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, 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 MARCH 31, 1997 AND DECEMBER 31, 1996
<CAPTION>
UNAUDITED AUDITED
MAR 31, DECEMBER 31,
ASSETS 1997 1996
- -------------------------------- ----------- ------------
<S> <C> <C>
INVESTMENT PROPERTIES, less
accumulated depreciation of
$3,275,767 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 7,659,413 7,738,475
PROPERTY HELD FOR SALE OR RELEASE 1,000,000 1,000,000
CASH AND CASH EQUIVALENTS 394,675 381,659
RENT AND OTHER RECEIVABLES
(net of allowance of $261,729
in 1997 and $261,729 in 1996 10,265 14,588
OTHER ASSETS 10,409 20,258
DEFERRED CHARGES (less accumulated
amortization of $1,182,123 in 1997
and $1,181,905 in 1996) 6,307 6,525
----------- -----------
TOTAL ASSETS 9,081,069 9,161,505
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
- ---------------------------------
ACCOUNTS PAYABLE AND ACCRUED EXPENSES 154,848 166,940
DEFERRED RENTS 53,017 35,406
TENANT SECURITY DEPOSITS 139,202 135,155
AFFILIATE'S PARTICIPATION IN
JOINT VENTURE 401,298 403,748
----------- -----------
TOTAL LIABILITIES 748,365 741,249
GENERAL PARTNERS' CAPITAL (102,392) (98,014)
LIMITED PARTNERS' CAPITAL 8,435,096 8,518,270
----------- -----------
PARTNERS' CAPITAL 8,332,704 8,420,256
----------- -----------
TOTAL LIABILITIES AND PARTNERS'
CAPITAL 9,081,069 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 the three months ended March 31, 1997 and 1996
Unaudited
<CAPTION>
3 MONTHS 3 MONTHS
ENDED MARCH ENDED MARCH
31, 1997 31, 1996
----------- -----------
<S>
REVENUE: <C> <C>
Rental income 487,013 560,083
Interest income 4,235 2,893
Other Income 27,622 19,266
------- -------
518,870 582,242
OPERATING EXPENSES:
Property operation
and administrative
expenses 267,046 251,894
Management fees 25,534 32,065
Bad Debts 3,694 12,795
Depreciation and
amortization 79,279 123,850
------- -------
375,553 420,604
------- -------
NET INCOME BEFORE AFFILIATE'S
PARTICIPATION IN INCOME
FROM JOINT VENTURE 143,317 161,638
------- -------
AFFILIATE'S PARTICIPATION
IN INCOME FROM
JOINT VENTURE (8,612) (7,343)
------- -------
NET INCOME 134,705 154,295
======= =======
<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 three months ended March 31, 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 (3,541) (67,283) (70,824)
CASH DISTRIBUTIONS (47,306) (1,198,812) (1,246,118)
-------- ----------- -----------
BALANCE, December 31, 1996 (98,014) 8,518,270 8,420,256
======== =========== ===========
NET INCOME 6,735 127,970 134,705
CASH DISTRIBUTIONS (11,113) (211,144) (222,257)
-------- ----------- -----------
BALANCE, March 31, 1997 (102,392) 8,435,096 8,332,704
======== =========== ===========
<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 three months ended March 31, 1997 and 1996
UNAUDITED
<CAPTION>
3 MONTHS 3 MONTHS
ENDED MAR 31, ENDED MAR 31,
1997 1996
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net income 134,705 154,295
ADJUSTMENTS TO RECONCILE NET
INCOME TO NET CASH PROVIDED
BY OPERATING ACTIVITIES:
Depreciation and amortization 79,279 123,850
Affiliate's participation in
income from joint venture 8,612 7,343
Changes in assets and
liabilities:
Accounts receivable 4,323 (4,585)
Other assets 9,849 13,853
Accounts payable and
accrued expenses (12,092) (2,231)
Tenant security deposits 17,611 3,731
Deferred rents 4,048 (13,876)
-------- --------
Net Cash provided by
operating activities: 246,335 282,380
-------- --------
CASH FLOWS FROM (USED FOR)
INVESTING ACTIVITIES:
Additions to property and
equipment 0 0
-------- --------
Net Cash used for
investing activities 0 0
-------- --------
I-4
CASH FLOWS FROM FINANCING
ACTIVITIES:
Cash Distributions
to Partners (222,257) (248,829)
Allocated distributions of
cash flow to joint venture
partner-affiliate (11,062) (13,521)
-------- ----------
Net Cash provided from (used
for) financing activities (233,319) (262,350)
-------- ----------
Increase (Decrease) in
cash balance 13,016 20,030
Cash balance beginning
of period 381,659 293,125
-------- ---------
Cash balance end of period 394,675 313,155
========= ===========
<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
the 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 three months
ended March 31 was $246,335 in 1997 and $282,380 in 1996. The
decrease in operating cash flow from 1996 to 1997 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. Both locations were closed in 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).
2. Due to the water leaks in the Cedar Crossings Apartments, sewer
and water expense increased $9,500.
I-7
The Partnership has not experienced, and is not currently experi-
encing any liquidity problems. It is not expected that the Part-
nership will experience liquidity problems, in light of the excess
of current liabilities over cash on hand, due to the nature of the
current liabilities. Approximately $139,000 of the current liabil-
ities represent tenant security deposits. The majority of the
remaining current liabilities are accrued and escrowed real estate
taxes payable in installments during 1997 and 1998. The Partner-
ship expects to meet all of its obligations as they come due.
A distribution of cash flow from operations totaling approximately
$211,000 was made to the Limited Partners in March, 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
$306,904. 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 three months ended March 31 were
$518,870 in 1997 compared to $582,242 in 1996. Total expenses
for the three months ended March 31 were $375,553 in 1997 and
$420,604 in 1996.
The decrease in gross revenues is due to the closing of the two
I-8
Hardee's stores and sale of Parkwood Estates Mobile Home Park in
1996. Expenses were reduced by approximated $45,000 as follows:
1. Decrease in expenses of $35,600 due to the sale of Parkwood
Estates.
2. Decrease in amortization expense of $30,000 due to
amortization of prepaid managements in full by the end of 1996.
3. Increase in sewer and water of $9,500 as noted above.
4. Increase in real estate taxes of $9,000 due to the Partner-
ship's obligation to pay the taxes on the closed Hardee's stores.
Net income for the three months ended March 31 was $134,705 in
1997 compared to $154,295 in 1996.
The leasees 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 three months ended March 31, 1997 and calendar year 1996:
<CAPTION>
3 Months ended
Mar. 31, 1997 1996
-------------- ----
<S> <C> <C>
1. South Hills MHP 99% 99%
2. Lakeshore Terrace MHP 92% 92%
3. Maplewood MHP 96% 96%
4. Alexandria MHP 85% 82%
5. Northrup Court Apartments 94% 94%
6. Parkwood Estates MHP N/A 77%
7. Cedar Crossing Apartments 99% 96%
</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-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 IV LIMITED PARTNERSHIP
(Registrant)
Date: May 12, 1997 Robert A. Long
----------------------
Robert A. Long
General Partner
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 394,675
<SECURITIES> 0
<RECEIVABLES> 14,588
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 421,656
<PP&E> 12,200,978
<DEPRECIATION> 3,541,565
<TOTAL-ASSETS> 9,081,069
<CURRENT-LIABILITIES> 347,067
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 8,332,704
<TOTAL-LIABILITY-AND-EQUITY> 9,081,069
<SALES> 0
<TOTAL-REVENUES> 518,870
<CGS> 0
<TOTAL-COSTS> 375,553
<OTHER-EXPENSES> 197
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 134,705
<INCOME-TAX> 0
<INCOME-CONTINUING> 134,705
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 134,705
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
