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 June 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 August 1, 1996 was 18,826.5. The number of the
registrant's Class A Units outstanding as of August 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>
June 30, December 31,
1996 1995
___________ ___________
(Unaudited)
<S> <C> <C>
ASSETS
Land and buildings:
Land $ 7,778,365 $ 7,778,365
Buildings and improvements 23,420,501 23,410,664
___________ ___________
31,198,866 31,189,029
Less accumulated depreciation and impairments (10,161,106) (9,735,490)
___________ ___________
21,037,760 21,453,539
Other assets:
Cash and cash equivalents 200,339 153,735
Prepaid expenses and other assets 579,381 546,594
___________ ___________
779,720 700,329
___________ ___________
$21,817,480 $22,153,868
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Mortgage loans payable $19,930,545 $19,966,935
Other liabilities:
Accounts payable and accrued liabilities 106,259 131,169
Accrued interest payable 122,994 58,506
Security deposits 178,694 165,201
Loan payable to affiliate 55,300 102,000
___________ ___________
20,393,792 20,423,811
Commitments
Partners' capital 1,433,688 1,740,057
Note receivable from general partner (10,000) (10,000)
___________ ___________
$21,817,480 $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 six months ended:
June 30, 1996 June 30, 1995 June 30, 1996 June 30, 1995
_____________ _____________ _____________ _____________
<S> <C> <C> <C> <C>
Revenues:
Rents 847,347 $1,051,859 $1,692,174 $2,064,079
Other 40,071 61,720 75,414 126,296
_____________ _____________ _____________ _____________
Total revenues 887,418 1,113,579 1,767,588 2,190,375
_____________ _____________ _____________ _____________
Expenses:
Interest 395,016 474,463 790,047 1,000,864
Operating expenses (excluding
depreciation and amortization) 333,377 560,462 858,292 1,105,122
Depreciation and amortization 213,071 296,230 425,616 592,461
_____________ _____________ _____________ _____________
Total expenses 941,464 1,331,155 2,073,955 2,698,447
_____________ _____________ _____________ _____________
Loss before extraordinary item (54,046) (217,576) (306,367) (508,072)
_____________ _____________ _____________ _____________
Extraordinary gain on
disqualified interest - 1,472,841 - 1,472,841
Net (loss) income (54,046) $1,255,265 $ (306,367) $ 964,769
============= ============= ============= =============
Net loss per limited partnership
unit before extraordinary gain (2.01) $ (10.16) $ (11.38) $ (23.73)
_____________ _____________ _____________ _____________
Income per limited partnership
unit from extraordinary gain - $ 68.80 $ - $ 68.80
_____________ _____________ _____________ _____________
Net (loss) income per limited
partnership unit (2.01) $ 58.63 $ (11.38) $ 45.06
============= ============= ============= =============
Weighted average limited
partnership units outstanding 26,926 21,409 26,926 21,409
============= ============= ============= =============
<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 Six Months Ended June 30
(UNAUDITED)
<CAPTION>
1996 1995
___________ ___________
<S> <C> <C>
Cash flows from operating activities:
Net tenant revenues $1,764,274 $2,190,375
Security deposits retained (refunded) 13,493 (6,881)
Cash paid to suppliers and employees (915,989) (1,809,940)
Interest received 3,314 -
Interest paid (725,560) (1,252,959)
___________ ___________
Net cash provided by (used in)
operating activities 139,532 (879,405)
___________ ___________
Cash flows from investing activities:
Purchase of land, buildings, and equipment (9,838) -
___________ ___________
Net cash used in investing activities (9,838) -
___________ ___________
Cash flows from financing activities:
Sale of Partnership Class A Units - 2,039,123
Principal payments under mortgage debt (36,390) (383,052)
Amounts due to affiliates, net (46,700) (17,028)
___________ ___________
Net cash (used in) provided by
financing activities (83,090) 1,639,043
___________ ___________
Net increase in cash 46,604 759,638
Cash and cash equivalents at beginning of period 153,735 180,696
___________ ___________
Cash and cash equivalents at end of period $ 200,339 $ 940,334
=========== ===========
Reconciliation of net (loss) income to net cash
provided by operating activities:
Net (loss) income $ (306,367) $ 964,769
Adjustments to reconcile net (loss) income to net
cash provided by operating activities:
Depreciation and amortization 425,616 592,461
Extraordinary gain (1,472,841)
Other, primarily changes in
other assets and liabilities 20,283 (963,794)
___________ ___________
Net cash provided by (used in) operating activities $ 139,532 $ (879,405)
=========== ===========
<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
June 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.
2. Activities of the Partnership
The Partnership continued operations pursuant to its Plan of Reorganization
during the second quarter of 1996. As discussed previously, the
Partnership emerged from its Chapter 11 Reorganization in May 1995, having
raised sufficient additional capital to retain two of its three original
properties. The third property was foreclosed on by its lender in August
1995. In December 1995 the Partnership refinanced its Mission Park
property, taking advantage of an opportunity to reduce the principal
balance of the loan and lower monthly debt service payments.
3. Contingencies
Activities of the General Partners
One of the general partners of the Partnership also serves as the general
partner in several other real estate partnerships. To the extent that the
operation of these partnerships requires significant financial resources of
the general partner or adversely affects the liquidity of the general
partner, the general partner's 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 approximately 64% of
the purchase prices as of June 30, 1996.
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 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 since then 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.
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 August 1996,
increases in the 11th District Cost of Funds Index totaling 1.146% 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. 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 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 91 months and 82 months
respectively at June 30, 1996. The Shadowridge Meadows Apartments and
Mission Park Apartments reflected occupancy rates of 94% and 99%
respectively as of June 30, 1996, compared to 91% and 93% respectively as
of June 30, 1995. This is consistent with a recent general increase in
occupancy rates throughout the county.
Total revenues for the three and six month periods ended June 30, 1996
decreased approximately $226,161 and $422,787 respectively, compared to the
same periods in 1995 due to the foreclosure of the Margarita Summit
property in the third quarter of 1995. Operating expenses, excluding
depreciation and amortization, for the three and six month periods ended
June 30, 1996 decreased approximately $227,085 and $246,830 respectively,
compared to the same periods in 1995. This was the combined result of the
foreclosure of the Margarita Summit property and the elimination of related
operating expenses, and increased refurbishment expenses during the first
two quarters of 1996. Interest expense decreased approximately $79,447 and
$210,817 respectively, and Depreciation and amortization expense decreased
approximately $83,159 and $166,845 respectively, for the three and six
month periods ended June 30, 1996 compared to the same periods 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: August 13, 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
___________ ___________________________________________________ ________
27.4 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 June 30, 1996 and is qualified in its entirety by reference to such
Financial Statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 200,339
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 779,720
<PP&E> 31,198,866
<DEPRECIATION> (10,161,106)
<TOTAL-ASSETS> 21,817,480
<CURRENT-LIABILITIES> 463,247
<BONDS> 19,930,545
0
0
<COMMON> 0
<OTHER-SE> 1,423,688
<TOTAL-LIABILITY-AND-EQUITY> 21,817,480
<SALES> 0
<TOTAL-REVENUES> 1,767,588
<CGS> 0
<TOTAL-COSTS> 858,292
<OTHER-EXPENSES> 425,616
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 790,047
<INCOME-PRETAX> (306,367)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (306,367)
<EPS-PRIMARY> (11.38)
<EPS-DILUTED> 0
</TABLE>
