-----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, JFmjE7uggKO5XPXF6MsaU6HDPMTWEXMTkiMqGza5F21l9egem3pgWAzn8u12vMqh dDWqB4U7/L0ztmSES8H3hw== 0000773911-96-000015.txt : 19961106 0000773911-96-000015.hdr.sgml : 19961106 ACCESSION NUMBER: 0000773911-96-000015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961105 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: LEASTEC INCOME FUND III CENTRAL INDEX KEY: 0000773911 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER RENTAL & LEASING [7377] IRS NUMBER: 680066209 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-15871 FILM NUMBER: 96654247 BUSINESS ADDRESS: STREET 1: 2855 MITCHELL DR STE 215 CITY: WALNUT CREEK STATE: CA ZIP: 94598 BUSINESS PHONE: 5109383443 MAIL ADDRESS: STREET 1: 2855 MITCHELL DR STREET 2: SUITE 215 CITY: WALNUT CREEK STATE: CA ZIP: 94598 10-Q 1 FORM 10-Q 1 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 September 30, 1996 Commission file number 299435 Leastec Income Fund III A California Limited Partnership (Exact name of registrant as specified in its charter) California 68-0066209 (State or other jurisdiction of (I.R.S. Employer Identification incorporation or organization) Number) 2855 Mitchell Drive, Suite 215, Walnut Creek, California 94598 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (510) 938-3443 _____________________________________________________________________ (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 __ APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: N/A Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13, or 15 (d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ___ No ___ APPLICABLE ONLY TO CORPORATE ISSUERS: N/A Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 2 Part 1. Financial Information LEASTEC INCOME FUND III A California Limited Partnership CONDENSED BALANCE SHEETS (Unaudited)
September 30 December 31 1996 1995 ------------ ----------- ASSETS: Cash $ 303,915 $ 706,443 Accounts receivable 87,417 Net investment in direct financing leases 95,129 541,980 Equipment on operating leases, net of accumulated depreciation of $6,166 in 1996 and $6,166 in 1995 0 0 --------- --------- Total assets $ 399,044 $1,335,840 ========= ========= LIABILITIES AND PARTNERS' CAPITAL: Liabilities: Payables to affiliates $ 0 $ 2,767 Accounts payable 57,293 64,323 Deposits 16,663 43,818 Prepaid rental income 9,262 2,944 Distributions payable 21,053 368,421 Notes payable 0 0 -------- --------- Total liabilities 104,271 482,273 -------- --------- Partners' capital: Partners' capital 294,773 853,567 -------- --------- Total partners' capital 294,773 853,567 -------- --------- Total liabilities & partners' capital $ 399,044 $1,335,840 ========= =========
The accompanying notes are an integral part of these condensed financial statements. 3 LEASTEC INCOME FUND III A California Limited Partnership CONDENSED STATEMENTS OF INCOME (Unaudited)
Nine Months Quarter Ended Ended September 30 September 30 1996 1995 1996 1995 ------ ------ ------ ------ Revenue: Rental income $ 78 $134,139 0 15,754 Direct financing lease income 21,837 204,854 5,006 13,734 Gain (loss) on sale of equipment 0 112,731 0 0 Interest income 6,284 12,657 1,530 3,817 Other income 6,601 147,508 0 22,545 ------- -------- ------- -------- Total revenues 34,800 611,889 6,536 55,850 ------- -------- ------- -------- Expenses: Management fees 27,914 118,166 5,028 26,226 General & administrative 162,620 142,955 75,277 45,788 Data processing 13,586 22,597 1,251 5,651 lnterest expense 0 3,186 0 122 ------- ------- ------- ------- Total expenses 204,120 286,904 81,556 77,787 ------- ------- ------- ------- Net Income (loss) $(169,320) $324,985 $(75,020) $(21,937) ======== ======= ======= ======= Net income (loss) per limited partnership unit $ (2.15) $ 4.12 $ (0.95) $ (0.28) ======== ======= ======= =======
The accompanying notes are an integral part of these condensed financial statements. 4 LEASTEC INCOME FUND III A California Limited Partnership STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended September 30 1996 1995 ------ ------ Cash flows from operating activities: Net (loss) income $ (169,320) 324,985 Adjustments to reconcile net income to net cash provided by operating activities: Loss on disposition of equipment 0 (112,731) Change in assets and liabilities: Decrease in accounts receivable 87,417 46,124 Decrease in payable to affiliates (2,767) (15,518) Decrease in accounts payable (7,030) (51,436) Decrease in deposits (27,155) (207,883) Increase (decrease) in prepaid rental income 6,318 (4,609) Decrease in distributions payable (347,368) (205,263) -------- -------- Net cash (used) by operating activities (459,905) (226,331) -------- --------- Cash flows from investing activities: Proceeds from disposition of equipment 0 89,050 Proceeds from sale of direct financing leases 0 37,313 Decrease in net investment in direct financing leases 446,851 1,265,345 -------- --------- Net cash provided by investing activities 446,851 1,391,708 ________ _________ Cash flows from financing activities: Repayment of notes payable 0 (44,864) Net distributions to partners (389,474) (1,210,424) -------- --------- Net cash used in financing activities (389,474) (1,255,288) -------- --------- Net (decrease) in cash (402,528) (89,911) Cash at beginning of period 706,443 645,072 -------- --------- Cash at end of period $ 303,915 $ 555,161 ======== =========
The accompanying notes are an integral part of these condensed financial statements. 5 LEASTEC INCOME FUND III A California Limited Partnership NOTES TO CONDENSED FINANCIAL STATEMENTS September 30, 1996, September 30, 1995 and December 31, 1995 (Unaudited) 1. Basis of Condensed Financial Statement Preparation __________________________________________________ In the opinion of the General Partner, the accompanying unaudited condensed financial statements contain all adjustments (consisting principally of normal, recurring accruals) necessary to present fairly the financial position of Leastec Income Fund III (the Partnership) as of September 30, 1996, September 30, 1995 and December 31, 1995. As provided for in the Partnership agreement and offering document, the Partnership engaged in leasing activities which intended to be completed in approximately eleven years from its inception at which time all remaining partnership assets will have been liquidated and cash proceeds distributed to the registrant's partners. The Partnership has presented its 1996 financial statements to reflect its leasing activities on a basis consistent with prior periods. 2. Wind Down Phase _______________ The Registrant has ceased acquisition of new capital equipment and is in the process of liquidating its lease portfolio. The Registrant will be fully liquidated at the end of its eleventh full year of operation, December 1996. 6 LEASTEC INCOME FUND III A California Limited Partnership Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operation The Registrant has been winding down operations since 1993 by discontinuing new leasing activities and returning cash available from operations to the Registrant's Partners. Although the Registrant has until December 1997 to liquidate operations, the Registrant will to be fully liquidated by December 1996. This is the Registrant's final year of operation. All of the Registrant's operating leases have terminated. As operating leases terminated the equipment was sold. The remaining lease portfolio is invested in Direct Finance leases which terminate with the lessee's contractually required purchase of equipment. The income of the Registrant is rapidly declining as the lease portfolio size declines. The cash balances and related interest income fluctuates according to the cash flow from rents and finance lease terminations during each quarter. Cash is distributed to the Partners according to their respective tax basis capital accounts. The Partners will have a loss of capital because of shortfalls in portfolio performance and a difficult economic environment during the life of the Partnership. The previous filing anticipated a return of original investment of approximately 80%. The percentage of capital return will vary according to the following factors: a) the timing of each partner's original investment and b) the decision to receive or reinvest distributions during the operating phase of Partnership. Those Partners that chose to reinvest acquired a larger percentage basis ownership in the Partnership and thereby, a larger share of the loss and lower return of original investment. With the close of the Partnership all of the Partners taxable losses may be applied against their taxable income. The Registrant reported a net loss of $169,320 or $2.15 per Limited Partnership Unit for the nine months ended September 30, 1996 as compared to net income of $324,985 or $4.12 per Limited Partnership Unit for the nine months ended September 30, 1995. Total revenues for the nine months ended September 30, 1996, were $34,800 compared to $611,889 for the same period in the prior year. This decrease reflects a reduced rental income from both operating and finance leases due to the rapid liquidation of the Registrant's lease portfolio. Revenue derived from the Fund's equipment management activities comprised 82% of the total income for the period, with the remaining 18% being interest income. Direct financing lease income decreased from September 30, 1995, to September 30, 1996, ($204,854 to $21,837 respectively). The net investment in direct financing leases decreased from $1,021,790 at September 30, 1995, to $95,129 at September 30, 1996. Interest income decreased because the Registrant held lower cash balances due to distributions to Partners and lease termination's during the first nine months of 1996 as compared to the same period in the prior year. All available cash is being paid out in distributions to the Fund's partners on a quarterly basis. 7 Total expenses for the nine months ended September 30, 1996, were $204,120 compared to $286,904 for the same period in the prior year. Management fees, interest, and general and administrative costs comprised 93% of the total expenses. Interest expense decreased from September 30, 1995, to September 30, 1996, ($3,186 to $-0- respectively). General and administrative costs increased from $142,955 for the first nine months of 1995 to $162,620 for the same period in 1996. The variable expenses of the Registrant have been reduced steadily as the liquidation progressed. There are certain fixed expenses caused by the Partnership Agreement's requirements for Regulatory and Partner reporting which will continue at their current level until the Registrant's final close of operations. Liquidity and Capital Resources _______________________________ Cash used by operating activities for the nine months ended September 30, 1996, was $495,905 compared to $226,331 for the same period in the prior year. The decrease in cash provided by operating activities reflects the continued winding down of the operating lease portfolio and decreases in distribution payable to Partners. Cash provided by investing activities decreased from $1,391,708 in the first three quarters of 1995 to $446,851 for the first three quarters of 1996, reflecting the final sales of operating lease equipment in the first half of 1995, lease terminations and decline of rental receipts from the direct finance lease portfolio. As rental payment on finance leases are received, the cash is broken up into income and return of principal. As a finance lease ages the income portion of the rental receipts decreases and the return of principal portion increases. Cash provided by investing activities was used to repay notes payable of $44,864 in the first nine months of 1995 compared to $-0- for the same period in 1996. As of September 30, 1996, the Fund's partners were allocated cash distributions of $21,053 payable on October 15, 1996. The size of cash available for distribution depends on the timing of lease terminations and collections of rents. As a result of the decreasing portfolio of leases, the amount of each distribution can be expected to decrease during the remainder of 1996. The cash balance increased from $645,072 at December 31, 1994, to $555,161 at September 30, 1995, and increased to $706,443 at December 31, 1995, then decreased to $303,915 at September 30, 1996. The cash position as of September 30, 1996, was $303,915. The General Partner anticipates that funds from operations will be adequate to cover all operating expenses of the Partnership during 1996. 8 PART II. OTHER INFORMATION Item 1. Legal Proceeding None. Item 2. Changes in Securities None. Item 3. Defaults Upon Senior Securities None. Item 4. Submission of Matters to a Vote of Security Holders None. Item 5. Other Information None. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits None. (b) Reports on Form 8-K None. 8 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. LEASTEC INCOME FUND III (Registrant) LEASTEC CORPORATION, General Partner Date: November 4, 1996 By: _____________________________ Ernest V. Lavagetto, President EX-27 2
5 9-MOS DEC-31-1995 JAN-01-1996 SEP-30-1996 303,915 0 95,129 0 0 399,044 0 0 399,044 104,271 0 0 0 0 294,773 399,044 34,800 34,800 0 0 204,120 0 0 (169,320) 0 0 0 0 0 (169,320) (2.15) (2.15)
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