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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d) of
the Securities Exchange Act of 1934
For Quarter Ended March 31, 2003 Commission file number 0-16508
USA REAL ESTATE INVESTMENT TRUST
(Exact Name of Registrant as specified in its Charter)
California 68-0109347
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2443 Fair Oaks Boulevard, #314, Sacramento, California 95825-7684
(Address of registrant's principal executive offices) (Zip Code)
(800) 308-4532
(Registrant's telephone number, including area code)
COMMONWEALTH EQUITY TRUST USA
(Former name)
Indicate by check mark whether the registrant (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
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
/ X/ Yes / / No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the close of the latest practical date.
Certificates of Beneficial Interest Outstanding at March 31, 2003
par value one dollar per share 26,163
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USA REAL ESTATE INVESTMENT TRUST
Index
Part I. Financial Information
Balance Sheets - March 31, 2003 and
December 31, 2002 ................................. 3
Statements of Income - For the Three Months
Ended March 31, 2003 and 2002 ..................... 4
Statements of Cash Flows - For the Three
Months Ended March 31, 2003 and 2002 .............. 5
Notes to Financial Statements ....................... 6
Management's Discussion and Analysis of the
Financial Condition and Results of Operations ..... 7
Part II. Other Information ................................... 8
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PART I. FINANCIAL INFORMATION
USA REAL ESTATE INVESTMENT TRUST
Balance Sheets
March 31, December 31,
2003 2002
(Unaudited) (Audited)
----------- -----------
Assets
Investments:
Rental properties, less accumulated
depreciation of $4,404,096 at March 31,
2003 and $4,285,259 at December 31, 2002 $ 12,944,659 $ 12,926,048
Note receivable 110,000 110,000
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13,054,659 13,036,048
Cash and cash equivalents 70,816 214,999
Other assets 304,070 261,370
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Total assets $ 13,429,545 $ 13,512,417
=========== ===========
Liabilities and Shareholders' Equity
Liabilities:
Long-term notes payable $ 0 $ 0
Line of credit 249,823 0
Lease deposits 29,335 30,263
Accounts payable 64,413 8,381
----------- -----------
Total liabilities 343,571 38,644
----------- -----------
Shareholders' Equity:
Shares of beneficial interest, par value
$1 a share; authorized 250,000 shares;
26,163 shares outstanding at March 31,
2003 and 26,285 shares outstanding at
December 31, 2002 $ 26,163 $ 26,285
Additional paid-in capital 30,489,624 30,546,358
Distributions in excess of cumulative
net income (17,429,813) (17,098,870)
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Total shareholders' equity 13,085,974 13,473,773
----------- -----------
Total liabilities and shareholders' equity $ 13,429,545 $ 13,512,417
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See notes to financial statements.
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USA REAL ESTATE INVESTMENT TRUST
Statements of Income
(Unaudited)
Three Months Ended
March 31,
2003 2002
---------- ----------
Revenues:
Rent $ 436,819 $ 685,765
Interest 2,750 3,542
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439,569 689,307
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Expenses:
Operating expenses 94,821 85,486
Property taxes 55,145 54,027
Property management fees 13,200 13,200
Interest 207 109,353
Depreciation and amortization 135,397 167,077
General and administrative 57,320 59,175
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356,090 488,318
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Net Income $ 83,479 $ 200,989
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Net income per share of beneficial interest $ 3.19 $ 7.53
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See notes to financial statements.
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USA REAL ESTATE INVESTMENT TRUST
Statements of Cash Flows
(Unaudited)
Three Months Ended
March 31,
2003 2002
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OPERATING ACTIVITIES:
Net income $ 83,479 $ 200,989
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Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 135,397 167,077
Changes in other assets and liabilities:
(Increase)decrease in other assets (59,259) 14,912
Decrease in lease deposits (928) 0
Increase in accounts payable 56,032 74,836
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Total adjustments to income 131,242 256,825
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Net cash provided by
operating activities 214,721 457,814
INVESTING ACTIVITIES:
Improvements to properties (137,447) (29,577)
Collections on note receivable 0 25,000
Increase(decrease)in lines of credit(net) 249,823 (638,000)
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Net cash provided by(used in)
investing activities 112,376 (642,577)
FINANCING ACTIVITIES:
Redemption of shares (56,856) (95,435)
Payments on long-term notes payable 0 (29,602)
Distributions paid (414,424) (424,301)
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Net cash used by financing activities (471,280) (549,338)
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Net decrease in cash (144,183) (734,101)
Cash and cash equivalents at beginning of period 214,999 737,709
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Cash and cash equivalents at end of period $ 70,816 $ 3,608
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See notes to financial statements.
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USA REAL ESTATE INVESTMENT TRUST
Notes to Financial Statements
1. In the opinion of the Trust, the accompanying unaudited financial
statements contain all adjustments necessary to present fairly
the Trust's financial position as of March 31, 2003, and the
results of its operations and cash flows for the three months
ended March 31, 2003 and 2002.
The accounting policies followed by the Trust are set forth in
Note 1 to the Trust's financial statements in the 2002 Form 10-K,
which are incorporated herein by reference.
2. In 1987, the Trust elected to be taxed as a real estate investment
trust and, as such, will not be taxed on that portion of its
taxable income which is distributed to shareholders provided that
at least 90% of its real estate investment trust taxable income
is distributed.
The Trust intends to continue to qualify as a real estate
investment trust and, accordingly, no provision for income taxes
has been made in the financial statements.
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USA REAL ESTATE INVESTMENT TRUST
Management's Discussion and Analysis of
Financial Condition and Results of Operations
RESULTS OF OPERATIONS
Rental revenues decreased $248,946 for the three months ended
March 31, 2003 compared to the three months ended March 31,
2002 primarily due to the sale of 1590 Sycamore Drive in
Hercules, California in July 2002 and reduced occupancy at
19401 Parthenia Street in Northridge, California.
Interest expense decreased $109,146 for the three months ended
March 31, 2003 compared to the three months ended March 31,
2002 due to lower average levels of outstanding debt.
Net income was $83,479 or $3.19 per share for the three months
ended March 31, 2003 compared to $200,989 or $7.53 per share for
the same period in 2002.
The Trust paid distributions of $15.84 per share for the three
months ended March 31, 2003 and for the same period in 2002.
LIQUIDITY AND CAPITAL RESOURCES
The Trust meets its liquidity requirements through net cash
provided by operating activities, along with traditional debt
alternatives available to it and proceeds from the sale of
properties. Cash provided by operating activities is
distributed to shareholders in the form of dividends.
Accordingly, capital outlays for renovations, principal
payments on long-term notes payable and share repurchases
require additional sources of capital. The expected
additional sources of capital are debt and proceeds from the
sale of properties.
The Trust's capital requirements depend upon the level of
improvements and redevelopment of its existing properties. The
sources of funding will be draws on its lines of credit,
collection of the remaining balance of the note receivable or
additional debt.
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PART 11. OTHER INFORMATION
USA REAL ESTATE INVESTMENT TRUST
ITEM 6: REPORTS ON FORM 8-K
None.
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USA REAL ESTATE INVESTMENT TRUST
Signatures
Pursuant to the requirement 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.
USA Real Estate Investment Trust
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May 14, 2003 Gregory Crissman
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Date Gregory Crissman,
Chairman
May 14, 2003 Benjamin Diaz
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Date Benjamin Diaz
Trustee