-----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, EMvkA8SMgmwFwo8TKcdKBuuz/n6A7gZA/O+E9Kjt4XKqTdXi72nrF6IL7tKeBl+A odmM9pmtNiWIa+eHk4Aiiw== 0000760386-98-000016.txt : 19981113 0000760386-98-000016.hdr.sgml : 19981113 ACCESSION NUMBER: 0000760386-98-000016 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981112 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WELLESLEY LEASE INCOME LTD PARTNERSHIP III-D CENTRAL INDEX KEY: 0000760386 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER RENTAL & LEASING [7377] IRS NUMBER: 042850823 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-15633 FILM NUMBER: 98744990 BUSINESS ADDRESS: STREET 1: ONE FINANCIAL CENTER 21ST FLR CITY: BOSTON STATE: MA ZIP: 02111 BUSINESS PHONE: 6174828000 10-Q 1 10-Q WELLESLEY LSE INCME LTD PTNRSP IID 9/30/98 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------------- FORM 10-Q Quarterly Report Under Section 13 or 15(d) of the United States Securities Exchange Act of 1934 ----------------------- For Quarter Ended September 30, 1998 Commission File No. 2-95011 WELLESLEY LEASE INCOME LIMITED PARTNERSHIP III-D (Exact name of registrant as specified in its charter) Massachusetts 04-2850823 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One Financial Center, 21st Floor, Boston, MA 02111 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (617) 482-8000 ---------------------- Not Applicable (Former name, former address and former fiscal year, if changed since last report) 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. Yes X No ___ There are no Exhibits. Page 1 of 13
WELLESLEY LEASE INCOME LIMITED PARTNERSHIP III-D (A Massachusetts Limited Partnership) INDEX Page No. Part I. FINANCIAL INFORMATION Financial Statements Balance Sheets as of September 30, 1998 and December 31, 1997 3 Statements of Operations Quarters Ended September 30, 1998 and 1997 and Nine Months Ended September 30, 1998 and 1997 4 Statements of Cash Flows Nine Months Ended September 30, 1998 and 1997 5 Notes to Financial Statements 6 - 7 Management's Discussion and Analysis of Financial Condition and Results of Operations 8 - 10 Computer Equipment Portfolio 11 Part II. OTHER INFORMATION Items 1 - 6 12 Signature 13
PART I. FINANCIAL INFORMATION WELLESLEY LEASE INCOME LIMITED PARTNERSHIP III-D (A Massachusetts Limited Partnership) Balance Sheets Assets (Unaudited) (Audited) 9/30/98 12/31/97 ---------------- ---------------- Investment property, at cost (note 3): Computer equipment $ 4,012,068 $ 6,164,470 Less accumulated depreciation 2,750,350 4,119,544 ---------------- ---------------- Investment property, net 1,261,718 2,044,926 Cash and cash equivalents 306,118 253,590 Rents receivable, net (note 2) 55,677 46,355 Sales receivable, net (note 2) - 2,200 Accounts receivable - affiliates 111,970 17,768 Other assets 15,421 17,293 ---------------- ---------------- Total assets $ 1,750,904 $ 2,382,132 ================ ================ Liabilities and Partners' Equity Liabilities: Current portion of long-term debt (note 5) $ 342,745 $ 628,925 Accounts payable and accrued expenses - affiliates (note 4) 33,458 31,639 Accounts payable and accrued expenses 53,313 61,989 Unearned rental revenue 23,906 39,641 Long-term debt, less current portion (note 5) 14,937 229,717 ---------------- ---------------- Total liabilities 468,359 991,911 ---------------- ---------------- Partners' equity: General Partner: Capital contribution 1,000 1,000 Cumulative net income 629,534 605,630 Cumulative cash distributions (630,534) (606,630) ---------------- ---------------- - - ---------------- ---------------- Limited Partners (20,185 units): Capital contribution, net of offering costs 8,987,039 8,987,039 Cumulative net income 4,275,316 3,928,822 Cumulative cash distributions (11,979,810) (11,525,640) ---------------- ---------------- 1,282,545 1,390,221 ---------------- ---------------- Total partners' equity 1,282,545 1,390,221 ---------------- ---------------- Total liabilities and partners' equity $ 1,750,904 $ 2,382,132 ================ ================
See accompanying notes to financial statements.
WELLESLEY LEASE INCOME LIMITED PARTNERSHIP III-D (A Massachusetts Limited Partnership) Statements of Operations (Unaudited) Quarters Ended Nine Months Ended September 30, September 30, --------------------------------- ---------------------------------- 1998 1997 1998 1997 --------------------------------- ---------------------------------- Revenue: Rental income $ 346,265 $ 472,496 $ 1,277,961 $ 1,281,352 Interest income 3,066 3,145 8,970 6,279 Net gain on sale of equipment 850 2,776 28,233 43,332 ---------------- -------------- -------------- --------------- Total revenue 350,181 478,417 1,315,164 1,330,963 ---------------- -------------- -------------- --------------- Costs and expenses: Depreciation 182,200 275,439 642,943 789,948 (Reversal of) provision for doubtful accounts 1,727 (7,379) (1,272) (50,878) Interest 10,636 20,441 43,763 51,635 Related party expenses (note 4): Management fees 23,889 36,498 92,262 96,530 General and administrative 55,671 38,851 167,078 126,036 ---------------- -------------- -------------- --------------- Total costs and expenses 274,123 363,850 944,774 1,013,271 ---------------- -------------- -------------- --------------- Net income $ 76,058 $ 114,567 $ 370,390 $ 317,692 ================ ============== ============== =============== Net income per Limited Partnership Unit $ 3.37 $ 5.28 $ 17.17 $ 14.82 ================ =============== ============== =============== See accompanying notes to financial statements.
WELLESLEY LEASE INCOME LIMITED PARTNERSHIP III-D (A Massachusetts Limited Partnership) Statements of Cash Flows Nine Months Ended September 30, 1998 and 1997 (Unaudited) 1998 1997 ---- ---- Cash flows from operating activities: Net income $ 370,390 $ 317,692 ---------------- ---------------- Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 642,943 789,948 (Reversal of) provision for doubtful accounts (1,272) (50,878) Net gain on sale of equipment (28,233) (43,332) Net (increase) decrease in current assets (98,172) 154,629 Net (decrease) increase in current liabilities (22,592) (20,189) ---------------- ---------------- Total adjustments 492,674 830,178 ---------------- ---------------- Net cash provided by operating activities 863,064 1,147,870 ---------------- ---------------- Cash flows from investing activities: Purchase of investment property - (866,431) Proceeds from sales of investment property 168,498 66,892 ---------------- ---------------- Net cash used in investing activities 168,498 (799,539) ---------------- ---------------- Cash flows from financing activities: Proceeds from borrowings on long-term debt - 533,704 Principal payments on long-term debt (500,960) (430,963) Cash distributions to partners (478,074) (371,830) ---------------- ---------------- Net cash used in financing activities (979,034) (269,089) ---------------- ---------------- Net increase in cash and cash equivalents 52,528 79,242 Cash and cash equivalents at beginning of period 253,590 265,199 ---------------- ---------------- Cash and cash equivalents at end of period $ 306,118 $ 344,441 ================ ================ Supplemental cash flow information: Interest paid during the period $ 43,763 $ 51,635 ================ ================
See accompanying notes to financial statements. WELLESLEY LEASE INCOME LIMITED PARTNERSHIP III-D (A Massachusetts Limited Partnership) Notes to Financial Statements Nine Months Ended September 30, 1998 and September 30, 1997 (Unaudited) (1) Organization and Partnership Matters The foregoing financial statements of Wellesley Lease Income Limited Partnership III-D (the "Partnership") have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission for Form 10-Q and reflect all adjustments which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. Pursuant to such rules and regulations, certain note disclosures which are normally required under generally accepted accounting principles have been omitted. It is recommended that these financial statements be read in conjunction with the Partnership's Annual Report on Form 10-K for the year ended December 31, 1998. (2) Summary of Significant Accounting Policies Allowance for Doubtful Accounts The financial statements include allowances for estimated losses on receivable balances. The allowances for doubtful accounts are based on past write off experience and an evaluation of potential uncollectible accounts within the current receivable balances. Receivable balances which are determined to be uncollectible are charged against the allowance and subsequent recoveries, if any, are credited to the allowance. At September 30, 1998 and December 31, 1997, the allowance for doubtful accounts included in rents receivable was $8,334 and $9,806, respectively, and $0 and $0 included in sales receivable, respectively. (3) Investment Property At September 30, 1998, the Partnership owned computer equipment with a depreciated cost basis of $1,261,718. All purchases of computer equipment are subject to a 3% acquisition fee paid to the General Partner. WELLESLEY LEASE INCOME LIMITED PARTNERSHIP III-D (A Massachusetts Limited Partnership) Notes to Financial Statements Nine Months Ended September 30, 1998 and September 30, 1997 (Unaudited) (4) Related Party Transactions Fees, commissions and other expenses paid or accrued by the Partnership to the General Partner or affiliates of the General Partner for the nine months ended September 30 are as follows: 1998 1997 ---- ---- Equipment acquisition fees $ - $ 13,147 Management fees 92,262 96,530 Reimbursable expenses paid 147,686 100,294 ------------ ------------ $ 239,948 $ 209,971 ============ ============ Under the terms of the Partnership Agreement, the General Partner is entitled to an equipment acquisition fee of 3% of the purchase price paid by the Partnership for the equipment. The General Partner is also entitled to a management fee equal to 7% of the monthly rental billings collected. The Partnership reimburses the General Partner and its affiliates for certain expenses incurred by them in connection with the operation of the Partnership. (5) Long-term Debt Long-term debt at September 30, 1998 consists of two installment notes from Pullman Capital Corporation totaling $95,693 with interest rates of 8.75% and 10.50%, and twelve loans totaling $261,989 from Liberty Bank, one bearing interest at 8.25%, two loans bearing interest at 8.50%, and the remaining nine loans bearing interest at 10.50%. All loans are non-recourse and are collateralized by equipment on the respective leases with a total net book value of $425,974 and assignment of the related leases. Maturities on long-term debt are as follows: 1998 $ 127,965 1999 225,770 2000 3,947 -------------- $ 357,682 ============== WELLESLEY LEASE INCOME LIMITED PARTNERSHIP III-D (A Massachusetts Limited Partnership) Management's Discussion and Analysis of Financial Condition and Results of Operations (Unaudited) Results of Operations The following discussion relates to the Partnership's operations for the quarter and nine months ended September 30, 1998 in comparison to the same periods ended September 30, 1997. The Partnership realized net income of $76,058 and $114,567 for the quarters ended September 30, 1998 and 1997, respectively. Rental income decreased $126,231 or 27% between the three month periods. The decrease is primarily due to lower rental rates obtained on equipment lease extensions and remarketings resulting after the initial lease term expires and due to a decrease in the overall size of the equipment portfolio. Total costs and expenses decreased $89,727 or 25% between the three month periods. Depreciation expense decreased $93,239 or 34% due to a portion of the equipment portfolio becoming fully depreciated. Also included in depreciation expense for the quarter ended September 30, 1998 is a provision of $10,446 for estimated losses on the ultimate disposition of equipment. Interest expense decreased $9,805 in the current quarter due to the continued paydown of long-term debt. The long-term debt balance at September 30, 1998 was $14,937 versus a balance of $277,775 at September 30, 1997. Management fees decreased as a result of the decline in rental income. General and administrative expenses increased $16,820 or 43% mainly due to an increase in the allocable salaries of the partnership accounting and reporting personnel of the General Partner. The Partnership realized net income of $370,390 and $317,692 for the nine months ended September 30, 1998 and 1997, respectively. The decrease in net gain on the sale of equipment is primarily due to a fewer number of equipment sales carrying low net book values. WELLESLEY LEASE INCOME LIMITED PARTNERSHIP III-D (A Massachusetts Limited Partnership) Management's Discussion and Analysis of Financial Condition and Results of Operations (Unaudited) Total costs and expenses decreased $68,497 or 7% during the nine month periods. As discussed in the quarter analysis above, depreciation expense decreased $147,005 or 19% between 1998 and 1997 due to the initial equipment portfolio becoming fully depreciated and a reduction in the overall equipment portfolio. Management fees decreased between the nine month periods due to the decline in rental income. General and administrative expenses increased $41,042 or 33% mainly due to an increase in the allocable salaries of the partnership accounting and reporting personnel of the General Partner during the current year. The Partnership recorded net income per Limited Partnership Unit of $3.37 and $5.28 for the quarters ended September 30, 1998 and 1997, respectively, and net income of $17.17 and $14.82 for the nine months ended September 30, 1998 and 1997, respectively. Liquidity and Capital Resources For the quarter ended September 30, 1998, rental revenue generated from operating leases and sales proceeds generated from equipment sales were the primary sources of funds for the Partnership. As equipment leases terminate, the General Partner determines if the equipment will be extended to the same lessee, remarketed to another lessee, or if it is less marketable, sold. This decision is made upon analyzing which options would generate the most favorable results. Rental income will continue to decrease due to two factors. First, lower rental rates are obtained on the remarketing of existing equipment after the expiration of the original lease. Typically the remarketed rates are lower due to the decrease in useful life of the equipment. Second, the increasing change of technology in the computer industry usually decreases the demand for older equipment, thus increasing the possibility of obsolescence. Both of these factors together will cause remarketed rates to be lower than original rates and will cause certain leases to terminate upon expiration. This decrease however, should not affect the partnership's ability to meet its future cash requirements, including its long-term debt obligations. To the extent that future cash flows should be insufficient to meet the Partnership's operating expenses and liabilities, additional funds could be obtained through the sale of equipment, or a reduction in the rate of cash distributions. Future rental revenues amount to $1,101,738 and are to be received over the next four years. WELLESLEY LEASE INCOME LIMITED PARTNERSHIP III-D (A Massachusetts Limited Partnership) Management's Discussion and Analysis of Financial Condition and Results of Operations (Unaudited) The Partnership's investing activities for the nine month periods resulted in equipment sales with a depreciated cost basis of $232,232, generating $168,498 in proceeds. Included in equipment sales is a $91,966 loss which was charged against the reserve, initially set up in a prior period to account for estimated losses on the ultimate disposition of equipment. The Partnership's financing activities resulted in the paydown on long-term debt in the amount of $500,960 for the nine months ended September 30, 1998. The Partnership will payoff its remaining long-term debt of $357,682 by 2000. Total long-term debt assumed by the Partnership from inception is $7,820,977, for a total leverage of 25%. Cash distributions are currently at an annual level of 6% per Limited Partnership Unit or $7.50 per Limited Partnership Unit on a quarterly basis. For the quarter ended September 30, 1998, the Partnership declared a cash distribution of $159,356, of which $7,968 was allocated to the General Partner and $151,388 was allocated to the Limited Partners. The distribution will be made on November 27, 1998. The Partnership expects to continue paying near this level in the future. The effects of inflation have not been significant to the Partnership and are not expected to have any material impact in future periods. On January 9, 1997, TLP Holding LLC purchased all the common stock of TLP Leasing Programs, Inc. from CMI Holding Co. Under the new ownership, it is expected that TLP Leasing Programs, Inc. will continue to operate in the same manner of business as it has in the past. WELLESLEY LEASE INCOME LIMITED PARTNERSHIP III-D (A Massachusetts Limited Partnership) Computer Equipment Portfolio (Unaudited) September 30, 1998 Lessee American Hard Cider Caterpillar Company, Incorporated Cerulean, Incorporated Direct Cable TV, Incorporated Evare, Incorporated Faxnet, Incorporated George Melhado and Company H.J. Meyers & Company, Incorporated Hughes Aircraft Internet Access Company J. Walter Thompson, U.S.A., Incorporated Jumbo Sports, Incorporated Mercury Marine, Division of Brunswick Corporation NYNEX National, Incorporated ON Technology Corporation Owens Corning Fiberglass, Incorporated Packard Hughes Interconnect, Incorporated USG Corporation Venturcom, Incorporated VIP Calling, Incorporated Equipment Description Acquisition Price Computer peripherals $ 1,546,149 Processors & upgrades 1,508,935 Other 956,984 ---------------- $ 4,012,068 ================ PART II. OTHER INFORMATION WELLESLEY LEASE INCOME LIMITED PARTNERSHIP III-D (A Massachusetts Limited Partnership) Item 1. Legal Proceedings Response: None Item 2. Changes in the Rights of the Partnership's Security Holders Response: None Item 3. Defaults by the Partnership on its Senior Securities Response: None Item 4. Results of Votes of Security Holders Response: None Item 5. Other Information Response: None Item 6. Exhibits and Reports on Form 8-K Response: A. None B. None SIGNATURE 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. WELLESLEY LEASE INCOME LIMITED PARTNERSHIP III-D (Registrant) By: Wellesley Leasing Partnership, its General Partner By: TLP Leasing Programs, Inc., one of its Corporate General Partners Date: November 12, 1998 By: Arthur P. Beecher, President EX-27 2 FDS FOR WELLESLEY LSE INCME LTD PRSP III-D 9/30/98
5 0000760386 WELLELSEY III-D FDS 9/30/98 9-MOS DEC-31-1998 SEP-30-1998 306,118 0 175,981 8,334 0 489,186 4,012,068 2,750,350 1,750,904 110,677 357,682 8,988,039 0 0 (7,705,494) 1,750,904 1,277,961 1,315,164 0 92,262 810,021 (1,272) 43,763 370,390 0 370,390 0 0 0 370,390 17.17 0
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