UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
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: 033-33504
AAA NET REALTY FUND IX, LTD.
NEBRASKA LIMITED PARTNERSHIP IRS IDENTIFICATION NO.
76-0318157
8 GREENWAY PLAZA, SUITE 824 HOUSTON, TX 77046
(713) 850-1400
Indicate by check mark whether the issuer (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 issuer was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90 days. X Yes No
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
AAA NET REALTY FUND IX, LTD.
(A LIMITED PARTNERSHIP)
BALANCE SHEET
MARCH 31, 1998
(Unaudited)
ASSETS
Cash and cash equivalents $ 196,028
Property:
Land 1,490,494
Buildings 2,946,375
4,436,869
Accumulated depreciation (569,949)
Total property 3,866,920
Other assets:
Accrued rental income 12,355
TOTAL ASSETS $4,075,303
LIABILITIES AND PARTNERSHIP EQUITY
Liabilities:
Accounts payable $ 12,092
TOTAL LIABILITIES 12,092
Partnership equity (deficit):
General partners (3,727)
Limited partners 4,066,938
TOTAL PARTNERSHIP EQUITY 4,063,211
TOTAL LIABILITIES AND PARTNERSHIP EQUITY $4,075,303
See Notes to Financial Statements.
-2-
AAA NET REALTY FUND IX, LTD.
(A LIMITED PARTNERSHIP)
STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND MARCH 31, 1997
(Unaudited)
Year To Date
1998 1997
Revenues:
Rental income $137,849 $123,575
Interest income 869 1,455
Total revenues 138,718 125,030
Expenses:
Advisory fees to related party 4,389 4,050
Depreciation 23,384 23,384
Professional fees 10,204 7,960
Total expenses 37,977 35,394
Net income $100,741 $ 89,636
Allocation of net income:
General partners $ 1,007 $ 896
Limited partners 99,734 88,740
$100,741 $ 89,636
Net income per unit $ 18.69 $ 16.63
Weighted average units outstanding 5,390.5 5,390.5
See Notes to Financial Statements.
-3-
AAA NET REALTY FUND IX, LTD.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND MARCH 31, 1997
(Unaudited)
Year To Date
1998 1997
Cash flows from operating activities:
Net income $ 100,741 $ 89,636
Adjustments to reconcile net income to net cash
flows from operating activities:
Depreciation 23,384 23,384
Decrease in accounts receivable 46,875 -
Increase in accrued rental income (5,295) -
Decrease in accounts payable (3,382) (4,292)
Net cash provided by operating activities 162,323 108,728
Cash flows from financing activities:
Distributions paid to partners (116,214) (115,675)
Net cash used in financing activities (116,214) (115,675)
Net increase (decrease) in cash and cash equivalents 46,109 (6,947)
Cash and cash equivalents at beginning of period 149,919 180,142
Cash and cash equivalents at end of period $ 196,028 $ 173,195
See Notes to Financial Statements.
-4-
AAA NET REALTY FUND IX, LTD.
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(Unaudited)
1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
AAA Net Realty Fund IX, Ltd. ("the Partnership"), is a limited
partnership formed February 1, 1990 under the laws of the
State of Nebraska. American Asset Advisers Management
Corporation IX (a Nebraska corporation) is the managing
general partner and H. Kerr Taylor is the individual general
partner. The Partnership commenced operations as of June 6,
1990.
The Partnership was formed to acquire commercial properties
for cash, own, lease, operate, manage and eventually sell the
properties. The supervision of the operations of the
properties is managed by American Asset Advisers Realty
Corporation, ("AAA"), a related party.
The financial records of the Partnership are maintained on the
accrual basis of accounting whereby revenues are recognized
when earned and expenses are reflected when incurred.
For purposes of the statement of cash flows, the Partnership
considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents. There
has been no cash paid for income taxes or interest during 1998
or 1997.
Land and buildings are stated at cost. Buildings are
depreciated on a straight-line basis over an estimated useful
life of 31.5 years.
The final property acquisition was completed as a joint
venture. The Partnership's interest in the joint venture is
4.8%. At March 31, 1998, the net book value of this property
comprised 1.7% of total assets, the rental income of $2,181
comprised 1.6% of total rental income and 2.2% of net income.
Because of the immateriality of these amounts to the financial
statements as a whole, the initial purchase and the subsequent
rental income and depreciation have been accounted for on the
proportionate consolidation method.
All income and expense items flow through to the partners for
tax purposes. Consequently, no provision for federal or state
income taxes is provided in the accompanying financial
statements.
The accompanying unaudited financial statements have been
prepared in accordance with the instructions to Form 10-QSB
and do not include all of the disclosures required by
generally accepted accounting principles.
The financial statements reflect all normal and recurring
adjustments which are, in the opinion of management, necessary
to present a fair statement of results for the three month
periods ended March 31, 1998 and March 31, 1997.
The financial statements of AAA Net Realty Fund IX, Ltd.
contained herein should be read in conjunction with the
financial statements included in the Partnership's annual
report on Form 10-KSB for the year ended December 31, 1997.
-5-
2. PARTNERSHIP EQUITY
The managing general partner, American Asset Advisers
Management Corporation IX, and the individual general partner,
H. Kerr Taylor, have made capital contributions in the amounts
of $990 and $10, respectively. The general partners shall not
be obligated to make any other contributions to the
Partnership, except that, in the event that the general
partners have negative balances in their capital accounts
after dissolution and winding up of, or withdrawal from, the
Partnership, the general partners will contribute to the
Partnership an amount equal to the lesser of the deficit
balances in their capital accounts or 1.01% of the total
capital contributions of the limited partners' over the amount
previously contributed by the general partners.
3. RELATED PARTY TRANSACTIONS
The Partnership Agreement provides for the reimbursement for
administrative services necessary for the prudent operation of
the Partnership and its assets with the exception that no
reimbursement is permitted for rent, utilities, capital
equipment, salaries, fringe benefits or travel expenses
allocated to the individual general partner or to any
controlling persons of the managing general partner. In
connection therewith, $4,389 and $4,050 was incurred and paid
to AAA for the three months ended March 31, 1998 and March 31,
1997, respectively.
4. MAJOR LESSEES
The following schedule summarizes total rental income by
lessee for the three months ended March 31, 1998 and March 31,
1997:
Year to Date
1998 1997
Foodmaker, Inc. (Texas) $ 17,249 $ 15,934
Tandy Corporation (Tennessee) - * 41,211
Baptist Memorial Health Services, Inc. (Tennessee) 52,170 -
Payless Shoe Source/WaldenBooks (Texas) 20,500 18,500
Golden Corral Corporation (Texas) 47,930 47,930
Total $137,849 $123,575
* Lease terminated during 1997
-6-
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
AAA Net Realty Fund IX, Ltd., a Nebraska limited partnership, was
formed February 1, 1990 to acquire on a debt-free basis, existing
and newly constructed commercial properties located in the
continental United States and particularly in the Southwest, to
lease these properties to tenants under generally "triple net"
leases, to hold the properties with the expectation of equity
appreciation and eventually to resell the properties.
The Partnership's overall investment objectives are to acquire
properties that offer investors the potential for (i)
preservation and protection of the Partnership's capital; (ii)
partially tax-deferred cash distributions from operations; and
(iii) long-term capital gains through appreciation in value of
the Partnership's properties realized upon sale.
AAA has conducted a comprehensive review of its computer systems
to identify the systems that could be affected by the Year 2000
Issue. The Year 2000 Issue is the result of computer programs
being written using two digits rather than four to define the
applicable year. Any programs that have time-sensitive software
may recognize a date using "00" as the year 1900 rather than the
year 2000. AAA's hardware and software are believed to be Year
2000 compliant. Accordingly, the Partnership does not expect to
incur any material costs in connection with the compliance of the
Year 2000 Issue.
RESULTS OF OPERATIONS
For the three months ended March 31, 1998, revenues totaled
$138,718 which was comprised of $137,849 of rental income and
$869 of interest income. Rental income increased from the rental
income recorded in the first quarter of 1997 primarily as a
result of negotiating a lease on one property with a new tenant
at a higher rental rate. In addition, the rental income from two
other properties increased based upon a specified measure of the
increase in the consumer price index. Expenses increased
slightly by $2,583 primarily from an increase in professional
fees. The Partnership recorded net income for the first quarter
of 1998 of $100,741 as compared to net income of $89,636 for the
first quarter of 1997.
-7-
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
NONE
Item 5. Other Information
NONE
Item 6. Exhibits and Reports on Form 8-K
Exhibit 27 - Financial Data Schedule
-8-
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.
AAA Net Realty Fund IX, Ltd.
(Issuer)
May 15, 1998 /s/ H. Kerr Taylor
Date H. Kerr Taylor, President of General Partner
May 15, 1998 /s/ L. Larry Mangum
Date L. Larry Mangum
(Principal Accounting Officer)
-9-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 196,028
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 196,028
<PP&E> 4,436,869
<DEPRECIATION> 569,949
<TOTAL-ASSETS> 4,075,303
<CURRENT-LIABILITIES> 12,092
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 4,063,211
<TOTAL-LIABILITY-AND-EQUITY> 4,075,303
<SALES> 137,849
<TOTAL-REVENUES> 138,718
<CGS> 0
<TOTAL-COSTS> 37,977
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 100,741
<INCOME-TAX> 0
<INCOME-CONTINUING> 100,741
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 100,741
<EPS-PRIMARY> 18.69
<EPS-DILUTED> 0
</TABLE>
