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, 1997
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, 1997 and December 31, 1996
<CAPTION>
UNAUDITED AUDITED
SEPTEMBER 30, DECEMBER 31,
ASSETS 1997 1996
- ------------------------------- ---------- ------------
<S> <C> <C>
INVESTMENT PROPERTIES, (net of
accumulated depreciation of
$1,636,586 and $1,517,554,
respectively) 4,005,348 4,114,763
CASH AND CASH EQUIVALENTS 285,440 383,182
RENT AND OTHER RECEIVABLES 5,445 1,820
OTHER ASSETS 3,339 3,327
NOTES RECEIVABLE (net of allowance of
$61,064 and $60,427, respectively) 0 0
DEFERRED CHARGES (net of allowance of
$10,125 and $9,000, respectively) 4,875 6,000
---------- ----------
TOTAL ASSETS 4,304,447 4,509,092
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
- ---------------------------------
ACCOUNTS PAYABLE AND ACCRUED EXPENSES 69,932 74,711
TENANT SECURITY DEPOSITS 61,648 56,495
PREPAID RENT 2,104 6,959
---------- ----------
TOTAL LIABILITIES 133,684 138,165
LIMITED PARTNERS' CAPITAL 4,121,048 4,323,648
GENERAL PARTNERS' CAPITAL 49,715 47,279
---------- ----------
TOTAL PARTNERS' CAPITAL 4,170,763 4,370,927
---------- ----------
TOTAL LIABILITIES AND PARTNERS' CAPITAL 4,304,447 4,509,092
========== ==========
<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, 1997 and 1996
UNAUDITED
<CAPTION>
3 MONTHS 9 MONTHS 3 MONTHS 9 MONTHS
ended ended ended ended
SEPT. 30, SEPT. 30, SEPT. 30, SEPT. 30,
1997 1997 1996 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
REVENUE:
Rental income 192,082 569,547 184,530 675,209
Restaurant sales 166,588 466,756 160,604 455,597
Gain on sale 0 0 (4,188) 368,751
Interest and other
income 14,702 36,904 24,872 54,310
-------- -------- -------- --------
373,372 1,073,207 365,818 1,553,867
EXPENSES:
Operating and
administrative 101,718 297,958 90,270 300,809
Restaurant operating
expenses 143,116 377,060 124,431 349,372
Management fees 11,828 34,474 11,145 39,877
Depreciation and
amortization 40,178 120,157 39,770 150,068
-------- -------- -------- --------
296,840 829,649 265,616 840,126
-------- -------- -------- --------
NET INCOME 76,532 243,558 100,202 713,741
======== ======== ======== ========
<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, 1997 and
for the year ended December 31, 1996
UNAUDITED
<CAPTION>
General Limited
Partners Partners
(1% ownership) (99% ownership) Total
-------------- --------------- --------
<S> <C> <C> <C>
BALANCE, January 1, 1996 39,419 5,815,162 5,854,581
---------- ---------- ----------
NET INCOME (LOSS) 7,860 778,108 785,968
CASH DISTRIBUTIONS 0 (2,269,622) (2,269,622)
---------- ---------- ----------
BALANCE, December 31, 1996 47,279 4,323,648 4,370,927
---------- ---------- ----------
NET INCOME 2,436 241,122 243,558
CASH DISTRIBUTIONS 0 (443,722) (443,722)
---------- ---------- ----------
BALANCE, September 30, 1997 49,715 4,121,048 4,170,763
========== ========== ==========
<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, 1997 and 1996
UNAUDITED
<CAPTION>
SEPTEMBER 30, SEPTEMBER 30,
1997 1996
--------- ---------
<S> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net income (loss) 243,558 713,741
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and
amortization expense 120,157 150,068
Gain on sale of assets 0 (368,751)
Change in assets and liabilities:
Accounts receivable (3,625) (12,381)
Notes receivable 0 10,000
Other assets (12) 2,149
Accounts payable and
accrued expenses (4,779) (95,687)
Tenants' security deposits 5,153 (14,038)
Prepaid Rent (4,855) 0
---------- ----------
Net Cash provided by
operating activities: 355,597 385,101
CASH FLOWS FROM INVESTING
ACTIVITIES:
Net proceeds from
sale of assets 0 1,684,888
Acquisitions of and additions to
investment properties (9,617) 0
---------- ----------
Net Cash used in
investing activities (9,617) 1,684,888
----------- ----------
I-4
CASH FLOWS FROM FINANCING
ACTIVITIES:
Cash distributions paid (443,722) (2,121,717)
---------- ----------
Net cash provided by (used
in) financing activities (443,722) (2,121,717)
---------- ----------
Net increase (decrease)
in cash (97,742) (51,728)
Cash at beginning of period 383,182 502,133
---------- ----------
Cash at end of period 285,440 450,405
========== ==========
<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, 1996. 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.
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 $355,597 in 1997 and $385,101 in
1996, primarily from earnings and depreciation (amortization).
The reduction in actual cash flow from 1996 to 1997 is primarily a
result of the loss of income from the two properties that were
sold in 1996.
The Partnership operates a Rocky Rococo restaurant in Milwaukee,
Wisconsin. The restaurant contributed $83,174 to cash flow in
the period ending September 30, 1997 compared to $98,983 for the
first nine months of 1996. The primary reasons for the decreased
cash flow are increased labor and maintenance costs.
I-7
As of September 30, 1997, the Partnership had cash of approximately
$285,000 representing undistributed cash flow, working capital
reserves, and tenant's security deposits. Current liabilities
amounted to approximately $134,000.
Results of Operations:
Gross rental revenues for the nine months ended September 30 were
$569,547 in 1997 versus $675,209 in 1996. Operating expenses,
excluding restaurant operations, from rental properties for the
nine months ended September 30 were $297,958 in 1997 and $300,809
in 1996. The decrease in rental revenues is primarily due to the
sale of the warehouse and mobile home park in 1996.
Net Income for the nine months ended September 30 was $243,558 in
1997 and $713,741 in 1996. The decrease in net income is primarily
due to the gain recognized on the sale of the warehouse in 1996.
The restaurant property on Howell Avenue in Milwaukee, Wisconsin
opened as a Rocky Rococo's in the fourth quarter of 1994. Revenues
of $469,628 generated $61,145 of net income for the partnership
during the first nine months of 1997 compared to revenues of
$457,505 and net income of $77,167 for the first nine months of
1996. The decrease in net income is due to increased labor and
maintenance costs.
<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, 1997 and calendar year 1996:
<CAPTION>
9 Months Calendar
ended September Year
30, 1997 1996
----------- --------
<S> <C> <C>
1. Forest Junction 91% 90%
2. Cloverleaf 94% 88%
3. Shamrock 98% 98%
</TABLE>
I-8
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: November 12, 1997 Robert A. Long
--------------------------
Robert A. Long
General Partner
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 285,440
<SECURITIES> 0
<RECEIVABLES> 65,509
<ALLOWANCES> 61,064
<INVENTORY> 0
<CURRENT-ASSETS> 294,224
<PP&E> 5,641,934
<DEPRECIATION> 1,636,586
<TOTAL-ASSETS> 4,304,447
<CURRENT-LIABILITIES> 133,684
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 4,170,763
<TOTAL-LIABILITY-AND-EQUITY> 4,304,447
<SALES> 0
<TOTAL-REVENUES> 1,073,207
<CGS> 0
<TOTAL-COSTS> 829,649
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 243,558
<INCOME-TAX> 0
<INCOME-CONTINUING> 243,558
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 243,558
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
