10-Q 1 0001.txt 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) (X) QUARTERLY REPORT PERSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended June 30, 2000 or ( ) TRANSITION REPORT PERSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission file number 0-21718 BOSTON CAPITAL TAX CREDIT FUND III L.P. (Exact name of registrant as specified in its charter) Delaware 52-1749505 (State or other jurisdiction (I.R.S. Employer of incorporation or Identification No.) organization) One Boston Place, Suite 2100, Boston, Massachusetts 02108 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (617)624-8900 (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 preceeding 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 _ BOSTON CAPITAL TAX CREDIT FUND III L.P. QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED June 30, 2000 TABLE OF CONTENTS FOR THE QUARTER ENDED JUNE 30, 2000 2 BALANCE SHEETS 4 SERIES 15 5 SERIES 16 6 SERIES 17 7 SERIES 18 8 SERIES 19 9 STATEMENTS OF OPERATIONS 10 THREE MONTHS ENDED JUNE 30, 10 SERIES 15 11 SERIES 16 12 SERIES 17 13 SERIES 18 14 SERIES 19 15 STATEMENTS OF CHANGES IN PARTNERS' CAPITAL 16 SERIES 15 17 SERIES 16 17 SERIES 17 18 SERIES 18 18 SERIES 19 19 STATEMENTS OF CASH FLOWS 20 THREE MONTHS ENDED JUNE 30, 20 SERIES 15 222 SERIES 16 24 SERIES 17 26 SERIES 18 28 SERIES 19 300 NOTES TO FINANCIAL STATEMENTS 322 NOTE A - ORGANIZATION 322 NOTE B - ACCOUNTING AND FINANCIAL REPORTING POLICIES 333 INVESTMENT SECURITIES 333 COST ERROR! BOOKMARK NOT DEFINED. NOTE C - RELATED PARTY TRANSACTIONS 34 NOTE D - INVESTMENTS IN OPERATING PARTNERSHIPS 35 COMBINED SUMMARIZED STATEMENTS OF OPERATIONS 37 SERIES 15 37 SERIES 16 38 SERIES 17 39 SERIES 18 40 SERIES 19 411 LIQUIDITY 433 CAPITAL RESOURCES 433 RESULTS OF OPERATIONS 44 YEAR 2000 COMPLIANCE 48 PART II - OTHER INFORMATION 49 SIGNATURES 50 Boston Capital Tax Credit Fund III L.P. BALANCE SHEETS June 30, March 31, 2000 2000 (Unaudited) (Audited) ASSETS INVESTMENTS IN OPERATING $ 93,867,056 $ 96,374,955 PARTNERSHIPS (Note D) OTHER ASSETS Cash and cash equivalents 1,873,383 1,754,063 Investments 1,540,719 1,538,967 Notes receivable 1,309,982 1,364,322 Deferred acquisition costs, net of accumulated amortization (Note B) 1,526,124 1,543,349 Other assets 2,997,561 2,940,636 $103,114,825 $105,516,292 LIABILITIES Accounts payable & accrued expenses (Note C) $ 4,551 $ 4,553 Accounts payable affiliates 14,056,479 13,374,147 Capital contributions payable 1,432,250 1,432,250 15,493,280 14,810,950 PARTNERS' CAPITAL Limited Partners Units of limited partnership interest, $10 stated value per BAC; 22,000,000 authorized BACs; 21,996,102 issued and 91,687,950 outstanding, 88,634,992 as of March 31, 2000 General Partner (1,013,447) (982,608) 87,621,545 90,705,342 $103,114,825 $105,516,292 The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. BALANCE SHEETS Series 15 June 30, March 31, 2000 2000 (Unaudited) (Audited) ASSETS INVESTMENTS IN OPERATING PARTNERSHIPS(Note D) $11,838,213 $12,293,726 OTHER ASSETS Cash and cash equivalents 357,939 308,497 Investments 135,167 135,167 Notes receivable - 32,170 Deferred acquisition costs, net of accumulated amortization (Note B) 233,884 236,512 Other assets 860,340 858,625 $13,425,543 $13,864,697 LIABILITIES Accounts payable & accrued expenses (Note C) $ 1,144 $ 1,145 Accounts payable affiliates 3,871,426 3,734,413 Capital contributions payable 32,922 32,922 3,905,492 3,768,480 PARTNERS' CAPITAL Limited Partners Units of limited partnership interest, $10 stated value per BAC; 22,000,000 authorized BACs; 3,870,500 issued and 9,757,522 10,327,926 outstanding, as of March 31, 2000 General Partner (237,471) (231,709) 9,520,051 10,096,217 $13,425,543 $13,864,697 The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. BALANCE SHEETS Series 16 June 30, March 31, 2000 2000 (Unaudited) (Audited) ASSETS INVESTMENTS IN OPERATING PARTNERSHIPS (Note D) $23,113,328 $23,933,776 OTHER ASSETS Cash and cash equivalents 316,164 307,415 Investments 654,460 652,708 Notes receivable - - Deferred acquisition costs, net of accumulated amortization (Note B) 374,958 379,171 Other assets 137,589 130,891 $24,596,499 $25,403,961 LIABILITIES Accounts payable & accrued expenses (Note C) $ - $ - Accounts payable affiliates 3,292,041 3,119,046 Capital contributions payable 140,006 140,006 3,432,047 3,259,052 PARTNERS' CAPITAL Limited Partners Units of limited partnership Interest, $10 stated value per BAC; 22,000,000 authorized BACs; 21,419,417 22,390,069 5,429,402 issued and outstanding, as of March 31, 2000 General Partner (254,965) (245,160) 21,164,452 22,144,909 $24,596,499 $25,403,961 The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. BALANCE SHEETS Series 17 June 30, March 31, 2000 2000 (Unaudited) (Audited) ASSETS INVESTMENTS IN OPERATING PARTNERSHIPS (Note D) $21,186,829 $21,661,017 OTHER ASSETS Cash and cash equivalents 436,868 404,005 Investments - - Notes receivable 1,309,982 1,332,152 Deferred acquisition costs, net of accumulated amortization (Note B) 338,210 342,098 Other assets 1,917,069 1,874,478 $25,188,958 $25,613,750 LIABILITIES Accounts payable & accrued expenses (Note C) $ - $ - Accounts payable affiliates 4,159,826 3,985,826 Capital contributions payable 1,206,768 1,206,768 5,366,594 5,192,594 PARTNERS' CAPITAL Limited Partners Units of limited partnership Interest, $10 stated value per BAC; 22,000,000 authorized BACs; 20,053,820 20,646,624 5,000,000 issued and outstanding, as of March 31, 2000 General Partner (231,456) (225,468) 19,822,364 20,421,156 $25,188,958 $25,613,750 The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. BALANCE SHEETS Series 18 June 30, March 31, 2000 2000 (Unaudited) (Audited) ASSETS INVESTMENTS IN OPERATING PARTNERSHIPS (NOTE D) $ 16,227,140 $ 16,650,144 OTHER ASSETS Cash and cash equivalents 408,447 377,094 Investments 102,771 102,771 Notes receivable - - Deferred acquisition costs, net of accumulated amortization(Note B) 254,889 257,743 Other assets 63,286 62,002 $17,056,533 $17,449,754 LIABILITIES Accounts payable & accrued expenses (Note C) $ - $ - Accounts payable affiliates 1,757,424 1,661,937 Capital contributions payable 18,554 18,554 1,775,978 1,680,491 PARTNERS' CAPITAL Limited Partners Units of limited partnership Interest, $10 stated value per BAC; 22,000,000 authorized BACs; 15,437,977 15,921,798 3,616,200 issued and outstanding, as of March 31, 2000 General Partner (157,422) (152,535) 15,280,555 15,769,263 $17,056,533 $17,449,754 The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. BALANCE SHEETS Series 19 June 30, March 31, 2000 2000 (Unaudited) (Audited) ASSETS INVESTMENTS IN OPERATING PARTNERSHIPS (NOTE D) $21,501,546 $ 21,836,292 OTHER ASSETS Cash and cash equivalents 353,965 357,052 Investments 648,321 648,321 Notes receivable - - Deferred acquisition costs, net of accumulated amortization (Note B) 324,183 327,825 Other assets 19,277 14,640 $22,847,292 $23,184,130 LIABILITIES Accounts payable & accrued expenses (Note C) $ 3,407 $ 3,408 Accounts payable affiliates 975,762 872,925 Capital contributions payable 34,000 34,000 1,013,169 910,333 PARTNERS' CAPITAL Limited Partners Units of limited partnership Interest, $10 stated value per BAC; 22,000,000 authorized BACs; 21,966,256 22,401,533 4,080,000 issued and outstanding, as of March 31, 2000 General Partner (132,133) (127,736) 21,834,123 22,273,797 $22,847,292 $23,184,130 The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. STATEMENTS OF OPERATIONS Three Months Ended June 30, (Unaudited) 2000 1999 Income Interest income $ 28,179 $ 59,471 Other income 998 300 29,177 59,771 Share of loss from Operating Partnerships(Note D) (2,489,704) (2,714,397) Expenses Professional fees 13,372 52,887 Fund management fee (Note C) 547,815 595,028 Amortization 17,225 25,169 General and administrative 44,858 52,310 expenses 623,270 725,394 NET LOSS $(3,083,797) $(3,380,020) Net loss allocated to limited $(3,052,958) $(3,346,220) partners Net loss allocated general partner $ (30,839) $ (33,800) Net loss per BAC $ (.69) $ (.74) The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. STATEMENTS OF OPERATIONS Three Months Ended June 30, (Unaudited) Series 15 2000 1999 Income Interest income $ 4,294 $ 13,494 Other income 9 - 4,303 13,494 Share of loss from Operating Partnerships(Note D) (455,506) (512,749) Expenses Professional fees 3,230 14,598 Fund management fee 110,891 119,516 Amortization 2,628 2,628 General and administrative 8,214 10,612 expenses 124,963 147,354 NET LOSS $ (576,166) $ (646,609) Net loss allocated to limited $ (570,404) $ (640,143) partners Net loss allocated general partner $ (5,762) $ (6,466) Net loss per BAC $ (.15) $ (.16) The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. STATEMENTS OF OPERATIONS Three Months Ended June 30, (Unaudited) Series 16 2000 1999 Income Interest income $ 10,425 $ 12,322 Other income 436 150 12,472 10,861 Share of loss from Operating Partnerships(Note D) (819,165) (829,749) Expenses Professional fees 4,283 12,260 Fund management fee 152,430 152,827 Amortization 4,213 4,213 General and administrative 11,227 13,037 expenses 172,153 182,337 NET LOSS $ (980,457) $ 999,614) Net loss allocated to limited $ (970,652) $ (989,618) partners Net loss allocated general partner $ (9,805) $ (9,996) Net loss per BAC $ (.18) $ (.18) The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. STATEMENTS OF OPERATIONS Three Months Ended June 30, (Unaudited) Series 17 2000 1999 Income Interest income $ 2,998 $ 4,617 Other income 553 150 3,551 4,767 Share of loss from Operating Partnerships(Note D) (473,016) (605,664) Expenses Professional fees 2,446 10,811 Fund management fee 112,419 132,841 Amortization 3,888 11,662 General and administrative 10,574 12,437 expenses 129,327 167,751 NET LOSS $ (598,792) $ (768,648) Net loss allocated to limited $ (592,804) $ (760,961) partners Net loss allocated general partner $ (5,988) $ (7,687) Net loss per BAC $ (.12) $ (.15) The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. STATEMENTS OF OPERATIONS Three Months Ended June 30, (Unaudited) Series 18 2000 1999 Income Interest Income $ 3,310 $ 4,481 - - 3,310 4,481 Share of loss from Operating Partnerships(Note D) (407,350) (340,799) Expenses Professional fees 1,916 9,123 Fund management fee 72,916 90,457 Amortization 2,854 2,853 General and administrative 6,982 7,788 expenses 84,668 110,221 NET LOSS $ (488,708) $ (446,539) Net loss allocated to limited $ (483,821) $ (442,074) partners Net loss allocated general partner $ (4,887) $ (4,465) Net loss per BAC $ (.14) $ (.12) The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. STATEMENTS OF OPERATIONS Three Months Ended June 30, (Unaudited) Series 19 2000 1999 Income Interest income $ 7,152 $ 24,557 Other income - - 7,152 24,557 Share of loss from Operating Partnerships(Note D) (334,667) (425,436) Expenses Professional fees 1,497 6,095 Fund management fee 99,159 99,387 Amortization 3,642 3,813 General and administrative 7,861 8,436 expenses 112,159 117,731 NET LOSS $ (439,674) $ (518,610) Net loss allocated to limited $ (435,277) $ (513,424) partners Net loss allocated general partner $ (4,397) $ (5,186) Net loss per BAC $ (.11) $ (.13) The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CHANGES IN PARTNERS' CAPITAL Three Months Ended June 30, (Unaudited) General Partner Assignees Total Partners' Capital (deficit) April 1, 2000 $ $ $ 90,705,342 91,687,950 (982,608) Net income (loss) (3,052,958) (30,839) (3,083,797) Partners' capital (deficit), June 30, 2000 $ $ $ 87,621,545 88,634,992 (1,013,447) The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CHANGES IN PARTNERS' CAPITAL Three Months Ended June 30, (Unaudited) Assignees General Total Partner Series 15 Partners' Capital (deficit) April 1, 2000 $ $ (231,709) $ 10,096,217 10,327,926 Net income (loss) (570,404) (5,762) (576,166) Partners' capital (deficit), June 30, 2000 $ $ (237,471) $ 9,520,051 9,757,522 Series 16 Partners' Capital (deficit) April 1, 2000 $ $ (245,160) $ 22,144,909 22,390,069 Net income (loss) (970,652) (9,805) (980,457) Partners' capital (deficit), June 30, 2000 $ $ (254,965) $ 21,164,152 21,419,417 The accompanying notes are an integral part of these statements. Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CHANGES IN PARTNERS' CAPITAL Three Months Ended June 30, (Unaudited) Assignees General Total Partner Series 17 Partners' Capital (deficit) April 1, 2000 $ $ $ 20,421,156 20,646,624 (225,468) Net income (loss) (592,804) (5,988) (598,792) Partners' capital (deficit), June 30, 2000 $ $ (231,456) $ 19,822,364 20,053,820 Series 18 Partners' Capital (deficit) April 1, 2000 $ $ (152,535) $ 15,769,263 15,921,798 Net income (loss) (483,821) (4,887) (488,708) Partners' capital (deficit), June 30, 2000 $ $ (157,422) $ 15,280,555 15,437,977 The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CHANGES IN PARTNERS' CAPITAL Three Months Ended June 30, (Unaudited) Assignees General Total Partner Series 19 Partners' Capital (deficit) April 1, 2000 $ $ $ 22,273,797 22,401,533 (127,736) Net income (loss) (435,277) (4,397) (439,674) Partners' capital (deficit), June 30, 2000 $ $ (132,133) $ 21,834,123 21,966,256 The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Three Months Ended June 30, (Unaudited) 2000 1999 Cash Flows from operating activities: Net Loss $(3,083,797) $(3,380,020) Adjustments Distributions from Operating Partnerships 18,195 37,565 Amortization 17,225 25,170 Share of Loss from Operating Partnerships 2,489,704 2,714,397 Changes in assets and liabilities (Decrease) Increase in accounts 380,778 payable and accrued (2) expenses Decrease (Increase) in accounts (56,925) (115,475) Receivable Decrease (Increase) in accounts 682,332 424,931 Payable affiliates Net cash (used in) provided by 66,732 87,346 Operating activities Cash Flows from investing activities: Capital contributions paid to Operating Partnerships - - Advances in Operating 54,340 - Partnerships Investments (1,752) (80,000) Net cash (used in) provided by investing activities 52,588 (80,000) The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Three Months Ended June 30, (Unaudited) 2000 1999 Continued Cash flows from financing activity: Credit adjusters received from Operating Partnerships - - Net cash (used in)provided by - - financing activity INCREASE (DECREASE) IN CASH AND 119,320 7,346 CASH EQUIVALENTS Cash and cash equivalents, 1,754,063 1,693,799 beginning Cash and cash equivalents, ending $ 1,873,383 $ 1,701,145 The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Three Months Ended June 30, (Unaudited) Series 15 2000 1999 Cash Flows from operating activities: Net Loss $(576,166) $ (646,609) Adjustments Distributions from Operating Partnerships 7 882 Amortization 2,628 2,628 Share of Loss from Operating Partnerships 455,506 512,749 Changes in assets and liabilities (Decrease) Increase in accounts 12,921 payable and accrued (1) expenses Decrease (Increase) in accounts (1,715) (1,717) Receivable Decrease (Increase) in accounts 137,013 138,141 payable affiliates Net cash (used in) provided by 17,272 18,995 operating activities Cash Flows from investing activities: Capital contributions paid to Operating Partnerships - - Advances in Operating - Partnerships 32,170 Investments - - Net cash (used in) provided by investing activities 32,170 - The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Three Months Ended June 30, (Unaudited) Series 15 2000 1999 Continued Cash flows from financing activity: Credit adjusters received from Operating Partnerships - - Net cash (used in)provided by - - financing activity INCREASE (DECREASE) IN CASH AND 49,442 18,995 CASH EQUIVALENTS Cash and cash equivalents, 308,497 306,884 beginning Cash and cash equivalents, ending $ 357,939 $ 325,879 The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Three Months Ended June 30, (Unaudited) Series 16 2000 1999 Cash Flows from operating activities: Net Loss $(980,457) $(999,614) Adjustments Distributions from Operating Partnerships 1,283 - Amortization 4,213 4,214 Share of Loss from Operating Partnerships 819,165 829,749 Changes in assets and liabilities (Decrease) Increase in accounts - 12,260 payable and accrued expenses Decrease (Increase) in accounts (6,698) (11,162) Receivable Decrease (Increase) in accounts 172,995 payable affiliates 172,995 Net cash (used in) provided by 10,501 8,442 operating activities Cash Flows from investing activities: Capital contributions paid to Operating Partnerships - - Advances in Operating - - Partnerships Investments (1,752) - Net cash (used in) provided by investing activities (1,752) - The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Three Months Ended June 30, (Unaudited) Series 16 2000 1999 Continued Cash flows from financing activity: Credit adjusters received from Operating Partnerships - - Net cash (used in)provided by - - financing activity INCREASE (DECREASE) IN CASH AND 8,749 8,442 CASH EQUIVALENTS Cash and cash equivalents, 307,415 213,451 beginning Cash and cash equivalents, ending $ 316,164 $ 221,893 The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Three Months Ended June 30, (Unaudited) Series 17 2000 1999 Cash Flows from operating activities: Net Loss $ (598,792) $(768,648) Adjustments Distributions from Operating Partnerships 1,172 4,113 Amortization 3,888 11,662 Share of Loss from Operating Partnerships 473,016 605,664 Changes in assets and liabilities (Decrease) Increase in accounts - 342,298 payable and accrued expenses (Decrease) Increase in accounts (42,591) (101,547) receivable Decrease (Increase) in accounts 174,000 (84,531) payable affiliates Net cash (used in) provided by 10,693 9,011 operating activities Cash Flows from investing activities: Capital contributions paid to Operating Partnerships - - Advances in Operating - Partnerships 22,170 Investments - - Net cash (used in) provided by Investing activities 22,170 - The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Three Months Ended June 30, (Unaudited) Series 17 2000 1999 Continued Cash flows from financing activity: Credit adjusters received from Operating Partnerships - - Net cash (used in)provided by - - financing activity INCREASE (DECREASE) IN CASH AND 32,863 9,011 CASH EQUIVALENTS Cash and cash equivalents, 404,005 349,189 beginning Cash and cash equivalents, ending $ 436,868 $ 358,200 The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Three Months Ended June 30, (Unaudited) Series 18 2000 1999 Cash Flows from operating activities: Net Loss $(488,708) $(446,539) Adjustments Distributions from Operating Partnerships 15,654 1,130 Amortization 2,854 2,853 Share of Loss from Operating Partnerships 407,350 340,799 Changes in assets and liabilities (Decrease) Increase in accounts - 7,310 payable and accrued expenses Decrease (Increase) in accounts (1,284) (2,844) Receivable Decrease (Increase) in accounts 95,487 95,488 payable affiliates Net cash (used in) provided by 31,353 (1,803) operating activities Cash Flows from investing activities: Capital contributions paid to Operating Partnerships - - Advances in Operating - - Partnerships Investments - - Net cash (used in) provided by investing activities - - The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Three Months Ended June 30, (Unaudited) 2000 1999 Continued Cash flows from financing activity: Credit adjusters received from Operating Partnerships - - Net cash (used in)provided by - - financing activity INCREASE (DECREASE) IN CASH AND 31,353 (1,803) CASH EQUIVALENTS Cash and cash equivalents, 377,094 306,065 beginning Cash and cash equivalents, ending $ 408,447 $ 304,262 The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Three Months Ended June 30, (Unaudited) Series 19 2000 1999 Cash Flows from operating activities: Net Loss (439,674) $(518,610) Adjustments Distributions from Operating Partnerships 79 31,440 Amortization 3,642 3,813 Share of Loss from Operating Partnerships 334,667 425,436 Changes in assets and liabilities (Decrease) Increase in accounts (1) 5,989 payable and accrued expenses (Decrease) Increase in accounts (4,637) 1,795 receivable/ other assets Decrease (Increase) in accounts 102,837 102,838 payable affiliates Net cash (used in) provided by (3,087) 52,701 operating activities Cash Flows from investing activities: Capital contributions paid to Operating Partnerships - - Advances in Operating - - Partnerships Investments - (80,000) Net cash (used in) provided by investing activities - (80,000) The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Three Months Ended June 30, (Unaudited) Series 19 2000 1999 Continued Cash flows from financing activity: Credit adjusters received from Operating Partnerships - - Net cash (used in)provided by - - financing activity INCREASE (DECREASE) IN CASH AND (3,087) (27,299) CASH EQUIVALENTS Cash and cash equivalents, 357,052 518,210 beginning Cash and cash equivalents, ending $ 353,965 $ 490,911 The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. NOTES TO FINANCIAL STATEMENTS June 30, 2000 (Unaudited) NOTE A - ORGANIZATION Boston Capital Tax Credit Fund III L.P. (the "Fund") was formed under the laws of the State of Delaware as of September 19, 1991 for the purpose of acquiring, holding, and disposing of limited partnership interests in Operating Partnerships which will acquire, develop, rehabilitate, operate and own newly constructed, existing or rehabilitated low-income apartment complexes ("Operating Partnerships"). The general partner of the Fund is Boston Capital Associates III L.P., a Delaware limited partnership. Boston Capital Associates, a Massachusetts general partnership, whose only two partners are Herbert F. Collins and John P. Manning, the principals of Boston Capital Partners, Inc., is the sole general partner of the general partner. The limited partner of the general partner is Capital Investment Holdings, a general partnership whose partners are certain officers and employees of Boston Capital Partners, Inc., and its affiliates. The Assignor Limited Partner is BCTC III Assignor Corp., a Delaware corporation which is wholly-owned by Herbert F. Collins and John P. Manning. Pursuant to the Securities Act of 1933, the Fund filed a Form S-11 Registration Statement with the Securities and Exchange Commission, effective January 24, 1992 which covered the offering (the "Public Offering") of the Fund's beneficial assignee certificates ("BACs") representing assignments of units of the beneficial interest of the limited partnership interest of the Assignor Limited Partner. The Fund registered 20,000,000 BACs at $10 per BAC for sale to the public in one or more series. On September 4, 1993 the Fund filed an amendment to Form S-11 with the Securities and Exchange Commission which registered an additional 2,000,000 BACs at $10 per BAC for sale to the public in one or more series. The registration for the additional BACs became effective on October 6, 1993. Offers and sales of BACs in Series 15 through19 of the Fund were completed and the last of the BACs in Series 15, 16, 17, 18 and 19 were issued by the Fund on June 26, 1992, December 28, 1992, June 17, 1993, September 22, 1993, and December 17, 1993, respectively. The Fund sold 3,870,500 of Series 15 BACs, for a total of $38,705,000; 5,429,402 of Series 16 BACs, for a total of $54,293,000; 5,000,000 of Series 17 BACs, for a total of $50,000,000; 3,616,200 of Series 18 BACs, for a total of $36,162,000; and 4,080,000 of Series 19 BACs, for a total of $4,080,000. The Fund issued the last BACs in Series 19 on December 17, 1993. This concluded the Public Offering of the Fund. Boston Capital Tax Credit Fund III L.P. NOTES TO FINANCIAL STATEMENTS - CONTINUED June 30, 2000 (Unaudited) NOTE B - ACCOUNTING AND FINANCIAL REPORTING POLICIES The condensed financial statements included herein as of June 30, 2000 and for the three months then ended have been prepared by the Fund, without audit. The Fund accounts for its investments in Operating Partnerships using the equity method, whereby the Fund adjusts its investment cost for its share of each Operating Partnership's results of operations and for any distributions received or accrued. Costs incurred by the Fund in acquiring the investments in the Operating Partnerships are capitalized to the investment account. The Fund's accounting and financial reporting policies are in conformity with generally accepted accounting principles and include adjustments in interim periods considered necessary for a fair presentation of the results of operations. Such adjustments are of a normal recurring nature. Investment The Fund has included in investments Certificates of Deposit with original materities of one year or less. These investments are carried at costs. Bston Capital Tax Credit Fund III L.P. NOTES TO FINANCIAL STATEMENTS - CONTINUED June 30, 2000 (Unaudited) NOTE - B ACCOUNTING AND FINANCIAL REPORTING POLICIES - CONTINUED Amortized cost is the face value of the securities and any unamortized premium or discount. The balance sheet reflects the fair market value under investments. Amortization On July 1, 1995, the Fund began amortizing unallocated acquisition costs over 330 months from April 1, 1995. As of June 30, 2000 the Fund has accumulated unallocated acquisition amortization totaling $367,213. The breakdown of accumulated unallocated acquisition amortization within the fund as of June 30, 2000 and 1999 is as follows: 2000 1999 Series 15 $55,286 $44,774 Series 16 88,471 71,620 Series 17 89,540 81,765 Series 18 60,050 48,636 Series 19 73,866 59,296 $367,213 $306,091 NOTE C - RELATED PARTY TRANSACTIONS The Fund has entered into several transactions with various affiliates of the general partner, including Boston Capital Partners, Inc., and Boston Capital Asset Management Limited Partnership as follows: Boston Capital Partners, Inc. is entitled to asset acquisition fees for selecting, evaluating, structuring, negotiating, and closing the Fund's acquisition of interests in the Operating Partnerships. Prior to the quarter ended June 30, 2000 all series had completed payment of all acquisition fees due to Boston Capital Partners, Inc. Boston Capital Tax Credit Fund III L.P. NOTES TO FINANCIAL STATEMENTS - CONTINUED June 30, 2000 (Unaudited) NOTE C - RELATED PARTY TRANSACTIONS - CONTINUED An annual fund management fee based on .5 percent of the aggregate cost of all apartment complexes owned by the Operating Partnerships, has been accrued to Boston Capital Asset Management Limited Partnership. The fund management fees accrued for the quarter ended June 30, 2000 and 1999 are as follows: 2000 1999 Series 15 $137,013 $137,013 Series 16 172,995 172,995 Series 17 140,925 141,342 Series 18 95,487 95,487 Series 19 102,837 102,837 $649,257 $649,674 NOTE D - INVESTMENTS IN OPERATING PARTNERSHIPS At June 30, 2000 and 1999, the Fund had limited partnership interests in 241 Operating Partnerships which own or are constructing apartment complexes. The breakdown of Operating Partnerships within the Fund at June 30, 2000 and 1999 is as follows: Series 15 68 Series 16 64 Series 17 49 Series 18 34 Series 19 26 241 Boston Capital Tax Credit Fund III L.P. NOTES TO FINANCIAL STATEMENTS - CONTINUED June 30, 2000 (Unaudited) NOTE D - INVESTMENTS IN OPERATING PARTNERSHIPS - CONTINUED Under the terms of the Fund's investment in each Operating Partnership, the Fund is required to make capital contributions to the Operating Partnerships. These contributions are payable in installments over several years upon each Operating Partnership achieving specified levels of construction and/or operations. The contributions payable at June 30, 2000 and 1999 are as follows: 2000 1999 Series 15 $ 32,922 $ 32,922 Series 16 140,006 142,506 Series 17 1,206,768 1,367,195 Series 18 18,554 18,554 Series 19 34,000 34,000 $1,432,250 $1,595,177 The Fund's fiscal year ends March 31st of each year, while all the Operating Partnerships' fiscal years are the calendar year. Pursuant to the provisions of each Operating Partnership Agreement, financial results for each of the Operating Partnerships are provided to the Fund within 45 days after the close of each Operating Partnership's quarterly period. Accordingly, the current financial results available for the Operating Partnerships are for the three months ended March 31, 2000. Boston Capital Tax Credit Fund III L.P. NOTES TO FINANCIAL STATEMENTS June 30, 2000 (Unaudited) NOTE D - INVESTMENTS IN OPERATING PARTNERSHIPS (continued) COMBINED SUMMARIZED STATEMENTS OF OPERATIONS Three months ended March 31, (Unaudited) Series 15 2000 1999 Revenues Rental $ 2,486,174 $ 2,427,558 Interest and other 82,688 83,133 2,568,862 2,510,691 Expenses Interest 687,628 694,218 Depreciation and 902,907 954,000 amortization Operating expenses 1,653,173 1,546,183 3,243,708 3,194,401 NET LOSS $ (674,846) $ (683,710) Net loss allocation to Boston Capital Tax Credit Fund $ (455,506) $ (512,749) III L.P. Net loss allocated to other Partners $ (6,748) $ (6,837) Net loss suspended $ (212,592) $ (164,124) The variance in allowable loss from the Operating Partnerships for the three months ended March 31, 2000 and 1999 is mainly a result of the way the Partnership accounts for its investment in Operating Partnerships. The Partnership accounts for its investments using the equity method of accounting. Under the equity method of accounting, the Partnership adjusts its investment cost for its share of each Operating Partnership's results of operations and for any distributions received or accrued. However, the Partnership recognizes individual operating losses only to the extent of capital contributions. Excess losses are suspended for use in future years to offset excess income. Boston Capital Tax Credit Fund III L.P. NOTES TO FINANCIAL STATEMENTS June 30, 2000 (Unaudited) NOTE D - INVESTMENTS IN OPERATING PARTNERSHIPS (continued) COMBINED SUMMARIZED STATEMENTS OF OPERATIONS Three months ended March 31, (Unaudited) Series 16 2000 1999 Revenues Rental $ 3,367,472 $ 3,085,327 Interest and other 139,573 142,545 3,507,045 3,227,872 Expenses Interest 996,864 927,227 Depreciation and 1,239,477 1,209,040 amortization Operating expenses 2,204,378 2,027,128 4,440,719 4,163,395 NET LOSS $ (933,674) $ (935,523) Net loss allocation to Boston Capital Tax Credit Fund $ (819,165) $ (829,749) III L.P. Net loss allocated to other Partners $ (9,337) $ (9,355) Net loss suspended $ (105,172) $ (96,419) The variance in allowable loss from the Operating Partnerships for the three months ended March 31, 2000 and 1999 is mainly a result of the way the Partnership accounts for its investment in Operating Partnerships. The Partnership accounts for its investments using the equity method of accounting. Under the equity method of accounting, the Partnership adjusts its investment cost for its share of each Operating Partnership's results of operations and for any distributions received or accrued. However, the Partnership recognizes individual operating losses only to the extent of capital contributions. Excess losses are suspended for use in future years to offset excess income. Boston Capital Tax Credit Fund III L.P. NOTES TO FINANCIAL STATEMENTS June 30, 2000 (Unaudited) NOTE D - INVESTMENTS IN OPERATING PARTNERSHIPS (continued) COMBINED SUMMARIZED STATEMENTS OF OPERATIONS Three months ended March 31, (Unaudited) Series 17 2000 1999 Revenues Rental $ 2,934,851 $ 2,737,626 Interest and other 106,438 87,828 3,041,289 2,825,454 Expenses Interest 905,724 915,328 Depreciation and 930,184 911,848 amortization Operating expenses 1,746,883 1,610,060 3,582,791 3,437,236 NET LOSS $ (541,502) $ (611,782) Net loss allocation to Boston Capital Tax Credit Fund $ (473,016) $ (605,664) III L.P. Net loss allocated to other Partners $ (68,486) $ (6,118) Boston Capital Tax Credit Fund III L.P. NOTES TO FINANCIAL STATEMENTS June 30, 2000 (Unaudited) NOTE D - INVESTMENTS IN OPERATING PARTNERSHIPS (continued) COMBINED SUMMARIZED STATEMENTS OF OPERATIONS Three months ended March 31, (Unaudited) Series 18 2000 1999 Revenues Rental $ 1,649,338 $ 1,610,813 Interest and other 86,082 86,695 1,735,420 1,697,508 Expenses Interest 470,360 457,470 Depreciation and 630,183 623,236 amortization Operating expenses 1,062,904 974,916 2,163,447 2,055,622 NET LOSS $ (428,027) $ (358,114) Net loss allocation to Boston Capital Tax Credit Fund $ (407,350) $ (340,799) III L.P. Net loss allocated to other Partners $ (4,280) $ (3,581) Net loss suspended $ (16,397) $ (13,734) The variance in allowable loss from the Operating Partnerships for the three months ended March 31, 2000 and 1999 is mainly a result of the way the Partnership accounts for its investment in Operating Partnerships. The Partnership accounts for its investments using the equity method of accounting. Under the equity method of accounting, the Partnership adjusts its investment cost for its share of each Operating Partnership's results of operations and for any distributions received or accrued. However, the Partnership recognizes individual operating losses only to the extent of capital contributions. Excess losses are suspended for use in future years to offset excess income. Boston Capital Tax Credit Fund III L.P. NOTES TO FINANCIAL STATEMENTS June 30, 2000 (Unaudited) NOTE D - INVESTMENTS IN OPERATING PARTNERSHIPS (continued) COMBINED SUMMARIZED STATEMENTS OF OPERATIONS Three months ended March 31, (Unaudited) Series 19 2000 1999 Revenues Rental $ 2,375,194 $ 2,261,354 Interest and other 65,676 77,908 2,440,870 2,339,262 Expenses Interest 803,038 843,587 Depreciation and 742,598 703,864 amortization Operating expenses 1,240,333 1,221,544 2,785,969 2,768,995 NET LOSS $ (345,099) $ (429,733) Net loss allocation to Boston Capital Tax Credit Fund $ (334,667) $ (425,436) III L.P. Net loss allocated to other Partners $ (3,451) $ (4,297) Net loss suspended $ $ (6,981) - The variance in allowable loss from the Operating Partnerships for the three months ended March 31, 2000 and 1999 is mainly a result of the way the Partnership accounts for its investment in Operating Partnerships. The Partnership accounts for its investments using the equity method of accounting. Under the equity method of accounting, the Partnership adjusts its investment cost for its share of each Operating Partnership's results of operations and for any distributions received or accrued. However, the Partnership recognizes individual operating losses only to the extent of capital contributions. Excess losses are suspended for use in future years to offset excess income. Boston Capital Tax Credit Fund III L.P. NOTES TO FINANCIAL STATEMENTS June 30, 2000 (Unaudited) NOTE E - TAXABLE LOSS The Fund's taxable loss for the year ended March 31, 2001 is expected to differ from its loss for financial reporting purposes. This is primarily due to accounting differences in depreciation incurred by the Operating Partnerships and also differences between the equity method of accounting and the IRS accounting methods. No provision or benefit for income taxes has been included in these financial statements since taxable income or loss passes through to, and is reportable by, the partners and assignees individually. Item 2. Management's Discussions and Analysis of Financial Condition and Results of Operations Liquidity The Fund's primary source of funds is the proceeds of its Public Offering. Other sources of liquidity will include (i) interest earned on capital contributions held pending investment and on Working Capital Reserves and (ii) cash distributions from operations of the operating Partnerships in which the Fund has and will invest. Interest income is expected to decrease over the life of the Fund as capital contributions are paid to the Operating Partnerships and Working Capital Reserves are expended. The Fund does not anticipate significant cash distributions from operations of the Operating Partnerships. The Fund is currently accruing the fund management fee. Fund management fees accrued during the quarter ended June 30, 2000 were $649,257 and total fund management fees accrued as of June 30, 2000 were $12,850,253. Pursuant to the Partnership Agreement, such liabilities will be deferred until the Fund receives sales of refinancing proceeds from Operating Partnerships which will be used to satisfy such liabilities. The Fund's working capital and sources of liquidity coupled with affiliated party liability accruals allow sufficient levels of liquidity to meet the third party obligations of the Fund. The Fund is currently unaware of any trends which would create insufficient liquidity to meet future third party obligations of the Fund. The Fund has recorded $928,656 as payable to affiliates. This represents fundings to make advances and/or loans to certain Operating Partnerships in Series 17 of the Fund. Capital Resources The Fund offered BACs in a Public Offering declared effective by the Securities and Exchange Commission on January 24, 1992. The Fund received $38,705,000, $54,293,000, $50,000,000, $36,162,000 and $40,800,000 representing 3,870,500, 5,429,402, 5,000,000, 3,616,200 and 4,080,000 BACs from investors admitted as BAC Holders in Series 15, Series 16, Series 17, Series 18, and Series 19, respectively. The Public Offering was completed on December 17, 1993. (Series 15) The Fund commenced offering BACs in Series 15 on January 24, 1992. Offers and sales of BACs in Series 15 were completed on June 26, 1992. The Fund has committed proceeds to pay initial and additional installments of capital contributions to 68 Operating Partnerships in the amount of $28,257,701. During the quarter ended June 30, 2000, none of Series 15 net offering proceeds had been used to pay capital contributions. Series 15 net offering proceeds in the amount of $32,922 remain to be used by the Fund to pay remaining capital contributions to the Operating Partnerships that Series 15 has invested in as of June 30, 2000. (Series 16) The Fund commenced offering BACs in Series 16 on July 13, 1992. Offers and sales of BACs in Series 16 were completed on December 28, 1992. The Fund has committed proceeds to pay initial and additional installments of capital contributions to 64 Operating Partnerships in the amount of $39,579,774. During the quarter ended June 30, 2000, none of Series 16 net offering proceeds had been used to pay capital contributions. Series 16 net offering proceeds in the amount of $140,006 remain to be used by the Fund to pay remaining capital contributions to the Operating Partnerships that Series 16 has invested in as of June 30, 2000. (Series 17) The Fund commenced offering BACs in Series 17 on January 24, 1993. Offers and sales of BACs in Series 17 were completed on June 17, 1993. The Fund has committed proceeds to pay initial and additional installments of capital contributions to 49 Operating Partnerships in the amount of $36,538,204. During the quarter ended June 30, 2000, none of Series 17 net offering proceeds had been used to pay capital contributions. Series 17 net offering proceeds in the amount of $436,868 remain to be used by the Fund to pay remaining capital contributions to the Operating Partnerships that Series 17 has invested in as of June 30, 2000. (Series 18) The Fund commenced offering BACs in Series 18 on June 17, 1993. Offers and sales of BACs in Series 18 were completed on September 22, 1993. The Fund has committed proceeds to pay initial and additional installments of capital contributions to 34 operating Partnerships in the amount of $26,442,202. During the quarter ended June 30, 2000, none of Series 18 net offering proceeds had been used to pay capital contributions. Series 18 net offering proceeds in the amount of $18,554 remain to be used by the Fund to pay remaining capital contributions to the Operating Partnerships that Series 18 has invested in as of June 30, 2000. (Series 19). The Fund commenced offering BACs in Series 19 on October 8, 1993. Offers and sales of BACs in Series 19 were completed on December 17, 1993. The Fund has committed proceeds to pay initial and additional installments of capital contributions to 26 Operating Partnerships in the amount of $29,614,506. During the quarter ended June 30, 2000, none of Series 19 net offering proceeds had been used to pay capital contributions. Series 19 net offering proceeds in the amount of $34,000 remain to be used by the Fund to pay remaining capital contributions to the Operating Partnerships that Series 19 has invested in as of June 30, 2000. Results of Operations As of June 30, 2000 and 1999 the Fund held limited partnership interests in 241 Operating Partnerships. In each instance the Apartment Complex owned by the applicable Operating Partnership is eligible for the Federal Housing Tax Credit. Occupancy of a unit in each Apartment Complex which initially complied with the Minimum Set-Aside Test (i.e., occupancy by tenants with incomes equal to no more than a certain percentage of area median income) and the Rent Restriction Test (i.e., gross rent charged tenants does not exceed 30% of the applicable income standards) is referred to hereinafter as "Qualified Occupancy." Each of the Operating Partnerships and each of the respective Apartment Complexes are described more fully in the Prospectus or applicable report on Form 8-K. The General Partner believes that there is adequate casualty insurance on the properties. The results of operations for future periods are likely to vary from those for the period ended June 30, 2000. The losses from Operating Partnerships reported for this interim period are not necessarily indicative of the results anticipated for future periods as some of these Operating Partnerships are in the lease-up phase. The Fund incurred a fund management fee to Boston Capital Asset Management Limited Partnerships (formerly Boston Capital Communications Limited Partnership) in an amount equal to .5 percent of the aggregate cost of the apartment complexes owned by the Operating Partnerships, less the amount of certain asset management and reporting fees paid by the Operating Partnerships. The fund management fees incurred for the quarter ended December 31, 1998 for Series 15, Series 16, Series 17, Series 18 and Series 19 were $118,637, $154,922, $138,451, $86,189, and $79,829 respectively. The Fund's investment objectives do not include receipt of significant cash distributions from the Operating Partnerships in which it has invested or intends to invest. The Fund's investments in Operating Partnerships have been made principally with a view towards realization of Federal Housing Tax Credits for allocation to its partners and BAC holders. (Series 15) As of June 30, 2000 and 1999, the average qualified occupancy for the series was 100% for both years. The series had a total of 68 properties at June 30, 2000, all of which were at 100% qualified occupancy. For the three months being reported Series 15 reflects a net loss from Operating Partnerships of $674,846. When adjusted for depreciation, which is a non-cash item, the Operating Partnerships reflect positive operations of $228,061. This is an interim period estimate; it is not necessarily indicative of the final year end results. Operations continue to improve at Hidden Cove Apartments (Hidden Cove) as evidenced by stabilized occupancy and increased rental collections. To date, the property has been able to complete minor capital improvements and fund its replacement reserve account without financial assistance. It is anticipated that the property will be able to operate at breakeven, barring any significant unforeseen repairs. At this time, the Operating General Partner has commenced negotiations with the property's management company aimed at transferring the Operating General Partnership interest to that entity. It is anticipated that the addition of a local Operating General Partner will enhance the property's ability to refinance its permanent mortgage. As part of the January 1999 debt restructure of School Street I LP, (School Street Apt. Phase I) the lender instituted a capital improvements project to be completed by December 1999. At year end most of the required improvements were completed. The lender has agreed to extend the deadline for the remaining items. In an effort to further improve operations at the property the Operating General Partner hired a new management company in September 1999. The new management company has been pursuing evictions of delinquent tenants, and as a result the average occupancy of the property declined to 50% in the fourth quarter of 1999. Occupancy has improved since the evictions and was at 62% as of June 2000. The Operating General Partner is continuing to actively participate with the new management company in the partnership's operations in order to achieve stable high occupancy and positive cash flow at the property. (Series 16) As of June 30, 2000 and 1999, the average qualified occupancy for the series was 99.7% for both years. The series had a total of 64 properties at June 30, 2000. Out of the total, 62 had 100% qualified occupancy. For the three months being reported Series 16 reflects a net loss from Operating Partnerships of $933,674. When adjusted for depreciation, which is a non-cash item, the Operating Partnerships reflect positive operations of $305,803. This is an interim period estimate; it is not necessarily indicative of the final year end results. Cass Partners, L.P. (Fitzgerald Apartments) continues to operate below breakeven due to low occupancy. An increasing supply of affordable housing in the area with superior amenities has hampered marketing efforts and made tenant retention difficult. Average physical occupancy for the first half of 2000 was 80.8%, down from an average of 85.4% in 1999. The Business Plan for the year 2000 outlines the following programs to increase occupancy: replace the building signage, improve the physical appearance of the property's common areas, and negotiate parking agreements with an other landlords to alleviate the issue of limited parking. The Operating General Partner continues to support the property financially and is working to refinance the partnership's second mortgage, which matures in August 2000. (Series 17) As of June 30, 2000 and 1999, the average qualified occupancy for the series was 99.7% for both years. The series had a total of 49 properties at June 30, 2000. Out of the total 48 had 100% qualified occupancy. For the three months being reported Series 17 reflects a net loss from Operating Partnerships of $541,502. When adjusted for depreciation, which, is a non-cash item, the Operating Partnerships reflect positive operations of $388,682. This is an interim period estimate; it is not necessarily indicative of the final year end results. Annadale Housing Partners (Kingsview Manor & Estates) reported net losses due to operational issues associated with the property. In order to address these issues, the Operating General Partner hired a consultant to assist management in aggressively marketing the property. In addition, the management agent hired a new on-site manager and leasing agent. As a result of these changes, occupancy reached 92% as of December 31, 1999, 93.7% as of March 31, 2000 and 92.3% as of June 30, 2000. In order to reduce operating costs, a loan restructure was finalized with the first mortgage lender. In exchange for payment by the Operating General Partner of $620,457, the monthly mortgage payments were reduced by 79%, thereby alleviating the property of a large monthly cash obligation. The payment to the first mortgage holder was funded through the sale of a portion of the Operating Partnerships future credit stream. With the additional cash available from a lower monthly debt service payment and increased rental rates, property operations are anticipated to improve significantly over prior years. As of June 30, 2000, the property has been successful in maintaining break-even operations. The Investment General Partner continues to monitor this situation closely. The property owned by California Investors VI LP (Orchard Park) has sustained a physical occupancy of 94.6% for the first six months of 2000. This stability has been the result of the management company's aggressive marketing efforts and the many capital improvements completed at the property, including office renovations and the addition of an activity center. These improvements have been successful in attracting and retaining tenants. The property's surrounding area is experiencing economic growth which include a major public sports park, currently being developed next to Orchard Park and scheduled to be completed in the fall of 2000. In addition to the park, a high school is in the process of construction. It is however, progressing slowly and its completion date is unknown as of this time. These types of public development in the area should increase the quantity of automobile traffic around Orchard Park and in turn should continue to assist with marketing efforts. Currently, the Investment Limited Partner is negotiating with a third party to assume the management of the partnership along with the general partner interest. Physical occupancy at Palmetto Properties Ltd. (Palmetto Villas) has remained at an average of 78% through the second quarter of 2000. Occupancy at the site begun to drop early in 1999 due to poor on-site management and significant deferred maintenance issues. As a result, the property management company was replaced in January 2000. However, due to a lack of replacement reserve funds to rehabilitate vacant units, occupancy remains low. In addition, the property is in arrears on its real estate tax payments for 1998 and 1999. At this time, the Investment General Partner is working with the new management company to obtain low interest deferred maintenance loans to complete necessary repairs, improve occupancy and cure the tax delinquency. The Investment General Partner has entered into negotiations with the current Operating General Partner aimed at removing him from the partnership. The new management company has expressed interest in assuming the role of Operating General Partner, and based on the management company's performance to date, the partnership would benefit substantially from this arrangement. (Series 18) As of June 30, 2000 and 1999 the average qualified occupancy for the series was 100% for both years. The series had a total of 34 properties at June 30, 2000, out of the total all had 100% qualified occupancy. For the three months being reported Series 18 reflects a net loss from Operating Partnerships of $428,027. When adjusted for depreciation, which is a non-cash item, the Operating Partnerships reflect positive operations of $202,156. This is an interim period estimate; it is not necessarily indicative of the final year end results. Harris Housing Limited Partnership (Harris Music Lofts) operated with a net loss during 1999 primarily as a result of high operating expenses. The Operating General Partner infused cash to fund operating deficits for the year. Operating costs on this property are high particularly in administration and maintenance. In addition to high expenses, the property suffers from under-funded tax and insurance and security deposit escrows. Despite the occupancy, which averaged at 97.8% during 1999, the property was unable to fund these accounts. Average occupancy for the first six months of 2000 was 97.4%, a slight decrease over the 1999 average. Unless expenses are significantly reduced, the property will continue to operate at a deficit and will be unable to fund the shortfall in the required accounts. It is the intention of the Operating General Partner to streamline expenses by sharing personnel and bulk ordering of supplies with another property that is only one mile away. However, at this time, the referenced property has not completed construction. It is the Operating General Partner's belief these efforts to streamline expenses should occur within the next 90 days. In addition, there was a rent increase effective May 1, 2000 which should generate some additional revenue for the property. Marengo Park Apartments, Limited Partnership is operating below breakeven due to low occupancy levels. Occupancy averaged 76.7% in 1999. Through the second quarter of 2000 occupancy has averaged 79.9%. Management has attributed the occupancy problem to the local economy. In Marengo, potential tenants do not consider 30% of their income a good rent. Single-family homes in the area may be rented for the same amount. As a result of weak occupancy, the property suffers from underfunded reserves, and a delinquent tax status. 1999 property taxes in the amount of $21,939 went unpaid, and were recently vouchered and paid by Rural Development. As a result of their vouchering the taxes, Rural Development has issued a notice of acceleration on the debt. The Investment General Partner has appealed this ruling, and is currently in discussion with Rural Development to facilitate a mutually acceptable workout plan in order to avoid a foreclosure. Parvin's Limited Partnership (Parvin's Branch Townhomes) continues to incur operating deficits due to higher than average operating expenses and occupancy issues with its six transitional units. The Operating General Partner and the Management Company have been deferring their respective fees to improve the property's cash flow. In addition, the Operating General Partner continues to fund deficits. The property's 18 non-transitional housing units operate with a strong occupancy, however, the six transitional units incur significant turnover, which results in increased operating expense. The Operating General Partner has taken a more active role in the leasing and day to day management of the six transitional units. It was previously reported that the Operating General Partner was successful in removing the six transitional units from the program and that as of January 1, 2000, all six units would be available to non-transitional qualified residence. However, the Investment Limited Partner was recently informed that two units will remain in the Transitional Housing program. The property operated with an average occupancy of 91.7% in the second quarter of 2000, up from 86.1% in the first quarter. The management company continues to monitor operating expenses and reports that expenses remain stable and within acceptable levels. (Series 19) As of June 30, 2000 and 1999 the average qualified occupancy for the series was 100% for both years. The series had a total of 26 properties at June 30, 2000, all of which were at 100% qualified occupancy. For the three months being reported Series 19 reflects a net loss from Operating Partnerships of $345,099. When adjusted for depreciation, which is a non-cash item, the Operating Partnerships reflect positive operations of $397,499. This is an interim period estimate; it is not necessarily indicative of the final year end results. Year 2000 Compliance As previously stated in the Partnership's 10-K, Boston Capital and its management have reviewed the potential computer problems that may arise from the century date change known as the "Year 2000" or "Y2K" problem. We are happy to announce that we did not experience any computer-related problems as a result of this date change and therefore, there was no impact on our investors. PART II - OTHER INFORMATION Item 1. Legal Proceedings 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 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 hereunto duly authorized. BOSTON CAPITAL TAX CREDIT FUND III L.P. By: Boston Capital Associates III L.P. By: C&M Associates d/b/a Boston Capital Associates Date: June 15, 2000 By: /s/ John P. Manning ------------------- John P. Manning, Partner & Principal Financial Officer