<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 September 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
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Income Growth Partners, Ltd. X and Subsidiary
(A California Limited Partnership)
Consolidated Balance Sheets
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------ ------------
(unaudited)
<S> <C> <C>
ASSETS
Rental properties:
Land $ 7,078,365 $ 7,078,365
Buildings and improvements 21,866,772 21,763,241
------------ ------------
28,945,137 28,841,606
Less accumulated depreciation 10,102,741 9,445,320
------------ ------------
18,842,396 19,396,286
Cash and cash equivalents 582,341 441,909
Deferred loan fees, net of accumulated amortization of
$174,388 and $132,140, respectively 602,795 645,044
Prepaid expenses and other assets 14,753 30,742
------------ ------------
1,199,889 1,117,695
------------ ------------
$ 20,042,285 $ 20,513,981
============ ============
LIABILITIES AND PARTNERS' CAPITAL
Mortgage loans payable $ 19,448,813 $ 19,579,523
Other liabilities:
Loan payable to affiliate 60,740 72,640
Accounts payable and accrued liabilities 130,373 170,177
Accrued interest payable 125,699 125,699
Security deposits 217,123 199,177
------------ ------------
19,982,748 20,147,216
Commitments
Partners' capital 69,537 376,765
Note receivable from general partner (10,000) (10,000)
------------ ------------
$ 20,042,285 $ 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 Nine Months
Ended September 30, Ended September 30,
-------------------------- --------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
Rents $ 1,081,445 $ 973,736 $ 3,182,432 $ 2,939,359
Other 52,651 69,053 152,997 148,449
----------- ----------- ----------- -----------
Total revenues 1,134,096 1,042,789 3,335,429 3,087,808
----------- ----------- ----------- -----------
Expenses:
Operating expenses 476,270 415,188 1,486,322 1,359,974
Depreciation 234,551 227,310 699,668 673,687
Interest 377,478 378,863 1,126,649 1,114,762
----------- ----------- ----------- -----------
Total expenses 1,088,299 1,021,361 3,312,639 3,148,423
----------- ----------- ----------- -----------
Net income (loss) $ 45,797 $ 21,428 $ 22,790 $ (60,615)
=========== =========== =========== ===========
Basic and diluted per limited
partnership unit data
Net income (loss) per limited
partnership unit $ 1.70 $ .80 $ .85 $ (2.25)
=========== =========== =========== ===========
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 Nine Months
Ended September 30,
-------------------------
1999 1998
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 22,790 $ (60,615)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization 699,668 647,413
(Increase) in:
Prepaid expenses and other assets 15,989 (109,350)
Deferred loan fees -- 26,274
Increase in:
Accounts payable, accrued liabilities and accrued
interest payable (39,803) 23,949
Security deposits 17,946 1,655
--------- ---------
Net cash provided by operating activities 716,590 529,326
--------- ---------
Cash flows from investing activities:
Capital expenditures (103,531) (124,028)
--------- ---------
Net cash used in investing activities (103,531) (124,028)
--------- ---------
Cash flows from financing activities:
Principal payments under mortgage debt (109,627) (136,057)
Loan fees and refinancing costs -- (7,016)
Principal payments to affiliate (11,900) (22,550)
Distributions to investors (351,100) (235,000)
--------- ---------
Net cash used by financing activities (472,627) (400,623)
--------- ---------
Net increase (decrease) in cash and cash equivalents 140,432 4,675
--------- ---------
Cash and cash equivalents at beginning of period 441,909 282,293
--------- ---------
Cash and cash equivalents at end of period $ 582,341 $ 286,968
========= =========
</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.
5
<PAGE> 7
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 nine months
ended September 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 nine months
ended September 30, 1999 was approximately $716,590 compared
to approximately $529,326 for the same period in 1998. The
principal reason for this increase was an increase in income.
Net cash used in financing activities for the nine months
ended September 30, 1999 was approximately $472,627
compared to approximately $400,623 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 September 30, 1999 to the
three months ended September 30, 1998.
Rental revenue for the three months ended September 30, 1999
was approximately $1,081,445, an increase of 11% over rents
of approximately $973,736 for the comparable period in 1998.
The increase is primarily attributable to an increase in
monthly tenant rental rates.
Operating expenses for the three months ended September 30,
1999 were approximately $476,270, an increase of 15% over
operating expenses of approximately $415,188 for the
comparable period in 1998. The increase is primarily
attributable to an increase in administration expenses.
Comparison of nine months ended September 30, 1999 to the
nine months ended September 30, 1998.
Rental revenue for the nine months ended September 30, 1999
was approximately $3,182,432, an increase of 8% over rents of
approximately $2,939,359 for the comparable period in 1998.
The increase is primarily attributable to an increase in
monthly tenant rental rates.
Operating expenses for the nine months ended September 30,
1999 were approximately $1,486,322, an increase of 9% over
operating expenses of approximately $1,359,974 for the
comparable period in 1998. The increase is primarily
attributable to increases in administration expenses, wages,
cleaning and supplies for rental turnovers, landscaping and
pool maintenance costs.
c. Year 2000
The Partnership has completed both the awareness phase and
the assessment phase of Year 2000 Compliance. 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 cost of addressing the Partnership's Year 2000 issues
should not have a material impact on the Partnership. The
Partnership's contingency plans for the Year 2000 problems
are finalized and should be implemented by the end of
November, 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: November 15, 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
SEPTEMBER 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 582,341
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,199,889
<PP&E> 28,945,137
<DEPRECIATION> 10,102,741
<TOTAL-ASSETS> 20,042,285
<CURRENT-LIABILITIES> 533,935
<BONDS> 19,448,813
0
0
<COMMON> 0
<OTHER-SE> 59,537
<TOTAL-LIABILITY-AND-EQUITY> 20,042,285
<SALES> 0
<TOTAL-REVENUES> 3,335,429
<CGS> 0
<TOTAL-COSTS> 1,486,322
<OTHER-EXPENSES> 699,668
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,126,649
<INCOME-PRETAX> 22,790
<INCOME-TAX> 0
<INCOME-CONTINUING> 22,790
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22,790
<EPS-BASIC> .85
<EPS-DILUTED> .85
</TABLE>
