<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 June 30, 1999
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, 1999 was 18,826.5. The number of the registrant's Class A Units
outstanding as of May 14, 1999 was 8,100.
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<PAGE> 3
INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARY
(A California Limited Partnership)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
unaudited
------------ ------------
<S> <C> <C>
ASSETS
Rental properties:
Land $ 7,078,365 $ 7,078,365
Buildings and improvements 21,829,335 21,763,241
------------ ------------
28,907,700 28,841,606
Less accumulated depreciation 9,883,122 9,445,320
------------ ------------
19,024,578 19,396,286
Cash and cash equivalents 478,847 441,909
Deferred loan fees, net of accumulated amortization of
$159,456 and $146,223, respectively 617,727 645,044
Prepaid expenses and other assets 21,662 30,742
------------ ------------
1,118,236 1,117,695
------------ ------------
$ 20,142,814 $ 20,513,981
============ ============
LIABILITIES AND PARTNERS' CAPITAL
Mortgage loans payable $ 19,483,035 $ 19,579,523
Other liabilities:
Loan payable to affiliate 60,740 72,640
Accounts payable and accrued liabilities 116,003 170,177
Accrued interest payable 125,699 125,699
Security deposits 213,997 199,177
------------ ------------
19,999,474 20,147,216
Commitments
Partners' capital 153,340 376,765
Note receivable from general partner (10,000) (10,000)
------------ ------------
$ 20,142,814 $ 20,513,981
============ ============
</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 OPERATIONS UNAUDITED
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
-------------------------- --------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
Rents $ 1,067,424 $ 980,981 $ 2,100,987 $ 1,965,623
Other 43,282 38,854 100,346 79,396
----------- ----------- ----------- -----------
Total revenues 1,110,706 1,019,835 2,201,333 2,045,019
----------- ----------- ----------- -----------
Expenses:
Operating expenses 474,929 490,734 1,010,052 944,786
Depreciation and amortization 233,319 223,546 465,117 446,377
Interest 369,879 343,796 749,171 735,899
----------- ----------- ----------- -----------
Total expenses 1,078,127 1,058,076 2,224,340 2,127,062
----------- ----------- ----------- -----------
Net income (loss) $ 32,579 $ (38,241) $ (23,007) $ (82,043)
=========== =========== =========== ===========
Basic and diluted per limited partnership unit data
Net income/(loss) per limited partnership unit $ 1.21 $ (1.42) $ (.85) $ (3.05)
=========== =========== =========== ===========
Weighted average limited
partnership units outstanding 26,926 26,926 26,926 26,926
=========== =========== =========== ===========
</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)
CONSOLIDATED STATEMENTS OF CASH FLOWS -- UNAUDITED
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30,
-----------------------------
1999 1998
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (23,007) $ (82,043)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization 465,117 446,379
(Increase) in:
Prepaid expenses and other assets 9,080 (92,912)
Deferred loan fees - (7,016)
Increase in:
Accounts payable, accrued liabilities and accrued
interest payable (54,173) 29,752
Security deposits 14,820 2,173
--------- ---------
Net cash provided by operating activities 411,837 296,333
--------- ---------
Cash flows from investing activities:
Capital expenditures (66,094) (93,229)
--------- ---------
Net cash used in investing activities (66,094) (93,229)
--------- ---------
Cash flows from financing activities:
Principal payments under mortgage debt (96,488) (91,166)
Principal payments to affiliate (11,900) (9,800)
Distributions to investors (200,417) (160,000)
--------- ---------
Net cash used by financing activities (308,805) (260,966)
--------- ---------
Net increase (decrease) in cash and cash equivalents 36,938 (57,862)
--------- ---------
Cash and cash equivalents at beginning of period 441,909 282,293
--------- ---------
Cash and cash equivalents at end of period $ 478,847 $ 224,431
========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE> 6
INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARY
(A CALIFORNIA LIMITED PARTNERSHIP)
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, 1998 filed on
Form 10-K.
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.
5
<PAGE> 7
INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARY
(A CALIFORNIA LIMITED PARTNERSHIP)
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 six months ended June 30,
1999, all of the Partnership's operating and debt service cash
requirements have been met through cash generated from
operations.
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%.
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 six months
ended June 30, 1999 was approximately $412,000 compared to
approximately $296,000 for the same period in 1998. The
principal reason for this increase was a decrease in funds
spent on prepaid expenses.
There was no material change in net cash used in investing
activities for the six months ended June 30, 1999 when
compared to the same period in 1998.
Net cash used in financing activities for the six months ended
June 30, 1999 was approximately $309,000 compared to
approximately $261,000 for the same period in 1998. The
principal reason for this increase was an increase in
distributions to investors.
6
<PAGE> 8
INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARY
(A CALIFORNIA LIMITED PARTNERSHIP)
b. Results of Operations:
COMPARISON OF THREE MONTHS ENDED JUNE 30, 1999 TO THE THREE
MONTHS ENDED JUNE 30, 1998.
Rental revenue for the three months ended June 30, 1999 was
approximately $1,067,000, an increase of 9% over rents of
approximately $981,000 for the comparable period in 1998. The
increase is primarily attributable to an increase in monthly
tenant rental rates and a decrease in employee lodging.
Operating expenses for the three months ended June 30, 1999
were approximately $475,000, a decrease of 3% over operating
expenses of approximately $491,000 for the comparable period
in 1998. The decrease is primarily attributable to a decrease
in partnership expenses.
COMPARISON OF SIX MONTHS ENDED JUNE 30, 1999 TO THE SIX MONTHS
ENDED JUNE 30, 1998.
Rental revenue for the six months ended June 30, 1999 was
approximately $2,101,000, an increase of 7% over rents of
approximately $1,966,000 for the comparable period in 1998.
The increase is primarily attributable to an increase in
monthly tenant rental rates and a decrease in employee
lodging.
Operating expenses for the six months ended June 30, 1999 were
approximately $1,010,000, an increase of 7% over operating
expenses of approximately $945,000 for the comparable period
in 1998. The increase is primarily attributable to increases
in advertising, credit check fees, liability insurance,
cleaning and supplies for rental turnovers, extensive mold
treatment, and gas and electric charges.
c. Year 2000
The Partnership has completed its awareness phase of Year 2000
Compliance and has begun its assessment. All of the
Partnership's current software applications and computer
hardware is undergoing assessment. So far, the Partnership's
computer software for the Operating System, Investor
Relations, Accounting and Property Management are in Year 2000
compliance. The on-site hardware assessment of the
Partnership's computer hardware at the Partnership's two
properties was completed by late April 1999.
The renovation phase was postponed because of falling system
prices and reconfiguration of the on-site hardware. The
renovation is anticipated to begin early September, 1999, with
system validation and implementation to follow in October,
1999.
The cost of addressing the Partnership's Year 2000 issues
should not have a material impact on the Partnership. The cost
of the Partnership assessment is minimal and renovation and
implementation will consist of an acceleration of scheduled
upgrade of computer hardware for the Partnership's properties
and the corresponding upgrade of the computer operating
system.
The Partnership's contingency plans for the Year 2000 problems
are still under assessment and should be completed by the end
of the 3rd Quarter of 1999.
7
<PAGE> 9
INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARY
(A CALIFORNIA LIMITED PARTNERSHIP)
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:
Exhibit 27.1 - Financial Data Schedule
8
<PAGE> 10
INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARY
(A CALIFORNIA LIMITED PARTNERSHIP)
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 10, 1999
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
JUNE 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 478,847
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,118,236
<PP&E> 28,881,243
<DEPRECIATION> (9,883,122)
<TOTAL-ASSETS> 20,142,814
<CURRENT-LIABILITIES> 516,439
<BONDS> 19,483,035
0
0
<COMMON> 0
<OTHER-SE> 143,340
<TOTAL-LIABILITY-AND-EQUITY> 20,142,814
<SALES> 0
<TOTAL-REVENUES> 2,201,333
<CGS> 0
<TOTAL-COSTS> 1,010,052
<OTHER-EXPENSES> 465,117
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 749,171
<INCOME-PRETAX> (23,007)
<INCOME-TAX> 0
<INCOME-CONTINUING> (23,007)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (23,007)
<EPS-BASIC> (.85)
<EPS-DILUTED> (.85)
</TABLE>
