<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
---------------
FORM 10-Q
---------------
[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE PERIOD ENDED SEPTEMBER 30, 2000
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 0-16888
FIRST CAPITAL INCOME AND GROWTH FUND--SERIES XII
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
ILLINOIS 36-3498223
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
TWO NORTH RIVERSIDE PLAZA, 60606-2607
SUITE 600, (ZIP CODE)
CHICAGO, ILLINOIS
(ADDRESS OF PRINCIPAL EXECUTIVE
OFFICES)
(312) 207-0020
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
NOT APPLICABLE
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST
REPORT)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [_]
DOCUMENTS INCORPORATED BY REFERENCE:
The First Amended and Restated Certificate and Agreement of Limited Partnership
filed as Exhibit A to the Partnership's Prospectus dated May 8, 1987, 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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<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, 1999 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.
The Partnership has substantially completed the disposition phase of its life
cycle. The Partnership has sold its remaining real property investments and is
working toward resolution of post-closing property sale matters.
OPERATIONS
Net income decreased by $4,716,400 and $4,417,200 for the quarter and nine
months ended September 30, 2000 when compared to the quarter and nine months
ended September 30, 1999, respectively. The decreases were primarily due to the
gain reported on the sale of Prentice Plaza during the third quarter of 1999.
The decreases were also due to the absence in 2000 of operating results from
the properties sold during 1999. The decreases were partially offset due to the
absence of interest charged on the Partnership's Front-End Fees during 2000.
The decrease for the nine-month periods under comparison was partially offset
by an increase in interest earned on the Partnership's short-term investments
primarily due to an increase in the average rate earned on these investments.
LIQUIDITY AND CAPITAL RESOURCES
The net decrease in the Partnership's cash of $24,269,200 for the nine months
ended September 30, 2000 was primarily the result of the February 29 and May
31, 2000 special distributions to Limited Partners. The decrease was partially
offset by the liquidation of the Partnership's investments in debt securities.
Liquid assets (including cash and cash equivalents) of the Partnership as of
September 30, 2000 were comprised of amounts held for post property sale
matters and Partnership liquidation expenses.
Net cash provided by operating activities decreased by $1,380,700 for the nine
months ended September 30, 2000 when compared to the nine months ended
September 30, 1999. The decrease was primarily the result of the absence of
results, exclusive of depreciation and amortization, in 2000 from properties
sold during 1999. The decrease was partially offset by an increase in interest
earned on the Partnership's short-term investments.
Net cash (used for) provided by investing activities changed from $(2,667,200)
for the nine months ended September 30, 1999 to $1,934,500 for the nine months
ended September 30, 2000. The change was primarily due to the 2000 maturity of
the Partnership's investments in debt securities, which contrasted with the net
investment in debt securities during the comparable 1999 period. The change was
partially offset by the 1999 receipt of proceeds from the sale of Prentice
Plaza.
The Partnership has no financial instruments for which there are significant
market risks.
The increase in net cash used for financing activities of $21,276,600 for the
nine months ended September 30, 2000 when compared to the nine months ended
September 30, 1999 was primarily the result of the special distributions paid
to Limited Partners in February and May of 2000. The increase was partially
offset by the 1999 repayment of the mortgage loan collateralized by Prentice
Plaza.
On February 29, 2000, the Partnership distributed $17,999,500 or $18.95 per
Unit to Limited Partners of record as of November 12, 1999. The cash proceeds
utilized for this distribution were generated from the November sale of
Deerfield Mall.
On May 31, 2000, the Partnership distributed $8,548,600 or $9.00 per Unit to
Limited Partners of record as of November 12, 1999. The cash proceeds utilized
for this distribution were available from amounts previously set aside for
working capital purposes.
The General Partner is in the process of wrapping-up the Partnership's affairs.
This process includes resolution of all post-closing property and Partnership
matters, together with the expiration of representations and warranties
included in the contract for the sale of Deerfield Mall. Following the
resolution of these matters and the establishment of a reserve for
contingencies and wrap-up expenses, the Partnership will make a liquidating
distribution to Partners and dissolve.
Based upon the current value of its assets, net of its outstanding liabilities,
the Partnership's cumulative distributions to its Limited Partners from
inception through the termination of the Partnership will be significantly less
than such Limited Partners' Original Capital Contribution.
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BALANCE SHEETS
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
September 30,
2000 December 31,
(Unaudited) 1999
-----------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $2,535,500 $26,804,700
Investments in debt securities 1,928,300
Escrow deposits 400 6,600
Other assets 16,700 3,700
-----------------------------------------------------------------------------
$2,552,600 $28,743,300
-----------------------------------------------------------------------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Front-End Fees Loan payable to Affiliate $ $13,434,400
Accounts payable and accrued expenses 28,500 104,600
Due to Affiliates 1,100 3,900
Distribution payable 17,999,500
Other liabilities 104,600 104,600
-----------------------------------------------------------------------------
134,200 31,647,000
-----------------------------------------------------------------------------
Partners' capital:
General Partner (deficit) 916,000 (2,903,700)
Limited Partners (1,000,000 Units issued, 949,843
Units outstanding) 1,502,400 --
-----------------------------------------------------------------------------
2,418,400 (2,903,700)
-----------------------------------------------------------------------------
$2,552,600 $28,743,300
-----------------------------------------------------------------------------
</TABLE>
STATEMENTS OF PARTNERS' CAPITAL
For the Nine Months Ended September 30, 2000 (Unaudited)
and the Year Ended December 31, 1999
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
General Limited
Partner Partners Total
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Partners' (deficit) capital,
January 1, 1999 $(1,146,000) $ 8,474,200 $ 7,328,200
Net (loss) income for the year ended
December 31, 1999 (1,757,700) 15,699,300 13,941,600
Distributions for the year ended
December 31, 1999 (24,173,500) (24,173,500)
-------------------------------------------------------------------------------
Partners' (deficit) capital, December
31, 1999 (2,903,700) -- (2,903,700)
Net income for the nine months ended
September 30, 2000 4,300 432,000 436,300
Capital adjustment, extinguishment of
debt to Affiliate of General Partner 3,815,400 9,619,000 13,434,400
Distributions for the nine months
ended September 30, 2000 (8,548,600) (8,548,600)
-------------------------------------------------------------------------------
Partners' capital, September 30, 2000 $ 916,000 $ 1,502,400 $ 2,418,400
-------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements
3
<PAGE>
STATEMENTS OF INCOME AND EXPENSES
For the Quarters Ended September 30, 2000 and 1999
(Unaudited)
(All dollars rounded to nearest 00s
except per Unit amounts)
<TABLE>
<CAPTION>
2000 1999
----------------------------------------------------------------------
<S> <C> <C>
Income:
Rental $ 1,000 $1,095,800
Interest 44,200 190,500
Gain on sale of property 4,594,000
----------------------------------------------------------------------
45,200 5,880,300
----------------------------------------------------------------------
Expenses:
Interest:
Affiliates 247,000
Nonaffiliates 320,400
Depreciation and amortization 175,400
Property operating:
Affiliates 2,500 35,500
Nonaffiliates 82,700
Real estate taxes (23,200) 170,700
Insurance--Affiliate 11,100
Repairs and maintenance 86,900
General and administrative:
Affiliates 2,000 8,000
Nonaffiliates 19,300 26,600
----------------------------------------------------------------------
600 1,164,300
----------------------------------------------------------------------
Net income $44,600 $4,716,000
----------------------------------------------------------------------
Net income allocated to General Partner $ 400 $1,836,800
----------------------------------------------------------------------
Net income allocated to Limited Partners $44,200 $2,879,200
----------------------------------------------------------------------
Net income allocated to Limited Partners per Unit
(949,843 Units outstanding) $ 0.05 $ 3.03
----------------------------------------------------------------------
</TABLE>
STATEMENTS OF INCOME AND EXPENSES
For the Nine Months Ended September 30, 2000 and 1999
(Unaudited)
(All dollars rounded to nearest 00s
except per Unit amounts)
<TABLE>
<CAPTION>
2000 1999
-----------------------------------------------------------------------
<S> <C> <C>
Income:
Rental $ (3,200) $4,013,100
Interest 476,400 417,800
Gain on sale of property 4,594,000
-----------------------------------------------------------------------
473,200 9,024,900
-----------------------------------------------------------------------
Expenses:
Interest:
Affiliates 717,000
Nonaffiliates 1,115,600
Depreciation and amortization 680,000
Property operating:
Affiliates 3,300 105,800
Nonaffiliates (16,700) 377,400
Real estate taxes (23,200) 709,000
Insurance--Affiliate (1,100) 36,000
Repairs and maintenance 318,800
General and administrative:
Affiliates 8,000 36,000
Nonaffiliates 66,600 75,800
-----------------------------------------------------------------------
36,900 4,171,400
-----------------------------------------------------------------------
Net income $436,300 $4,853,500
-----------------------------------------------------------------------
Net income allocated to General Partner $ 4,300 $1,838,200
-----------------------------------------------------------------------
Net income allocated to Limited Partners $432,000 $3,015,300
-----------------------------------------------------------------------
Net income allocated to Limited Partners per Unit
(949,843 Units outstanding) $ 0.45 $ 3.17
-----------------------------------------------------------------------
</TABLE>
STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 2000 and 1999
(Unaudited)
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
2000 1999
-------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 436,300 $ 4,853,500
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 680,000
Gain on sale of property (4,594,000)
Changes in assets and liabilities:
Decrease in rents receivable 194,800
(Increase) decrease in other assets (13,000) 12,600
(Decrease) increase in accounts payable and
accrued expenses (76,100) 209,700
(Decrease) increase in due to Affiliates (2,800) 434,500
(Decrease) in other liabilities (66,000)
-------------------------------------------------------------------------------
Net cash provided by operating activities 344,400 1,725,100
-------------------------------------------------------------------------------
Cash flows from investing activities:
Proceeds from sale of property 10,897,400
Payments for capital and tenant improvements (411,600)
Decrease (increase) in investments in debt
securities, net 1,928,300 (12,807,100)
Decrease (increase) in escrow deposits 6,200 (345,900)
-------------------------------------------------------------------------------
Net cash provided by (used for) investing
activities 1,934,500 (2,667,200)
-------------------------------------------------------------------------------
Cash flows from financing activities:
Principal payments on mortgage loans payable (479,000)
Repayments of mortgage loans payable (4,726,700)
Distributions to Partners (26,548,100)
(Decrease) in security deposits (65,800)
-------------------------------------------------------------------------------
Net cash (used for) financing activities (26,548,100) (5,271,500)
-------------------------------------------------------------------------------
Net (decrease) in cash and cash equivalents (24,269,200) (6,213,600)
Cash and cash equivalents at the beginning of the
period 26,804,700 9,704,900
-------------------------------------------------------------------------------
Cash and cash equivalents at the end of the period $ 2,535,500 $ 3,491,300
-------------------------------------------------------------------------------
Supplemental information:
Interest paid to Affiliate during the period $ -- $ 312,400
-------------------------------------------------------------------------------
Interest paid to nonaffiliates during the period $ -- $ 1,145,400
-------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements
4
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
September 30, 2000
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 Agreement of Limited Partnership,
which is included in the Registration Statement and incorporated herein by
reference.
ACCOUNTING POLICIES:
The Partnership sold its remaining properties during 1999. The Partnership is
in the process of resolving post-closing matters related to the sold
properties, which include reprorations, adjustments, as well as expiration of
representations and warranties made to a purchaser of one of the properties
sold during 1999. Upon completion of this process, together with the resolution
of other pending matters, the Partnership will make a liquidating distribution
to Partners and dissolve.
The financial statements have been prepared in accordance with accounting
principles generally accepted in the United States ("GAAP"). The Partnership
utilizes the accrual method of accounting. Under this method, revenues are
recorded when earned and expenses are recorded when incurred. The Partnership
recognizes rental income that is contingent upon tenants' achieving specified
targets only to the extent that such targets are achieved.
Preparation of the Partnership's financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
The financial information included in these financial statements is unaudited;
however, in management's opinion, all adjustments (consisting of only normal,
recurring accruals) necessary for a fair presentation of the results of
operations for the periods included have been made. Results of operations for
the quarter and nine months ended September 30, 2000 are not necessarily
indicative of the operating results for the year ending December 31, 2000.
The financial statements include the Partnership's 50% interest in a joint
venture with an Affiliated partnership, which was formed for the purpose of
acquiring a 100% interest in certain real property. This joint venture was,
until its property was sold in July 1999, operated under the common control of
the General Partner. Accordingly, the Partnership's pro rata share of the joint
ventures' revenues, expenses, assets, liabilities and Partners' (deficit)
capital is included in the financial statements.
The Partnership has one reportable segment as the Partnership is in the
disposition phase of its life cycle, wherein it is seeking to resolve post-
closing property sale matters.
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. Gains and losses on sales are recognized in accordance with GAAP.
Cash equivalents are considered all highly liquid investments with a maturity
of three months or less when purchased.
Investments in debt securities were comprised of corporate debt obligations and
were classified as held-to-maturity. These investments were carried at their
amortized cost basis in the financial statements, which approximated fair
value. All of these securities had maturities of less than one year when
purchased.
Reference is made to the Partnership's Annual Report for the year ended
December 31, 1999, 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, as compensation for services
rendered in managing the affairs of the Partnership, the General Partner shall
be entitled to receive subsequent to November 22, 1988, the Termination of the
Offering, a Portfolio Management Fee, payable quarterly, which shall be an
amount equal to the lesser of (i) 0.5% of the gross value of the Partnership's
assets (not reduced by indebtedness collateralized by such assets), all as
estimated by the General Partner in its reasonable discretion, plus, to the
extent the Portfolio Management Fee paid in any prior year was less than 0.5%
of the gross value of the Partnership's assets in such prior year, the amount
of such deficit, or (ii) an amount equal to the remainder obtained by
subtracting the aggregate amount previously paid to the General Partner as
Portfolio Management Fees during such fiscal year, from an amount equal to 10%
of the Partnership's aggregate Cash Flow (as defined in the Partnership
Agreement) (computed prior to the deduction for Portfolio Management Fees) for
such fiscal year. For the quarter and nine months ended September 30, 2000 and
1999, 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 Portfolio Management Fee.
In accordance with the Partnership Agreement, Net Profits and Net Losses
(exclusive of Net Profits and Net Losses from a Major Capital Event) are
allocated 1% to the General Partner and 99% to the Limited Partners as a group.
Net Losses from a Major Capital Event are allocated: first, prior to giving
effect to any distributions of Sale or Refinancing Proceeds from the
transaction, to the General Partner and Limited Partners with positive balances
in their Capital Accounts, in proportion to and to the extent of such positive
balances; and second, the balance, if any, 1% to the General Partner and 99% to
the Limited Partners as a group. Net Profits from a Major Capital Event are
allocated: first, prior to giving effect to any distributions of Sale or
Refinancing Proceeds from the transaction, Net Profit in the amount of the
Minimum Gain (as defined in the Partnership Agreement) attributable to the
property that is the subject of such Major Capital Event is allocated to the
General Partner and Limited
5
<PAGE>
Partners with negative balances in their Capital Accounts, pro rata in
proportion to such respective negative balances; second, to the General Partner
and each Limited Partner in proportion to and to the extent of such amounts, if
any, equal to the amount of Sale or Refinancing Proceeds to be distributed to
each such General Partner or Limited Partner with respect to such Major Capital
Event; and third, the balance, if any, 20% to the General Partner and 80% to
the Limited Partners as a group. 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 nine months ended September 30, 2000, the
General Partner was allocated Net Profits of $400 and $4,300, respectively. For
the quarter and nine months ended September 30, 1999, the General Partner was
allocated Net Profits of $1,836,800 and $1,838,200, respectively, which
included a gain on the sale of a property of $1,834,500.
Fees and reimbursements paid and payable by the Partnership to Affiliates
during the quarter and nine months ended September 30, 2000 were as follows:
<TABLE>
<CAPTION>
Paid
-------------------
Quarter Nine Months Payable
------------------------------------------------------------------
<S> <C> <C> <C>
Asset management fees $2,500 $ 3,300 None
Refund of property insurance premiums -- (1,100) None
Reimbursement of expenses, at cost:
--Accounting -- 4,700 None
--Investor communications 1,200 6,500 1,100
------------------------------------------------------------------
$3,700 $13,400 $1,100
------------------------------------------------------------------
</TABLE>
3. FRONT-END FEES LOAN PAYABLE TO AFFILIATE:
The Partnership borrowed $13,434,400, the full amount available pursuant to the
loan's terms, from an Affiliate of the General Partner, an amount needed for
the payment of securities sales commissions, Offering and Organizational
Expenses and other Front-End Fees, other than Acquisition Fees. Repayment of
the principal amount of the Front-End Fees Loan is subordinated (the
"Subordination") to payment to the Limited Partners of 100% of their Original
Capital Contribution from Sale or Refinancing Proceeds (as defined in the
Partnership Agreement). Interest on the outstanding balance of this loan was
due and payable monthly at a rate no greater than the cost of funds obtained by
the Affiliate from unaffiliated lenders. Effective following the May 1999
payment of interest on this loan, the Affiliate of the General Partner waived
further collection of interest on this loan. Following the sale of the
Partnership's last remaining property, it has been determined that the
requirements of the Subordination will not be attained and, accordingly, the
Front-End Fees loan will not be repaid. During the quarter ended June 30, 2000,
the Partnership wrote-off the balance due on this loan through an adjustment to
Partners' Capital in the amount of $13,434,400. Included in the allocation to
Partners is an adjustment for 1999 net income, which was not allocated in
accordance with the Partnership Agreement to preclude the Limited Partners from
having a negative capital balance. For additional information, refer to Note 2
of Notes to Financial Statements included in the Partnership's Annual Report
for the year ended December 31, 1999.
4. DISTRIBUTIONS TO LIMITED PARTNERS:
On February 29, 2000, the Partnership distributed $17,999,500 or $18.95 per
Unit to Limited Partners of record as of November 12, 1999. The cash proceeds
utilized for this distribution were generated from the November 12, 1999 sale
of Deerfield Mall.
On May 31, 2000, the Partnership distributed $8,548,600 or $9.00 per Unit to
Limited Partners of record as of November 12, 1999. The cash proceeds utilized
for this distribution were generated from amounts previously set aside for
working capital purposes.
6
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:
(a) Exhibits: None
(b) Reports on Form 8-K:
There were no reports filed on Form 8-K for the quarter ended September 30,
2000.
7
<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 AND GROWTH FUND--
SERIES XII
By: FIRST CAPITAL FINANCIAL CORPORATION
GENERAL PARTNER
/s/ DOUGLAS CROCKER II
Date: November 14, 2000 By: ______________________________________
DOUGLAS CROCKER II
PRESIDENT AND CHIEF EXECUTIVE OFFICER
/s/ NORMAN M. FIELD
Date: November 14, 2000 By: ______________________________________
NORMAN M. FIELD
VICE PRESIDENT--FINANCE AND TREASURER
8
