<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________ TO ________
Commission file number 0-10474
IEA MARINE CONTAINER INCOME FUND III
(A CALIFORNIA LIMITED PARTNERSHIP)
(Exact name of registrant as specified in its charter)
California 94-2717330
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
444 Market Street, 15th Floor, San Francisco, California 94111
(Address of principal executive offices) (Zip Code)
(415) 677-8990
(Registrant's telephone number, including area code)
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 .
---- ----
<PAGE> 2
IEA MARINE CONTAINER INCOME FUND III
(A CALIFORNIA LIMITED PARTNERSHIP)
REPORT ON FORM 10-Q FOR THE QUARTERLY
PERIOD ENDED SEPTEMBER 30, 1997
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<S> <C> <C>
Balance Sheets - September 30, 1997 (unaudited) and December 31,
1996 4
Statements of Operations for the three and nine months ended
September 30, 1997 and 1996 (unaudited) 5
Statements of Cash Flows for the nine months ended September 30,
1997 and 1996 (unaudited) 6
Notes to Financial Statements (unaudited) 7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 10
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 14
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Presented herein are the Registrant's balance sheets as of September
30, 1997 and December 31, 1996, statements of operations for the three
and nine months ended September 30, 1997 and 1996, and statements of
cash flows for the nine months ended September 30, 1997 and 1996.
3
<PAGE> 4
IEA MARINE CONTAINER INCOME FUND III
(A CALIFORNIA LIMITED PARTNERSHIP)
BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
---------- ----------
<S> <C> <C>
Assets
------
Current assets:
Cash and cash equivalents, includes $359,527 at September 30, 1997
and $656,038 at December 31, 1996 in interest-bearing accounts $ 406,441 $ 656,333
Net lease receivables due from Leasing Company
(notes 1 and 2) 96,384 252,850
---------- ----------
Total current assets 502,825 909,183
---------- ----------
Container rental equipment, at cost 2,148,765 3,173,384
Less accumulated depreciation 1,482,825 2,201,024
---------- ----------
Net container rental equipment 665,940 972,360
---------- ----------
$1,168,765 $1,881,543
========== ==========
Partners' Capital
-----------------
Partners' capital:
General partners $ 896 $ 3,103
Limited partners 1,167,869 1,878,440
---------- ----------
Total partners' capital 1,168,765 1,881,543
---------- ----------
$1,168,765 $1,881,543
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 5
IEA MARINE CONTAINER INCOME FUND III
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
--------------------------- -----------------------------
September 30, September 30, September 30, September 30,
1997 1996 1997 1996
------------ ------------- ------------ ------------
<S> <C> <C> <C> <C>
Net lease revenue (notes 1 and 3) $ 78,441 $157,011 $229,030 $522,541
Other operating expenses:
Other general and administrative expenses 9,607 9,475 31,029 27,911
-------- -------- -------- --------
Earnings from operations 68,834 147,536 198,001 494,630
Other income:
Interest income 4,825 12,706 17,460 34,310
Net gain on disposal of equipment 27,757 73,368 100,075 276,268
-------- -------- -------- --------
32,582 86,074 117,535 310,578
-------- -------- -------- --------
Net earnings $101,416 $233,610 $315,536 $805,208
======== ======== ======== ========
Allocation of net earnings:
General partners $ 4,835 $ 8,674 $ 13,599 $ 17,853
Limited partners 96,581 224,936 301,937 787,355
-------- -------- -------- --------
$101,416 $233,610 $315,536 $805,208
======== ======== ======== ========
Limited partners' per unit share of net earnings $ 3.21 $ 7.50 $ 10.06 $ 26.25
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 6
IEA MARINE CONTAINER INCOME FUND III
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
-----------------------------
September 30, September 30,
1997 1996
------------- -------------
<S> <C> <C>
Net cash provided by operating activities $ 347,095 $ 640,752
Cash flows provided by investing activities:
Proceeds from disposal of equipment 431,327 1,122,439
Cash flows used in financing activities:
Distribution to partners (1,028,314) (1,838,608)
----------- -----------
Net decrease in cash and cash equivalents (249,892) (75,417)
Cash and cash equivalents at January 1 656,333 837,918
----------- -----------
Cash and cash equivalents at September 30 $ 406,441 $ 762,501
=========== ===========
</TABLE>
6
<PAGE> 7
IEA MARINE CONTAINER INCOME FUND III
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
(1) Summary of Significant Accounting Policies
(a) Nature of Operations
IEA Marine Container Income Fund III (A California Limited Partnership)
(the "Partnership"), was organized under the laws of the State of
California on January 3, 1980 for the purpose of owning and leasing
marine dry cargo containers. The managing general partner is Cronos
Capital Corp. ("CCC"); the associate general partner is Smith Barney
Shearson, Inc. CCC, with its affiliate, Cronos Containers Limited (the
"Leasing Company"), manages the business of the partnership.
The Partnership commenced operations on April 3, 1981, when the minimum
subscription proceeds of $500,000 were obtained. The Partnership
offered 30,000 units of limited partnership interest at $500 per unit,
or $15,000,000. The offering terminated on June 26, 1981, at which time
30,000 limited partnership units had been purchased.
As of September 30, 1997, 11% of the original equipment remained in the
Partnership's fleet and was comprised of 777 twenty-foot and 105
forty-foot marine dry cargo containers. Commencing in 1991, the
Partnership's 11th year of operations, the Partnership began focusing
its attention on the disposition of its fleet in accordance with
another of its original investment objectives, realizing the residual
value of its containers after the expiration of their economic useful
lives, estimated to be between 10 to 15 years after placement in leased
service. During this phase, the Partnership has actively disposed of
containers within its fleet, while cash proceeds from equipment
disposals, in addition to cash from operations, provided the cash flow
for distributions to the limited partners. The Partnership, in its 17th
year of operations, will focus its attention during the remainder of
1997 and subsequent periods on disposing of its remaining fleet.
(b) Leasing Company and Leasing Agent Agreement
Pursuant to the Limited Partnership Agreement of the Partnership, all
authority to administer the business of the Partnership is vested in
CCC. CCC has entered into a Leasing Agent Agreement whereby the Leasing
Company has the responsibility to manage the leasing operations of all
equipment owned by the Partnership. Pursuant to the Agreement, the
Leasing Company is responsible for leasing, managing and re-leasing the
Partnership's containers to ocean carriers and has full discretion over
which ocean carriers and suppliers of goods and services it may deal
with. The Leasing Agent Agreement permits the Leasing Company to use
the containers owned by the Partnership, together with other containers
owned or managed by the Leasing Company and its affiliates, as part of
a single fleet operated without regard to ownership. Since the Leasing
Agent Agreement meets the definition of an operating lease in Statement
of Financial Accounting Standards (SFAS) No. 13, it is accounted for as
a lease under which the Partnership is lessor and the Leasing Company
is lessee.
(Continued)
7
<PAGE> 8
IEA MARINE CONTAINER INCOME FUND III
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
(b) Leasing Company and Leasing Agent Agreement - (Continued)
The Leasing Agent Agreement generally provides that the Leasing Company
will make payments to the Partnership based upon rentals collected from
ocean carriers after deducting direct operating expenses and management
fees to CCC. The Leasing Company leases containers to ocean carriers,
generally under operating leases which are either master leases or term
leases (mostly two to five years). Master leases do not specify the
exact number of containers to be leased or the term that each container
will remain on hire but allow the ocean carrier to pick up and drop off
containers at various locations; rentals are based upon the number of
containers used and the applicable per-diem rate. Accordingly, rentals
under master leases are all variable and contingent upon the number of
containers used. Most containers are leased to ocean carriers under
master leases; leasing agreements with fixed payment terms are not
material to the financial statements. Since there are no material
minimum lease rentals, no disclosure of minimum lease rentals is
provided in these financial statements.
(c) Basis of Accounting
The Partnership utilizes the accrual method of accounting. Net lease
revenue is recorded by the Partnership in each period based upon its
leasing agent agreement with the Leasing Company. Net lease revenue is
generally dependent upon operating lease rentals from operating lease
agreements between the Leasing Company and its various lessees, less
direct operating expenses and management fees due in respect of the
containers specified in each operating lease agreement.
(d) Financial Statement Presentation
These financial statements have been prepared without audit. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
procedures have been omitted. It is suggested that these financial
statements be read in conjunction with the financial statements and
accompanying notes in the Partnership's latest annual report on Form
10-K.
The preparation of financial statements in conformity with generally
accepted accounting principles (GAAP) requires the Partnership to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reported period. Actual results could
differ from those estimates.
The interim financial statements presented herewith reflect all
adjustments of a normal recurring nature which are, in the opinion of
management, necessary to a fair statement of the financial condition
and results of operations for the interim periods presented.
(Continued)
8
<PAGE> 9
IEA MARINE CONTAINER INCOME FUND III
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
(2) Net Lease Receivables Due from Leasing Company
Net lease receivables due from the Leasing Company are determined by
deducting direct operating payables and accrued expenses, base management
fees and incentive fees payable to CCC and its affiliates from the rental
billings payable by the Leasing Company to the Partnership under operating
leases to ocean carriers for the containers owned by the Partnership. Net
lease receivables at September 30, 1997 and December 31, 1996 were as
follows:
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------ ------------
<S> <C> <C>
Lease receivables, net of doubtful accounts
of $234,086 at September 30, 1997 and $199,540
at December 31, 1996 $175,310 $368,092
Less:
Direct operating payables and accrued expenses 38,687 71,137
Damage protection reserve 40,239 44,105
-------- --------
$ 96,384 $252,850
======== ========
</TABLE>
(3) Net Lease Revenue
Net lease revenue is determined by deducting direct operating expenses and
base management fees to CCC from the rental revenue billed by the Leasing
Company under operating leases to ocean carriers for the containers owned
by the Partnership. Net lease revenue for the three and nine-month periods
ended September 30, 1997 and 1996, was as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
----------------------------- -----------------------------
September 30, September 30, September 30, September 30,
1997 1996 1997 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Rental revenue $111,104 $235,248 $383,640 $873,641
Less:
Rental equipment operating expenses 9,780 36,788 76,363 196,082
Base management fees 22,883 41,449 78,247 155,018
-------- -------- -------- --------
$ 78,441 $157,011 $229,030 $522,541
======== ======== ======== ========
</TABLE>
9
<PAGE> 10
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
It is suggested that the following discussion be read in conjunction with the
Registrant's most recent annual report on Form 10-K.
1) Material changes in financial condition between September 30, 1997 and
December 31, 1996.
As discussed in the Registrant's report for the year ended December 31,
1996, the Registrant entered 1997 with a view towards disposing its
remaining container fleet. During the first nine months of 1997, the
Registrant disposed of 410 containers as part of its ongoing container
operations, contributing to a decline in the Registrant's operating results
and related cash balances. At September 30, 1997, 11% of the original
equipment remained in the Registrant's fleet, as compared to 16% at
December 31, 1996, and was comprised of the following:
<TABLE>
<CAPTION>
20-Foot 40-Foot
------- -------
<S> <C> <C>
Containers on lease:
Term leases 67 9
Master lease 636 83
--- ---
Subtotal 703 92
Containers off lease 74 13
--- ---
Total container fleet 777 105
=== ===
</TABLE>
<TABLE>
<CAPTION>
20-Foot 40-Foot
------------ ----------
Units % Units %
----- --- ----- ---
<S> <C> <C> <C> <C>
Total purchases 7,257 100% 890 100%
Less disposals 6,480 89% 785 88%
----- --- --- ---
Remaining fleet at September 30, 1997 777 11% 105 12%
===== === === ===
</TABLE>
The Registrant's diminishing fleet size and its related operating
performance contributed to a 62% decline in net lease receivables at
September 30, 1997, when compared to December 31, 1996. During the third
quarter of 1997, distributions from operations and sales proceeds
amounted to $267,098, reflecting distributions to the general and
limited partners for the second quarter of 1997. This represents a
decline from the $305,292 distributed during the second quarter of 1997,
reflecting distributions for the first quarter of 1997. The Registrant's
efforts to dispose of the remaining fleet should produce lower operating
results and, consequently, reduce distributions to its partners in
subsequent quarters. Additionally, the Registrant may refrain from
distributing cash generated from operations and sales proceeds to its
partners, reserving all excess cash as part of its working capital in
order to maintain sufficient cash reserves for expenses relating to its
final liquidation and subsequent dissolution.
10
<PAGE> 11
During 1996, ocean carriers and other transport companies moved away from
leasing containers outright, as declining container prices, favorable
interest rates and the abundance of available capital resulted in ocean
carriers and transport companies purchasing a larger share of equipment for
their own account, reducing their need for leased containers. Once the
demand for leased containers began to fall, per-diem rental rates were also
adversely affected. Since the beginning of 1997, the container leasing
industry has experienced a modest recovery as indicated by an upward trend
in container utilization. This trend can also be seen within the
Registrant's utilization rate, which remained at a favorable level of 90%
at September 30, 1997, consistent with the utilization rate at December 31,
1996. Increasing cargo volumes and continuing equipment imbalances within
the container fleets of shipping lines and transport companies have
re-established a need for these companies to replenish their leased fleets
during 1997.
Although there has been an improvement in container utilization rates,
per-diem rental rates continue to remain under pressure as a result of the
following factors: start-up leasing companies offering new containers and
low rental rates in an effort to break into the leasing market; established
leasing companies reducing rates to very low levels; and a continuing
oversupply of containers. The recent volatility of the Hong Kong and other
Asian financial markets and its impact on trade, shipping, and container
leasing, especially intra-Asia and Asia-Europe routes, has yet to be
determined. While these conditions could impact the Registrant's financial
condition and operating performance through the remainder of 1997 and first
half of 1998, the Registrant is well positioned to take advantage of
further improvements in the container leasing market.
2) Material changes in the results of operations between the three and
nine-month periods ended September 30, 1997 and the three and nine-month
periods ended September 30, 1996.
Net lease revenue for the three and nine-month periods ended September 30,
1997 was $78,441 and $229,030, respectively, a decline of 50% and 56%
respectively, from the same three and nine-month periods in the prior year.
Approximately 27% and 32% of the Registrant's net earnings for the three
and nine-month periods ended September 30, 1997, respectively, were from
gain on disposal of equipment, as compared to 31% and 34% respectively, for
the same three and six-month periods in the prior year. As the Registrant
continues the disposal of its containers in subsequent periods, net gain on
disposal may fluctuate and should contribute significantly to the
Registrant's net earnings.
Gross rental revenue (a component of net lease revenue) for the three and
nine-month periods ended September 30, 1997 was $111,104 and $383,640,
respectively, reflecting a decline of 53% and 56% from the same three and
nine-month periods in 1996, respectively. During 1997, gross rental revenue
was impacted by the Registrant's diminishing fleet size and a decline in
per-diem rental rates. Average per-diem rental rates decreased
approximately 15% and 13% respectively, when compared to the same three and
nine-month periods in the prior year. Utilization rates increased when
compared to the same three and nine-month periods in the prior year, as the
demand for leased containers improved and the Registrant continued
disposing of containers, reducing the number of off-hire containers within
its fleet. The Registrant's average fleet size and utilization rates for
the three and nine-month periods ended September 30, 1997 and September 30,
1996 were as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
--------------------------- ----------------------------
September 30, September 30, September 30, September 30,
1997 1996 1997 1996
------------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Average Fleet Size (measured in
twenty-foot equivalent units (TEU)) 1,030 1,838 1,201 2,303
Average Utilization 92% 90% 91% 87%
</TABLE>
11
<PAGE> 12
Rental equipment operating expenses were 9%, and 20% respectively, of the
Registrant's gross lease revenue during the three and nine-month periods
ended September 30, 1997, as compared to 16% and 22% respectively, during
the three and nine-month periods ended September 30, 1996. Contributing to
these declines were reductions in costs associated with higher utilization
levels, including storage and handling. The Registrant's decision to
dispose of its off-hire containers also contributed to lower rental
equipment operating expenses, as well as lower base management fees.
As reported in the Registrant's Current Report on Form 8-K and Amendment
No. 1 to Current Report on Form 8-K, filed with the Commission on February
7, 1997 and February 26, 1997, respectively, Arthur Andersen, London,
England, resigned as auditors of The Cronos Group, a Luxembourg Corporation
headquartered in Orchard Lea, England (the "Parent Company"), on February
3, 1997.
The Parent Company is the indirect corporate parent of Cronos Capital
Corp., the managing general partner of the Registrant. In its letter of
resignation to the Parent Company, Arthur Andersen states that it resigned
as auditors of the Parent Company and all other entities affiliated with
the Parent Company. While its letter of resignation was not addressed to
the managing general partner or the Registrant, Arthur Andersen confirmed
to the managing general partner that its resignation as auditors of the
entities referred to in its letter of resignation included its resignation
as auditors of Cronos Capital Corp. and the Registrant. Following Arthur
Andersen's resignation, the Parent Company subsequently received
notification from the Securities and Exchange Commission that it was
conducting a private investigation of the Parent Company regarding the
events and circumstances leading to Arthur Andersen's resignation. The
results of this investigation are still pending. Accordingly, the
Registrant does not, at this time, have sufficient information to determine
the impact, if any, that the Securities and Exchange Commission
investigation of the Parent Company and the concerns expressed by Arthur
Andersen in its letter of resignation may have on the future operating
results and financial condition of the Registrant or the Leasing Company's
ability to manage the Registrant's fleet in subsequent periods. However,
the managing general partner of the Registrant does not believe, based upon
the information currently available to it, that Arthur Andersen's
resignation was triggered by any concern over the accounting policies and
procedures followed by the Registrant.
Arthur Andersen's report on the financial statements of Cronos Capital
Corp. and the Registrant, for either of the previous two years, has not
contained an adverse opinion or a disclaimer of opinion, nor was any such
report qualified or modified as to uncertainty, audit scope, or accounting
principles. During the Registrant's previous two fiscal years and the
subsequent interim period preceding Arthur Andersen's resignation, there
have been no disagreements between Cronos Capital Corp. or the Registrant
and Arthur Andersen on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure.
The Registrant retained a new auditor, Moore Stephens, P.C. ("Moore
Stephens") on April 10, 1997, as reported in the Registrant's Current
Report on Form 8-K, filed April 14, 1997.
The President of the Leasing Company, a subsidiary of the Parent Company,
along with two marketing Vice Presidents, resigned in June 1997. These
vacancies were filled by qualified, long-time employees who average over 15
years of experience in the container leasing industry, therefore providing
continuity in the management of the Leasing Company. The Registrant and
managing general partner do not believe these changes will have a material
impact on the future operating results and financial condition of the
Registrant.
12
<PAGE> 13
Cautionary Statement
This Quarterly Report on Form 10-Q contains statements relating to future
results of the Registrant, including certain projections and business
trends, that are "forward-looking statements" as defined in the Private
Securities Litigation Reform Act of 1995. Actual results may differ
materially from those projected as a result of certain risks and
uncertainties, including but not limited to changes in: economic
conditions; trade policies; demand for and market acceptance of leased
marine cargo containers; competitive utilization and per-diem rental rate
pressures; as well as other risks and uncertainties, including but not
limited to those described in the above discussion of the marine container
leasing business under Item 2., Management's Discussion and Analysis of
Financial Condition and Results of Operations; and those detailed from time
to time in the filings of Registrant with the Securities and Exchange
Commission.
13
<PAGE> 14
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
No. Description Method of Filing
------- ----------- ----------------
<S> <C> <C>
3(a) Limited Partnership Agreement of the Registrant, *
amended and restated as of February 11, 1981
3(b) Certificate of Limited Partnership of the Registrant **
27 Financial Data Schedule Filed with this document
</TABLE>
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Registrant during the quarter
ended September 30, 1997.
- -------------
* Incorporated by reference to Exhibit "A" to the Prospectus of the
Registrant dated February 12, 1981, included as part of Registration
Statement on Form S-1 (No. 2-70401)
** Incorporated by reference to Exhibit 3.4 to the Registration Statement
on Form S-1 (No. 2-70401)
14
<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
IEA MARINE CONTAINER INCOME FUND III
(A California Limited Partnership)
By Cronos Capital Corp.
The Managing General Partner
By /s/ JOHN KALLAS
----------------------------------------
John Kallas
Vice President, Treasurer
Principal Finance & Accounting Officer
Date: November 10, 1997
15
<PAGE> 16
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description Method of Filing
------- ----------- ----------------
<S> <C> <C>
3(a) Limited Partnership Agreement of the Registrant, amended and *
restated as of February 11, 1981
3(b) Certificate of Limited Partnership of the Registrant **
27 Financial Data Schedule Filed with this document
</TABLE>
- -------------
* Incorporated by reference to Exhibit "A" to the Prospectus of the
Registrant dated February 12, 1981, included as part of Registration
Statement on Form S-1 (No. 2-70401)
** Incorporated by reference to Exhibit 3.4 to the Registration Statement
on Form S-1 (No. 2-70401)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AT SEPTEMBER 30, 1997 (UNAUDITED) AND THE STATEMENT OF OPERATIONS FOR THE
QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997 (UNAUDITED) AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS INCLUDED AS PART OF ITS
QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD SEPTEMBER 30, 1997
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 406,441
<SECURITIES> 0
<RECEIVABLES> 96,384
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 502,825
<PP&E> 2,148,765
<DEPRECIATION> 1,482,825
<TOTAL-ASSETS> 1,168,765
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,168,765
<TOTAL-LIABILITY-AND-EQUITY> 1,168,765
<SALES> 0
<TOTAL-REVENUES> 229,030
<CGS> 0
<TOTAL-COSTS> 31,029
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 315,536
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
