Microsoft Word 10.0.2627; 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, 2001
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
JUNE 30, 2001
(Unaudited)
ASSETS
Cash and cash equivalents $ 472,517
Accounts receivable 1,043
Property:
Land 2,566,250
Buildings 5,370,984
----------
7,937,234
Accumulated depreciation (1,050,518)
----------
Total property, net 6,886,716
----------
Net investment in direct financing leases 613,194
Investment in joint ventures 1,343,346
Other assets:
Accrued rental income 186,966
Deferred lease costs, net of accumulated
amortization of $7,840 23,925
----------
Total other assets 210,891
----------
TOTAL ASSETS $ 9,527,707
===========
LIABILITIES AND PARTNERSHIP EQUITY
Liabilities:
Accounts payable $ 236
Security deposit 12,000
----------
TOTAL LIABILITIES 12,236
----------
Partnership equity (deficit):
General partners (4,445)
Limited partners 9,519,916
----------
TOTAL PARTNERSHIP EQUITY 9,515,471
----------
TOTAL LIABILITIES AND PARTNERSHIP EQUITY $ 9,527,707
===========
See Notes to Financial Statements.
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AAA NET REALTY FUND X, LTD.
(A LIMITED PARTNERSHIP)
STATEMENTS OF INCOME
FOR THE THREE AND SIX MONTHS ENDED JUNE 30,
(Unaudited)
Quarter Year to Date
2001 2000 2001 2000
--------- --------- --------- ---------
Revenues:
Rental income from operating leases $ 218,117 $ 217,618 $ 437,825 $ 437,489
Earned income from direct financing leases 17,491 17,595 34,982 35,194
Interest income and other income 4,627 3,329 9,733 5,686
Equity income from investment in joint ventures 35,676 35,630 71,339 71,244
--------- --------- --------- ---------
Total revenues 275,911 274,172 553,879 549,613
--------- --------- --------- ---------
Expenses:
Advisory fees to related party 28,635 28,635 57,270 57,270
Amortization 784 784 1,568 1,568
Depreciation 36,118 36,118 72,234 72,234
Professional fees 7,034 6,815 16,703 17,384
Other 1,160 - 3,078 -
--------- --------- --------- ---------
Total expenses 73,731 72,352 150,853 148,456
--------- --------- --------- ---------
Net income $ 202,180 $ 201,820 $ 403,026 $ 401,157
========= ========= ========= =========
Allocation of net income:
General partners $ 2,022 $ 2,018 $ 4,030 $ 4,012
Limited partners 200,158 199,802 398,996 397,145
========= ========= ========= =========
$ 202,180 $ 201,820 $ 403,026 $ 401,157
========= ========= ========= =========
Net income per unit $ 17.66 $ 17.62 $ 35.20 $ 35.02
========= ========= ========= =========
Weighted average units outstanding 11,451 11,454 11,451 11,454
========= ========= ========= =========
See Notes to Financial Statements.
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AAA NET REALTY FUND X, LTD.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30,
(Unaudited)
Quarter Year to Date
2001 2000 2001 2000
--------- --------- --------- ---------
Cash flows from operating activities:
Net income $ 202,180 $ 201,820 $ 403,026 $ 401,157
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization 784 784 1,568 1,568
Depreciation 36,118 36,118 72,234 72,234
Decrease in accounts receivable 7,490 1,238 20,918 14,027
Increase (decrease) in accounts payable 1 (1,257) (45,831) (30,692)
Decrease in property costs payable - 12,917 - 17,223
Cash received from direct financing leases
greater than income recognized 982 876 1,964 1,753
Investment in joint ventures:
Equity income (35,676) (35,630) (71,339) (71,244)
Distributions received 35,676 35,630 71,339 71,244
Increase in accrued rental income (3,579) (7,119) (7,809) (14,232)
--------- --------- --------- ---------
Net cash provided by operating activities 243,975 245,377 446,070 463,038
--------- --------- --------- ---------
Cash flows provided by investing activities:
Joint venture distributions in excess of income 2,892 2,940 5,797 5,885
--------- --------- --------- ---------
Net cash provided by investing activities 2,892 2,940 5,797 5,885
--------- --------- --------- ---------
Cash flows used in financing activities:
Distributions paid to partners (246,751) (185,981) (438,101) (367,286)
--------- --------- --------- ---------
Net cash used in financing activities (246,751) (185,981) (438,101) (367,286)
--------- --------- --------- ---------
Net increase in cash and cash equivalents 116 62,336 13,766 101,637
Cash and cash equivalents, beginning of period 472,401 271,169 458,751 231,868
--------- --------- --------- ---------
Cash and cash equivalents, end of period $ 472,517 $ 333,505 $ 472,517 $ 333,505
========= ========= ========= =========
See Notes to FInancial Statements
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AAA NET REALTY FUND X, LTD
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2001 AND 2000
(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 were 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 maturity of three months or
less to be cash equivalents. There has been no cash paid for income taxes
or interest during 2001 or 2000.
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 is the responsibility of the tenant. The leases are
accounted for under the operating method or the direct financing method.
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.
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.
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The preparation of financial statements inconfirmity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assest 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 accounting principles generally accepted in the
United States of America. 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, 2001 and 2000.
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,
2000.
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 and $57,270 were incurred
and expensed for the three and six months ended June 30, 2001, respectively
and $28,635 and $57,270 for the three and six months ended June 30, 2000,
respectively.
4. MAJOR LESSEES
The following schedule summarizes total rental income by lessee for the
three and six months ended June 30, respectively, under both operating and
direct financing leases:
Quarter Year to Date
2001 2000 2001 2000
---- ---- ---- ----
Tandy Corporation (Minnesota) $ 64,153 $ 64,155 $ 128,311 $ 128,310
TGI Friday's, Inc. (Texas) 45,125 45,125 90,250 90,250
Golden Corral Corporation (Texas) 43,240 43,242 88,308 88,737
Memorial Hermann Hospital System (Texas) 44,025 43,536 87,821 87,072
America's Favorite Chicken Company (Georgia) 25,825 25,928 51,650 51,860
Goodyear Tire & Rubber Company (Texas) 13,240 13,227 26,467 26,454
-------- -------- -------- --------
Total $235,608 $235,213 $472,807 $472,683
======== ======== ======== ========
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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
company's interest in the joint venture is 18.25%.
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 Wherehouse Entertainment, Inc. in Missouri. The Company's
interest in the joint venture is 45.16%.
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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.
RESULTS OF OPERATIONS
For the three months ended June 30, 2001, revenues totaled $275,911, which
included $271,284 from real estate operations and $4,627 of interest and other
income. Revenues for the second quarter of 2001 increased slightly from those of
the second quarter of 2000, primarily due to a increase of $441 in rental income
from the collection of late fees on Memorial Hermann Hospital System, a slight
decrease in income from direct financing leases, a slight increase in equity
income from joint ventures, and an increase of $1,298 in interest income due to
better cash management and overnight investing opportunities. Expenses increased
from $72,352 in the second quarter of 2000 to $73,731 in the second quarter of
2001, primarily from an increase in property cost expense at Memorial Hermann
Hospital System. The Partnership recorded $202,180 of net income for the second
quarter of 2001 compared to $201,820 for the second quarter of 2000.
For the six months ended June 30, 2001, revenues totals $553,879, which included
$544,146 from real estate operations and $9,733 of interest income and other
income. Revenues for the first six months of 2001 increased $4,266 from those of
the first six months in 2000, which was attributable to a $4,047 increase in
interest income and other income due to better cash management and overnight
investing opportunities and a $219 increase in rental income, from the
collection of late fees on Memorial Hermann Hospital System, a slight
decrease in income from direct financing leases, a slight increase in equity
income from joint ventures. Expenses increased from $148,456 in the first six
months of 2000 to $150,853 in the first six months of 2001, primarily from an
increase in property cost expense at Memorial Hermann Hospital System and
interest due on property taxes for the Wherehouse store in Missouri. The
Partnership recorded $403,026 of net income for the first six months of 2001
compared to $401,157 for the first six months of 2000.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
NONE
Item 5. Other Information
NONE
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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)
August 10, 2001 /s/ H. Kerr Taylor
Date ------------------
H. Kerr Taylor, President of General Partner
August 10, 2001 /s/ Chad Braun
--------------
Date Chad Braun (Principal Accounting Officer)
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