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
March 31, 1998
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
- ------ SECURITIES EXCHANGE ACT OF 1934
Commission File Number
0-14548
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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
March 31, 1998 and December 31, 1997
<CAPTION>
UNAUDITED AUDITED
MAR 31, DECEMBER 31,
ASSETS 1998 1997
- ------------------------------------- ----------- -----------
<S> <C> <C>
INVESTMENT PROPERTY, less accumulated
depreciation of $1,668,764 in 1998
and $1,631,493 in 1997 $3,362,529 $3,399,801
PROPERTY HELD FOR SALE OR RELEASE 500,000 500,000
CASH AND CASH EQUIVALENTS 273,536 358,191
RENT AND OTHER RECEIVABLES 13,937 7,777
DEFERRED CHARGES (net) 19,416 19,791
NOTE RECEIVABLE 213,433 217,258
OTHER ASSETS 3,071 4,403
---------- ----------
TOTAL ASSETS $4,385,922 $4,507,221
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
- ---------------------------------
ACCOUNTS PAYABLE AND ACCRUED EXPENSES $120,189 $153,439
TENANT SECURITY DEPOSITS 32,278 32,078
---------- ----------
$152,467 $185,517
LIMITED PARTNERS' CAPITAL 4,170,561 4,259,936
GENERAL PARTNERS' CAPITAL 62,894 61,768
---------- ----------
PARTNERS' CAPITAL 4,233,455 4,321,704
---------- ----------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $4,385,922 $4,507,221
========== ==========
<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 the three months ended March 31, 1998 and 1997
UNAUDITED
<CAPTION>
3 MONTHS 3 MONTHS
ended ended
MAR 31, MAR 31,
1998 1997
-------- --------
<S>
REVENUE: <C> <C>
Rental income $184,835 $206,329
Restaurant sales 178,059 204,759
Interest & other 15,818 20,362
-------- --------
$378,712 $431,450
OPERATING EXPENSES:
Restaurant operating
expenses $146,328 $151,146
Management fees 12,598 13,410
Mobile home park and
administrative exp. 69,492 82,953
Depreciation and
amortization 37,647 41,686
-------- --------
$266,065 $289,195
-------- --------
NET INCOME (LOSS) $112,647 $142,255
======== ========
<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 three months ended March 31, 1998 and
for the year ended December 31, 1997
UNAUDITED
<CAPTION>
General Limited
Partners Partners
(1% ownership) (99% ownership) Total
-------------- -------------- -----------
<S> <C> <C> <C>
BALANCE, Jan. 1, 1997 $56,528 $4,544,766 $4,601,294
---------- ----------- -----------
NET INCOME 5,240 518,755 523,995
CASH DISTRIBUTIONS 0 (803,585) (803,585)
---------- ----------- -----------
BALANCE, Dec. 31, 1997 $61,768 $4,259,936 $4,321,704
NET INCOME 1,126 111,521 112,647
CASH DISTRIBUTIONS 0 (200,896) (200,896)
---------- ----------- -----------
BALANCE, March 31, 1998 $62,894 $4,170,561 $4,233,455
========== =========== ===========
<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 three months ended March 31, 1998 and 1997
UNAUDITED
<CAPTION>
MAR 31, MAR 31,
1998 1997
------------- -------------
<S> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net income (loss) $112,647 $142,255
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and
amortization expense 37,647 41,686
Gain on sale of equipment 0 0
Change in assets and
liabilities:
Rent and Receivables (6,160) 8,965
Other Assets 1,332 (420)
Accounts payable and
accrued expenses (33,250) (5,178)
Tenants' security
deposits 200 0
----------- -----------
Net Cash provided by
operating activities: $112,416 $187,308
Cash flows from investing
activities:
Additions to investment
properties 0 (8,583)
Proceeds from Note
Receivable 3,825 3,484
----------- -----------
Net Cash provided by
(used in) investing
activities 3,825 (5,099)
I-4
Cash flows from financing
activities:
Cash distributions paid (200,896) (200,896)
----------- -----------
Net Cash used in
financing activities ($200,896) ($200,896)
----------- -----------
Net increase (decrease)
in cash (84,655) (18,687)
Cash at beginning of period 358,191 428,615
----------- ----------
Cash at end of period $273,536 $409,928
=========== ===========
<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, 1997.
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 working capital reserves for normal repairs,
replacements, working capital, and contingencies.
Net cash flow provided by operating activities for the three months
ended March 31 was $112,416 in 1998 and $187,308 in 1997,
primarily from earnings and depreciation.
As of March 31, 1998, the Partnership had cash and cash equivalents
of approximately $274,000 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 distribution to the limited partners
due to the large amount of cash reserves on hand.
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.
I-7
A distribution totaling approximately $201,000 was made to the
Limited Partners in March, 1998.
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 March 31, 1998. Home
Depot has cut off the drive-thru ingress-egress, as well as the
cross easement parking in violation of the existing cross easement
agreement; the Partnership has filed a lawsuit against Home Depot
to regain access. The tenant of the property in Racine, Wisconsin
has been notified that they are two months behind in their rent.
The total amount owed is $13,505. They continue to pay regularly
and it is hoped that they will catch up entirely in the near
future. Spacious Acres Mobile Home Park has been notified by
Wisconsin Natural Gas that the park's gas lines are non-code and
must be replaced. The cost could be as high as $100,000.
Results of Operations:
Gross rental revenues of $184,835 for the first quarter of 1998
has decreased from the gross rental revenues of $206,329 for
the first quarter of 1997. The decrease is due to the vacant
restaurant property in West Allis.
Rental property operating and administrative expenses were $69,492
for the first quarter of 1998 and $82,953 for the first quarter
1997.
Restaurant operations reported net income for the first quarter of
1998 of $21,000 on sales of $178,000. In the first quarter of
1997, restaurant operations reported net income of $44,000 on
sales of $207,000.
Net income for the first quarter of 1998 was $113,000 compared to
net income of $142,000 for the first quarter of 1997. The decrease
in net income is due primarily to the vacant restaurant property
in West Allis and the decline in sales from the restaurant
operations.
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
Three months
ended Mar 31, 1998 1997
-------------------- ----
<S> <C> <C>
Spacious Acres MHP 99% 99%
</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.
Potential Sale of Partnership Properties
The Partnership has received an offer from a prospective purchaser
for all or substantially all of the Partnership's properties.
Accordingly, the Partnership has entered into an asset purchase
agreement with the potential purchaser subject to Securities and
Exchange Commission review of the necessary proxy statement/consent
document, approval of the limited partners and the receipt of an
acceptable fairness opinion.
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: May 12, 1998 Robert A. Long
-------------------------
Robert A. Long
General Partner
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 273,536
<SECURITIES> 0
<RECEIVABLES> 13,937
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 290,544
<PP&E> 5,531,293
<DEPRECIATION> 1,668,764
<TOTAL-ASSETS> 4,385,922
<CURRENT-LIABILITIES> 152,467
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 4,233,455
<TOTAL-LIABILITY-AND-EQUITY> 4,385,922
<SALES> 0
<TOTAL-REVENUES> 378,712
<CGS> 0
<TOTAL-COSTS> 266,064
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 112,648
<INCOME-TAX> 0
<INCOME-CONTINUING> 112,648
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 112,648
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
