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, 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
September 30, 1998 and December 31, 1997
<CAPTION>
UNAUDITED AUDITED
SEPTEMBER 30, DECEMBER 31,
ASSETS 1998 1997
- ------------------------------------- ----------- -----------
<S> <C> <C>
INVESTMENT PROPERTY, less accumulated
depreciation of $1,743,308 in 1998
and $1,631,493 in 1997 3,327,781 3,399,801
PROPERTY HELD FOR SALE OR RELEASE 500,000 500,000
CASH AND CASH EQUIVALENTS 165,827 358,191
RENT AND OTHER RECEIVABLES 8,457 7,777
DEFERRED CHARGES, less accumulated
amortization of $10,719 in 1998
and $9,594 in 1997 82,415 19,791
NOTE RECEIVABLE 205,512 217,258
OTHER ASSETS 8,381 4,403
---------- ----------
TOTAL ASSETS 4,298,373 4,507,221
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
- ---------------------------------
ACCOUNTS PAYABLE AND ACCRUED EXPENSES 140,636 153,439
TENANT SECURITY DEPOSITS 32,808 32,078
---------- ----------
173,444 185,517
LIMITED PARTNERS' CAPITAL 4,059,820 4,259,936
GENERAL PARTNERS' CAPITAL 65,109 61,768
---------- ----------
PARTNERS' CAPITAL 4,124,929 4,321,704
---------- ----------
TOTAL LIABILITIES AND PARTNERS' CAPITAL 4,298,373 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 nine months ended September 30, 1998 and 1997
UNAUDITED
<CAPTION>
3 MONTHS 9 MONTHS 3 MONTHS 9 MONTHS
ended ended ended ended
SEPT. 30, SEPT. 30, SEPT. 30, SEPT. 30,
1998 1998 1997 1997
-------- --------- --------- ---------
<S>
REVENUE: <C> <C> <C> <C>
Rental income 186,515 564,274 198,952 612,296
Restaurant sales 202,785 575,922 219,534 631,850
Interest & other 15,140 45,516 19,195 55,520
-------- -------- -------- --------
404,440 1,185,712 437,681 1,299,666
OPERATING EXPENSES:
Restaurant operating
expenses 167,905 469,575 165,927 463,099
Management fees 13,293 38,985 14,120 40,614
Mobile home park
operating and
administrative exp. 72,064 230,090 74,693 229,729
Depreciation and
amortization 37,647 112,941 41,750 125,122
-------- -------- -------- --------
290,909 851,591 296,490 858,564
-------- -------- -------- --------
NET INCOME (LOSS) 113,531 334,121 141,191 441,102
======== ======== ======== ========
<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, 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 3,341 330,780 334,121
CASH DISTRIBUTIONS 0 (530,896) (530,896)
---------- ----------- -----------
BALANCE,
September 30, 1998 65,109 4,059,820 4,124,929
========== =========== ===========
<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, 1998 and 1997
UNAUDITED
<CAPTION>
SEPT. 30, SEPT. 30,
1998 1997
------------- -------------
<S> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net income (loss) 334,121 441,102
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and
amortization expense 112,941 125,122
Gain on sale of equipment 0 0
Change in assets and
liabilities:
Rent and Receivables (680) 8,972
Other Assets (67,727) (968)
Accounts payable and
accrued expenses (12,803) (28,160)
Tenants' security
deposits 730 644
----------- -----------
Net Cash provided by
operating activities: 366,582 546,712
Cash flows from investing
activities:
Proceeds from sale of
equipment 0 0
Additions to investment
properties (39,796) (9,755)
----------- -----------
Net Cash provided by
(used in) investing
activities (39,796) (9,755)
I-4
Cash flows from financing
activities:
Note Receivable 11,746 10,694
Cash distributions paid (530,896) (602,689)
----------- -----------
Net Cash used in
financing activities (519,150) (591,995)
----------- -----------
Net increase (decrease)
in cash (192,364) (55,038)
Cash at beginning of period 358,191 428,615
----------- -----------
Cash at end of period 165,827 373,577
=========== ===========
<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 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 $366,582 in 1998 and $546,712 in
1997, primarily from earnings and depreciation.
As of September 30, 1998, the Partnership had cash and cash
equivalents of $165,827 representing undistributed cash flow,
working capital reserves, repair and improvement reserves, and
tenant security deposits.
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 September
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.
A distribution totaling approximately $165,000 was made to the
Limited Partners in August, 1998.
Results of Operations:
Gross rental revenues of $564,274 for the period ended September
30, 1998 has declined from gross rental revenues of $612,296
for the first nine months of 1997. This is primarily due to the
vacant restaurant in West Allis, Wisconsin.
Rental property operating and administrative expenses were
$230,090 for the period ended September 30, 1998 and $229,729 for
the period ended September 30, 1997.
Restaurant operations reported net income for the first three
quarters of 1998 of $73,222 on sales of $575,922. In the first
three quarters of 1997, restaurant operations reported net income
of $135,389 on sales of $631,851. The decrease in revenue from
the restaurant is a result of increased competition in the area.
Net income for the period ended September 30, 1998 was $334,121
compared to net income of $441,102 for the period ended September
30, 1997. The decrease in net income is due primarily to decreased
profitability of the restaurant and the vacant restaurant property.
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, 1998 1997
-------------------- ----
<S> <C> <C>
Spacious Acres MHP 100% 98%
</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.
Subsequent Event:
On October 26, 1998, the Partnership sold all of its properties for
$6,334,000. The Partnership intends to distribute the net proceeds
from the sale and dissolve the Partnership by December 31, 1998.
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 10, 1998 Robert A. Long
-------------------------
Robert A. Long
General Partner
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 165,827
<SECURITIES> 0
<RECEIVABLES> 8,457
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 182,665
<PP&E> 5,815,371
<DEPRECIATION> 1,961,201
<TOTAL-ASSETS> 4,298,373
<CURRENT-LIABILITIES> 173,444
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 4,124,929
<TOTAL-LIABILITY-AND-EQUITY> 4,298,373
<SALES> 0
<TOTAL-REVENUES> 1,185,712
<CGS> 0
<TOTAL-COSTS> 851,591
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 334,121
<INCOME-TAX> 0
<INCOME-CONTINUING> 334,121
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 334,121
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
