------------------------------------------------
</TABLE>
The increase in Cash Flow (as defined in the Partnership Agreement) of $58,200
for the three months ended March 31, 1997 when compared to three months ended
March 31, 1996 was primarily due to improved operating results at Citrus
Center, exclusive of depreciation and amortization, as previously discussed,
together with decreased principal payments on the mortgage loan collateralized
by Glendale. The increase was partially offset by diminished operating results
at Glendale, exclusive of depreciation and amortization.
The decrease of $5,255,700 in the Partnership's cash position during the three
months ended March 31, 1997 was primarily the result of the increase in
investments in debt securities, as well as the 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 March
31, 1997 were comprised of amounts held for working capital purposes.
The increase in net cash provided by operating activities of $418,600 for the
three months ended March 31, 1997 when compared to the three months ended March
31, 1996 was primarily due to the receipt of refunds for real estate taxes at
Glendale. The increase was also due to the timing of the payment of certain
operating expenses at Shoppes and Citrus Center.
Net cash used for investing activities increased by $5,568,400 for the three
months ended March 31, 1997 when compared to the three months ended March 31,
1996. This increase was primarily due to an 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 mature less than one year from their date of purchase.
The Partnership maintains working capital reserves to pay for building and
tenant improvements and lease commissions. During the three months ended March
31, 1997, the Partnership spent only $2,100 for building and tenant
improvements and leasing costs but has projected to spend approximately
$1,125,000 during the remainder of 1997. Of the projected amount, approximately
$550,000, $275,000, $175,000 and $125,000 relates to anticipated improvement
and leasing costs expected to be incurred at Glendale, Citrus Center, Richmond
and Shoppes, respectively. Actual amounts expended may vary depending on a
number of factors including actual leasing activity, the sale of Partnership
properties 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 prepare the
remaining properties for eventual disposition.
As more fully discussed in the Partnership's Annual Report for the year ended
December 31, 1996, the future tenancy level at Glendale is uncertain. The
potential loss of one or both of its anchor tenants at their lease termination
dates (January 2001) would have a dramatic negative impact on the operations of
the property. The Managing General Partner is exploring alternatives for
Glendale, which include, but are not limited to, pursuing other tenants and the
sale of the property.
The increase in net cash used for financing activities of $52,000 for the three
months ended March 31, 1997 when compared to the three months ended March 31,
1996 was primarily due to an increase in distributions paid to Partners. The
increase was partially offset by a decrease in principal payments on the
mortgage loan collateralized by Glendale. The mortgage loan collateralized by
Glendale contains provisions that require that a portion of the cash generated
by Glendale be utilized to reduce the outstanding mortgage balance.
The Managing General Partner continues to take a conservative approach to
projections of future rental income in its determination of adequate levels of
cash reserves due to the uncertainty surrounding Glendale and 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 Partnership's best sources of cash. As a result, cash
continues to be retained to supplement working capital reserves. For the three
months ended March 31, 1997, Cash Flow (as defined in the Partnership
Agreement) retained to supplement working capital reserves amounted to $60,600.
Distributions to Limited Partners for the quarter ended March 31, 1997 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.
6
<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
March 31, 1997.
<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: May 15, 1997 By: /s/ DOUGLAS CROCKER II
------------ -------------------------------------
DOUGLAS CROCKER II
President and Chief Executive Officer
Date: May 15, 1997 By: /s/ NORMAN M. FIELD
------------ -------------------------------------
NORMAN M. FIELD
Vice President - Finance and Treasurer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 10,437,800
<SECURITIES> 5,784,900
<RECEIVABLES> 600,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 16,822,700
<PP&E> 69,229,100
<DEPRECIATION> 20,043,100
<TOTAL-ASSETS> 66,276,100
<CURRENT-LIABILITIES> 2,510,500
<BONDS> 7,079,800
0
0
<COMMON> 0
<OTHER-SE> 56,385,400
<TOTAL-LIABILITY-AND-EQUITY> 66,276,100
<SALES> 0
<TOTAL-REVENUES> 2,997,000
<CGS> 0
<TOTAL-COSTS> 1,253,800
<OTHER-EXPENSES> 74,100
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 182,100
<INCOME-PRETAX> 878,900
<INCOME-TAX> 0
<INCOME-CONTINUING> 878,900
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 878,900
<EPS-PRIMARY> 7.62
<EPS-DILUTED> 7.62
</TABLE>
