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, 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
June 30, 1998 and December 31, 1997
<CAPTION>
UNAUDITED AUDITED
JUNE 30, DECEMBER 31,
ASSETS 1998 1997
- ------------------------------------- ----------- -----------
<S> <C> <C>
INVESTMENT PROPERTY, less accumulated
depreciation of $1,706,036 in 1998
and $1,631,493 in 1997 3,327,850 3,399,801
PROPERTY HELD FOR SALE OR RELEASE 500,000 500,000
CASH AND CASH EQUIVALENTS 250,143 358,191
RENT AND OTHER RECEIVABLES 15,646 7,777
DEFERRED CHARGES, less accumulated
amortization of $10,344 in 1998
and $9,594 in 1997 42,840 19,791
NOTE RECEIVABLE 209,517 217,258
OTHER ASSETS 8,824 4,403
---------- ----------
TOTAL ASSETS 4,354,820 4,507,221
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
- ---------------------------------
ACCOUNTS PAYABLE AND ACCRUED EXPENSES 145,819 153,439
TENANT SECURITY DEPOSITS 32,603 32,078
---------- ----------
178,422 185,517
LIMITED PARTNERS' CAPITAL 4,112,424 4,259,936
GENERAL PARTNERS' CAPITAL 63,974 61,768
---------- ----------
PARTNERS' CAPITAL 4,176,398 4,321,704
---------- ----------
TOTAL LIABILITIES AND PARTNERS' CAPITAL 4,354,820 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 three months and six months ended June 30, 1998 and 1997
UNAUDITED
<CAPTION>
3 MONTHS 6 MONTHS 3 MONTHS 6 MONTHS
ended ended ended ended
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1998 1998 1997 1997
-------- --------- --------- ---------
<S>
REVENUE: <C> <C> <C> <C>
Rental income 192,924 377,759 207,015 413,344
Restaurant sales 195,078 373,137 207,557 412,316
Interest & other 14,558 30,376 15,963 36,325
-------- -------- -------- --------
402,560 781,272 430,535 861,985
OPERATING EXPENSES:
Restaurant operating
expenses 155,342 301,670 146,026 297,172
Management fees 13,094 25,692 13,084 26,494
Mobile home park
operating and
administrative exp. 88,534 158,026 72,083 155,036
Depreciation and
amortization 37,647 75,294 41,686 83,372
-------- -------- -------- --------
294,617 560,682 272,879 562,074
-------- -------- -------- --------
NET INCOME (LOSS) 107,943 220,590 157,656 299,911
======== ======== ======== ========
<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 six months ended June 30, 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 2,206 218,384 220,590
CASH DISTRIBUTIONS 0 (365,896) (365,896)
---------- ----------- -----------
BALANCE, June 30, 1998 63,974 4,112,424 4,176,398
========== =========== ===========
<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 six months ended June 30, 1998 and 1997
UNAUDITED
<CAPTION>
JUNE 30, JUNE 30,
1998 1997
------------- -------------
<S> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net income (loss) 220,590 299,911
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and
amortization expense 75,294 83,372
Change in assets and
liabilities:
Rent and Receivables (7,869) 8,050
Other Assets (28,220) (527)
Accounts payable and
accrued expenses (7,620) (37,411)
Tenants' security
deposits 525 320
----------- -----------
Net Cash provided by
operating activities: 252,700 353,715
Cash flows from investing
activities:
Additions to investment
properties (2,593) (9,225)
----------- -----------
Net Cash provided by
(used in) investing
activities (2,593) (9,225)
I-4
Cash flows from financing
activities:
Note Receivable 7,741 7,049
Cash distributions paid (365,896) (401,792)
----------- -----------
Net Cash used in
financing activities (358,155) (394,743)
----------- -----------
Net increase (decrease)
in cash (108,048) (50,253)
Cash at beginning of period 358,191 428,615
Cash at end of period 250,143 378,362
=========== ===========
<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 six
months ended June 30 was $252,700 in 1998 and $353,715 in 1997,
primarily from earnings and depreciation.
As of June 30, 1998, the Partnership had cash and cash
equivalents of approximately $250,000 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 a 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.
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
The Partnership has one vacant restaurant property in West Allis,
Wisconsin. 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 June 30,
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 one month behind
in their rent. The total amount owed is $6,752. 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.
A distribution totaling approximately $165,000 was made to the
Limited Partners in May, 1998.
Results of Operations:
Gross rental revenues of $377,759 for the first half of 1998 has
declined from gross rental revenues of $413,344 for the first half
of 1997. This is primarily due to vacant restaurant in West Allis.
Rental property operating and administrative expenses were
$158,026 for the first half of 1998 and $155,036 for the first
half 1997.
Restaurant operations reported net income for the first two
quarters of 1998 of $49,448 on sales of $373,137. In the first
two quarters of 1997, restaurant operations reported net income
of $92,599 on sales of $412,316. The decrease in revenue from
the restaurant is a result of a decrease in sales volume due to
increased competition in the area.
Net income for the period ended June 30, 1998 was $220,590
compared to net income of $299,911 for the period ended June 30,
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.
<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 Six Months
ended June 30, 1998 1997
------------------------- ----
<S> <C> <C>
Spacious Acres MHP 100% 99%
</TABLE>
I-8
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: August 4, 1998 Robert A. Long
-------------------------
Robert A. Long
General Partner
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 250,143
<SECURITIES> 0
<RECEIVABLES> 15,646
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 274,613
<PP&E> 5,778,168
<DEPRECIATION> 1,923,929
<TOTAL-ASSETS> 4,354,820
<CURRENT-LIABILITIES> 178,422
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 4,176,398
<TOTAL-LIABILITY-AND-EQUITY> 4,354,820
<SALES> 0
<TOTAL-REVENUES> 781,272
<CGS> 0
<TOTAL-COSTS> 560,682
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 220,590
<INCOME-TAX> 0
<INCOME-CONTINUING> 220,590
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 299,911
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
