<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, 1996
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OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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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
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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 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>
BALANCE SHEETS
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
June 30,
1996 December 31,
(Unaudited) 1995
- ------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investment in commercial rental properties:
Land $ 3,928,400 $ 3,928,400
Buildings and improvements 20,686,500 20,551,600
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24,614,900 24,480,000
Accumulated depreciation and amortization (7,382,700) (7,099,000)
- ------------------------------------------------------------------------------
Total investment properties, net of accumulated
depreciation and amortization 17,232,200 17,381,000
Cash and cash equivalents 2,477,700 2,464,100
Rents receivable 465,000 444,500
Escrow deposits 44,400 111,000
Other assets (primarily loan acquisition costs, net
of accumulated amortization of $198,700 and
$179,000, respectively) 103,800 122,300
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$20,323,100 $20,522,900
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LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgage loans payable $11,528,800 $11,998,000
Accounts payable and accrued expenses 611,600 549,200
Due to Affiliates 25,800 30,500
Security deposits 19,400 18,500
Other liabilities 8,700 68,100
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12,194,300 12,664,300
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Partners' capital:
General Partner (deficit) (70,000) (72,700)
Limited Partners (43,861 units issued and
outstanding) 8,198,800 7,931,300
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8,128,800 7,858,600
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$20,323,100 $20,522,900
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</TABLE>
STATEMENTS OF PARTNERS' CAPITAL
For the six months ended June 30, 1996 (Unaudited)
and the year ended December 31, 1995
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
General Limited
Partner Partners Total
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Partners' capital, January 1, 1995 $ 0 $15,130,200 $15,130,200
Net (loss) for the year ended
December 31, 1995 (72,700) (7,198,900) (7,271,600)
- -------------------------------------------------------------------------------
Partners' (deficit) capital,
December 31, 1995 (72,700) 7,931,300 7,858,600
Net income for the six months ended
June 30, 1996 2,700 267,500 270,200
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Partners' (deficit) capital, June 30, 1996 $(70,000) $ 8,198,800 $ 8,128,800
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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 June 30, 1996 and 1995
(Unaudited)
(All dollars rounded to nearest 00s
except per Unit amounts)
<TABLE>
<CAPTION>
1996 1995
- ---------------------------------------------------------------------------
<S> <C> <C>
Income:
Rental $1,098,300 $ 999,500
Interest 31,200 38,900
- ---------------------------------------------------------------------------
1,129,500 1,038,400
- ---------------------------------------------------------------------------
Expenses:
Interest 266,000 313,000
Depreciation and amortization 150,500 188,600
Property operating:
Affiliates 77,500 99,700
Nonaffiliates 189,200 195,000
Real estate taxes 139,200 119,200
Insurance--Affiliate 13,800 7,500
Repairs and maintenance 86,400 104,000
General and administrative:
Affiliates 7,200 6,400
Nonaffiliates 25,100 53,100
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954,900 1,086,500
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Net income (loss) $ 174,600 $ (48,100)
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Net income (loss) allocated to General Partner $ 1,700 $ (500)
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Net income (loss) allocated to Limited Partners $ 172,900 $ (47,600)
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Net income (loss) allocated to Limited Partners per
Unit (43,861 Units outstanding) $ 3.94 $ (1.09)
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</TABLE>
STATEMENTS OF INCOME AND EXPENSES
For the six months ended June 30, 1996 and 1995
(Unaudited)
(All dollars rounded to nearest 00s
except per Unit amounts)
<TABLE>
<CAPTION>
1996 1995
- ---------------------------------------------------------------------------
<S> <C> <C>
Income:
Rental $2,143,200 $2,010,700
Interest 64,200 74,900
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2,207,400 2,085,600
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Expenses:
Interest 541,600 635,600
Depreciation and amortization 303,400 374,600
Property operating:
Affiliates 154,100 185,600
Nonaffiliates 392,600 373,100
Real estate taxes 257,100 247,500
Insurance--Affiliate 27,700 25,800
Repairs and maintenance 186,800 214,900
General and administrative:
Affiliates 16,200 17,200
Nonaffiliates 57,700 108,600
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1,937,200 2,182,900
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Net income (loss) $ 270,200 $ (97,300)
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Net income (loss) allocated to General Partner $ 2,700 $ (1,000)
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Net income (loss) allocated to Limited Partners $ 267,500 $ (96,300)
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Net income (loss) allocated to Limited Partners per
Unit (43,861 Units outstanding) $ 6.10 $ (2.20)
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</TABLE>
STATEMENTS OF CASH FLOWS
For the six months ended June 30, 1996 and 1995
(Unaudited)
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
1996 1995
- ---------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 270,200 $ (97,300)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 303,400 374,600
Changes in assets and liabilities:
(Increase) decrease in rents receivable (20,500) 41,200
Decrease in restricted cash and certificate of
deposit 37,500
Decrease in prepaid expenses 12,500
Decrease (increase) in other assets 400 (70,000)
Increase (decrease) in accounts payable and accrued
expenses 62,400 (41,100)
(Decrease) in due to Affiliates (4,700) (3,400)
(Decrease) increase in other liabilities (59,400) 42,700
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Net cash provided by operating activities 551,800 296,700
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Cash flows from investing activities:
Payments for capital and tenant improvements (134,900) (203,800)
Decrease (increase) in escrow deposits 66,600 (34,800)
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Net cash (used for) investing activities (68,300) (238,600)
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Cash flows from financing activities:
Proceeds from issuance of mortgage loan payable 8,500,000
Repayment of mortgage loan payable (6,650,000)
Principal payments on mortgage loans payable (469,200) (244,400)
Loan acquisition costs incurred (1,600)
Increase in security deposits 900 2,700
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Net cash (used for) provided by financing activities (469,900) 1,608,300
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Net increase in cash and cash equivalents 13,600 1,666,400
Cash and cash equivalents at the beginning of the period 2,464,100 1,092,300
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Cash and cash equivalents at the end of the period $2,477,700 $2,758,700
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Supplemental information:
Interest paid during the period $ 510,400 $ 685,800
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</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
June 30, 1996
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
DEFINITION OF SPECIAL TERMS:
Capitalized terms used in this report have the same meaning as those terms have
in the Partnership's Registration Statement filed with the Securities and
Exchange Commission on Form S-11. Definitions of these terms are contained in
Article III of the First Amended and Restated Certificate and Agreement of
Limited Partnership, which is included in the Registration Statement and
incorporated herein by reference.
ACCOUNTING POLICIES:
The financial statements have been prepared in accordance with generally
accepted accounting principles ("GAAP"). Under this method of accounting,
revenues are recorded when earned and expenses are recorded when incurred.
Preparation of the Partnership's financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
The financial information included in these financial statements is unaudited;
however, in management's opinion, all adjustments (consisting of only normal,
recurring accruals) necessary for a fair presentation of the results of
operations for the periods included have been made. Results of operations for
the quarter and six months ended June 30, 1996 are not necessarily indicative
of the operating results for the year ending December 31, 1996.
The financial statements include the Partnership's 50% interest in one joint
venture and its 25% interest in another joint venture with Affiliated
partnerships. These joint ventures were formed for the purpose of each
acquiring a 100% interest in certain real property and are operated under the
common control of the General Partner. Accordingly, the Partnership's pro rata
share of the venture's revenues, expenses, assets, liabilities and Partners'
capital was included in the financial statements.
Commercial rental properties held for investment are recorded at cost, net of
any provisions for value impairment, and depreciated (exclusive of amounts, if
any, allocated to land and value impairments) on the straight-line method over
their estimated useful lives. Upon classifying a commercial rental property as
held for disposition, no further depreciation or amortization of such property
is provided for in the financial statements. Lease acquisition fees are
recorded at cost and amortized over the life of the lease. Repair and
maintenance costs are expensed as incurred; expenditures for improvements are
capitalized and depreciated over the estimated life of the improvements.
Loan acquisition costs are amortized over the term of the mortgage loan made in
connection with the acquisition of Partnership properties or refinancing of
Partnership loans. When a property is disposed of or a loan is refinanced, the
related loan acquisition costs and accumulated amortization are removed from
the respective accounts and any unamortized balance is expensed.
During the first quarter of 1996, the Partnership adopted Financial Accounting
Standards Board Statement No. 121 "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of" (the "Standard"). The
Standard established guidance for determining if the value of defined assets
are impaired, and if so, how impairment losses should be measured and reported
in the financial statements. The Standard also addressed the accounting for
long-lived assets that are expected to be disposed of. The adoption of the
Standard did not have a material effect on the Partnership's financial
statements.
Cash equivalents are considered all highly liquid investments with an original
maturity of three months or less when purchased.
Certain reclassifications have been made to the previously reported 1995
statements in order to provide comparability with the 1996 statements. These
reclassifications had no effect on net (loss) or Partners' (deficit) capital.
Reference is made to the Partnership's annual report for the year ended
December 31, 1995 for a description of other accounting policies and additional
details of the Partnership's financial condition, results of operations,
changes in Partners' capital and changes in cash balances for the year then
ended. The details provided in the notes thereto have not changed except as a
result of normal transactions in the interim or as otherwise disclosed herein.
2. RELATED PARTY TRANSACTIONS:
In accordance with the Partnership Agreement, subsequent to September 24, 1985,
the Termination of the Offering, the General Partner is entitled to 10% of
distributable Cash Flow (as defined in the Partnership Agreement), as a
Partnership Management Fee. For the quarter and six months ended June 30, 1996,
in conjunction with the suspension of distributions of Cash Flow (as defined in
the Partnership Agreement) to Limited Partners, the General Partner was not
paid a Partnership Management Fee.
In accordance with the Partnership Agreement, Net Profits (exclusive of Net
Profits from the sale or disposition of Partnership properties) are allocated
to the General Partner in an amount equal to the greater of 1% of such Net
Profits or the Partnership Management Fee paid by the Partnership to the
General Partner during such year, and the balance, if any, to the Limited
Partners. Net Losses (exclusive of Net Losses from the sale, disposition and
provision for value impairment of Partnership properties) are allocated 1% to
the General Partner and 99% to the Limited Partners. Net Profits from the sale
or disposition of a Partnership property are allocated: first, prior to giving
effect to any distribution of Sale or Refinancing Proceeds from the
transaction, to all 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 Partner in an
amount necessary to make the positive balance in its Capital Account equal to
the amount of Sale or Refinancing Proceeds to be distributed to the General
Partner with respect to the sale or disposition of such property; and third,
the balance, if any, to the Limited Partners. Net Losses from the sale or
disposition of Partnership properties are 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
amount of such
4
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
positive balances; and second, the balance, if any, 1% to the General Partner
and 99% to the Limited Partners. Notwithstanding anything to the contrary,
there shall be allocated to the General Partner not less than 1% of all items
of Partnership income, gain, loss, deduction and credit during the existence of
the Partnership. For the quarter and six months ended June 30, 1996, the
General Partner was allocated Net Profits of $1,700 and $2,700, respectively.
Fees and reimbursements paid and payable by the Partnership to Affiliates
during the quarter and six months ended June 30, 1996 were as follows:
<TABLE>
<CAPTION>
Paid
-----------------
Six
Quarter Months Payable
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Property management and leasing fees $ 78,500 $143,500 $11,700
Reimbursement of property insurance premiums, at
cost 27,700 27,700 None
Real estate commission (a) None None 10,000
Reimbursement of expenses, at cost:
--Accounting 4,900 11,200 3,600
--Investor communication 1,300 2,900 500
--Legal 8,200 19,800 None
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$120,600 $205,100 $25,800
- ---------------------------------------------------------------------------
</TABLE>
(a) As of June 30, 1996, the Partnership owed $10,000 to the 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 shall not pay
the General Partner or any affiliate 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 investment date) of 6% simple
interest per annum on their Capital Investment from the initial investment
date.
3. MORTGAGE LOANS PAYABLE:
Mortgage loans payable at June 30, 1996 and December 31, 1995 consisted of the
following non-recourse loans:
<TABLE>
<CAPTION>
Partnership's Share of
Principal Balance at Average
Property Pledged as ----------------------- Interest Maturity
Collateral 6/30/96 12/31/95 Rate Date
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Glendale Center Shopping
Mall (50%) $ 7,640,600 $ 8,039,400 9.97%(a) 1/1/99
Regency Park Shopping
Center (25%) 3,888,200 3,958,600 (b) (b)
- ---------------------------------------------------------------------
$11,528,800 $11,998,000
- ---------------------------------------------------------------------
</TABLE>
(a) This interest rate represents the weighted average for the six months ended
June 30, 1996. This interest rate is subject to monthly change in
accordance with the provisions of the loan agreement. As of June 30, 1996,
the interest rate on this loan was 9.94%.
(b) The joint venture which owns Regency, in which the Partnership has a 25%
interest with Affiliated partnerships, is in default under the terms of its
mortgage loan which matured on January 1, 1996. The General Partner is
finalizing negotiations with the lender to modify the terms of this
mortgage loan. As of the date of this report, the General Partner and the
lender have substantively agreed to the following, which would be
retroactive to January 1, 1996: 1) an extension of the maturity date to
December 31, 1997; 2) monthly principal and interest payments based on a 23
year amortization schedule with a per annum interest rate of 7.5%; and 3)
net property cash flow (as defined in the proposed modification agreement),
if any, after deducting scheduled principal and interest payments, approved
capital and tenant improvements and leasing commissions, will be required
to be deposited into a non-interest bearing reserve account maintained by
the lender to be used for capital and tenant improvements, leasing
commissions and operating deficits of Regency. This agreement has not yet
been executed, and there can be no assurance that an agreement will be
finalized. The General Partner believes that a modification agreement will
be finalized incorporating the above provisions. Since January 1, 1996, the
joint venture has made sufficient remittances to the lender to comply with
the terms of the above described modification.
For additional information regarding the mortgage loans payable, see Notes to
the Financial Statements included in the Partnership's Annual Report for the
year ended December 31, 1995.
5
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Reference is made to the Partnership's annual report for the year ended
December 31, 1995, for a discussion of the Partnership's business.
OPERATIONS
The table below is a recap of the Partnership's share of certain operating
results of each of its remaining properties for the quarters and six months
ended June 30, 1996 and 1995. The discussion following the table should be read
in conjunction with the financial statements and notes thereto appearing in
this report.
<TABLE>
<CAPTION>
Comparative Operating Results (a)
For the Quarters For the Six Months
Ended Ended
6/30/96 6/30/95 6/30/96 6/30/95
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<S> <C> <C> <C> <C>
GLENDALE CENTER SHOPPING MALL (50%)
Rental revenues $947,600 $846,300 $1,843,000 $1,709,400
- ---------------------------------------------------------------------
Property net income (loss) $170,300 $(10,400) $ 279,800 $ (8,700)
- ---------------------------------------------------------------------
Average occupancy 91% 92% 91% 92%
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REGENCY PARK SHOPPING CENTER (25%)
Rental revenues $150,800 $148,500 $ 300,200 $ 296,600
- ---------------------------------------------------------------------
Property net income (loss) $ 5,400 $(18,700) $ 200 $ (37,700)
- ---------------------------------------------------------------------
Average occupancy 88% 88% 88% 88%
- ---------------------------------------------------------------------
</TABLE>
(a) Excludes certain income and expense items which are not directly related to
individual property operating results such as Partnership interest income
and general and administrative expenses or are related to properties
previously owned by the Partnership.
Unless otherwise disclosed, discussions of fluctuations between 1996 and 1995
refer to both the quarters and six months ended June 30, 1996 and 1995.
Net income increased $222,700 and $367,500, respectively, for the quarter and
six months ended June 30, 1996 when compared to the quarter and six months
ended June 30, 1995. The increases were primarily due to improved operating
results at Glendale Center Shopping Mall ("Glendale") and at Regency Park
Shopping Center ("Regency") and decreased general and administrative costs in
legal, data processing and printing and mailing costs.
Rental revenues increased by $98,800 or 9.9% and $132,500 or 6.6%,
respectively, for the quarterly and six-month periods under comparison. The
increases were primarily due an increase in rental revenues at Glendale, which
resulted from increased rental rates charged to new and renewing tenants,
increased real estate tax escalation income and the 1996 receipt of a payment
as consideration for the early termination of a tenant's lease.
Interest expense decreased $47,000 and $94,000, respectively, for the periods
under comparison. These decreases were primarily due to a reduction in the
interest rates as well as the effects of principal payments made during the
past 18 months on the Partnership's mortgage loans.
Repairs and maintenance expense decreased $17,600 and $28,100, respectively,
for the quarter and six months ended June 30, 1996 when compared to the quarter
and six months ended June 30, 1995. The decreases were primarily due to a
decrease in the amount of improvements made in 1996 to improve the interior and
exterior appearance of Glendale and a decrease in the costs associated with the
maintenance of the energy plant at Glendale.
Property operating expenses decreased $28,000 and $12,000, respectively, for
the quarterly and six-month periods under comparison. The decrease for the
quarters under comparison was primarily due to a decrease in promotional and
advertising costs at Glendale and Regency and a decrease in utilities at
Glendale, partially offset by an increase in security costs at Glendale. For
the six-month periods under comparison, the decrease was primarily due to a
reduction in advertising costs at Glendale and Regency, partially offset by an
increase in security costs and professional fees at Glendale.
Real estate tax expense increased $20,000 and $9,600, respectively, for the
quarterly and six month periods. These increases were primarily due to an
increase in the tax rate imposed by the taxing authority at Glendale.
To increase and/or maintain occupancy levels at the Partnership's properties,
the General Partner, through its Affiliated asset and property management
groups, continues to take the following actions: 1) implementation of marketing
programs, including hiring of third-party leasing agents or providing on-site
leasing personnel, advertising, direct mail campaigns and development of
property brochures; 2) promotion of local broker events and networking with
local brokers; 3) networking with national level retailers; 4) cold-calling
other businesses and tenants in the market area; and 5) 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 it properties.
Cash Flow (as defined in the Partnership Agreement) is generally not equal to
net income or cash flows as defined by generally accepted accounting principles
("GAAP"), since certain items are treated differently under the Partnership
Agreement than under GAAP. Management believes that to facilitate a clear
understanding of the Partnership's operations, an analysis of Cash Flow (as
defined in the Partnership Agreement) should be examined in conjunction with an
analysis of net income or cash flows as defined by GAAP. The following table
includes a reconciliation of Cash Flow (as defined in the Partnership
Agreement) to net cash provided by operating activities as determined by GAAP.
Such amounts 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.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
<TABLE>
<CAPTION>
Comparative Cash
Flow Results For the
Six Months Ended
6/30/96 6/30/95
- ----------------------------------------------------------------------------
<S> <C> <C>
Cash Flow (as defined in the Partnership Agreement) $ 144,200 $ 32,900
Items of reconciliation:
Principal payments on mortgage loans 429,400 244,400
(Increase) decrease in current assets (20,100) 21,200
(Decrease) in current liabilities (1,700) (1,800)
- ----------------------------------------------------------------------------
Net cash provided by operating activities $ 551,800 $ 296,700
- ----------------------------------------------------------------------------
Net cash (used for) investing activities $ (68,300) $ (238,600)
- ----------------------------------------------------------------------------
Net cash (used for) provided by financing activities $(469,900) $1,608,300
- ----------------------------------------------------------------------------
</TABLE>
The increase in Cash Flow (as defined in the Partnership Agreement) of $111,300
for the six months ended June 30, 1996 when compared to the six months ended
June 30, 1995 was primarily due to improved operating results, exclusive of
depreciation and amortization, at Glendale and Regency as previously discussed.
The increase in the Partnership's cash position of $13,600 for the six months
ended June 30, 1996 was primarily the result of net cash provided by operating
activities exceeding the cash used for capital, tenant improvement and leasing
costs and principal payments on mortgage debt.
The increase in net cash provided by operating activities of $255,100 for the
six months ended June 30, 1996 when compared to the six months ended June 30,
1995, was primarily the result of the increase in net income due to improved
operating results at Glendale and Regency, exclusive of depreciation and
amortization, as previously discussed, partially offset by the timing of the
collection of tenant's rental payments.
Net cash used for investing activities decreased by $170,300 for the six months
ended June 30, 1996 when compared to the six months ended June 30, 1995. The
decrease was due to the 1996 release of $55,000 from a capital improvement
escrow held by the lender for the replacement of a chiller at Glendale and a
decrease in expenditures for capital, tenant improvement and leasing costs at
the Partnership's properties. The Partnership maintains working capital
reserves to pay for capital expenditures such as building and tenant
improvements and leasing costs. During the six months ended June 30, 1996, the
Partnership spent $134,900 for building and tenant improvements and leasing
costs and has projected to spend approximately $250,000 during the remainder of
1996. Of the projected amount, approximately $200,000 relates to anticipated
capital, tenant improvement and leasing costs expected to be incurred at
Glendale. The General Partner believes that these expenditures are necessary in
order to increase and/or maintain occupancy levels and to maximize rental rates
charged to new and renewing tenants.
Net cash provided by (used for) financing activities changed from $1,608,300
for the six months June 30, 1995 to $(469,900) for the six months ended June
30, 1996. This change was due primarily to the net proceeds received in 1995
from the refinancing of the mortgage loan collateralized by Glendale and to a
lesser extent to increased principal payments made during 1996 on this loan.
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 joint venture which owns Regency, in which the Partnership has a 25%
interest with Affiliated partnerships, is in default under the terms of its
mortgage loan which matured on January 1, 1996. The General Partner is
finalizing negotiations with the lender to modify the terms of this mortgage
loan. As of the date of this report, the General Partner and the lender have
substantively agreed to the following, which is retroactive to January 1, 1996:
1) an extension of the maturity date to December 31, 1997; 2) monthly principal
and interest payments based on a 23 year amortization schedule with a per annum
interest rate of 7.5% and 3) net property cash flow, if any, after deducting
scheduled principal and interest payments, approved capital, tenant improvement
and leasing commissions, will be required to be deposited into a non-interest
bearing reserve account maintained by the lender to be used for capital and
tenant improvements, leasing commissions and operating deficits of Regency.
This agreement has not yet been executed, and there can be no assurance that an
agreement will be finalized. The General Partner believes that a modification
agreement will be finalized incorporating the above provisions. Since January
1, 1996, the joint venture has made sufficient remittances to the lender to
comply with the terms of the above described modification.
As a result of the mortgage issues discussed above, combined with cash required
to fund anticipated capital, tenant improvement and leasing costs to be made at
the Partnership's properties, the General Partner believes that it is in the
best interest of the Partnership to retain all cash available. Accordingly,
distributions to Limited Partners continue to be suspended. The amount of
future distributions to Partners will ultimately be dependent upon the
performance of the Partnership's investments as well as the General Partner's
determination of the amount of cash necessary to supplement working capital
reserves to meet future liquidity requirements of the Partnership. There can be
no assurance as to the amount and/or availability of cash for future
distributions to Partners.
Based upon the current estimated value of its assets, net of its outstanding
liabilities, together with its expected operating results and capital
expenditure requirements, the General Partner believes that the Partnership's
cumulative distributions to its Limited Partners from inception through the
termination of the Partnership will be substantially less than such Limited
Partners' original Capital Investment.
7
<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, 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIRST CAPITAL INCOME PROPERTIES, LTD. - SERIES X
By: FIRST CAPITAL FINANCIAL CORPORATION
GENERAL PARTNER
Date: August 14, 1996 By: /s/ DOUGLAS CROCKER II
--------------- --------------------------------------
DOUGLAS CROCKER II
President and Chief Executive Officer
Date: August 14, 1996 By: /s/ NORMAN M. FIELD
--------------- --------------------------------------
NORMAN M. FIELD
Vice President - Finance and Treasurer
7
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 2,477,700
<SECURITIES> 0
<RECEIVABLES> 465,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,987,100
<PP&E> 24,614,900
<DEPRECIATION> 7,382,700
<TOTAL-ASSETS> 20,323,100
<CURRENT-LIABILITIES> 646,800
<BONDS> 11,528,800
<COMMON> 0
0
0
<OTHER-SE> 8,128,800
<TOTAL-LIABILITY-AND-EQUITY> 20,323,100
<SALES> 0
<TOTAL-REVENUES> 2,207,400
<CGS> 0
<TOTAL-COSTS> 1,018,300
<OTHER-EXPENSES> 73,900
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 541,600
<INCOME-PRETAX> 270,200
<INCOME-TAX> 0
<INCOME-CONTINUING> 270,200
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 270,200
<EPS-PRIMARY> 6.10
<EPS-DILUTED> 6.10
</TABLE>
