UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For The Fiscal Year Ended December 31, 1999
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File #0-21606
InLand Capital Fund, L.P.
(Exact name of registrant as specified in its charter)
Delaware 36-3767977
(State of organization) (I.R.S. Employer Identification Number)
2901 Butterfield Road, Oak Brook, Illinois 60523
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: 630-218-8000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class: Name of each exchange on which registered:
None None
Securities registered pursuant to Section 12(g) of the Act:
LIMITED PARTNERSHIP UNITS
(Title of class)
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
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [X]
State the aggregate market value of the voting stock held by nonaffiliates of
the registrant. Not applicable.
The Prospectus of the Registrant dated December 13, 1991, filed pursuant to
Rule 424(b) and 424(c) under the Securities Act of 1933 is incorporated by
reference in Parts I, II and III of this Annual Report on Form 10-K.
-1-
INLAND CAPITAL FUND, L.P.
(a limited partnership)
TABLE OF CONTENTS
Part I Page
------ ----
Item 1. Business...................................................... 3
Item 2. Properties.................................................... 5
Item 3. Legal Proceedings............................................. 5
Item 4. Submission of Matters to a Vote of Security Holders........... 5
Part II
-------
Item 5. Market for Partnership's Limited Partnership
Units and Related Security Holder Matters.................... 6
Item 6. Selected Financial Data....................................... 7
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.......................... 8
Item 7(a)Quantitative and Qualitative Disclosures About Market Risk.... 11
Item 8. Financial Statements and Supplementary Data................... 12
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.......................... 30
Part III
--------
Item 10. Directors and Executive Officers of the Registrant............ 30
Item 11. Executive Compensation........................................ 35
Item 12. Security Ownership of Certain Beneficial Owners and
Management................................................... 36
Item 13. Certain Relationships and Related Transactions................ 36
Part IV
-------
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K.................................................. 37
SIGNATURES............................................................. 38
-2-
PART I
Item 1. Business
The Registrant, InLand Capital Fund, L.P. (the "Partnership"), is a limited
partnership formed on June 21, 1991 pursuant to the Delaware Revised Uniform
Limited Partnership Act, to invest in multiple parcels of land on an all-cash
basis. The Partnership intends to engage in a number of preliminary development
activities with the objective of maximizing the resale value of the land
parcels. 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. The
Offering terminated on August 23, 1993, with total sales of 32,399.28 Units, 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.
As of December 31, 1999, the Partnership has repurchased a total of 50.17 Units
for $48,172 from various Limited Partners through the Unit Repurchase Program.
Under this program, Limited Partners may under certain circumstances have their
Units repurchased for an amount equal to their Invested Capital.
The Partnership is engaged in the business of real estate investment. A
presentation of information about industry segments would not be material to an
understanding of the Partnership's business taken as a whole.
The Partnership acquired fee ownership of the following real property
investments:
Gross Acres Purchase/Sales
Parcel & Location Purchased/Sold Date
- ----------------------------------- -------------------- ------------------
Parcel 1, Kendall County, Illinois 108.8960 07/22/92
Parcel 2, McHenry County, Illinois 201.0000 11/09/93
(17.7420 sold 08/02/95)
(8.6806 sold Var 1997)
(1.9290 sold Var 1998)
(13.5030 sold Var 1999)
Parcel 3, Will County, Illinois 34.0474 03/04/94
(34.0474 sold 02/04/99)
Parcel 4, Will County, Illinois 86.9195 03/30/94
(2.3050 sold Var 1997)
(3.3600 sold Var 1998)
(1.0331 sold 08/19/99)
Parcel 5, LaSalle County, Illinois 190.9600 04/01/94
(2.0600 sold 04/08/98)
(188.9000 sold 10/07/99)
Parcel 6, DeKalb County, Illinois 59.0800 05/11/94
(4.9233 sold Apr 1998)
(54.1567 sold 07/23/98)
-3-
Gross Acres Purchase/Sales
Parcel & Location Purchased/Sold Date
- ----------------------------------- -------------------- ------------------
Parcel 7, Kendall County, Illinois 200.8210 07/28/94
Parcel 8, Kendall County, Illinois 133.0000 08/17/94
Parcel 9, LaSalle County, Illinois 335.9600 08/30/94
Parcel 10, Kendall County, Illinois 230.7860 09/16/94
(7.0390 sold 04/21/95)
(2.9770 sold 11/03/99)
Parcel 11, Kane County, Illinois 123.0000 09/26/94
Parcel 12, Kendall County, Illinois 110.2530 09/28/94
Parcel 13, LaSalle County, Illinois 352.7390 10/06/94
(10.0000 sold 07/27/98)
(342.7390 sold 08/31/98)
Parcel 14, Kendall County, Illinois 134.7760 10/26/94
(10.6430 sold 05/21/99)
Parcel 15, McHenry County, Illinois 169.5400 10/31/94
Parcel 16, McHenry County, Illinois 207.0754 11/30/94
Parcel 17, LaSalle County, Illinois 236.4400 12/07/94
Parcel 18, Kendall County, Illinois 386.9900 11/02/95
(386.9900 sold 08/31/98)
Reference is made to Note 4 of the Notes to Financial Statements (Item 8 of
this Annual Report) for additional descriptions of the Partnership's real
property investments.
The Partnership purchased, primarily on an all-cash basis, eighteen parcels of
undeveloped land and one building and is engaged in the rezoning and resale of
the parcels. All of the investments were made in the collar counties
surrounding the Chicago metropolitan area. The anticipated holding period of
the land is approximately two to seven years from the completion of the land
portfolio acquisitions. As of December 31, 1999, the Partnership has had
multiple sales transactions through which it has disposed of the building and
approximately 1,093 acres of the approximately 3,302 acres originally owned.
The General Partner anticipates that land purchased by the Partnership will
produce sufficient income to pay property taxes, insurance and other
miscellaneous expenses, with surplus funds, if any, to be retained in the
working capital reserve for pre-development activities. Income is expected to
be derived from leases to farmers or from other activities compatible with the
the Partnership's business plan for land parcels. Although the General Partner
believes that leasing the Partnership's land will generate sufficient revenues
to pay these expenses, there can be no assurance that this will in fact occur.
-4-
However, the General Partner has agreed to make a Supplemental Capital
Contribution to the Partnership if and to the extent that real estate taxes and
insurance payable with respect to the Partnership's land during a given year
exceed the revenue earned by the Partnership from leasing its land during such
year. Any Supplemental Capital Contribution will be repaid only after Limited
Partners have received, over the life of the Partnership, a return of their
Original Capital plus the 15% Cumulative Return. All of the parcels purchased
by the Partnership consist of land which generates revenue from farming or
other leasing activities. It is not expected that the Partnership will generate
cash distributions to the partners from farm leases or other activities.
The Partnership had no employees during 1999.
The terms of transactions between the Partnership and Affiliates of the General
Partner of the Partnership are set forth in Item 11 below and Note 3 of the
Notes to Financial Statements (Item 8 of this Annual Report) to which reference
is hereby made for a description of such terms and transactions.
Item 2. Properties
The Partnership owns directly the parcels of land referred to in Item 1 and in
Note 4 of the Notes to Financial Statements (Item 8 of this Annual Report) to
which reference is hereby made for a description of said parcels.
Item 3. Legal Proceedings
The Partnership is not subject to any material pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders during 1999.
-5-
PART II
Item 5. Market for the Partnership's Limited Partnership Units and Related
Security Holder Matters
As of December 31, 1999, there were 2,665 holders of Units of the Partnership.
There is no public market for Units nor is it anticipated that any public
market for Units will develop.
Although the Partnership has established a Unit Repurchase Program, funds for
repurchase of Units are limited. Reference is made to "Unit Repurchase Program"
on page 61 of the Prospectus of the Partnership dated December 13, 1991, as
amended, which is incorporated herein by reference. As of December 31, 1999,
the Partnership had approximately $167,000 available for the repurchase of
Units.
-6-
Item 6. Selected Financial Data
INLAND CAPITAL FUND, L.P.
(a limited partnership)
For the years ended December 31, 1999, 1998, 1997, 1996 and 1995
(not covered by the Report of Independent Accountants)
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
Total assets....... $23,494,350 25,966,480 28,953,356 29,381,700 28,884,088
=========== =========== =========== =========== ===========
Total income....... $ 5,264,045 5,259,595 1,717,766 410,743 1,102,930
=========== =========== =========== =========== ===========
Net income......... $ 2,399,704 1,207,517 1,066,944 94,338 368,124
=========== =========== =========== =========== ===========
Net income allocated
to the one General
Partner Unit..... $ 260,957 44 635 943 1,393
=========== =========== =========== =========== ===========
Net income allocated
per Limited
Partnership
Unit (b)......... $ 66.11 37.32 32.94 2.88 11.32
=========== =========== =========== =========== ===========
Distributions per
Limited Partnership
Unit from sales
(b)(c):.......... $ 145.50 130.39 30.89 - 19.90
=========== =========== =========== =========== ===========
Weighted average
Limited Partnership
Units............ 32,351.35 32,352.11 32,368.73 32,388.75 32,397.11
=========== =========== =========== =========== ===========
(a) The above selected financial data should be read in conjunction with the
financial statements and related notes appearing elsewhere in this Annual
Report.
(b) The net income per Unit, basic and diluted, and distributions per Unit are
based upon the weighted average number of Units outstanding.
(c) Distributions from sales represents a return of Invested Capital, as
defined in the Partnership Agreement.
(d) Reference is made to Note 4 of the Notes to Financial Statements (Item 8 of
this Annual Report) for a description of the Partnership's land
acquisitions and dispositions.
-7-
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Certain statements in this "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and elsewhere in this annual report on Form
10-K constitute "forward-looking statements" within the meaning of the Federal
Private Securities Litigation Reform Act of 1995. These forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause the Partnership's actual results, performance, or achievements
to be materially different from any future results, performance, or achievements
expressed or implied by these forward-looking statements. These factors include,
among other things, federal, state or local regulations; adverse changes in
general economic or local conditions; uninsured losses; and potential conflicts
of interest between the Partnership and its Affiliates, including the General
Partner.
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. The Offering terminated
on August 23, 1993, with total sales of 32,399.28 Units, 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. 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 December 31, 1999,
the Partnership has had multiple sales transactions through which it has
disposed of the building and approximately 1,093 acres of the 3,302 acres
originally owned. As of December 31, 1999, cumulative distributions to the
Limited Partners have totaled $10,571,706 (which represents a return of Invested
Capital, as defined in the Partnership Agreement) and $259,418 to the General
Partner. Through December 31, 1999, the Partnership has used $3,686,748 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 December 31, 1999, the Partnership owns, in whole or in part,
thirteen of its original parcels, the majority of which are leased to local
farmers and are generating sufficient cash flow from farm leases to cover
property taxes and insurance.
-8-
At December 31, 1999, the Partnership had cash and cash equivalents of $288,022,
of which approximately $167,000 is reserved for the repurchase of Units through
the Unit Repurchase Program. The remaining $121,022 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.
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 2, annexed to the
village of McHenry and zoned for a business park, has one phase of improvements
complete and sites are being marketed to potential buyers, of which 25 of the
190 lots were sold as of December 31, 1999. (See Note 4 of the Notes to
Financial Statements.) Parcel 4, zoned for a variety of business uses, has
improvements underway and sites are being marketed to potential buyers, of which
one site consisting of .87 acres was sold to a hotel chain on June 6, 1997,
another site consisting of 1.435 acres was sold to a combination gas
station/convenient store on August 12, 1997, a third site consisting of 1.5
acres was sold to a national fast-food chain on August 13, 1998, a fourth site
consisting of 1.86 acres was sold to a different national fast-food chain on
October 16, 1998 and a fifth site consisting of 1.033 acres was sold to a
national discount tire retailer on August 19, 1999. (See Note 4 of the Notes to
Financial Statements.) Parcels 15 and 16 have been annexed to the village of
Huntley and zoned for residential and commercial development. The Partnership
sold a portion of Parcels 10 and 14 and the remaining acres of Parcels 3 and 5
to unaffiliated third-parties. (See Note 4 of the Notes to Financial
Statements.)
Results of Operations
As of December 31, 1999, the Partnership owned thirteen parcels of land
consisting of approximately 2,209 acres. Of the 2,209 acres owned, approximately
2,058 acres are tillable and leased to local farmers and are generating
sufficient cash flow to cover property taxes, insurance and other miscellaneous
property expenses. Income from the sale of investment properties and the cost of
investment properties sold for the year ended December 31, 1999 is the result of
the sale of Parcel 3 and Parcel 5, additional lot sales at Parcel 2, the sale of
1.033 acres of Parcel 4, the sale of 2.977 acres of Parcel 10, and the sale of
10.643 acres of Parcel 14. Income from the sale of investment properties and the
cost of investment properties sold for the year ended December 31, 1998 is the
result of the sale of Parcels 6, 13 and 18, additional sales at Parcels 2 and 4
and an easement sale on Parcel 5. Income from the sale of investment properties
and cost of investment properties sold for the year ended December 31, 1997 is
the result of the sale of .87 acres of Parcel 4 on June 6, 1997, the sale of
1.435 acres of Parcel 4 on August 12, 1997, the sale of 1.929 acres of Parcel 2
on September 2, 1997 and the sale of 6.7516 acres of Parcel 2 on November 7,
1997. (See Note 4 of the Notes to Financial Statements.)
Rental income decreased for the year ended December 31, 1999, as compared to the
years ended December 31, 1998 and 1997, due to the decrease in tillable acres
due to land sales and pre-development activity on the Partnership's land
investments. This decrease was partially offset by the annual increase in lease
amounts from tenants.
-9-
Interest income increased for the years ended December 31, 1999 and 1998, as
compared to the year ended December 31, 1997, due primarily as a result of the
interest income earned on the mortgage loan receivable the Partnership received
from the sale of the remaining acreage of Parcel 6. See Note 6 of the Notes to
Financial Statements for further discussion of the terms of the mortgage loan
receivable received from this sale.
The other income recorded for the year ended December 31, 1999 is the result of
the Partnership receiving a non-refundable deposit on a land sale which did not
occur. The other income recorded for the year ended December 31, 1998 is the
result of the Partnership receiving non-refundable extension fees from the
potential buyer of Parcel 3. The other income recorded for the year ended
December 31, 1997 is the result of the Partnership receiving a non-refundable
deposit on a land sale which did not occur.
Professional services to Affiliates decreased for the year ended December 31,
1999, as compared to the years ended December 31, 1998 and December 31, 1997,
due to a decrease in legal services and accounting services. Professional
services to non-affiliates decreased for the years ended December 31, 1999 and
1998, as compared to the year ended December 31, 1997, due to a decrease in
legal services. This decrease was partially offset by an increase in accounting
fees.
General and administrative expenses to Affiliates decreased for the year ended
December 31, 1999, as compared to the years ended December 31, 1998 and 1997,
due to decreases in postage and investor services expenses. The decrease for
the year ended December 31, 1999 was partially offset by an increase in data
processing expenses. General and administrative expenses to non-affiliates
increased for the years ended December 31, 1999 and 1998, as compared to the
year ended December 31, 1997, due primarily to an increase in the Illinois
Replacement Tax.
Marketing expenses to Affiliates and non-affiliates decreased for the year ended
December 31, 1999, as compared to the year ended December 31, 1998, due to a
decrease in non-recurring marketing, advertising and travel expenses relating to
marketing the land portfolio to prospective purchasers, as well as an increase
in the capitalization of marketing costs to specific land parcels. Marketing
expenses to Affiliates and non-affiliates increased for the year ended December
31, 1998, as compared to the year ended December 31, 1997, due to increases in
marketing, advertising and travel expenses relating to marketing the land
portfolio to prospective purchasers.
Land operating expenses to Affiliates decreased for the year ended December 31,
1999, as compared to the years ended December 31, 1998 and 1997, due to a
decrease in tillable acres due to land sales. Land operating expenses to non-
affiliates decreased for the year ended December 31, 1999, as compared to the
year ended December 31, 1998, due to a decrease in real estate tax expense which
was partially offset by an increase in grounds maintenance. Land operating
expenses to non-affiliates increased for the year ended December 31, 1998, as
compared to the years ended December 31, 1997, due to an increase in real estate
taxes and maintenance expenses of the Partnership's land investments.
-10-
Year 2000 Issues
As part of it's year 2000 readiness plan, the Partnership had identified three
areas for compliance efforts: business computer systems, tenants and suppliers
and non-information technology systems. The Partnership had not experienced any
problems relating to year 2000 issues in any of these areas. Total costs
associated with year 2000 readiness were not material.
Inflation
Inflation in future periods may cause capital appreciation of the Partnership's
investments in land. Rental income levels (from leases to new tenants or
renewals of existing tenants) are expected to rise and fall in accordance with
normal agricultural market conditions and may or may not be affected by
inflation. To date, the operations of the Partnership have not been
significantly affected by inflation.
Item 7(a). Quantitative and Qualitative Disclosures About Market Risk
Not Applicable.
-11-
Item 8. Financial Statements and Supplementary Data
INLAND CAPITAL FUND, L.P.
(a limited partnership)
Index
-----
Page
----
Independent Auditors' Reports............................................ 13
Financial Statements:
Balance Sheets, December 31, 1999 and 1998............................. 15
Statements of Operations, for the years ended December 31, 1999,
1998 and 1997........................................................ 17
Statements of Partners' Capital, for the years ended December
31, 1999, 1998 and 1997.............................................. 19
Statements of Cash Flows, for the years ended December 31, 1999,
1998 and 1997........................................................ 20
Notes to Financial Statements.......................................... 22
Schedules not filed:
All schedules have been omitted as the required information is inapplicable or
the information is presented in the financial statements or related notes.
-12-
INDEPENDENT AUDITORS' REPORT
To the Partners of
InLand Capital Fund, L.P.
We have audited the accompanying balance sheet of InLand Capital Fund, L.P. (a
limited partnership) as of December 31, 1999, and the related statements of
operations, partners' capital, and cash flows for the year ended December 31,
1999. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of InLand Capital Fund, L.P. as of December
31, 1999, and the results of its operations and its cash flows for the year
then ended, in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Chicago, Illinois
February 18, 2000
-13-
REPORT OF INDEPENDENT ACCOUNTANTS
The Partners of InLand
Capital Fund, L.P.
In our opinion, the accompanying balance sheets and the related statements of
operations, partners' capital and cash flows present fairly, in all material
respects, the financial position of Inland Capital Fund, L.P. (the "Company")
at December 31, 1998 and 1997, and the results of its operations and its cash
flows for each of the two years in the period ended December 31, 1998 in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for the
opinion expressed above.
PricewaterhouseCoopers
Chicago, Illinois
March 15, 1999
-14-
INLAND CAPITAL FUND, L.P.
(a limited partnership)
Balance Sheets
December 31, 1999 and 1998
Assets
------
1999 1998
Current assets: ---- ----
Cash and cash equivalents (Note 1).............. $ 288,022 569,663
Accrued interest and other receivables.......... 82,119 44,801
Other current assets............................ 1,837 2,406
------------ ------------
Total current assets.............................. 371,978 616,870
------------ ------------
Other assets...................................... 47,554 3,074
Mortgage loan receivable (Note 6)................. 400,000 400,000
Investment properties and improvements (including
acquisition fees paid to Affiliates of $1,076,390
and $1,187,120 at December 31, 1999 and 1998,
respectively) (Notes 3 and 4)................... 22,674,818 24,946,536
------------ ------------
Total assets...................................... $23,494,350 25,966,480
============ ============
See accompanying notes to financial statements.
-15-
INLAND CAPITAL FUND, L.P.
(a limited partnership)
Balance Sheets
(continued)
December 31, 1999 and 1998
Liabilities and Partners' Capital
---------------------------------
1999 1998
Current liabilities: ---- ----
Accounts payable................................ $ 75,366 18,124
Accrued real estate taxes....................... 53,194 80,989
Due to Affiliates (Note 3)...................... 27,698 19,796
Unearned income................................. 74,537 15,012
------------ ------------
Total current liabilities......................... 230,795 133,921
------------ ------------
Deferred gain on sale (Note 6).................... 2,805 2,805
Partners' capital (Notes 1 and 2):
General Partner:
Capital contribution.......................... 500 500
Cumulative cash distributions................. (259,418) -
Cumulative net income......................... 274,676 13,719
------------ ------------
15,758 14,219
Limited Partners: ------------ ------------
Units of $1,000. Authorized 60,000 Units,
32,349.11 and 32,352.11 outstanding
at December 31, 1999 and 1998, respectively
(net of offering costs of $4,466,765, of
which $3,488,574 was paid to Affiliates).... 27,884,346 27,886,551
Cumulative cash distributions................. (10,571,706) (5,864,621)
Cumulative net income......................... 5,932,352 3,793,605
------------ ------------
23,244,992 25,815,535
------------ ------------
Total Partners' capital........................... 23,260,750 25,829,754
------------ ------------
Total liabilities and Partners' capital........... $23,494,350 25,966,480
============ ============
See accompanying notes to financial statements.
-16-
INLAND CAPITAL FUND, L.P.
(a limited partnership)
Statements of Operations
For the years ended December 31, 1999, 1998 and 1997
1999 1998 1997
Income: ---- ---- ----
Sale of investment properties..... $ 4,848,387 4,812,864 1,328,482
Rental income..................... 237,072 273,188 298,616
Interest income................... 139,586 133,043 57,643
Other income...................... 39,000 40,500 33,025
------------ ------------ ------------
5,264,045 5,259,595 1,717,766
Expenses: ------------ ------------ ------------
Cost of investment properties sold 2,602,552 3,609,742 325,044
Professional services to
Affiliates...................... 31,333 36,583 36,820
Professional services to
non-affiliates.................. 24,139 24,655 45,112
General and administrative
expenses to Affiliates.......... 19,402 23,174 22,472
General and administrative
expenses to non-affiliates...... 21,391 19,139 12,558
Marketing expenses to Affiliates.. (2,259) 76,926 10,812
Marketing expenses to
non-affiliates.................. 34,345 60,702 48,084
Land operating expenses to
Affiliates...................... 50,421 61,445 63,744
Land operating expenses to
non-affiliates.................. 83,017 139,712 86,176
------------ ------------ ------------
2,864,341 4,052,078 650,822
------------ ------------ ------------
Net income.......................... $ 2,399,704 1,207,517 1,066,944
============ ============ ============
See accompanying notes to financial statements.
-17-
INLAND CAPITAL FUND, L.P.
(a limited partnership)
Statements of Operations
(continued)
For the years ended December 31, 1999, 1998 and 1997
1999 1998 1997
---- ---- ----
Net income allocated to (Note 2):
General Partner................... $ 260,957 44 635
Limited Partners.................. 2,138,747 1,207,473 1,066,309
------------ ------------ ------------
Net income.......................... $ 2,399,704 1,207,517 1,066,944
============ ============ ============
Net income per the one General
Partner Unit...................... $ 260,957 44 635
============ ============ ============
Net income per Unit, basic and
diluted, allocated to Limited
Partners per weighted average
Limited Partnership Units
(32,351.35, 32,352.11 and 32,368.73
for the years ended December 31,
1999, 1998 and 1997, respectively) $ 66.11 37.32 32.94
============ ============ ============
See accompanying notes to financial statements.
-18-
INLAND CAPITAL FUND, L.P.
(a limited partnership)
Statements of Partners' Capital
For the years ended December 31, 1999, 1998 and 1997
General Limited
Partner Partners Total
------------ ------------ ------------
Balance January 1, 1997............. $ 13,540 28,784,092 28,797,632
Repurchase of Limited Partnership
Units............................. - (24,192) (24,192)
Distributions to Partners ($30.89 per
weighted average Limited Partnership
Units of 32,368.73) (Note 2)...... - (999,860) (999,860)
Net income.......................... 635 1,066,309 1,066,944
------------ ------------ ------------
Balance at December 31, 1997........ 14,175 28,826,349 28,840,524
Distributions to Partners ($130.39 per
weighted average Limited Partnership
Units of 32,352.11) (Note 2)...... - (4,218,287) (4,218,287)
Net income.......................... 44 1,207,473 1,207,517
------------ ------------ ------------
Balance at December 31, 1998........ 14,219 25,815,535 25,829,754
Repurchase of Limited Partnership
Units............................. - (2,205) (2,205)
Distributions to Partners ($145.50 per
weighted average Limited Partnership
Units of 32,351.35) (Note 2)...... (259,418) (4,707,085) (4,966,503)
Net income.......................... 260,957 2,138,747 2,399,704
------------ ------------ ------------
Balance December 31, 1999........... $ 15,758 23,244,992 23,260,750
============ ============ ============
See accompanying notes to financial statements.
-19-
INLAND CAPITAL FUND, L.P.
(a limited partnership)
Statements of Cash Flows
For the years ended December 31, 1999, 1998 and 1997
1999 1998 1997
Cash flows from operating activities: ---- ---- ----
Net income........................ $ 2,399,704 1,207,517 1,066,944
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Gain on sale of investment
properties..................... (2,245,835) (1,203,122) (1,003,438)
Changes in assets and liabilities:
Accrued interest and other
receivables.................. (37,318) (43,783) 3,885
Other current assets.......... (43,911) 226 70
Accounts payable.............. 57,242 9,534 (465,468)
Accrued real estate taxes..... (27,795) 7,892 66
Due to Affiliates............. 7,902 9,453 3,892
Unearned income............... 59,525 (5,790) (9,726)
Deferred gain on sale......... - (5,084) -
Net cash provided by (used in) ------------ ------------ ------------
operating activities.............. 169,514 (23,157) (403,775)
------------ ------------ ------------
Cash flows from investing activities:
Additions to investment properties (330,834) (254,963) (911,759)
Sale (purchase) of marketable
securities, net................. - 174,800 903,002
Other assets...................... - 166,065 (169,139)
Principal payments collected on
mortgage loans receivable....... - 725,000 -
Proceeds from sale of investment
properties...................... 4,848,387 3,695,753 1,328,482
Net cash provided by (used in) ------------ ------------ ------------
investing activities.............. 4,517,553 4,506,655 1,150,586
------------ ------------ ------------
See accompanying notes to financial statements.
-20-
INLAND CAPITAL FUND, L.P.
(a limited partnership)
Statements of Cash Flows
(continued)
For the years ended December 31, 1999, 1998 and 1997
1999 1998 1997
---- ---- ----
Cash flows from financing activities:
Repurchase of Limited Partnership
Units........................... $ (2,205) - (24,192)
Distributions paid................ (4,966,503) (4,218,287) (999,860)
------------ ------------ ------------
Net cash used in financing activities (4,968,708) (4,218,287) (1,024,052)
Net increase (decrease) in cash and ------------ ------------ ------------
cash equivalents.................. (281,641) 265,211 (277,241)
Cash and cash equivalents at
beginning of year................. 569,663 304,452 581,693
Cash and cash equivalents at end of ------------ ------------ ------------
year.............................. $ 288,022 569,663 304,452
============ ============ ============
Supplemental schedule of noncash investing activities:
Mortgage loan receivable............ $ - (1,125,000) -
Reduction of investment properties.. 2,602,552 3,609,742 -
Deferred gain on sale............... - 7,889 -
Gain on sale of land................ 2,245,835 1,203,122 -
Proceeds from sale of investment ------------ ------------ ------------
properties........................ $ 4,848,387 3,695,753 -
============ ============ ============
See accompanying notes to financial statements.
-21-
INLAND CAPITAL FUND, L.P.
(a limited partnership)
Notes to Financial Statements
For the years ended December 31, 1999, 1998 and 1997
(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. The
Offering terminated on August 23, 1993, with total sales of 32,399.28 Units, 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. 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. As of December 31, 1999, the Partnership has repurchased
and canceled a total of 50.17 Units for $48,172 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.
The Partnership considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents.
-22-
INLAND CAPITAL FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
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. For parcels with significant buildings and improvements (Parcel
10, described in Note 4), the Partnership recorded the buildings and
improvements at a cost based upon the appraised value at the date of
acquisition. Repair and maintenance expenses are charged to operations as
incurred. Significant improvements are capitalized and depreciated over their
estimated useful lives.
Statement of Financial Accounting Standards No. 121 "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of"
("SFAS 121") requires the Partnership to record an impairment loss on its
property to be held for investment whenever its carrying value cannot be fully
recovered through estimated undiscounted future cash flows from their
operations and sale. The amount of the impairment loss to be recognized would
be the difference between the property's carrying value and the property's
estimated fair value. The adoption of SFAS 121 did not have any effect on the
Partnership's financial position, results of operations or liquidity. As of
December 31, 1999, the Partnership has not recognized any such impairment.
Statement of Financial Accounting Standards No. 128 "Earnings per Share" was
adopted by the Partnership for the year ended December 31, 1998 and has been
applied to all prior earnings periods presented in the financial statements.
The Partnership has no dilutive securities.
The Partnership is required to pay a withholding tax to the Internal Revenue
Service with respect to a Partner's allocable share of the Partnership's
taxable net income, if the Partner is a foreign person. The Partnership will
first pay the withholding tax from the distributions to any foreign person, and
to the extent that the tax exceeds the amount of distributions withheld, or if
there have been no distributions to withhold, the excess will be accounted for
as a distribution to the foreign person. Future withholding tax payments will
be made every April, June, September and December.
-23-
INLAND CAPITAL FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
No provision for Federal income taxes has been made as the liability for such
taxes is that of the Partners rather than the Partnership.
The Partnership records are maintained on the accrual basis of accounting in
accordance with generally accepted accounting principles ("GAAP"). The Federal
income tax return has been prepared from such records after making appropriate
adjustments, if any, to reflect the Partnership's accounts as adjusted for
Federal income tax reporting purposes. Such adjustments are not recorded on the
records of the Partnership. The net effect of these items is summarized as
follows:
1999 1998
------------------------ ------------------------
GAAP Tax GAAP Tax
Basis Basis Basis Basis
----------- ------------ ----------- ------------
Total assets................ $23,494,350 23,494,350 25,966,480 25,966,480
Partners' capital:
General Partner........... 15,758 15,758 14,219 14,219
Limited Partners.......... 23,244,992 23,245,060 25,815,535 25,815,604
Net income:
General Partner........... 260,957 260,957 44 44
Limited Partners.......... 2,138,747 2,138,747 1,207,473 1,207,473
Net income per Limited
Partnership Unit, basic
and diluted............... 66.11 66.11 37.32 37.32
The net income per Limited Partnership Unit is based upon the weighted average
number of Units of 32,351.35 and 32,352.11 during 1999 and 1998, respectively.
(2) Partnership Agreement
The Partnership Agreement defines the allocation of profits and losses, and
available cash. If and to the extent that real estate taxes and insurance
payable with respect to the Partnership's land during a given year exceed
revenues of the Partnership, the General Partner will make a Supplemental
Capital Contribution of such amount to the Partnership to ensure that it has
sufficient funds to make such payments.
Distributions of Net Sale Proceeds will be allocated between the General
Partner and the Limited Partners based upon both an aggregate overall return to
the Limited Partners and a separate return with respect to each parcel of land
purchased by the Partnership.
-24-
INLAND CAPITAL FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
Profits and losses from operations (other than capital transactions) will be
allocated 99% to the Limited Partners and 1% to the General Partner. The net
gain from a sale of Partnership properties is first allocated among the Partners
in proportion to the negative balances, if any, in their respective capital
accounts. Thereafter, except as provided below, net gain is allocated to the
General Partner in an amount equal to the proceeds distributable to the General
Partner from such sale and the balance of any net gain is allocated to the
Limited Partners. If the amount of net gain realized from a sale is less than
the amount of cash distributed to the General Partner from such sale, the
Partnership will allocate income or gain to the General Partner in an amount
equal to the excess of the cash distributed to the General Partner with respect
to such sale as quickly as permitted by law. Any net loss from a sale will be
allocated to the Limited Partners.
As a general rule, Net Sale Proceeds will be distributed 90% to the Limited
Partners and 10% to the General Partner until the Limited Partners have received
from Net Sale Proceeds (i) a return of their Original Capital plus (ii) a
noncompounded Cumulative Preferred Return of 15% on their Invested Capital.
However, with respect to each parcel of land, the General Partner's 10% share
will be subordinated until the Limited Partners receive a return of the Original
Capital attributed to such parcel ("Parcel Capital") plus a 6% per annum
noncompounded cumulative preferred return thereon.
At the conclusion of Partnership operations, after all Parcels have been sold,
if Limited Partners have not received the return of their Original Capital,
plus a 6% annual, noncompounded return on their Invested Capital, the General
Partner has agreed to rebate to the Partnership, for distribution to the
Limited Partners, sales proceeds received by the General Partner in an amount
equal to the deficiency in the Limited Partners' return, plus 6% noncompounded
annual interest. The amount of this rebate by the General Partner, exclusive of
the 6% noncompounded annual interest to be paid on the rebate, will not exceed
the amount of sales proceeds received by the General Partner over the life of
the Partnership.
After the amounts described in items (i) and (ii) above and any previously
subordinated distributions to the General Partner have been paid, and the amount
of any Supplemental Capital Contributions have been repaid to the General
Partner, subsequent distributions shall be paid 75% to the Limited Partners and
25% to the General Partner without considering Parcel Capital. If, after all Net
Sale Proceeds have been distributed, the General Partner has received more than
25% of all Net Sale Proceeds (exclusive of distributions made to the Limited
Partners to return their Original Capital), the General Partner shall contribute
to the Partnership for distribution to the Limited Partners an amount equal to
such excess.
Any distributions from Net Sales Proceeds at a time when Invested Capital is
greater than zero shall be deemed applied first to reduction of such Invested
Capital before application to payment of any deficiency in the 15% noncompounded
Cumulative Preferred Return.
-25-
INLAND CAPITAL FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
(3) 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 and general and administrative expenses to Affiliates, of
which $878 and $2,722 was unpaid as of December 31, 1999 and 1998, respectively.
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 $50,421, $61,445
and $63,744 have been incurred for the years ended December 31, 1999, 1998 and
1997, respectively, of which $0 and $14,024 was unpaid as of December 31, 1999
and 1998, respectively.
An Affiliate of the General Partner performed sales marketing and advertising
services for the Partnership and was reimbursed (as set forth under terms of
the Partnership Agreement) for direct costs. Such costs of $(2,259), $76,926
and $10,812 have been incurred and are included in marketing expenses to
Affiliates for the years ended December 31, 1999, 1998 and 1997, respectively,
of which $0 and $3,000 was unpaid as of December 31, 1999 and 1998,
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 salaries and direct costs. The Affiliate did not take a profit
on any project. Such costs of $100,516, $48,939, and $102,300 have been
incurred for the years ended December 31, 1999, 1998 and 1997, respectively,
and are included in investment properties, of which $26,819 and $0 was unpaid
as of December 31, 1999 and 1998, respectively.
-26-
<TABLE> INLAND CAPITAL FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
(4) Investment Properties
<CAPTION>
Total
Gross Initial Costs Costs Cumulative 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 12/31/99 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 83,121 - 848,613 -
2 McHenry 201.0000 11/09/93 2,020,314 122,145 2,142,459 1,758,109 942,483 2,958,085 438,841
(17.7420) 08/02/95
(8.6806) Var 1997
(1.9290) Var 1998
(13.5030) Var 1999
3 Will 34.0474 03/04/94 1,235,830 88,092 1,323,922 37,857 1,361,779 - 1,232,401
(34.0474) 02/04/99
4 Will 86.9195 03/30/94 1,778,820 143,817 1,922,637 407,460 261,286 2,068,811 277,948
(2.3050) Var 1997
(3.3600) Var 1998
(1.0331) 08/19/99
5 LaSalle 190.9600 04/01/94 532,000 18,145 550,145 69,391 619,536 - 159,729
(2.0600) 04/08/98
(188.9000) 10/07/99
6 DeKalb 59.0800 05/11/94 670,207 58,373 728,580 486,869 1,215,449 - -
(4.9233) Apr 1998
(54.1567) 07/23/98
7 Kendall 200.8210 07/28/94 1,506,158 82,999 1,589,157 27,069 - 1,616,226 -
8 Kendall 133.0000 08/17/94 1,300,000 106,949 1,406,949 9,229 - 1,416,178 -
9 LaSalle 335.9600 08/30/94 993,441 79,329 1,072,770 113,566 - 1,186,336 -
10 Kendall 223.7470 09/16/94 2,693,025 205,660 2,898,685 32,343 38,989 2,892,039 47,755
(2.9770) 11/03/99
10A(a) Kendall 7.0390 09/16/94 206,975 15,806 222,781 1,327 224,108 - -
(7.0390) 04/21/95
11 Kane 123.0000 09/26/94 1,353,000 75,551 1,428,551 14,506 - 1,443,057 -
12 Kendall 110.2530 09/28/94 600,001 51,220 651,221 67,554 - 718,775 -
------------ ------------ ------------ -------------- ------------ ------------ ------------
Subtotal 15,597,338 1,106,011 16,703,349 3,108,401 4,663,630 15,148,120 2,156,674
-27-
-27-
INLAND CAPITAL FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
(4) Investment Properties (continued)
Total
Gross Initial Costs Costs Cumulative 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 12/31/99 Recognized
- ------ --------- --------- ---------- ------------ ------------ ------------ -------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Subtotal 15,597,338 1,106,011 16,703,349 3,108,401 4,663,630 15,148,120 2,156,674
13 LaSalle 352.7390 10/06/94 1,032,666 91,117 1,123,783 22,723 1,146,506 - -
(10.0000) 07/27/98
(342.7390) 08/31/98
14 Kendall 134.7760 10/26/94 1,000,000 81,674 1,081,674 9,514 85,960 1,005,228 89,161
(10.6430) 05/21/99
15 McHenry 169.5400 10/31/94 2,900,000 79,196 2,979,196 257,531 - 3,236,727 -
16 McHenry 207.0754 11/30/94 1,760,256 101,388 1,861,644 250,139 - 2,111,783 -
17 LaSalle 236.4400 12/07/94 1,060,286 74,735 1,135,021 37,939 - 1,172,960 -
18 Kendall 386.9900 11/02/95 934,993 126,329 1,061,322 501 1,061,823 - -
(386.9900) 08/31/98
------------ ------------ ------------ -------------- ------------ ------------ ------------
$24,285,539 1,660,450 25,945,989 3,686,748 6,957,919 22,674,818 2,245,835
============ ============ ============ ============== ============ ============ ============
</TABLE>
-28-
-28-
INLAND CAPITAL FUND, L.P.
(a limited partnership)
Notes to Financial Statements
(continued)
(4) 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) The aggregate cost of real estate owned at December 31, 1999 for Federal
income tax purposes was approximately $22,675,000 (unaudited).
(c) Reconciliation of real estate owned:
1999 1998
---- ----
Balance at January 1,................... $24,946,536 28,301,315
Additions during year................... 330,834 254,963
------------ ------------
25,277,370 28,556,278
Sales during year....................... 2,602,552 3,609,742
------------ ------------
Balance at December 31,................. $22,674,818 24,946,536
============ ============
(5) 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 December 31, 1999, the Partnership had farm leases of generally one year
in duration, for approximately 2,058 acres of the approximately 2,209 acres
owned.
(6) Mortgage Loans Receivable
As a result of the sale of the remaining acres of Parcel 6 for a sales price of
$1,125,000 on July 7, 1998, the Partnership received a mortgage loan receivable
of $1,125,000 and recorded a deferred gain on sale of $7,889. The deferred
gain will be recognized over the life of the related mortgage loan receivable
as principal payments are received, of which $5,084 has been recognized as of
December 31, 1999. Of the $1,125,000 mortgage loan receivable received,
$725,000 accrued interest at 9% per annum and had a maturity date of November
30, 1998 (extended from September 30, 1998). On November 30, 1998, the $725,000
principal payment was received. The remaining $400,000 accrues interest at 9%
per annum and has a maturity date of July 7, 2001, at which time all accrued
interest, as well as principal, is due. As of December 31, 1999, accrued
interest totaled $80,744.
As of December 31, 1999, the fair market value of the mortgage loan receivable
approximated its carrying value.
-29-
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
There were no disagreements on accounting or financial disclosure during 1999.
PART III
Item 10. Directors and Executive Officers of the Registrant
The General Partner of the Partnership, Inland Real Estate Investment
Corporation, was organized in 1984 for the purpose of acting as general partner
of limited partnerships formed to acquire, own and operate real properties.
The General Partner is a wholly-owned subsidiary of The Inland Group, Inc. In
1990, Inland Real Estate Investment Corporation became the replacement General
Partner for an additional 301 privately-owned real estate limited partnerships
syndicated by Affiliates. The General Partner has responsibility for all
aspects of the Partnership's operations. The relationship of the General
Partner to its Affiliates is described under the caption "Conflicts of
Interest" at pages 11 to 13 of the Prospectus, a copy of which description is
hereby incorporated herein by reference.
Officers and Directors
The officers, directors, and key employees of The Inland Group, Inc. and its
Affiliates ("Inland") that are likely to provide services to the Partnership
are as follows:
Functional Title
Daniel L. Goodwin....... Chairman and Chief Executive Officer
Robert H. Baum.......... Executive Vice President-General Counsel
G. Joseph Cosenza....... Senior Vice President-Acquisitions
Robert D. Parks......... Senior Vice President-Investments
Brenda G. Gujral........ President and Chief Operating Officer-IREIC
Catherine L. Lynch...... Treasurer
Roberta S. Matlin....... Assistant Vice President-Investments
Mark Zalatoris.......... Assistant Vice President-Due Diligence
Patricia A. DelRosso.... Vice President-Asset Management
Kelly Tucek............. Assistant Vice President-Partnership Accounting
Venton J. Carlston...... Assistant Controller
-30-
DANIEL L. GOODWIN (age 56) is Chairman of the Board of Directors of The
Inland Group, Inc., a billion-dollar real estate and financial organization
located in Oak Brook, Illinois. Among Inland's subsidiaries is the largest
property management firm in Illinois and one of the largest commercial real
estate and mortgage banking firms in the Midwest.
Mr. Goodwin has served as Director of the Avenue Bank of Oak Park and as a
director of the Continental Bank of Oakbrook Terrace. He was Chairman of the
Bank Holding Company of American National Bank of DuPage. Currently he is the
Chairman of the Board of Inland Mortgage Corporation.
Mr. Goodwin has been in the housing industry for more than 30 years, and has
demonstrated a lifelong interest in housing-related issues. He is a licensed
real estate broker and a member of the National Association of Realtors. He
has developed thousands of housing units in the Midwest, New England, Florida,
and the Southwest. He is also the author of a nationally recognized real
estate reference book for the management of residential properties.
Mr. Goodwin has served on the Board of the Illinois State Affordable Housing
Trust Fund for six years. He is an advisor for the Office of Housing
Coordination Services of the State of Illinois, and a member of the Seniors
Housing Committee of the National Multi-Housing Council. He was appointed
Chairman of the Housing Production Committee for the Illinois State Affordable
Housing Conference by former Governor Edgar. He also served as a member of the
Cook County Commissioner's Economic Housing Development Committee, and he was
the Chairman of the DuPage County Affordable Housing Task Force. The 1992
Catholic Charities Award was presented to Mr. Goodwin for his work in
addressing affordable housing needs. The City of Hope designated him as the
Man of the Year for the Illinois construction industry. In 1989, the Chicago
Metropolitan Coalition on Aging presented Mr. Goodwin with an award in
recognition of his efforts in making housing more affordable to Chicago's
Senior Citizens. On May 4, 1995, PADS, Inc. (Public Action to Deliver Shelter)
presented Mr. Goodwin with an award, recognizing The Inland Group as the
leading corporate provider of transitional housing for the homeless people of
DuPage County. Mr. Goodwin also serves as Chairman of New Directions Housing
Corporation, a provider of affordable housing.
Mr. Goodwin is a product of Chicago-area schools, and obtained his Bachelor's
and Master's Degrees from Illinois Universities. Following graduation, he
taught for five years in the Chicago Public Schools. His commitment to
education has continued through his work with the BBF Family Services' Pilot
Elementary School in Chicago, and the development of the Inland Vocational
Training Center for the Handicapped located at Little City in Palatine,
Illinois. He personally established an endowment which funds a perpetual
scholarship program for inner-city disadvantaged youth. In 1990 he received
the Northeastern Illinois University President's Meritorious Service Award.
Mr. Goodwin holds a Master's Degree in Education from Northern Illinois
University, and in 1986, he was awarded an Honorary Doctorate from Northeastern
Illinois University College of Education. More than 12 years ago, under Mr.
Goodwin's direction, Inland instituted a program to educate disabled students
about the workplace. Most of those original students are employed at Inland
today, and Inland continues as one of the largest employers of the disabled in
DuPage County. Mr. Goodwin has served as a member of the Board of Governors of
Illinois State Colleges and Universities, and he is currently Vice Chairman of
the Board of Trustees of Benedictine University. Since January 1996, he has
been Chairman of the Northeastern Illinois University Board of Trustees.
-31-
In 1988 Mr. Goodwin received the Outstanding Business Leader Award from the Oak
Brook Jaycees and in March 1994 he won the Excellence in Business Award from
the DuPage Area Association of Business and Industry. Additionally, he was by
Little Friends on May 17, 1995 for rescuing their Parent-Handicapped Infant
Program. He was the recipient of the 1995 March of Dimes Life Achievement
Award and was recently recognized as the 1998 Corporate Leader of the Year by
the Oak Brook Area Association of Commerce and Industry. The Ray Graham
Association for People with Disabilities honored Mr. Goodwin as the 1999
Employer of the Year. Also, in 1999, the YWCA DuPage District bestowed the
Corporate Recognition Award for Inland's policies and practices that
demonstrate a commitment to the advancement of women in the workplace. For
many years, he has been Chairman of the National Football League Players
Association Mackey Awards for the benefit of inner-city youth and he served as
the recent Chairman of the Speakers Club of the Illinois House of
Representatives.
ROBERT H. BAUM (age 55) has been with The Inland Group, Inc. and its
affiliates since 1968 and is one of the four original principals. Mr. Baum is
Vice Chairman and Executive Vice President-General Counsel of The Inland Group,
Inc. In his capacity as General Counsel, Mr. Baum is responsible for the
supervision of the legal activities of The Inland Group, Inc. and its
affiliates. This responsibility includes the supervision of The Inland Law
Department and serving as liaison with outside counsel. Mr. Baum has served as
a member of the North American Securities Administrators Association Real
Estate Advisory Committee and as a member of the Securities Advisory Committee
to the Secretary of State of Illinois. He is a member of the American
Corporation Counsel Association and has also been a guest lecturer for the
Illinois State Bar Association. Mr. Baum has been admitted to practice before
the Supreme Court of the United States, as well as the bars of several federal
courts of appeals and federal district courts and the State of Illinois. He has
served as a director of American National Bank of DuPage and currently serves
as a director of Westbank. Mr. Baum also is a member of the Governing Council
of Wellness House, a charitable organization that provides emotional support
for cancer patients and their families.
G. JOSEPH COSENZA (age 55) has been with The Inland Group, Inc. and its
affiliates since 1968 and is one of the four original principals. Mr. Cosenza
is a Director and Vice Chairman of The Inland Group, Inc. and oversees,
coordinates and directs Inland's many enterprises. In addition, Mr. Cosenza
immediately supervises a staff of twelve persons who engage in property
acquisition. Mr. Cosenza has been a consultant to other real estate entities
and lending institutions on property appraisal methods.
Mr. Cosenza received his B.A. Degree from Northeastern Illinois University and
his M.S. Degree from Northern Illinois University. From 1967 to 1968, he
taught in the LaGrange Illinois School District and from 1968 to 1972, he
served as Assistant Principal and taught in the Wheeling, Illinois School
District. Mr. Cosenza has been a licensed real estate broker since 1968 and an
active member of various national and local real estate associations, including
the National Association of Realtors and the Urban Land Institute.
Mr. Cosenza has also been Chairman of the Board of American National Bank of
DuPage, and has served on the Board of Directors of Continental Bank of
Oakbrook Terrace. He is presently a Director on the Board of Westbank in
Westchester and Hillside, Illinois.
-32-
ROBERT D. PARKS (age 55) is a Director of The Inland Group, Inc.; Chairman
of Inland Real Estate Investment Corporation; President, Chief Executive
Officer, Chief Operating Officer and Affiliated Director of Inland Real Estate
Corporation, and Chairman, Chief Executive Officer and Affiliated Director of
Inland Retail Real Estate Trust, Inc.
Mr. Parks is responsible for the ongoing administration of existing investment
programs, corporate budgeting and administration for Inland Real Estate
Investment Corporation. He oversees and coordinates the marketing of all
investments and investor relations.
Prior to joining Inland, Mr. Parks was a school teacher in Chicago's public
schools. He received his B.A. degree from Northeastern Illinois University and
his M.A. degree from the University of Chicago. He is a member of the Real
Estate Investment Association and a member of the National Association of Real
Estate Investment Trusts (NAREIT).
BRENDA G. GUJRAL (age 58) is President and Chief Operating Officer of
Inland Real Estate Investment Corporation (IREIC), the parent company of the
Advisor. She is also President and Chief Operating Officer of the Dealer-
Manager, Inland Securities Corporation (ISC), a member firm of the National
Association of Securities Dealers (NASD).
Mrs. Gujral has overall responsibility for the operations of IREIC, including
the distribution of checks to over 50,000 investors, review of periodic
communications to those investors, the filing of quarterly and annual reports
for Inland's publicly registered investment programs with the Securities and
Exchange Commission, compliance with other SEC and NASD securities regulations
both for IREIC and ISC, review of asset management activities, and marketing
and communications with the independent broker/dealer firms selling Inland's
current and prior programs. Mrs. Gujral works with internal and outside legal
counsel in structuring and registering the prospectuses for IREIC's investment
programs.
Mrs. Gujral has been with Inland for 18 years, becoming an officer in 1982.
Prior to joining Inland, she worked for the Land Use Planning Commission
establishing an office in Portland, Oregon, to implement land use legislation
for that state.
She is a graduate of California State University. She holds Series 7, 22, 39
and 63 licenses from the NASD and is a member of the National Association of
Real Estate Investment Trusts (NAREIT) and the National Association of Female
Executives.
CATHERINE L. LYNCH (age 41) joined Inland in 1989 and is the Treasurer of
Inland Real Estate Investment Corporation. Ms. Lynch is responsible for
managing the Corporate Accounting Department. Prior to joining Inland, Ms.
Lynch worked in the field of public accounting for KPMG Peat Marwick since
1980. She received her B.S. degree in Accounting from Illinois State
University. Ms. Lynch is a Certified Public Accountant and a member of the
American Institute of Certified Public Accountants and the Illinois CPA
Society. She is registered with the National Association of Securities Dealers
as a Financial Operations Principal.
-33-
ROBERTA S. MATLIN (age 55) joined Inland in 1984 as Director of Investor
Administration and currently serves as Senior Vice President-Investments.
Prior to that, Ms. Matlin spent 11 years with the Chicago Region of the Social
Security Administration of the United States Department of Health and Human
Services. She is a Director of Inland Real Estate Investment Corporation,
Inland Securities Corporation, and Inland Real Estate Advisory Services, Inc.
As Senior Vice President-Investments, she directs the day-to-day internal
operations of the General Partner. Ms. Matlin received her B.A. degree from
the University of Illinois. She is registered with the National Association of
Securities Dealers, Inc. as a General Securities Principal.
MARK ZALATORIS (age 42) joined Inland in 1985 and currently serves as Vice
President of Inland Real Estate Investment Corporation. His responsibilities
include the coordination of due diligence activities by selling broker/dealers
and is also involved with limited partnership asset management, especially with
regard to financing activities. Mr. Zalatoris is a graduate of the University
of Illinois where he received a Bachelors degree in Finance and a Masters
degree in Accounting and Taxation. He is a Certified Public Accountant and
holds a General Securities License with Inland Securities Corporation.
PATRICIA A. DELROSSO (age 47) joined Inland in 1985. Ms. DelRosso serves
as Senior Vice President of Inland Real Estate Investment Corporation in the
area of Asset Management. As head of the Asset Management Department, she
develops operating and disposition strategies for all investment-owned
properties. Ms. DelRosso received her Bachelor's degree from George Washington
University and her Master's from Virginia Tech University. Ms. DelRosso is a
licensed real estate broker, NASD registered securities sales representative
and is a member of the Urban Land Institute.
KELLY TUCEK (age 37) joined Inland in 1989 and is an Assistant Vice
President of Inland Real Estate Investment Corporation. As of August 1996, Ms.
Tucek is responsible for the Investment Accounting Department which includes
all public partnership accounting functions along with quarterly and annual SEC
filings. Prior to joining Inland, Ms. Tucek was on the audit staff of Coopers
and Lybrand since 1984. She received her B.A. Degree in Accounting and
Computer Science from North Central College.
VENTON J. CARLSTON (age 42) joined Inland in 1985 and is the Assistant
Controller of Inland Real Estate Investment Corporation where he supervises the
corporate bookkeeping staff and is responsible for financial statement
preparation and budgeting for Inland Real Estate Investment Corporation and its
subsidiaries. Prior to joining Inland, Mr. Carlston was a partnership
accountant with JMB Realty. He received his B.S. degree in Accounting from
Southern Illinois University. Mr. Carlston is a Certified Public Accountant
and a member of the Illinois CPA Society. He is registered with the National
Association of Securities Dealers, Inc. as a Financial Operations Principal.
-34-
Item 11. Executive Compensation
The General Partner is entitled to receive a share of cash distributions of Net
Sales Proceeds based upon both an aggregate overall return to the Limited
Partners and a separate return with respect to each parcel of land purchased by
the Partnership as described under the caption "Cash Distributions" and a share
of profits or losses as described under the caption "Allocation of Profits or
Losses" at pages 41-42 of the Prospectus, and at pages A-10 to A-11 of the
Partnership Agreement, included as an exhibit to the Prospectus, a copy of
which descriptions is incorporated herein by reference.
The Partnership is permitted to engage in various transactions involving
Affiliates of the General Partner of the Partnership, as described under the
captions "Compensation and Fees" at pages 14-16 and "Conflicts of Interest" at
pages 16-18 of the Prospectus, and at pages A-13 to A-22 of the Partnership
Agreement, included as an exhibit to the Prospectus, a copy of which
descriptions is incorporated herein by reference. The relationship of the
General Partner (and its directors and officers) to its Affiliates is set forth
above in Item 10.
The General Partner and its Affiliates may be reimbursed for its expenses or
out-of-pocket costs relating to the administration of the Partnership. As of
December 31, 1999, such costs were $50,735, of which $878 was unpaid.
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. For the year ended December 31,
1999, the Partnership incurred $50,421 in Asset Management Fees, of which $0
was unpaid.
An Affiliate of the General Partner performed sales marketing and advertising
services for the Partnership and was reimbursed (as set forth under terms of
the Partnership Agreement) for direct costs. For the year ended December 31,
1999, such costs were $(2,259), of which $0 was unpaid.
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 salaries and direct costs. For the year ended December 31, 1999,
the Partnership incurred $100,516 of such costs, of which $26,819 is unpaid,
and are included in investment properties.
-35-
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) No person or group is known by the Partnership to own beneficially more
than 5% of the outstanding Units of the Partnership.
(b) The officers and directors of the General Partner of the Partnership own as
a group the following Units of the Partnership as of December 31, 1999:
Amount and Nature
of Beneficial Percent
Title of Class Ownership of Class
-------------- ---------------- --------------
Limited Partnership 11.09 Units directly Less than 1/2%
Units
No officer or director of the General Partner of the Partnership possesses
a right to acquire beneficial ownership of Units of the Partnership.
All of the outstanding shares of the General Partner of the Partnership are
owned by an Affiliate or its officers and directors as set forth above in
Item 10.
(c) There exists no arrangement, known to the Partnership, the operation of
which may, at a subsequent date, result in a change in control of the
Partnership.
Item 13. Certain Relationships and Related Transactions
There were no significant transactions or business relationships with the
General Partner, Affiliates or their management other than those described in
Items 10 and 11 above. Reference is made to Note 3 of the Notes to Financial
Statements (Item 8 of this Annual Report) for information regarding related
party transactions.
-36-
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) The financial statements listed in the index at page 13 of this Annual
Report are filed as part of this Annual Report.
(b) Exhibits. The following exhibits are filed as part of this Report:
23 Consent of Independent Accountants
27 Financial Data Schedule
The following exhibits are incorporated herein by reference:
3 Amended and Restated Agreement of Limited Partnership, included in Post-
Effective Amendment #3 dated February 16, 1993, and as Exhibit A of the
Prospectus dated December 13, 1991, as amended, is incorporated herein by
reference thereto.
28 Prospectus, to Form S-11 Registration Statement, File No. 33-42245, as
filed with Securities and Exchange Commission on December 13, 1991, as
supplemented to date, is incorporated herein by reference thereto.
(c) Financial Statement Schedules:
All schedules have been omitted as the required information is inapplicable
or the information is presented in the financial statements or related
notes.
(d) Reports on Form 8-K:
Report on Form 8-K dated January 26, 2000
Item 4. Changes in Registrant's Certifying Accountant
No Annual Report or proxy material for the year 1999 has been sent to the
Partners of the Partnership. An Annual Report will be sent to the Partners
subsequent to this filing and the Partnership will furnish copies of such
report to the Commission when it is sent to the Partners.
-37-
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) 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.
Inland Real Estate Investment Corporation
General Partner
/s/ Robert D. Parks
By: Robert D. Parks
Chairman of the Board
and Chief Executive Officer
Date: March 22, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
By: Inland Real Estate Investment Corporation
General Partner
/s/ Robert D. Parks
By: Robert D. Parks
Chairman of the Board
and Chief Executive Officer
Date: March 22, 2000
/s/ Patricia A. DelRosso
By: Patricia A. DelRosso
Senior Vice President
Date: March 22, 2000
/s/ Kelly Tucek
By: Kelly Tucek
Principal Financial Officer
and Principal Accounting Officer
Date: March 22, 2000
/s/ Daniel L. Goodwin
By: Daniel L. Goodwin
Director
Date: March 22, 2000
/s/ Robert H. Baum
By: Robert H. Baum
Director
Date: March 22, 2000
-38-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 288022
<SECURITIES> 0
<RECEIVABLES> 82119
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 371978
<PP&E> 22674818
<DEPRECIATION> 0
<TOTAL-ASSETS> 23494350
<CURRENT-LIABILITIES> 230795
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 23260750
<TOTAL-LIABILITY-AND-EQUITY> 23494350
<SALES> 4848387
<TOTAL-REVENUES> 5264045
<CGS> 2602552
<TOTAL-COSTS> 133438
<OTHER-EXPENSES> 128351
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2399704
<INCOME-TAX> 0
<INCOME-CONTINUING> 2399704
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2399704
<EPS-BASIC> 66.11
<EPS-DILUTED> 66.11
</TABLE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation in the 1999 Form 10-K of our report
dated March 15, 1999 relating to the financial statements of InLand Capital
Fund, L.P. as of December 31, 1998 and 1997, and for the years then ended.
PricewaterhouseCoopers LLP
Chicago, Illinois
March 20, 2000
