UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
------- SECURITIES EXCHANGE ACT OF 1934
For the quarter ended
September 30, 1996
OR
------- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number
0-15677
-------
RAL YIELD + EQUITIES III LIMITED PARTNERSHIP
--------------------------------------------
(Exact name of registrant as specified in its charter)
Wisconsin 39-1546907
- ------------------------------- -----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
20875 Crossroads Circle
Suite 800
Waukesha, Wisconsin 53186
- ------------------------------- -----------------------
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code (414) 798-0900
--------------
Securities registered pursuant to Section 12(b) of the Act:
None
----
Securities registered pursuant to Section 12(g) of the Act:
LIMITED PARTNERSHIP INTERESTS
(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
------- -------
RAL YIELD + EQUITIES III
LIMITED PARTNERSHIP
FORM 10-Q
TABLE OF CONTENTS
PAGES
PART I FINANCIAL INFORMATION
Item 1. Financial Statements I-1
Item 2. Management's Discussion and
Analysis of Financial Condition and
Results of Operations I-7
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K (None)
Signatures
<TABLE>
RAL YIELD + EQUITIES III
LIMITED PARTNERSHIP
Balance Sheets at September 30, 1996 and Decmeber 31, 1995
<CAPTION>
UNAUDITED AUDITED
SEPTEMBER 30, DECEMBER 31,
ASSETS 1996 1995
- ------------------------------- ---------- ------------
<S> <C> <C>
INVESTMENT PROPERTIES, (net of
accumulated depreciation of
$1,477,554 and $1,942,969,
respectively) 4,117,137 5,582,217
CASH AND CASH EQUIVALENTS 450,405 502,133
RENT AND OTHER RECEIVABLES 13,647 1,266
OTHER ASSETS 3,017 5,166
NOTES RECEIVABLE (net of allowance of
$60,387 and $60,711, respectively) 3,000 13,000
DEFERRED CHARGES (net of allowance of
$8,625 and $6,750, respectively) 6,375 7,500
---------- ----------
TOTAL ASSETS 4,593,581 6,111,282
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
- ---------------------------------
ACCOUNTS PAYABLE AND ACCRUED EXPENSES 91,142 186,830
TENANT SECURITY DEPOSITS 55,833 69,871
---------- ----------
TOTAL LIABILITIES 146,975 256,701
LIMITED PARTNERS' CAPITAL 4,403,914 5,815,162
GENERAL PARTNERS' CAPITAL 42,692 39,419
---------- ----------
TOTAL PARTNERS' CAPITAL 4,446,606 5,854,581
---------- ----------
TOTAL LIABILITIES AND PARTNERS' CAPITAL 4,593,581 6,111,282
========== ==========
<FN>
The accompanying notes are an integral part of these
statements.
</FN>
</TABLE>
<TABLE>
I-1
RAL YIELD + EQUITIES III
LIMITED PARTNERSHIP
Statement of Operations
For three months and nine months ended September 30, 1996 and 1995
UNAUDITED
<CAPTION>
3 MONTHS 9 MONTHS 3 MONTHS 9 MONTHS
ended ended ended ended
SEPT. 30, SEPT. 30, SEPT. 30, SEPT. 30,
1996 1996 1995 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
REVENUE:
Rental income 184,530 675,209 242,203 725,462
Restaurant sales 160,604 455,597 173,030 449,759
Gain on sale (4,188) 368,751 0 0
Interest and other
income 24,872 54,310 14,990 33,319
-------- -------- -------- --------
365,818 1,553,867 430,223 1,208,540
EXPENSES:
Operating and
administrative 90,270 300,809 95,815 280,520
Restaurant operating
expenses 124,431 349,372 119,255 329,279
Management fees 11,145 39,877 11,160 33,480
Depreciation and
amortization 39,770 150,068 58,317 225,345
-------- -------- -------- --------
265,616 840,126 284,547 868,624
-------- -------- -------- --------
NET INCOME 100,202 713,741 145,676 339,916
======== ======== ======== ========
<FN>
The accompanying notes are an integral part of these
statements.
</FN>
</TABLE>
I-2
<TABLE>
RAL YIELD + EQUITIES III
LIMITED PARTNERSHIP
Statements of Changes in Partners' Capital
For the nine months ended September 30, 1996 and
for the year ended December 31, 1995
UNAUDITED
<CAPTION>
General Limited
Partners Partners
(1% ownership) (99% ownership) Total
-------------- --------------- --------
<S> <C> <C> <C>
BALANCE, January 1, 1995 35,248 6,044,389 6,079,637
---------- ---------- ----------
NET INCOME (LOSS) 4,171 412,883 $417,054
CASH DISTRIBUTIONS 0 (642,110) ($642,110)
---------- ---------- ----------
BALANCE, December 31, 1995 39,419 5,815,162 5,854,581
---------- ---------- ----------
NET INCOME 3,273 710,468 713,741
CASH DISTRIBUTIONS 0 (2,121,716) (2,121,717)
---------- ---------- ----------
BALANCE, September 30, 1996 42,692 4,403,914 4,446,606
========== ========== ==========
<FN>
The accompanying notes are an integral part of these
statements.
</FN>
</TABLE>
I-3
<TABLE>
RAL YIELD + EQUITIES III
LIMITED PARTNERSHIP
Statements of Cash Flows
For the nine months ended September 30, 1996 and 1995
UNAUDITED
<CAPTION>
SEPTEMBER 30, SEPTEMBER 30,
1996 1995
--------- ---------
<S> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net income (loss) 713,741 339,916
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and
amortization expense 150,068 225,345
Gain on sale of assets (368,751) 0
Change in assets and liabilities:
Accounts receivable (12,381) 3,150
Notes receivable 10,000 3,000
Other assets 2,149 396
Accounts payable and
accrued expenses (95,687) 6,532
Tenants' security deposits (14,038) 4,373
---------- ----------
Net Cash provided by
operating activities: 385,101 582,712
CASH FLOWS FROM INVESTING
ACTIVITIES:
Net proceeds from
sale of assets 1,684,888 0
Acquisitions of and additions to
investment properties 0 (9,673)
---------- ----------
Net Cash used in
investing activities 1,684,888 (9,673)
---------- ----------
I-4
CASH FLOWS FROM FINANCING
ACTIVITIES:
Cash distributions paid (2,121,717) (468,206)
---------- ----------
Net cash provided by (used
in) financing activities (2,121,717) (468,206)
---------- ----------
Net increase (decrease)
in cash (51,728) 104,833
Cash at beginning of period 502,133 415,471
---------- ----------
Cash at end of period 450,405 520,304
========== ==========
<FN>
The accompanying notes are an integral part of these
statements.
</FN>
</TABLE>
I-5
RAL YIELD + EQUITIES III
LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
Pursuant to Rule 10-01(a)(5) of Regulation S-X (17 CFR Part 210)
RAL Yield + Equities III Limited Partnership is omitting its
footnote disclosure. The Registrant has presumed that users of
the interim financial information have read or have access to the
audited financial statements for the preceding fiscal year.
Copies of the audited statements will be furnished upon request.
The disclosure is being omitted since it substantially duplicates
the disclosure contained in the most recent annual report to
security holders, Form 10-K for the fiscal year ended December
31, 1995. No events have occurred (other than those discussed in
the Management's Discussion and Analysis of Financial Condition
and Results of Operations) subsequent to the end of the most
recent fiscal year which would have a material impact on RAL
Yield + Equities III Limited Partnership.
In the opinion of management, the unaudited financial statements
presented herein reflect all adjustments necessary to a fair
statement of the results for the interim periods presented.
I-6
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RAL YIELD + EQUITIES III LIMITED PARTNERSHIP (the "Partnership")
is a Wisconsin Limited Partnership formed on April 29, 1985,
under the Wisconsin Revised Uniform Limited Partnership Act. The
Partnership was organized to acquire new and existing
income-producing properties. The properties consist primarily of
restaurants (including land and building) leased on a "triple
net" lease basis (i.e. for the tenant to pay for maintenance,
repairs, real estate taxes and insurance) to chain restaurants,
including Hardee's, Pizza Hut, and Wendy's. The Partnership also
owns and operates three mobile home communities located in
Wisconsin and Minnesota. The Partnership's offering of limited
partnership interests to the public pursuant to the Securities Act
of 1933 raised $13,725,000, in which the above-described properties
were purchased for cash. During 1993 four of the commercial
properties and one of the mobile home communities were sold. In
1994 an additional commercial property was sold. During the second
quarter of 1996 one mobile home park and the warehouse building
were sold. The details of the 1996 sales are discussed below.
Liquidity and Capital Resources:
Properties acquired by the Partnership are generally intended to
be held from seven to ten years. During the Properties' holding
periods, the investment strategy is to maintain (on the "triple
net lease" restaurant properties) and improve (on the mobile home
parks) occupancy rates through the application of professional
property management (including selective capital improvements).
The Partnership also accumulates working capital reserves for
normal repairs, replacements, working capital, and contingencies.
Net cash flow provided by operating activities for the nine
months ended September 30 was $385,101 in 1996 and $582,712 in
1995. Cash flow from operating activities was negatively impacted
in 1996 by an $83,000 decrease in accrued expenses and security
deposits. This decrease was the result of the pay off of real
estate tax escrows and refund of security deposits resulting from
the sale of two properties in the second quarter. These amounts
did not directly impact cash on hand as they were taken as a credit
against the amount due the Partnership by the buyer on the closing
statements of the properties sold. By increasing the cash flow
from operating activities by the $83,000 in liability reductions,
actual cash flow from operations is approximately $468,100.
The 19% reduction in actual cash flow from 1995 to 1996 is
primarily a result of the loss of income from the two properties
that were sold. Cash flow from the warehouse that was sold has
resulted in a reduction of $50,000 along with about $5,000 from the
sale of the mobile home park.
I-7
Cash flow was negatively impacted by a one time $8,000 charge in
1996 for the 1995 workers compensation audit. Insurance premiums
are also $8,000 higher this year than last. Repair expense is up
over $9,000 from the prior year due to some major electrical and
plumbing repairs at the mobile home parks. Cash flow from the
restaurant operations is $12,000 lower than the prior year; the
explantions for this change are listed in the following paragraph.
An overall increase in a variety of operating expenses accounts for
the rest of the decreased cash flow.
The Partnership operates a Rocky Rococo restaurant in Milwaukee,
Wisconsin. The restaurant contributed $108,133 to cash flow in
the period ending September 30, 1996 compared to $120,564 for the
first nine months of 1995. The primary reason for the decreased
cash flow is related to two different insurance costs:
1. A $7,600 increase in business insurance premiums has
occurred, $5,000 of which is due to the worker's
compensation premium audit from 1995.
2. Health insurance premiums have also increased by $3,400 as
more of the eligible management employees have chosen to be
added to the coverage offered.
As sales volume continues to increase at this restaurant, it should
continue to be a large contributor to overall partnership cash
flow. A 4% price increase was instituted after Labor Day, 1996 to
help cover rising food and labor costs. This should also have a
positive impact on cash flow.
As of September 30, 1996, the Partnership had cash of approximately
$450,000 representing undistributed cash flow, working capital
reserves, and tenant's security deposits. Current liabilities
amounted to approximately $147,000.
Coachlite mobile home park, located in Green Lake, Wisconsin, was
sold May 31, 1996 to an unrelated third party for $160,000. This
sale resulted in $140,000 net cash available for return of capital
distribution and a book loss on sale of $17,591.
The warehouse property located in Fond du lac, Wisconsin was sold
on June 28, 1996 to the current tenant of the property. The sale
price of $1,550,000 resulted in net cash available for distribution
of $1,460,000. A book gain on sale of $390,530 was recognized.
The total amount available to distribute of $1,600,000 as a return
of capital resulting from the above mentioned sales was
distributed in August, 1996.
I-8
Results of Operations:
Gross rental revenues for the nine months ended September 30 were
$675,209 in 1996 versus $725,462 in 1995. Operating expenses,
excluding restaurant operations, from rental properties
for the nine months ended September 30 were $300,809 in 1996 and
$280,520 in 1995. The decrease in rental revenues is due to the
sale of the two properties. We will continue to see this variance
for the next year. The 7% increase in operating expenses were
discussed above in the Liquidity and Capital Resources sections.
Net Income for the nine months ended September 30 was $713,741 in
1996 and $339,916 in 1995. Income is high due to the inclusion of
approximately $369,000 of net gain on sale of properties.
The restaurant property on Howell Avenue in Milwaukee, Wisconsin
continues to perform well. Revenues of $455,597 generated $77,167
of net income for the partnership during the nine months ended
September 30, 1996 compared to revenues of $449,759 and net income
of $89,753 for the same period of 1995. The decrease in net income
is a primarily a result of the worker's compensation insurance
audit bill mentioned above, $5,000 of which impacted the Rocky's
restaurant.
<TABLE>
The following is a listing of the approximate average physical
occupancy rates for the Partnership's mobile home parks during
the nine months ended September 30, 1996 and calendar year 1995:
<CAPTION>
9 Months Calendar
ended September Year
30, 1996 1995
----------- --------
<S> <C> <C>
1. Forest Junction 91% 97%
2. Coachlite N/A 92%
3. Cloverleaf 90% 89%
4. Shamrock 97% 93%
</TABLE>
I-9
Inflation:
Due to the comparatively low level of inflation since the
Partnership commenced operations, the effect of inflation on the
Partnership has not been material to date. Should the rate of
inflation increase substantially over the life of the
Partnership, it is likely to influence ongoing operations, in
particular, the operating expenses of the Partnership. Most of
the commercial leases contain clauses permitting pass-through of
certain increased operating costs. Residential leases are
typically of one year or less in duration; this allows the
Partnership to react quickly (through rental increases) to
changes in the level of inflation. These factors should serve to
reduce, to a certain degree, any impact of rising costs on the
Partnership.
I-10
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.
RAL YIELD + EQUITIES III LIMITED PARTNERSHIP
(Registrant)
Date: November 12, 1996 Robert A. Long
--------------------------
Robert A. Long
General Partner
Christine Kennedy
--------------------------
Christine Kennedy
Controller
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 450,405
<SECURITIES> 0
<RECEIVABLES> 13,647
<ALLOWANCES> 60,387
<INVENTORY> 0
<CURRENT-ASSETS> 470,069
<PP&E> 4,117,137
<DEPRECIATION> 1,477,554
<TOTAL-ASSETS> 4,593,581
<CURRENT-LIABILITIES> 146,975
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 4,446,606
<TOTAL-LIABILITY-AND-EQUITY> 4,593,581
<SALES> 0
<TOTAL-REVENUES> 1,185,116
<CGS> 0
<TOTAL-COSTS> 840,126
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 713,741
<INCOME-TAX> 0
<INCOME-CONTINUING> 713,741
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 713,741
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
