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
0-16890
---------
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, 1997 AND DECEMBER 31, 1996
<CAPTION>
UNAUDITED AUDITED
SEPTEMBER 30, DECEMBER 31,
ASSETS 1997 1996
- -------------------------------- ----------- ------------
<S> <C> <C>
INVESTMENT PROPERTIES, less
accumulated depreciation of
$3,433,876 in 1997 and
$3,196,705 in 1996 and an
allowance to reduce carrying
value of $124,297 in 1997 and
$124,297 in 1996 7,555,538 7,738,475
PROPERTY HELD FOR SALE OR RELEASE 1,000,000 1,000,000
CASH AND CASH EQUIVALENTS 376,312 381,659
RENT AND OTHER RECEIVABLES
(net of allowance of $261,729
in 1997 and $261,729 in 1996) 15,089 14,588
OTHER ASSETS 30,477 20,258
DEFERRED CHARGES (less accumulated
amortization of $1,182,557 in 1997
and $1,181,905 in 1996) 5,873 6,525
----------- -----------
TOTAL ASSETS 8,983,289 9,161,505
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
- ---------------------------------
ACCOUNTS PAYABLE AND ACCRUED EXPENSES 144,499 166,940
DEFERRED RENTS 22,331 35,406
TENANT SECURITY DEPOSITS 141,194 135,155
AFFILIATE'S PARTICIPATION IN
JOINT VENTURE 400,624 403,748
----------- -----------
TOTAL LIABILITIES 708,648 741,249
GENERAL PARTNERS' CAPITAL (102,545) (98,014)
LIMITED PARTNERS' CAPITAL 8,377,186 8,518,270
----------- -----------
PARTNERS' CAPITAL 8,274,641 8,420,256
----------- -----------
TOTAL LIABILITIES AND PARTNERS'
CAPITAL 8,983,289 9,161,505
=========== ===========
<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, 1997 and 1996
Unaudited
<CAPTION>
3 MONTHS 9 MONTHS 3 MONTHS 9 MONTHS
ENDED SEPT ENDED SEPT ENDED SEPT ENDED SEPT
30, 1997 30, 1997 30, 1996 30, 1996
---------- ---------- ---------- ----------
<S>
REVENUE: <C> <C> <C> <C>
Rental income 489,071 1,467,238 491,607 1,589,199
Interest income 3,895 11,643 3,315 9,532
Other Income 25,374 76,957 21,982 65,075
------- ------- ------- ---------
518,340 1,555,838 516,904 1,663,806
OPERATING EXPENSES:
Property operation
and administrative
expenses 243,378 773,578 240,284 777,082
Management fees 25,914 76,728 25,364 79,283
Bad debts (136) 4,429 16,040 46,477
Depreciation and
amortization 79,264 237,823 116,697 364,591
Loss on sale of
investment property 0 0 334,668 334,668
------- --------- ------- --------
348,420 1,092,558 733,053 1,602,101
------- --------- ------- --------
NET INCOME BEFORE AFFILIATE'S
PARTICIPATION IN INCOME
FROM JOINT VENTURE 169,920 463,280 (216,149) 61,705
------- ------- ------- --------
AFFILIATE'S PARTICIPATION
IN INCOME FROM
JOINT VENTURE (9,765) (26,375) (9,241) (24,659)
------- ------- ------- --------
NET INCOME 160,155 436,905 (225,390) 37,046
======= ======= ======= =======
<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, 1997 and
for the year ended December 31, 1996
UNAUDITED
<CAPTION>
General Limited
Partner Partners
(5% ownership) (95% ownership) Total
------------- ------------ ---------
<S> <C> <C> <C>
BALANCE, January 1, 1996 (47,167) 9,784,365 9,737,198
-------- ----------- ----------
NET INCOME (Loss) (3,541) (67,283) (70,824)
CASH DISTRIBUTIONS (47,306) (1,198,812) (1,246,118)
-------- ---------- ----------
BALANCE, Dec. 31, 1996 (98,014) 8,518,270 8,420,256
======== ========= =========
NET INCOME 21,845 415,060 436,905
CASH DISTRIBUTIONS (26,376) (556,144) (582,520)
-------- --------- ---------
BALANCE,
September 30, 1997 (102,545) 8,377,186 8,274,641
======== ========= =========
<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, 1997 and 1996
UNAUDITED
<CAPTION>
9 MONTHS 9 MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
1997 1996
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net income 436,905 37,046
ADJUSTMENTS TO RECONCILE NET
INCOME TO NET CASH PROVIDED
BY OPERATING ACTIVITIES:
Depreciation and amortization 237,823 364,591
Affiliate's participation in
income from joint venture 26,375 24,659
Loss on sale of investment
property 0 334,668
Changes in assets and
liabilities:
Accounts receivable (501) 14,201
Other assets (10,219) (5,964)
Accounts payable and
accrued expenses (22,442) (111,452)
Deferred rents 6,039 0
Tenant security deposits (13,075) (5,533)
-------- --------
Net Cash provided by
operating activities: 660,905 652,216
-------- --------
CASH FLOWS FROM (USED FOR)
INVESTING ACTIVITIES:
Net proceeds from sale of
investment property 0 478,962
Additions to property and
equipment (54,234) (10,779)
-------- --------
Net Cash provided from (used for)
investing activities (54,234) 468,183
-------- --------
I-4
CASH FLOWS FROM FINANCING
ACTIVITIES:
Cash distributions
to Partners (582,520) (1,023,864)
Allocated distributions of
cash flow to joint venture
partner-affiliate (29,498) (31,340)
-------- --------
Net Cash provided from (used
for) financing activities (612,018) (1,055,204)
-------- --------
Increase (Decrease) in
cash balance (5,347) 65,195
Cash balance beginning
of period 381,659 293,125
-------- -------
Cash balance end of period 376,312 358,320
========= ========
<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, 1996. 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 $660,905 in 1997 and $652,216 in 1996.
The Hardee's tenant in the commercial properties located in
Mundelein and Joliet, Illinois stopped paying rent in February,
1996. Both locations were closed 1996. Due to their precarious
financial position, the Partnership had been accruing rent due it
and immediately recording a bad debt expense. Beginning January,
1997 rent revenue due and the corresponding bad debt expense will
no longer be accrued on the financial statements (essentially this
had a zero impact on net income).
I-7
As of September 30, 1997 the Partnership had cash of approximately
$376,000 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 $141,000 of the current
liabilities represent tenant security deposits. The majority of
current liabilities are accrued and escrowed real estate taxes
payable in installments during 1997 and 1998. The Partnership
expects to meet all of its obligations as they come due.
A distribution of cash flow from operations totaling approximately
$200,000 was made to the Limited Partners in August, 1997. Total
limited partner distributions made during 1996 were approximately
$1,199,000.
As discussed above, the Partnership is experiencing one tenant
delinquency problem with its Hardee's tenants in Mundelein and
Joliet, Illinois. The Partnership has not received any rent from
them since February, 1996. The total now due the Partnership is
$397,254. All of this amount has been reserved for as a
conservative measure, although the general partners feel that some
of that amount may be collectible due to the personal guarantee
signed by the owner. The general partners are negotiating with the
tenant in order to resolve this past due amount.
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 reserved $100,000
of the proceeds from the sale of Parkwood Estates Mobile Home Park.
The rest of this expense will probably be paid for through a loan.
Near the site of the Northrup Court Apartments in North Canton,
Ohio a series of sinkholes has been occurring; the latest sinkhole
was directly across the street from Northrup Court Apartments. It
measured 5-6 feet deep and eight feet across, and is apparently
caused by the settling of abandoned mine shafts. Should a
sinkhole(s) occur at Northrup Court, it could cause extensive
damage. While insurance is in place for sinkhole damage, the
protection amount is limited. Therefore, the Partnership could
suffer extensive uninsured losses if a sinkhole strikes the
apartment project.
Results of Operations:
Gross revenues for the nine months ended September 30 were
$1,555,838 in 1997 compared to $1,663,806 in 1996. Total expenses,
I-8
excluding the loss from the sale of investment property, for the
nine months ended September 30 were $1,092,558 in 1997 and
$1,267,433 in 1996.
Net income for the nine months ended September 30 was $436,905 in
1997 compared to $37,046 in 1996.
The decrease in gross revenues is due to the closing of the two
Hardee's stores and sale of Parkwood Estates Mobile Home Park in
1996. Expenses were reduced by approximately $175,000 as follows:
1. Decrease in expenses of $86,800 due to the sale of Parkwood
Estates.
2. Decrease in amortization expense of $90,600 due to the
amortization of prepaid managements in full by the end of 1996.
3. Increase in sewer and water expense of $9,300 at Cedar
Crossings Apartments due to water leaks which now have been fixed.
4. Increase in real estate taxes of $25,900 due to the Partner-
ship's obligation to pay the taxes on the closed Hardee's stores.
5. Decrease in depreciation expense of $24,000 on the two Hardee's
stores held for sale or release.
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, 1997 and calendar year
1996:
<CAPTION>
9 Months ended
September 30, 1997 1996
-------------- ----
<S> <C> <C>
1. South Hills MHP 99% 99%
2. Lakeshore Terrace MHP 94% 92%
3. Maplewood MHP 97% 96%
4. Alexandria MHP 86% 82%
5. Northrup Court Apartments 92% 94%
6. Cedar Crossing Apartments 99% 96%
</TABLE>
I-9
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, 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> 376,312
<SECURITIES> 0
<RECEIVABLES> 15,089
<ALLOWANCES> 261,729
<INVENTORY> 0
<CURRENT-ASSETS> 421,878
<PP&E> 12,255,212
<DEPRECIATION> 3,699,674
<TOTAL-ASSETS> 8,983,289
<CURRENT-LIABILITIES> 308,024
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 8,274,641
<TOTAL-LIABILITY-AND-EQUITY> 8,983,289
<SALES> 0
<TOTAL-REVENUES> 1,555,838
<CGS> 0
<TOTAL-COSTS> 1,092,558
<OTHER-EXPENSES> 26,375
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 436,905
<INCOME-TAX> 0
<INCOME-CONTINUING> 436,905
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 436,905
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
