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: 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 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 I - FINANCIAL INFORMATION
Item 1. Financial Statements
AAA NET REALTY FUND X, LTD.
(A LIMITED PARTNERSHIP)
BALANCE SHEET
MARCH 31, 1998
(Unaudited)
ASSETS
Cash and cash equivalents $ 228,118
Property:
Land 2,566,250
Buildings 5,370,984
7,937,234
Accumulated depreciation (581,001)
Total property 7,356,233
Net investment in direct financing leases 615,775
Investment in joint ventures 1,373,459
Other assets:
Accrued rental income 107,430
Organization costs, net of accumulated amortization of $287,245 12,755
Total other assets 120,185
TOTAL ASSETS $9,693,770
LIABILITIES AND PARTNERSHIP EQUITY
Liabilities:
Accounts payable $ 7,735
Security deposit 12,000
TOTAL LIABILITIES 19,735
Partnership equity:
General partners 14,602
Limited partners 9,659,433
TOTAL PARTNERSHIP EQUITY 9,674,035
TOTAL LIABILITIES AND PARTNERSHIP EQUITY $9,693,770
See Notes to Financial Statements.
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AAA NET REALTY FUND X, 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 from operating leases $216,119 $214,210
Earned income from direct financing leases 17,594 17,505
Interest income 1,026 832
Equity income from investment in joint ventures 35,535 35,503
Total revenues 270,274 268,050
Expenses:
Advisory fees to related party 17,283 17,133
Amortization 15,000 15,000
Depreciation 36,116 36,116
Professional fees 10,763 8,881
Total expenses 79,162 77,130
Net income $191,112 $190,920
Allocation of net income:
General partners $ 1,911 $ 1,909
Limited partners 189,201 189,011
$191,112 $190,920
Net income per unit $ 16.69 $ 16.67
Weighted average 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, 1998 AND MARCH 31, 1997
(Unaudited)
Year To Date
1998 1997
Cash flows from operating activities:
Net income $ 191,112 $ 190,920
Adjustments to reconcile net income to net cash
flows from operating activities:
Amortization 15,000 15,000
Depreciation 36,116 36,116
Decrease (increase) in accounts receivable 14,399 (20,906)
Increase (decrease) in accounts payable (11,232) 7,674
Cash received from direct financing leases
less than income recognized (817) (728)
Investment in joint ventures:
Equity income (35,535) (35,503)
Distributions received 35,535 35,503
Increase in accrued rental income (6,636) (7,968)
Net cash provided by operating activities 237,942 220,108
Cash flows from investing activities:
Joint venture distributions in excess of income 1,099 1,134
Net cash provided by investing activities 1,099 1,134
Cash flows from financing activities:
Distributions paid to partners (233,342) (231,119)
Net cash used in financing activities (233,342) (231,119)
Net increase (decrease) in cash and cash equivalents 5,699 (9,877)
Cash and cash equivalents at beginning of period 222,419 193,466
Cash and cash equivalents at end of period $ 228,118 $ 183,589
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, 1998 AND 1997
(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 Partnership was formed to acquire commercial properties
for cash, 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.
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.
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. The Partnership owns a
minority interest and does not exercise control over the
management of the joint ventures.
Organization costs are amortized on a straight line basis over
five years.
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.
-5-
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 X, 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.
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, $17,283 and $17,133 were 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 under both operating and direct financing leases:
Year to Date
1998 1997
Golden Corral Corporation (Texas) $ 43,241 $ 43,241
TGI Friday's, Inc. (Texas) 45,126 45,126
Goodyear Tire & Rubber Company (Texas) 13,227 13,227
Tandy Corporation (Minnesota) 64,155 64,155
America's Favorite Chicken Company (Georgia) 25,926 25,836
One Care Health Industries, Inc. (Texas) 42,038 40,130
Total $233,713 $231,715
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
The Partnership was organized on April 15, 1992, 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.
LIQUIDITY AND CAPITAL RESOURCES
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.
RESULTS OF OPERATIONS
For the three months ended March 31, 1998, revenues totaled
$270,274 which included $269,248 from real estate operations and
$1,026 of interest income. Revenues for the first quarter of
1998 increased $2,224 from those of the first quarter of 1997
which was attributable to a $2,030 increase in rental income and
a slight increase of $194 in interest income. Rental income
increased based upon a specified rental adjustment during the
first quarter of 1998. Expenses increased from $77,130 in the
first quarter of 1997 to $79,162 in the first quarter of 1998
primarily from an increase in professional fees. The Partnership
recorded $191,112 of net income for the first quarter of 1998
compared to $190,920 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 X, 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-
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
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