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, 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: 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
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
AAA NET REALTY FUND X, LTD.
(A LIMITED PARTNERSHIP)
BALANCE SHEET
MARCH 31, 2000
(Unaudited)
ASSETS
Cash and cash equivalents $ 271,169
Accounts receivable 56,439
Property:
Land 2,566,250
Buildings 5,370,984
-------------
7,937,234
Accumulated depreciation (869,933)
-------------
Total property, net 7,067,301
-------------
Net investment in direct financing leases 617,787
Investment in joint ventures 1,357,935
Other assets:
Accrued rental income 157,794
Deferred lease costs, net of accumulated
amortization of $3,920 27,845
-------------
Total other assets 185,639
-------------
TOTAL ASSETS $ 9,556,270
=============
LIABILITIES AND PARTNERSHIP EQUITY
Liabilities:
Accounts payable $ 33,022
Property costs payable 4,306
Security deposit 12,000
-------------
TOTAL LIABILITIES 49,328
-------------
Partnership equity:
General partners 21,438
Limited partners 9,485,504
-------------
TOTAL PARTNERSHIP EQUITY 9,506,942
-------------
TOTAL LIABILITIES AND PARTNERSHIP EQUITY $ 9,556,270
=============
See Notes to Financial Statements.
2
<PAGE>
AAA NET REALTY FUND X, LTD.
(A LIMITED PARTNERSHIP)
STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(Unaudited)
2000 1999
---- ----
Revenues:
Rental income from operating leases $ 219,871 $ 217,283
Earned income from direct financing leases 17,599 17,668
Interest income 2,357 912
Equity income from investment in
joint ventures 35,614 35,574
----------- -----------
Total revenues 275,441 271,437
----------- -----------
Expenses:
Advisory fees to related party 28,635 19,716
Amortization 784 784
Depreciation 36,116 36,117
Professional fees 5,227 6,212
Other 5,342 -
----------- -----------
Total expenses 76,104 62,829
----------- -----------
Net income $ 199,337 $ 208,608
=========== ===========
Allocation of net income:
General partners $ 1,993 $ 2,086
Limited partners 197,344 206,522
----------- -----------
$ 199,337 $ 208,608
=========== ===========
Net income per unit $ 17.40 $ 18.21
=========== ===========
Weighted average units outstanding 11,454 11,454
=========== ===========
See Notes to Financial Statements.
3
<PAGE>
AAA NET REALTY FUND X, LTD.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(Unaudited)
2000 1999
---- ----
Cash flows from operating activities:
Net income $ 199,337 $ 208,608
Adjustments to reconcile net income
to net cash provided by operating activities:
Amortization 784 784
Depreciation 36,116 36,117
Decrease (increase) in accounts receivable 12,789 (26,791)
(Decrease) increase in accounts payable (29,435) 31,875
Increase in property costs payable 4,306 -
Cash received from direct financing leases
greater (less) than income recognized 877 (892)
Investment in joint ventures:
Equity income (35,614) (35,574)
Distributions received 35,614 35,574
Increase in accrued rental income (7,113) (7,799)
Increase in deferred lease costs - (31,765)
----------- -----------
Net cash provided by operating activities 217,661 210,137
----------- -----------
Cash flows from investing activities:
Joint venture distributions in excess of income 2,945 1,060
----------- -----------
Net cash provided by investing activities 2,945 1,060
----------- -----------
Cash flows from financing activities:
Distributions paid to partners (181,305) (234,587)
----------- -----------
Net cash used in financing activities (181,305) (234,587)
----------- -----------
Net increase (decrease) increase in cash and cash
equivalents 39,301 (23,390)
Cash and cash equivalents at beginning of period 231,868 241,636
----------- -----------
Cash and cash equivalents at end of period $ 271,169 $ 218,246
=========== ===========
See Notes to Financial Statements.
4
<PAGE>
AAA NET REALTY FUND X, LTD
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(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. Prior to June 5,
1998, the selection, acquisition, and 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.
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. Percentage rents are recognized when received.
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.
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
<PAGE>
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 month periods ended March 31, 2000 and 1999.
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,
1999.
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 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, $28,635 were incurred and
expensed for the three months ended March 31, 2000 and for the three months
ended March 31, 1999 $51,481 were incurred and $19,716 expensed.
4. MAJOR LESSEES
The following schedule summarizes total rental income by lessee for the
three months ended March 31, 2000 and 1999, respectively, under both
operating and direct financing leases:
2000 1999
---- ----
Golden Corral Corporation (Texas) $ 45,495 $ 43,241
TGI Friday's, Inc. (Texas) 45,125 45,126
Goodyear Tire & Rubber Company (Texas) 13,227 13,227
Tandy Corporation (Minnesota) 64,155 64,155
America's Favorite Chicken Company (Georgia) 25,932 25,666
One Care Health Industries, Inc. (Texas) 43,536 43,536
----------- -----------
Total $237,470 $234,951
=========== ===========
6
<PAGE>
5. INVESTMENT IN JOINT VENTURES
On April 5, 1996, the Partnership formed a joint venture, AAA Joint
Venture 96-1, with AAA Net Realty Fund XI, Ltd. and AmREIT, Inc., entities
with common management, for the purpose of acquiring a property, which
is being operated as a Just For Feet retail store in Tucson, Arizona. The
property was purchased on September 11, 1996 after construction was
completed. The Partnership's interest in the joint venture is 18.25%. On
November 4, 1999, Just For Feet, Inc. filed a petition of relief under
Chapter 11 of the Federal bankruptcy code. On January 27, 2000 Just For
Feet, Inc. announced that its previous efforts of reorganization were
unsuccessful. As such, the bankruptcy court in Delaware approved a
liquidation auction of all of Just For Feet, Inc.'s retail stores and
inventory. On February 16, 2000 Just For Feet, Inc. entered into an
agreement whereby Footstar, Inc. would purchase the inventory of Just For
Feet, Inc., and assume certain retail operating leases. Included in the
leases being assumed by Footstar, Inc. is the Just For Feet located in
Tucson, Arizona, which is owned by AAA Joint Venture 96-1. The bankruptcy
court in Delaware has ordered Just For Feet, Inc. to cure any deficiencies
under the lease prior to the assumption of the lease by Footstar, Inc.
These deficiencies represent a receivable for rent, property taxes and
insurance at March 31, 2000 of approximately $16,837. Footstar Inc. is
the second largest retailer of athletic footwear and apparel. Footstar,
Inc. is a publicly owned company, whose common stock is traded on the New
York Stock Exchange.
On October 27, 1994, the Partnership formed a joint venture, AAA Joint
Venture 94-1, with AmREIT, Inc., for the purpose of acquiring a property
on lease to BlockBuster Music Retail Inc. in Missouri. The Company's
interest in the joint venture is 45.16%.
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.
7
<PAGE>
RESULTS OF OPERATIONS
For the three months ended March 31, 2000, revenues totaled $275,441, which
included $273,084 from real estate operations and $2,357 of interest and other
income. Revenues for the first quarter of 2000 increased $4,004 from those of
the first quarter of 1999 which was attributable to a $2,588 increase in rental
income from percentage rent on Golden Corral and AFC, a slight decrease of $69
in income from direct financing leases, an increase of $1,445 in interest income
and an increase of $40 in equity income from joint ventures. Expenses increased
from $62,829 in the first quarter of 1999 to $76,104 in the first quarter of
2000 primarily from an increase in advisory fees to related party and an
increase in other expense. The Partnership recorded $199,337 of net income for
the first quarter of 2000 compared to $208,608 for the first quarter of 1999.
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 X, Ltd.
(Issuer)
May 14, 2000 /s/ H. Kerr Taylor
- ------------ ------------------
Date H. Kerr Taylor, President of General Partner
May 14, 2000 /s/ Chad C. Braun
- ------------ -------------------
Date Chad C. Braun (Principal Accounting Officer)
10
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 271,169
<SECURITIES> 0
<RECEIVABLES> 56,439
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 327,608
<PP&E> 7,937,234
<DEPRECIATION> 869,933
<TOTAL-ASSETS> 9,556,270
<CURRENT-LIABILITIES> 49,328
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 9,506,942
<TOTAL-LIABILITY-AND-EQUITY> 9,556,270
<SALES> 273,084
<TOTAL-REVENUES> 275,441
<CGS> 0
<TOTAL-COSTS> 76,104
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 199,337
<INCOME-TAX> 0
<INCOME-CONTINUING> 199,337
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 199,337
<EPS-BASIC> 17.40
<EPS-DILUTED> 17.40
</TABLE>
