FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
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 0-18528
INCOME GROWTH PARTNERS, LTD. X
(Exact name of registrant as specified in its charter)
CALIFORNIA 33-0294177
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11300 Sorrento Valley Road, Suite 108, San Diego, California 92121
(Address of principal executive offices) (Zip Code)
(619) 457-2750
(Registrant's telephone number, including area code)
(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
filing requirements for the past 90 days. Yes [X] No [ ]
The number of the registrant's Original Limited Partnership Units
outstanding as of November 1, 1996 was 18,826.5. The number of the
registrant's Class A Units outstanding as of November 1, 1996 was 8,100.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<PAGE>
<TABLE>
INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARY
(A California Limited Partnership)
CONSOLIDATED BALANCE SHEETS
<CAPTION>
September 30, December 31,
1996 1995
___________ ___________
(Unaudited)
<S> <C> <C>
ASSETS
Land and buildings:
Land $ 7,778,365 $ 7,778,365
Buildings and improvements 23,436,161 23,410,664
___________ ___________
31,214,526 31,189,029
Less accumulated depreciation and impairments (10,373,914) (9,735,490)
___________ ___________
20,840,612 21,453,539
Other assets:
Cash and cash equivalents 225,566 153,735
Prepaid expenses and other assets 627,085 546,594
___________ ___________
852,651 700,329
___________ ___________
$21,693,263 $22,153,868
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Mortgage loans payable $19,836,970 $19,966,935
Other liabilities:
Accounts payable and accrued liabilities 147,953 131,169
Accrued interest payable 126,380 58,506
Security deposits 184,717 165,201
Loan payable to affiliate 55,300 102,000
___________ ___________
20,351,320 20,423,811
Commitments
Partners' capital 1,351,943 1,740,057
Note receivable from general partner (10,000) (10,000)
___________ ___________
$21,693,263 $22,153,868
=========== ===========
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
<TABLE>
INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARY
(A California Limited Partnership)
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<CAPTION>
For the three months ended: For the nine months ended:
Sept 30, 1996 Sept 30, 1995 Sept 30, 1996 Sept 30, 1995
_____________ _____________ _____________ _____________
<S> <C> <C> <C> <C>
Revenues:
Rents $ 867,611 $ 790,318 $2,559,785 $2,856,179
Other 38,025 63,209 113,438 189,877
_____________ _____________ _____________ _____________
Total revenues 905,636 853,527 2,673,223 3,046,056
_____________ _____________ _____________ _____________
Expenses:
Interest 330,307 181,690 1,120,354 1,166,120
Operating expenses (excluding
depreciation and amortization) 416,969 469,605 1,275,261 1,574,919
Depreciation and amortization 240,106 240,616 665,722 833,077
_____________ _____________ _____________ _____________
Total expenses 987,382 891,911 3,061,337 3,574,116
_____________ _____________ _____________ _____________
Loss before extraordinary items (81,746) (38,384) (388,114) (528,060)
_____________ _____________ _____________ _____________
Extraordinary gain:
Disqualified interest - - - 1,472,841
Debt forgiveness - 999,146 - 999,146
_____________ _____________ _____________ _____________
Net income (loss) $ (81,746) $ 960,762 (388,114) $1,943,927
============= ============= ============= =============
Net loss per limited partnership
unit before extraordinary gain $ (3.04) $ (1.65) $ (14.41) $ (22.72)
_____________ _____________ _____________ _____________
Income per limited partnership
unit from extraordinary gain $ - $ 42.98 $ - $ 106.34
_____________ _____________ _____________ _____________
Net income (loss) per limited
partnership unit $ (3.04) $ 41.33 $ (14.41) $ 83.63
============= ============= ============= =============
Weighted average limited
partnership units outstanding 26,926 23,245 26,926 23,245
============= ============= ============= =============
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
<TABLE>
INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARY
(A California Limited Partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30
(UNAUDITED)
<CAPTION>
1996 1995
___________ ___________
<S> <C> <C>
Cash flows from operating activities:
Net tenant revenues $2,673,223 $3,046,056
Security deposits retained (refunded) 19,516 (39,963)
Cash paid to suppliers and employees (1,366,265) (2,479,202)
Interest paid (1,052,480) (1,418,215)
___________ ___________
Net cash provided by (used in)
operating activities 273,994 (891,324)
___________ ___________
Cash flows from investing activities:
Purchase(s) of building & improvements and equipment (25,498) -
___________ ___________
Net cash used in investing activities (25,498) -
___________ ___________
Cash flows from financing activities:
Sale of Partnership Class A Units - 2,019,241
Principal payments under mortgage debt (129,965) (461,847)
Amounts due to affiliates, net (46,700) (17,028)
___________ ___________
Net cash (used in) provided by
financing activities (176,665) 1,540,366
___________ ___________
Net increase in cash 71,831 649,042
Cash and cash equivalents at beginning of period 153,735 180,696
___________ ___________
Cash and cash equivalents at end of period $ 225,566 $ 829,738
=========== ===========
Reconciliation of net (loss) income to net cash
provided by operating activities:
Net (loss) income $ (388,114) $ 1,943,927
Adjustments to reconcile net (loss) income to net
cash provided by (used in) operating activities:
Depreciation and amortization 664,084 833,077
Extraordinary gains - (2,471,987)
Other, primarily changes in
other assets and liabilities (1,976) (1,196,341)
___________ ___________
Net cash provided by (used in) operating activities $ 273,994 $ (891,324)
=========== ===========
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARY
(A California Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1996
(UNAUDITED)
1. Basis of Financial Statement Presentation
The accompanying unaudited consolidated financial statements of Income
Growth Partners, Ltd. X, a California Limited Partnership, and Subsidiary
(the "Partnership") have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information
and note disclosures normally included in annual financial statements
prepared in accordance with generally accepted accounting principles have
been condensed or omitted pursuant to those rules and regulations, although
the Partnership believes that the disclosures made are adequate to make the
information presented not misleading. These consolidated financial
statements should be read in conjunction with the financial statements and
the notes thereto included in the Partnership's latest audited financial
statements for the year ended December 31, 1995 filed on Form 10K.
The accompanying consolidated financial statements include all adjustments
(consisting of normal recurring adjustments) which are, in the opinion of
the general partners, necessary for a fair presentation of the financial
condition, results of operations and cash flows for periods presented.
However, these results are not necessarily indicative of results for a full
year.
Certain prior period amounts have been reclassified to conform with the
current period presentation.
The accompanying financial statements have been prepared on a going concern
basis which assumes continuity of operations and realization of assets and
liquidation of liabilities in the ordinary course of business. As a result
of the Partnership's continuing high levels of mortgage indebtedness, there
are significant uncertainties relating to the ability of the Partnership to
continue as a going concern. The financial statements do not include any
adjustments that might be necessary as a result of the outcome of the
uncertainties discussed herein.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following Management's Discussion and Analysis of Financial Condition
and Results of Operations should be read in conjunction with the Financial
Statements and Notes thereto filed herewith.
a. Liquidity and Capital Resources
Historically, the Limited Partnership has been dependent upon proceeds from
the sale of Original Partnership Units to meet its obligations, including
debt service requirements. In 1992 the Limited Partnership discontinued
sales of Original Partnership Units, and since then the Limited
Partnership's primary source of liquidity has been from cash generated from
operations. In May 1995, the Partnership's Plan of Reorganization became
effective and the Partnership received approximately $2,025,000 in capital
from Class A Unit sales to fund the Plan.
Although the Partnership successfully refinanced its Mission Park property
at a fixed annual interest rate of 7.76%, its Shadowridge Meadows property
remains highly leveraged and sensitive to interest rate fluctuations since
its debt service is adjusted monthly based upon the 11th District Cost of
Funds Index. Between May 1994 and November 1996, increases in the 11th
District Cost of Funds Index totaling 1.205% have been announced. If the
11th District Cost of Funds index continues to increase more rapidly than
projected, and the Partnership is unable to raise rents at Shadowridge
Meadows to cover the increased debt service payments, the Partnership may
have to fund shortfalls from reserves. Furthermore the existing loan on
Shadowridge Meadows is currently scheduled to expire in July 1998. If the
real estate and financing markets have not improved sufficiently for the
Partnership to refinance this property by that time, the Partnership may
have to restructure the existing loan, file another bankruptcy petition,
sell the property, or risk losing the property to foreclosure.
Mortgage indebtedness on the properties remains high, despite the
Partnership's success at curing and reinstating the loans, disqualifying
penalty interest and fees, making principal reduction payments, and
obtaining debt forgiveness from refinancing. If occupancy or rental income
drops significantly, or if operating expenses or interest rates increase,
current levels and terms of mortgage indebtedness could make it difficult
for the properties to service their debt through Partnership operations.
In the event that one or more of the properties is unable to support its
debt service and the Partnership is unable to cover operational shortfalls
from cash reserves, the Partnership may have to take one or more
alternative courses of action. The general partners would then determine,
based on their analysis of relevant economic conditions and the status of
the properties, a course of action intended to be consistent with the best
interests of the Partnership. Possible courses of action might include the
sacrifice of one or more of the properties to reduce negative cash flow,
the sale or refinancing of one or more of the properties, the entry into
one or more joint venture partnerships with other entities, or the filing
of another bankruptcy petition.
b. Results of Operations
The Partnership had been operating the Shadowridge Meadows Apartments and
Mission Park Apartments for approximately 94 months and 85 months
respectively at September 30, 1996. The Shadowridge Meadows Apartments and
Mission Park Apartments reflected occupancy rates of 97% and 98%
respectively as of September 30, 1996, compared to 96% and 92% respectively
as of September 30, 1995. This is consistent with a recent, general
increase in occupancy rates throughout San Diego county.
Total revenues for the three month period ended September 30, 1996
increased approximately $52,109 compared to the same period in 1995
primarily due to increased occupancy and rental rates during 1996. Total
revenues for the nine month period ended September 30, 1996 decreased
approximately $372,833 compared to the same period in 1995 due to the
foreclosure of the Margarita Summit property during the third quarter of
1995. Operating expenses, excluding depreciation and amortization, for the
three and nine month periods ended September 30, 1996 decreased
approximately $52,636 and $299,658 respectively, compared to the same
periods in 1995, primarily due to the foreclosure of the Margarita Summit
property and the elimination of related operating expenses. Interest
expense for the three month period ended September 30, 1996 increased
approximately $148,617 compared to the same period in 1995, despite some
adjustments made during the third quarter of 1996 to allocate some
previously expensed mortgage interest to mortgage principal reduction on
the Shadowridge Meadows loan, primarily due to adjustments made during the
third quarter of 1995 related to the foreclosure of Margarita Summit.
Interest expense for the nine month period ended September 30, 1996
decreased approximately $45,766 primarily due to decreased debt service in
1996 resulting from lower mortgage loan balances and lower interest rates
after the Chapter 11 Reorganization and the subsequent refinancing of
Mission Park. Depreciation and amortization expense for the three month
period ended September 30, 1996 changed very little compared to the same
period in 1995, because the 27,807 decrease in depreciation expense due to
the loss of Margarita Summit was offset by a 27,297 increase in
amortization expense on Mission Park to amortize loan refinancing fees.
Depreciation and amortization expense for the nine month period ended
September 30, 1996 decreased approximately $167,355 compared to the same
period in 1995, primarily due to the foreclosure of Margarita Summit.
In the past the Partnership experienced losses from operations primarily
due to the high degree of debt service on its mortgage loans. Management
estimates that the Partnership may experience continued operating losses in
the future from its Shadowridge Meadows property unless debt service can be
restructured or reduced.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There are no pending legal proceedings which may have a material adverse
effect on the Partnership. However, the Partnership is involved in small
claims court proceedings against certain present or former tenants of its
apartment complexes with regard to landlord-tenant matters, all of which
are considered to be in the ordinary course of its business.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
None
<PAGE>
INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARY
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.
Date: November 14, 1996
INCOME GROWTH PARTNERS, LTD. X,
a California Limited Partnership
By: Income Growth Management, Inc.
General Partner
By: /s/ Timothy C. Maurer
_______________________________
Timothy C. Maurer
Principal Financial Officer AND
Duly Authorized Officer of the Registrant
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Location
___________ ___________________________________________________ ________
27.5 Financial Data Schedule Attached
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Financial Statements filed with the Registrant's Form 10-Q for the quarter
ended September 30, 1996 and is qualified in its entirety by reference to
such Financial Statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 225,566
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 852,651
<PP&E> 31,214,526
<DEPRECIATION> (10,373,914)
<TOTAL-ASSETS> 21,693,263
<CURRENT-LIABILITIES> 514,350
<BONDS> 19,836,970
0
0
<COMMON> 0
<OTHER-SE> 1,341,943
<TOTAL-LIABILITY-AND-EQUITY> 21,693,263
<SALES> 0
<TOTAL-REVENUES> 2,673,223
<CGS> 0
<TOTAL-COSTS> 1,275,261
<OTHER-EXPENSES> 665,722
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,120,354
<INCOME-PRETAX> (388,114)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (388,114)
<EPS-PRIMARY> (14.41)
<EPS-DILUTED> 0
</TABLE>
