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
0-14548
-------
RAL-YIELD EQUITIES II LIMITED PARTNERSHIP
-----------------------------------------
(Exact name of registrant as specified in its charter)
Wisconsin 39-1494302
- ------------------------------- ---------------------------
(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 II
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 II
LIMITED PARTNERSHIP
BALANCE SHEETS
September 30, 1997 and December 31, 1996
<CAPTION>
UNAUDITED AUDITED
SEPTEMBER 30, DECEMBER 31,
ASSETS 1997 1996
- ------------------------------------- ----------- -----------
<S> <C> <C>
INVESTMENT PROPERTY, less accumulated
depreciation of $1,594,201 in 1997
and $1,546,462 in 1996 3,437,093 3,538,978
PROPERTY HELD FOR SALE OR RELEASE 548,920 561,276
CASH AND CASH EQUIVALENTS 373,577 428,615
RENT AND OTHER RECEIVABLES 7,181 16,153
DEFERRED CHARGES, less accumulated
amortization of $9,219 in 1997
and $8,094 in 1996 5,781 6,906
NOTE RECEIVABLE 220,985 231,679
OTHER ASSETS 4,351 3,383
---------- ----------
TOTAL ASSETS 4,597,888 4,786,990
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
- ---------------------------------
ACCOUNTS PAYABLE AND ACCRUED EXPENSES 126,383 154,543
TENANT SECURITY DEPOSITS 31,798 31,153
---------- ----------
158,181 185,696
LIMITED PARTNERS' CAPITAL 4,378,768 4,544,766
GENERAL PARTNERS' CAPITAL 60,939 56,528
---------- ----------
PARTNERS' CAPITAL 4,439,707 4,601,294
---------- ----------
TOTAL LIABILITIES AND PARTNERS' CAPITAL 4,597,888 4,786,990
========== ==========
<FN>
The accompanying notes are an integral part of these
statements.
</FN>
</TABLE>
I-1
<TABLE>
RAL-YIELD EQUITIES II
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>
REVENUE: <C> <C> <C> <C>
Rental income 198,952 612,296 202,655 603,751
Restaurant sales 219,534 631,850 226,263 658,166
Interest & other 19,195 55,520 21,734 61,610
-------- -------- -------- --------
437,681 1,299,666 450,652 1,323,527
OPERATING EXPENSES:
Restaurant operating
expenses 165,927 463,099 163,857 476,907
Management fees 14,120 40,614 13,647 39,649
Mobile home park
operating and
administrative exp. 74,693 229,729 58,290 174,515
Depreciation and
amortization 41,750 125,122 40,741 120,811
-------- -------- -------- --------
296,490 858,564 276,535 811,882
-------- -------- -------- --------
NET INCOME (LOSS) 141,191 441,102 174,117 511,645
======== ======== ======== ========
<FN>
The accompanying notes are an integral part of these
statements.
</FN>
</TABLE>
I-2
<TABLE>
RAL-YIELD EQUITIES II
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, Jan. 1, 1996 50,097 4,974,396 5,024,493
---------- ----------- -----------
NET INCOME 6,431 636,702 643,133
CASH DISTRIBUTIONS 0 (1,066,332) (1,066,332)
---------- ----------- -----------
BALANCE, Dec. 31, 1996 56,528 4,544,766 4,601,294
NET INCOME 4,411 436,691 441,102
CASH DISTRIBUTIONS 0 (602,689) (602,689)
---------- ----------- -----------
BALANCE,
September 30, 1997 60,939 4,378,768 4,439,707
========== =========== ===========
<FN>
The accompanying notes are an integral part of these statements.
</FN>
</TABLE>
I-3
<TABLE>
RAL-YIELD EQUITIES II
LIMITED PARTNERSHIP
Statements of Cash Flows
For the nine months ended September 30, 1997 and 1996
UNAUDITED
<CAPTION>
SEPT. 30, SEPT. 30,
1997 1996
------------- -------------
<S> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net income (loss) 441,102 511,645
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and
amortization expense 125,122 120,811
Gain on sale of equipment 0 (1,000)
Change in assets and
liabilities:
Rent and Receivables 8,972 (9,985)
Other Assets (968) 722
Accounts payable and
accrued expenses (28,160) (40,080)
Tenants' security
deposits 644 1,373
----------- -----------
Net Cash provided by
operating activities: 546,712 583,486
Cash flows from investing
activities:
Proceeds from sale of
equipment 0 1,000
Additions to investment
properties (9,755) (33,811)
----------- -----------
Net Cash provided by
(used in) investing
activities (9,755) (32,811)
I-4
Cash flows from financing
activities:
Note Receivable 10,694 9,778
Cash distributions paid (602,689) (865,436)
----------- -----------
Net Cash used in
financing activities (591,995) (855,658)
----------- -----------
Net increase (decrease)
in cash (55,038) (304,983)
Cash at beginning of period 428,615 796,258
----------- -----------
Cash at end of period 373,577 491,275
=========== ===========
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
I-5
RAL YIELD EQUITIES II
LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
Pursuant to Rule 10-01(a)(5) of Regulation S-X (17 CFR Part 210)
RAL-Yield Equities II 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. 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.
In the opinion of management, the unaudited interim financial
statements presented herein reflect all adjustments necessary to
a fair statement of the results for the interim periods
presented.
I-6
MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RAL-YIELD EQUITIES II LIMITED PARTNERSHIP (the "Registrant" or
"Partnership") is a Wisconsin Limited Partnership formed on March
30, 1984, under the Wisconsin Revised Uniform Limited Partnership
Act. The Registrant was organized to acquire real estate
including mobile home communities and other commercial
properties. The Partnership sold $8,301,500 in Limited
Partnership Interests (8,301.5 Interests at $1,000 per unit) from
March 30, 1984, through June 30, 1985. After deducting offering
costs, the Partnership had approximately $6,641,200 with which to
make investments in income producing residential and commercial
properties, to pay legal fees and other costs related to such
investments and for working capital reserves. The Partnership
utilized the net offering proceeds to purchase real property
investments.
Liquidity and Capital Resources:
Properties acquired by the Partnership were purchased for cash.
Therefore, liquidity is not reduced by debt service payments.
During the Properties' holding periods, the investment strategy
is to maintain (on the "triple net lease" restaurant properties)
and improve (on Spacious Acres Mobile Home Park) occupancy rates
through the application of professional property management
(including selective capital improvements). The Partnership also
accumulates cash reserves for normal repairs, replacements, working
capital, and contingencies.
Net cash flow provided by operating activities for the nine
months ended September 30 was $546,712 in 1997 and $583,486 in
1996, primarily from earnings and depreciation.
As of September 30, 1997, the Partnership had cash and cash
equivalents of $373,577 representing undistributed cash flow,
working capital reserves, repair and improvement reserves, and
tenant security deposits. The Partnership has the following cash
needs for repairs and improvements:
The Partnership has approved the plan to upgrade the sewage
treatment plant at Spacious Acres Mobile Home Park. The upgrade
will improve and expand the life of the sewage treatment plant.
The approximate cost to perform this repair, including
engineering fees, has been estimated at $100,000. This should
not effect the level of cash distributions to the limited
partners due to the large amount of cash reserves on hand.
I-7
The general partners are considering an expansion of Spacious Acres
after work on the sewage treatment plant is complete. No estimates
have been done as to the cost of this expansion, but the expansion
would be funded out of the excess cash on hand and would not effect
current distribution levels.
The Partnership has one vacant restaurant property in West Allis,
WI. The property was leased to a Hardee's Restaurant franchisee
who vacated the premises in December 1996. The Partnership
received $57,300 in 1997 as a buyout of the lease. The property
has been reclassified in the Partnership Financial Statements as
property held for sale or re-lease as of September 30, 1997. The
tenant of the property in Racine, Wisconsin was recently notified
for a second time that they are one month behind in their rent.
The total amount owed is $6,753. They continue to pay regularly
and it is hoped that they will catch up entirely in the near
future.
A distribution totaling approximately $201,000 was made to the
Limited Partners in August, 1997.
Results of Operations:
Gross rental revenues of $612,296 for the period ended September
30, 1997 increased 1.4% percent over gross rental revenues of
$603,751 for the first nine months of 1996. This is primarily due
to the annual rent increases at the mobile home park and the effect
of the rent increase at the commercial property in Waterloo, Iowa.
Rental property operating and administrative expenses were
$229,729 for the period ended September 30, 1997 and $174,515 for
the period ended September 30, 1996.
Restaurant operations reported net income for the first three
quarters of 1997 of $135,389 on sales of $631,851. In the first
three quarters of 1996, restaurant operations reported net income
of $148,356 on sales of $658,166. The decrease in revenue from
the restaurant is a result of a decrease in sales volume.
Net income for the period ended September 30, 1997 was $441,102
compared to net income of $511,645 for the period ended September
30, 1996. The decrease in net income is due primarily to decreased
profitability of the restaurant, increased legal costs and real
estate taxes of approximately $35,000 related to the Hardee's
store, $4,000 in legal costs related to the mobile home park, and
$9,000 in partnership administration expenses.
I-8
<TABLE>
The following is a listing of the approximate average physical
occupancy rates for the Partnership's investment in Spacious
Acres Mobile Home Park during the period covered by this report.
<CAPTION>
Occupancy Rate
Nine months
ended September 30, 1997 1996
-------------------- ----
<S> <C> <C>
Spacious Acres MHP 99% 100%
</TABLE>
Inflation:
Due to the comparatively low level of inflation in the
Partnership's last three fiscal years, the effect of inflation on
the Partnership has not been material. Should the rate of
inflation increase substantially over the life of the
Partnership, it is likely to moderately influence ongoing
operations, in particular, the operating expenses of the
Partnership. The commercial leases generally 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 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 II 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> 373,577
<SECURITIES> 0
<RECEIVABLES> 7,181
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 385,109
<PP&E> 5,775,576
<DEPRECIATION> 1,789,563
<TOTAL-ASSETS> 4,597,888
<CURRENT-LIABILITIES> 158,181
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 4,439,707
<TOTAL-LIABILITY-AND-EQUITY> 4,597,888
<SALES> 0
<TOTAL-REVENUES> 1,299,666
<CGS> 0
<TOTAL-COSTS> 858,564
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 441,102
<INCOME-TAX> 0
<INCOME-CONTINUING> 441,102
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 441,102
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
