<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
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 2-81033
Winthrop Residential Associates III, A Limited Partnership
(Exact name of small business issuer as specified in its charter)
Maryland 04-2782016
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One International Place, Boston, Massachusetts 02110
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (617) 330-8600
Indicate by check mark whether 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_____
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WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1996
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Balance Sheets (Unaudited)
(In Thousands, Except Unit Data)
June 30, December 31,
1996 1995
-------- ------------
Assets
Investments in Local Limited Partnerships $ 424 $ 410
------- -------
Other Assets:
Cash and cash equivalents 1,570 1,609
Interest receivable -- 7
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Total other assets 1,570 1,616
Total Assets $ 1,994 $ 2,026
======= =======
Liabilities and Partners' Capital
Liabilities:
Distribution payable $ 135 $ 189
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Total Liabilities 135 189
------- -------
Partners Capital:
Limited Partners -
Units of Limited Partnership Interest,
$1,000 stated value per Unit; authorized, issued
and outstanding - 25,005 Units 3,116 3,096
General Partners (deficit) (1,257) (1,259)
------- -------
Total Partners' Capital 1,859 1,837
------- -------
Total Liabilities and Partners' Capital $ 1,994 $ 2,026
======= =======
See notes to financial statements.
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WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1996
<TABLE>
<CAPTION>
Statements of Operations (Unaudited)
(In Thousands, Except Unit Data)
For the Three Months For the Six Months
Ended Ended
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Income:
Income from Local Limited Partnership
cash distributions $ 287 $ 186 $ 287 $ 186
Equity in income of Local Limited Partnerships 10 11 16 18
Interest income 20 32 36 62
------ ------ ------ ------
Total income 317 229 339 266
------ ------ ------ ------
Expenses:
Amortization 2 1 2 2
General and administrative 29 29 45 31
------ ------ ------ ------
Total expenses 31 30 47 33
------ ------ ------ ------
Net income $ 286 $ 199 $ 292 $ 233
====== ====== ====== ======
Net income per Unit of Limited Partnership Interest $10.58 $ 7.36 $10.80 $ 8.62
====== ====== ====== ======
Distributions per Unit of Limited Partnership Interest $ 5.00 $10.00 $10.00 $20.00
====== ====== ====== ======
</TABLE>
See notes to financial statements.
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WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1996
Statement of Changes in Partners' Capital (Unaudited)
(In Thousands, Except Unit Data)
Units of
Limited General Limited
Partnership Partners' Partners' Total
Interest Deficit Capital Capital
----------- --------- --------- -------
Balance - January 1, 1996 25,005 $(1,259) $3,096 $1,837
Distributions (20) (250) (270)
Net income 22 270 292
------ ------- ------ ------
Balance - June 30, 1996 25,005 $(1,257) $3,116 $1,859
====== ======= ====== ======
See notes to financial statements.
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WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
FORM 10-QSB JUNE 30, 1996
Statements of Cash Flows (Unaudited)
(In Thousands)
For the Six Months Ended
June 30, 1996 June 30, 1995
------------- -------------
Cash Flows from Operating Activities:
Net income $ 292 $ 233
Adjustments to reconcile net income to net
cash (used in) provided by operating activities:
Amortization 2 2
Equity in income of Local Limited Partnerships (16) (18)
Income from Local Limited Partnership
cash distributions (287) (186)
Changes in assets and liabilities:
Decrease in interest receivable 7 --
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Net cash (used in) provided by operating
activities (2) 31
------- -------
Cash Flows From Investing Activities:
Cash distributions from Local Limited
Partnership 287 186
------- -------
Cash provided by investing activities 287 186
------- -------
Cash Flows From Financing Activities:
Cash distributions (324) (540)
------- -------
Cash used in financing activities (324) (540)
------- -------
Net decrease in cash and cash equivalents (39) (323)
Cash and cash equivalents, beginning of period 1,609 2,339
------- -------
Cash and cash equivalents, end of period $ 1,570 $ 2,016
======= =======
See notes to financial statements.
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WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
FORM 10 - QSB JUNE 30, 1996
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. General
The accompanying financial statements, footnotes and discussions should be
read in conjunction with the financial statements, related footnotes and
discussions contained in the Partnership's report on Form 10-K for the year
ended December 31, 1995.
The financial information contained herein is unaudited. In the opinion of
management, all adjustments necessary for a fair presentation of such
financial information have been included. All adjustments are of a normal
recurring nature. Certain amounts have been reclassified to conform to the
June 30, 1996 presentation. The balance sheet at December 31, 1995 was
derived from audited financial statements at such date.
The results of operations for the three and six months ended June 30, 1996
and 1995, are not necessarily indicative of the results to be expected for
the full year.
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WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
FORM 10 - QSB JUNE 30, 1996
2. Management's Discussion and Analysis or Plan of Operation
This Item should be read in conjunction with the financial statements and
other items contained elsewhere in the report.
Liquidity and Capital Resources
As of June 30,1996, the Partnership retained an equity interest in seven
Local Limited Partnerships, each of which owns a single apartment property.
The Partnership's primary source of income is distributions from the Local
Limited Partnerships. The Partnership requires cash to pay its general and
administrative expenses or to make capital contributions to any of the Local
Limited Partnerships which the Managing General Partner deems to be in the
Partnership's best interest to preserve its ownership interest.
To date, all cash requirements have been satisfied by interest income earned
on short-term investments and cash distributed to the Partnership by the
Local Limited Partnerships. If the Partnership funds any operating deficits,
it will use monies from its operating reserves. As of June 30, 1996, the
Partnership had cash and cash equivalents of $1,570,000, as compared to
$1,609,000 at December 31, 1995. The Managing General Partner's current
policy is to maintain a reserve balance sufficient to provide the Partnership
the flexibility to preserve its economic interest in the Local Limited
Partnerships. Therefore, a lack of cash distributed by the Local Limited
Partnerships to the Partnership in the future should not deplete the
reserves, though it may restrict the Partnership from making distributions.
With the exception of the Dunhaven Apartments property, as discussed below,
the Partnership does not anticipate funding any operating deficits of any
Local Limited Partnerships in 1996.
The level of liquidity based on cash and cash equivalents experienced a
$39,000 decrease at June 30, 1996, as compared to December 31, 1995. The
Partnership's $287,000 of cash distributions from Local Limited Partnerships
was more than offset by $324,000 distributed to partners and $2,000 of net
cash used in operating activities.
The Partnership is not obligated to provide any additional funds to the Local
Limited Partnerships to fund operating deficits. The Partnership determines
on a case by case basis whether to fund any operating deficits. If a Local
Limited Partnership sustains continuing operating deficits and has no other
sources of funding, it is likely that it will eventually default on its
mortgage obligations and risk a foreclosure on its property by the lender. If
a foreclosure were to occur, the Local Limited Partnership would lose its
investment in the property and would incur a tax liability due to the
recapture of tax benefits taken in prior years. The Partnership, as an owner
of the Local Limited Partnership, would share these consequences in
proportion to its ownership interest in the Local Limited Partnership.
The loan encumbering Dunhaven Apartments, ("Dunhaven") is currently in
default. The Partnership is currently negotiating with the general partner of
the Local Limited Partnership which holds title to Dunhaven pursuant to which
the Partnership, or an affiliate of the Partnership, would be appointed as
general partner of the Dunhaven Local Limited Partnership
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WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
FORM 10 - QSB JUNE 30, 1996
2. Management's Discussion and Analysis or Plan of Operation
(Continued)
and the Partnership, or its affiliate, would satisfy the default on the loan.
The current default amount is approximately $70,000. If the Partnership is
unable to finalize a deal with the existing general partner, it is possible
that the Dunhaven property could be lost through foreclosure.
As of June 30, 1996, Partnership distributions (paid or accrued) aggregated
$250,000 ($10.00 per Unit) to its limited partners and $20,000 to the general
partners. The ability of the Partnership to continue to make distributions to
its partners is dependent upon the financial performance of the Local Limited
Partnerships. The Managing General Partner anticipates that it will be
necessary to use the Partnership's reserves to make distributions for the
balance of 1996.
Results of Operations
Net income increased for the six and three months ended June 30, 1996 by
$59,000 and $87,000, respectively, as compared to 1995, primarily due to an
increase in income from Local Limited Partnership cash distributions, which
was partially offset by a decrease in interest income. The Local Limited
Partnership owning Village Square Apartments distributed $287,000 during the
six months ended June 30, 1996 as compared to $186,000 during the comparable
1995 period. It is anticipated that no further cash distributions will be
received during 1996. Interest income decreased due to lower working capital
reserves available for investment during the six months ended June 30, 1996,
as compared to 1995. Expenses increased by $14,000 for the six months ended
June 30, 1996, as compared to 1995, due to an increase in professional fees
and related costs.
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WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
FORM 10 - QSB JUNE 30, 1996
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
27. Financial Data Schedule
99. Supplementary Information Required Pursuant to Section 9.4 of
the Partnership Agreement.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the three months ended
June 30, 1996.
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WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
FORM 10 - QSB JUNE 30, 1996
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BY: ONE WINTHROP PROPERTIES, INC.
Managing General Partner
BY: /s/ Michael L. Ashner
Michael L. Ashner
Chief Executive Officer
BY: /s/ Edward V. Williams
Edward V. Williams
Chief Financial Officer
Dated: August 12, 1996
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WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
JUNE 30, 1996
Exhibit Index
Exhibit Page No.
------- --------
27. Financial Data Schedule --
99. Supplementary Information Required Pursuant to
Section 9.4 of the Partnership Agreement. 12
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Exhibit 99
WINTHROP RESIDENTIAL ASSOCIATES III, A LIMITED PARTNERSHIP
June 30, 1996
Supplementary information required pursuant to section 9.4 of the partnership
agreement:
1. Statement of cash available for distribution for the three months ended
June 30, 1996:
Net Income $ 286,000
Add: Amortization expense 2,000
Less: Equity in income of Local Limited Partnerships (10,000)
Cash to reserves (143,000)
---------
Cash Available for Distribution $ 135,000
=========
Distributions allocated to General Partners $ 10,000
=========
Distributions allocated to Limited Partners $ 125,000
=========
2. Fees and other compensation paid or accrued by the Partnership to the General
Partners, or their affiliates, during the three months ended June 30, 1996:
Entity Receiving Form of
Compensation Compensation Amount
---------------- -------------------------- ------
General Partners Interest in Cash Available $10,000
for Distribution
WFC Realty Co., Inc. $ 25
(Initial Limited Partner) Interest in Cash Available
for Distribution
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from Winthrop
Residential Associates III, A Limited Partnership and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,570,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,994,000
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 1,859,000
<TOTAL-LIABILITY-AND-EQUITY> 1,994,000
<SALES> 0
<TOTAL-REVENUES> 303,000
<CGS> 0
<TOTAL-COSTS> 2,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 292,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 292,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 292,000
<EPS-PRIMARY> 10.80
<EPS-DILUTED> 10.80
</TABLE>
