<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Quarterly Period Ended March 31, 1996
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 #0-21606
InLand Capital Fund, L.P.
(Exact name of registrant as specified in its charter)
Delaware #36-3767977
(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation or organization)
2901 Butterfield Road, Oak Brook, Illinois 60521
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: 708-218-8000
N/A
----------------------------------------------
(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 such
filing requirements for the past 90 days. Yes X No
--- ---
-1-
<PAGE>
INLAND CAPITAL FUND, L.P.
(a limited partnership)
Balance Sheets
March 31, 1996 and December 31, 1995
(unaudited)
Assets
------
<TABLE>
<CAPTION>
1996 1995
----------- --------
<S> <C> <C>
Current assets:
Cash and cash equivalents (Note 1).............. $ 770,878 708,979
Investments in marketable securities (Note 1)... 1,750,000 2,000,000
Accrued interest and other receivables.......... 40,300 41,062
Deposits and other assets....................... - 1,279
----------- ----------
Total current assets.......................... 2,561,178 2,751,320
Investment properties and improvements (including
acquisition fees paid to Affiliates of
$1,418,902) (Notes 3 and 4):.................... 26,408,864 26,130,416
Deferred organization costs (net of accumulated
amortization of $12,958 and $12,229 at March 31,
1996 and December 31, 1995, respectively)
(Note 1)........................................ 1,623 2,352
----------- ----------
Total assets...................................... $28,971,665 28,884,088
=========== ==========
</TABLE>
See accompanying notes to financial statements.
-2-
<PAGE>
INLAND CAPITAL FUND, L.P.
(a limited partnership)
Balance Sheets
(continued)
March 31, 1996 and December 31, 1995
(unaudited)
Liabilities and Partners' Capital
---------------------------------
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Current liabilities:
Accounts payable................................ $ 40,266 29,277
Accrued real estate taxes....................... 98,663 77,815
Due to Affiliates (Note 2)...................... 56,053 26,531
Unearned income................................. 52,628 27,431
----------- ----------
Total current liabilities.................... 247,610 161,054
----------- ----------
Partners' capital (Notes 1 and 2):
General Partner:
Capital contribution.......................... 500 500
Cumulative net income......................... 12,109 12,097
----------- ----------
12,609 12,597
----------- ----------
Limited Partners:
Units of $1,000. Authorized 60,000 Units,
32,397.11 Units outstanding (net of offering
costs of $4,466,765, of which $3,488,574 was
paid to Affiliates)......................... 27,930,343 27,930,343
Cumulative cash distributions................. (646,474) (646,334)
Cumulative net income......................... 1,427,577 1,426,428
----------- ----------
28,711,446 28,710,437
----------- ----------
Total Partners' capital...................... 28,724,055 28,723,034
----------- ----------
Total liabilities and Partners' capital........... $28,971,665 28,884,088
=========== ==========
</TABLE>
See accompanying notes to financial statements.
-3-
<PAGE>
INLAND CAPITAL FUND, L.P.
(a limited partnership)
Statements of Operations
For the three months ended March 31, 1996 and 1995
(unaudited)
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Income:
Interest income................................. $ 34,255 49,265
Rental income................................... 67,879 49,831
-------- --------
102,134 99,096
-------- --------
Expenses:
Professional services to Affiliates............. 6,321 10,810
Professional services to non-affiliates......... 24,445 19,800
General and administrative expenses to
Affiliates.................................... 8,905 7,431
General and administrative expenses to
non-affiliates................................ 3,840 4,349
Marketing expenses to Affiliates................ 10,572 13,337
Marketing expenses to non-affiliates............ 5,321 3,204
Land operating expenses to Affiliates........... 15,959 15,553
Land operating expenses to non-affiliates....... 24,881 20,940
Depreciation.................................... - 1,653
Amortization of deferred organization costs..... 729 728
-------- --------
100,973 97,805
-------- --------
Net income.................................... $ 1,161 1,291
======== ========
Net income allocated to:
General Partner................................. 12 13
Limited Partners................................ 1,149 1,278
-------- --------
Net income.................................... $ 1,161 1,291
======== ========
Net income allocated to the one
General Partner Unit............................ $ 12 13
======== ========
Net income allocated to Limited Partners per
weighted average Limited Partnership Units
of 32,397.11.................................... $ .04 .04
======== ========
</TABLE>
See accompanying notes to financial statements.
-4-
<PAGE>
INLAND CAPITAL FUND, L.P.
(a limited partnership)
Statements of Cash Flows
For the three months ended March 31, 1996 and 1995
(unaudited)
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income...................................... $ 1,161 1,291
Adjustments to reconcile net income to net
cash provided by operating activities:
Amortization of deferred organization costs... 729 728
Depreciation.................................. - 1,653
Changes in assets and liabilities:
Accrued interest and other receivables...... 762 (17,615)
Deposits and other assets................... 1,279 (6,058)
Accounts payable............................ 10,989 11,744
Accrued real estate taxes................... 20,848 17,249
Due to Affiliates........................... 29,522 45,358
Unearned income............................. 25,197 37,559
--------- ---------
Net cash provided by operating activities......... 90,487 91,909
--------- ---------
Cash flows from investing activities:
Sale (purchase) of marketable securities, net... 250,000 500,000
Purchase of and additions to investment
properties.................................... (278,448) (665,247)
--------- ---------
Net cash used in investing activities............. (28,448) (165,247)
--------- ---------
Cash flows from financing activities:
Distributions paid.............................. (140) -
--------- ---------
Net cash used in financing activities............. (140) -
--------- ---------
Net increase (decrease) in cash and cash
equivalents..................................... 61,899 (73,338)
Cash and cash equivalents at beginning of period.. 708,979 2,722,009
--------- ---------
Cash and cash equivalents at end of period........ $ 770,878 2,648,671
========= =========
</TABLE>
See accompanying notes to financial statements.
-5-
<PAGE>
INLAND CAPITAL FUND, L.P.
(a limited partnership)
Notes to Financial Statements
March 31, 1996
(unaudited)
Readers of this Quarterly Report should refer to the Partnership's audited
financial statements for the fiscal year ended December 31, 1995, which are
included in the Partnership's 1995 Annual Report, as certain footnote
disclosures which would substantially duplicate those contained in such audited
financial statements have been omitted from this Report.
(1) Organization and Basis of Accounting
InLand Capital Fund, L.P. (the "Partnership") was organized on June 21, 1991 by
the filing of a Certificate of Limited Partnership under the Revised Uniform
Limited Partnership Act of the State of Delaware. On December 13, 1991, the
Partnership commenced an Offering of 60,000 Limited Partnership Units pursuant
to a Registration under the Securities Act of 1933. The Amended and Restated
Agreement of Limited Partnership (the "Partnership Agreement") provides for
Inland Real Estate Investment Corporation to be the General Partner. On April
30, 1992, the Partnership received and accepted subscriptions for the minimum
offering of 2,500 Units. Offering proceeds were subsequently released from
escrow and were available for use by the Partnership and additional Limited
Partners have been admitted. On August 23, 1993, the Partnership terminated its
Offering of Units. Subscriptions for a total of 32,399.28 Units have been
received from the public at $1,000 per Unit resulting in $32,399,282 in gross
offering proceeds, not including the General Partner's capital contribution of
$500. All of the holders of these Units have been admitted to the Partnership.
As of March 31, 1996, the Partnership has repurchased a total of 2.174 Units
for $2,174 from various Limited Partners through the Units Repurchase Program.
Under this program, Limited Partners may under certain circumstances have their
Units repurchased for an amount equal to their Invested Capital.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting periods.
Actual results could differ from those estimates.
Deferred organization costs are amortized over a 60-month period. Offering
costs have been offset against the Limited Partners' capital accounts.
The Partnership considers all highly liquid investments purchased with a
maturity of three months or less to be cash equivalents and are carried at
cost, which approximates fair value because of the relative short maturity of
these instruments.
Investments purchased with a maturity of three months or more are considered to
be investments in marketable securities and are carried at cost, which
approximates fair value.
-6-
<PAGE>
INLAND CAPITAL FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
March 31, 1996
(unaudited)
Investment properties held by the Partnership are carried at the lower of
aggregate cost or net realizable value. Periodically, the Partnership reviews
the portfolio and if the parcels suffer an impairment in value which is deemed
to be other than temporary, the parcels would be reduced to their net
realizable value through the direct write-off method. Through March 31, 1996,
there were no such impairments.
For vacant land parcels and parcels with insignificant buildings and
improvements, the Partnership uses the area method of allocation, which
approximates the relative sales method of allocation, whereby a per acre price
is used as the standard allocation method for land purchases and sales. The
total cost of the parcel is divided by the total number of acres to arrive at a
per acre price. Repair and maintenance expenses are charged to operations as
incurred.
No provision for Federal income taxes has been made as the liability for such
taxes is that of the Partners rather than the Partnership.
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets to Be Disposed Of" was issued in March 1995 and
is effective for fiscal years beginning after December 15, 1995. This
pronouncement is not expected to have a material effect on the financial
position or results of operations of the Partnership when adopted in 1996.
In the opinion of management, the financial statements contain all the
adjustments necessary, which are of a normal recurring nature, to present
fairly the financial position and results of operations for the period
presented herein. Results of interim periods are not necessarily indicative of
results to be expected for the year.
(2) Transactions with Affiliates
The General Partner and its Affiliates are entitled to reimbursement for
salaries and expenses of employees of the General Partner and its Affiliates
relating to the administration of the Partnership. Such costs are included in
professional services to Affiliates and general and administrative expenses to
Affiliates, of which $18,136 and $6,417 was unpaid as of March 31, 1996 and
December 31, 1995, respectively.
-7-
<PAGE>
INLAND CAPITAL FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
March 31, 1996
(unaudited)
The General Partner is entitled to receive Asset Management Fees equal to one-
quarter of 1% of the original cost to the Partnership of undeveloped land
annually, limited to a cumulative total over the life of the Partnership of 2%
of the land's original cost to the Partnership. Such fees of $15,959 and
$15,553 have been incurred and are included in land operating expenses to
Affiliates for the three months ended March 31, 1996 and 1995, respectively, of
which $15,959 and $15,738 was unpaid as of March 31, 1996 and December 31,
1995, respectively.
An Affiliate of the General Partner performed marketing and advertising
services for the Partnership's land investments and was reimbursed (as set
forth under terms of the Partnership Agreement) for direct costs, of which
$14,916 and $4,376 was unpaid as of March 31, 1996 and December 31, 1995,
respectively.
An Affiliate of the General Partner performed property upgrades, rezoning,
annexation and other activities to prepare the Partnership's land investments
for sale and was reimbursed (as set forth under terms of the Partnership
Agreement) for direct costs. Such fees of $7,042 and $16,093 have been incurred
for the three months ended March 31, 1996 and 1995, respectively, and are
included in investment properties, of which $7,042 was unpaid as of March 31,
1996.
-8-
<PAGE>
INLAND CAPITAL FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
(3) Investment Properties
All of the Partnership's investment properties are located in the collar
counties surrounding the Chicago metropolitan area. The following real property
investments are owned by the Partnership as of March 31, 1996:
<TABLE>
<CAPTION>
Total
Gross Initial Costs Costs Remaining Current
Acres Purchase/ ----------------------------------- Capitalized Costs of Costs of Year Gain
Parcel Location: Purchased Sales Original Acquisition Total Subsequent to Property Parcels at On Sale
# County /(Sold) Date Costs Costs Costs Acquisition Sold 3/31/96 Recognized
- - ------ --------- --------- --------- ----------- ----------- ---------- ------------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 Kendall 108.8960 07/22/92 $ 707,566 57,926 765,492 49,535 - 815,027 -
2 McHenry 201.0000 11/09/93 2,020,314 122,145 2,142,459 171,454 196,473 2,117,440 -
(17.742) 08/02/95
3 Will 34.0474 03/04/94 1,235,830 88,092 1,323,922 8,720 - 1,332,642 -
4 Will 86.9195 03/30/94 1,778,820 143,817 1,922,637 36,774 - 1,959,411 -
5 LaSalle 190.9600 04/01/94 532,000 18,145 550,145 33,157 - 583,302 -
6 DeKalb 59.0800 05/11/94 670,207 58,373 728,580 351,246 - 1,079,826 -
7 Kendall 200.8210 07/28/94 1,506,158 82,999 1,589,157 15,497 - 1,604,654 -
8 Kendall 133.0000 08/17/94 1,300,000 106,949 1,406,949 2,879 - 1,409,828 -
9 LaSalle 335.9600 08/30/94 993,441 79,329 1,072,770 54,009 - 1,126,779 -
10 Kendall 223.7470 09/16/94 2,693,025 205,660 2,898,685 21,499 - 2,920,184 -
10A(a) Kendall 7.0390 09/16/94 206,975 15,806 222,781 1,327 221,078 - -
(7.0390) 04/21/95
11 Kane 123.0000 09/26/94 1,353,000 75,551 1,428,551 3,989 - 1,432,540 -
12 Kendall 110.2530 09/28/94 600,001 51,220 651,221 7,137 - 658,358 -
13 LaSalle 352.7390 10/06/94 1,032,666 91,117 1,123,783 19,808 - 1,143,591 -
14 Kendall 134.7760 10/26/94 1,000,000 81,674 1,081,674 4,406 - 1,086,080 -
15 McHenry 169.5400 10/31/94 2,900,000 79,196 2,979,196 50,306 - 3,029,502 -
16 McHenry 207.0754 11/30/94 1,760,256 101,388 1,861,644 51,469 - 1,913,113 -
17 LaSalle 236.4400 12/07/94 1,060,286 74,735 1,135,021 244 - 1,135,265 -
18 Kendall 386.9900 11/02/95 934,993 126,329 1,061,322 - - 1,061,322 -
----------- --------- ---------- ------- ------- ---------- -------
$24,285,539 1,660,450 25,945,989 883,456 417,551 26,408,864 -
=========== ========= ========== ======= ======= ========== =======
</TABLE>
-9-
<PAGE>
INLAND CAPITAL FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
March 31, 1996
(unaudited)
(3) Investment Properties (continued)
(a) Included in the purchase of Parcel 10 was a house and several outbuildings,
located on approximately seven acres, which was sold on April 21, 1995.
(b) Reconciliation of real estate owned:
<TABLE>
<CAPTION>
1996 1995
----------- ----------
<S> <C> <C>
Balance at January 1,........................... $26,130,416 25,033,665
Additions during period:
Acquisitions.................................... - 1,061,322
Improvements.................................... 278,448 456,010
----------- ----------
26,408,864 26,550,997
Sales during period............................. - 420,581
----------- ----------
Balance at end of period........................ $26,408,864 26,130,416
=========== ==========
(c) Reconciliation of accumulated depreciation:
1996 1995
----------- ----------
Balance at January 1,........................... - 1,377
Depreciation expenses........................... - 1,653
Sales during period............................. - (3,030)
----------- ----------
Balance at end of period........................ $ - -
=========== ==========
</TABLE>
(4) Farm Rental Income
The Partnership has determined that all leases relating to the farm parcels are
operating leases. Accordingly, rental income is reported when earned.
As of March 31, 1996, the Partnership had farm leases of generally one year in
duration, for approximately 2,873 acres of the approximately 3,278 acres owned.
-10-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
On December 13, 1991, the Partnership commenced an Offering of 60,000 Limited
Partnership Units ("Units") at $1,000 per Unit, pursuant to a Registration
Statement on Form S-11 under the Securities Act of 1933. On August 23, 1993,
the Partnership terminated its Offering of Units. Subscriptions for a total of
32,399.28 Units have been received from the public at $1,000 per Unit resulting
in $32,399,282 in gross offering proceeds, not including the General Partner's
capital contribution of $500. All of the holders of these Units have been
admitted to the Partnership. Inland Real Estate Investment Corporation is the
General Partner. The Limited Partners of the Partnership will share in their
portion of benefits of ownership of the Partnership's real property investments
according to the number of Units held.
The Partnership used $25,945,989 of gross offering proceeds to purchase, on an
all-cash basis, eighteen parcels of land and one building. These investments
include the payment of the purchase price, acquisition fees and acquisition
costs of such properties. One of the parcels was purchased during 1992, one
during 1993, fifteen during 1994 and one during 1995. As of March 31, 1996, the
Partnership has had two sales transactions through which it has disposed of the
building and approximately twenty-five acres of the 3,302 acres originally
owned. As of March 31, 1996, cumulative distributions to the Limited Partners
have totalled $646,474 (which represents a return of Invested Capital, as
defined the Partnership Agreement). Through March 31, 1996, the Partnership has
used $883,456 of working capital reserve for rezoning and other activities and
such amount is included in investment properties.
The Partnership's capital needs and resources will vary depending upon a number
of factors, including the extent to which the Partnership conducts rezoning and
other activities relating to utility access, the installation of roads,
subdivision and/or annexation of land to a municipality, changes in real estate
taxes affecting the Partnership's land, and the amount of revenue received from
leasing. As of March 31, 1996, the Partnership owns, in whole or in part, all
eighteen of its original parcels, all of which are leased to local farmers and
are generating sufficient cash flow from farm leases to cover property taxes
and insurance.
At March 31, 1996, the Partnership had cash, cash equivalents and investments
in marketable securities of $2,520,878, of which approximately $180,500 is
reserved for the repurchase of Units through the Unit Repurchase Program. The
remaining $2,340,378 is available, upon maturity, to be used for Partnership
expenses and liabilities, cash distributions to partners, and other activities
with respect to some or all of its land parcels. The Partnership plans to
maximize its parcel sales effort in anticipation of rising land values.
-11-
<PAGE>
The Partnership plans to enhance the value of its land through pre-development
activities such as rezoning, annexation and land planning. The Partnership has
already been successful in, or is in the process of pre-development activity on
a majority of the Partnership's land investments. Parcel 1 has been zoned for
residential development with Kendall County. Parcel 2 has been annexed to the
village of McHenry and zoned for a business park, of which a contract is
pending for the sale of four lots. Parcels 3 and 4 have been zoned for
commercial and residential uses. Parcel 6, annexed to the village of DeKalb,
has been zoned for twenty-five residential lots. Parcels 15 and 16 have been
annexed to the village of Huntley and zoned for residential and commercial
development. Therefore, it is anticipated that Parcels 1, 2, 3, 4, 6, 15 and 16
will begin development and be marketed for sale in 1996.
Results of Operations
Interest income decreased for the three months ended March 31, 1996, as
compared to the three months ended March 31, 1995, due to the timing of the
parcel acquisitions. The Partnership completed the purchase of its land
portfolio in 1995, and anticipates that income in future years will be earned
from leasing the land and sales of investment properties rather than income
from short-term investments.
As of March 31, 1996, the Partnership owned eighteen parcels of land consisting
of 3,278 acres. Of the 3,278 acres owned, approximately 2,873 acres are
tillable and leased to local farmers and are generating sufficient cash flow to
cover property taxes, insurance and other miscellaneous expenses. The increase
in rental income and land operating expenses to Affiliates and non-affiliates
and depreciation for the three months ended March 31, 1996, as compared to the
three months ended March 31, 1995, is due to the Partnership recording the
operations of the parcels as they were purchased.
Professional services to Affiliates decreased for the three months ended March
31, 1996, as compared to the three months ended March 31, 1995, due to
decreases in -house legal and accounting services required by the
Partnership. Professional services to non-affiliates increased for the three
months ended March 31, 1996, as compared to the three months ended March 31,
1995, due to increases in outside legal and accounting fees.
General and administrative expenses to Affiliates increased for the three
months ended March 31, 1996, as compared to the three months ended March 31,
1995, due to increases in data processing, postage and investor services
expenses. General and administrative expenses to non-affiliates decreased for
the three months ended March 31, 1996, as compared to the three months ended
March 31, 1995, due to a decrease in the Illinois Replacement Tax paid in 1996.
Marketing expenses to Affiliates decreased for the three months ended March 31,
1996, as compared to the three months ended March 31, 1995, due to a decrease
in expenses relating to marketing and advertising the Partnership's land
investments. Marketing expenses to non-affiliates increased for the three
months ended March 31, 1996, as compared to the three months ended March 31,
1995, due to advertising and travel expenses relating to marketing the land
portfolio to prospective purchasers.
-12-
<PAGE>
PART II
Items 1 through 6(b) are omitted because of the absence of conditions under
which they are required.
-13-
<PAGE>
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.
INLAND CAPITAL FUND, L.P.
By: Inland Real Estate Investment Corporation
General Partner
/S/ ROBERT D. PARKS
By: Robert D. Parks
Chairman
Date: May 13, 1996
/S/ CYNTHIA M. HASSETT
By: Cynthia M. Hassett
Principal Financial Officer and
Principal Accounting Officer
Date: May 13, 1996
-14-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 770,878
<SECURITIES> 1,750,000
<RECEIVABLES> 40,300
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,561,178
<PP&E> 26,408,864
<DEPRECIATION> 0
<TOTAL-ASSETS> 28,971,665
<CURRENT-LIABILITIES> 247,610
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 28,724,055
<TOTAL-LIABILITY-AND-EQUITY> 28,971,665
<SALES> 0
<TOTAL-REVENUES> 102,134
<CGS> 0
<TOTAL-COSTS> 40,840
<OTHER-EXPENSES> 90,133
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,161
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,161
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,161
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
