-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, C21cUxNWrNmggzGQbbmTB5zT2yGBOnb1DHvY/4+fR2REu9oExboVfDJCbfCuIHtg yJkEMvaeET3HWsbPI0FRBw== 0000860754-99-000014.txt : 19990817 0000860754-99-000014.hdr.sgml : 19990817 ACCESSION NUMBER: 0000860754-99-000014 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990816 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AAA NET REALTY FUND IX LTD CENTRAL INDEX KEY: 0000860754 STANDARD INDUSTRIAL CLASSIFICATION: LESSORS OF REAL PROPERTY, NEC [6519] IRS NUMBER: 760318157 STATE OF INCORPORATION: NE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 033-33504 FILM NUMBER: 99691988 BUSINESS ADDRESS: STREET 1: 8 GREENWAY PLZ STE 824 CITY: HOUSTON STATE: TX ZIP: 77046 BUSINESS PHONE: 7138501400 MAIL ADDRESS: STREET 1: 8 GREENWAY PLAZA STREET 2: STE 824 CITY: HOUSTON STATE: TX ZIP: 77046 10QSB 1 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 June 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. X Yes No PART 1 - FINANCIAL INFORMATION Item 1. Financial Statements AAA NET REALTY FUND IX, LTD. (A LIMITED PARTNERSHIP) BALANCE SHEET JUNE 30, 1999 (Unaudited) ASSETS Cash and cash equivalents $ 219,738 Property: Land 1,490,494 Buildings 2,946,375 ---------------- 4,436,869 Accumulated depreciation (686,869) ---------------- Total property 3,750,000 ---------------- Other assets: Accrued rental income 38,830 ---------------- TOTAL ASSETS $ 4,008,568 ================ LIABILITIES AND PARTNERSHIP EQUITY Liabilities: Accounts payable $ 9,665 ---------------- TOTAL LIABILITIES 9,665 ---------------- Partnership equity (deficit): General partners (2,287) Limited partners 4,001,190 ---------------- TOTAL PARTNERSHIP EQUITY 3,998,903 ---------------- TOTAL LIABILITIES AND PARTNERSHIP EQUITY $ 4,008,568 ================ See Notes to Financial Statements. 2 AAA NET REALTY FUND IX, LTD. (A LIMITED PARTNERSHIP) STATEMENTS OF INCOME FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1999 AND 1998 (Unaudited)
Quarter Year To Date 1999 1998 1999 1998 ---- ---- ---- ---- Revenues: Rental income $ 137,848 $ 137,849 $ 278,494 $ 275,698 Interest income 1,747 1,041 3,599 1,910 ---------- ---------- ---------- ---------- Total revenues 139,595 138,890 282,093 277,608 ---------- ---------- ---------- ---------- Expenses: Advisory fees to related party 9,960 4,389 19,920 8,778 Depreciation 23,384 23,384 46,768 46,768 Professional fees 5,378 2,220 10,770 12,424 ---------- ---------- ---------- ---------- Total expenses 38,722 29,993 77,458 67,970 ---------- ---------- ---------- ---------- Net income $ 100,873 $ 108,897 $ 204,635 $ 209,638 ========== ========== ========== ========== Allocation of net income: General partners $ 1,009 $ 1,089 $ 2,047 $ 2,096 Limited partners 99,864 107,808 202,588 207,542 ---------- ---------- ---------- ---------- $ 100,873 $ 108,897 $ 204,635 $ 209,638 ========== ========== ========== ========== Net income per unit $ 18.71 $ 20.20 $ 37.96 $ 38.89 ========== ========== ========== ========== Weighted average units outstanding 5,390.5 5,390.5 5,390.5 5,390.5 ========== ========== ========== ========== See Notes to Financial Statements.
3 AAA NET REALTY FUND IX, LTD. (A LIMITED PARTNERSHIP) STATEMENTS OF CASH FLOWS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1999 AND 1998 (Unaudited)
Quarter Year To Date 1999 1998 1999 1998 ---- ---- ---- ---- Cash flows from operating activities: Net income $ 100,873 $ 108,897 $ 204,635 $ 209,638 Adjustments to reconcile net income to net cash flows from operating activities: Depreciation 23,384 23,384 46,768 46,768 Decrease in accounts receivable - - - 46,875 Increase in accrued rental income (5,295) (5,295) (10,590) (10,590) Increase (decrease) in accounts payable 3,120 (1,067) (3,762) (4,449) ---------- ---------- ---------- ---------- Net cash provided by operating activities 122,082 125,919 237,051 288,242 ---------- ---------- ---------- ---------- Cash flows from financing activities: Distributions paid to partners (116,861) (116,376) (233,615) (232,590) ---------- ---------- ---------- ---------- Net cash used in financing activities (116,861) (116,376) (233,615) (232,590) ---------- ---------- ---------- ---------- Net increase in cash and cash equivalents 5,221 9,543 3,436 55,652 Cash and cash equivalents at beginning of period 214,517 196,028 216,302 149,919 ---------- ---------- ---------- ---------- Cash and cash equivalents at end of period $ 219,738 $ 205,571 $ 219,738 $ 205,571 ========== ========== ========== ========== See Notes to Financial Statements.
4 AAA NET REALTY FUND IX, LTD. (A LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 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 June 30, 1999, the net book value of this property comprised 1.6% of total assets, the rental income of $4,361 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 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 and six month periods ended June 30, 1999 and 1998. 5 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 $19,920 was incurred and paid to ARIC for the three and six months ended June 30, 1999, respectively and $4,389 and $8,778 was incurred and paid to AAA or ARIC for the three and six months ended June 30, 1998, respectively. 4. MAJOR LESSEES The following schedule summarizes total rental income by lessee for the three and six months ended June 30, 1999 and 1998: Quarter Year to Date
1999 1998 1999 1998 ---- ---- ---- ---- Foodmaker, Inc. (Texas) $ 17,248 $ 17,249 $ 34,497 $ 34,498 Baptist Memorial Health Services, Inc. (Tennessee) 52,170 52,170 104,340 104,340 Payless Shoe Source/WaldenBooks (Texas) 20,500 20,500 41,000 41,000 Golden Corral Corporation (Texas) 47,930 47,930 98,657 95,860 --------- --------- --------- --------- Total $ 137,848 $ 137,849 $ 278,494 $ 275,698 ========= ========= ========= =========
6 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 September 30, 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 RESULTS OF OPERATIONS For the three months ended June 30, 1999, revenues totaled $139,595 which was comprised of $137,848 of rental income and $1,747 of interest income. Rental income is unchanged from the rental income recorded in the second quarter of 1998. Expenses increased by $8,729 primarily from an increase in professional and advisory fees. The Partnership recorded net income for the second quarter of 1999 of $100,873 as compared to net income of $108,897 for the second quarter of 1998. For the six months ended June 30, 1999, revenues totaled $282,093 which was comprised of $278,494 of rental income and $3,599 of interest income. Rental income increased from the rental income recorded in the first six months of 1998 primarily as a result of annual percentage rent proceeds received on one of two Golden Corral Restaurants. Expenses increased by $9,488 primarily from an increase in advisory fees which were partially offset by a slight decrease in professional fees. The Partnership recorded net income for the first six months of 1999 of $204,635 as compared to net income of $209,638 for the first six months of 1998. 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 IX, Ltd. ---------------------------- (Issuer) August 13, 1999 /s/ H. Kerr Taylor - --------------- ------------------ Date H. Kerr Taylor, President of General Partner August 13, 1999 /s/ L. Larry Mangum - --------------- ------------------- Date L. Larry Mangum (Principal Accounting Officer) 10 EX-27 2
5 6-MOS DEC-31-1999 JUN-30-1999 219,738 0 0 0 0 219,738 4,436,869 686,869 4,008,568 9,665 0 0 0 0 3,998,904 4,008,568 278,494 282,093 0 77,458 0 0 0 204,635 0 204,635 0 0 0 204,635 37.96 0
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