<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, 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)
<TABLE>
<CAPTION>
CALIFORNIA 33-0294177
<S> <C>
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
</TABLE>
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>
MARCH 31, DECEMBER 31,
1999 1998
------------ ------------
<S> <C> <C>
ASSETS
Rental properties:
Land $ 7,078,365 $ 7,078,365
Buildings and improvements 21,802,878 21,763,241
------------ ------------
28,881,243 28,841,606
Less accumulated depreciation 9,663,036 9,445,320
------------ ------------
19,218,207 19,396,286
Cash and cash equivalents 532,918 441,909
Deferred loan fees, net of accumulated amortization of
$146,223 and $132,140, respectively 630,960 645,044
Prepaid expenses and other assets 28,666 30,742
------------ ------------
1,192,544 1,117,695
------------ ------------
$ 20,410,752 $ 20,513,981
============ ============
LIABILITIES AND PARTNERS' CAPITAL
Mortgage loans payable $ 19,535,060 $ 19,579,523
Other liabilities:
Loan payable to affiliate 72,640 72,640
Accounts payable and accrued liabilities 242,938 170,177
Accrued interest payable 125,699 125,699
Security deposits 202,077 199,177
------------ ------------
20,178,415 20,147,216
Commitments
Partners' capital 242,337 376,765
Note receivable from general partner (10,000) (10,000)
------------ ------------
$ 20,410,752 $ 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
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
---------------------------------
1999 1998
----------- -----------
<S> <C> <C>
Revenues:
Rents $ 1,033,563 $ 984,642
Other 57,063 40,542
----------- -----------
Total revenues 1,090,627 1,025,184
----------- -----------
Expenses:
Operating expenses 535,123 454,052
Depreciation 231,798 222,831
Interest 379,292 392,103
----------- -----------
Total expenses 1,146,213 1,068,986
----------- -----------
Net income (loss) $ (55,586) $ (43,802)
=========== ===========
Basic and diluted per limited partnership unit data
Net loss per limited partnership unit $ 2.06 $ 1.63
=========== ===========
Weighted average limited
partnership units outstanding 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
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
-----------------------------
1999 1998
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (55,586) $ (43,802)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and Amortization 231,798 222,831
(Increase) in:
Prepaid expenses and other assets 2,076 (128,508)
Deferred Loan Fees -- (7,016)
Increase in:
Accounts payable, accrued liabilities and accrued
interest payable 72,762 73,978
Security deposits 2,900 (1,191)
--------- ---------
Net cash provided by operating activities 253,951 116,292
--------- ---------
Cash flows from investing activities:
Capital expenditures (39,637) (53,462)
--------- ---------
Net cash used in investing activities (39,637) (53,462)
--------- ---------
Cash flows from financing activities:
Principal payments under mortgage debt (44,463) (47,144)
Principal payments to affiliate -- (3,292)
Collection on loan receivable from general partner -- --
Distributions to Investors (78,842) (100,000)
--------- ---------
Net cash used by financing activities (123,305) (150,436)
--------- ---------
Net increase (decrease) in cash and cash equivalents 91,009 (87,606)
--------- ---------
Cash and cash equivalents at beginning of period 441,909 282,293
--------- ---------
Cash and cash equivalents at end of period $ 532,918 $ 194,687
========= =========
</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 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.
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<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 three months ended March
31, 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%.
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, 1999 was approximately $253,951 compared to
approximately $116,292 for the same period in 1998. The reason
for this increase was primarily attributable to a decrease in
prepaid property taxes of $67,000.
There was no material change in net cash used in investing
activities for the three months ended March 31, 1999 when
compared to the same period in 1998.
Net cash used in investing activities for the three months ended
March 31, 1999 was approximately $123,305 compared to
approximately $150,436 for the same period in 1998. The
principal reason for this decrease is a decrease in
distributions to investors.
b. Results of Operations:
COMPARISON OF THREE MONTHS ENDED MARCH 31, 1999 TO THE THREE
MONTHS ENDED MARCH 31, 1998.
Rental revenue for the three months ended March 31, 1999 was
approximately $1,033,563, an increase of 5% over rents of
approximately $984,642 for the comparable period in 1998. The
increase is primarily attributable to an increase in monthly
tenant rental rates and steady average occupancy rates.
Operating expenses for the three months ended March 31, 1999
were approximately $535,123, an increase of 18% over operating
expenses of approximately $454,052 for the comparable period in
1998.
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
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<PAGE> 8
INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARY
(A CALIFORNIA LIMITED PARTNERSHIP)
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' two
properties will be completed by late April 1999. The computer
software for the Partnership's two properties is under
assessment and is to be completed by late April 1999.
After the Partnership's assessment is completed in late April
1999, the renovation phase will begin. It is anticipated it will
be completed by the end of the 2nd Quarter of 1999 with system
validation and implementation to follow during the 3rd Quarter.
The cost of addressing the Partnership's Year 2000 issues have
been estimated at $30,000. The cost of the renovation and
implementation will consist of an acceleration of scheduled
upgrade of computer hardware for the Partnership 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 2nd Quarter of 1999.
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
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<PAGE> 9
INCOME GROWTH PARTNERS, LTD. X AND SUBSIDIARY
(A CALIFORNIA LIMITED PARTNERSHIP)
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
(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: March 14, 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
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<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, 1999 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-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 532,918
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,192,544
<PP&E> 28,881,243
<DEPRECIATION> (9,663,036)
<TOTAL-ASSETS> 20,410,752
<CURRENT-LIABILITIES> 643,355
<BONDS> 19,535,060
0
0
<COMMON> 0
<OTHER-SE> 232,337
<TOTAL-LIABILITY-AND-EQUITY> 20,410,752
<SALES> 0
<TOTAL-REVENUES> 1,090,627
<CGS> 0
<TOTAL-COSTS> 535,123
<OTHER-EXPENSES> 231,798
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 379,292
<INCOME-PRETAX> (55,586)
<INCOME-TAX> 0
<INCOME-CONTINUING> (55,586)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (55,586)
<EPS-PRIMARY> 2.06
<EPS-DILUTED> 2.06
</TABLE>
