UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the United States Securities Exchange Act of 1934
-----------------------
For Quarter Ended September 30, 1995 Commission File No. 2-84106
WELLESLEY LEASE INCOME LIMITED PARTNERSHIP D
(Exact name of registrant as specified in its charter)
Massachusetts 04-2794296
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Financial Center, 21st Floor, Boston, MA 02111
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 482-8000
----------------
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
There are no Exhibits.
Page 1 of 12
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WELLESLEY LEASE INCOME LIMITED PARTNERSHIP D
(A Massachusetts Limited Partnership)
INDEX Page No.
Part I. FINANCIAL INFORMATION
<S> <C> <C>
Financial Statements
Balance Sheets as of September 30, 1995 and December 31, 1994 3
Statements of Operations For the Quarters Ended
September 30, 1995 and 1994 and the Nine Months Ended
September 30, 1995 and 1994 4
Statements of Cash Flows For the Nine Months Ended
September 30, 1995 and 1994 5
Notes to Financial Statements 6 - 8
Management's Discussion and Analysis of Financial Condition and
Results of Operations 9 - 10
Part II. OTHER INFORMATION
Items 1 - 6 11
Signature 12
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<TABLE>
<CAPTION>
Part I. FINANCIAL INFORMATION
WELLESLEY LEASE INCOME LIMITED PARTNERSHIP D
(A Massachusetts Limited Partnership)
Balance Sheets
Assets (Unaudited) (Audited)
9/30/95 12/31/94
Investment property, at cost:
<S> <C> <C>
Computer equipment $ - $ 2,541,961
Less accumulated depreciation - 2,395,541
--------- ---------
Investment property, net - 146,420
Cash and cash equivalents 167,288 434,029
Marketable securities (notes 2 & 4) 45,209 -
Rents receivable, net (note 2) - 16,161
Accounts receivable - affiliates, net (note 2) - -
--------- --------
Total assets $ 212,497 $ 596,610
= ========= = ========
Liabilities and Partners' Equity
Liabilities:
Accounts payable and accrued
expenses - affiliates (note 3) $ - $ 28,766
Accounts payable and accrued expenses - 88,713
Unearned rental income - 5,242
--------- -------
Total liabilities - 122,721
--------- -------
Partners' equity:
General Partner:
Capital contribution 1,000 1,000
Cumulative net income 1,250,822 1,185,408
Cumulative cash distributions (1,251,822) (1,223,036)
---------- ----------
- (36,628)
---------- ----------
Limited Partners (36,463 Units):
Capital contribution, net of
offering costs 16,259,064 16,259,064
Cumulative net income 7,742,908 7,488,960
Cumulative cash distributions (23,784,452) (23,237,507)
----------- -----------
217,520 510,517
----------- -----------
Unrealized losses on marketable securities (note 4) (5,023) -
----------- -----------
Total partners' equity 212,497 473,889
----------- -----------
Total liabilities and partners' equity $ 212,497 $ 596,610
= =========== = ===========
</TABLE>
See accompanying notes to financial statements.
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<CAPTION>
WELLESLEY LEASE INCOME LIMITED PARTNERSHIP D
(A Massachusetts Limited Partnership)
Statements of Operations
(Unaudited)
Quarters Ended Nine Months Ended
September 30, September 30,
------------- -------------
1995 1994 1995 1994
---- ---- ---- ----
Revenue:
<S> <C> <C> <C> <C>
Rental income $ 69,670 $ 181,226 $ 203,346 $ 513,850
Interest income 3,624 3,517 11,914 35,245
Recovery of net unsecured
pre-petition claim (note 5) 67,026 - 111,619 -
Net gain on sale
of equipment 43,975 78,757 105,032 113,312
------ ------ ------- -------
Total revenue 184,295 263,500 431,911 662,407
------- ------- ------- -------
Costs and expenses:
Depreciation - 57,849 47,414 206,486
Interest - - 43 -
Related party expenses (note 3):
Management fees 3,919 10,637 11,977 24,812
General and administrative 42,107 20,057 81,892 55,249
(Reversal of) provision for
doubtful accounts (4,329) 18,866 (28,777) 39,814
------ ------ ------- ------
Total costs and expenses 41,697 107,409 112,549 326,361
------ ------- ------- -------
Net income $ 142,598 $ 156,091 $ 319,362 $ 336,046
= ======= = ======= = ======= = =======
Net income per Limited
Partnership Unit $ 3.72 $ 1.91 $ 6.97 $ 2.60
= ==== = ==== = ==== = ====
</TABLE>
See accompanying notes to financial statements.
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<CAPTION>
WELLESLEY LEASE INCOME LIMITED PARTNERSHIP D
(A Massachusetts Limited Partnership)
Statements of Cash Flows
For the Nine Months Ended September 30, 1995 and 1994
(Unaudited)
1995 1994
---- ----
Cash flows from operating activities:
<S> <C> <C>
Net income $ 319,362 $ 336,046
------- -------
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 47,414 206,486
(Reversal of) provision for doubtful accounts (28,777) 39,814
Net gain on sale of equipment (105,032) (113,312)
Net (increase) decrease in current assets (5,294) 12,029
Net decrease in current liabilities (122,721) (93,617)
-------- -------
Total adjustments (214,410) 51,400
-------- ------
Net cash provided by operating activities 104,952 387,446
------- -------
Cash flows from investing activities:
Proceeds from sales of investment property 204,038 149,331
------- -------
Net cash provided by investing activities 204,038 149,331
------- -------
Cash flows from financing activities:
Cash distributions to partners (575,731) (575,733)
-------- --------
Net cash used in financing activities (575,731) (575,733)
-------- --------
Net decrease in cash and cash equivalents (266,741) (38,956)
Cash and cash equivalents at beginning of period 434,029 348,438
------- -------
Cash and cash equivalents at end of period $ 167,288 $ 309,482
= ======= = =======
Supplemental cash flow information:
Interest paid during the period $ 1,120 $ -
= ===== = =====
</TABLE>
See accompanying notes to financial statements.
<PAGE>
WELLESLEY LEASE INCOME LIMITED PARTNERSHIP D
(A Massachusetts Limited Partnership)
Notes to Financial Statements
For the Months Ended September 30, 1995 and 1994
(Unaudited)
(1) Organization and Partnership Matters
The foregoing financial statements of Wellesley Lease Income Limited Partnership
D (the "Partnership") have been prepared in accordance with the rules and
regulations of the Securities and Exchange Commission for Form 10-Q and reflect
all adjustments which are, in the opinion of management, necessary for a fair
presentation of the results for the interim periods presented. Pursuant to such
rules and regulations, certain note disclosures which are normally required
under generally accepted accounting principles have been omitted. It is
recommended that these financial statements be read in conjunction with the
Partnership's Annual Report on Form 10-K for the year ended December 31, 1994.
In the fourth quarter of 1994, the General Partner announced its intentions of
winding down the operations of the Partnership beginning in 1995. As of August
30, 1995, all assets have been sold with the exception of the marketable
securities and the unsecured pre-petition claim, and the proceeds have been
accumulated to settle all outstanding liabilities and make a final distribution.
The Partnership will not be terminated until the unsecured pre-petition claim
against CIS has been settled and the remaining proceeds have been distributed to
the Partners (see note 5 for further discussion).
(2) Significant Accounting Policies
Allowance for Doubtful Accounts
The financial statements include allowances for estimated losses on receivable
balances. The allowances for doubtful accounts are based on past write off
experience and an evaluation of potential uncollectible accounts within the
current receivable balances. Receivable balances which are determined to be
uncollectible are charged against the allowance and subsequent recoveries, if
any, are credited to the allowance. At September 30, 1995 and December 31, 1994,
the allowance for doubtful accounts included in rents receivable was $112 and
$28,289, respectively. The allowance for doubtful accounts included in accounts
receivable - affiliates was $25,968 and $99,631 at September 30, 1995 and
December 31, 1994, respectively, of which $25,968 and $98,981 was related to the
net unsecured pre-petition bankruptcy claim for each year, respectively.
Marketable Securities
The marketable securities are stated at fair value at the balance sheet date and
consist of common stock in Continental Information Systems Corporation received
by the Partnership in the distributions made December 27, 1994 and July 20, 1995
by the Trustee of the Liquidating Estate of CIS Corporation, et al, ("the
Trustee"), with respect to the outstanding net unsecured pre-petition claim.
During the second quarter of 1995, the stock began trading, thereby providing an
objective valuation measure for establishing the cost basis. Unrealized gains
and losses are recorded directly in partners' equity except those gains and
losses that are deemed to be other than temporary, which would be reflected in
income or loss (see note 4).
Reclassifications
Certain prior year financial statement items have been reclassified to conform
with the current year's financial statement presentation.
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WELLESLEY LEASE INCOME LIMITED PARTNERSHIP D
(A Massachusetts Limited Partnership)
Notes to Financial Statements
(Unaudited)
(3) Related Party Transactions
Fees, commissions and other expenses paid or accrued by the Partnership to the
General Partner or affiliates of the General Partner for the nine months ended
September 30, 1995 and 1994 are as follows:
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<CAPTION>
1995 1994
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<S> <C> <C>
Management fees $ 11,977 $ 24,812
Reimbursable expenses paid 54,486 54,059
------ ------
$ 66,463 $ 78,871
= ====== = ======
</TABLE>
Under the terms of the Partnership Agreement, the General Partner is entitled to
an equipment acquisition fee of 3% of the purchase price paid by the Partnership
for the equipment. The General Partner is also entitled to a management fee
equal to 7% of the monthly rental billings collected. Also, the Partnership
reimburses the General Partner and its affiliates for certain expenses incurred
by them in connection with the operation of the Partnership.
(4) Fair Values of Financial Instruments
Pursuant to Statement of Financial Accounting Standards No. 115 ("SFAS 115"),
"Accounting for Certain Investments in Debt and Equity Securities," which
requires investments in debt and equity securities other than those accounted
for under the equity method to be carried at fair value or amortized cost for
debt securities expected to be held to maturity, the Partnership has classified
its investments in equity securities as available for sale. Accordingly, the net
unrealized gains and losses computed in marking these securities to market are
reported as a component of partners' equity. At September 30, 1995 the
difference between the fair value and the original cost of these securities is
an unrealized loss of $5,023.
The fair value is based on currently quoted market prices. The carrying amount
and estimated fair value of the Partnership's marketable securities for the
quarters ended September 30, 1995 and 1994 are as follows:
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<CAPTION>
1995 1994
---- ----
Carrying Fair Carrying Fair
Amount Value Amount Value
Investment in Continental Information
<S> <C> <C> <C> <C>
Systems Corporation Stock $ 50,232 $ 45,209 $ - $ -
======== ======== ========= ==========
</TABLE>
As was discussed in note 2, Marketable Securities, the Partnership received
stock in Continental Information Systems Corporation as part of the December 27,
1994 and July 20, 1995 distributions from the Trustee, with respect to the
outstanding net unsecured pre-petition claim. The receivables comprising the net
unsecured pre-petition claim had been fully reserved during prior years; thus,
during the second quarter of 1995 when the stock began actively trading, the
carrying amount for the stock was established to be $2.50 per share which
approximated fair value at June 30, 1995.
<PAGE>
WELLESLEY LEASE INCOME LIMITED PARTNERSHIP D
(A Massachusetts Limited Partnership)
Notes to Financial Statements
(Unaudited)
(5) Bankruptcy of Continental Information Systems Corporation
As was discussed in the Form 10-Q for the quarter ended June 30, 1995, note 5
Subsequent Events, the Partnership received the second distribution from the
Trustee, with respect to the net unsecured pre-petition claim. The distribution
consisted of cash proceeds of $61,386 and 2,256 shares of common stock in
Continental Information Systems Corporation with a carrying value of $5,640 (see
note 6).
(6) Subsequent Events
On October 20, 1995, the Partnership received the third distribution from the
Trustee, with respect to the net unsecured pre-petition claim. The distribution
consisted of cash proceeds of $1,216 and 775 shares of common stock in
Continental Information Systems Corporation with a carrying value of $1,938. The
cash and stock will be reflected in the financial statements for the fourth
quarter of 1995. Following the Trustee's third distribution and an additional
charge off made during the year, the Partnership has a remaining net unsecured
pre-petition claim balance of $22,814 as of October 20, 1995. The General
Partner anticipates that the Liquidating Estate will make future distributions
on the remaining outstanding claim balance, although it is not possible at this
time to determine when these distributions will be made.
<PAGE>
WELLESLEY LEASE INCOME LIMITED PARTNERSHIP D
(A Massachusetts Limited Partnership)
Management's Discussion and Analysis of
Financial Condition and Results of Operations
(Unaudited)
Results of Operations
The following discussion relates to the Partnership's operations for the quarter
and nine months ended September 30, 1995 in comparison to the same periods in
1994.
The Partnership realized net income of $142,598 and $156,091 for the quarters
ended September 30, 1995 and 1994, respectively. Rental income decreased
$111,556 or 62% between the three month periods. The decrease is primarily due
to the continued decrease in the overall size of the equipment portfolio. The
sale of the equipment portfolio and the related leases occurred at the end of
August 1995; thus, there was a direct impact of the sale on current quarter
rental revenue since it did not include rental revenue for the month of
September. Interest income slightly increased from 1994 as a result of higher
average short-term investment balances in the quarter. The recovery of the net
unsecured pre-petition claim was the result of the second distribution from the
Trustee of the Liquidating Estate of CIS Corporation, et al ("the Trustee"),
with respect to the outstanding claim balance. The decrease in net gain on sale
of equipment between the two periods is primarily due to significant sales of
equipment carrying lower net book values in 1994.
Total costs and expenses decreased $65,712 or 61% during the third quarter of
1995 primarily due to the $57,849 decrease in depreciation expense. The
Partnership did not recognize any depreciation expense in the current quarter
due to a portion of the equipment portfolio becoming fully depreciated and the
sale of the equipment. Management fees have decreased in relation to the decline
in rental income. General and administrative expenses increased $22,050 due to
the establishment and satisfaction of outstanding liabilities related to the
liquidation of the Partnership in 1995. For example, the Partnership will still
need to cover costs relating to investor reports, Schedule K-1 preparation and
mailings, etc. The reversal of provision for doubtful accounts of $4,329 is due
to successful collection efforts on delinquent rents receivable.
The Partnership realized net income of $319,362 and $336,046 for the nine months
ended September 30, 1995 and 1994, respectively. Rental income decreased
$310,504 or 61%. As discussed above in the quarter analysis, the decrease in
rental income is primarily due to the continued decrease in the overall size of
the equipment portfolio. Interest income decreased as a result of lower average
short-term investment balances held during 1995. The recovery of the net
unsecured pre-petition claim was the result of the third quarter of 1995 receipt
of the Trustee's July 20, 1995 second distribution along with the second quarter
of 1995 establishment of the carrying value of the stock received in the
December 27, 1994 distribution. The decrease in net gain on sale of equipment is
due to significant sales of equipment carrying low net book values in 1994.
Total costs and expenses decreased $213,812 or 67% during the first nine months
of 1995 primarily as a result of lower depreciation expense which exceeded the
increase in general and administrative expenses. As discussed above in the
quarter analysis, depreciation expense decreased $159,072 due to a large portion
of the equipment portfolio becoming fully depreciated and the sale of the entire
equipment portfolio. Management fees expense decreased in relation to the
decline in rental income. As discussed above, general and administrative
expenses increased significantly due to the establishment and satisfaction of
outstanding liabilities as a result of the Partnership's liquidation. The
reversal of provision for doubtful accounts for the nine months of $28,777 is
due to successful collection efforts on delinquent rents receivable, as
mentioned above.
<PAGE>
WELLESLEY LEASE INCOME LIMITED PARTNERSHIP D
(A Massachusetts Limited Partnership)
Management's Discussion and Analysis of
Financial Condition and Results of Operations
(Unaudited)
During the quarter ended September 30, 1995 and the nine months ended September
30, 1995, the Partnership allocated profits and losses resulting in $3.72 and
$6.97 per Limited Partnership Unit, respectively.
Liquidity and Capital Resources
During the fourth quarter of 1994, the General Partner announced its intentions
of winding down the operations of the Partnership beginning in 1995. As of
August 30, 1995, substantially all of the assets have been liquidated and the
proceeds have been accumulated to settle all outstanding liabilities and make a
final distribution. As discussed in note 6 Subsequent Events, the Partnership
received the third distribution from the Trustee, with respect to the unsecured
pre-petition claim. The distribution consisted of cash proceeds of $1,216 and
775 shares of common stock in Continental Information Systems Corporation with a
carrying value of $1,938. The cash and stock will be reflected in the financial
statements for the fourth quarter of 1995. Following the Trustee's third
distribution, the Partnership has a remaining net unsecured pre-petition claim
of $22,814 as of October 20, 1995.
The stock cannot be sold immediately by the Partnership due to limitations
imposed by the Securities Exchange Act of 1933 (the "Exchange Act"). Because TLP
Leasing Programs, Inc., one of the Corporate General Partners, is a wholly-owned
subsidiary of Continental Information Systems Corporation ("CIS"), the
Partnership is considered an "Affiliate" of CIS. Accordingly, in order for the
Partnership to sell the shares, the Partnership must comply with the
restrictions imposed by Rule 144 of the Exchange Act. In doing, so, the
Partnership anticipates selling the stock and distributing the proceeds to the
investors in the form of a final distribution within the next twelve months.
The Partnership's investing activities for the nine months resulted in the sale
of its remaining equipment portfolio with a depreciated cost basis of $107,284,
generating $204,038 in sales proceeds. Also associated with the equipment sales
were $8,278 of loss charge offs against the reserve, initially set up in prior
periods for estimated losses on the ultimate disposition of equipment.
Cash distributions are currently at a level of an annual 3% per Limited
Partnership Unit or $3.75 per Limited Partnership Unit on a quarterly basis. For
the quarter ended September 30, 1995, the Partnership declared a cash
distribution of $143,933, of which $7,197 was allocated to the General Partner
and $136,736 was allocated to the Limited Partners. The distribution will be
made on November 28, 1995. As discussed above, the Partnership is accumulating
its cash in anticipation of a final distribution. The effects of inflation have
not been significant to the Partnership and are not expected to have a material
impact in future periods.
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<CAPTION>
PART II. OTHER INFORMATION
WELLESLEY LEASE INCOME LIMITED PARTNERSHIP D
(A Massachusetts Limited Partnership)
<S> <C>
Item 1. Legal Proceedings
Response: None
Item 2. Changes in the Rights of the Partnership's Security Holders
Response: None
Item 3. Defaults by the Partnership on its Senior Securities
Response: None
Item 4. Results of Votes of Security Holders
Response: None
Item 5. Other Information
Response: None
Item 6. Exhibits and Reports on Form 8-K
Response:
A. None
B. None
</TABLE>
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
WELLESLEY LEASE INCOME LIMITED PARTNERSHIP D
(Registrant)
By: Wellesley Leasing Partnership,
its General Partner
By: TLP Leasing Programs, Inc.,
one of its Corporate General Partners
By: Arthur P. Beecher
President
Date: November 14, 1995
-----------------
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000720308
<NAME> WELLESLEY LEASE INCOME LIMITED PARTNERSHIP I-D
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 167,288
<SECURITIES> 45,209
<RECEIVABLES> 27,916
<ALLOWANCES> 27,916
<INVENTORY> 0
<CURRENT-ASSETS> 212,497
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 212,497
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 16,260,064
0
0
<OTHER-SE> (16,047,567)
<TOTAL-LIABILITY-AND-EQUITY> 212,497
<SALES> 203,346
<TOTAL-REVENUES> 431,911
<CGS> 0
<TOTAL-COSTS> 11,977
<OTHER-EXPENSES> 129,306
<LOSS-PROVISION> (28,777)
<INTEREST-EXPENSE> 43
<INCOME-PRETAX> 319,362
<INCOME-TAX> 0
<INCOME-CONTINUING> 319,362
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 319,362
<EPS-PRIMARY> 6.97
<EPS-DILUTED> 0
</TABLE>
