UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended June 30, 1995
or
[ ]Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to
Commission File Number: 0-16171
USAA Income Properties IV Limited Partnership
(Exact name of registrant as specified in its charter)
Delaware 74-2449334
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8000 Robert F. McDermott Fwy., IH 10 West, Suite 600
San Antonio, Texas 78230-3884
(Address of principal executive offices) (Zip Code)
(210) 498-7391
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed
since last report.)
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
1
<PAGE>
PART I
Item 1. Financial Statements
<TABLE>
USAA Income Properties IV Limited Partnership
Condensed Consolidated Balance Sheets
<CAPTION>
June 30,
1995 December 31,
(Unaudited) 1994
<S> <C> <C>
Assets
Rental properties, net $ 46,953,305 47,806,604
Temporary investments, at cost
which approximates market value:
USAA Mutual Fund, Inc. -- 13,920
Money market fund 2,471,190 2,180,318
2,471,190 2,194,238
Cash 258,864 14,506
Cash and cash equivalents 2,730,054 2,208,744
Accounts receivable 59,765 63,505
Deferred charges and other assets, at amortized cost 230,454 351,189
$ 49,973,578 50,430,042
Liabilities and Partners' Equity
Mortgages payable $ 16,740,936 16,839,334
Note payable to affiliate 6,000,000 6,000,000
Accounts payable, including amounts due
to affiliates of $38,089 and $34,886 110,388 59,971
Accrued expenses and other liabilities 273,058 250,852
Total liabilities 23,124,382 23,150,157
Minority interest in joint venture 4,409,350 4,581,924
Partners' equity
General Partner:
Capital contribution 1,000 1,000
Cumulative net income 57,355 55,353
Cumulative distributions (117,293) (112,710)
(58,938) (56,357)
Limited Partners (60,495 interests):
Capital contributions, net of
offering costs 28,432,650 28,432,650
Cumulative net income 5,678,149 5,479,971
Cumulative distributions (11,612,015) (11,158,303)
22,498,784 22,754,318
Total Partners' equity 22,439,846 22,697,961
$ 49,973,578 50,430,042
See accompanying notes to condensed consolidated financial statements.
</TABLE>
2
<PAGE>
<TABLE>
USAA Income Properties IV Limited Partnership
Condensed Consolidated Statements of Income
(Unaudited)
<CAPTION>
Three Months Three Months
Ended Ended
June 30, 1995 June 30, 1994
<S> <C> <C>
Income
Rental income $ 1,161,480 1,280,326
Less direct expenses, including depreciation
of $467,736 and $465,895 500,159 479,602
Net operating income 661,321 800,724
Interest income (note 1) 38,376 14,727
Total income 699,697 815,451
Expenses
General and administrative (note 1) 53,079 52,211
Management fee (note 1) 23,637 24,648
Interest (note 1) 533,703 538,064
Minority interest in joint venture earnings 47,002 46,927
Total expenses 657,421 661,850
Net income $ 42,276 153,601
Net income per limited partnership interest $ 0.69 2.51
<CAPTION>
Six Months Six Months
Ended Ended
June 30, 1995 June 30, 1994
<S> <C> <C>
Income
Rental income $ 2,440,691 2,560,253
Less direct expenses, including depreciation
of $934,747 and $931,790 987,595 970,097
Net operating income 1,453,096 1,590,156
Interest income (note 1) 72,899 24,985
Total income 1,525,995 1,615,141
Expenses
General and administrative (note 1) 121,927 128,905
Management fee (note 1) 44,933 47,798
Interest (note 1) 1,066,570 1,075,179
Minority interest in joint venture earnings 92,385 89,569
Total expenses 1,325,815 1,341,451
Net income $ 200,180 273,690
Net income per limited partnership interest $ 3.28 4.48
See accompanying notes to condensed consolidated financial statements.
</TABLE>
3
<PAGE>
<TABLE>
USAA Income Properties IV Limited Partnership
Condensed Consolidated Statements of Cash Flows
Six months ended June 30, 1995 and 1994
(Unaudited)
<CAPTION>
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income $ 200,180 273,690
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 934,747 931,790
Amortization 12,054 12,054
Decrease (increase) in accounts receivable 3,740 (10,958)
Decrease in deferred charges and other
assets 108,681 92,560
Increase in accounts payable, accrued expenses
and other liabilities 72,623 127,309
Minority interest in joint venture earnings 92,385 89,569
Cash provided by operating activities 1,424,410 1,516,014
Cash flows used in investing activities-
Additions to rental properties (81,448) (12,128)
Cash flows from financing activities:
Repayment of mortgages payable (98,398) (89,790)
Distributions to co-venturer (264,959) (264,960)
Distributions to partners (458,295) (458,296)
Cash used in financing activities (821,652) (813,046)
Net increase in cash and cash equivalents 521,310 690,840
Cash and cash equivalents at beginning of period 2,208,744 1,007,862
Cash and cash equivalents at end of period $ 2,730,054 1,698,702
See accompanying notes to condensed consolidated financial statements.
</TABLE>
4
<PAGE>
Notes to Condensed Consolidated Financial Statements
June 30, 1995
(Unaudited)
1. Transactions with Affiliates
A summary of transactions with affiliates follows for the six-
month period ended June 30, 1995:
Quorum
USAA USAA Real Estate
Mutual Real Estate Services
Fund, Inc. Company Corporation
Reimbursement of
expenses (a) $ -- 59,752 16,905
Interest income (27) -- --
Management fees -- 44,933 30,455
Lease commissions -- -- 4,692
Interest expense (b) -- 297,534 --
Total $ (27) 402,219 52,052
(a) Reimbursement of expenses represents amounts paid or
accrued as reimbursement of expenses incurred on behalf of
the Partnership at actual cost and does not include any
mark-up or items normally considered as overhead.
(b) Represents interest expense at market rate on a mortgage
loan.
2. Other
Reference is made to the consolidated financial statements in
the Annual Report filed with the Form 10-K for the year ended
December 31, 1994 with respect to significant accounting and
financial reporting policies as well as to other pertinent
information concerning the Partnership. Information furnished
in this report reflects all normal recurring adjustments which
are, in the opinion of management, necessary for a fair
presentation of the results for the interim periods presented.
Further, the operating results presented for these interim
periods are not necessarily indicative of the results which may
occur for the remaining six months of 1995 or any other future
period.
The financial information included in this interim report as of
June 30, 1995 and for the three months and six months ended June
30, 1995 and 1994 has been prepared by management without audit
by independent certified public accountants who do not express
an opinion thereon. The Partnership's annual report includes
audited financial statements.
5
<PAGE>
PART I
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
At June 30, 1995, the Partnership had cash of $258,864 and
temporary investments of $2,471,190. Included in these amounts was
the working capital reserve and funds held for payment of current
obligations of the Partnership. Accounts receivable consisted of
amounts due from tenants. Deferred charges and other assets
consisted primarily of deferred rent resulting from recognition of
income as required by generally accepted accounting principles.
Accounts payable consisted of amounts due to affiliates for
reimbursable expenses and management fees, and amounts due to third
parties for expenses incurred for operations. Accrued expenses and
other liabilities consisted primarily of prepaid rent, security
deposits and property tax accruals.
During the quarter ended June 30, 1995, the Partnership distributed
$226,856 to Limited Partners and $2,291 to the General Partner for
a total of $229,147.
The lease with Linear Technology Corporation expired in June 1995
and negotiations are in the final phases regarding lease renewal.
The rental rates in the market are lower than the rate Linear was
paying on the original lease and will be reflected by a rent
reduction on the lease renewal.
At the Kodak Building, the Invitrogen lease expires in April 1996
and the tenant has expressed a need for additional space and is
considering available market opportunities. Invitrogen's need for
additional space cannot be accommodated at the Kodak property.
Invitrogen is also seeking a possible six-month lease extension.
Kodak has made no commitment to take Invitrogen's space; therefore,
management intends to begin marketing the space during the third
quarter of 1995. The building is 100% leased by Kodak and
Invitrogen.
During May, MagneTek vacated the Century Electric Building in St.
Louis, Missouri. This property will undergo some improvements to
prepare the building for new tenants and will be marketed as the
1881 Pine Street property. These expenditures will be paid from
the Partnership's cash reserves. The rental rates in the market
are lower than the rate MagneTek was paying.
Future liquidity is expected to result from cash generated from
operations of the properties, interest on temporary investments and
ultimately through the sale of the properties.
6
<PAGE>
Results of Operations
For the periods ended June 30, 1995 and 1994, income was generated
from rental income from the income-producing real estate properties
and interest income earned on the funds in temporary investments.
Expenses incurred during the same periods were associated with the
operation of the Partnership's properties, interest on the
mortgages payable and various other costs required for
administration of the Partnership.
Rental properties decreased as of June 30, 1995 as compared to
December 31, 1994 due to depreciation offset by tenant improvement
costs. The increase in cash and cash equivalents reflected the
reduction in distributions that was made in order to build the
working capital reserve for future operations.
Rental income decreased for the three-month and six-month periods
ended June 30, 1995 as compared to the same periods ended June 30,
1994 as a result of MagneTek vacating the 1881 Pine Street
property. Depreciation increased for the periods ended June 30,
1995 as compared to the periods ended June 30, 1994 due to Kodak
tenant improvements. Direct expenses were higher for the three
months and six months ended June 30, 1995 as compared to the same
periods ended June 30, 1994 as a result of sidewalk repairs and
property tax accruals at the 1881 Pine Street property.
An increase in cash reserves and higher interest rates accounted
for the increase in interest income for the three months and six
months ended June 30, 1995 as compared to the three months and six
months ended June 30, 1994.
General and administrative expenses decreased for the six months
ended June 30, 1995 as compared to the six months ended June 30,
1994 due to a reduction in charges for preparation of federal and
state tax returns and a reduction in audit fees. The management
fee is based on cash flow from operations of the Partnership
adjusted for cash reserves and fluctuated accordingly. Interest
expense for the periods ended June 30, 1995 was lower than the
periods ended June 30, 1994 due to principal balance reductions.
Minority interest in joint venture earnings increased for the
periods ended June 30, 1995 as compared to the periods ended June
30, 1994 due to a decrease in interest expense at Apollo.
7
<PAGE>
PART II
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Sequentially
Exhibit Numbered
No. Description Page
4 Restated Certificate and Agreement of
Limited Partnership dated as of June 8,
1987, attached as Exhibit A to the
Partnership's Prospectus dated June 8,
1987 filed pursuant to Rule 424(b),
Registration No. 33-11892 incorporated
herein by this reference. --
27 Financial Data Schedule 10
(b) During the quarter ended June 30, 1995, there
were no Current Reports on Form 8-K filed.
8
<PAGE>
FORM 10-Q
SIGNATURES
USAA INCOME PROPERTIES IV LIMITED PARTNERSHIP
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.
USAA INCOME PROPERTIES IV
LIMITED PARTNERSHIP (Registrant)
BY: USAA PROPERTIES IV, INC.,
General Partner
August 11, 1995 By: /s/Edward B. Kelley
Edward B. Kelley
Chairman, President and
Chief Executive Officer
August 11, 1995 BY: /s/Martha J. Barrow
Martha J. Barrow
Vice President -
Administration
and Finance
9
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 2,730,054
<SECURITIES> 0
<RECEIVABLES> 59,765
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 46,953,305
<DEPRECIATION> 0
<TOTAL-ASSETS> 49,973,578
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 22,439,846
<TOTAL-LIABILITY-AND-EQUITY> 49,973,578
<SALES> 0
<TOTAL-REVENUES> 2,440,691
<CGS> 0
<TOTAL-COSTS> 987,595
<OTHER-EXPENSES> 259,245
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,066,570
<INCOME-PRETAX> 200,180
<INCOME-TAX> 0
<INCOME-CONTINUING> 200,180
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 200,180
<EPS-PRIMARY> 3.28
<EPS-DILUTED> 0
</TABLE>
