<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 JUNE 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,
SUITE 700,
CHICAGO, ILLINOIS 60606-2607
(ADDRESS OF PRINCIPAL EXECUTIVE (ZIP CODE)
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 Registrant's Registration Statement on Form S-11, is incorporated herein
by reference in Part I of this report.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<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 increased by $77,500 and $254,200 for the quarter and six months
ended June 30, 2000 when compared to the quarter and six months ended June 30,
1999, respectively. The increase for the six-month periods under comparison was
primarily due to an increase in interest earned on the Partnership's short-term
investments. The increase for the quarterly and to a lesser extent the six-
month periods under comparison was due to the absence of interest charged on
the Partnership's Front-End Fees loan partially offset by the absence in 2000
of operating results from properties sold during 1999.
LIQUIDITY AND CAPITAL RESOURCES
The net decrease in the Partnership's cash of $24,301,500 for the six months
ended June 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
June 30, 2000 were comprised of amounts held for post property sale matters and
Partnership liquidation expenses.
Net cash provided by operating activities decreased by $732,700 for the six
months ended June 30, 2000 when compared to the six months ended June 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 $(8,449,600)
for the six months ended June 30, 1999 to $1,934,600 for the six months ended
June 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 Partnership has no financial instruments for which there are significant
market risks.
The increase in net cash used for financing activities of $26,218,300 for the
six months ended June 30, 2000 when compared to the six months ended June 30,
1999 was primarily the result of the special distributions paid to Limited
Partners in February and May of 2000.
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, which is expected to be completed in the fourth quarter of 2000,
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>
BALANCE SHEETS
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
June 30,
2000 December 31,
(Unaudited) 1999
---------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $2,503,200 $26,804,700
Investments in debt securities 1,928,300
Escrow deposits 300 6,600
Other assets 16,700 3,700
---------------------------------------------------------------------------
$2,520,200 $28,743,300
---------------------------------------------------------------------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Front-End Fees Loan payable to Affiliate $ $13,434,400
Accounts payable and accrued expenses 41,500 104,600
Due to Affiliates, net 300 3,900
Distribution payable 17,999,500
Other liabilities 104,600 104,600
---------------------------------------------------------------------------
146,400 31,647,000
---------------------------------------------------------------------------
Partners' capital:
General Partner (deficit) 915,600 (2,903,700)
Limited Partners (1,000,000 Units issued, 949,843
Units outstanding) 1,458,200 --
---------------------------------------------------------------------------
2,373,800 (2,903,700)
---------------------------------------------------------------------------
$2,520,200 $28,743,300
---------------------------------------------------------------------------
</TABLE>
STATEMENTS OF PARTNERS' CAPITAL
For the Six Months Ended June 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 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 six months ended
June 30, 2000 3,900 387,800 391,700
Capital adjustment, extinguishment of
debt to Affiliate of General Partner 3,815,400 9,619,000 13,434,400
Distributions for the six months
ended June 30, 2000 (8,548,600) (8,548,600)
-------------------------------------------------------------------------------
Partners' capital, June 30, 2000 $ 915,600 $ 1,458,200 $ 2,373,800
-------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements
3
<PAGE>
STATEMENTS OF INCOME AND EXPENSES
For the quarters ended June 30, 2000 and 1999
(Unaudited)
(All dollars rounded to nearest 00s
except per Unit amounts)
<TABLE>
<CAPTION>
2000 1999
------------------------------------------------------------------------
<S> <C> <C>
Income:
Rental $ (2,200) $1,407,200
Interest 123,300 112,600
------------------------------------------------------------------------
121,100 1,519,800
------------------------------------------------------------------------
Expenses:
Interest:
Affiliates 235,300
Nonaffiliates 396,700
Depreciation and amortization 250,900
Property operating:
Affiliates 500 29,200
Nonaffiliates 151,600
Real estate taxes 272,800
Insurance--Affiliate 12,500
Repairs and maintenance 122,000
General and administrative:
Affiliates 3,100 6,700
Nonaffiliates 26,900 29,000
------------------------------------------------------------------------
30,500 1,506,700
------------------------------------------------------------------------
Net income $ 90,600 $ 13,100
------------------------------------------------------------------------
Net (loss) income allocated to General Partner $(297,200) $ 200
------------------------------------------------------------------------
Net income allocated to Limited Partners $ 387,800 $ 12,900
------------------------------------------------------------------------
Net income allocated to Limited Partners per Unit
(949,843 Units outstanding) $ 0.41 $ 0.01
------------------------------------------------------------------------
</TABLE>
STATEMENTS OF INCOME AND EXPENSES
For the Six Months ended June 30, 2000 and 1999
(Unaudited)
(All dollars rounded to nearest 00s
except per Unit amounts)
<TABLE>
<CAPTION>
2000 1999
-----------------------------------------------------------------------
<S> <C> <C>
Income:
Rental $ (4,200) $2,917,300
Interest 432,200 227,300
-----------------------------------------------------------------------
428,000 3,144,600
-----------------------------------------------------------------------
Expenses:
Interest:
Affiliates 470,000
Nonaffiliates 795,200
Depreciation and amortization 504,600
Property operating:
Affiliates 800 48,800
Nonaffiliates (16,700) 316,200
Real estate taxes 538,300
Insurance--Affiliate (1,100) 24,900
Repairs and maintenance 231,900
General and administrative:
Affiliates 6,000 28,000
Nonaffiliates 47,300 49,200
-----------------------------------------------------------------------
36,300 3,007,100
-----------------------------------------------------------------------
Net income $391,700 $ 137,500
-----------------------------------------------------------------------
Net income allocated to General Partner $ 3,900 $ 1,400
-----------------------------------------------------------------------
Net income allocated to Limited Partners $387,800 $ 136,100
-----------------------------------------------------------------------
Net income allocated to Limited Partners per Unit
(949,843 Units outstanding) $ 0.41 $ 0.14
-----------------------------------------------------------------------
</TABLE>
STATEMENTS OF CASH FLOWS
For the Six Months ended June 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 $ 391,700 $ 137,500
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 504,600
Changes in assets and liabilities:
Decrease in rents receivable 219,900
(Increase) decrease in other assets (13,000) 14,900
(Decrease) increase in accounts payable and accrued
expenses (63,100) 141,900
(Decrease) increase in due to Affiliates (3,600) 147,200
(Decrease) in other liabilities (121,300)
---------------------------------------------------------------------------------
Net cash provided by operating activities 312,000 1,044,700
---------------------------------------------------------------------------------
Cash flows from investing activities:
Payments for capital and tenant improvements (30,100)
Decrease (increase) in investments in debt
securities, net 1,928,300 (8,280,300)
Decrease (increase) in escrow deposits 6,300 (139,200)
---------------------------------------------------------------------------------
Net cash provided by (used for) investing
activities 1,934,600 (8,449,600)
---------------------------------------------------------------------------------
Cash flows from financing activities:
Principal payments on mortgage loans payable (325,700)
Distributions to Partners (26,548,100)
(Decrease) in security deposits (4,100)
---------------------------------------------------------------------------------
Net cash (used for) financing activities (26,548,100) (329,800)
---------------------------------------------------------------------------------
Net (decrease) in cash and cash equivalents (24,301,500) (7,734,700)
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 $ 2,503,200 $ 1,970,200
---------------------------------------------------------------------------------
Supplemental information:
Interest paid to Affiliate during the period $ $ 312,400
---------------------------------------------------------------------------------
Interest paid to nonaffiliates during the period $ $ 824,500
---------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements
4
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
June 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 six months ended June 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 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.
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 six months ended June 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 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 six months ended June
30, 2000, the General Partner was allocated Net Profits of $3,900. For the
quarter ended June 30, 2000, the General Partner was allocated Net (Losses) of
$(297,200), which included a re-allocation of Net Profits of $298,000 from the
quarter ended March 31, 2000. For the quarter and six months ended June 30,
1999, the General Partner was allocated Net Profits of $200 and $1,400,
respectively.
Fees and reimbursements paid and payable by the Partnership to Affiliates
during the quarter and six months ended June 30, 2000 were as follows:
<TABLE>
<CAPTION>
Paid
---------------
Six
Quarter Months Payable
---------------------------------------------------------------
<S> <C> <C> <C>
Asset management fees $ 500 $ 800 None
Refund of property insurance premiums -- (1,100) None
Reimbursement of expenses, at cost:
--Accounting 900 4,700 None
--Investor communications 2,100 5,300 300
---------------------------------------------------------------
$3,500 $ 9,700 $300
---------------------------------------------------------------
</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 made available from amounts previously set aside for
working capital purposes.
5
<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 June 30, 2000.
6
<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: August 14, 2000 By: ______________________________________
DOUGLAS CROCKER II
PRESIDENT AND CHIEF EXECUTIVE OFFICER
/s/ NORMAN M. FIELD
Date: August 14, 2000 By: ______________________________________
NORMAN M. FIELD
VICE PRESIDENT--FINANCE AND TREASURER
7
