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, 2000
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
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
AAA NET REALTY FUND IX, LTD.
(A LIMITED PARTNERSHIP)
BALANCE SHEET
SEPTEMBER 30, 2000
(Unaudited)
ASSETS
Cash and cash equivalents $ 322,037
Property:
Land 1,490,494
Buildings 2,946,375
----------------
4,436,869
Accumulated depreciation (803,788)
----------------
Total property, net 3,633,081
----------------
Other assets:
Accrued rental income 63,898
----------------
TOTAL ASSETS $ 4,019,016
================
LIABILITIES AND PARTNERSHIP EQUITY
Liabilities:
Accounts payable $ 21,888
----------------
TOTAL LIABILITIES 21,888
----------------
Partnership equity (deficit):
General partners (952)
Limited partners 3,998,080
----------------
TOTAL PARTNERSHIP EQUITY 3,997,128
----------------
TOTAL LIABILITIES AND PARTNERSHIP EQUITY $ 4,019,016
================
See Notes to Financial Statements.
2
<PAGE>
<TABLE>
AAA NET REALTY FUND IX, LTD.
(A LIMITED PARTNERSHIP)
STATEMENTS OF INCOME
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(Unaudited
<CAPTION>
Quarter Year To Date
<S> <C> <C> <C> <C>
2000 1999 2000 1999
---- ---- ---- ----
Revenues:
Rental income $ 138,979 $ 137,849 $ 414,790 $ 416,343
Interest income 3,841 1,678 9,598 5,277
---------- ---------- ---------- ----------
Total revenues 142,820 139,527 424,388 421,620
---------- ---------- ---------- ----------
Expenses:
Advisory fees to related party 13,476 9,960 40,428 29,880
Depreciation 23,384 23,384 70,152 70,152
Professional fees 2,307 274 12,783 11,044
---------- ---------- ---------- ----------
Total expenses 39,167 33,618 123,363 111,076
---------- ---------- ---------- ----------
Net income $ 103,653 $ 105,909 $ 301,025 $ 310,544
========== ========== ========== ==========
Allocation of net income:
General partners $ 1,036 $ 1,059 $ 3,010 $ 3,106
Limited partners 102,617 104,850 298,015 307,438
---------- ---------- ---------- ----------
$ 103,653 $ 105,909 $ 301,025 $ 310,544
========== ========== ========== ==========
Net income per unit $ 19.23 $ 19.65 $ 55.84 $ 57.61
========== ========== ========== ==========
Weighted average units outstanding 5,390.5 5,390.5 5,390.5 5,390.5
========== ========== ========== ==========
See Notes to Financial Statements.
</TABLE>
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<PAGE>
<TABLE>
AAA NET REALTY FUND IX, LTD.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(Unaudited)
<CAPTION>
Quarter Year To Date
<S> <C> <C> <C> <C>
2000 1999 2000 1999
---- ---- ---- ----
Cash flows from operating activities:
Net income $ 103,653 $ 105,909 $ 301,025 $ 310,544
Adjustments to reconcile net income to net
cash flows from operating activities:
Depreciation 23,384 23,384 70,152 70,152
Increase in accrued rental income (3,888) (5,295) (14,478) (15,885)
Decrease in accounts payable 7,803 3,876 7,471 114
---------- ---------- ---------- ----------
Net cash provided by operating activities 130,952 127,874 364,170 364,925
---------- ---------- ---------- ----------
Cash flows from financing activities:
Distributions paid to partners (92,765) (117,023) (276,310) (350,638)
---------- ---------- ---------- ----------
Net cash used in financing activities (92,765) (117,023) (276,310) (350,638)
---------- ---------- ---------- ----------
Net increase in cash and cash equivalents 38,187 10,851 87,860 14,287
Cash and cash equivalents at beginning of period 283,850 219,738 234,177 216,302
---------- ---------- ---------- ----------
Cash and cash equivalents at end of period $ 322,037 $ 230,589 $ 322,037 $ 230,589
========== ========== ========== ==========
See Notes to Financial Statements.
</TABLE>
4
<PAGE>
AAA NET REALTY FUND IX, LTD.
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(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 2000 or 1999.
Properties are leased on a triple-net basis. Revenue is recognized on a
straight-line basis over the terms of the individual leases. Percentage rents
are recognized when received 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, 2000, the
net book value of this property comprised 1.6% of total assets, the rental
income of $6,656 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 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, 2000 and 1999.
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, 1999.
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, $13,476 and $40,428 was incurred and paid to ARIC for the three and
nine months ended September 30, 2000, respectively and $9,960 and $29,880 was
incurred and paid to ARIC for the three and nine months ended September 30,1999,
respectively.
4. MAJOR LESSEES
The following schedule summarizes total rental income by lessee for the three
and nine months ended September 30, 2000 and 1999:
<TABLE>
Quarter Year to Date
<CAPTION>
<S> <C> <C> <C> <C>
2000 1999 2000 1999
---- ---- ---- ----
Foodmaker, Inc. (Texas) $ 18,380 $ 17,249 $ 52,879 $ 51,746
Baptist Memorial Health
Services, Inc. (Tennessee) 52,169 52,170 156,509 156,510
Payless Shoe Source/WaldenBooks (Texas) 20,500 20,500 61,500 61,500
Golden Corral Corporation (Texas) 47,930 47,930 143,902 146,587
--------- --------- --------- ---------
Total $ 138,979 $ 137,849 $ 414,790 $ 416,343
========= ========= ========= =========
</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.
RESULTS OF OPERATIONS
For the three months ended September 30, 2000, revenues totaled $142,820, which
was comprised of $138,979 of rental income and $3,841 of interest income,
compared to total revenues of $139,527 for the three months ended September 30,
1999, which was comprised of $137,849 of rental income and $1,678 of interest
income. Rental income for the third quarter of 2000 increased slightly from that
of the third quarter of 1999 due to an increase in rental from Foodmaker, Inc.
and Baptist Memorial Health Services, Inc. Interest income for the third quarter
of 2000 increased slightly from that of the third quarter of 1999, primarily due
to more effective cash management and overnight investing opportunities.
Expenses increased from $33,618 in the third quarter of 1999 to $39,167 in the
third quarter of 2000, primarily from an increase in advisory fees paid for the
administrative services necessary for the operation of the partnership and in
professional fees which includes legal, audit and transfer agent fees. The
Partnership recorded net income of $103,653 for the third quarter of 2000, as
compared to net income of $105,909 for the third quarter of 1999.
For the nine months ended September 30, 2000, revenues totaled $424,388, which
was comprised of $414,790 of rental income and $9,598 of interest income,
compared to total revenues of $421,620 for the nine months ended September 30,
1999, which was comprised of $416,343 of rental income and $5,277 of interest
income. Rental income decreased from the rental income recorded in the first
nine months of 1999 due to less percentage rent collected from Golden Corral
Corporation. This decrease in rental income was partially off-set by an increase
in interest income due to more effective cash management and overnight investing
opportunities. Expenses increased from $111,076 in the first nine months of 1999
to $123,363 in the first nine months of 2000, primarily from an increase in
advisory fees paid for the administrative services necessary for the operation
of the partnership. The Partnership recorded net income of $301,025 for the
first nine months of 2000 as compared to net income of $310,544 for the first
nine months of 1999.
7
<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
8
<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 14, 2000 /s/ H. Kerr Taylor
--------------- ------------------
Date H. Kerr Taylor, President of General Partner
November 14, 2000 /s/ Chad C. Braun
--------------- -------------------
Date Chad C. Braun (Principal Accounting Officer)
9
