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, 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 PART 1 - FINANCIAL INFORMATION Item 1. Financial Statements AAA NET REALTY FUND IX, LTD. (A LIMITED PARTNERSHIP) BALANCE SHEET JUNE 30, 2000 (Unaudited) ASSETS Cash and cash equivalents $ 283,850 Property: Land 1,490,494 Buildings 2,946,375 ---------------- 4,436,869 Accumulated depreciation (780,404) ---------------- Total property, net 3,656,465 ---------------- Other assets: Accrued rental income 60,010 ---------------- TOTAL ASSETS $ 4,000,325 ================ LIABILITIES AND PARTNERSHIP EQUITY Liabilities: Accounts payable $ 14,085 ---------------- TOTAL LIABILITIES 14,085 ---------------- Partnership equity (deficit): General partners (1,238) Limited partners 3,987,478 ---------------- TOTAL PARTNERSHIP EQUITY 3,986,240 ---------------- TOTAL LIABILITIES AND PARTNERSHIP EQUITY $ 4,000,325 ================ 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, 2000 AND 1999 (Unaudited Quarter Year To Date 2000 1999 2000 1999 ---- ---- ---- ---- Revenues: Rental income $ 137,848 $ 137,848 $ 275,811 $ 278,494 Interest income 3,331 1,747 5,757 3,599 ---------- ---------- ---------- ---------- Total revenues 141,179 139,595 281,568 282,093 ---------- ---------- ---------- ---------- Expenses: Advisory fees to related party 13,476 9,960 26,952 19,920 Depreciation 23,384 23,384 46,768 46,768 Professional fees 3,811 5,378 10,476 10,770 ---------- ---------- ---------- ---------- Total expenses 40,671 38,722 84,196 77,458 ---------- ---------- ---------- ---------- Net income $ 100,508 $ 100,873 $ 197,372 $ 204,635 ========== ========== ========== ========== Allocation of net income: General partners $ 1,005 $ 1,009 $ 1,974 $ 2,047 Limited partners 99,503 99,864 195,398 202,588 ---------- ---------- ---------- ---------- $ 100,508 $ 100,873 $ 197,372 $ 204,635 ========== ========== ========== ========== Net income per unit $ 18.65 $ 18.71 $ 36.61 $ 37.96 ========== ========== ========== ========== 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, 2000 AND 1999 (Unaudited) Quarter Year To Date 2000 1999 2000 1999 ---- ---- ---- ---- Cash flows from operating activities: Net income $ 100,508 $ 100,873 $ 197,372 $ 204,635 Adjustments to reconcile net income to net cash flows from operating activities: Depreciation 23,384 23,384 46,768 46,768 Increase in accrued rental income (5,295) (5,295) (10,590) (10,590) Decrease (increase) in accounts payable 9,326 3,120 (332) (3,762) ---------- ---------- ---------- ---------- Net cash provided by operating activities 127,923 122,082 233,218 237,051 ---------- ---------- ---------- ---------- Cash flows from financing activities: Distributions paid to partners (92,774) (116,861) (183,545) (233,615) ---------- ---------- ---------- ---------- Net cash used in financing activities (92,774) (116,861) (183,545) (233,615) ---------- ---------- ---------- ---------- Net increase in cash and cash equivalents 35,149 5,221 49,673 3,436 Cash and cash equivalents at beginning of period 248,701 214,517 234,177 216,302 ---------- ---------- ---------- ---------- Cash and cash equivalents at end of period $ 283,850 $ 219,738 $ 283,850 $ 219,738 ========== ========== ========== ========== 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, 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 June 30, 2000, the net book value of this property comprised 1.6% of total assets, the rental income of $4,475 comprised 1.6% of total rental income and 2.3% 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 six month periods ended June 30, 2000 and 1999. 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, 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 $9,960 was incurred and paid to ARIC for the three and six months ended June 30, 2000 and 1999, respectively. 4. MAJOR LESSEES The following schedule summarizes total rental income by lessee for the three and six months ended June 30, 2000 and 1999: Quarter Year to Date 2000 1999 2000 1999 ---- ---- ---- ---- Foodmaker, Inc. (Texas) $ 17,250 $ 17,248 $ 34,499 $ 34,497 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) 47,928 47,930 95,972 98,657 --------- --------- --------- --------- Total $ 137,848 $ 137,848 $ 275,811 $ 278,494 ========= ========= ========= ========= 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. RESULTS OF OPERATIONS For the three months ended June 30, 2000, revenues totaled $141,179, which was comprised of $137,848 of rental income and $3,331 of interest income, compared to total revenues of $139,595 for the three months ended June 30, 1999, which was comprised of $137,848 of rental income and $1,747 of interest income. Interest income for the second quarter of 2000 increased slightly from that of the second quarter of 1999, primarily due to more effective cash management and overnight investing opportunities. Expenses increased from $38,722 in the second quarter of 1999 to $40,671 in the second quarter 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 $100,508 for the second quarter of 2000, as compared to net income of $100,873 for the second quarter of 1999. For the six months ended June 30, 2000, revenues totaled $281,568, which was comprised of $275,811 of rental income and $5,757 of interest income, compared to total revenues of $282,093 for the six months ended June 30, 1999, which was comprised of $278,494 of rental income and $3,599 of interest income. Rental income decreased from the rental income recorded in the first six 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 $77,458 in the first six months of 1999 to $84,196 in the first six 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 $197,372 for the first six months of 2000 as compared to net income of $204,635 for the first six months of 1999. 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 IX, Ltd. ---------------------------- (Issuer) August 12, 2000 /s/ H. Kerr Taylor - --------------- ------------------ Date H. Kerr Taylor, President of General Partner August 12, 2000 /s/ Chad C. Braun - --------------- ------------------- Date Chad C. Braun (Principal Accounting Officer) 9