<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, 1998
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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
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(Exact name of registrant as specified in its charter)
Florida 59-2255857
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Two North Riverside Plaza, Suite 1000, Chicago, Illinois 60606-2607
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(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 _____
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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.
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BALANCE SHEETS
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
March 31,
1998 December 31,
(Unaudited) 1997
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<S> <C> <C>
ASSETS
Investment in commercial rental properties:
Land $ 2,887,600 $ 5,841,900
Buildings and improvements 13,994,500 22,451,500
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16,882,100 28,293,400
Accumulated depreciation and amortization (6,900,200) (9,587,600)
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Total investment properties, net of accumulated
depreciation and amortization 9,981,900 18,705,800
Cash and cash equivalents 15,058,900 22,387,300
Investments in debt securities 22,751,800 4,862,000
Rents receivable 494,200 499,000
Escrow deposits 120,000 100,400
Other assets (including loan acquisition costs, net
of accumulated amortization of
$125,400 and $193,900, respectively) 126,800 79,600
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$48,533,600 $46,634,100
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LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgage loan payable $ 6,149,500 $ 6,559,700
Accounts payable and accrued expenses 741,400 598,500
Due to Affiliates 100,800 62,600
Distributions payable 21,455,600 10,905,600
Security deposits 5,500 21,200
Other liabilities 355,000 353,600
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28,807,800 18,501,200
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Partners' capital:
General Partners 106,600 86,700
Limited Partners (100,000 units issued and
outstanding) 19,619,200 28,046,200
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19,725,800 28,132,900
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$48,533,600 $46,634,100
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</TABLE>
STATEMENTS OF PARTNERS' CAPITAL
For the quarter ended March 31, 1998 (Unaudited)
and the year ended December 31, 1997
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
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<S> <C> <C> <C>
Partners' (deficit) capital,
January 1, 1997 $(117,000) $56,790,200 $56,673,200
Net income for the year ended December
31, 1997 548,100 12,206,000 12,754,100
Distributions for the year ended December
31, 1997 (344,400) (40,950,000) (41,294,400)
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Partners' capital, December 31, 1997 86,700 28,046,200 28,132,900
Net income for the quarter ended March
31, 1998 75,500 2,623,000 2,698,500
Distributions for the quarter ended
March 31, 1998 (55,600) (11,050,000) (11,105,600)
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Partners' capital, March 31, 1998 $ 106,600 $19,619,200 $19,725,800
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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, 1998 and 1997
(Unaudited)
(All dollars rounded to nearest 00s except per Unit amounts)
<TABLE>
<CAPTION>
1998 1997
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<S> <C> <C>
Income:
Rental $ 1,130,100 $ 2,793,000
Interest 424,700 204,000
Gain on sale of property 1,990,300
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3,545,100 2,997,000
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Expenses:
Interest 161,400 182,100
Depreciation and amortization 149,500 608,100
Property operating:
Affiliates 36,500 112,700
Nonaffiliates 208,500 552,000
Real estate taxes 102,600 261,000
Insurance--Affiliate 16,400 31,700
Repairs and maintenance 61,200 296,400
General and administrative:
Affiliates 10,300 10,300
Nonaffiliates 100,200 63,800
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846,600 2,118,100
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Net income $ 2,698,500 $ 878,900
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Net income allocated to General Partners $ 75,500 $ 116,700
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Net income allocated to Limited Partners $ 2,623,000 $ 762,200
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Net income allocated to Limited Partners per Unit
(100,000 Units outstanding) $ 26.23 $ 7.62
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</TABLE>
STATEMENTS OF CASH FLOWS
For the quarters ended March 31, 1998 and 1997
(Unaudited)
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
1998 1997
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<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,698,500 $ 878,900
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 149,500 608,100
Gain on sale of property (1,990,300)
Changes in assets and liabilities:
Decrease in rents receivable 4,800 6,800
(Increase) decrease in other assets (57,100) 51,700
Increase in accounts payable and accrued expenses 142,900 272,500
Increase (decrease) in due to Affiliates 38,200 (33,800)
Increase in other liabilities 1,400 193,400
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Net cash provided by operating activities 987,900 1,977,600
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Cash flows from investing activities:
Payments for capital and tenant improvements (800) (2,100)
(Increase) in investments in debt securities (17,889,800) (5,784,900)
Proceeds from the sale of property 10,575,400
(Increase) in escrow deposits (19,600) (22,000)
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Net cash (used for) investing activities (7,334,800) (5,809,000)
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Cash flows from financing activities:
Principal payments on mortgage loan payable (410,200) (259,700)
Distributions paid to Partners (555,600) (1,166,700)
(Decrease) increase in security deposits (15,700) 2,100
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Net cash (used for) financing activities (981,500) (1,424,300)
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Net (decrease) in cash and cash equivalents (7,328,400) (5,255,700)
Cash and cash equivalents at the beginning of the
period 22,387,300 15,693,500
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Cash and cash equivalents at the end of the period $15,058,900 $10,437,800
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Supplemental information:
Interest paid during the period $ 161,400 $ 182,100
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</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
March 31, 1998
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"). The Partnership utilizes the accrual
method of accounting. Under this method, 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, 1998 are not necessarily indicative of the
operating results for the year ending December 31, 1998.
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 property is recorded at cost, net of any provisions for value
impairment, and depreciated (exclusive of amounts allocated to land) on the
straight-line method over its estimated useful life. 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 property for impairment when conditions
exist which may indicate that it is probable that the sum of expected future
cash flows (undiscounted) is less than its estimated carrying basis. Upon
determination that an impairment has occurred, the basis 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.
Property sales are recorded when title transfers and sufficient consideration
has been received by the Partnership. Upon disposition, the related costs and
accumulated depreciation and amortization are removed from the respective
accounts. Any gain or loss is recognized in accordance with GAAP.
Investments in debt securities are comprised of obligations of the United
States government and corporate debt securities 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 1997
statements in order to provide comparability with the 1998 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, 1997 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
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
4
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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, 1998
and 1997, the General Partners were paid a Partnership Management Fee, and were
allocated Net Profits from operations, of $55,500 and $116,700, respectively.
In addition, in 1998 the General Partners were allocated Net Profits from the
sale of a property of $19,900.
Fees and reimbursements paid and payable by the Partnership to Affiliates
during the quarter ended March 31, 1998 were as follows:
<TABLE>
<CAPTION>
Paid Payable
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<S> <C> <C>
Property management and leasing fees $ 10,600 $ 7,000
Reimbursement of property insurance premiums, at cost 1,000 15,500
Real estate commission (a) None 48,500
Legal 18,500 20,000
Reimbursement of expenses, at cost:
--Accounting None 8,500
--Investor communications None 1,300
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$ 30,100 $100,800
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</TABLE>
(a) As of March 31, 1998, 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.
3. MORTGAGE LOAN PAYABLE:
Mortgage loan payable at March 31, 1998 and December 31, 1997 consisted of the
following nonrecourse loan:
<TABLE>
<CAPTION>
Property Partnership's Share of Average
Pledged Principal Balance at Interest Maturity
as Collateral 3/31/98 12/31/97 Rate (a) Date
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<S> <C> <C> <C> <C>
Glendale Center
Shopping Mall
(50%) $6,149,500 $6,559,700 10.17% 1/1/99(b)
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</TABLE>
(a) This represents the weighted average interest rate for the three months
ended March 31, 1998. The interest rate is subject to change on a monthly
basis in accordance with the provisions of the loan agreement. As of March
31, 1998, the interest rate on this loan was 10.19%.
(b) Upon meeting certain covenants, the Partnership has two options to extend
the maturity date for one year each.
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, 1997.
4. PROPERTY SALE:
On February 27, 1998, the Partnership completed the sale of Shoppes of West
Melbourne, located in West Melbourne, Florida, for a sale price of $11,000,000.
Net proceeds, net of actual and estimated closing expenses was $10,575,400. The
Partnership recorded a gain of $1,990,300 for the quarter ended March 31, 1998
and will distribute $10,550,000 or $105.50 per Unit on August 31, 1998 to
Limited Partners of record as of February 27, 1998.
<PAGE>
ITEM 2
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, 1997 for a discussion of the Partnership's business.
Statements contained in this Management's Discussion and Analysis of Financial
Condition and Results of Operations, which are not historical facts, may be
forward-looking statements. Such statements are subject to certain risks and
uncertainties, which could cause actual results to differ materially from those
projected. Readers are cautioned not to place undue reliance on these forward-
looking statements, which speak only as of the date hereof.
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.
During the disposition phase of the Partnership's life cycle, comparisons of
operating results are complicated due to the timing and effect of property
sales. Components of the Partnership's operating results are generally expected
to decline as real property interests are sold or disposed of since the
Partnership no longer realizes income nor incurs expenses from such real
property interests. Through March 31, 1998, the Partnership has sold all of its
investments with the exception of its 50% interest in Glendale Center Shopping
Mall ("Glendale").
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,
1998 and 1997. 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
3/31/98 3/31/97
- ------------------------------------------------------------
<S> <C> <C>
GLENDALE CENTER SHOPPING MALL (50%)
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Rental revenues $ 894,700 $ 869,000
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Property net income $ 245,100 $ 22,100
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Average occupancy 88% 91%
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SOLD PROPERTIES (B)
Rental revenues $ 235,300 $ 1,924,000
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Property net income $ 147,500 $ 727,400
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</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.
(b) Sold Properties includes the results of Citrus Center (sold August 1,
1997), Richmond Plaza Shopping Center ("Richmond") (sold December 31, 1997)
and Shoppes of West Melbourne ("Shoppes") (sold February 27, 1998).
Net income for the Partnership for the three months ended March 31, 1998
increased by $1,819,600 when compared to the three months ended March 31, 1997.
The increase was primarily due to the gain recorded in 1998 on the sale of
Shoppes. The increase was partially offset by the absence of results in 1998
from Richmond and Citrus Center due to their sales in 1997. Net income,
exclusive of the effects of the Sold Properties, increased by $409,200 for the
three months ended March 31, 1998 when compared to the three months ended March
31, 1997. The increase was primarily due to improved operating results at
Glendale and an increase in interest earned on the Partnership's short-term
investments due to an increase in cash available for investment. Partially
offsetting the improved operating results was an increase in general and
administrative expenses resulting from an increase in state taxes.
The following comparative discussion includes only the results of Glendale.
Rental revenues increased by $25,700 or 3% for the three month periods under
comparison. The increase was primarily due to an increase in percentage rental
income, which was due to actual 1997 tenant sales being greater than estimated.
Partially offsetting the increase was the 1997 receipt as consideration for the
early termination of a tenant's lease.
Interest expense decreased by $20,700 for the 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.
Real estate tax expense decreased by $26,600 for the three months ended March
31, 1998 when compared to the three months ended March 31, 1997. The decrease
was primarily due to the successful appeal of the taxing authorities' assessed
value of Glendale, which has reduced the estimated tax liability for 1998.
Repair and maintenance expense decreased by $59,300 for the three months ended
March 31, 1998 when compared to the three months ended March 31, 1997. The
decrease was primarily due to a decrease in snow removal costs resulting from a
mild winter.
Property operating expenses decreased by $81,600 for the periods under
comparison. The decrease was primarily due to a decrease in utility costs,
which was also due to a mild winter. Also contributing to the decrease was
reductions in security and professional costs.
To increase and/or maintain the occupancy at Glendale, 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 remaining
property. 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
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
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
Quarters Ended
3/31/98 3/31/97
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<S> <C> <C>
Cash Flow (as defined in the Partnership Agreement) $ 447,500 $ 1,227,300
Items of reconciliation:
Principal payments on mortgage loan 410,200 259,700
(Increase) decrease in current assets (52,300) 58,500
Increase in current liabilities 182,500 432,100
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Net cash provided by operating activities $ 987,900 $ 1,977,600
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Net cash (used for) investing activities $(7,334,800) $(5,809,000)
- ------------------------------------------------------------------------------
Net cash (used for) financing activities $ (981,500) $(1,424,300)
- ------------------------------------------------------------------------------
</TABLE>
The decrease in Cash Flow (as defined in the Partnership Agreement) of $779,800
for the three months ended March 31, 1998 when compared to three months ended
March 31, 1997 was primarily due to the absence of results from the
Partnership's Sold Properties. The decrease was partially offset by improved
operating results at Glendale, exclusive of depreciation and amortization, as
previously discussed, together with increased interest income on the
Partnership's short-term investments.
The decrease of $7,328,400 in the Partnership's cash position during the three
months ended March 31, 1998 was primarily the result of the increase in
investments in debt securities, partially offset by the receipt of proceeds
from the sale of Shoppes. Liquid assets (including cash, cash equivalents and
investments in debt securities) of the Partnership as of March 31, 1998 were
comprised of amounts held for working capital purposes and undistributed
Proceeds from the sales of Shoppes and Richmond.
The decrease in net cash provided by operating activities of $989,700 for the
three months ended March 31, 1998 when compared to the three months ended March
31, 1997 was primarily due to the effects on the Partnership's operating
results from the 1997 sales of Citrus Center and Richmond and the 1998 sale of
Shoppes.
Net cash used for investing activities increased by $1,525,800 for the three
months ended March 31, 1998 when compared to the three months ended March 31,
1997. This increase was primarily due to the Partnership investing a greater
portion of its undistributed Sale Proceeds in investments with longer terms.
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 capital
expenditures and to potentially facilitate the refinancing of the mortgage loan
collateralized by Glendale. During the three months ended March 31, 1998, the
Partnership spent $800 for building and tenant improvements.
As more fully discussed in the Partnership's Annual Report for the year ended
December 31, 1997, 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 adverse 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.
On February 27, 1998, the Partnership consummated the sale of Shoppes for a
sale price of $11,000,000. Proceeds, net of actual and estimated closing
expenses, amounted to $10,575,400. In connection with this sale, the
Partnership will distribute $10,550,000 or $105.50 per Unit on August 31, 1998
to Limited Partners of record as of February 27, 1998.
On May 31, 1998, the Partnership will distribute $10,350,000 or $103.50 per
Unit to Limited Partners of record as of December 31, 1997. This distribution
represents approximately the net proceeds realized from the December 31, 1997
sale of Richmond.
The decrease in net cash used for financing activities of $442,800 for the
three months ended March 31, 1998 when compared to the three months ended March
31, 1997 was primarily due to a decrease in distributions of Cash Flow (as
defined in the Partnership Agreement) paid to Partners in line with reduced
operating results following the sale of several Partnership properties. The
decrease was partially offset by an increase 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. This
mortgage loan matures in January 1999, subject to fulfilling covenants that
would provide the Partnership with 2 extension options of one year each. Any
potential extension or refinancing could result in the Partnership having to
further reduce the principal balance on the mortgage loan.
The Managing General Partner, on behalf of the Partnership, has contracted for
substantially all of its business activities with certain principal entities
for which computer programs are utilized. Each of these companies is
financially responsible and have represented to management of the Managing
General Partner that they are taking appropriate steps for modifications needed
to their respective systems to accommodate processing data by Year 2000.
Accordingly, the Partnership anticipates incurring no material Year 2000 costs
and is currently not aware of any material contingencies related to this
matter.
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. The Managing General
Partner believes that Cash Flow (as defined in the Partnership Agreement) is
one of the Partnership's best and least expensive sources of cash. As a result,
cash continues to be retained to supplement working capital reserves. During
the three months ended March 31, 1998, the Partnership utilized $108,100 of
previously undistributed Cash Flow (as defined in the Partnership Agreement) in
its distributions to Partners.
Distributions to Limited Partners for the quarter ended March 31, 1998 were
declared in the amount of $500,000, or $5.00 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
Glendale. Accordingly, there can be no assurance as to the amounts of cash for
future distributions to Partners.
7
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
- ------- --------------------------------
(a) Exhibits: None
(b) Reports on Form 8-K:
A report on Form 8-K was filed on March 16, 1998, reporting the
sale of Shoppes of West Melbourne.
<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, 1998 By: /s/ DOUGLAS CROCKER II
------------ --------------------------------------
DOUGLAS CROCKER II
President and Chief Executive Officer
Date: May 15, 1998 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-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 15,058,900
<SECURITIES> 22,751,800
<RECEIVABLES> 494,200
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 38,304,900
<PP&E> 16,882,100
<DEPRECIATION> 6,900,200
<TOTAL-ASSETS> 48,533,600
<CURRENT-LIABILITIES> 22,254,800
<BONDS> 6,149,500
0
0
<COMMON> 0
<OTHER-SE> 19,725,800
<TOTAL-LIABILITY-AND-EQUITY> 48,533,600
<SALES> 0
<TOTAL-REVENUES> 3,545,100
<CGS> 0
<TOTAL-COSTS> 425,200
<OTHER-EXPENSES> 110,500
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 161,400
<INCOME-PRETAX> 2,698,500
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,698,500
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,698,500
<EPS-PRIMARY> 26.23
<EPS-DILUTED> 26.23
</TABLE>
