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
June 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 JUNE 30, 1996 AND DECEMBER 31, 1995
<CAPTION>
UNAUDITED AUDITED
JUNE 30, DECEMBER 31,
ASSETS 1996 1995
- ------------------------------- ---------- ------------
<S> <C> <C>
INVESTMENT PROPERTIES, (net of
accumulated depreciation of
$1,438,159 and $1,942,969,
respectively) 4,156,531 5,582,217
CASH AND CASH EQUIVALENTS 2,086,091 502,133
RENT AND OTHER RECEIVABLES 7,948 1,266
OTHER ASSETS 2,976 5,166
NOTES RECEIVABLE (net of allowance of
$60,868 and $60,711, respectively) 6,000 13,000
DEFERRED CHARGES (net of allowance of
$8,250 and $6,750, respectively) 6,750 7,500
---------- ----------
TOTAL ASSETS 6,266,296 6,111,282
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
- ---------------------------------
ACCOUNTS PAYABLE AND ACCRUED EXPENSES 91,175 186,830
TENANT SECURITY DEPOSITS 54,811 69,871
---------- ----------
TOTAL LIABILITIES 145,986 256,701
LIMITED PARTNERS' CAPITAL 6,078,661 5,815,162
GENERAL PARTNERS' CAPITAL 41,649 39,419
---------- ----------
TOTAL PARTNERS' CAPITAL 6,120,310 5,854,581
---------- ----------
TOTAL LIABILITIES AND PARTNERS' CAPITAL 6,266,296 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 six months ended June 30, 1996 and 1995
UNAUDITED
<CAPTION>
3 MONTHS 6 MONTHS 3 MONTHS 6 MONTHS
ended ended ended ended
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1996 1996 1995 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
REVENUE:
Rental income 243,148 490,679 242,812 483,258
Restaurant sales 155,328 294,993 142,040 276,729
Gain on sale 372,939 372,939 200 200
Interest and other
income 9,764 29,439 8,143 18,130
-------- -------- -------- --------
781,179 1,188,050 393,195 778,317
EXPENSES:
Operating and
administrative 109,196 219,289 95,135 194,204
Restaurant operating
expenses 109,739 216,192 102,055 200,523
Management fees 14,394 28,732 11,160 22,320
Depreciation and
amortization 55,168 110,298 83,572 167,029
-------- -------- -------- --------
288,497 574,511 291,922 584,076
-------- -------- -------- --------
NET INCOME 492,682 613,539 101,273 194,241
======== ======== ======== ========
<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 six months ended June 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 2,230 611,309 613,539
CASH DISTRIBUTIONS 0 (347,810) (347,810)
---------- ---------- ----------
BALANCE, June 30, 1996 41,649 6,078,661 6,120,310
========== ========== ==========
<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 six months ended June 30, 1996 and 1995
UNAUDITED
<CAPTION>
JUNE 30, JUNE 30,
1996 1995
--------- ---------
<S> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net income (loss) 613,539 194,241
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and
amortization expense 110,298 167,029
Gain on sale of assets (372,939) 0
Change in assets and liabilities:
Accounts receivable (6,682) 218
Notes receivable 7,000 0
Other assets 2,190 334
Accounts payable and
accrued expenses (95,655) (17,157)
Tenants' security deposits (15,060) 3,282
---------- ----------
Net Cash provided by
operating activities: 242,691 347,947
CASH FLOWS FROM INVESTING
ACTIVITIES:
Net proceeds from
sale of assets 1,689,077 0
Acquisitions of and additions to
investment properties 0 (9,673)
---------- ----------
Net Cash used in
investing activities 1,689,077 (9,673)
---------- ----------
I-4
CASH FLOWS FROM FINANCING
ACTIVITIES:
Cash distributions paid (347,810) (307,679)
---------- ----------
Net cash provided by (used
in) financing activities (347,810) (307,679)
---------- ----------
Net increase (decrease)
in cash 1,583,958 30,595
Cash at beginning of period 502,133 415,471
---------- ----------
Cash at end of period 2,086,091 446,066
========== ==========
<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 six
months ended June 30 was $242,691 in 1996 and $347,947 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 $326,000. The 6%
reduction in actual cash flow from 1995 to 1996 is related to a
general increase in a variety of expenses plus a one time $8,000
charge in 1996 for the 1995 workers compensation audit.
I-7
As of June 30, 1996, the Partnership had cash of approximately
$2,086,000 representing undistributed cash flow, undistributed
return of capital from the sale of properties, working capital
reserves, and tenant's security deposits. Current liabilities
amounted to approximately $145,000.
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 $1,600,000 resulted in net cash available for distribution
of $1,440,000. 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 will be
distributed in August, 1996.
The Partnership operates a Rocky Rococo restaurant in Milwaukee,
Wisconsin. The restaurant contributed $78,800 to cash flow in
the first half of 1996 compared to $76,000 in the first
half of 1995. 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 will also be
instituted after Labor Day, 1996 to help cover rising food and
labor costs. This should also have a positive impact on cash flow.
Results of Operations:
Gross rental revenues for the six months ended June 30 were
$490,679 in 1996 versus $483,258 in 1995. Operating expenses,
excluding restaurant operations, from rental properties
for the six months ended June 30 were $219,289 in 1996 and
$194,204 in 1995. Operating expenses rose 12% from 1995 to 1996.
A large part of this increase is due to an $8,000 increase in
insurance costs due to the payment of a large worker's
compensation audit bill. This effect of this bill will even out
as the year progresses.
Net Income for the six months ended June 30 was $613,539 in
1996 and $194,241 in 1995. Income is high due to the inclusion of
approximately $373,000 of net gain on sale of properties.
The restaurant property on Howell Avenue in Milwaukee, Wisconsin
continues to perform well. Revenues of $294,993 generated $50,395
of net income for the partnership during the first half of 1996
compared to revenues of $276,729 and net income of $52,200 for the
first half 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.
I-8
<TABLE>
The following is a listing of the approximate average physical
occupancy rates for the Partnership's mobile home parks during
the six months ended June 30, 1996 and calendar year 1995:
<CAPTION>
6 Months Calendar
ended June Year
30, 1996 1995
----------- --------
<S> <C> <C>
1. Forest Junction 93% 97%
2. Coachlite N/A 92%
3. Cloverleaf 89% 89%
4. Shamrock 97% 93%
</TABLE>
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-9
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: August 9, 1996 Robert A. Long
--------------------------
Robert A. Long
General Partner
Christine Kennedy
--------------------------
Christine Kennedy
Controller
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 2,086,091
<SECURITIES> 0
<RECEIVABLES> 7,948
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,103,015
<PP&E> 4,156,531
<DEPRECIATION> 1,438,159
<TOTAL-ASSETS> 6,266,296
<CURRENT-LIABILITIES> 145,986
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 6,120,310
<TOTAL-LIABILITY-AND-EQUITY> 6,266,296
<SALES> 0
<TOTAL-REVENUES> 1,188,050
<CGS> 0
<TOTAL-COSTS> 574,511
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 613,539
<INCOME-TAX> 0
<INCOME-CONTINUING> 613,539
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 613,539
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
