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, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF
- -------- THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number
0-16890
---------
RAL YIELD + EQUITIES IV LIMITED PARTNERSHIP
-------------------------------------------
(Exact name of registrant as specified in its charter)
Wisconsin 39-1558614
- ------------------------------- -----------------------
(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 IV
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 (none)
Item 6. Exhibits and Reports on Form 8-K (None)
Signatures
<TABLE>
RAL YIELD + EQUITIES IV
LIMITED PARTNERSHIP
BALANCE SHEETS AT SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
<CAPTION>
UNAUDITED AUDITED
SEPTEMBER 30, DECEMBER 31,
ASSETS 1996 1995
- -------------------------------- ----------- ------------
<S> <C> <C>
INVESTMENT PROPERTIES, less
accumulated depreciation of
$3,376,429 in 1996 and
$3,324,125 in 1995 and an
allowance to reduce carrying
value of $124,297 in 1996 and
$124,297 in 1995 8,983,408 10,059,595
CASH AND CASH EQUIVALENTS 358,320 293,125
RENT AND OTHER RECEIVABLES
(net of allowance of $121,379
in 1996 and $53,000 in 1995) 62,452 76,653
OTHER ASSETS 30,107 24,143
DEFERRED CHARGES (less accumulated
amortization of $1,148,987 in 1996
and $1,057,731 in 1995) 36,944 128,199
----------- -----------
TOTAL ASSETS 9,471,231 10,581,715
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
- ---------------------------------
ACCOUNTS PAYABLE AND ACCRUED EXPENSES 174,278 285,730
TENANT SECURITY DEPOSITS 133,476 139,006
AFFILIATE'S PARTICIPATION IN
JOINT VENTURE 413,097 419,781
----------- -----------
TOTAL LIABILITIES 720,851 844,517
GENERAL PARTNERS' CAPITAL (00,000) (47,167)
LIMITED PARTNERS' CAPITAL 0,000,000 9,784,365
----------- -----------
PARTNERS' CAPITAL 8,750,380 9,737,198
----------- -----------
TOTAL LIABILITIES AND PARTNERS'
CAPITAL 9,471,231 10,581,715
=========== ===========
<FN>
The accompanying notes are an integral part of these
statements.
</FN>
</TABLE>
I-1
<TABLE>
RAL YIELD + EQUITIES IV
LIMITED PARTNERSHIP
Statement of Operations
For three months and nine months ended September 30, 1996 and 1995
Unaudited
<CAPTION>
3 MONTHS 9 MONTHS 3 MONTHS 9 MONTHS
ENDED SEPT ENDED SEPT ENDED SEPT ENDED SEPT
30, 1996 30, 1996 30, 1995 30, 1995
---------- ---------- ---------- ----------
<S>
REVENUE: <C> <C> <C> <C>
Rental income 491,607 1,589,199 560,303 1,671,895
Interest income 3,315 9,532 1,575 4,857
Other Income 21,982 65,075 20,245 55,932
------- ------- ------- ---------
516,904 1,663,806 582,123 1,732,684
OPERATING EXPENSES:
Property operation
and administrative
expenses 240,284 777,082 266,401 752,784
Management fees 25,364 79,283 25,170 75,510
Bad debts 16,040 46,477 531 628
Depreciation and
amortization 116,697 364,591 133,884 365,283
Loss on sale of
investment property 334,668 334,668 0 0
------- --------- ------- --------
733,053 1,602,101 425,986 1,194,205
------- --------- ------- --------
NET INCOME BEFORE AFFILIATE'S
PARTICIPATION IN INCOME
FROM JOINT VENTURE (216,149) 61,705 156,137 538,479
------- ------- ------- --------
AFFILIATE'S PARTICIPATION
IN INCOME FROM
JOINT VENTURE (9,241) (24,659) (8,718) (24,660)
------- ------- ------- --------
NET INCOME (225,390) 37,046 147,419 513,819
======= ======= ======= =======
<FN>
The accompanying notes are an integral part of these statements.
</FN>
</TABLE>
I-2
<TABLE> RAL YIELD + EQUITIES IV
LIMITED PARTNERSHIP
Statements of Changes in Partners' Capital
For the nine months ended September 30, 1996 and
for the year ended December 31, 1995
UNAUDITED
<CAPTION>
General Limited
Partner Partners
(5% ownership) (95% ownership) Total
------------- ------------ ---------
<S> <C> <C> <C>
BALANCE, January 1, 1995 (24,856) 10,208,264 10,183,408
-------- ----------- ----------
NET INCOME 27,455 521,651 549,106
CASH DISTRIBUTIONS (49,766) (945,550) (995,316)
-------- ---------- ----------
BALANCE, Dec. 31, 1995 (47,167) 9,784,365 9,737,198
======== ========= =========
NET INCOME 370 36,676 37,046
CASH DISTRIBUTIONS (36,193) (987,671) (1,023,864)
-------- --------- ---------
BALANCE,
September 30, 1996 (82,990) 8,833,370 8,750,380
======== ========= =========
<FN>
The accompanying notes are an integral part of these
statements.
</FN>
</TABLE>
I-3
<TABLE>
RAL YIELD + EQUITIES IV
LIMITED PARTNERSHIP
Statements of Cash Flows
For the nine months ended September 30, 1996 and 1995
UNAUDITED
<CAPTION>
9 MONTHS 9 MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
1996 1995
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net income 37,046 513,819
ADJUSTMENTS TO RECONCILE NET
INCOME TO NET CASH PROVIDED
BY OPERATING ACTIVITIES:
Depreciation and amortization 364,591 365,283
Affiliate's participation in
income from joint venture 24,659 24,660
Loss on sale of investment
property 334,668 0
Changes in assets and
liabilities:
Accounts receivable 14,201 (42,223)
Other assets (5,964) (9,766)
Accounts payable and
accrued expenses (111,452) (36,552)
Tenant security deposits (5,533) 9,933
-------- --------
Net Cash provided by
operating activities: 652,216 825,154
-------- --------
CASH FLOWS FROM (USED FOR)
INVESTING ACTIVITIES:
Net proceeds from sale of
investment property 478,962 0
Additions to property and
equipment (10,779) (18,812)
-------- --------
Net Cash used for
investing activities 468,183 (18,812)
-------- --------
I-4
CASH FLOWS FROM FINANCING
ACTIVITIES:
Cash distributions
to Partners (1,023,864) (746,487)
Allocated distributions of
cash flow to joint venture
partner-affiliate (31,340) (28,884)
-------- --------
Net Cash provided from (used
for) financing activities (1,055,204) (775,371)
-------- --------
Increase (Decrease) in
cash balance 65,195 30,971
Cash balance beginning
of period 293,125 230,502
-------- -------
Cash balance end of period 358,320 261,473
========= ========
<FN>
The accompanying notes are an integral part of these
statements.
</FN>
</TABLE>
I-5
RAL YIELD + EQUITIES IV LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
Pursuant to Rule 10-01(a)(5) of Regulation S-X (17 CFR Part 210)
RAL Yield + Equities IV Limited Partnership is omitting its
footnote disclosure. 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, 1995. 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 financial statements will be furnished
upon request.
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.
Events which have occurred subsequent to the end of the most
recent fiscal year which would have a material impact on the
Partnership are discussed in the following section.
I-6
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RAL YIELD + EQUITIES IV LIMITED PARTNERSHIP is a Wisconsin
Limited Partnership formed on August 8, 1986, under the Wisconsin
Revised Uniform Limited Partnership Act. The Partnership was
formed to acquire new and existing income-producing properties for
cash.
The Partnership purchased a total of fifteen income-producing
properties. The Partnership originally purchased six mobile home
communities (three in Wisconsin and three in Minnesota) and two
garden apartment complexes located in Ohio and Maryland. The
Partnership also originally purchased the following commercial
properties: a restaurant located in Longmont, Colorado;
two retail auto parts and service stores located in Menasha,
Wisconsin and Neenah, Wisconsin; a mobile home park office
located in Beaver Dam, Wisconsin and three Hardee's restaurants,
located in Mundelein, Illinois; Joliet, Illinois; and Eagan,
Minnesota.
The Partnership sold one of the mobile home communities and two
of the commercial properties during 1993. An additional commercial
property was sold in 1994. On July 31, 1996 the Partnership sold
a mobile home community in Willmar, Minnesota.
Liquidity and Capital Resources:
Properties acquired by the Partnership are intended to be held
for approximately 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
residential properties) occupancy rates through the application of
professional property management (including selective capital
improvements). Cash flow generated from property operations is
distributed to the partners on a quarterly basis. The Partnership
also accumulates working capital reserves for normal repairs,
replacements, working capital, and contingencies.
Net cash provided by operating activities for the nine months
ended September 30 was $652,216 in 1996 and $825,154 in 1995. The
21% decrease in operating cash flow from 1995 to 1996 is a result
of several items:
1. The Hardee's tenant in the commercial properties located in
Mundelein and Joliet, Illinois stopped paying rent in February,
1996. The tenant is having extreme financial difficulties and has
closed the Mundelein store and will probably be closing the Joliet
store in the near future. The tenant would like to buy the two
buildings and address back rent owed in the same deal. Due to
their precarious financial position, the Partnership had been
accruing rent due it and immediately recording a bad debt expense.
Beginning May, 1996 rent revenue due and the corresponding bad debt
I-7
expense will no longer be accrued on the financial statements
(essentially this had a zero impact on net income). The seven
months (March, 1996-September, 1996) of unpaid rent amount to
about $89,000 in reduced cash flow.
2. Due to the severe winter, snow removal is $9,500 higher than
last year.
3. Most of our utility expenses have seen a general increase over
the prior year.
4. Cash flow from operating activities was negatively impacted by
a $77,000 decrease in special assessments and security deposits.
This decrease was the result of a pay off of the assessments and
security deposits as a result of the sale of the Willmar, Minnesota
mobile home park (discussed below). These amounts did not directly
impact cash on hand as they were taken as a credit against the
amount due the Partnership by the buyer on the closing statement of
the property sold.
As of September 30, 1996 the Partnership had cash of approximately
$358,000 consisting of undistributed cash flow, working capital
reserves, and tenant security deposits. Current liabilities
totaled approximately $308,000.
The Partnership has not experienced, and is not currently
experiencing any liquidity problems. It is not expected that the
Partnership will experience liquidity problems due to the
nature of the current liabilities. Approximately $133,000 of the
current liabilities represent tenant security deposits. The
majority of current liabilities are accrued and escrowed real
estate taxes payable in installments during 1996 and 1997. The
Partnership expects to meet all of its obligations as they come
due.
A distribution of cash flow from operations totaling
approximately $215,000 was made to the Limited Partners in August,
1996. A return of capital distribution of $300,000 as a result of
the sale of the mobile home park was also made in August, 1996.
Total limited partner distributions made during 1995 were
approximately $945,550.
As discussed above, the Partnership is experiencing one tenant
delinquency problem with its Hardee's tenants in Mundelein and
Joliet, Illinois. Although the tenant had been paying rent each
month, they did not pay the rent increase that went into effect in
1992. This resulted in a shortfall of rent paid each month of
approximately $2,300 for the two stores. The Partnership has not
received any rent from them since February, 1996. The total now
due the Partnership is $217,000. All except $50,000 of this amount
has been reserved for. The tenant has offered to purchase both
buildings and negotiate a settlement of the lease. Nothing has
I-8
been finalized regarding these negotiations and cash flow will
therefore continue to be negatively impacted by the loss of this
rental income. Once the buildings are sold, however, a return of
capital will be made to limited partners and any money received
towards the lease settlement will also be available for
distribution.
South Hills mobile home park, located in Beaver Dam, Wisconsin, has
been experiencing problems with frequent leaks in its water lines.
The solution to this problem is a complete replacement of the water
lines. The total cost to do this has been estimated at $300,000.
To begin to cover this expense, the Partnership will be reserving
$100,000 of the last property sale (see below). The rest of this
expense will probably be paid for through a loan.
On July 31, 1996 the Partnership sold Parkwood Estates mobile home
park, located in Willmar, Minnesota, for $525,000. After deducting
selling costs and the remaining $61,000 due on a special assessment
to the village of Willmar, the Partnership received cash of
$400,000. As noted above, $100,000 of these funds are being
reserved to pay for replacement of water lines at South Hills
mobile home park. The sale resulted in a book loss of $334,668.
Results of Operations:
Gross revenues for the nine months ended September 30 were
$1,663,806 in 1996 compared to $1,732,684 in 1995. Total expenses,
excluding the loss from the sale of investment property,
for the nine months ended September 30 were $1,267,433 in 1996 and
$1,194,205 in 1995.
Net income for the nine months ended September 30 was $37,046 in
1996 compared to $513,819 in 1995.
The reasons for the decreased revenue and increased expenses are
detailed in the Liquidity and Capital Resources section above.
Three additional items, which do not affect cash flow but do affect
total expenses are as follows:
1. The write-off of rent due from the two Hardee's restaurants
caused a $46,000 increase in bad debt expense in 1996 in
comparison to 1995. The related decrease of $89,000 in revenue
from these restaurants as discussed above also negatively impacted
income.
2. Real estate taxes were about $15,000 lower in 1995 due to an
adjustment made in the first half of 1995 for an overaccrual made
in 1994. The actual tax bill received in 1995 for the 1994 taxes
on the apartment complex located in Canton, Ohio was about $13,000
less than expected. The remainder of the difference represents a
general increase in real estate tax amounts among all the
properties.
I-9
3. The loss from the sale of investment properties contributed a
$334,668 decrease in net income.
The leases of the commercial properties are currently paying rent
based on the minimum lease payments. Certain tenant leases
provide for rental payments based on a percentage of purchase price
of the properties or a percentage of sales whichever is greater.
None of the Partnership's tenants are currently generating a sales
volume which would trigger percentage rent.
<TABLE>
The following is a listing of approximate average physical
occupancy rates for the Partnership's residential properties
during the nine months ended September 30, 1996 and calendar year
1995:
<CAPTION>
9 Months ended
September 30, 1996 1995
-------------- ----
<S> <C> <C>
1. South Hills MHP 98% 99%
2. Lakeshore Terrace MHP 92% 93%
3. Maplewood MHP 98% 99%
4. Alexandria MHP 83% 83%
5. Northrup Court Apartments 98% 99%
6. Parkwood Estates MHP N/A 81%
7. Cedar Crossing Apartments 99% 100%
</TABLE>
Inflation:
Due to the relatively 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. All 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-10
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 IV LIMITED PARTNERSHIP
(Registrant)
Date: November 8, 1996 Robert A. Long
----------------------
Robert A. Long
General Partner
Christine Kennedy
----------------------
Christine Kennedy
Controller
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 358,320
<SECURITIES> 0
<RECEIVABLES> 62,452
<ALLOWANCES> 121,379
<INVENTORY> 0
<CURRENT-ASSETS> 450,879
<PP&E> 8,983,408
<DEPRECIATION> 3,376,429
<TOTAL-ASSETS> 9,471,231
<CURRENT-LIABILITIES> 307,754
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 8,750,380
<TOTAL-LIABILITY-AND-EQUITY> 9,471,231
<SALES> 0
<TOTAL-REVENUES> 1,663,806
<CGS> 0
<TOTAL-COSTS> 1,602,101
<OTHER-EXPENSES> 15,418
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 262,436
<INCOME-TAX> 0
<INCOME-CONTINUING> 262,436
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 262,436
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
