<PAGE>
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 September 30, 1999
[_] 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.
Yes [X] No [_]
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
AAA NET REALTY FUND IX, LTD.
(A LIMITED PARTNERSHIP)
BALANCE SHEET
SEPTEMBER 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Cash and cash equivalents $ 230,589
Property:
Land 1,490,494
Buildings 2,946,375
-----------
4,436,869
Accumulated depreciation (710,253)
-----------
Total property 3,726,616
-----------
Other assets:
Accrued rental income 44,125
-----------
TOTAL ASSETS $ 4,001,330
===========
LIABILITIES AND PARTNERSHIP EQUITY
Liabilities:
Accounts payable $ 13,541
-----------
TOTAL LIABILITIES 13,541
-----------
Partnership equity (deficit):
General partners (1,978)
Limited partners 3,989,767
-----------
TOTAL PARTNERSHIP EQUITY 3,987,789
-----------
TOTAL LIABILITIES AND PARTNERSHIP EQUITY $ 4,001,330
===========
</TABLE>
See Notes to Financial Statements.
2
<PAGE>
AAA NET REALTY FUND IX, LTD.
(A LIMITED PARTNERSHIP)
STATEMENTS OF INCOME
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(Unaudited)
<TABLE>
<CAPTION>
Quarter Year To Date
-------------------------- --------------------------
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 137,849 $ 137,848 $ 416,343 $ 413,546
Interest income 1,678 2,121 5,277 4,031
--------- --------- --------- ---------
Total revenues 139,527 139,969 421,620 417,577
--------- --------- --------- ---------
Expenses:
Advisory fees to related party 9,960 4,389 29,880 13,167
Depreciation 23,384 23,384 70,152 70,152
Professional fees 274 3,372 11,044 15,796
--------- --------- --------- ---------
Total expenses 33,618 31,145 111,076 99,115
--------- --------- --------- ---------
Net income $ 105,909 $ 108,824 $ 310,544 $ 318,462
========= ========= ========= =========
Allocation of net income:
General partners $ 1 ,059 $ 1,089 $ 3,106 $ 3,185
Limited partners 104,850 107,735 307,438 315,277
--------- --------- --------- ---------
$ 105,909 $ 108,824 $ 310,544 $ 318,462
========= ========= ========= =========
Net income per unit $ 19.65 $ 20.19 $ 57.61 $ 59.08
========= ========= ========= =========
Weighted average units outstanding 5,390.5 5,390.5 5,390.5 5,390.5
========= ========= ========= =========
</TABLE>
See Notes to Financial Statements.
3
<PAGE>
AAA NET REALTY FUND IX, LTD.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(Unaudited)
<TABLE>
<CAPTION>
Quarter Year To Date
-------------------------- --------------------------
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income $ 105,909 $ 108,824 $ 310,544 $ 318,462
Adjustments to reconcile net income to net cash
flows from operating activities:
Depreciation 23,384 23,384 70,152 70,152
Decrease in accounts receivable - - - 46,875
Increase in accrued rental income (5,295) (5,295) (15,885) (15,885)
Increase (decrease) in accounts payable 3,876 186 114 (4,263)
--------- --------- --------- ---------
Net cash provided by operating activities 127,874 127,099 364,925 415,341
--------- --------- --------- ---------
Cash flows from financing activities:
Distributions paid to partners (117,023) (116,484) (350,638) (349,074)
--------- --------- --------- ---------
Net cash used in financing activities (117,023) (116,484) (350,638) (349,074)
--------- --------- --------- ---------
Net increase in cash and cash equivalents 10,851 10,615 14,287 66,267
Cash and cash equivalents at beginning of period 219,738 205,571 216,302 149,919
--------- --------- --------- ---------
Cash and cash equivalents at end of period $ 230,589 $ 216,186 $ 230,589 $ 216,186
========= ========= ========= =========
</TABLE>
See Notes to Financial Statements.
4
<PAGE>
AAA NET REALTY FUND IX, LTD.
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED
SEPTEMBER 30, 1999 AND 1998
(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. Prior to June 5,
1998, the supervision of the operations of the properties was managed by
American Asset Advisers Realty Corporation, ("AAA"), a related party.
Beginning June 5, 1998, the supervision of the operations of the properties is
managed by AmREIT Realty Investment Corporation, ("ARIC"), 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 1999 or 1998.
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 September 30, 1999,
the net book value of this property comprised 1.6% of total assets, the rental
income of $6,542 comprised 1.6% of total rental income and 2.1% 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 preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
The accompanying unaudited financial statements have been prepared in
accordance with the instructions to Form 10-QSB and 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 and nine month periods ended September 30, 1999 and
1998.
5
<PAGE>
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,
1998.
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 payment for 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, a total of $9,960 and $29,880 was incurred and paid
to ARIC for the three and nine months ended September 30, 1999, respectively
and $4,389 and $13,167 was incurred and paid to AAA or ARIC for the three and
nine months ended September 30, 1998, respectively.
4.MAJOR LESSEES
The following schedule summarizes total rental income by lessee for the three
and nine months ended September 30, 1999 and 1998:
<TABLE>
<CAPTION>
Quarter Year to Date
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Foodmaker, Inc. (Texas) $ 17,249 $ 17,248 $ 51,746 $ 51,746
Baptist Memorial Health Services, Inc. (Tennessee) 52,170 52,170 156,510 156,510
Payless Shoe Source/WaldenBooks (Texas) 20,500 20,500 61,500 61,500
Golden Corral Corporation (Texas) 47,930 47,930 146,587 143,790
-------- -------- -------- --------
Total $137,849 $137,848 $416,343 $413,546
======== ======== ======== ========
</TABLE>
6
<PAGE>
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.
The operations of the Partnership are relatively simple and are managed by ARIC,
a subsidiary of AmREIT, Inc. (The "Company"). The following disclosure has been
made in the Form 10-KSB of the Company.
The Year 2000 problem ("Y2K") concerns the inability of information and non-
information technology systems to properly recognize and process date-sensitive
information beyond January 1, 2000. The Company's information technology system
consists of a network of personal computers and servers built using hardware and
software from mainstream suppliers. The Company has no internally generated
programmed software coding to correct, as all of the software utilized by the
Company is purchased or licensed from external providers.
In 1998, the Company formed a Year 2000 committee (the "Y2K Team") for the
purpose of identifying, understanding and addressing the various issues
associated with the Year 2000 problems. The Y2K Team consists of members from
the Company, including representatives from senior management, accounting and
computer consultants. The Y2K Team's initial step in assessing the Company's Y2K
readiness consists of identifying any systems that are date-sensitive and,
accordingly, could have potential Y2K problems. The Y2K Team is in the process
of conducting inspections, interviews and tests to identify which of the
Company's systems could have a potential Y2K problem.
The Company's information system is comprised of hardware and software
applications from mainstream suppliers; accordingly, the Y2K Team is in the
process of contacting the respective vendors and manufacturers to verify the Y2K
compliance of their products. In addition, the Y2K Team has also requested and
is evaluating documentation from other companies with which the Company has a
material third party relationship, including the Company's tenants, major
vendors, financial institutions and the Company's transfer agent. The Company
depends on its tenants for rents and cash flows, its financial institutions for
availability of cash and financing and its transfer agent to maintain and track
investor information. Although the Company continues to receive positive
responses from its third party relationships regarding their Y2K compliance, the
Company cannot be assured that the tenants, financial institutions, transfer
agent and other vendors have adequately considered the impact of the Year 2000.
The Company does not expect the Y2K impact of third parties to have a materially
adverse effect on its results of operation or financial position.
The Company has identified and has implemented upgrades for certain hardware
equipment. In addition, the Company has identified certain software applications
which will require upgrades to become Year 2000 compliant. The Company expects
all of these upgrades as well as any other necessary remedial measures on the
information technology systems used in the business activities and operations of
the Company to be completed by December 31, 1999. The Company does not expect
the aggregate cost of the Year 2000 remedial measures to exceed $10,000.
Based upon the progress the Company has made in addressing its Year 2000 issues,
the Company does not foresee significant risks associated with its Year 2000
compliance at this time. The Company plans to address its significant Year 2000
issues prior to being affected by them; therefore, it has not developed a
comprehensive contingency plan. However, if the Company identifies significant
risks related to its Year 2000 compliance, the Company will develop contingency
plans as deemed necessary at that time.
7
<PAGE>
RESULTS OF OPERATIONS
For the three months ended September 30, 1999, revenues totaled $139,527 which
was comprised of $137,849 of rental income and $1,678 of interest income.
Rental income is unchanged from the rental income recorded in the third quarter
of 1998. Expenses increased by $2,473 primarily from an increase in advisory
fees which were partially offset by a decrease in professional fees. The
Partnership recorded net income for the third quarter of 1999 of $105,909 as
compared to net income of $108,824 for the third quarter of 1998.
For the nine months ended September 30, 1999, revenues totaled $421,620 which
was comprised of $416,343 of rental income and $5,277 of interest income.
Rental income increased from the rental income recorded in the first nine months
of 1998 primarily as a result of annual percentage rent proceeds received on one
of two Golden Corral Restaurants. Expenses increased by $11,961 primarily from
an increase in advisory fees which were partially offset by a decrease in
professional fees. The Partnership recorded net income for the first nine
months of 1999 of $310,544 as compared to net income of $318,462 for the first
nine months of 1998.
8
<PAGE>
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
9
<PAGE>
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)
November 15, 1999 /s/ H. Kerr Taylor
- ----------------- --------------------------------------------
Date H. Kerr Taylor, President of General Partner
November 15, 1999 /s/ L. Larry Mangum
- ----------------- --------------------------------------------
Date L. Larry Mangum (Principal Accounting
Officer)
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 230,589
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 230,589
<PP&E> 4,436,869
<DEPRECIATION> 710,253
<TOTAL-ASSETS> 4,001,330
<CURRENT-LIABILITIES> 13,541
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 3,987,789
<TOTAL-LIABILITY-AND-EQUITY> 4,001,330
<SALES> 416,343
<TOTAL-REVENUES> 421,620
<CGS> 0
<TOTAL-COSTS> 111,076
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 310,544
<INCOME-TAX> 0
<INCOME-CONTINUING> 310,544
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 310,544
<EPS-BASIC> 57.61
<EPS-DILUTED> 0
</TABLE>
