<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549-1004
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995
---------------------------------------------
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 numuber 0-17611
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FIRST CAPITAL GROWTH FUND - XIV, A REAL ESTATE LIMITED PARTNERSHIP
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C>
Illinois 36-3552804
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Two North Riverside Plaza, Suite 950, Chicago, Illinois 60606-2607
- ------------------------------------------------------- ------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (312) 207-0020
------------------------------------
Securities registered pursuant to Section 12(b) of the Act: NONE
------------------------------------
Securities registered pursuant to Section 12(g) of the Act: Limited Partnership Assignee Units
------------------------------------
</TABLE>
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
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
DOCUMENTS INCORPORATED BY REFERENCE:
The First Amended and Restated Agreement of Limited Partnership filed as Exhibit
A to the definitive Prospectus dated December 8, 1988, included in the
Registrant's Registration Statement on Form S-11 (Registration No. 33-19365), is
incorporated herein by reference in Part IV of this report.
EXHIBIT INDEX - PAGE A-1
- ------------------------
<PAGE>
PART I
ITEM 1. BUSINESS
- ------- --------
The registrant, First Capital Growth Fund - XIV, A Real Estate Limited
Partnership (the "Partnership"), is a limited partnership organized in 1987
under the Revised Uniform Limited Partnership Act of the State of Illinois. The
Partnership sold $14,518,200 in Limited Partnership Assignee Units (the "Units")
to the public from December 1988 to September 1990, pursuant to a Registration
Statement on Form S-11 filed with the Securities and Exchange Commission
(Registration No. 33-19365). Capitalized terms used in this report have the same
meaning as those terms have in the Partnership's Registration Statement.
The business of the Partnership is to invest on a leveraged basis in a
diversified portfolio of primarily institutional-quality, income-producing real
estate, such as shopping centers, office buildings, apartments, warehouses,
manufactured housing or any one or more of these categories. In December 1988,
the Partnership purchased a 25% interest in one joint venture which was formed
with an Affiliated partnership for the purpose of acquiring a 100% interest in
certain real property and in March 1991 purchased a 50% interest in one joint
venture which was formed with the same Affiliated partnership for the purpose of
acquiring a 100% interest in certain real property. These joint ventures, prior
to dissolution, are operated under the common control of First Capital Fund -
XIV, Inc. (the "General Partner") and its Affiliate. During 1993, the joint
venture which had a 25% interest in one real property, transferred title to the
property to the mortgage holder through foreclosure and subsequently dissolved
the joint venture (see Note 5 in Notes to Financial Statements for additional
information).
Property management services for the Partnership's real estate investment are
provided by an Affiliate of the General Partner for fees calculated as a
percentage of gross rents received from the property.
The real estate business is highly competitive. The results of operations of the
Partnership will depend upon the availability of suitable tenants, real estate
market conditions and general economic conditions which may impact the success
of these tenants. The property owned by the Partnership frequently competes for
tenants with similar properties owned by others.
As of March 1, 1996, the Partnership employed, through its joint venture, 3
people for on-site property maintenance and administration.
ITEM 2. PROPERTY
- ------- --------
As of December 31, 1995, the Partnership owned a 50% interest in a joint venture
which owned, in fee simple, the 1800 Sherman Office Building ("the Property"),
located in Evanston, Illinois. The Partnership has budgeted in 1996 to spend
approximately $140,000 for building and tenant improvements at the Property. The
Property has 134,541 net leasable square feet of which 97%, 97%, 94%, 88% and
86%, was occupied as of December 31, 1995, 1994, 1993, 1992 and 1991,
respectively. The average annual rental per square foot, as computed by dividing
the property's base revenues by its average occupied square footage, for the
years ended December 31, 1995, 1994, 1993, 1992 and 1991 (1991 is based on the
10 months of ownership) was $21.14, $20.58, $20.20, $19.67 and $19.19,
respectively.
For federal income tax purposes, the Partnership depreciates the portion of the
acquisition costs of the Property allocable to real property (exclusive of
land), and all improvements, over a useful life of 40 years, utilizing the
straight-line method. In the opinion of the General Partner, the Property is
adequately insured and serviced by all necessary utilities. The Partnership's
share of 1995 real estate taxes for the Property was $554,400.
2
<PAGE>
ITEM 2. PROPERTY - Continued
- ------- --------------------
As of December 31, 1995 there were 33 tenants at the Property. The tenants which
occupy ten percent or more of the rentable square footage of the Property are ZS
Associates ("ZS"), a sales-force life insurance company occupying 22% of the net
leasable square footage of the Property, and The Sachs Group ("Sachs"), health
care information specialists occupying 11% of the net leasable square footage of
the Property. The Partnership's 50% interest in the per annum base rents
provided for in the ZS lease, which expires on December 31, 2004 and has one
five-year renewal option, will be $270,700 during 1996 and $317,200 during the
last twelve months of the current lease. The Partnership's 50% interest in the
per annum base rents provided for in the Sachs lease, which expires on June 30,
2004 and also has one five-year renewal option, will be $168,400 during 1996 and
$206,600 during the last twelve months of the current lease. The Partnership's
share of per annum base rents for the ZS and Sachs leases for each of the years
between 1996 and the final twelve months of each of the leases is no lesser or
greater than the amounts mentioned above.
The amounts in the following table represent the Partnership's portion of leases
in the year of expiration (assuming no lease renewals) for the Property through
the year ending December 31, 2004:
<TABLE>
<CAPTION>
Number Base Rents
of in Year of % of Total
Year Tenants Square Feet Expiration (a) Base Rents (b)
---- ------- ----------- -------------- --------------
<S> <C> <C> <C> <C>
1996 3 4,804 $ 43,200 3.24%
1997 7 15,320 $ 76,500 6.24%
1998 7 12,867 $121,200 10.42%
1999 4 7,914 $ 64,700 6.13%
2000 4 18,660 $131,100 14.13%
2001 2 4,626 $ 45,500 5.75%
2002 1 2,204 $ 2,500 0.34%
2003 3 17,246 $128,604 19.99%
2004 2 45,042 $420,500 100.00%
</TABLE>
(a) Represents the Partnership's portion of base rents to be collected
each year on expiring leases.
(b) Represents the Partnership's portion of base rents to be collected
each year on expiring leases as a percentage of the Partnership's
portion of the total base rents to be collected based on existing
leases as of December 31, 1995.
ITEM 3. LEGAL PROCEEDINGS
- ------- -----------------
(a & b) The Partnership and its property were not a party to, nor the subject
of, any material pending legal proceedings, nor were any such proceedings
terminated during the quarter ended December 31, 1995. Ordinary routine
litigation incidental to the business which is not deemed material was
maintained during the quarter ended December 31, 1995.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------- ---------------------------------------------------
(a,b,c & d) None.
3
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S EQUITY AND RELATED SECURITY HOLDER MATTERS
- ------- ----------------------------------------------------------------------
There has not been, nor is there expected to be, a public market for Units.
As of March 1, 1996, there were 1,470 Holders of Units.
ITEM 6. SELECTED FINANCIAL DATA
- ------- -----------------------
<TABLE>
<CAPTION>
For the Years Ended December 31,
---------------------------------------------------------------------
1995 1994 1993 1992 1991
---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Total revenues $1,663,200 $1,597,900 $ 2,244,300 $ 3,133,000 $ 2,992,500
Net (loss) income $ (856,800) $ 410,400 $(1,612,900) $(1,642,400) $ 335,200
Net (loss) income allocated to Limited Partners $ (865,800) $ 376,100 $(1,572,700) $(1,624,700) $ 301,700
Net (loss) income allocated to Limited Partners
per Unit (145,182 Units issued and
outstanding) (a) $ (5.96) $ 2.59 $ (10.83) $ (11.19) $ 2.08
Total assets $8,535,600 $9,774,200 $ 9,816,900 $17,555,700 $19,517,600
Mortgage loan payable None None None $ 6,180,200 $ 6,218,300
Distributions to Limited Partners per Unit
(145,182 Units issued and outstanding) $ 3.00 $ 2.08 None $ 1.45 $ 3.00
Return of capital to Limited Partners per Unit
(145,182 Units issued and outstanding)(b) $ 3.00 None None $ 1.45 $ 0.92
Other data:
- -----------
Investment in commercial rental properties
(net of accumulated depreciation and
amortization) $6,138,800 $7,422,300 $ 7,467,000 $13,653,600 $15,819,800
Number of real property interests owned at
December 31 1 1 1 2 2
</TABLE>
(a) Net (loss) allocated to Limited Partners per Unit for 1993 included an
extraordinary gain on extinguishment of debt.
4
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA -- Continued
- ------- ------------------------------------
(b) For the purposes of this table, return of capital represents either: the
amount by which distributions, if any, exceed net income for the respective
year or; total distributions, if any, when the Partnership incurs a net
loss for the respective year. Pursuant to the Partnership Agreement,
Capital Investment is only reduced by distributions of Sale or Refinancing
Proceeds. Accordingly, return of capital as used in the above table does
not impact Capital Investment.
The following table includes a reconciliation of Cash Flow (as defined in the
Partnership Agreement) to cash flow provided by operating activities as
determined by generally accepted accounting principles ("GAAP"):
<TABLE>
<CAPTION>
For the Years Ended December 31,
---------------------------------------------------------------
1995 1994 1993 1992 1991
--------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C>
Cash Flow (as defined in the Partnership
Agreement) (a) $ 600,200 $ 645,800 $ 537,200 $ 707,900 $ 780,400
Items of reconciliation:
Principal payments on mortgage loan payable 17,000 38,100 31,700
Loan application fee (113,200)
Changes in current assets and liabilities:
Decrease (increase) in current assets 17,900 30,400 199,300 141,700 (246,300)
Increase (decrease) in current liabilities 72,200 (202,100) 154,500 71,400 582,400
--------- --------- --------- --------- -----------
Net cash provided by operating activities $ 690,300 $ 474,100 $ 908,000 $ 959,100 $ 1,035,000
========= ========= ========= ========= ===========
Net cash (used for) investing activities $(173,500) $(190,700) $(686,000) $(250,200) $(7,666,500)
========= ========= ========= ========= ===========
Net cash (used for) financing activities $(454,000) $(251,000) $ (14,500) $(390,900) $ (586,800)
========= ========= ========= ========= ===========
</TABLE>
(a) Cash Flow is defined in the Partnership Agreement as Partnership cash
revenues earned from operations (excluding tenant deposits and proceeds
from a Major Capital Event), minus all cash expenses incurred (including
Operating Expenses, payments of principal and interest on any Partnership
indebtedness, and any reserves of revenues from operations deemed
reasonably necessary by the General Partner), except capital expenditures
and lease acquisition expenditures.
The above selected financial data should be read in conjunction with the
financial statements and the related notes appearing on pages A-1 through A-7
in this report and the supplemental schedule on pages A-8 and A-9.
5
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The ordinary business of the Partnership is expected to pass through its life
cycle in three phases: (i) the Offering of Units and Investment in Properties;
(ii) the operation of properties and (iii) the sale or other disposition of
properties.
The Partnership commenced the Offering of Units on December 8, 1988 and began
operations on February 1, 1989 after reaching the required minimum subscription
level. On September 28, 1990, the Offering was Terminated upon the sale of
145,182 units. In July 1989, the Partnership purchased a 25% interest in one
joint venture which was formed with an Affiliated partnership for the purpose
of acquiring a 100% interest in certain real property and in March 1991,
purchased a 50% interest in one joint venture which was formed with the same
Affiliated partnership for the purpose of acquiring a 100% interest in certain
real property.
During 1993, the joint venture which had a 25% interest in one real property,
transfered title to the property to the mortgage holder through foreclosure and
subsequently dissolved the joint venture (see Note 5 in Notes to Financial
Statements for additional information). During the disposition phase of the
Partnership's life cycle, comparisons of operating results are complicated due
to the timing and effect of property sales and dispositions. Partnership
operating results are generally expected to decline as real property interests
are sold or disposed of since the Partnership no longer receives income
generated from such real property interests.
1800 Sherman Office Building's ("1800 Sherman") operations are expected to be
adversely affected by a potential leveling or reduction in rental rates
resulting from an increased supply of vacant office space in its local area.
The General Partner has learned that a competitive office property will shortly
be vacated by its sole tenant. This event may cause an imbalance in the supply
of office space available versus the demand for such space.
The General Partner has historically reviewed significant factors regarding the
property, to determine that the property is carried at lower of cost or market,
and where appropriate has made value impairment adjustments. These factors
include, but are not limited to: 1) recent and/or budgeted operating
performance; 2) research of market conditions; 3) econcomic trends affecting
major tenants; 4) economic factors related to the region where the property is
located and 5) when available, recent property appraisals. As a result of the
current year review, the Partnership has recorded a provision for value
impairment for 1800 Sherman Office Building ("1800 Sherman") of $1,200,000 for
the year ended December 31, 1995. For more details related to this provision,
see Note 6 of Notes to Financial Statements. The General Partner will continue
to evaluate real estate market conditions affecting the Partnership's property,
in its efforts to maximize the realization of proceeds on its eventual
disposition. The recording of the provision for value impairment does not
impact cash flows as defined by GAAP or Cash Flow (as defined in the
Partnership Agreement).
OPERATIONS
The table below is a recap of certain operating results of each of the
Partnership's properties for the years ended December 31, 1995, 1994 and 1993.
The discussion following the table should be read in conjunction with Financial
Statements and Notes thereto appearing in this report.
<TABLE>
<CAPTION>
Comparative Operating Results
(a) For the Years Ended December
31,
--------------------------------
1995 1994 1993
- ------------------------------------------------------
<S> <C> <C> <C>
1800 SHERMAN OFFICE BUILDING
Rental revenues $1,538,200 $1,496,900 $1,427,300
- ------------------------------------------------------
Property net income $ 316,000 $ 388,900 $ 461,500
- ------------------------------------------------------
Average occupancy 97% 95% 93%
- ------------------------------------------------------
ONE CHARLES CENTER (B)
Rental revenues $ 728,000
- ------------------------------------------------------
Property net (loss) $ (145,800)
- ------------------------------------------------------
Average occupancy (b)
- ------------------------------------------------------
</TABLE>
(a) Excludes certain income and expense items which are either not directly
related to individual property operating results such as interest income
and general and administrative expenses, provision for value impairment or
are related to the property disposed of by the Partnership prior to the
periods under comparison.
(b) The joint venture which owned One Charles Center, in which the Partnership
had a 25% interest, transfered title to the property to the mortgage holder
through foreclosure on August 17, 1993 and the joint venture was
subsequently dissolved. The property net (loss) excludes the cumulative
(loss) of $(5,383,000) on the disposition of the property of which
$(1,975,000) was included as a provision for value impairment in the
Statement of Income and Expenses for the year ended December 31, 1992 and
the remaining $(3,408,000) was included as a (loss) on the disposition of
property included in the Statement of Income and Expenses for the year
ended December 31, 1993. In addition, in 1993, the Partnership also
recorded an extraordinary gain of $1,534,000 on extinguishment of debt in
connection with the disposition of the property (see Note 5 of Notes to
Financial Statements for additional information).
COMPARISON OF THE YEAR ENDED DECEMBER 31, 1995 TO THE YEAR ENDED DECEMBER 31,
1994
Net income for the Partnership for the year ended December 31, 1995 decreased
by $1,267,200, when compared to the year ended December 31, 1994, primarily due
to a provision for value impairment of $1,200,000 during 1995 for 1800 Sherman.
In addition, operating results decreased $72,900 at 1800 Sherman and general
and administrative expenses increased $12,800, primarily due to an increase in
printing and mailing costs which were partially offset by a decrease in data
processing costs. Partially offseting the decrease in net income was an
increase of $47,100 in interest income earned on short-term investments
primarily due to an increase in the average interest rate earned on these
investments.
Rental revenues at 1800 Sherman increased $41,300, or 3%, for the year ended
December 31, 1995 when compared to the year ended December 31, 1994, primarily
due to increases in the base rental rate and average occupancy rate. Partially
offsetting the 1995 increase was a decrease of $20,500 in tenant expense
reimbursements as a result of an overestimate of prior year reimbursements.
6
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--(CONTINUED)
Insurance expense at 1800 Sherman decreased $2,300 for the year ended December
31, 1995 when compared to the year ended December 31, 1994. This decrease was
primarily due to a lower rate on 1800 Sherman's insurance coverage as a result
of a minimal amount of claims made over the past several years.
Real estate tax expense at 1800 Sherman increased $55,200 for the year ended
December 31, 1995 when compared to the year ended December 31, 1994, primarily
due to a projected increase in the tax rate as well as an underestimate of 1994
real estate taxes which were paid in 1995.
Property operating expenses at 1800 Sherman increased $34,900 for the year
ended December 31, 1995 when compared to the year ended December 31, 1994. The
increase was primarily due to an increase in property management and leasing
fees, as a result of the increase in rental income which determine the amount
of property management and leasing fees to be paid, and an increase in utility
costs. Partially offsetting the increase was a decrease in professional service
fees.
Depreciation and amortization increased $21,600 for the years under comparison.
The increase is due to the fact that the periodic depreciation and amortization
expense for depreciable and amortizable assets placed in service during 1995
exceeded the periodic depreciation and amortization expense for certain assets
for which the depreciable and amortizable lives expired during 1995.
Repairs and maintenance expense increased $3,700 for the year ended December
31, 1995 when compared to the year ended December 31, 1994. The increase was
primarily due to: 1) increased costs associated with the maintenance of the
property as a result of the increase in the average occupancy, 2) expenditures
made in 1995 to enhance the overall appearance of the property including
landscaping and signage and 3) an increase in 1995 in the costs associated with
adequately protecting the property in the event of a fire. Partially offsetting
the increase was the absence of expenditures made in the prior year for repairs
of the parking lot apshalt and painting the outside of the building.
COMPARISON OF THE YEAR ENDED DECEMBER 31, 1994 TO THE YEAR ENDED DECEMBER 31,
1993
Net income for the Partnership for the year ended December 31, 1994 increased
by $2,023,300, when compared to the year ended December 31, 1993 primarily due
to: 1) the net (loss) of $(1,874,000) in 1993, (which includes an extraordinary
gain on extingushiment of debt of $1,534,000) on the disposition of One Charles
Center (see Note 5 of Notes to Financial Statements for additional
information); 2) the absence in 1994 of the net operating (loss) of $(145,800)
at One Charles Center; 3) lower general and administrative expenses of $29,100
primarily due to lower printing and mailing costs as well as professional
service fees and 4) an increase of $22,900 in interest income earned on the
Partnership's short-term investments (excluding the effect of the interest
earned in 1993 on the escrow deposits related to One Charles Center) primarily
due to an increase in the average interest rate earned on these investments.
Partially offsetting the increase in 1994 net income was lower operating
results of $72,600 at 1800 Sherman.
The following comparative discussion includes only the operating results of the
Partnership's remaining property investment, 1800 Sherman.
Rental revenues at 1800 Sherman increased $69,600, or 5%, for the year ended
December 31, 1994 when compared to the year ended December 31, 1993. The
increase was primarily due to increases in the base rental rate and average
occupancy rate as well as an increase of $46,900 in tenant expense
reimbursements as a result of an overestimate of 1992 reimbursements paid in
1993. Partially offsetting the 1994 increase was one-time lease cancellation
fees received in 1993 totaling $27,600.
Real estate tax expense at 1800 Sherman increased $88,300 for the year ended
December 31, 1994 when compared to the year ended December 31, 1993, primarily
due to an overestimate in 1992 of the real estate taxes paid in 1993 as well as
a projected increase in the 1994 tax rate.
Depreciation and amortization increased $40,100 for the years under comparison.
The increase was due to the fact that the periodic depreciation and
amortization expense for depreciable and amortizable assets placed in service
during 1994 exceeded the periodic depreciation and amortization expense for
certain assets for which the depreciable and amortizable lives expired during
1994.
Repairs and maintenance expense increased $12,600 for the year ended December
31, 1994 when compared to the year ended December 31, 1993. The increase was
primarily due to: 1) increased costs associated with the maintenance of the
property as a result of the increase in the average occupancy rate and
expenditures made in 1994 to enhance the overall appearance of the property
including landscaping, parking lot repairs and painting the outside of the
building. Partially offsetting the increase in repair and maintenance expenses
was the absence in 1994 of additional costs associated with adequately
protecting the property in the event of a fire.
Property operating expenses at 1800 Sherman remained stable with a $2,400
decrease for the year ended December 31, 1994 when compared to the year ended
December 31, 1993.
To increase and/or maintain the occupancy level at 1800 Sherman, the General
Partner, through its Affiliated asset and property management group, continues
to take the following actions: 1) implementation of marketing programs,
including hiring of third-party leasing agents or providing on-site leasing
personnel, advertising, direct mail campaigns and development of building
brochures; 2) early renewal of existing tenant leases and addressing any
expansion needs these tenants may have; 3) promotion of local broker events and
networking with local brokers; 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.
The rate of inflation has remained relatively stable during the years under
comparison and has had a minimal impact on the operating results of the
Partnership. The nature of various tenant lease clauses protects the
Partnership, to some extent, from increases in the rate of inflation. Certain
of the lease clauses provide for the following: (1) annual rent increases based
on the Consumer Price Index or graduated rental increases; (2) total or partial
tenant reimbursement of property operating expenses (e.g., common area
maintenance, real estate taxes, etc.).
LIQUIDITY AND CAPITAL RESOURCES
A primary objective of the Partnership is to provide cash distributions to
Partners from Partnership operations. Cash Flow (as defined in the Partnership
Agreement) is generally
7
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS--(CONTINUED)
not equal to Partnership net income or cash flows as defined by GAAP, since
certain items are treated differently under the Partnership Agreement than
under GAAP. The General Partner 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 flow as defined by GAAP. The table in Item 6.
Selected Financial Data of this report includes a reconciliation of Cash Flow
(as defined in the Partnership Agreement) to cash flow provided by operating
activities as defined 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 Flows.
The decrease in Cash Flow (as defined in the Partnership Agreement) of $45,600
for the year ended December 31, 1995, when compared to the year ended December
31, 1994 was primarily due to the decrease in net income, as previously
discussed, exclusive of depreciation and amortization expense and the provision
for value impairment.
The increase in the Partnership's cash position of $62,800 as of December 31,
1995 when compared to December 31, 1994 was the result of net cash provided by
operating activities exceeding distributions made to Partners and expenditures
for capital and tenant improvements and leasing costs. Liquid assets of the
Partnership as of December 31, 1995 were comprised of working capital reserves
and undistributed cash from operations.
Net cash provided by operating activities increased $216,200 for the year ended
December 31, 1995 when compared to the year ended December 31, 1994. The
increase was primarily due to the timing of the payment of certain Partnership
expenses and collection of tenant rental revenues. Included in the 1994
(decrease) in other liabilities is a payment of $104,800 to the holder of the
mortgage loan previously collateralized by One Charles Center, which
represented the Partnership's share of the mortgage holder's portion of the
final proration of all income and expense items as of August 17, 1993 (the
title transfer date), the majority of which represented net cash flow from
operations received subsequent to June 1, 1993.
The Partnership's (use of) cash for investing activities of $(173,500), which
increased $17,200 in 1995 as compared to 1994, was for capital and tenant
improvements and leasing costs made to 1800 Sherman. The Partnership maintains
working capital reserves to pay for capital expenditures such as building and
tenant improvements and leasing costs. The Partnership has budgeted to spend
approximately $140,000 at 1800 Sherman during the year ending December 31,
1996. The General Partner believes these improvements and leasing costs are
necessary in order to increase and/or maintain occupancy in a very competitive
market and to maximize rental rates charged to new and renewing tenants.
Net cash (used for) financing activities increased from $(251,000) for the year
ended December 31, 1994 to $(454,000) for the year ended December 31, 1995. The
increase was primarily due to an increase in 1995 of cash distributions paid to
Partners.
The General Partner continues to take a conservative approach to projections of
future rental income and to maintain higher levels of cash reserves. The
General Partner believes that Cash Flow (as defined in the Partnership
Agreement) is one of the best and least expensive sources of cash. As a result
of this, cash continues to be retained to supplement working capital reserves.
For the year ended December 31, 1995 Cash Flow (as defined in the Partnership
Agreement) retained to supplement working capital reserves was $116,300.
Distributions to Limited Partners for the quarter ended December 31, 1995, were
declared in the amount of $0.75 per Unit. Cash distributions are made 60 days
after the last day of each fiscal quarter. The amount of future distributions
to Partners will ultimately be dependent upon the performance of 1800 Sherman
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. Accordingly, there can be no assurance as to the amount and/or
availability of cash for distribution to Partners.
Based upon the current estimated value if 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 less than such Limited Partners'
original Capital Investment.
8
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ------- -------------------------------------------
The response to this item is submitted as a separate section of this report. See
page A-1 "Index of Financial Statements, Schedule and Exhibits."
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
- ------- -----------------------------------------------------------
AND FINANCIAL DISCLOSURE
------------------------
None.
9
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) DIRECTORS
The Partnership has no directors. First Capital Fund - XIV, Inc. is the
General Partner. The directors of First Capital Fund - XIV, Inc., as of
March 29, 1996, are shown in the table below. Directors serve for one year
or until their successors are elected. The next annual meeting of First
Capital Fund - XIV, Inc. will be held in June 1996.
<TABLE>
<CAPTION>
Name Office
---- ------
<S> <C>
Samuel Zell..............................Chairman of the Board
Douglas Crocker II.......................Director
Sheli Z. Rosenberg.......................Director
Sanford Shkolnik.........................Director
</TABLE>
Samuel Zell, 54, has been a Director of the General Partner since 1983
(Chairman of the Board since December 1985) and is Chairman of the Board of
Great American Management and Investment, Inc. ("Great American"). Mr. Zell
is also Chairman of the Board of Equity Financial and Management Company
("EFMC") and Equity Group Investments, Inc. ("EGI"), and is a trustee and
beneficiary of a general partner of Equity Holdings Limited, an Illinois
Limited Partnership, a privately owned investment partnership. He is also
Chairman of the Board of Directors of Anixter International Inc., Falcon
Building Products, Inc. and American Classic Voyages Co. He is Chairman of
the Board of Trustees of Equity Residential Properties Trust. He is a
director of Quality Food Centers, Inc. and Sealy Corporation. He is
Chairman of the Board of Directors and Chief Executive Officer of Capsure
Holdings Corp. and Manufactured Home Communities, Inc. and Co-Chairman of
the Board of Revco D.S., Inc. Mr. Zell was President of Madison Management
Group, Inc. ("Madison") prior to October 4, 1991. Madison filed for
protection under the Federal bankruptcy laws on November 8, 1991.
Douglas Crocker II, 55, has been President and Chief Executive Officer
since December 1992 and a Director since January 1993 of the General
Partner. Mr. Crocker has been an Executive Vice President of EFMC since
November 1992. Mr. Crocker has been President, Chief Executive Officer and
trustee of Equity Residential Properties Trust since March 31, 1993. He was
President of Republic Savings Bank, F.S.B. ("Republic") from 1989 to June,
1992 at which time the Resolution Trust Company took control of Republic.
Mr. Crocker is a member of the Board of Directors of Horizon Group, Inc.
Sheli Z. Rosenberg, 54, was President and Chief Executive Officer of the
General Partner from December 1990 to December 1992 and has been a Director
of the General Partner since September 1983; was Executive Vice President
and General Counsel for EFMC from October 1980 to November 1994; has been
President and Chief Executive Officer of EFMC and EGI since November 1994;
has been a Director of Great American since June 1984 and is a director of
various subsidiaries of Great American. She is also a Director of Anixter
International Inc., Capsure Holdings Corp., American Classic Voyages Co.,
Falcon Building Products, Inc., Jacor Communications, Inc., Revco D.S.,
Inc., Sealy Corporation and CFI Industries, Inc. She was Chairman of the
Board from January 1994 to September 1994; Co-Chairman of the Board from
September 1994 until March 1995 of CFI Industries, Inc. She is also a
trustee of Equity Residential Properties Trust. Ms. Rosenberg is a
Principal of Rosenberg & Liebentritt, P.C., counsel to the Partnership, the
General Partner and certain of their Affiliates. Ms. Rosenberg was Vice
President of Madison prior to October 4, 1991. Madison filed for protection
under the Federal bankruptcy
10
<PAGE>
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT - Continued
(a) DIRECTORS (continued)
laws on November 8, 1991. She has been Vice President of First Capital
Benefit Administrators, Inc. ("Benefit Administrators") since July 22,
1987. Benefit Administrators filed for protection under the Federal
bankruptcy laws on January 3, 1995.
Sanford Shkolnik, 57, has been a Director of the General Partner since
December 1985. Mr. Shkolnik has been Executive Vice President of EFMC since
1976. He is Chairman of the Board and Chief Executive Officer of SC
Management, Inc., which is general partner of Equity Properties and
Development Limited Partnership, a nationally ranked shopping center
management company.
(b,c & e) EXECUTIVE OFFICERS
The Partnership does not have any executive officers. The executive
officers of the General Partner as of March 29, 1996 are shown in the
table. All officers are elected to service for one year or until their
successors are elected and qualified.
<TABLE>
<CAPTION>
Name Office
---- ------
<S> <C>
Douglas Crocker II......President and Chief Executive Officer
Arthur A. Greenberg.....Senior Vice President
Norman M. Field.........Vice President - Finance and Treasurer
</TABLE>
PRESIDENT AND CEO - See Table of Directors above.
Arthur A. Greenberg, 54, has been Senior Vice President of the General
Partner since August 1986. Mr. Greenberg was Executive Vice President and
Chief Financial Officer of Great American from December 1986 to March 1995.
Mr. Greenberg also is an Executive Vice President of EFMC since 1971, and
President of Greenberg & Pociask, Ltd. He is Senior Vice President since
1989 and Treasurer since 1990 of Capsure Holdings Corp. Mr. Greenberg is a
director of American Classic Voyages Co. and Chairman of the Board of
Firstate Financial A Savings Bank. Mr. Greenberg was Vice President of
Madison prior to October 4, 1991. Madison filed for protection under the
Federal bankruptcy laws on November 8, 1991.
Norman M. Field, 47, has been Vice President of Finance and Treasurer of
the General Partner since February 1984, and also served as Vice President
and Treasurer of Great American from July 1983 until March 1995. Mr. Field
has been Treasurer of Benefit Administrators since July 22, 1987. He also
served as Vice President of Madison until October 4, 1991. He was Chief
Financial Officer of Equality Specialties, Inc. ("Equality"), a subsidiary
of Great American, from August 1994 to April 1995. Equality was sold in
April 1995.
(d) FAMILY RELATIONSHIPS
There are no family relationships among any of the foregoing directors and
officers.
(f) INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
With the exception of the bankruptcy matters disclosed under Items 10 (a),
(b), (c) and (e), there are no involvements in certain legal proceedings
among any of the foregoing directors and officers.
11
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
(a,b,c & d) As stated in Item 10, the Partnership has no officers or directors.
Neither the General Partner, nor any director or officer of the General
Partner, received any direct compensation from the Partnership during the
year ended December 31, 1995. Affiliates of the General Partner do
compensate directors and officers of the General Partner. For additional
information see Item 13 (a) Cetain Relationships and Related Transactions.
(e) None.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
(a) As of March 1, 1996, no person of record owned or was known by the
Partnership to own beneficially more than 5% of the Partnership's Units
outstanding.
(b) The Partnership has no directors or executive officers. As of March 1,
1996, the executive officers and directors of the General Partner did not
own any Units.
(c) None.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a) Affiliates of the General Partner provide leasing, property management and
supervisory services to the Partnership. Compensation for these property
management services may not exceed 6% of the gross receipts from a property
being managed where the General Partner or its Affiliates provide leasing,
re-leasing and leasing-related services, or 3% of gross receipts where the
General Partner or its Affiliates do not perform leasing, re-leasing and
leasing-related services. Affiliates were entitled to property management
and supervisory fees of $87,600 during 1995. In addition, other Affiliates
of the General Partner were entitled to fees and compensation of $32,100
for insurance and personnel services for 1995. In accordance with the
Partnership Agreement, these services were provided at a price which did
not exceed the lesser of the cost of such services to the General Partner
or its Affiliates or 90% of the competitive price which would be charged by
nonaffiliated persons rendering similar services in the same or comparable
geographic location. As of December 31, 1995, total fees and reimbursements
of $4,200 were due to Affiliates.
In accordance with the Partnership Agreement, commencing with respect to
the fiscal quarter in which the Minimum Subscription Closing Date occurred
(the quarter ended March 31, 1989), distributable Cash Flow (as defined in
the Partnership Agreement), if any, is distributed 90% to the Limited
Partners and 10% to the General Partner. For the year ended December 31,
1995 the General Partner was entitled to distributable Cash Flow (as
defined in the Partnership Agreement) of $48,400.
In accordance with the Partnership Agreement, Losses (exclusive of Losses
from a Major Capital Event) are allocated 1% to the General Partner and 99%
to the Limited Partners as a group. Losses from a Major Capital Event are
allocated prior to giving effect to any distribution of Sale or Refinancing
Proceeds from such Major Capital Event, including any provisions for value
impairment: first, 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. Profits
(exclusive of Profits from a Major Capital Event) are allocated: first, in
accordance with the ratio in which Cash Flow (as defined in the Partnership
Agreement) was distributable among the Partners for such fiscal year, to
the extent of such Cash Flow (as defined in the Partnership Agreement):
provided, however, that if the Partnership makes no distributions of Cash
Flow (as defined in the Partnership Agreement) for such fiscal year, then
such
12
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS - Continued
Profits are allocated 1% to the General Partner and 99% to the Limited
Partners as a group; and second, the balance, if any, 1% to the General
Partner and 99% to the Limited Partners as a group. Profits from a Major
Capital Event are allocated prior to giving effect to any distributions of
Sale or Refinancing Proceeds from such Major Capital Event: first, to the
General Partner and Limited Partners with negative balances in their
Capital Accounts, in proportion to and to the extent of such negative
balances; second, in proportion to and to the extent of the amounts, if
any, necessary to make the positive balance in the Capital Account of each
Limited Partner equal to the Capital Investment of such Limited Partner;
third, in proportion to and to the extent of the amounts, if any, necessary
to make the positive balance in the Capital Account of each Limited Partner
equal to the Capital Investment of such Limited Partner, plus an amount
equal to a cumulative, simple return of 6% per annum on the Capital
Investment from time to time of such Limited Partner from the date on which
the investment in the Partnership was made (less amounts previously
returned by way of Cash Flow (as defined in the Partnership Agreement)) and
Sale or Refinancing Proceeds in payment of said cumulative return; and
fourth, any remaining Profits are allocated 17% to the General Partner and
83% to the Limited Partners as a group. For the year ended December 31,
1995, the General Partner was allocated Profits of $9,000, which included a
(loss) from a provision for value impairment of $(25,300).
(b) Rosenberg & Liebentritt, P.C. ("Rosenberg"), serves as legal counsel to the
Partnership, the General Partner and certain of their Affiliates. Sheli Z.
Rosenberg, President and Chief Executive Officer of the General Partner
from December 1990 to December 1992 and a director of the General Partner
since December 1983, is a Principal of Rosenberg. For the year ended
December 31, 1995, Rosenberg was entitled to $2,100 for legal fees from the
Partnership. As of December 31, 1995, all fees due to Rosenberg have been
paid. Compensation for these services are on terms which are fair,
reasonable and no less favorable to the Partnership than reasonably could
be obtained from unaffiliated persons.
(c) No management person is indebted to the Partnership.
(d) None.
13
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a,c & d) See Index of Financial Statements, Schedule and Exhibits on page A-1
of Form 10-K.
(b) Reports on Form 8-K:
There were no reports filed on Form 8-K for the quarter ended December 31,
1995.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 GROWTH FUND - XIV,
A REAL ESTATE LIMITED PARTNERSHIP
BY: FIRST CAPITAL FUND - XIV, INC.
GENERAL PARTNER
Dated: March 29, 1996 By: /s/ DOUGLAS CROCKER II
----------------- -----------------------------------------
DOUGLAS CROCKER II
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
/s/ SAMUEL ZELL March 29, 1996 Chairman of the Board and
- ----------------------- -------------- Director of the General Partner
SAMUEL ZELL
/s/ DOUGLAS CROCKER II March 29, 1996 President, Chief Executive Officer
- ----------------------- -------------- and Director of the General Partner
DOUGLAS CROCKER II
/s/ SHELI Z. ROSENBERG March 29, 1996 Director of the General Partner
- ----------------------- --------------
SHELI Z. ROSENBERG
/s/ SANFORD SHKOLNIK March 29, 1996 Director of the General Partner
- ----------------------- --------------
SANFORD SHKOLNIK
/s/ NORMAN M. FIELD March 29, 1996 Vice President - Finance and
- ----------------------- -------------- Treasurer
NORMAN M. FIELD
15
<PAGE>
<TABLE>
<CAPTION>
INDEX OF FINANCIAL STATEMENTS, SCHEDULE AND EXHIBITS
FINANCIAL STATEMENTS FILED AS PART OF THIS REPORT
<S> <C>
Pages
--------------------------------
Report of Independent Auditors A - 2
Balance Sheets at December 31, 1995 and 1994 A - 3
Statements of Partners' Capital for the Years
Ended December 31, 1995, 1994 and 1993 A - 3
Statements of Income and Expenses for the Years
Ended December 31, 1995, 1994 and 1993 A - 4
Statements of Cash Flows for the Years Ended
December 31, 1995, 1994 and 1993 A - 4
Notes to Financial Statements A - 5 to A - 7
SCHEDULE FILED AS PART OF THIS REPORT
III - Real Estate and Accumulated Depreciation as of December 31, 1995 A - 8 and A - 9
</TABLE>
All other schedules have been omitted as inapplicable, or for the reason that
the required information is shown in the financial statements or notes thereto.
EXHIBITS FILED AS PART OF THIS REPORT
EXHIBITS (3 & 4) First Amended and Restated Agreement of Limited Partnership as
set forth on pages A-1 through A-38 of the Partnership's definitive Prospectus
dated December 8, 1988; Registration No. 33-19365, filed pursuant to Rule 424
(b), is incorporated herein by reference.
EXHIBIT (10) Material Contracts
(a) Lease agreement for a tenant at 1800 Sherman Office Building whose revenues
exceed 10% of the Partnership's 1995 budgeted rental income, filed as an exhibit
to the Partnership's Report on Form 10-K dated December 31, 1994, is
incorporated herein by reference.
(b) Disposition of the Partnership's joint venture interest in the One Charles
Center filed as an exhibit to the Partnership's Report on Form 8-K dated August
17, 1993, is incorporated herein by reference.
EXHIBIT (13) Annual Report to Security Holders
The 1994 Annual Report to Limited Partners is being sent under separate cover,
not as a filed document and not via EDGAR, for the information of the
Commission.
EXHIBIT (27) Financial Data Schedule
A - 1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Partners
First Capital Growth Fund - XIV,
A Real Estate Limited Partnership
Chicago, Illinois
We have audited the accompanying balance sheets of First Capital Growth Fund -
XIV, A Real Estate Limited Partnership as of December 31, 1995 and 1994, and the
related statements of income and expenses, partners' capital and cash flows for
each of the three years in the period ended December 31, 1995, and the schedule
listed in the accompanying index. These financial statements and schedule are
the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements and schedule based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of First Capital Growth Fund -
XIV, A Real Estate Limited Partnership as of December 31, 1995 and 1994, and the
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1995, in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement schedule, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects, the information set forth therein.
Ernst & Young LLP
Chicago, Illinois
March 1, 1996
A - 2
<PAGE>
BALANCE SHEETS
December 31, 1995 and 1994
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
1995 1994
- ----------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investment in commercial rental property:
Land $1,319,000 $1,319,000
Building and improvements 5,807,300 6,833,800
- ----------------------------------------------------------------------
7,126,300 8,152,800
Accumulated depreciation and amortization (987,500) (730,500)
- ----------------------------------------------------------------------
Total investment property, net of accumulated
depreciation and amortization 6,138,800 7,422,300
Cash and cash equivalents 2,364,800 2,302,000
Rents receivable 6,000 11,600
Other assets 26,000 38,300
- ----------------------------------------------------------------------
$8,535,600 $9,774,200
- ----------------------------------------------------------------------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accrued real estate taxes $ 550,500 $ 500,400
Distributions payable 121,000 83,900
Accounts payable and accrued expenses 97,300 65,100
Due to Affiliates 4,200 15,900
Prepaid rent 18,100
Security deposits 38,100 45,300
Other liabilities 19,700
- ----------------------------------------------------------------------
830,800 728,700
- ----------------------------------------------------------------------
Partners' capital:
General Partner 163,400 202,800
Limited Partners (145,182 Units issued and
outstanding) 7,541,400 8,842,700
- ----------------------------------------------------------------------
7,704,800 9,045,500
- ----------------------------------------------------------------------
$8,535,600 $9,774,200
- ----------------------------------------------------------------------
</TABLE>
STATEMENTS OF PARTNERS' CAPITAL
For the years ended December 31, 1995, 1994 and 1993
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
General Limited
Partner Partners Total
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Partners' capital, January 1, 1993 $242,300 $10,341,300 $10,583,600
Net (loss) for the year ended December 31,
1993 (40,200) (1,572,700) (1,612,900)
- -------------------------------------------------------------------------------
Partners' capital, December 31, 1993 202,100 8,768,600 8,970,700
Net income for the year ended December 31,
1994 34,300 376,100 410,400
Distributions for the year ended December
31, 1994 (33,600) (302,000) (335,600)
- -------------------------------------------------------------------------------
Partners' capital, December 31, 1994 202,800 8,842,700 9,045,500
Net income (loss) for the
year ended December 31, 1995 9,000 (865,800) (856,800)
Distributions for the year ended December
31, 1995 (48,400) (435,500) (483,900)
- -------------------------------------------------------------------------------
Partners' capital, December 31, 1995 $163,400 $ 7,541,400 $ 7,704,800
- -------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
A-3
<PAGE>
STATEMENTS OF INCOME AND EXPENSES
For the years ended Dedember 31, 1995, 1994 and 1993
(All dollars rounded to nearest 00s except per Unit amounts)
<TABLE>
<CAPTION>
1995 1994 1993
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Income:
Rental $1,530,500 $1,512,300 $ 2,155,300
Interest 132,700 85,600 89,000
- ------------------------------------------------------------------------------
1,663,200 1,597,900 2,244,300
- ------------------------------------------------------------------------------
Expenses:
Interest 308,400
Depreciation and amortization 257,000 235,400 293,100
Property operating:
Affiliates 87,900 61,300 128,200
Nonaffiliates 149,500 139,700 401,800
Real estate taxes 554,400 499,200 484,700
Insurance--Affiliate 12,700 9,900 20,500
Repairs and maintenance 165,900 162,200 237,600
General and administrative:
Affiliates 20,400 21,500 24,300
Nonaffiliates 72,200 58,300 84,600
Provision for value impairment 1,200,000
Loss on diposition of property 3,408,000
- ------------------------------------------------------------------------------
2,520,000 1,187,500 5,391,200
- ------------------------------------------------------------------------------
Net (loss) income before extraordinary
gain on extinguishment of debt (856,800) 410,400 (3,146,900)
Extraordinary gain on extinguishment of
debt 1,534,000
- ------------------------------------------------------------------------------
Net (loss) income $ (856,800) $ 410,400 $(1,612,900)
- ------------------------------------------------------------------------------
Net income (loss) allocated to General
Partner $ 9,000 $ 34,300 $ (40,200)
- ------------------------------------------------------------------------------
Net (loss) income allocated to Limited
Partners $(865,800) $ 376,100 $(1,572,700)
- ------------------------------------------------------------------------------
Net (loss) income before extraordinary
gain on extinguishment of debt allocated
to Limited Partners per Unit (145,182
Units outstanding) $ (5.96) $ 2.59 $ (21.16)
- ------------------------------------------------------------------------------
Net (loss) income allocated to Limited
Partners per Unit (145,182 Units
outstanding) $ (5.96) $ 2.59 $ (10.83)
- ------------------------------------------------------------------------------
</TABLE>
STATEMENTS OF CASH FLOWS
For the years ended December 31, 1995, 1994 and 1993
(All dollars rounded to nearest 00s)
<TABLE>
<CAPTION>
1995 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net (loss) income $ (856,800) $ 410,400 $(1,612,900)
Adjustments to reconcile net (loss)
income to net cash provided by
operating activities:
Depreciation and amortization 257,000 235,400 293,100
Provision for value impairment 1,200,000
Loss on disposition of property 3,408,000
Extraordinary (gain) on extinguishment
of debt (1,534,000)
Changes in assets and liabilities:
Decrease in rents receivable 5,600 9,200 113,700
Decrease in other assets 12,300 21,200 85,600
Increase (decrease) in accrued real
estate taxes 50,100 20,900 (45,800)
Increase (decrease) in accounts payable
and accrued expenses 32,200 (4,400) 8,600
(Decrease) increase in due to
Affiliates (11,700) 1,600 (41,000)
(Decrease) increase in prepaid rent (18,100) (115,200) 127,700
Increase (decrease) in other
liabilities 19,700 (105,000) 105,000
- -------------------------------------------------------------------------------
Net cash provided by operating
activities 690,300 474,100 908,000
- -------------------------------------------------------------------------------
Cash flows from investing activities:
Payments for capital and tenant
improvements (173,500) (190,700) (763,900)
Decrease in escrow deposits 77,900
- -------------------------------------------------------------------------------
Net cash (used for) investing
activities (173,500) (190,700) (686,000)
- -------------------------------------------------------------------------------
Cash flows from financing activities:
Distributions paid to Partners (446,800) (251,700)
(Decrease) increase in security deposits (7,200) 700 2,500
Principal payments on mortgage loan
payable (17,000)
- -------------------------------------------------------------------------------
Net cash (used for) financing
activities (454,000) (251,000) (14,500)
- -------------------------------------------------------------------------------
Net increase in cash and cash equivalents 62,800 32,400 207,500
Cash and cash equivalents at the
beginning of the year 2,302,000 2,269,600 2,062,100
- -------------------------------------------------------------------------------
Cash and cash equivalents at the end of
the year $2,364,800 $2,302,000 $ 2,269,600
- -------------------------------------------------------------------------------
Supplemental information:
Interest paid during the year $ 257,200
- -------------------------------------------------------------------------------
Noncash investing activity:
Disposal of commercial rental property
(see Note 5)
- -------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
A-4
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND 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.
ORGANIZATION:
The Partnership was formed on December 29, 1987, by the filing of a Certificate
and Agreement of Limited Partnership with the Recorder of Deeds of Cook County,
Illinois, and commenced the Offering of Units on December 8, 1988. On February
1, 1989, the required minimum subscription level was reached, and the
Partnership commenced operations. The Offering was Terminated on September 28,
1990 with 145,182 Units sold. The Partnership was formed to invest primarily in
existing, improved, income-producing real estate on a leveraged basis.
The Partnership Agreement provides that the Partnership will be dissolved on or
before December 31, 2018. The Limited Partners, by a majority vote, may
dissolve the Partnership at any time.
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 preparation of the Partnership's financial statements in conformity with
generally accepted accounting principles 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 statements include the Partnership's 50% interest in one joint
venture and its 25% interest in another joint venture (prior to dissolution in
1993) with an Affiliated partnership. These joint ventures were each formed for
the purpose of acquiring a 100% interest in certain real property and is, or
was, operated under the common control of the General Partner and an Affiliate
of the General Partner. Accordingly, the Partnership's pro rata share of the
ventures' revenues, expenses, assets, liabilities and capital is included in
the financial statements.
The Partnership is not liable for federal income taxes as the Partners
recognize their proportionate share of the Partnership income or loss in their
individual tax returns; therefore, no provision for income taxes is made in the
financial statements of the Partnership. In addition, it is not practicable for
the Partnership to determine the aggregate tax bases of the individual
Partners; therefore, the disclosure of the differences between the tax bases
and the reported assets and liabilities of the Partnership would not be
meaningful.
Commercial rental property is recorded at cost, net of any provision for value
impairment, and depreciated (exclusive of amounts allocated to land) on a
straight-line method over its estimated useful life. 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.
The General Partner periodically reviews significant factors regarding the
property to determine that the property is carried at lower of cost or fair
market value. These factors include, but are not limited to, the General
Partner's experience in the real estate industry, an evaluation of recent
operating performance against expected results, economic trends or factors
affecting major tenants or the region in which the property is located, and
when available, information included in recent appraisals of the property.
Based on this analysis, where it is anticipated that the carrying value of its
remaining investment property will not be recovered, the General Partner has
deemed it appropriate to reduce the basis of the property for financial
reporting purposes to fair market value. Such fair market value is the General
Partner's best estimate of the amount expected to be realized were the
remaining property sold as of the Balance Sheet date, based upon current
information available. The ultimate realization may differ from this amount.
Provisions, where applicable are reflected in the accompanying Statement of
Income and Expenses in the year such evaluations have been made. For additional
information, see Note 6.
Property sales or dispositions are recorded when title transfers and sufficient
consideration has been received by the Partnership. Upon disposition, the
related costs and accumulated depreciation and amortization are removed from
the respective accounts. Any gain or loss on sale or disposition is recognized
in accordance with generally accepted accounting principles.
Cash equivalents are considered all highly liquid investments with a maturity
of three months or less when purchased.
The Partnership's financial statements include financial instruments, including
receivables and trade liabilities. The fair value of financial instruments,
including cash and cash equivalents, was not materially different from their
carrying value at December 31, 1995 and 1994.
Certain reclassifications have been made to the previously reported 1993 and
1994 statements in order to provide comparability with the 1995 statements.
These reclassifications had no effect on net income (loss) or Partners'
capital.
A-5
<PAGE>
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
2. RELATED PARTY TRANSACTIONS:
In accordance with the Partnership Agreement, commencing with the fiscal
quarter in which the Minimum Subscription Closing Date occurred (the quarter
ended March 31, 1989), distributable Cash Flow (as defined in the Partnership
Agreement), if any, is distributed 90% to the Limited Partners and 10% to the
General Partner. For the years ended December 31, 1995 and 1994
the General Partner was entitled to distributable Cash Flow (as defined in the
Partnership Agreement) of $48,400 and $33,600, respectively. There were no
distributions of Cash Flow to Partners for the year ended December 31, 1993.
In accordance with the Partnership Agreement, Losses (exclusive of Losses from
a Major Capital Event) are allocated 1% to the General Partner and 99% to the
Limited Partners as a group. Losses from a Major Capital Event are allocated
prior to giving effect to any distribution of Sale or Refinancing Proceeds from
such Major Capital Event including any provisions for value impairment: first,
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. Profits (exclusive of Profits from a Major Capital
Event) are allocated; first, in accordance with the ratio in which Cash Flow
(as defined in the Partnership Agreement) was distributable among the Partners
for such fiscal year, to the extent of such Cash Flow (as defined in the
Partnership Agreement); provided, however, that if the Partnership makes no
distributions of Cash Flow (as defined in the Partnership Agreement) for such
fiscal year, then such Profits are allocated 1% to the General Partner and 99%
to the Limited Partners as a group; and second, the balance, if any, 1% to the
General Partner and 99% to the Limited Partners as a group. Profits from a
Major Capital Event are allocated prior to giving effect to any distributions
of Sale or Refinancing Proceeds from such Major Capital Event: first, to the
General Partner and Limited Partners with negative balances in their Capital
Accounts, in proportion to and to the extent of such negative balances; second,
in proportion to and to the extent of the amounts, if any, necessary to make
the positive balance in the Capital Account of each Limited Partner equal to
the Capital Investment of such Limited Partner; third, in proportion to and to
the extent of the amounts, if any, necessary to make the positive balance in
the Capital Account of each Limited Partner equal to the Capital Investment of
such Limited Partner, plus an amount equal to a cumulative, simple return of 6%
per annum on the Capital Investment from time to time of such Limited Partner
from the date on which the investment in the Partnership was made (less amounts
previously returned by way of Cash Flow (as defined in the Partnership
Agreement)) and Sale or Refinancing Proceeds in payment of said cumulative
return; and fourth, any remaining Profits are allocated 17% to the General
Partner and 83% to the Limited Partners as a group. For the year ended December
31, 1995, the General Partner was allocated Profits of $9,000, which included a
(loss) from a provision for value impairment of $(25,300). For the year ended
December 31, 1994, the General Partner was allocated Profits of $34,300. For
the year ended December 31, 1993, the General Partner was allocated a (Loss) of
$(40,200), which included a (loss) of $(78,000) on the disposition of a
property and an extraordinary gain of $35,200 on the extinguishment of debt.
Fees and reimbursements paid and payable by the Partnership to Affiliates were
as follows:
<TABLE>
<CAPTION>
For the Years Ended December 31,
-------------------------------------------------
1995 1994 1993
---------------- --------------- ----------------
Paid Payable Paid Payable Paid Payable
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Property management and
leasing fees $100,800 $ 400 $45,300 $13,600 $174,000 $10,900
Reimbursement of property
insurance premiums, at
cost 12,700 None 10,000 None 19,700 None
Reimbursement of expenses,
at cost:
--Accounting 8,600 2,400 12,100 1,300 17,800 2,600
--Investor communication 9,300 1,400 9,000 1,000 6,500 800
--Legal 2,100 None 14,900 None 6,600 None
- -----------------------------------------------------------------------------
$133,500 $4,200 $91,300 $15,900 $224,600 $14,300
- -----------------------------------------------------------------------------
</TABLE>
On-site property management for the Partnership's property is provided by an
Affiliate of the General Partner, for fees based on a percentage of gross rents
received from the property. These fees range from 3% to 6%, based upon the
terms of the property management agreement.
3. FUTURE MINIMUM RENTALS:
The Partnership's share of future minimum rental income due on noncancelable
leases as of December 31, 1995 was as follows:
<TABLE>
<S> <C>
1996 $1,334,000
1997 1,226,300
1998 1,163,000
1999 1,055,000
2000 928,100
Thereafter 2,592,400
-------------
$8,298,800
-------------
</TABLE>
The Partnership is subject to the usual business risks associated with the
collection of the above-scheduled rentals. In addition to the amounts scheduled
above, the Partnership expects to receive rental revenue from operating expense
and real estate tax expense reimbursements and percentage rents. Percentage
rents earned for the years ended December 31, 1995, 1994 and 1993 were $2,000,
$2,100 and $1,300, respectively.
A-6
<PAGE>
4. INCOME TAX:
The Partnership utilizes the accrual basis of accounting for both income tax
reporting and financial statement purposes. The results for financial statement
purposes will differ from the results for income tax reporting purposes due to
the use of differing depreciation lives and methods, the recognition of rents
paid in advance as taxable income and the Partnership's provision for value
impairment. The net effect of these accounting differences for the year ended
December 31, 1995, was that the net income for tax reporting purposes was
greater than the net (loss) for financial statement purposes by $1,248,700. The
aggregate cost in commercial rental property for federal income tax purposes at
December 31, 1995 was $8,326,300.
5. DISPOSITION OF PROPERTY:
On August 17, 1993, the joint venture which owned One Charles Center (the
"Property"), in which the Partnership had a 25% interest, transferred title to
the Property to the mortgage holder through foreclosure. The disposition of the
Property relieved the Partnership of its share of the obligation under the
nonrecourse mortgage loan collateralized by the Property as well as any
interest in the assets therein including escrow deposits which represented
funds reserved from the original loan proceeds to cover costs of building and
tenant improvements and lease commissions. This extinguishment of debt was
considered a non-cash event for the purposes of the Statement of Cash Flows,
and was not included in the Partnership's calculation of Cash Flow (as defined
in the Partnership Agreement) for the year ended December 31, 1993. The
Partnership recorded a cumulative (loss) on the foreclosure of the Property of
$(5,383,000) for financial statement purposes. This loss represented the net
book value of the Property in excess of its fair market value. The Partnership
recorded $(1,975,000) of the total (loss) during the year ended December 31,
1992 as a provision for value impairment, and the remaining portion of the
(loss) was recorded in 1993 upon the disposition of the Property. In addition,
in 1993, the Partnership also recorded an extraordinary gain on extinguishment
of debt in connection with the disposition of the Property of $1,534,000 for
financial statement purposes. This extraordinary gain on extinguishment of debt
represented the excess property indebtedness over the estimated fair market
value of the Property. In addition, during the year ended December 31, 1994,
the Partnership paid $104,800 as its portion due to the mortgage holder as a
final proration of all income and expense items as of August 17, 1993, the
majority of which represented net cash flow received subsequent to June 1,
1993. This amount was included in other liabilities as of December 31, 1993.
For tax reporting purposes, the Partnership recorded a (loss) in 1993 of
$(3,840,800) on this disposition.
6. PROVISION FOR VALUE IMPAIRMENT:
Due to regional factors and other matters affecting the Partnership's remaining
property, there is uncertainty as to the Partnership's ability to recover the
net carrying value of the property during its remaining estimated holding
period. Accordingly, it was deemed appropriate to reduce the basis of 1800
Sherman Office Building by recording a (loss) from a provision for value
impairment of $(1,200,000) during the year ended December 31, 1995. The
provision for value impairment was considered a non-cash event for the purpose
of the Statement of Cash Flows and was not utilized in the determination of
Cash Flow (as defined in the Partnership Agreement) and was a material fourth
quarter adjustment pursuant to Accounting Principles Board Opinion No. 28,
"Interim Financial Reporting". No other material adjustments were made in the
fourth quarter.
Beginning on January 1, 1996 the Partnership will adopt 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 is effective for fiscal years
beginning after December 15, 1995. The General Partner believes that, based on
the current circumstances, the adoption on January 1, 1996 of the Standard will
not materially affect the Partnership's financial position or results of
operations.
A-7
<PAGE>
<TABLE>
<CAPTION>
FIRST CAPITAL GROWTH FUND - XIV
A REAL ESTATE LIMITED PARTNERSHIP
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
AS OF DECEMBER 31, 1995
<S> <C> <C> <C> <C>
Column A Column C Column D Column E
- -------------- --------------------------- ------------------------- ------------------------------------
Initial cost Costs capitalized Gross amount at which
to Partnership subsequent to acquisition carried at close of period
------------------------ ------------------------- ------------------------------------
Buildings Buildings
and and
Improve- Improve- Carrying Improve-
Description Land ments ments Costs (1) Land ments Total (2)(3)
- ---------------- -------------- ----------- ----------- --------- ----------- ------------ ------------
Office Building:
1800 Sherman
(Evanston, IL)
(50% Interest) $ 1,319,000 $6,147,100 $ 833,300 $ 26,900 $1,319,000 $5,807,300 (4)$7,126,300
============= =========== =========== ========= =========== ============ ===========
Column A Column F Column G Column H Column I
- ---------------- ---------- -------- -------- ------------
Life on
which
deprecia-
tion in lat-
Accumu- est income
lated Date of statements
Deprecia- construc- Date is com-
Description tion (2) tion Acquired puted
- ----------------- ---------- -------- -------- ------------
Office Building:
1800 Sherman
(Evanston, IL) March 35(5)
(50% Interest) $ 987,500 1986 1991 3-10(6)
==========
</TABLE>
Column B - Not Applicable
See accompanying notes on the following page.
A-8
<PAGE>
<TABLE>
<CAPTION>
FIRST CAPITAL GROWTH FUND - XIV
A REAL ESTATE LIMITED PARTNERSHIP
NOTES TO SCHEDULE III
Note 1. Consists of legal fees, appraisal fees, title costs and other related
professional fees.
Note 2. The following is a reconciliation of activity in Columns E and F:
December 31, 1995 December 31, 1994 December 31, 1993
------------------------- --------------------------- ---------------------------------
Accumulated Accumulated Accumulated
Cost Depreciation Cost Depreciation Cost Depreciation
---------- ------------- ---------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at
beginning
of the
year $8,152,800 $ 730,500 $7,962,100 $ 495,100 $14,827,900 $ 1,174,300
Additions
during the
year:
Improvements 173,500 190,700 763,900
Provisions
for
depreciation 257,000 235,400 287,800
Deductions
during the
year:
Cost of
real estate
disposed (7,629,700)
Accumulated
depreciation
on real
estate
disposed (967,000)
Provision
for value
impairment (1,200,000)
---------- ---------- ---------- --------- ----------- -----------
Balance at
end of the
year $7,126,300 $ 987,500 $8,152,800 $ 730,500 $ 7,962,100 $ 495,100
========== ========== ========== ========= =========== ===========
Note 3. The aggregate cost for federal income tax purposes as of December 31,
1995 was $8,326,300.
Note 4. Includes provision for value impairment of $1,200,000. See Note 6 of
Notes to Financial Statements for more information.
Note 5. Estimated useful life for building in years.
Note 6. Estimated useful life for improvements in years.
A - 9
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 2,364,800
<SECURITIES> 0
<RECEIVABLES> 6,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,370,800
<PP&E> 7,126,300
<DEPRECIATION> 987,500
<TOTAL-ASSETS> 8,535,600
<CURRENT-LIABILITIES> 811,100
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 7,704,800
<TOTAL-LIABILITY-AND-EQUITY> 8,535,600
<SALES> 0
<TOTAL-REVENUES> 1,663,200
<CGS> 0
<TOTAL-COSTS> 970,400
<OTHER-EXPENSES> 92,600
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (856,800)
<INCOME-TAX> 0
<INCOME-CONTINUING> (856,800)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (856,800)
<EPS-PRIMARY> (5.96)
<EPS-DILUTED> (5.96)
</TABLE>
