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, 1997
__________ 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: 0-25436
AAA NET REALTY FUND X, LTD.
NEBRASKA LIMITED PARTNERSHIP IRS IDENTIFICATION
NO. 76-0381949
8 GREENWAY PLAZA, SUITE 824 HOUSTON, TX 77046
(713) 850-1400
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
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
AAA NET REALTY FUND X, LTD.
(A LIMITED PARTNERSHIP)
BALANCE SHEET
MARCH 31, 1997
(Unaudited)
ASSETS
CASH & CASH EQUIVALENTS $ 183,589
ACCOUNTS RECEIVABLE 21,101
PROPERTY:
Land 2,566,250
Building 5,370,984
7,937,234
Accumulated depreciation (436,535)
TOTAL PROPERTY 7,500,699
NET INVESTMENT IN DIRECT FINANCING LEASE 612,762
INVESTMENT IN JOINT VENTURES 1,377,908
OTHER ASSETS:
Organization costs, net of accumulated
amortization of $227,245 72,755
Accrued rental income 77,420
TOTAL OTHER ASSETS 150,175
TOTAL ASSETS 9,846,234
LIABILITIES & PARTNERSHIP EQUITY
LIABILITIES:
Accounts payable 9,083
Security deposits 12,000
TOTAL LIABILITIES 21,083
PARTNERSHIP EQUITY:
General partners 12,114
Limited partners 9,813,037
TOTAL PARTNERSHIP EQUITY 9,825,151
TOTAL LIABILITIES & PARTNERSHIP EQUITY $ 9,846,234
See Notes to Financial Statements.
2
AAA NET REALTY FUND X, LTD.
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND MARCH 31, 1996
(Unaudited)
Year to Date
1997 1996
REVENUES
Rental income from operating
leases $ 214,210 $ 214,210
Earned income from direct
financing lease 17,505 15,933
Interest income 832 9,235
Equity income from investment
in joint venture 35,503 17,085
TOTAL REVENUES 268,050 256,463
EXPENSES
Accounting 7,150 6,774
Administrative expenses 17,133 16,179
Amortization 15,000 15,000
Depreciation 36,116 36,494
Legal & professional fees 1,625 5,081
Other 106 522
TOTAL EXPENSES 77,130 80,050
NET INCOME $ 190,920 $ 176,413
ALLOCATION OF NET INCOME
General partners $ 1,909 $ 1,764
Limited partners 189,011 174,649
$ 190,920 $ 176,413
NET INCOME PER UNIT $ 16.67 $ 15.40
UNITS OUTSTANDING 11,454 11,454
See Notes to Financial Statements.
3
AAA NET REALTY FUND X, LTD.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND MARCH 31, 1996
(Unaudited)
Year to Date
1997 1996
CASH FLOWS FROM OPERATING
ACTIVITIES
Net income $ 190,920 $ 176,413
Adjustments to reconcile net income
to net cash from operating activities:
Depreciation 36,116 36,494
Amortization 15,000 15,000
Increase in accounts receivable (20,906) (14,093)
Increase in accounts payable 7,674 11,014
Cash received from direct financing lease
in excess of (less than) income recognized (728) 747
Investment in joint venture:
Equity income (35,503) (17,085)
Distributions received 35,503 17,085
Increase in accrued rental income (7,968) (7,969)
NET CASH FLOWS PROVIDED BY OPERATING
ACTIVITIES 220,108 217,606
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in acquisition costs - (53)
Joint venture distributions in excess of income 1,134 2,267
NET CASH FLOWS PROVIDED BY INVESTING
ACTIVITIES 1,134 2,214
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions (231,119) (230,272)
NET CASH FLOWS USED IN FINANCING
ACTIVITIES (231,119) (230,272)
NET DECREASE IN CASH
AND CASH EQUIVALENTS (9,877) (10,452)
CASH and CASH EQUIVALENTS at beginning
of period 193,466 824,805
CASH and CASH EQUIVALENTS at end of
period $ 183,589 $ 814,353
See Notes to Financial Statements.
4
AAA NET REALTY FUND X, LTD
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31,1997 AND 1996
(Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
AAA Net Realty Fund X, Ltd. ("the Partnership"), is a
limited partnership formed April 15, 1992, under the laws
of the State of Nebraska. American Asset Advisers
Management Corporation X (a Nebraska corporation) is the
managing general partner and H. Kerr Taylor is the
individual general partner. The offering period for
subscriptions terminated September 1, 1994 with a total
of 11,453.61 units having been subscribed at an offering
price of $1,000 per unit.
The Partnership was formed to acquire commercial
properties for cash. The Partnership will own, lease,
operate, manage and eventually sell the properties. The
selection, acquisition, and 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. Rental income is recorded ratably over the
life of the lease.
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 1997 or 1996.
Real estate is leased to others on a net lease basis
whereby all operating expenses related to the properties
including property taxes, insurance and common area
maintenance are the responsibility of the tenant. The
leases are accounted for under the operating method or
the direct financing method.
Under the operating method, the properties are recorded
at cost. Rental income is recognized ratably over the
life of the lease and depreciation is charged as
incurred.
Under the direct financing method, the properties are
recorded at their net investment. Unearned income is
deferred and amortized to income over the life of the
lease so as to produce a constant periodic rate of
return.
The Partnership's interests in joint venture investments
are accounted for under the equity method whereby the
Partnership's investment is increased or decreased by its
share of earnings or losses in the joint venture and also
decreased by any distributions.
Organization costs are amortized on a straight line basis
over five years.
5
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, 1997 and 1996.
The financial statements of AAA Net Realty Fund X, Ltd.
contained herein should be read in conjunction with the
financial statements included in the Partnership's annual
report on Form
10-K for the year ended December 31, 1996.
2. PARTNERSHIP EQUITY
The managing general partner, American Asset Advisers
Management Corporation X, 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, $17,133 and
$16,179 were incurred and paid to AAA for the three
months ended March 31, 1997 and March 31, 1996,
respectively.
6
4. MAJOR LESSEES
The following schedule summarizes total rental income by
lessee for the three months ended March 31, 1997 and
March 31, 1996 under both operating and direct financing
leases:
Year to Date
1997 1996
Golden Corral Corporation $43,241 $43,241
TGI Friday's, Inc. 45,126 45,126
Goodyear Tire & Rubber Company 13,227 13,227
Tandy Corporation 64,155 64,155
America's Favorite Chicken Company 25,836 24,264
One Care Health Industries, Inc. 40,130 40,130
5. CONTINGENCY
The Partnership had determined that, beginning on
December 1, 1993, it inadvertently failed to update its
then outstanding prospectus with current information as
required by Section 10(a)(3) of the Securities Act of
1933 as amended (the "33 Act") and by the standard
undertakings made by the Partnership in its amended
registration statement filed pursuant to the 33 Act.
However, the Partnership did publicly disclose such
information in its Form 8-K and 10-Q filings with the
Securities and Exchange Commission.
As a result of the above information, the Partnership has
been advised that it has a contingent liability to
investors for recession rights or damages which, at a
maximum, would not exceed approximately $5.5 million.
Management anticipates that recessions, if any, will not
be material.
7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
AAA Net Realty Fund X, Ltd., a Nebraska limited partnership, was
formed April 15, 1992. The offering for 20,000 units was
effective September 17, 1992. The offering period for
subscriptions terminated September 1, 1994 with a total of
11,453.61 units having been subscribed at $1,000 per unit. In
addition, the general partners had previously made contributions
of $1,000.
LIQUIDITY AND CAPITAL RESOURCES
The Partnership had determined that, beginning on December 1,
1993, it inadvertently failed
to update its then outstanding prospectus with current
information as required by Section 10(a)(3) of the Securities Act
of 1933 as amended (the "33 Act") and by the standard
undertakings made by the Partnership in its amended registration
statement filed pursuant to the 33 Act. However, the Partnership
did publicly disclose such information in its Form 8-K and 10-Q
filings with the Securities and Exchange Commission.
As a result of the above information, the Partnership has been
advised that it has a contingent liability to investors for
recession rights or damages which, at a maximum, would not exceed
approximately $5.5 million. Management anticipates that
recessions, if any, will not be material.
RESULTS OF OPERATIONS
For the three months ended March 31, 1997, revenues totaled
$268,050 which included $267,218 from real estate operations and
$832 of interest income. Revenues for the first quarter of 1997
increased $11,587 from those of the first quarter of 1996 which
was attributable to a $19,990 increase in rental income partially
offset by a $8,403 decline in interest income. Rental income
increased as the Partnership owned eight properties during the
first quarter of 1997 while seven properties were owned during
the first quarter of 1996, the eighth property coming from a
joint venture investment. Interest income declined as funds
which had been held in short term investments were used to
acquire the final property. Expenses decreased from $80,050 in
the first quarter of 1996 to $77,130 in the first quarter of 1997
primarily from a decrease in legal and professional fees. The
Partnership recorded $190,920 of net income for the first quarter
of 1997 compared to $176,413 for the first quarter of 1996.
For the three months ended March 31, 1996, revenues totaled
$256,463 which included $247,228 from real estate operations and
$9,235 of interest income. Revenues for the first quarter of
1996 increased $6,807 from those of the first quarter of 1995
which was attributable to a $12,765 increase in rental income
partially offset by a $5,958 decline in interest income. Rental
income increased as the Partnership owned seven properties during
the first quarter of 1996 while six properties were owned for the
entire first quarter of 1995 and the seventh property was
acquired during the first quarter of 1995. Interest income
declined as funds which had been held in short term investments
were used to acquire properties. Expenses increased from $68,521
in the first quarter of 1995 to $80,050 in the first quarter of
1996 primarily from increased professional fees and
administrative fees. The Partnership recorded $176,413 of net
income for the first quarter of 1996 compared to $181,135 for the
first quarter of 1995.
8
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
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 X, Ltd.
(Registrant)
May 15, 1997 /s/ H. Kerr Taylor
Date H. Kerr Taylor, President of General Partner
May 15, 1997 /s/ L. Larry Mangum
Date L. Larry Mangum (Principal Accounting Officer)
10
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 183,589
<SECURITIES> 0
<RECEIVABLES> 21,101
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 204,690
<PP&E> 7,937,234
<DEPRECIATION> 436,535
<TOTAL-ASSETS> 9,846,234
<CURRENT-LIABILITIES> 9,083
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 9,825,151
<TOTAL-LIABILITY-AND-EQUITY> 9,846,234
<SALES> 267,218
<TOTAL-REVENUES> 268,050
<CGS> 0
<TOTAL-COSTS> 77,130
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 190,920
<INCOME-TAX> 0
<INCOME-CONTINUING> 190,920
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 190,920
<EPS-PRIMARY> 16.67
<EPS-DILUTED> 0
</TABLE>
