<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the period ended June 30, 1994
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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: 0-14121
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FIRST CAPITAL INCOME PROPERTIES, LTD. - SERIES X
- - --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 59-2417973
- - ------------------------------- -------------------
(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 Agreement of Limited Partnership filed as Exhibit
A to the Partnership's Prospectus dated September 25, 1984, included in the
Partnership's Registration Statement on Form S-11, is incorporated herein by
reference in Part I of this report.
<PAGE>
PART I. FINANCIAL INFORMATION
BALANCE SHEETS
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
June 30,
1994 December 31,
(Unaudited) 1993
- - -------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investment in commercial rental properties:
Land $ 11,037,500 $ 11,037,500
Buildings and improvements 37,675,400 37,504,000
- - -------------------------------------------------------------------------------
48,712,900 48,541,500
Accumulated depreciation and amortization (10,880,800) (10,268,000)
- - -------------------------------------------------------------------------------
Total investment properties, net of accumulated
depreciation and amortization 37,832,100 38,273,500
Cash and cash equivalents 5,582,100 5,051,700
Restricted cash and certificate of deposit 359,000 261,100
Rents receivable 533,200 691,700
Escrow deposits 39,800 39,800
Prepaid expenses 5,000 6,000
Other assets (primarily loan acquisition costs net
of accumulated amortization of $301,800 and
$279,300, respectively) 85,500 72,000
- - -------------------------------------------------------------------------------
$ 44,436,700 $ 44,395,800
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LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgage loans payable $ 26,776,700 $ 26,794,900
Accounts payable and accrued expenses 1,507,900 1,131,100
Due to Affiliates 43,500 52,200
Security deposits 331,500 275,600
Other liabilities 35,600 62,700
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28,695,200 28,316,500
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Partners' (deficit) capital:
General Partner (246,500) (243,100)
Limited Partners (43,861 Units authorized, issued
and outstanding) 15,988,000 16,322,400
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15,741,500 16,079,300
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$ 44,436,700 $ 44,395,800
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</TABLE>
STATEMENTS OF PARTNERS' CAPITAL
For the six months ended June 30, 1994
and the year ended December 31, 1993
(Unaudited)
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
- - -------------------------------------------------------------------------------
<S> <C> <C> <C>
Partners' (deficit) capital, January 1,
1993 $(177,800) $22,789,600 $22,611,800
Net (loss) for the
year ended
December 31, 1993 (65,300) (6,467,200) (6,532,500)
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Partners' (deficit) capital, December 31,
1993 (243,100) 16,322,400 16,079,300
Net (loss) for the six months ended June
30, 1994 (3,400) (334,400) (337,800)
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Partners' (deficit) capital, June 30,
1994 $(246,500) $15,988,000 $15,741,500
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</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
STATEMENTS OF INCOME AND EXPENSES
For the quarters ended June 30, 1994 and 1993
(Unaudited)
(All dollars rounded to nearest 00s
except per Unit amounts)
<TABLE>
<CAPTION>
1994 1993
- - ----------------------------------------------------------------------------
<S> <C> <C>
Income:
Rental $1,423,100 $ 1,939,200
Interest 51,000 28,100
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1,474,100 1,967,300
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Expenses:
Interest 446,400 345,400
Depreciation and amortization 331,900 344,700
Property operating 431,100 423,900
Real estate taxes and insurance 360,700 356,300
Repairs and maintenance 142,900 193,000
General and administrative 44,900 53,200
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1,757,900 1,716,500
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Net (loss) income before (loss) on sale of land
parcel and provision for value impairment (283,800) 250,800
(Loss) on sale of land parcel (900)
Provision for value impairment (5,500,000)
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Net (loss) $ (283,800) $(5,250,100)
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Net (loss) allocated to General Partners $ (2,800) $ (52,500)
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Net (loss) allocated to Limited Partners $ (281,000) $(5,197,600)
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Net (loss) allocated to Limited Partners per Unit
(43,861 Units authorized, issued and outstanding) $ (6.41) $ (118.50)
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</TABLE>
STATEMENTS OF INCOME AND EXPENSES
For the six months ended June 30, 1994 and 1993
(Unaudited)
(All dollars rounded to nearest 00s
except per Unit amounts)
<TABLE>
<CAPTION>
1994 1993
- - ----------------------------------------------------------------------------
<S> <C> <C>
Income:
Rental $2,992,000 $ 3,575,000
Interest 89,800 51,600
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3,081,800 3,626,600
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Expenses:
Interest 795,500 710,100
Depreciation and amortization 635,300 684,400
Property operating 859,600 812,600
Real estate taxes and insurance 703,800 711,400
Repairs and maintenance 324,700 337,900
General and administrative 100,700 90,200
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3,419,600 3,346,600
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Net (loss) income before (loss) on sale of land
parcel and provision for value impairment (337,800) 280,000
(Loss) on sale of land parcel (20,800)
Provision for value impairment (5,500,000)
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Net (loss) $ (337,800) $(5,240,800)
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Net (loss) allocated to General Partners $ (3,400) $ (52,400)
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Net (loss) allocated to Limited Partners $ (334,400) $(5,188,400)
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Net (loss) allocated to Limited Partners per Unit
(43,861 Units authorized, issued and outstanding) $ (7.62) $ (118.29)
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</TABLE>
STATEMENTS OF CASH FLOWS
For the six months ended June 30, 1994 and 1993
(Unaudited)
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
1994 1993
- - -------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net (loss) $ (337,800) $(5,240,800)
Adjustments to reconcile net (loss) to net cash
provided by operating activities:
Depreciation and amortization 635,300 684,400
Loss on sale of land parcel 20,800
Provision for value impairment 5,500,000
Changes in assets and liabilities:
Decrease in rents receivable 158,500 331,800
(Increase) in restricted cash and certificate of
deposit (97,900) (400)
Decrease in prepaid expenses 1,000 446,100
(Increase) decrease in other assets, net of
accumulated amortization (36,000) 19,000
Increase (decrease) in accounts payable and accrued
expenses 376,800 (63,200)
(Decrease) in due to Affiliates (8,700) (1,000)
(Decrease) in other liabilities (27,100) (26,500)
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Net cash provided by operating activities 664,100 1,670,200
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Cash flows from investing activities:
Payments for capital and tenant improvements (171,400) (204,500)
Proceeds from the sale of land parcel 76,700
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Net cash (used for) investing activities (171,400) (127,800)
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Cash flows from financing activities:
Principal payments on mortgage loans payable (18,200) (57,100)
Increase in security deposits 55,900 8,300
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Net cash provided by (used for) financing
activities 37,700 (48,800)
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Net increase in cash and cash equivalents 530,400 1,493,600
Cash and cash equivalents at the beginning of the
period 5,051,700 2,676,500
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Cash and cash equivalents at the end of the period $5,582,100 $ 4,170,100
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Supplemental information:
Interest paid during the period $ 795,500 $ 721,300
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</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
June 30, 1994
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
DEFINITION OF SPECIAL TERMS:
Capitalized terms used in this report have the same meaning as those terms have
in the Partnership's Registration Statement on Form S-11, filed with the
Securities and Exchange Commission. Definitions of these terms are contained in
Article III of the First Amended and Restated Agreement of Limited Partnership,
which is incorporated herein by reference.
ACCOUNTING POLICIES:
The financial statements have been prepared in accordance with generally
accepted accounting principles. Under this method of accounting, revenues are
recorded when earned and expenses are recorded when incurred.
The financial information included in these financial statements is unaudited;
however, in management's opinion, all adjustments (consisting of only normal,
recurring accruals) necessary for a fair presentation of the results of
operations for the periods included have been made. Results of operations for
the quarter and six months ended June 30, 1994 are not necessarily indicative
of the operating results for the year ending December 31, 1994.
The financial statements include the Partnership's 50% interest in two joint
ventures and a 25% interest in one joint venture. The joint ventures are
operated under the control of the General Partner. Accordingly, the
Partnership's pro rata share of the ventures' revenues, expenses, assets and
liabilities is included in the financial statements.
Cash equivalents are considered all highly liquid investments purchased with a
maturity of three months or less.
Certain reclassifications have been made to the previously reported 1993
statements in order to provide comparability with the 1994 statements. These
reclassifications have no effect on income or Partner's capital.
Reference is made to the Partnership's annual report for the year ended
December 31, 1993, 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 disclosed
herein.
2. RELATED PARTY TRANSACTIONS:
Subsequent to September 24, 1985, the Termination of the Offering, the General
Partner is entitled to 10% of Cash Flow, as a Partnership Management Fee. In
accordance with the Partnership Agreement, Net Profits (exclusive of Net
Profits from the sale or disposition of a Partnership property) shall be
allocated to the General Partner in an amount equal to the greater of 1% of
such Net Profits or the Partnership Management Fee, as defined, and the
balance, if any, to the Unit Holders. Net Losses (exclusive of Net Losses from
thesale or disposition of a Partnership property) shall be allocated 1% to the
General Partner and 99% to the Unit Holders. Net Losses from the sale or
disposition of a Partnership property (including provisions for value
impairment) shall be allocated; first, after giving effect to any distribution
of Sale or Refinancing Proceeds from the transaction, to all Partners with
positive balances in their Capital Accounts, pro rata in proportion to such
respective positive balances, to the extent of the total of such positive
balances; and second, the balance if any, 1% to the General Partner and 99% to
the Unit Holders. Notwithstanding, there shall be allocated to the General
Partner not less than 1% of all items of Partnership income, gain and loss
during the existence of the Partnership. For the quarter and six months ended
June 30, 1994, the General Partner was not allocated a Partnership Management
Fee, but was allocated Net Losses from operations of approximately $2,100 and
$2,600, respectively.
Fees and reimbursements paid and payable by the Partnership to Affiliates
during the quarter and six months ended June 30, 1994 are as follows:
<TABLE>
<CAPTION>
Paid
Quarter Six Months Payable
- - -----------------------------------------------------------------------------
<S> <C> <C> <C>
Property management and leasing fees $ 83,200 $162,400 $29,100
Reimbursement of property insurance premiums, at
cost 6,100 41,000 None
Real estate commission (a) None None 10,000
Reimbursement of expenses, at cost
(1) Accounting 6,300 9,300 3,300
(2) Investor communication 2,600 4,500 1,100
(3) Legal 13,500 22,600 None
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$111,700 $239,800 $43,500
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</TABLE>
(a) As of June 30, 1994, the Partnership owed $10,000 to the General Partner
for a real estate commission earned in connection with the sale of one
Partnership property. This commission has been accrued but not paid. Under
the terms of the Partnership Agreement, this fee will not be paid until
such time as the Limited Partners have received cumulative distributions of
Sale or Refinancing Proceeds equal to 100% of their Original Capital
Contribution, plus a cumulative return (including all Cash Flow which has
been distributed to the Unit Holders) of 6% simple interest per annum on
their Capital Investment from the initial date of investment.
3. RESTRICTED CASH AND CERTIFICATE OF DEPOSIT:
On June 24, 1994, the joint venture which owns Regency Park Shopping Center
("Regency Park"), in which the Partnership has a 25% interest, invested
$150,000 in a restricted certificate of deposit which collateralizes a letter
of credit for a construction allowance to a major new tenant which will occupy
40,150 leasable square feet at Regency Park. This amount, of which the
Partnership's share is $37,500, will be reimbursed to the new tenant upon
compliance of the lease section pertaining to this construction allowance,
which includes the tenant's completion of all improvements, taking occupancy of
the leased space and commencement of business.
Restricted cash represents tenant security deposits for the Partnership's New
York property that are required to be placed in an interest-bearing account.
4. MORTGAGE LOANS PAYABLE:
The mortgage loan collateralized by the Glendale Center Shopping Mall has been
further extended until September 1, 1994. All other terms of the loan remained
the same.
The General Partner had been engaged in discussions with the mortgage holder
regarding the restructuring of the mortgage loan collateralized by the Fashion
Atrium Building ("Fashion Atrium"). The General Partner was unable to reach a
mutual resolution regarding the restructuring of the loan and as a result, in
April 1994, the Partnership received a notice of default from the mortgage
holder. The General Partner intends to assist in the orderly conveyance of
title of the property to the mortgage holder and is actively negotiating a Cash
Collateral Use Agreement with the mortgage holder. As of June 30, 1994, accrued
real estate taxes plus penalties and interest totalled approximately
$1,615,000, of which the Partnership's proportionate share is approximately
$807,500. The scheduled monthly payments of interest due on the loan were
funded from Fashion Atrium's cash flow through June 1, 1994. As of the date of
this report, the interest payment due on July 1, 1994 has been suspended. At
the point in time in which the conveyance of title occurs, the Partnership
would be relieved of its obligation under the mortgage loan of approximately
$12,100,000 and any ownership in Fashion Atrium.
<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, 1993, for a discussion of the Partnership's business.
OPERATIONS
The Statements of Cash Flows presented in the financial statements represent a
reconciliation of the changes in cash balances. Cash Flow, as defined in the
Partnership Agreement, is generally not equal to Partnership net income or cash
flows as determined under generally accepted accounting principles, since
certain items are treated differently under the Partnership Agreement than
under generally accepted accounting principles. Management believes that in
order 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 generally accepted accounting principles. The amount of Cash Flow
and the return on Capital Investment are not indicative of actual distributions
and actual returns on Capital Investment.
<TABLE>
<CAPTION>
Comparative Cash Flow Results
For the Six Months
For the Quarters Ended Ended
<S> <C> <C> <C> <C>
6/30/94 6/30/93 6/30/94 6/30/93
- - -------------------------------------------------------------------------------
Amount of Cash Flow (as
defined in the Partnership
Agreement) $ 38,900 $ 586,400 $ 279,300 $ 947,200
Capital Investment $43,861,000 $43,861,000 $43,861,000 $43,861,000
Annualized return on Capital
Investment (Cash Flow/Capital
Investment) 0.35% 5.35% 1.27% 4.32%
- - -------------------------------------------------------------------------------
</TABLE>
The decrease in Cash Flow of approximately $547,500 and $667,900 for the
quarter and six months ended June 30, 1994 when compared to the quarter and six
months ended June 30, 1993 was primarily due to the following factors: 1)
decreased rental revenues at the Fashion Atrium Building ("Fashion Atrium") and
Glendale Center Shopping Mall ("Glendale"); 2) higher financing costs on the
Partnership's variable rate loans due primarily to an increase in the interest
rate on the mortgage loan collateralized by Fashion Atrium as a result of the
receipt of a notice of default from the mortgage holder; 3) increased property
operating expenses at Glendale of approximately $61,500 for the six months
ended June 30, 1994 due primarily to an increase in utilities as a result of a
colder winter in 1994 and 4) increased general and administrative expenses due
to a provision for 1993 Indiana state and county income taxes being recorded in
1994. Partially offsetting the decrease in Cash Flow results was increased
interest income earned on short-term investments.
Rental revenues at Glendale for the six months ended June 30, 1994 and 1993
were approximately $1,737,100 and $2,012,900, respectively, and for the
quarters ended June 30, 1994 and 1993 were approximately $849,100 and
$1,145,700, respectively. Rental revenues decreased primarily due to the
recognition in 1993 of billings made for the collection of additional tenant
reimbursements for real estate taxes paid in prior years.
Rental revenues at Fashion Atrium for the six months ended June 30, 1994 and
1993 were approximately $993,300 and $1,287,300, respectively, and for the
quarters ended June 30, 1994 and 1993 were approximately $444,500 and $658,400,
respectively. The decrease in rental revenues for the periods under comparison
was due to a decrease in tenant expense reimbursements and a decrease in the
quarterly and six-month average occupancy rates from 76% and 75%, respectively,
in 1993 to 72% and 71%, respectively, in 1994.
Rental revenues at Regency for the six months ended June 30, 1994 and 1993 were
approximately $261,600 and $274,800, respectively, and for the quarters ended
June 30, 1994 and 1993 were approximately $129,500 and $135,100, respectively.
Occupancy at Regency has remained stable at approximately 78% for both periods
under comparison.
LIQUIDITY AND CAPITAL RESOURCES
The increase in the Partnership's cash position as of June 30, 1994 when
compared to December 31, 1993 was primarily the result of amounts being
retained from Cash Flow to supplement working capital reserves reduced by
expenditures made for capital and tenant improvements for the Partnership's
properties. Liquid assets of the Partnership as of June 30, 1994 are comprised
of amounts held for working capital purposes.
Net cash provided by operating activities continues to be the Partnership's
primary source of funds. Net cash provided by operating activities decreased
from $1,670,200 for the six months ended June 30, 1993 to $664,100 for the six
months ended June 30, 1994. This decrease was primarily due to a delay in the
collection of rents in 1994 when compared to 1993 as well as the decrease in
Cash Flow as discussed above, partially offset by the timing of the payment of
certain Partnership expenses.
The primary use of cash for investing activities is capital and tenant
improvements made to the Partnership's properties. Net cash used for investing
activities increased from $127,800 for the six months ended June 30, 1993 to
$171,400 for the six months ended June 30, 1994 primarily due to the receipt in
1993 of proceeds from the sale of a parcel of land at Regency partially offset
by a decrease in payments for capital and tenant improvements in 1994.
During the six months ended June 30, 1994, the Partnership spent approximately
$171,400 for capital and tenant improvements and has budgeted to spend
approximately $585,000 and $200,000 for the remainder of 1994 at Glendale and
Regency, respectively. The General Partner feels that these improvements are
necessary in order to preserve the physical integrity of these properties as
well as to improve occupancy levels and maintain rental rates in very
competitive markets. Generally, working capital reserves are maintained to fund
these types of expenditures.
Net cash (used for) provided by financing activities changed from ($48,800) for
the six months ended June 30, 1993 to $37,700 for the six months ended June 30,
1994 due primarily to an increase in security deposit collections.
Distributions to Limited Partners continue to be suspended to insure that the
required cash is available when needed to fund anticipated capital and tenant
improvements, potential mortgage principal paydowns and other liquidity
requirements. All Cash Flow earned by the Partnership during the six months
ended June 30, 1994 was retained to supplement working capital reserves. The
General Partner views Cash Flow as one of the Partnership's best and least
expensive sources of cash. For the quarter and six months ended June 30, 1994,
the entire Cash Flow amounts of $38,900 and $279,300, respectively, were
retained to supplement working capital reserves.
The mortgage loan collateralized by Glendale has been further extended until
September 1, 1994. All other terms of the loan remained the same. The General
Partner continues to discuss the possibility of receiving a longer-term
extension with the existing lender and to pursue permanent financing
opportunities with other potential lenders.
The General Partner had been engaged in discussions with the mortgage holder
regarding restructuring of the mortgage loan collateralized by Fashion Atrium.
The General Partner was unable to reach a mutual resolution regarding the
restructuring of the loan and as a result, in April 1994, the Partnership
received a notice of default from the mortgage holder. The General Partner
intends to assist in the orderly conveyance of title of the property to the
mortgage holder and is actively negotiating a Cash Collateral Use Agreement
with the mortgage holder. At the point in time in which the conveyance of title
occurs, the Partnership will be relieved of its obligation under the mortgage
loan of approximately $12,100,000 and any ownership in Fashion Atrium.
<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 June
30, 1994.
<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 X
BY: FIRST CAPITAL FINANCIAL CORPORATION
GENERAL PARTNER
Date: August 12, 1994 By: /s/ DOUGLAS CROCKER II
--------------- --------------------------------------------
DOUGLAS CROCKER II
President and Chief Executive Officer
Date: August 12, 1994 By: /s/ MICHAEL J. MCHUGH
--------------- ---------------------------------------------
MICHAEL J. MCHUGH
Senior Vice President and
Chief Financial Officer
