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 March 31, 1997
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 May 5, 1997 was 18,826.5. The number of the
registrant's Class A Units outstanding as of May 5, 1997 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>
March 31, December 31,
1997 1996
___________ ___________
(Unaudited)
<S> <C> <C>
ASSETS
Land and buildings:
Land $ 7,778,365 $ 7,778,365
Buildings and improvements 23,497,886 23,455,047
___________ ___________
31,276,251 31,233,412
Less accumulated depreciation and impairments (10,758,340) (10,545,531)
___________ ___________
20,517,911 20,687,881
Other assets:
Cash and cash equivalents 298,396 244,582
Prepaid expenses and other assets 596,657 544,455
___________ ___________
895,053 789,037
___________ ___________
$21,412,964 $21,476,918
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Mortgage loans payable $19,740,754 $19,788,869
Other liabilities:
Accounts payable and accrued liabilities 191,513 81,473
Accrued interest payable 123,392 123,392
Security deposits 189,803 184,355
Loan payable to affiliate 43,000 55,300
___________ ___________
20,288,462 20,233,389
Commitments
Partners' capital 1,134,502 1,253,529
Note receivable from general partner (10,000) (10,000)
___________ ___________
$21,412,964 $21,476,918
=========== ===========
<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:
Mar 31, 1997 Mar 31, 1996
_____________ _____________
<S> <C> <C>
Revenues:
Rents $ 886,959 $ 844,827
Other 39,625 35,343
_____________ _____________
Total revenues 926,584 880,170
_____________ _____________
Expenses:
Interest 379,392 395,031
Operating expenses (excluding
depreciation and amortization) 443,328 524,915
Depreciation and amortization 222,892 212,544
_____________ _____________
Total expenses 1,045,612 1,132,490
_____________ _____________
Net loss (119,028) (252,320)
============= =============
Net loss per limited
partnership unit $ (4.42) $ (9.37)
============= =============
Weighted average limited
partnership units outstanding 26,926 26,926
============= =============
<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 Three Months Ended March 31
(UNAUDITED)
<CAPTION>
1997 1996
___________ ___________
<S> <C> <C>
Cash flows from operating activities:
Net loss $(119,028) $ (252,320)
Adjustments to reconcile net loss to net cash provided
by operating activities:
Depreciation and amortization 222,892 212,544
Increase in prepaid expenses and other assets (62,283) (69,477)
Increase in:
Accounts payable and accrued liabilities 110,039 135,826
Security deposits 5,448 3,878
Accrued interest payable - 65,600
___________ ___________
Net cash provided by operating activities 157,068 96,051
___________ ___________
Cash flows from investing activities:
Capital expenditures (42,839) (1,072)
___________ ___________
Net cash used in investing activities (42,839) (1,072)
___________ ___________
Cash flows from financing activities:
Principal payments under mortgage debt (48,115) -
Principal payments to affiliate (12,300) (14,416)
___________ ___________
Net cash used by financing activities (60,415) (14,416)
___________ ___________
Net increase in cash and cash equivalents 53,814 80,563
Cash and cash equivalents at beginning of period 244,582 153,735
___________ ___________
Cash and cash equivalents at end of period $ 298,396 $ 234,298
=========== ===========
<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
March 31, 1997
(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, 1996 filed on Form 10K.
The accompanying consolidated financial statements have not been audited by
independent public accountants, but 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.
2. Recent Accounting Pronouncements
In February 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 128, Earnings per Share
("SFAS No. 128"). SFAS No. 128 requires dual presentation of newly defined
basic and diluted earnings per share on the face of the Income statement
for all entities with complex capital structures. The accounting standard
is effective for fiscal years ending after December 15, 1997, including
interim periods. The effect of SFAS No. 128 is not expected to have a
material effect on the financial statements.
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 operating obligations, including debt
service requirements. Since 1992, however, the Limited Partnership's
primary source of liquidity has been from cash generated from operations.
The Partnership has been able to generate sufficient cash flow to cover its
expenses and continue rebuilding cash reserves during 1997 due to the $2
million in capital raised in 1995, the $476,000 debt paydown on Shadowridge
Meadows, and the $2 million debt reduction resulting from the refinancing
of Mission Park.
Although the Partnership successfully refinanced the Mission Park mortgage
at a fixed annual interest rate of 7.76%, it remains sensitive to interest
rates because the Shadowridge Meadows property remains highly leveraged and
subject to a variable interest rate. If interest rates increase more
rapidly than market rents, the Partnership may have to fund shortfalls from
cash reserves. Furthermore the loan on Shadowridge Meadows matures in July
1998. If the Partnership is unable to refinance 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, which may 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.
The Partnership changed its method of reporting cash flows from the direct
method to the indirect method in 1996. Prior period amounts have been
reclassified to conform with the current year presentation. Net cash
provided by operating activities for the three month period ended March 31,
1997 was $157,068 compared to net cash provided by operating activities of
$96,051 for the same period in 1996. The principal reason for this
difference is increased income due to a recovery in the rental market.
b. Results of Operations
On March 31, 1997 the Shadowridge Meadows Apartments and Mission Park
Apartments reflected occupancy rates of 96% and 100%, respectively,
compared to 94% and 98%, respectively, on March 31, 1996, and 99% and 96%,
respectively, on December 31, 1996.
Total revenues for the three month period ended March 31, 1997 increased
approximately $46,414 compared to the same period in 1996 due to a recovery
in the rental market. Operating expenses, excluding depreciation and
amortization, for the three month period ended March 31, 1997 decreased
approximately $81,587 compared to the same period in 1996 primarily due to
reduced refurbishment expenses. Interest expense decreased approximately
$15,639 for the three month period ended March 31, 1997 compared to the
same period in 1996 primarily due to a decrease in the 11th District Cost
of Funds index used to calculate the interest rate on the Shadowridge
Meadows mortgage. Depreciation and amortization expense increased by
$10,348 for the three month period ended March 31, 1997 compared to the
same period in 1996 due to fixed asset additions.
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: May 14, 1997
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
___________ ___________________________________________________ ________
27.7 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 March 31, 1997 and is qualified in its entirety by reference to such
Financial Statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 298,396
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 895,053
<PP&E> 31,276,251
<DEPRECIATION> (10,758,340)
<TOTAL-ASSETS> 21,412,964
<CURRENT-LIABILITIES> 547,708
<BONDS> 19,740,754
0
0
<COMMON> 0
<OTHER-SE> 1,124,502
<TOTAL-LIABILITY-AND-EQUITY> 21,412,964
<SALES> 0
<TOTAL-REVENUES> 926,584
<CGS> 0
<TOTAL-COSTS> 443,328
<OTHER-EXPENSES> 222,892
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 379,392
<INCOME-PRETAX> (119,028)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (119,028)
<EPS-PRIMARY> (4.42)
<EPS-DILUTED> 0
</TABLE>
