FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED] 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 [NO FEE REQUIRED]
For the transition period from______to______
Commission File Number 0-18528
INCOME GROWTH PARTNERS, LTD. X, A CALIFORNIA LIMITED PARTNERSHIP
(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)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
LIMITED PARTNERSHIP INTERESTS
(Title of Class)
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 [ ]
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. [X]
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING
THE PRECEDING FIVE YEARS:
Indicate by check mark whether the Registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a
plan confirmed by a court. Yes [X] No [ ]
DOCUMENTS INCORPORATED BY REFERENCE:
Prospectus dated January 3, 1991, incorporated by reference as Exhibit 28.1
from the Partnership's Annual Report on Form 10-K for the Fiscal Year ended
December 31, 1992 (incorporated into Parts I-III herein).
Letter regarding resignation of a General Partner, incorporated by
reference from the Partnership's Annual Report on Form 10-K for the Fiscal
Year ended December 31, 1993 (incorporated into Part III herein).
Exhibit 2.2 from the Partnership's Quarterly Report on Form 10-Q for the
third quarter ended September 30, 1994 (incorporated into Parts I-III
herein) containing the following documents:
Second Amended Disclosure Statement to Debtor's Second Amended Plan of
Reorganization, As Revised (with Second Amended Plan of Reorganization
attached as Exhibit 1) filed with the Bankruptcy Court on October 25,
1994;
Order Approving Second Amended Disclosure Statement to Debtor's Second
Amended Plan of Reorganization, Approving Ballots and Fixing Dates for
Filing Acceptances or Rejections of Plan and for Confirmation Hearing,
Combined with Notice Thereof;
Equity Interest Holder Ballot for Accepting or Rejecting Debtor's Second
Amended Plan of Reorganization;
Offering Memorandum for Income Growth Partners, Ltd. X Class A Units
dated October 27, 1994 (with Amended and Restated Agreement of Limited
Partnership attached as Exhibit B).
Articles of Incorporation of IGP X Mission Park, Inc., incorporated by
reference as Exhibit 3.1 from the Partnership's Current Report on Form 8-K
dated December 27, 1995 (incorporated into Part III herein).
Agreement of Limited Partnership of IGP X Mission Park Associates, L.P., A
California Limited Partnership, incorporated by reference as Exhibit 4.3
from the Partnership's Current Report on Form 8-K dated December 27, 1995
(incorporated into Part III herein).
OUTLINE
Item 1. Business
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Market for Registrant's Units and Related Security Holder Matters
Item 6. Selected Financial Data
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operation
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Item 10. Directors and Executive Officers of the Registrant
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management
Item 13. Certain Relationships and Related Transactions
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
PART I
Item 1. Business
Information regarding the general development of the business of Income
Growth Partners, Ltd. X, a California Limited Partnership (the "Limited
Partnership") is hereby incorporated herein by this reference from pages
20-31 (under the captions "Partnership Investment Objectives and Policies"
and "Real Estate Property Investments") of the Limited Partnership's
Prospectus dated January 3, 1991 (the "Prospectus"), incorporated herein by
reference as Exhibit 28.1 from the Limited Partnership's Annual Report on
Form 10-K for the Fiscal Year ended December 31, 1992; and from pages 15-17
of the Limited Partnership's Offering Memorandum for Class A Units dated
October 27, 1994 from Exhibit 2.2 of the Limited Partnership's Quarterly
Report on Form 10-Q for the third quarter ended September 30, 1994, as
supplemented by the following:
(a) Current Principal Balances of Loans Encumbering Properties
Property Balance as of December 31, 1995
Shadowridge Meadows Apartments $ 9,766,935
Mission Park Apartments $10,200,000
As previously reported, on January 26, 1994 the Limited Partnership filed a
voluntary petition (the "Chapter 11 filing") in the United States
Bankruptcy Court for the Southern District of California (the "Bankruptcy
Court") seeking to reorganize under Chapter 11 of Title 11 of the United
States Code (the "Bankruptcy Code"). Throughout 1994 and until May 2, 1995
the Limited Partnership operated as a debtor-in-possession under the
supervision of the Bankruptcy Court.
During 1995 the Limited Partnership raised approximately $2,025,000 in
additional capital from existing investors in the form of Class A Units to
satisfy its court confirmed Plan of Reorganization ("Plan"). The offering
was closed effective June 30, 1995. The Class A Units were offered
pursuant to exemptions from the registration requirements of the Securities
Act of 1933 and applicable states' securities laws. On October 27, 1994
the Limited Partnership released an Offering Memorandum for the Class A
Units which contained an Amended and Restated Agreement of Limited
Partnership ("Partnership Agreement"). A copy of the Disclosure Statement
and Offering Memorandum are incorporated herein by this reference from
Exhibit 2.2 of the Registrant's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1994.
The Limited Partnership emerged from bankruptcy effective May 2, 1995 and
paid its creditors in accordance with the Plan. As part of the Limited
Partnership's Plan of Reorganization the Limited Partnership cured and
reinstated the loans on the Mission Park and Shadowridge Meadows properties
with payments to the lenders of $344,534 and $556,144 respectively. The
payment to the lender on the Mission Park property was made as a full cure
and reinstatement of the existing note in accordance with the Plan and was
applied against all qualified accrued interest based on the non-default
contract rate of interest in the note. The lender was not entitled to any
default interest, penalties, or late fees or charges as a result of the
bankruptcy proceedings. The remaining principal balance after this loan
was cured and reinstated was $12,316,258.
The $556,144 payment to the lender on the Shadowridge Meadows property was
a full cure and reinstatement of the loan and buydown of the amortization
term of the loan from 20 years to 30 years in accordance with the
provisions of the Plan and the existing Loan Modification Agreement in
effect on this property. Of the $556,144 paid to the lender, $476,144 was
applied towards reducing the principal balance of the loan, and the
difference was applied towards the lender's fees in accordance with the
Plan. The remaining loan balance after the buydown payment was
approximately $9,816,119.
Since the Limited Partnership was unable to retain ownership of Margarita
Summit under the terms of the Plan, it did not cure and reinstate this loan
or pay the claim for past due real estate taxes on this property. On May
18, 1995 the Limited Partnership stipulated to the appointment of a
receiver to take over the day-to-day operations of the property, while the
lender completed foreclosure proceedings. Title to Margarita Summit was
held by the Limited Partnership until the lender completed foreclosure
proceedings on August 1, 1995. The accompanying financial statements
include internal results of operations for Margarita Summit through May
1995 and external operations as reported by the receiver for the months of
June and July. The lender received all cash collateral generated by
Margarita Summit during receivership. Additionally, the accompanying
financial statements reflect the elimination of the mortgage debt, land,
and building and improvements related to Margarita Summit. As part of the
foreclosure transaction, the Limited Partnership recorded an extraordinary
gain related to forgiveness of debt of approximately $999,000.
In December 1995 the Limited Partnership refinanced its Mission Park
property to take advantage of an opportunity to pay off the existing $12.3
million loan on the property for the discounted amount of $10.2 million,
pursuant to a Loan Pay-off Agreement with the existing lender. This
effectively created approximately an additional $2 million in equity in the
property, and lowered the monthly debt service payments on the property by
approximately $20,000 to approximately $73,000 per month. With this new
financing, the property generates a positive cash flow, and is in a much
better position to meet its ongoing financial obligations. As part of the
refinancing, it was necessary for the Limited Partnership to pay off the
remaining past-due property taxes on Mission Park of approximately
$152,350.
In order to complete the refinancing, the Limited Partnership contributed
certain assets including the Mission Park Apartments to a new limited
partnership called IGP-X Mission Park Associates, L.P. (the "Subsidiary")
in exchange for an interest in the Subsidiary. As discussed in the
Registrant's Form 8-K dated December 27, 1995, incorporated herein by this
reference, the newly formed Subsidiary is separate and distinct from the
Limited Partnership, having separate assets, liabilities, and business
operations. The Limited Partnership and Subsidiary are collectively
referred to as the "Partnership."
Under Chapter 11, certain claims against the Limited Partnership in
existence prior to the filing were stayed while the Limited Partnership
continued operations as a debtor-in-possession. These claims, which
totaled $32,181,911 are reflected in the December 31, 1994 balance sheet as
"Liabilities subject to compromise," as required under Statement of
Position 90-7, "Financial Reporting by Entities in Reorganization under the
Bankruptcy Code" ("SOP 90-7"). Disposition of these obligations is
outlined in the Plan and reflected in the 1995 financial statements.
Reorganization items include income and expenses that were realized or
incurred by the Limited Partnership as a result of reorganization under the
Bankruptcy Code.
Pursuant to SOP 90-7, the Limited Partnership did not qualify for Fresh-
Start Reporting because the holders of existing voting shares immediately
before confirmation retained more than 50% of the voting shares of the
emerging entity. According to section 41 of SOP 90-7, Entities emerging
from Chapter 11 that do not meet the criteria for Fresh-Start Reporting
should report liabilities compromised by a confirmed plan at present values
of amounts to be paid, determined at appropriate current interest rates,
and forgiveness of debt, if any, should be reported as an extraordinary
item. Accordingly, during 1995 the Partnership recorded an extraordinary
reorganization item listed as Gain on forgiveness of debt in the amount of
$2,432,394 related to the reversal of previously accrued interest that was
disqualified by the Plan, and gain resulting from the forgiveness of debt
related to the Margarita Summit foreclosure. The Partnership also recorded
a $2,013,625 extraordinary Gain on forgiveness of debt, unrelated to the
reorganization, due to a mortgage obligation forgiven by the previous
lender on the Mission Park property.
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.
(b) Operating Information for Partnership Properties
Average Effective Annual Rent Average Annual
Fiscal Year Per Occupied Square Foot* Occupancy Rate*
___________ _____________________________ ______________
SHADOWRIDGE MEADOWS APARTMENTS
1991 $7.80 93%
1992 $8.40 90%
1993 $7.94 91%
1994 $8.04 91%
1995 $8.08 94%
MISSION PARK APARTMENTS
1991 $9.24 96%
1992 $9.24 95%
1993 $9.48 94%
1994 $9.04 93%
1995 $9.10 93%
* "Average Effective Annual Rent" is calculated by dividing actual rental
revenues by average number of occupied square feet of rentable space.
Average number of occupied square feet is calculated by multiplying total
rentable square feet by the average annual occupancy rate. "Average Annual
Occupancy Rate" reflects the average for the year of all average monthly
occupancies.
(c) Market Area Occupancy Rates - Based on information obtained from
sources deemed reliable by the Partnership, the average occupancy rates of
residential rental properties in the respective market areas in which the
Partnership's properties are located were as follows, as of the dates
indicated:
MARKET AREA OCCUPANCY RATE
PROPERTY MARKET AREA DECEMBER 31, 1994 DECEMBER 31, 1995
________ ___________ _________________ _________________
Shadowridge Vista, California 90% 94%
Meadows Apartments
Mission Park San Marcos, 93% 93%
Apartments California
(d) Employees of the Partnership - The Partnership has no full-time
employees. Employees of corporations affiliated with the general partners,
however, perform certain administrative and other services on behalf of the
Partnership.
Item 2. Properties
As of the date hereof, the Partnership owns the properties referred to in
Item 1 above. The information regarding such properties set forth in Item
1 is incorporated herein by this reference.
Item 3. Legal Proceedings
The information from Item 1, subsection (a) above regarding the bankruptcy
proceedings is incorporated herein by this reference. On January 26, 1994,
a legal proceeding was brought against the Limited Partnership based on
allegations that the Limited Partnership was in default on the loan secured
by the Mission Park Apartments. This proceeding was stayed by the
bankruptcy, and effectively ended when the Limited Partnership cured and
reinstated the loan on the Mission Park Apartments on May 2, 1995 pursuant
to the Limited Partnership's Plan of Reorganization.
As anticipated in the Limited Partnership's Plan, on May 10, 1995, the
lender on the Margarita Summit property filed a Complaint for Unified
Judicial Foreclosure; For Specific Performance of Assignment of Rents
Provision; For Appointment of a Receiver; and For Injunctive Relief in the
Superior Court of the State of California, County of Riverside, in order to
start the foreclosure process on Margarita Summit, and appoint a receiver
to take over operations of the property. On May 18, 1995 the court
approved a Stipulation and Order for the Appointment of a Receiver. The
lender completed a non-judicial foreclosure by trustee's sale on August 1,
1995, effectively ending this litigation.
There are no other 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 4. Submission of Matters to a Vote of Securities Holders
The information contained in the Partnership's Second Amended Disclosure
Statement to Debtor's Second Amended Plan of Reorganization, As Revised and
Offering Memorandum for Class A Units from Exhibit 2.2 of the Partnership's
Quarterly Report on Form 10-Q for the third quarter ended September 30,
1994 is incorporated herein by this reference. Along with the Disclosure
Statement and Offering Memorandum, the existing limited partners received
an Equity Interest Holder Ballot for Accepting or Rejecting Debtor's Second
Amended Plan of Reorganization ("Ballot"). A copy of this Ballot was
contained in Exhibit 2.2 on sequentially numbered page 217 therein.
Pursuant to the Bankruptcy Code, it was requested that the existing equity
interest holders complete the Ballot and return it to the Partnership's
attorneys by February 1, 1995.
By February 1, 1995 the Partnership's attorneys had received completed
Ballots from approximately 17% of the 18,826.5 holders of Original
Partnership Units. Of the votes received, approximately 89.2% of the
unitholders voted to accept the Plan, and 10.8% voted to reject the Plan.
There were no other matters submitted to a vote of the holders of Limited
Partnership Interests, through solicitation of proxies or otherwise, during
1995.
PART II
Item 5. Market for Registrant's Units and Related Security Holder Matters
(a) Market Information
As of December 31, 1995 the outstanding securities of the Partnership were
the Original Units and Class A Units held by the Limited Partners. The
Partnership's Amended and Restated Agreement of Limited Partnership
substantially restricts transfers of all units and no public trading market
for the units exists or is intended or expected to develop.
(b) Holders
As of December 31, 1995, the Partnership's 18,826.5 outstanding Original
Units and 8,100 Class A Units were held by an aggregate of 2,078 Limited
Partners.
(c) Rescission Offer
Information regarding a rescission offer made by the Limited Partnership
with respect to certain of the Original Units is incorporated herein by
this reference from pages 10-11 of the Prospectus (under the caption
"Rescission Offer").
(d) Dividends
As a limited partnership, the Partnership does not pay dividends, nor has
the Partnership made any distributions to the Limited Partners for the
fiscal year covered by this report or for any prior fiscal year.
The general partners anticipate that Partnership operations may generate
sufficient cash to enable the Partnership to make distributions to the
partners at some time during the life of the Partnership, but such
distributions cannot be assured at this time. Since the Partnership has
issued approximately 8,100 preferred Class A Units, if any cash becomes
available for distributions, these distributions would first be allocated
to paying the priority return on the Class A Units. The ability of the
Partnership to make any distributions is largely dependent on future
income, expenses, debt service, and operating reserves. The Partnership is
currently rebuilding its operating reserve accounts with any positive cash
flow from operations in anticipation of future costs associated with
refinancing or selling the Shadowridge Meadows Apartments in 1998.
Item 6. Selected Financial Data
The following selected financial data should be read in conjunction with
the Financial Statements and the related Notes described in Item 8 herein:
<TABLE>
Income Growth Partners, Ltd. X and Subsidiary (A California Limited Partnership)
<CAPTION>
1995 1994 1993 1992 1991
____________ ____________ ____________ ____________ ____________
<S> <C> <C> <C> <C> <C>
Total revenues $ 3,896,384 $ 4,344,717 $ 4,418,407 $ 4,393,944 $ 4,348,840
Extraordinary gain on forgiveness
of debt 4,446,019 - - - -
Net income (loss) 3,757,729 (5,322,740) (2,550,654) (2,526,354) (5,233,126)
Total assets 22,153,868 28,945,057 33,954,409 35,272,654 37,209,311
Long-term obligations 19,966,935 29,426,708 29,678,456 29,991,066 30,013,501
Net income (loss) per limited
partnership unit before
extraordinary gain (28.48) (282.73) (135.49) (134.13) (301.15)
Net income (loss) per limited
partnership unit after
extraordinary gain 155.53 (282.73) (135.49) (134.13) (301.15)
<FN>
To date there have been no cash distributions to partners.
</TABLE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operation
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. See the discussion in Item 1,
subsection (a) regarding the bankruptcy proceedings and refinancing of the
Mission Park Property. The information set forth in Item 1 is incorporated
herein by this reference.
Liquidity and Capital Resources
Historically, the Limited Partnership was dependent upon proceeds from the
sale of Original Units to meet its obligations, including debt service
requirements. In 1992 the Limited Partnership discontinued sales of
Original Units, and between 1992 and 1995 the Limited Partnership's primary
source of liquidity has been from cash generated from operations. On May
2, 1995, the Limited Partnership's Plan of Reorganization became effective
and after all fundraising efforts were complete, the Limited Partnership
had received approximately $2,025,000 in additional capital from Class A
Unit sales to fund the Plan. After paying the creditors as outlined in the
Plan, the Limited Partnership set aside a portion of remaining proceeds of
the new offering in a cash reserve account to provide liquidity for short
term negative cash flows. In December 1995 the Partnership successfully
refinanced the Mission Park Property as discussed in Item 1 above and in
the Registrant's Form 8-K dated December 27, 1995. In order to complete
the refinancing the Partnership had to use cash reserves to pay off the
outstanding past-due property taxes and cover loan origination fees and
refinancing costs. As of December 31, 1995 the Partnership had
approximately $153,735 in cash and cash equivalents.
Although the Partnership successfully refinanced its Mission Park property
at a fixed annual interest rate of 7.76%, it remains sensitive to interest
rates because the Shadowridge Meadows property remains highly leveraged.
The interest rate on the Shadowridge Meadows mortgage adjusts monthly with
the 11th District Cost of Funds Index. Between May 1994 and March 1996,
increases in the 11th District Cost of Funds Index totaling 1.404% 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.
Net cash provided by (used in) operating activities before reorganization
items in 1995 was approximately ($1,080,024) compared to net cash provided
by operating activities of $568,338 and $191,735 in 1994 and 1993
respectively. The principal reason for the difference between net cash
used in operating activities in 1995 and net cash provided by operating
activities in 1994 was the cash used to fund the Partnership's Plan of
Reorganization and refinance the Mission Park Property in 1995. The
principal reason for the increase in cash provided by operating activities
between 1994 and 1993 was the decrease in interest paid to lenders on the
Partnership's properties during 1994 due to debt service payments that were
missed and/or reduced as a result of bankruptcy proceedings and the cash
collateral stipulations with the lenders. This increase in 1994 cash flow
was partially offset by the payment of professional fees related to the
bankruptcy proceedings of approximately $254,175.
Mortgage indebtedness during 1995 remained 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. This mortgage indebtedness makes 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 proceeds of the new offering, 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.
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.
Results of Operations
1995 and 1994
The Partnership had been operating the Shadowridge Meadows Apartments and
Mission Park Apartments for approximately 85 months and 76 months
respectively at December 31, 1995. As of December 31, 1995, the
Shadowridge Meadows Apartments and Mission Park Apartments reflected
occupancy rates of 96 percent and 92 percent respectively.
The Partnership continued to stabilize its properties in 1995, although it
lost the Margarita Summit property and may experience negative cash flows
from its Shadowridge Meadows property in the future. In the past, the
Partnership experienced a net loss from operations primarily due to the
high degree of debt service discussed previously. Although the Mission
Park property has stabilized, management estimates that the Partnership may
experience operating losses from Shadowridge Meadows in the future unless
the mortgage indebtedness balance (and related interest expense burden) is
permanently reduced and/or restructured.
Since the properties remain highly leveraged, earnings from operations are
sensitive to changes in debt service. Although the Partnership was
recently able to refinance the Mission Park property with fixed rate
financing, the debt service on the Shadowridge Meadows property continues
to vary with changes in interest rates. However, earnings are also
sensitive to changes in rental income resulting from inflation or other
market factors. Generally, increasing interest rates indicate impending
inflation, so any decreases in earnings resulting from higher interest
rates may be partially offset by increased rental income.
Operating revenues for the year ended December 31, 1995 decreased by
approximately $448,333 compared to the year ended December 31, 1994
primarily due to the loss of revenues generated by the Margarita Summit
property in 1995. Depreciation and amortization also decreased
approximately $269,980 in 1995 due to the loss of Margarita Summit.
Interest expense decreased approximately $468,688 primarily due to the loss
of Margarita Summit, and the reduced loan balances resulting from the
bankruptcy.
During 1995 the Partnership recorded an extraordinary reorganization item
listed as Gain on forgiveness of debt in the amount of $2,432,394 related
to the reversal of previously accrued interest that was disqualified by the
Plan, and gain resulting from the forgiveness of debt related to the
Margarita Summit foreclosure. The Partnership also recorded a $2,013,625
extraordinary Gain on forgiveness of debt, unrelated to the reorganization,
due to a mortgage obligation forgiven by the previous lender on the Mission
Park property
1994 and 1993
The Partnership had been operating the Shadowridge Meadows Apartments,
Mission Park Apartments, and Margarita Summit Apartments for approximately
73 months, 64 months, and 58 months respectively, at December 31, 1994. As
of December 31, 1994, the Shadowridge Meadows Apartments, Mission Park
Apartments, and Margarita Summit Apartments reflected occupancy rates of 87
percent, 94 percent, and 92 percent, respectively.
The Partnership experienced improved earnings from operations in 1994
(excluding depreciation and amortization, write down of buildings, and
reorganization items), but also incurred reorganization costs of
approximately $254,175. In the past, the Partnership experienced a net
loss from operations primarily due to the high degree of debt service
discussed previously.
Operating revenues for the year ended December 31, 1994 decreased by
approximately $73,690 compared to the year ended December 31, 1993
primarily as a result of a continued decrease in rental revenues. The
Partnership has had to continue to offer rental incentives at its
properties in order to compete with other properties and maintain
occupancy.
Interest expense decreased approximately $1,330,784, principally as a
result of default interest on the Mission Park loan that was due in
accordance with the terms of the debt, and required to be recorded as of
year end 1993. The bankruptcy proceedings later disqualified the penalty
interest that was expensed in 1993. Operating expenses decreased
approximately $110,125 in 1994 compared to 1993 levels primarily due to
decreased property taxes and property management fees.
Item 8. Financial Statements and Supplementary Data
INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARY
(A California Limited Partnership)
REPORT OF INDEPENDENT ACCOUNTANTS
Income Growth Partners, Ltd. X,
a California limited partnership
We have audited the consolidated financial statements and the
financial statement schedule of Income Growth Partners, Ltd. X,
a California limited partnership, and subsidiary (collectively,
the "Partnership") listed in Item 14(a) of this Form 10-K.
These financial statements and financial statement schedule are
the responsibility of the general partners and the Partnership's
management. Our responsibility is to express an opinion on
these financial statements and financial statement 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 consolidated
financial position of Income Growth Partners, Ltd. X and
subsidiary as of December 31, 1995 and 1994 and the results of
their operations and cash flows for each of the three years in
the period ended December 31, 1995, in conformity with generally
accepted accounting principles. In addition, in our opinion the
financial statement schedule referred to above, when considered
in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information
required to be included therein.
The accompanying financial statements have been prepared
assuming that the Partnership will continue as a going concern.
As discussed in Note 1 to the financial statements, the
Partnership filed a voluntary petition for reorganization under
Chapter 11 of the Federal Bankruptcy Code in the United States
Bankruptcy Court in January 1994. The Partnership filed a Plan
of Reorganization in the United States Bankruptcy Court in
October 1994 which was confirmed by the Bankruptcy Court in
March 1995, and became effective in May 1995. Although the
Partnership has successfully emerged from bankruptcy, the
continuation of their business as a going concern is contingent
upon, among other things, the Partnership's ability to maintain
compliance with all debt covenants under the current financing
arrangements, and achieve satisfactory levels of future
earnings. The financial statements do not include any
adjustments that might result from the outcome of these
uncertainties.
/s/Coopers & Lybrand L.L.P.
San Diego, California
February 20, 1996
<PAGE>
<TABLE>
INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARY
(A California Limited Partnership)
CONSOLIDATED BALANCE SHEETS
December 31, 1995 and 1994
<CAPTION>
1995 1994
___________ ___________
<S> <C> <C>
ASSETS
Land and buildings:
Land $ 7,778,365 $ 9,378,607
Buildings and improvements 23,410,664 32,385,377
___________ ___________
31,189,029 41,763,984
Less accumulated depreciation and impairments (9,735,490) (13,240,165)
___________ ___________
21,453,539 28,523,819
___________ ___________
Other assets:
Cash and cash equivalents 153,735 180,696
Prepaid expenses and other assets 546,594 240,542
___________ ___________
700,329 421,238
___________ ___________
$22,153,868 $28,945,057
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Liabilities not subject to compromise:
Accounts payable and accrued liabilities $ 131,169 $ 537,684
Accrued interest payable 58,506 -
Security deposits 165,201 207,875
Mortgage loans payable 19,966,935 -
Loan payable to affiliate 102,000 -
Liabilities subject to compromise:
Accounts payable and accrued liabilities - 934,979
Accrued interest payable - 1,803,196
Due to affiliates - 17,028
Mortgage Loans Payable - 29,426,708
___________ ___________
20,423,811 32,927,470
Commitments
Partners' capital (deficit) 1,740,057 (3,972,413)
Note receivable from general partner (10,000) (10,000)
___________ ___________
$22,153,868 $28,945,057
=========== ===========
<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
For the Years Ended December 31, 1995, 1994 and 1993
<CAPTION>
1995 1994 1993
_____________ _____________ _____________
<S> <C> <C> <C>
Revenues:
Rents $3,663,206 $4,130,693 $4,210,435
Interest 31,714 2,843 4,843
Other 201,464 211,181 203,129
_____________ _____________ _____________
Total revenues 3,896,384 4,344,717 4,418,407
_____________ _____________ _____________
Expenses:
Operating expenses 2,005,969 2,195,909 2,306,034
Depreciation and amortization 931,342 1,201,322 1,216,192
Interest and penalties 1,647,363 2,116,051 3,446,835
Write down of land and building - 3,900,000 -
_____________ _____________ _____________
Total expenses 4,584,674 9,413,282 6,969,061
_____________ _____________ _____________
Loss before reorganization item (688,290) (5,068,565) (2,550,654)
Reorganization item, professional fees - 254,175 -
_____________ _____________ _____________
Loss before extraordinary item (688,290) (5,322,740) (2,550,654)
Extraordinary item:
Gain on forgiveness of debt 4,446,019 - -
_____________ _____________ _____________
Net income (loss) $3,757,729 $(5,322,740) $(2,550,654)
============= ============= =============
Loss per limited partnership unit before
extraordinary gain $(28.48) $(282.73) $(135.49)
============= ============= =============
Extraordinary gain per limited partnership unit $184.01 $ - $ -
============= ============= =============
Net income (loss) per limited partnership unit $155.53 $(282.73) $(135.49)
============= ============= =============
Weighted average limited partnership units 24,161 18,826 18,826
============= ============= =============
<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 PARTNERS' CAPITAL (DEFICIT)
For the Years Ended December 31, 1995, 1994, and 1993
<CAPTION>
Limited Partners
________________
Class A
General Original Original
Partners Partners Partners Total
____________ ____________ ____________ ____________
<S> <C> <C> <C> <C>
Balance, December 31, 1992 $(1,807,755) $5,708,736 $ - $3,900,981
Net Loss (382,598) (2,168,056) - (2,550,654)
____________ ____________ ____________ ____________
Balance, December 31, 1993 (2,190,353) 3,540,680 - 1,350,327
Net Loss (1,782,060) (3,540,680) - (5,322,740)
____________ ____________ ____________ ____________
Balance, December 31, 1994 (3,972,413) - - (3,972,413)
Net Income 3,757,729 - - 3,757,729
Issuance of 8,099 Class A
partnership units, net of
issuance costs - - 1,954,741 1,954,741
____________ ____________ ____________ ____________
Balance, December 31, 1995 $(214,684) $ - $1,954,741 $1,740,057
============ ============ ============ ============
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
<TABLE>
INCOME GROWTH PARTNERS, LTD. X
(A California Limited Partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1995, 1994 and 1993
<CAPTION>
1995 1994 1993
___________ ___________ ___________
<S> <C> <C> <C>
Cash flows from operating activities:
Net tenant revenues $3,864,670 $4,341,874 $4,413,564
Security deposits (refunded) retained (42,674) (5,115) 5,165
Cash paid to suppliers and employees,
including fees paid to an affiliate (3,078,083) (1,409,193) (1,590,329)
Real estate taxes paid (266,794) (298,249) (190,860)
Interest received 31,714 2,843 4,843
Insurance proceeds received - - 41,851
Interest paid (1,588,857) (2,063,822) (2,492,499)
___________ ___________ ___________
Net cash provided by (used in) operating
activities before reorganization item (1,080,024) 568,338 191,735
___________ ___________ ___________
Operating cash flows from reorganization item:
Professional fees - (254,175) -
___________ ___________ ___________
Net cash used by reorganization item - (254,175) -
___________ ___________ ___________
Net cash provided by (used in) operating activities (1,080,024) 314,163 191,735
___________ ___________ ___________
Cash flows from investing activities:
Purchase of land, buildings and improvements (98,273) - (11,243)
Other assets (273,521) - -
___________ ___________ ___________
Net cash used in investing activities (371,794) - (11,243)
___________ ___________ ___________
Cash flows from financing activities:
Sale of Partnership units 2,024,991 - -
Payments of issuance costs (70,250) - -
Principal payments under mortgage debt (512,856) (251,748) (312,610)
Increase (decrease) in amounts due to affiliates (17,028) - 8,368
___________ ___________ ___________
Net cash provided by (used in) financing activities 1,424,857 (251,748) (304,242)
___________ ___________ ___________
Net increase (decrease) in cash and cash equivalents (26,961) 62,415 (123,750)
Cash and cash equivalents at beginning of year 180,696 118,281 242,031
___________ ___________ ___________
Cash and cash equivalents at end of year $ 153,735 $ 180,696 118,281
=========== =========== ===========
Reconciliation of net income (loss) to net cash
provided by (used in) operating activities:
Net income (loss) $ 3,757,729 $(5,322,740) $(2,550,654)
Depreciation and amortization 863,301 1,201,322 1,216,192
Write down of land and buildings - 3,900,000 -
Write off of refinancing deposit and deferred costs 67,805 - -
Write off of amount due from affiliate - - 81,866
Other, primarily changes in
other assets and liabilities (1,322,840) 535,581 1,444,331
Extraordinary gain on forgiveness of debt (4,446,019) - -
___________ ___________ ___________
Net cash provided by (used in) operating activities $(1,080,024) $ 314,163 $ 191,735
=========== =========== ===========
<FN>
The accompanying notes are an integral part of the financial statements.
</TABLE>
INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARY
(A California Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Description of Business and Basis of Presentation:
Income Growth Partners, Ltd. X (a California limited
partnership) (the "Limited Partnership") was formed in February
1988, to acquire, operate and hold for investment one or more
parcels of income-producing, multi-family residential real
property. Currently, the Partnership has acquired and operates
two separate apartment complexes in the Southern California area.
In January 1994, the Partnership filed a voluntary petition for
relief under Chapter 11 of the federal bankruptcy laws in the
United States Bankruptcy Court for Southern District of
California. Under Chapter 11, certain claims against the
Partnership which were in existence prior to the filing of the
petitions for relief under the federal bankruptcy laws were
stayed while the Partnership continued business operations as
Debtor-in-Possession. These claims, which included all
liabilities except for security deposits and certain accounts
payable and accrued liabilities, are reflected in the December
31, 1994 balance sheet as "liabilities subject to compromise."
The statements of operations and statements of cash flows for
the year ended December 31, 1994 separately discloses expenses
and cash transactions, respectively, related to the Bankruptcy.
In October 1994, the Partnership filed a Plan of Reorganization
(the "Plan") that was confirmed by the Bankruptcy Court in March
1995. The Partnership emerged from Chapter 11 effective in May
1995. In general, the Plan provided for resolution of all
claims against the Partnership as of January 26, 1994. The
amount of claims outstanding at December 31, 1994 were less than
the claims filed with the Court as the result of adjustments and
payments made under Court approval. To reflect the consummation
of the Plan, an extraordinary gain on forgiveness of debt of
approximately $1,400,000 related to pre-petition liabilities has
been reflected in the accompanying consolidated financial
statements. At December 31, 1995, all claims had been fully
satisfied in accordance with the Plan.
The Plan proposed that the Partnership raise additional funds
through an offering of Class A Units that have a preferred
status over the Original Units. The total proceeds from the
offering which closed in June 1995 were approximately $2 million
(see Note 4).
Under the provisions of the Plan, the Partnership was allowed to
retain ownership of the Mission Park and Shadowridge Meadows
properties. However, the Partnership was unable to raise the
required capital as of the effective date of the Plan, necessary
to retain ownership of its third property, Margarita Summit (see
Note 5).
The extraordinary gain on forgiveness of debt reflected in the
accompanying consolidated statement of operations for the year
ended December 31, 1995 is summarized as follows:
Discharge of debt due to reorganization
according to the Plan 1,433,394
Refinancing of Mission Park $2,013,625
Foreclosure of Margarita Summit 999,000
__________
$4,446,019
==========
During 1995, in exchange for a 99% interest in IGP X Mission
Park associates, L.P. (the "Subsidiary"), a newly formed
California limited partnership, the Limited Partnership
contributed certain assets on a tax free basis including a
parcel of real property and improvements known as Mission Park
Apartments which were recorded at cost. The newly formed
Subsidiary is separate and distinct from the Limited
Partnership, having separate assets, liabilities and business
operations. The Limited Partnership and Subsidiary are
collectively referred to as the "Partnership."
The accompanying financial statements have been prepared
assuming the Partnership will continue as a going concern, which
contemplates continuity of operations, realization of assets,
and liquidation of liabilities in the ordinary course of
business. Although the Partnership has successfully emerged
from bankruptcy, such continuity of operations, realization of
assets and liquidation of liabilities is contingent upon, among
other things, the Partnership's ability to maintain compliance
with all debt covenants and achieve satisfactory levels of
future earnings. The accompanying financial statements do not
include any adjustments relating to the recoverability and
classification of reported asset amounts or the amounts and
classification of liabilities that might be necessary should the
Partnership be unable to continue as a going concern. These
uncertainties raise substantial doubt about the Partnership's
ability to continue as a going concern.
2. Summary of Significant Accounting Policies:
Principles of Consolidation
The consolidated financial statements include the accounts of
the Limited Partnership and its subsidiary. All significant
intercompany balances and transactions are eliminated.
Use of Estimates
The preparation of consolidated 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 consolidated financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash and short-term
investments with original maturities of 90 days or less when
purchased. The carrying amount of cash equivalents approximates
fair value of those instruments due to their short maturity.
Real Estate
Land, buildings and improvements are recorded at the lower of
cost or net realizable value. Buildings and improvements are
depreciated using the straight-line method over the estimated
useful lives of 7 to 27 years.
Expenditures for maintenance and repairs are charged to expense
as incurred. Significant renovations are capitalized. The cost
and related accumulated depreciation of real estate are removed
from the accounts upon disposition. Gains and losses arising
from the dispositions are reported as income or expense.
During the fourth quarter of 1994, the Partnership recorded a
$3,900,000 write down on its properties, based on independent
appraisals or comparable market value.
Revenue Recognition
Rental revenues are recognized at the beginning of each month
based on the current occupancy of the apartments. Amounts not
collected by the end of the month are 100% reserved. When such
amounts are collected, the reserve is reduced by a corresponding
amount.
Income Taxes
No provision has been made for federal or state income taxes on
the operations of the Partnership. Such taxes are imposed on
the individual partners for their respective shares of
Partnership income or loss. The tax returns and amounts of
allocable Partnership income or loss of the Partnership are
subject to examination by federal and state taxing authorities.
If such examinations result in a change in the Partnership
status, or in changes to allocable Partnership income or loss,
the tax liability of the Partnership or of the partners could be
changed accordingly.
Reclassifications
Certain prior year amounts have been reclassified to conform
with the current year presentation.
3. Supplemental Cash Flow Information:
Excluded from the consolidated statements of cash flows was the
effect of certain noncash activities. The Partnership is
obligated for $102,000 to an affiliate for payment of loan
origination costs associated with the refinancing of the Mission
Park property. The Partnership also incurred approximately
$80,000 of additional debt in connection with the cure and
reinstatement of the mortgage loan related to the Shadowridge
Meadows property.
In August 1995, the Partnership realized an extraordinary gain
of $999,000 as a result of foreclosure on the Margarita Summit
property. Such gain was the difference between the carrying
value of the property and the related liability of approximately
$6,274,000 and $7,273,000, respectively. During 1995,
$1,433,000 of liabilities subject to compromise were discharged
due to reorganization. The Partnership realized an
extraordinary gain of approximately $2,014,000, representing the
forgiveness of debt as a result of refinancing its Mission Park
property.
4. Activities of the Partnership:
The original partnership agreement provided that distributions
of distributable cash from operations be allocated in the
following order: first, 100% to the limited partners until they
have received a 10% per annum noncumulative return (the
"Operating Cash Preference") on their adjusted invested capital,
as defined in the agreement, thereafter 90% to the limited
partners and 10% to the general partners.
Additionally, net losses were generally allocated 85% to the
limited partners and 15% to the general partners. Losses in
excess of the limited partners' capital balances were allocated
100% to the general partners. Net income was allocated 85% to
the limited partners and 15% to the general partners. Proceeds
resulting from a sale upon liquidation of the Partnership would,
in general, be allocated as described above, except that
proceeds would first be allocated entirely to the general
partners until, on a cumulative basis, they had been allocated
proceeds equal to the net loss allocated solely to them and then
15% to the general partners and 85% to the limited partners
until they had reached the amount of net losses previously
allocated to them.
In October 1994, the original partnership agreement was amended,
contingent upon the completion sale of Class A partnership
units. The sale of 8,100 Class A units was successfully
completed in June of 1995. The amended partnership agreement
provides that cash distributions from operations are to be
determined at the discretion of the general partner. After
adequate working capital reserves have been met, cash
distributions deemed appropriate by the general partner will be
made as set forth, herein.
Pursuant to terms of the amended partnership agreement, net
losses are allocated 85% to the limited partners and 15% to the
general partners. Losses in excess of the limited partners'
capital balances are allocated to the general partners. Net
income will be allocated 100% to the general partners until the
aggregate net income allocated is equal to the aggregate net
losses allocated to the general partners in all previous years.
The balance of net income after the initial allocation to the
general partners, shall be allocated 85% to the limited partners
and 15% to the general partners.
The Class A Units were offered first to existing limited
partners, who had the right of first refusal to purchase as many
of the new units as they wished subject to the maximum offering
and the right of each existing limited partner to purchase at
least the same number of Class A Units as Original Units they
owned. The cost of each Class A Unit was $250 or 25% of the
initial cost of Original Units. Each Class A Unit will receive
a 12% cumulative noncompounded annual return on the balance of
actual funds invested in Class A Units. In addition each Class
A Unit will receive a $500 bonus to be paid from excess cash
flow or from liquidation proceeds. All Class A benefits will
have priority over and be paid prior to distributions on
Original Units. No distributions have been made to date.
The general partners or their affiliates manage and control the
affairs of the Partnership and have general responsibility for
supervising the Partnership's properties and operations. The
general partners and affiliates are compensated for these
efforts as explained in Note 6.
5. Mortgage and Other Loans Payable:
At December 31, 1995 and 1994, mortgage and other loans payable
consisted of the following:
1995 1994
____________ ____________
Mission Park - first trust deed dated
March 23, 1989, collateralized by land and
buildings and a personal guarantee of a
general partner, interest only of $102,515
payable for the first 60 months, thereafter
interest payments shall be based on the 11th
District cost of funds plus 3%, amortized
over 25 years, remaining principal and
interest due April 1999, refinanced $ - $12,316,258
Mission Park - first trust deed dated
December 27, 1995, collateralized by land
and buildings and a personal guarantee of a
general partner, interest and principal of
$73,144 payable monthly based on 7.76%
annual interest rate, amortized over 30
years, remaining principal and interest due
January 2006 10,200,000 $ -
Shadowridge Meadows - first trust deed dated
July 26, 1988, collateralized by land and
buildings with interest only payments based
on 11th District cost of funds, plus 2.125%
until January 1995, thereafter these
payments include principal and interest, and
call for periodic increases in interest
rates with remaining principal and interest
due July 31, 1998 9,766,935 10,292,263
Margarita Summit - first trust deed dated
June 5, 1990, collateralized by land and
buildings, payments adjusted annually to
amortize the loan balance over the remaining
life of the loan based on the 11th District
cost of funds plus 2.5%, $1,000,000 in
principal due on July 1, 1992 and the
remainder maturing in July 2002, foreclosed
upon August 1, 1995 (See Note 1) - 6,818,187
Note payable to affiliate - promissory note
dated December 27, 1995, with simple
interest and principal payable from time to
time at the published prime rate, stated as
8.5% at December 31, 1995, and due upon demand 102,000 -
____________ ____________
$20,068,935 $29,426,708
============ ============
The carrying amounts of both fixed and variable-rate debt
instruments approximate their fair value at December 31, 1995.
The Partnership was in default on all mortgage loans in 1994.
Under the terms of the Plan, the Partnership cured and
reinstated the mortgage loans for the Mission Park and
Shadowridge Meadows properties with payments to lenders of
$344,534 and $556,144, respectively. The payment to cure and
reinstate the mortgage loan for Shadowridge Meadows included a
non-cash transaction, whereby, certain legal fees incurred by
the lender were incorporated into the outstanding principal
balance. However, the Partnership was unable to retain
ownership of the Margarita Summit property.
In August 1995, the lender finalized foreclosure proceedings
against Margarita Summit. Outstanding principal due on the
mortgage prior to foreclosure was approximately $6.8 million.
As a result of this foreclosure, the Partnership recognized an
extraordinary gain of approximately $999,000, representing the
difference between the outstanding principal and interest due,
and the carrying value of the property.
During the fourth quarter of 1995, the Partnership successfully
refinanced the mortgage loan underlying its Mission Park
property. In connection with the refinancing, the Partnership
recognized an extraordinary gain of approximately $2,000,000,
representing the mortgage obligation forgiven by the previous
lender. Approximately $375,500, inclusive of a loan payable to
an affiliate of $102,000, of certain costs incurred related to
the refinancing have been capitalized and are to be amortized
over the term of the related mortgage loan.
Future minimum annual principal payments are summarized as
follows:
1996 $ 274,759
1997 193,807
1998 9,681,544
1999 111,960
2000 120,964
Thereafter 9,685,901
___________
$20,068,935
===========
6. Related Party Transactions:
Following is a description of related party transactions for the
three years ended December 31, 1995 that have not otherwise been
disclosed:
Management Fees
The Partnership's properties are managed by an affiliate of the
general partners who received a management fee equal to 5% of
the operating revenues received from the properties in 1993.
These management fees were reduced in 1994 to approximately 4%
as a condition of the cash collateral stipulations with the
lenders. Management fees aggregated approximately $175,000,
$182,000 and $209,000 in 1995, 1994 and 1993, respectively.
Administrative Costs
The general partners are entitled to reimbursement of actual
costs incurred in furnishing certain administrative services and
facilities to the Partnership, including accounting, data
processing, duplication, transfer agent expenses, and
professional fees. These reimbursements aggregated $81,100,
$45,900 and $35,000 in 1995, 1994 and 1993, respectively.
Note Receivable from General Partners
At December 31, 1995 and 1994, a non-interest bearing note
receivable of $10,000 was due from the general partners for
their initial partnership capital contribution.
7. Commitments:
Activities of General Partners
The general partners of the Partnership also serve as the
general partners in several other real estate partnerships. To
the extent that operations of these partnerships require
significant financial resources of the general partners or
adversely affect the liquidity of the general partners, the
general partners' ability to operate and/or manage the affairs
of the Partnership could be impaired.
Property Leverage Levels
A certain provision of the Partnership Agreement stipulates that
indebtedness not exceed 40% of a property's purchase price as of
the completion of the initial offering. However, the foregoing
limit on indebtedness does not apply in the case of refinancing
where up to 80% of the value of the property may be encumbered
by indebtedness. The aggregate indebtedness on the
Partnership's properties equaled 71% and 70% of the purchase
price as of December 31, 1995 and 1994, respectively.
8. Concentration of Credit Risk:
Financial instruments which potentially subject the Partnership
to concentrations of credit risk consist of Partnership cash
equivalents.
At December 31, 1995, the Partnership had at one financial
institution approximately $75,000 of cash equivalents, in excess
of FDIC insurance protection. All of the Partnership's cash
equivalents are held in a U.S. Treasury Money Fund, which
invests in short-term U.S. Treasury securities. The Partnership
has not experienced any losses to date on its cash equivalents.
There were no such investments at December 31, 1994.
<PAGE>
<TABLE>
SCHEDULE III
INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARY
(A California Limited Partnership)
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1995
<CAPTION>
Cost Capitalized Gross Amount at Which
Initial Costs Subsequent to Acquisition Carried at Close of Period
________________________ _________________________________ __________________________
Building & Carrying Building &
Description Encumbrances Land Improvements Improvements Costs Land Improvements
________________________ ____________ __________ ____________ __________________ _____________ __________ ______________
(A)
<S> <C> <C> <C> <C> <C> <C> <C>
As of December 31, 1995:
184-unit apartment $9,766,935 $3,294,260 $9,821,589 Building $42,627 $3,294,260 $9,878,152
building located in Paving/grading 8,862
Vista, CA (Shadowridge Computer equipment 5,074
Meadows)
264-unit apartment 10,200,000 4,484,105 13,490,802 Building 19,154 4,484,105 13,532,512
building located in Paving/grading 16,852
San Marcos, CA Office furniture/ 630
(Mission Park) fixture
Computer equipment 5,074
143-unit apartment 0 1,600,242 9,072,986 Disposal of (10,673,228) 0 0
building located in property due to
Southern Riverside foreclosure
County, CA (Margarita
Summit) ____________ __________ ____________ _____________ __________ ______________
$19,966,935 $9,378,607 $32,385,377 $(10,574,955) $7,778,365 $23,410,664
============ ========== ============ ============= ========== ==============
<FN>
(A) The aggregate cost for federal income tax purposes is the same as reported above.
(Schedule continued below)
</TABLE>
<PAGE>
<TABLE>
SCHEDULE III
(Continued from above)
<CAPTION>
Gross Amount at Which
Carried at Close of Period
__________________________________
Total Accumulated Date of Date
Description (Land and Building & Improvements) Depreciation Construction Acquired Depreciable Life
________________________ __________________________________ ____________ _____________ _____________ _______________________
(B)
<S> <C> <C> <C> <C> <C>
As of December 31, 1995:
184-unit apartment $13,172,412 $4,127,332 January 1988 November 1988 27 years-building &
building located in improvement; 7-10 years
Vista, CA (Shadowridge landscape, furniture &
Meadows) equipment
264-unit apartment 18,016,617 5,608,158 May 1989 August 1989 Same
building located in
San Marcos, CA
(Mission Park)
143-unit apartment 0 0 February 1989 March 1990 Same
building located in
Southern Riverside
County, CA (Margarita
Summit) __________________________________ ____________
$31,189,029 $9,735,490
================================== ============
<FN>
(B) These amounts include write downs on Mission Park and Shadowridge Meadows of $1.2 million and $1.6 million respectively.
See Note 2 to the financial statements.
</TABLE>
<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None during the fiscal year ended December 31, 1995.
PART III
Item 10. Directors and Executive Officers of the Registrant
The Registrant is a California Limited Partnership. On January 10, 1994,
the Registrant received a letter of resignation from an Individual General
Partner, Polly Van Every Maurer. This letter stated that she was resigning
as an Individual General Partner as of April 18, 1993. A copy of this
letter was attached to the Partnership's Annual Report on Form 10-K for the
year ended December 31, 1993 as Exhibit 28.4.
According to Section 5.3.2(4) of the Registrant's Agreement of Limited
Partnership, a General Partner is required to obtain the consent of a
Majority-In-Interest of the Limited Partners prior to retiring. Since such
consent was not obtained, it would appear that this resignation may
constitute a breach of the Agreement of Limited Partnership. The remaining
General Partner, Income Growth Management, Inc., is evaluating what course
of action, if any, to take regarding this resignation.
Sections 8.4 and 9.1 of the Registrant's Agreement of Limited Partnership
provide that the withdrawal of a General Partner of the Registrant will
cause the termination of the Registrant unless the remaining General
Partner(s), if any, elect to continue the business of the Registrant. On
January 11, 1994, Income Growth Management, Inc. elected to continue the
business of the Registrant as the sole remaining General Partner of the
Registrant.
Due to this resignation, the Limited Partnership no longer has any
Individual General Partners. Furthermore, the Subsidiary of the Limited
Partnership also has only corporate general partners. Since the Registrant
is a limited partnership and the sole remaining general partner of the
Limited Partnership is a corporation, there are no immediate directors or
executive officers of the Registrant. The following information pertains
to the directors and executive officers of the corporate general partners
of the Registrant and its Subsidiary.
Information regarding the management of the Partnership is hereby
incorporated herein by this reference from pages 17-18 of the Offering
Memorandum for Class A Units dated October 27, 1994 (under the caption
"Management of the Partnership") from Exhibit 2.2 attached to the
Partnership's Quarterly Report on Form 10-Q for the third quarter ended
September 30, 1994.
Item 11. Executive Compensation
Information regarding the compensation of the Partnership's general
partners and its affiliates is hereby incorporated herein by this reference
from pages 33-35 of the Prospectus (under the caption "Compensation of
General Partners and Affiliates") and from the Partnership's Form 8-K dated
December 27, 1995 including Exhibit 3.1 (Articles of Incorporation of IGP X
Mission Park, Inc.) and Exhibit 4.3 (Agreement of Limited Partnership of
IGP X Mission Park Associates, L.P., A California Limited Partnership)
attached thereto. Disclosures under Item 402 of Regulation S-K are not
applicable as the Partnership has no C.E.O. nor any employees or officers
who earn salary plus bonuses in excess of $100,000.
Item 12. Securities Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners
Name and address of Amount and nature of
Title of Class beneficial owner beneficial ownership Percent of Class
______________ ___________________ ____________________ ________________
Class A Units John W. Baer 600.0000 7.4%
1091 Valley View Ct
Los Altos, CA 94024
No other person or group is known by the Partnership to own beneficially
more than 5 percent of the outstanding Original Units or Class A Units.
(b) Security Ownership of Management
None of the officers and directors of the Partnership's corporate general
partners are the beneficial owners of any Original Units or Class A Units.
Item 13. Certain Relationships and Related Transactions
On December 27, 1995 the Partnership refinanced its Mission Park property
as discussed in its Form 8-K dated December 27, 1995. This Form 8-K is
incorporated herein by this reference. The new loan was obtained through
ENA Corporation, a licensed California Real Estate Broker that is an
affiliate of the Registrant, for which it received a loan origination fee
of approximately $102,000 in the form of a promissory note. David Maurer
and Timothy Maurer are both owners of ENA Corporation and officers and
directors of the Registrant.
The Partnership is entitled to engage in various transactions involving its
general partners and its affiliates as described in Sections 3.2.9 and 6 of
the Partnership Agreement. None of the agreements and arrangements,
including those relating to compensation, between the Partnership and the
general partners and its affiliates are the result of arm's-length
negotiations. The potential conflicts of interest inherent in such
transactions are discussed on pages 41-42 of the Prospectus and on page 24
of the Offering Memorandum for Class A Units dated October 27, 1994 (under
the caption "Conflicts of Interest"), which discussions are hereby
incorporated herein by this reference. Also incorporated herein is the
information included in Note 6 to the financial statements with regard to
related-party transactions.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) (1) Financial Statements
The following Financial Statements of the Partnership and related Notes
to Financial Statements and Accountants' Report are filed herewith:
Report of Independent Accountants
Consolidated Balance Sheets as of December 31, 1995 and 1994
Consolidated Statements of Operations for the years ended December 31,
1995, 1994, and 1993
Consolidated Statements of Partners' Capital (Deficit) for the years
ended December 31, 1995, 1994, and 1993
Consolidated Statements of Cash Flows for the years ended December 31,
1995, 1994, and 1993
Notes to Consolidated Financial Statements
(a) (2) Financial Statement Schedule
Schedule III Real Estate and Accumulated Depreciation
All other schedules are either not required, or the information therein
is included in the notes to the Audited Financial Statements.
(a) (3) Exhibits
The Exhibit Index contained in this report lists the exhibits that are
either filed as part of this report or incorporated herein by reference
from a prior filing.
(b) Reports on Form 8-K
Form 8-K dated December 27, 1995 regarding the refinance and transfer to
a new Subsidiary of the Mission Park property.
(c) Exhibits
See Exhibits following Exhibit Index.
(d) Financial Statement Schedule
The Financial Statement Schedule listed in Item (a) (2) above is attached
hereto.
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.
Date: March 29, 1996
INCOME GROWTH PARTNERS, LTD. X,
a California Limited Partnership
By: Income Growth Management, Inc.
General Partner
By: /s/ David W. Maurer
David W. Maurer, President
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.
Signatures Title and Capacity Date
_____________________ __________________ ______________
/s/ David W. Maurer (1) (2) March 29, 1996
David W. Maurer
/s/ Timothy C. Maurer (1) (3) March 29, 1996
Timothy C. Maurer
_______________
(1) Director of Income Growth Management, Inc., General Partner of the
Registrant
(2) Chief executive officer of the Registrant and of Income Growth
Management, Inc.
(3) Chief financial officer and chief accounting officer of the Registrant
and of Income Growth Management, Inc.
EXHIBIT INDEX
Exhibit No. Description Location
___________ ______________________________________________________ ________
2.2 Second Amended Disclosure Statement to Debtor's *
Second Amended Plan of Reorganization, As Revised
(with Second Amended Plan of Reorganization
attached as Exhibit 1) filed with the Bankruptcy
Court on October 25, 1994;
Order Approving Second Amended Disclosure Statement
to Debtor's Second Amended Plan of Reorganization,
Approving Ballots and Fixing Dates for Filing
Acceptances or Rejections of Plan and for
Confirmation Hearing, Combined with Notice Thereof;
Equity Interest Holder Ballot for Accepting or
Rejecting Debtor's Second Amended Plan of
Reorganization;
Offering Memorandum for Income Growth Partners,
Ltd. X Class A Units dated October 27, 1994 (with
Amended and Restated Agreement of Limited
Partnership attached as Exhibit B).
3.1 Articles of Incorporation of IGP X Mission Park, Inc. **
4.2 Amended and Restated Agreement of Limited Partnership ***
4.3 Agreement of Limited Partnership of IGP X Mission Park **
Associates, L.P., A California Limited Partnership
11.3 Weighted Average Partnership Units Calculation Attached
27.1 Financial Data Schedule Attached
28.1 Prospectus dated January 3, 1991 ****
28.4 Letter regarding resignation of General Partner *****
___________________________________
* Incorporated by reference from the Partnership's Quarterly Report on
Form 10-Q for the third quarter ended September 30, 1994 (Commission
File Number 0-18528).
** Incorporated by reference from the Partnership's Current Report on
Form 8-K dated December 27, 1995 (Commission File Number 0-18528).
*** Included as Exhibit "B" to the Partnership's Offering Memorandum for
Income Growth Partners, Ltd. X Class A Units dated October 27, 1994,
included in Exhibit 2.2 incorporated by reference from the
Partnership's Quarterly Report on Form 10-Q for the third quarter
ended September 30, 1994 (Commission File Number 0-18528).
**** Incorporated by reference from the Partnership's Annual Report on
Form 10-K for the Fiscal Year ended December 31, 1992 (Commission
File Number 0-18528).
***** Incorporated by reference from the Partnership's Annual Report on
Form 10-K for the Fiscal Year ended December 31, 1993 (Commission
File Number 0-18528).
<PAGE>
EXHIBIT 11.3
Weighted Average Partnership Units Calculation
Limited Partnership units outstanding at 12/31/94 18,826
Months
Additional Class A Units: Outstanding Weighted
___________ ________
Issued and outstanding 1/1/95-4/30/95 0 12 0
Issued and outstanding 5/1/95-5/31/95 7,377 8 59,016
Issued and outstanding 6/1/95-6/30/95 713 7 4,991
Issued and outstanding 7/1/95-11/30/95 0 6 0
Issued and outstanding 12/1/95-12/31/95 10* 1 10
________
64,017
Divided by twelve months in period 5,335
Weighted average partnership units outstanding at 12/31/95 24,161
======
* 10 Units effective 12/1/95 were due to lost check for subscription sent
prior to 6/30/95
34
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Financial Statements filed with the Registrant's Form 10-K for the year ended
December 31, 1995 and is qualified in its entirety by reference to such
Financial Statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 153,735
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 700,329
<PP&E> 31,189,029
<DEPRECIATION> (9,735,490)
<TOTAL-ASSETS> 22,153,868
<CURRENT-LIABILITIES> 456,876
<BONDS> 19,966,935
0
0
<COMMON> 0
<OTHER-SE> 1,730,057
<TOTAL-LIABILITY-AND-EQUITY> 22,153,868
<SALES> 0
<TOTAL-REVENUES> 3,896,384
<CGS> 0
<TOTAL-COSTS> 2,005,969
<OTHER-EXPENSES> 931,342
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,647,363
<INCOME-PRETAX> (688,290)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 4,446,019
<CHANGES> 0
<NET-INCOME> 3,757,729
<EPS-PRIMARY> 155.53
<EPS-DILUTED> 0
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