<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d) of
the Securities Exchange Act of 1934
For Quarter Ended June 30, 1997 Commission file number 0-16508
USA REAL ESTATE INVESTMENT TRUST
(Exact Name of Registrant as specified in its Charter)
California 68-0109347
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One Scripps Drive, Suite 201, Sacramento, California 95825
(Address of registrant's principal executive offices) (Zip Code)
(916) 564-4532
(Registrant's telephone number, including area code)
COMMONWEALTH EQUITY TRUST USA
(Former name)
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.
/ X/ Yes / / No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the close of the latest practical date.
Certificates of Beneficial Interest Outstanding at June 30, 1997
par value one dollar per share 4,009,348
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USA REAL ESTATE INVESTMENT TRUST
Index
Part I. Financial Information
Balance Sheets - June 30, 1997 and
December 31, 1996 ................................. 3
Statements of Income - For the Three Months
Ended June 30, 1997 and 1996 ...................... 4
Statements of Income - For the Six Months
Ended June 30, 1997 and 1996 ...................... 5
Statements of Cash Flows - For the Six
Months Ended June 30, 1997 and 1996 ............... 6
Notes to Financial Statements ....................... 7
Management's Discussion and Analysis of the
Financial Condition and Results of Operations ..... 8
Part II. Other Information ................................... 8
<PAGE> 3
PART I. FINANCIAL INFORMATION
USA REAL ESTATE INVESTMENT TRUST
Balance Sheets
June 30, December 31,
1997 1996
(Unaudited) (Audited)
----------- -----------
Assets
Investments:
Rental properties, less accumulated
depreciation of $2,571,650 at June 30,
1997 and $2,271,650 at December 31, 1996
and valuation allowances of $5,060,000
at June 30, 1997 and December 31, 1996 $ 25,242,562 $ 17,939,415
Notes receivable 726,000 726,000
---------- -----------
25,968,562 18,665,415
Cash 87,593 3,909,665
Other assets 488,386 268,013
----------- -----------
Total assets $ 26,544,541 $ 22,843,093
=========== ===========
Liabilities and Shareholders' Equity
Liabilities:
Long-term notes payable $ 6,213,561 $ 2,047,333
Accounts payable and accrued expenses 15,358 40,638
Lease deposits 59,845 59,845
----------- -----------
Total liabilities 6,288,764 2,147,816
----------- -----------
Shareholders' Equity:
Shares of beneficial interest, par value
$1 a share; authorized 7,500,000 shares;
4,009,348 shares outstanding at June 30,
1997 and 4,042,904 at December 31, 1996 $ 4,009,348 $ 4,042,904
Additional paid-in capital 30,119,426 30,202,139
Distributions in excess of cumulative
net income (13,872,997) (13,549,766)
----------- -----------
Total shareholders' equity 20,255,777 20,695,277
----------- -----------
Total liabilities and shareholders' equity $ 26,544,541 $ 22,843,093
=========== ===========
See accompanying notes to financial statements.
<PAGE> 4
USA REAL ESTATE INVESTMENT TRUST
Statements of Income
(Unaudited)
Three Months Ended
June 30,
1997 1996
---------- ----------
Revenues:
Rent $ 660,230 $ 646,229
Interest 35,801 31,312
---------- ----------
696,031 677,541
---------- ----------
Expenses:
Operating expenses 76,229 76,712
Property taxes 52,803 63,501
Property management fees 12,000 12,000
Interest 82,175 40,764
Depreciation and amortization 150,000 152,000
General and administative 69,691 99,997
---------- ----------
442,898 444,974
---------- ----------
Net income $ 253,133 $ 232,567
========== ==========
Net income per share of beneficial interest $ 0.06 $ 0.06
========== ==========
See accompanying notes to financial statements.
<PAGE> 5
USA REAL ESTATE INVESTMENT TRUST
Statements of Income
(Unaudited)
Six Months Ended
June 30,
1997 1996
---------- ----------
Revenues:
Rent $ 1,253,764 $ 1,293,088
Interest 97,589 65,756
---------- ----------
1,351,353 1,358,844
---------- ----------
Expenses:
Operating expenses 153,699 147,890
Property taxes 105,606 129,213
Property management fees 24,000 24,000
Interest 122,470 81,767
Depreciation and amortization 300,000 308,000
General and administrative 162,588 230,970
---------- ----------
$ 868,363 $ 921,840
---------- ----------
Net income 482,990 437,004
========== ==========
Net income per share of beneficial interest $ 0.12 $ 0.11
========== ==========
See accompanying notes to financial statements.
<PAGE> 6
Statements of Cash Flows
(Unaudited)
Six Months Ended
June 30,
1997 1996
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 482,990 437,004
---------- ----------
Adjustments to reconcile net income
to net cash used by operating activities:
Depreciation and amortization 300,000 308,000
Changes in other assets and liabilities:
Increase (decrease) in other assets (220,373) (24,480)
Increase (decrease) in accounts
payable and accrued expenses (25,280) 17,041
---------- ----------
Total adjustments to income 54,347 300,561
---------- ----------
Net cash provided by
operating activities 537,337 737,565
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of rental properties 0 245,882
Purchases of and improvements to
rental properties (7,603,147) (139,228)
Collections on notes receivable 0 79,274
---------- ----------
Net cash provided by
investing activities (7,603,147) 185,928
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term notes payable 4,200,000 0
Redemption of shares (116,269) (210,714)
Principal payments on long-term notes payable (33,772) (25,316)
Distributions paid (806,221) (737,356)
---------- ----------
Net cash used by
financing activities 3,243,738 (973,386)
---------- ----------
Net increase (decrease) in cash (3,822,072) (49,893)
Cash and cash equivalents, beginning of period 3,909,665 1,487,661
---------- ----------
Cash and cash equivalents, end of period $ 87,593 $ 1,437,768
========== ==========
See accompanying notes to financial statements.
<PAGE> 7
USA REAL ESTATE INVESTMENT TRUST
Notes to Financial Statements
1. In the opinion of the Trust, the accompanying unaudited financial
statements contain all adjustments necessary to present fairly the Trust's
financial position as of June 30, 1997, and the results of its operations
for the six months ended June 30, 1997 and 1996 and cash flows for the six
months ended June 30, 1997 and 1996.
The accounting policies followed by the Trust are set forth in Note 1 to
the Trust's financial statements in the 1996 Form 10-K, which are
incorporated herein by reference.
2. In 1987, the Trust elected to be taxed as a real estate investment trust
and, as such, will not be taxed on that portion of its taxable income
which is distributed to shareholders provided that at least 95% of its
real estate investment trust taxable income is distributed.
The Trust intends to continue to qualify as a real estate investment trust
and, accordingly, no provision for income taxes has been made in the
financial statements.
<PAGE> 8
USA REAL ESTATE INVESTMENT TRUST
Management's Discussion and Analysis of
Financial Condition and Results of Operations
RESULTS OF OPERATIONS
Interest expense increased $41,411 and $40,703 for the three months and six
months ended June 30, 1997, respectively, compared to the same periods in
1996. This increase is attributed to the debt associated with the purchase
of 1590 Sycamore Drive in Hercules, California.
General and administrative expense decreased $30,306 and $68,382 for the
three months and six months ended June 30, 1997, respectively, compared to
the same periods in 1996. These decreases were primarily the result of
fewer professional fees in 1997.
Net income was $482,990 or 12 cents per share in the six months ended June 30,
1997 compared to $437,004 or 11 cents per share in the six months ended
June 30, 1996.
CAPITAL RESOURCES AND LIQUIDITY
The Trust anticipates that operating income, proceeds from the sale of
properties, collections on notes receivable, and borrowings collateralized by
specific properties will provide for its future liquidity and capital
resource needs.
PART II. OTHER INFORMATION
USA REAL ESTATE INVESTMENT TRUST
ITEM 5: OTHER INFORMATION:
On May 12, 1997, the Annual Meeting of the Shareholders of the Trust was held
in Sacramento, California. At said meeting, the shareholders renominated and
relected Gregory E. Crissman, Benjamin A. Diaz, William M. Gallagher and
Joyce A. Marks as trustees of the Trust.
ITEM 6: REPORTS ON FORM 8-K
None.
<PAGE> 9
USA REAL ESTATE INVESTMENT TRUST
Signatures
Pursuant to the requirement 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.
USA Real Estate Investment Trust
----------------------------------------
August 7, 1997 Gregory Crissman
-------------------- ----------------------------------------
Date Gregory Crissman
Chairman
August 7, 1997 Benjamin Diaz
-------------------- ----------------------------------------
Date Benjamin Diaz
Trustee
<PAGE> 10
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Statement of Financial Condition at June 30, 1997 (Unaudited) and the
Statement of Income for the Six Months Ended June 30, 1997 (Unaudited)
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 87,593
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 87,593
<PP&E> 27,814,212
<DEPRECIATION> 2,571,650
<TOTAL-ASSETS> 25,242,562
<CURRENT-LIABILITIES> 75,203
<BONDS> 0
<COMMON> 4,009,348
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 26,544,541
<SALES> 1,351,353
<TOTAL-REVENUES> 1,351,353
<CGS> 0
<TOTAL-COSTS> 868,363
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 122,470
<INCOME-PRETAX> 482,990
<INCOME-TAX> 0
<INCOME-CONTINUING> 482,990
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 482,990
<EPS-PRIMARY> 0.120
<EPS-DILUTED> 0.120
</TABLE>
