10-Q 1 d10q.txt FORM 10-Q ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549-1004 ----------------- FORM 10-Q ----------------- [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the period ended June 30, 2002 OR [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission File Number 0-12537 First Capital Income Properties, Ltd.--Series VIII (Exact name of registrant as specified in its charter) Florida 59-2192277 (State or other (I.R.S. Employer jurisdiction of Identification No.) incorporation or organization) Two North Riverside Plaza, 60606-2607 Suite 700, (Zip Code) Chicago, Illinois (Address of principal executive offices) (312) 207-0020 (Registrant's telephone number, including area code) Not applicable (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 [_] Documents incorporated by reference: The First Amended and Restated Certificate and Agreement of Limited Partnership filed as Exhibit A to the Partnership's Prospectus dated July 28, 1982, included in the Partnership's Registration Statement on Form S-11, is incorporated herein by reference in Part I of this report. ================================================================================ BALANCE SHEETS (All dollars rounded to nearest 00s)

STATEMENTS OF PARTNERS' CAPITAL For the six months ended June 30, 2002 (Unaudited) and the year ended December 31, 2001 (All dollars rounded to nearest 00s)

3 The accompanying notes are an integral part of the financial statements. STATEMENTS OF INCOME AND EXPENSES-- DISCONTINUED OPERATIONS For the quarters ended June 30, 2002 and 2001 (Unaudited) (All dollars rounded to nearest 00s except per Unit amounts)

STATEMENTS OF INCOME AND EXPENSES-- DISCONTINUED OPERATIONS For the six months ended June 30, 2002 and 2001 (Unaudited) (All dollars rounded to nearest 00s except per Unit amounts)

STATEMENTS OF CASH FLOWS For the six months ended June 30, 2002 and 2001 (Unaudited) (All dollars rounded to nearest 00s)

4 The accompanying notes are an integral part of the financial statements. NOTES TO FINANCIAL STATEMENTS (Unaudited) June 30, 2002 1. Summary of significant accounting policies: Definition of special terms: Capitalized terms used in this report have the same meaning as those terms have in the Partnership's Registration Statement filed with the Securities and Exchange Commission on Form S-11. Definitions of these terms are contained in Article III of the First Amended and Restated Certificate and Agreement of Limited Partnership, which is included in the Registration Statement and incorporated herein by reference. Accounting policies: The financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP"). The Partnership utilizes the accrual method of accounting. Under this method, revenues are recorded when earned and expenses are recorded when incurred. The Partnership recognizes rental income that is contingent upon tenants' achieving specified targets, only to the extent that such targets are attained. Preparation of the Partnership's financial statements in conformity with GAAP 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 period. Actual results could differ from those estimates. The financial information included in these financial statements is unaudited; however, in management's opinion, all adjustments (consisting of only normal, recurring accruals) necessary for a fair presentation of the results of operations for the periods included have been made. Results of operations for the quarter and six months ended June 30, 2002 are not necessarily indicative of the operating results for the year ending December 31, 2002. The Partnership has one reportable segment as the Partnership is in the disposition phase of its life cycle, wherein it is seeking to resolve post-closing matters related to the properties sold by the Partnership. Commercial rental property held for investment is recorded at cost, net of any provisions for value impairment, and depreciated (exclusive of amounts allocated to land) on the straight-line method over its estimated useful life. Upon classifying a commercial rental property as held for disposition, no depreciation or amortization of such property is provided for in the financial statements. Lease acquisition fees are recorded at cost and amortized over the life of the lease. Repair and maintenance costs are expensed as incurred; expenditures for improvements are capitalized and depreciated over the estimated life of such improvements. The Partnership evaluates its rental property for impairment when conditions exist which may indicate that it is probable that the sum of expected cash flows (undiscounted) from a property is less than its estimated carrying basis. Upon determination that an impairment has occurred, the carrying basis in the rental property is reduced to its estimated fair market value. Management was not aware of any indicator that would result in a significant impairment loss during the periods reported. Cash equivalents are considered all highly liquid investments with a maturity of three months or less when purchased. Reference is made to the Partnership's Annual Report for the year ended December 31, 2001 for a description of other accounting policies and additional details of the Partnership's financial condition, results of operations, changes in Partners' capital and changes in cash balances for the year then ended. The details provided in the notes thereto have not changed except as a result of normal transactions in the interim or as otherwise disclosed herein. 2. Related party transactions: In accordance with the Partnership Agreement, subsequent to December 23, 1982, the Termination of the Offering, the General Partners are entitled to 10% of Cash Flow (as defined in the Partnership Agreement), as a Partnership Management Fee. In addition, Net Profits (exclusive of Net Profits from the sale or disposition of Partnership properties) are allocated: first, to the General Partners, in an amount equal to the greater of the General Partners' Partnership Management Fee for such fiscal year, or 1% of such Net Profits; and second, the balance, if any, to the Limited Partners. Net Profits from the sale or disposition of a Partnership property are allocated: first, to the General Partners and the Limited Partners with negative balances in their capital accounts, pro rata in proportion to such respective negative balances, to the extent of the total of such negative balances; second, to the General Partners, in an amount necessary to make the aggregate amount of their capital accounts equal to the greater of the Sale or Refinancing Proceeds to be distributed to the General Partners with respect to the sale or disposition of such property or 1% of such Net Profits; and third, the balance, if any, to the Limited Partners. Net Losses (exclusive of Net Losses from the sale, disposition or provision for value impairment of Partnership properties) are allocated 1% to the General Partners and 99% to the Limited Partners. Net Losses from the sale, disposition or provision for value impairment of Partnership properties are allocated: first, to the extent that the balance in the General Partners' capital accounts exceeds their Capital Investment or the balance in the capital accounts of the Limited Partners exceeds the amount of their Capital Investment (the "Excess Balances"), to the General Partners and the Limited Partners pro rata in proportion to such Excess Balances until such Excess Balances are reduced to zero; second, to the General Partners and the Limited Partners pro rata in proportion to the balances in their respective capital accounts until the balances in their capital accounts shall be reduced to zero; and third, the balance, if any, 99% to the Limited Partners and 1% to the General Partners. In all events there shall be allocated to the General Partners not less than 1% of Net Profits and Net Losses from the sale, disposition or provision for value impairment of a Partnership property. For the quarter and six months ended June 30, 2002, the General Partners were paid a Partnership Management Fee $0 and $15,600, respectively. For the quarter and six months ended June 30, 2002 the General Partners were allocated Net (Losses) Profits of $(100) and $26,800. For the quarter and six months ended June 30, 2001, the General Partners were paid a Partnership Management Fee and allocated Net Profits of $15,500 and $31,100, respectively. 5 Fees and reimbursements paid and payable by the Partnership to Affiliates during the quarter and six months ended June 30, 2002 were as follows:

3. Property Sale: On March 15, 2002, the Partnership completed the sale of Walker Springs Plaza Shopping Center for a sale price of $6,210,000. Net proceeds from this transaction amounted to $5,855,800, was net of actual and estimated closing expenses. The Partnership reported a gain for financial reporting purposes of $1,118,500 for the six-months ended June 30, 2002 and distributed $5,870,900 or $83.87 per Unit on May 31, 2002 to Limited Partners of record as of March 15, 2002. In accordance with FAS 144, the Partnership's Statements of Income and Expenses are presented as discontinued Operations. TRANSFER AGENT AND REGISTRAR The Bank of New York P.O. Box 7090 Troy, Michigan 48007-7090 (800) 447-7364 [LOGO] FIRST CAPITAL INCOME PROPERTIES, Ltd. Series VII [GRAPHIC] sponsored by FIRST CAPITAL FINANCIAL LLC Two North Riverside Plaza Chicago, Illinois 60606 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Reference is made to the Partnership's Annual Report for the year ended December 31, 2001 for a discussion of the Partnership's business. Statements contained in this Management's Discussion and Analysis of Financial Condition and Results of Operations, which are not historical facts, may be forward-looking statements. Such statements are subject to certain risks and uncertainties, which could cause actual results to differ materially from those projected. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as to the date hereof. The Partnership is in the disposition of properties phase of its life cycle. During the disposition phase of the Partnership's life cycle, comparisons of operating results are complicated due to the timing and effect of property sales. Partnership operating results are generally expected to decline as real property interests are sold since the Partnership no longer receives the net income generated from such properties. Operations Net income increased by $1,009,300 for the six months ended June 30, 2002 when compared to the six months ended June 30, 2001. The increase was primarily due to the sale of Walker Springs Plaza Shopping Center ("Walker Springs"). Exclusive of the gain on sale, net income decreased by $109,200 which was primarily due to a decrease in interest earned on the Partnership's short-term investments, which was due to a decrease in the rates earned on those investments. Net income (loss) changed from $119,500 for the quarter ended June 30, 2001 to $(14,700) for the quarter ended June 30, 2002. The change was primarily due to a decrease in interest earned on the Partnership's short-term investments and the absence of results from Walker Springs due to its March 15, 2002 sale. Operations at Walker Springs were reduced for the quarter and six-month periods under comparison by its sale on March 15, 2002. Liquidity and Capital Resources One of the Partnership's objectives is to dispose of its properties when market conditions allow for the achievement of the maximum possible sales price. Notwithstanding the Partnership's intention relative to property sales, another primary objective of the Partnership is to provide cash distributions to Partners from Partnership operations. To the extent cash distributions exceed net income, such excess distributions will be treated as a return of capital. Cash Flow (as defined in the Partnership Agreement) is generally not equal to net income or cash flows as determined by accounting principles generally accepted in the United States ("GAAP"), since certain items are treated differently under the Partnership Agreement than under GAAP. Management believes that to facilitate a clear understanding of the Partnership's operations, an analysis of Cash Flow (as defined in the Partnership Agreement) should be examined in conjunction with an analysis of net income or cash flows as determined by GAAP. The following table includes a reconciliation of Cash Flow (as defined in the Partnership Agreement) to cash flow provided by operating activities as determined by GAAP and are not indicative of actual distributions to Partners and should not necessarily be considered as an alternative to the results disclosed in the Statements of Income and Expenses and Statements of Cash Flow.

The decrease in Cash Flow (as defined in the Partnership Agreement) of $164,000 for the six months ended June 30, 2002 when compared to six months ended June 30, 2001 was primarily due to the decrease in interest earned on the Partnership's short-term investments, as previously discussed. The decrease in the Partnership's cash position of $321,100 for the six months ended June 30, 2002 was primarily the result of cash used for distributions to Partners and capital and tenant improvements exceeding cash proceeds from the sale of Walker Springs and net cash provided by operating activities. Liquid assets, including cash and cash equivalents, of the Partnership as of June 30, 2002 are comprised of amounts held to resolve post-closing sale matters. Net cash provided by operating activities decreased by $311,200 for the six months ended June 30, 2002 when compared to the six months ended June 30, 2001. The decrease was primarily due to decline in operating results, as previously discussed. In addition, the decrease was due to the timing of the payment of certain expenses. Net cash (used for) provided by investing activities changed from $(122,200) for the six months ended June 30, 2001 to $5,739,100 for the six months ended June 30, 2002. The change was primarily due to the receipt of proceeds from the sale of Walker Springs. The Partnership has no financial instruments for which there are significant market risks. The increase in net cash used for financing activities of $5,901,400 for the six months ended June 30, 2002 as compared to the six months ended June 30, 2001 was primarily due to the special distribution of Walker Springs sale proceeds on May 31, 2002. In connection with the sale of Walker Springs, the Partnership distributed $5,870,900 or $83.87 per Unit on May 31, 2002 to Limited Partners of record as of March 15, 2002. The Partnership does not anticipate making another distribution until all post closing sale matters are resolved and the Partnership liquidates. 2 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K: (a) Exhibits: 99.1: Certification Of Periodic Financial Report Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350. (b) Reports on Form 8-K: There were no reports filed on Form 8-K during the quarter ended June 30, 2002. 7 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. FIRST CAPITAL INCOME PROPERTIES, LTD.--SERIES VIII By: FIRST CAPITAL FINANCIAL LLC MANAGING GENERAL PARTNER /s/ DOUGLAS CROCKER II Date: August 12, 2002 By: ______________________________ DOUGLAS CROCKER II President and Chief Executive Officer /s/ PHILIP G. TINKLER Date: August 12, 2002 By: _________________________________ PHILIP G. TINKLER Vice President--Finance and Treasurer 8

FIRST CAPITAL INCOME PROPERTIES LTD SERIES VIII 10-Q