<PAGE> 1
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, 1998
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 registration (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 14, 1998 was 18,826.5. The number of the registrant's Class A Units
outstanding as of May 14, 1998 was 8,100.
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARY
(A CALIFORNIA LIMITED PARTNERSHIP)
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1998 AND DECEMBER 31, 1997
(UNAUDITED)
----------
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1997
------------ ------------
<S> <C> <C>
ASSETS
Rental properties:
Land $ 7,078,365 $ 7,078,365
Buildings and improvements 21,660,540 21,607,078
------------ ------------
28,738,905 28,685,443
Less accumulated depreciation (8,795,303) (8,582,492)
------------ ------------
19,943,602 20,102,951
Other assets:
Cash and cash equivalents 194,687 282,293
Deferred loan fees, net of accumulated amortization of $90,893
and $80,873, respectively 686,290 689,294
Prepaid expenses and other assets 279,689 151,181
------------ ------------
1,160,666 1,122,768
------------ ------------
$ 21,104,268 $ 21,225,719
============ ============
LIABILITIES AND PARTNERS' CAPITAL
Mortgage loans payable $ 19,718,058 $ 19,765,202
Other liabilities:
Loan payable to affiliate 109,708 113,000
Accounts payable and accrued liabilities 222,403 148,501
Accrued interest payable 125,699 125,623
Security deposits 200,059 201,250
------------ ------------
20,375,927 20,353,576
Commitments
Partners' capital 738,341 882,143
Note receivable from general partner (10,000) (10,000)
------------ ------------
$ 21,104,268 $ 21,225,719
============ ============
</TABLE>
The accompanying notes are an integral part
of the financial statements.
1
<PAGE> 3
INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARY
(A CALIFORNIA LIMITED PARTNERSHIP)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(UNAUDITED)
----------
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
------------------------------
1998 1997
----------- -----------
<S> <C> <C>
Revenues:
Rents $ 984,642 $ 886,959
Other 40,542 39,625
----------- -----------
Total revenues 1,025,184 926,584
----------- -----------
Expenses:
Operating expenses 454,052 443,328
Depreciation and amortization 222,831 222,892
Interest and penalties 392,103 379,392
----------- -----------
Total expenses 1,068,986 1,045,612
----------- -----------
Net loss $ (43,802) $ (119,028)
=========== ===========
Basic and diluted per limited partnership unit data:
Net loss per limited partnership unit $ (1.63) $ (4.42)
=========== ===========
Weighted average limited partnership units
outstanding 26,926 26,926
=========== ===========
</TABLE>
The accompanying notes are an integral part
of the financial statements.
2
<PAGE> 4
INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARY
(A CALIFORNIA LIMITED PARTNERSHIP)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(UNAUDITED)
----------
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
--------------------------
1998 1997
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (43,802) $(119,028)
Adjustments to reconcile net loss to net cash provided
by operating activities:
Depreciation and amortization 222,831 222,892
(Increase) in:
Deferred loan fees (7,016) --
Prepaid expenses and other assets (128,508) (62,283)
Increase (decrease) in:
Accounts payable and accrued liabilities 73,978 110,039
Security deposits (1,191) 5,448
--------- ---------
Net cash provided by operating activities 116,292 157,068
--------- ---------
Cash flows from investing activities:
Capital expenditures (53,462) (42,839)
--------- ---------
Net cash used in investing activities (53,462) (42,839)
--------- ---------
Cash flows from financing activities:
Principal payments under mortgage debt (47,144) (48,115)
Principal payments to affiliate (3,292) (12,300)
Distributions to Investors (100,000) --
--------- ---------
Net cash used by financing activities (150,436) (60,415)
--------- ---------
Net increase (decrease) in cash and cash equivalents (87,606) 53,814
Cash and cash equivalents at beginning of period 282,293 244,582
--------- ---------
Cash and cash equivalents at end of period $ 194,687 $ 298,396
========= =========
</TABLE>
The accompanying notes are an integral part
of the financial statements.
3
<PAGE> 5
INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARY
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
----------
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, 1997
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 the 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 AUTHORITATIVE PRONOUNCEMENTS:
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 from the
beginning of the fiscal 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 has adopted this standard
for the interim financial statements, however, the Partnership has no
comprehensive income items at March 31, 1998.
4
<PAGE> 6
INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARY
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
----------
2. RECENT AUTHORITATIVE PRONOUNCEMENTS, CONTINUED:
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 periods be restated to conform to the requirements of this
standard, however, the new standard has no effect on the Partnership's
financial statement presentation.
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:
Since inception, the Partnership's operating and debt
service obligations have been financed through the sale of
Partnership Units, cash provided by operating activities,
and 1995 debt restructuring activities. During the three
months ended March 31, 1998, all of the Partnership's
operating and debt service cash requirements have been met
through cash generated from operations.
As of March 31, 1998, the Partnership's properties,
Shadowridge Meadows and Mission Park, remain highly
leveraged. The Mission Park mortgage was refinanced in
December 1995 at a fixed interest rate of 7.76%. The
Shadowridge Meadows mortgage was refinanced in October 1997
at a fixed interest rate of 7.49%.
5
<PAGE> 7
INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARY
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
----------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED:
Despite the refinancings, 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, 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.
Net cash provided by operating activities for the three months
ended March 31, 1998 was approximately $116,000 compared to
approximately $157,000 for the same period in 1997. The principal
reason for this decrease was an increase in prepaids and other
expenses of approximately $67,000 which was related to increases
in the tax impound accounts due to continued payments to lenders
on mortgage debt.
Net cash used in investing activities for the three months ended
March 31, 1998 was approximately $53,000 compared to approximately
$43,000 for the same period in 1997. The increase related to
building improvements made possible by increased rental revenues.
Net cash used in financing activities for the three months ended
March 31, 1998 was approximately $150,000 compared to
approximately $60,000 for the same period in 1997. The increase is
primarily due to payments on the principal amounts of debt and
distributions to partners or investors of $100,000. There were no
such distributions in the same period of 1997.
6
<PAGE> 8
INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARY
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
----------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, CONTINUED:
b. Results of Operations:
COMPARISON OF THREE MONTHS ENDED MARCH 31, 1998 TO THE THREE
MONTHS ENDED MARCH 31, 1997.
Rental revenue for the three months ended March 31, 1998 was
approximately $985,000, an increase of 11% over rents of
approximately $887,000 for the comparable period in 1997. The
increase is primarily attributable to an increase in monthly
tenant rental rates and steady average occupancy rates which were
98% at March 31, 1998 and 1997.
Interest expense for the three months ended March 31, 1998 was
approximately $392,000, an increase of 4% over interest expense of
approximately $380,000 for the comparable period in 1997. The
increase is attributable to amortization of loan fees related to
the refinancing of the Shadowridge Meadows property, which began
amortizing in the fourth quarter of 1997.
Operating expenses for the three months ended March 31, 1998 were
approximately $454,000, an increase of 3% over operating expenses
of approximately $443,000 for the comparable period in 1997. The
increase was driven by payments made for property related expenses
and supplies during the year.
Depreciation and amortization expenses for the three months ended
March 31, 1998 and 1997 were approximately $223,000. Depreciation
and amortization expenses have remained constant as there have
been few material additions to buildings and improvements in the
period.
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.
7
<PAGE> 9
INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARY
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
----------
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
8
<PAGE> 10
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, 1998
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
9
<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, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 194,687
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 279,689
<PP&E> 28,738,905
<DEPRECIATION> 8,795,303
<TOTAL-ASSETS> 21,104,268
<CURRENT-LIABILITIES> 348,102
<BONDS> 19,718,058
0
0
<COMMON> 0
<OTHER-SE> 728,341
<TOTAL-LIABILITY-AND-EQUITY> 21,104,268
<SALES> 984,642
<TOTAL-REVENUES> 1,025,184
<CGS> 454,052
<TOTAL-COSTS> 454,052
<OTHER-EXPENSES> 222,831
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 392,103
<INCOME-PRETAX> (43,802)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (43,802)
<EPS-PRIMARY> (1.63)
<EPS-DILUTED> (1.63)
</TABLE>
