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 March 31, 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>
March 31,
1995 December 31,
(Unaudited) 1994
<S> <C> <C>
Assets
Rental properties, net $ 47,345,196 47,806,604
Temporary investments, at cost
which approximates market value:
USAA Mutual Fund, Inc. -- 13,920
Money market fund 2,499,814 2,180,318
2,499,814 2,194,238
Cash 23,331 14,506
Cash and cash equivalents 2,523,145 2,208,744
Accounts receivable 96,955 63,505
Deferred charges and other assets, at
amortized cost 272,201 351,189
$ 50,237,497 50,430,042
Liabilities and Partners' Equity
Mortgages payable $ 16,790,539 16,839,334
Note payable to affiliate 6,000,000 6,000,000
Accounts payable, including amounts due
to affiliates of $46,169 and $34,886 62,735 59,971
Accrued expenses and other liabilities 262,678 250,852
Total liabilities 23,115,952 23,150,157
Minority interest in joint venture 4,494,828 4,581,924
Partners' equity
General Partner:
Capital contribution 1,000 1,000
Cumulative net income 56,932 55,353
Cumulative distributions (115,002) (112,710)
(57,070) (56,357)
Limited Partners (60,495 interests):
Capital contributions, net of
offering costs 28,432,650 28,432,650
Cumulative net income 5,636,296 5,479,971
Cumulative distributions (11,385,159) (11,158,303)
22,683,787 22,754,318
Total Partners' equity 22,626,717 22,697,961
$ 50,237,497 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
Three months ended March 31, 1995 and 1994
(Unaudited)
<CAPTION>
1995 1994
<S> <C> <C>
Income
Rental income $ 1,279,211 1,279,927
Less direct expenses, including depreciation
of $467,011 and $465,895 487,436 490,496
Net operating income 791,775 789,431
Interest income (note 1) 34,523 10,258
Total income 826,298 799,689
Expenses
General and administrative (note 1) 68,848 76,693
Management fee (note 1) 21,296 23,150
Interest (note 1) 532,867 537,115
Minority interest in joint venture earnings 45,383 42,642
Total expenses 668,394 679,600
Net income $ 157,904 120,089
Net income per limited partnership interest $ 2.58 1.97
See accompanying notes to condensed consolidated financial statements.
</TABLE>
3
<PAGE>
<TABLE>
USAA Income Properties IV Limited Partnership
Condensed Consolidated Statements of Cash Flows
Three months ended March 31, 1995 and 1994
(Unaudited)
<CAPTION>
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income $ 157,904 120,089
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 467,011 465,895
Amortization 6,027 6,027
Increase in accounts receivable (33,450) (38,649)
Decrease in deferred charges and other
assets 72,961 63,939
Increase in accounts payable, accrued
expenses and other liabilities 14,590 160,047
Minority interest in joint venture earning 45,383 42,642
Cash provided by operating activities 730,426 819,990
Cash flows used in investing activities:
Additions to rental properties (5,603) (12,129)
Cash flows from financing activities:
Repayment of mortgages payable (48,795) (44,547)
Distributions to co-venturer (132,479) (132,480)
Distributions to partners (229,148) (229,149)
Cash used in financing activities (410,422) (406,176)
Net increase in cash and cash equivalents 314,401 401,685
Cash and cash equivalents at beginning of period 2,208,744 1,007,862
Cash and cash equivalents at end of period $ 2,523,145 1,409,547
See accompanying notes to condensed consolidated financial statements.
</TABLE>
4
<PAGE>
Notes to Condensed Consolidated Financial Statements
March 31, 1995
(Unaudited)
1. Transactions with Affiliates
A summary of transactions with affiliates follows for the three-month
period ended March 31, 1995:
Quorum
USAA USAA Real Estate
Mutual Real Estate Services
Fund, Inc. Company Corporation
Reimbursement of
expenses (a) $ -- 34,110 8,394
Interest income (27) -- --
Management fees -- 21,296 14,725
Lease commissions -- -- 1,495
Interest expense (b) -- 147,945 --
Total $ (27) 203,351 24,614
(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
The notes to the financial statements on pages 14 through 19 of
the Partnership's 1994 annual report are an integral part of
these financial statements. 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 nine months of 1995 or any other future period.
The financial information included in this interim report as of
March 31, 1995 and for the three-months ended March 31, 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 March 31, 1995, the Partnership had cash of $23,331 and
temporary investments of $2,499,814. 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 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 March 31, 1995, the Partnership
distributed $226,856 to Limited Partners and $2,292 to the General
Partner for a total of $229,148.
The lease with Linear Technology Corporation expires in June 1995
and negotiations continue regarding lease renewal. The rental
rates in the market are lower than the rate currently being paid by
Linear.
At the Kodak Building, the Invitrogen lease expires in April 1996
and renewal discussions have begun; however, the tenant has
expressed a need for expansion. The building is 100% leased by
Kodak and Invitrogen and may not be able to accommodate growth
needs of both tenants simultaneously.
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.
Results of Operations
For the periods ended March 31, 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 March 31, 1995 as compared to
March 31, 1994 due to depreciation offset slightly by tenant
improvement costs. The increase in cash and cash equivalents
reflected the reduction in distributions in order to build the
working capital reserve for future operations.
6
<PAGE>
Rental income remained consistent at March 31, 1995 as compared to
March 31, 1994. Depreciation increased slightly from March 31,
1994 to March 31, 1995 due to Kodak tenant improvements. Direct
expenses were higher for March 31, 1994 as compared to March 31,
1995 as a result of parking lot maintenance at Kodak in 1994.
An increase in cash reserves and higher interest rates accounted
for the increase in interest income for the three-months ended
March 31, 1995 as compared to March 31, 1994.
General and administrative expenses decreased in 1995 as compared
to 1994 due to a reduction in charges for preparation for federal
and state tax returns. The management fee is based on cash flow
from operations of the Partnership adjusted for cash reserves and
fluctuated accordingly. Interest expense for the period ended
March 31, 1995 was lower than March 31, 1994 due to principal
balance reductions. Minority interest in joint venture earnings
increased for the period ended March 31, 1995 as compared to March
31, 1994 due to a decrease in interest expense.
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,
incorporated as Exhibit A to the Partnership's
Prospectus dated June 8, 1987 filed
pursuant to Rule 424(b), incorporated herein
by this reference. __
27 Financial Data Schedule 10
(b) During the quarter ended March 31, 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
May 11, 1995 BY: /s/Edward B. Kelley
Edward B. Kelley
Chairman, President and
Chief Executive Officer
May 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 2,523,145
<SECURITIES> 0
<RECEIVABLES> 96,955
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 47,345,196
<DEPRECIATION> 0
<TOTAL-ASSETS> 50,237,497
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 22,626,717
<TOTAL-LIABILITY-AND-EQUITY> 50,237,497
<SALES> 0
<TOTAL-REVENUES> 1,279,211
<CGS> 0
<TOTAL-COSTS> 487,436
<OTHER-EXPENSES> 135,527
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 532,867
<INCOME-PRETAX> 157,904
<INCOME-TAX> 0
<INCOME-CONTINUING> 157,904
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 157,904
<EPS-PRIMARY> 2.58
<EPS-DILUTED> 0
</TABLE>
