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, 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 July 31, 1997 was 18,826.5. The number of the
registrant's Class A Units outstanding as of July 31, 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>
June 30, December 31,
1997 1996
___________ ___________
(Unaudited)
<S> <C> <C>
ASSETS
Land and buildings:
Land $ 7,778,365 $ 7,778,365
Buildings and improvements 23,543,612 23,455,047
___________ ___________
31,321,977 31,233,412
Less accumulated depreciation and impairments (10,971,150) (10,545,531)
___________ ___________
20,350,827 20,687,881
Other assets:
Cash and cash equivalents 258,240 244,582
Prepaid expenses and other assets 688,365 544,455
___________ ___________
946,605 789,037
___________ ___________
$21,297,432 $21,476,918
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Mortgage loans payable $19,700,126 $19,788,869
Other liabilities:
Accounts payable and accrued liabilities 255,169 81,473
Accrued interest payable 119,111 123,392
Security deposits 193,890 184,355
Loan payable to affiliate 43,000 55,300
___________ ___________
20,311,296 20,233,389
Commitments
Partners' capital 996,136 1,253,529
Note receivable from general partner (10,000) (10,000)
___________ ___________
$21,297,432 $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: For the six months ended:
June 30, 1997 June 30, 1996 June 30, 1997 June 30, 1996
_____________ _____________ _____________ _____________
<S> <C> <C> <C> <C>
Revenues:
Rents $ 902,231 $ 847,347 $1,789,190 $1,692,174
Other 37,111 40,071 76,736 75,414
_____________ _____________ _____________ _____________
Total revenues 939,342 887,418 1,865,926 1,767,588
_____________ _____________ _____________ _____________
Expenses:
Interest 386,876 395,016 766,268 790,047
Operating expenses (excluding
depreciation and amortization) 467,791 333,377 911,119 858,292
Depreciation and amortization 223,039 213,071 445,931 425,616
_____________ _____________ _____________ _____________
Total expenses 1,077,706 941,464 2,123,318 2,073,955
_____________ _____________ _____________ _____________
Net loss $ (138,364) $ (54,046) $ (257,392) $ (306,367)
============= ============= ============= =============
Net loss per limited
partnership unit $ (5.14) $ (2.01) $ (9.56) $ (11.38)
============= ============= ============= =============
Weighted average limited
partnership units outstanding 26,926 26,926 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 Six Months Ended June 30
(UNAUDITED)
<CAPTION>
1997 1996
___________ ___________
<S> <C> <C>
Cash flows from operating activities:
Net loss $(257,392) $ (306,367)
Adjustments to reconcile net loss to net cash provided
by operating activities:
Depreciation and amortization 445,931 425,616
Increase in prepaid expenses and other assets (164,222) (32,788)
Increase (decrease) in:
Accounts payable and accrued liabilities 173,695 (24,910)
Security deposits 9,535 13,493
Accrued interest payable (4,281) 64,488
___________ ___________
Net cash provided by operating activities 203,266 139,532
___________ ___________
Cash flows from investing activities:
Capital expenditures (88,565) (9,838)
___________ ___________
Net cash used in investing activities (88,565) (9,838)
___________ ___________
Cash flows from financing activities:
Principal payments under mortgage debt (88,743) (36,390)
Principal payments to affiliate (12,300) (46,700)
___________ ___________
Net cash used by financing activities (101,043) (83,090)
___________ ___________
Net increase in cash and cash equivalents 13,658 46,604
Cash and cash equivalents at beginning of period 244,582 153,735
___________ ___________
Cash and cash equivalents at end of period $ 258,240 $ 200,339
=========== ===========
<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, 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 any
impact on the Partnership's previously reported earnings per partnership
unit.
In February 1997, FASB issued SFAS No. 129, Disclosure of Information about
Capital Structure. This statement establishes standards for disclosing
information about an entity's capital structure. Management intends to
comply with the disclosure requirements for this statement which are
effective for periods ending after December 15, 1997.
In June 1997, the FASB issued SFAS No. 130, Reporting Comprehensive Income.
SFAS No. 130 establishes requirements for disclosure of comprehensive
income and becomes effective for the Partnership for the year ending
December 31, 1998. Comprehensive income includes such items as foreign
currency translation adjustments and unrealized holding gains and losses on
available for sale securities that are currently being presented by the
Company as a component of stockholders' equity (deficit). The Partnership
does not expect this pronouncement to materially impact the Partnership's
results of operations.
In June 1997, the FASB issued SFAS No. 131, Disclosures about Segments of
an Enterprise and Related Information. SFAS No. 131 establishes standards
for disclosure about operating segments in annual financial statements and
selected information in interim financial reports. It also establishes
standards for related disclosures about products and services, geographic
areas and major customers. This statement supersedes SFAS No. 14,
Financial Reporting for Segments of a Business Enterprise. The new
standard becomes effective for the Partnership for the year ending December
31, 1998, and requires that comparative information from earlier years be
restated to conform to the requirements of this standard. The Partnership
does not expect this pronouncement to materially change the Partnership's
current reporting and disclosures.
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. Contributing
factors were increased occupancy rates and higher average rents in 1997, as
well as capital raised from the sale of Class A Units and debt
restructuring activities in 1995.
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. The Partnership is currently exploring refinancing options for this
property. 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 six month period ended June 30,
1997 was $203,266 compared to net cash provided by operating activities of
$139,532 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 June 30, 1997 the Shadowridge Meadows Apartments and Mission Park
Apartments reflected occupancy rates of 95% and 97%, respectively, compared
to 94% and 99%, respectively, on June 30, 1996, and 99% and 96%,
respectively, on December 31, 1996.
Total revenues for the three and six month periods ended June 30, 1997
increased approximately $51,924 and $97,016, respectively, compared to the
same periods in 1996 due to a recovery in the rental market. Operating
expenses, excluding depreciation and amortization, for the three and six
month periods ended March 31, 1997 increased approximately $134,414 and
$52,827, respectively, compared to the same periods in 1996 primarily due
to increased refurbishment expenses. Interest expense decreased
approximately $8,140 and $23,779, respectively, for the three and six month
periods ended June 30, 1997 compared to the same periods 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 $9,968 and $20,315,
respectively, for the three and six month periods ended June 30, 1997
compared to the same periods 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: August 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
___________ ___________________________________________________ ________
27.8 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, 1997 and is qualified in its entirety by reference to such
Financial Statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 258,240
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 946,605
<PP&E> 31,321,977
<DEPRECIATION> (10,971,150)
<TOTAL-ASSETS> 21,297,432
<CURRENT-LIABILITIES> 611,170
<BONDS> 19,700,126
0
0
<COMMON> 0
<OTHER-SE> 986,136
<TOTAL-LIABILITY-AND-EQUITY> 21,297,432
<SALES> 0
<TOTAL-REVENUES> 1,865,926
<CGS> 0
<TOTAL-COSTS> 911,119
<OTHER-EXPENSES> 445,931
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 766,268
<INCOME-PRETAX> (257,392)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (257,392)
<EPS-PRIMARY> (9.56)
<EPS-DILUTED> 0
</TABLE>
