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 June 30, 1995 Commission File No. 2-95011
WELLESLEY LEASE INCOME LIMITED PARTNERSHIP III-D
(Exact name of registrant as specified in its charter)
Massachusetts 04-2850823
(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
(Page 2)
<TABLE>
WELLESLEY LEASE INCOME LIMITED PARTNERSHIP III-D
(A Massachusetts Limited Partnership)
<CAPTION>
INDEX Page No.
<S> <C>
Part I. FINANCIAL INFORMATION
Financial Statements
Balance Sheets as of June 30, 1995
and December 31, 1994 3
Statements of Operations For the
Quarters Ended June 30, 1995 and 1994 and the
Six Months Ended June 30, 1995 and 1994 4
Statements of Cash Flows For the Six
Months Ended June 30, 1995 and 1994 5
Notes to Financial Statements 6 - 7
Management's Discussion and Analysis of
Financial Condition and Results of Operations 8 - 9
Computer Equipment Portfolio 10
Part II. OTHER INFORMATION
Items 1 - 6 11
Signature 12
</TABLE>
(Page 3)
<TABLE>
PART I. FINANCIAL INFORMATION
WELLESLEY LEASE INCOME LIMITED PARTNERSHIP III-D
(A Massachusetts Limited Partnership)
Balance Sheets
Assets
<CAPTION>
(Unaudited) (Audited)
6/30/95 12/31/94
<S> <C> <C>
Investment property, at cost (note 3):
Computer equipment $ 8,206,153 $ 7,469,559
Less accumulated depreciation 5,052,191 4,853,270
----------------------------
Investment property, net 3,153,962 2,616,289
Cash and cash equivalents 191,722 592,377
Rents receivable, net (note 2) 149,046 58,471
Sales receivable, net (note 2) - 4,940
Accounts receivable - affiliates 27,202 12,332
Other accounts receivable 205,244 -
----------------------------
Total assets $ 3,727,176 $ 3,284,409
----------------------------
----------------------------
Liabilities and Partners' Equity
Liabilities:
Current portion of long-term debt (note 6) $ 530,109 $ 278,737
Accounts payable and accrued expenses -
affiliates (note 4) 135,095 48,297
Accrued expenses 3,190 11,754
Accounts payable 53,423 78,109
Unearned rental revenue 1,269 31,494
Distribution payable 26,560 -
Notes payable - affiliates (note 5) 100,725 -
Long-term debt, less current portion (note 6) 276,691 88,008
----------------------------
Total liabilities 1,127,062 536,399
----------------------------
Partners' equity:
General Partner:
Capital contribution 1,000 1,000
Cumulative net income 508,006 479,918
Cumulative cash distributions (513,670) (487,110)
----------------------------
(4,664) (6,192)
----------------------------
Limited Partners (20,185 units):
Capital contribution, net of offering costs 8,987,039 8,987,039
Cumulative net income 3,377,189 3,021,988
Cumulative cash distributions (9,759,450) (9,254,825)
----------------------------
2,604,778 2,754,202
----------------------------
Total partners' equity 2,600,114 2,748,010
----------------------------
Total liabilities and partners' equity $ 3,727,176 $ 3,284,409
----------------------------
----------------------------
</TABLE>
See accompanying notes to financial statements.
(Page 4)
<TABLE>
WELLESLEY LEASE INCOME LIMITED PARTNERSHIP III-D
(A Massachusetts Limited Partnership)
Statements of Operations
(Unaudited)
<CAPTION>
Quarters Ended Six Months Ended
June 30, June 30,
--------------------------------------------------
1995 1994 1995 1994
--------------------------------------------------
Revenue:
<S> <C> <C> <C> <C>
Rental income $ 600,236 $ 560,633 $1,228,637 $1,135,379
Interest income 2,138 9,890 8,443 15,151
Net gain on sale
of equipment 7,702 176,430 11,254 319,974
---------------------- ------------------------
Total revenue 610,076 746,953 1,248,334 1,470,504
---------------------- ------------------------
Costs and expenses:
Depreciation 407,489 348,257 733,603 726,479
Reversal of provision
for doubtful accounts (6,182) - (20,348) -
Interest 6,092 2,165 13,169 3,977
Related party expenses
(note 4):
Management fee 31,782 34,949 78,405 75,283
General and
administrative 36,897 27,720 60,216 49,555
---------------------- ------------------------
Total costs and
expenses 476,078 413,091 865,045 855,294
---------------------- ------------------------
Net income $ 133,998 $ 333,862 $ 383,289 $ 615,210
---------------------- ------------------------
---------------------- ------------------------
Net income per Limited
Partnership Unit $ 6.06 $ 15.67 $ 17.60 $ 28.95
======================= ========================
</TABLE>
See accompanying notes to financial statements.
(Page 5)
<TABLE>
WELLESLEY LEASE INCOME LIMITED PARTNERSHIP III-D
(A Massachusetts Limited Partnership)
Statements of Cash Flows
For the Six Months Ended June 30, 1995 and 1994
(Unaudited)
<CAPTION>
1995 1994
Cash flows from operating activities:
<S> <C> <C>
Net income $ 383,289 $ 615,210
---------------------------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 733,603 726,479
Reversal of provision for doubtful accounts (20,348) -
Net gain on sale of equipment (11,254) (319,974)
Net (increase) decrease in current assets (285,401) 96,026
Net increase in current liabilities 23,323 51,811
---------------------------
Total adjustments 439,923 554,342
---------------------------
Net cash provided by operating activities 823,212 1,169,552
---------------------------
Cash flows from investing activities:
Purchase of investment property (1,353,163) (476,331)
Proceeds from sales of investment property 93,141 501,387
---------------------------
Net cash (used in) provided by investing
activities (1,260,022) 25,056
---------------------------
Cash flows from financing activities:
Proceeds from borrowings on notes payable-
affiliates 139,047 -
Principal payments on notes payable -
affiliates (38,322) -
Proceeds from borrowings on long-term debt 643,906 266,596
Principal payments on long-term debt (203,851) (87,969)
Cash distributions to partners (504,625) (531,185)
----------------------------
Net cash provided by (used in) financing
activities 36,155 (352,558)
----------------------------
Net (decrease) increase in cash and cash
equivalents (400,655) 842,050
Cash and cash equivalents at beginning of
period 592,377 621,024
----------------------------
Cash and cash equivalents at end of period $ 191,722 $1,463,074
----------------------------
----------------------------
Supplemental cash flow information:
Interest paid during the period $ 14,246 $ 4,993
----------------------------
----------------------------
</TABLE>
See accompanying notes to financial statements.
(Page 6)
WELLESLEY LEASE INCOME LIMITED PARTNERSHIP III-D
(A Massachusetts Limited Partnership)
Notes to Financial Statements
(Unaudited)
(1) Organization and Partnership Matters
The foregoing financial statements of Wellesley
Lease Income Limited Partnership III-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.
(2) Summary of 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 June 30, 1995 and December 31, 1994, the
allowance for doubtful accounts included in rents
receivable was $39,170 and $55,208, respectively,
and $0 and $4,310 included in sales receivable,
respectively.
Reclassifications
Certain prior year financial statement items have
been reclassified to conform with the current
year's financial statement presentation.
(3) Investment Property
At June 30, 1995, the Partnership owned computer
equipment with a depreciated cost basis of
$3,005,045, subject to existing leases and
equipment with a depreciated cost basis of
$148,917 in inventory, awaiting re-lease or sale.
All purchases of computer equipment are subject to
a 3% acquisition fee paid to the General Partner.
(Page 7)
(4) 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 years
ended June 30, 1995 and 1994 are as follows:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Equipment acquisition fees $ 39,413 $ 13,638
Management fees 78,405 75,283
Reimbursable expenses paid 60,177 44,274
------------------------
$ 177,995 $ 133,195
------------------------
------------------------
</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.
(5) Notes Payable-Affiliates
Notes payable-affiliates at June 30, 1995,
consists of one non-recourse promissory note
payable to TLP Leasing Programs, Inc. in the
amount of $100,725, bearing interest at the rate
of 9.00%. The note payable matures in 1995.
(6) Long-term Debt
Long-term debt at June 30, 1995 consists of one
loan for $64,383 from Randolph Computer Company
with an interest rate of 5.75%, one loan for
$117,434 from Relational Funding with an interest
rate of 8.15%, two loans totaling $244,966 from
Union Chelsea National Bank each with an interest
rate of 9.00%, one loan for $60,862 from CIT
Group/Equipment Financing, Incorporated with an
interest rate of 14.17%, and seven installment
notes from Pullman Capital Corporation totaling
$319,155, all with an interest rate of 8.00%. All
loans are non-recourse and are collateralized by
the equipment on the respective leases with a
total net book value of $1,075,891 and assignment
of the related leases.
<TABLE>
<CAPTION>
Maturities on long-term debt are as follows:
<S> <C>
1995 $ 343,960
1996 292,364
1997 141,602
1998 28,874
----------
$ 806,800
----------
----------
</TABLE>
(Page 8)
WELLESLEY LEASE INCOME LIMITED PARTNERSHIP III-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 six
months ended June 30, 1995 in comparison to the
same periods ended June 30, 1994.
The Partnership realized net income of $133,998
and $333,862 for the quarters ended June 30, 1995
and 1994, respectively. Rental income increased
$39,603 or 7% in 1995. The increase in rental
income can be attributed to new leases related to
new equipment acquisitions in 1995 of $1,353,163.
Interest income decreased from 1994 as a result of
lower average short-term investment balances held
during the three month periods. The decrease in
gain on the sale of equipment between the three
month periods is primarily due fewer equipment
sales in 1995.
Total costs and expenses increased 16% in 1995.
The increase in costs and expenses is primarily a
result of higher depreciation expense.
Depreciation expense increased 17% due to the new
acquisitions made in 1995. For the quarter ended
June 30, 1995, interest expense increased due to
new debt leveraged at the end of 1994 and the
first six months in 1995. Management fees expense
was fairly constant from 1994, although for the
quarter ended June 30, 1994, management fees
expense reflects a one time adjustment for a
change in method on which management fees are
calculated. General and administrative expenses
increased in relation to the increase in rental
income. The reversal of provision for doubtful
accounts is due to successful collection efforts
on delinquent rents receivable.
The Partnership realized net income of $383,289
and $615,210 for the six months ended June 30,
1995 and 1994, respectively. The Partnership
recognized rental income of $1,228,637 and
$1,135,379 an increase of 9% for the six months
ended June 30, 1995 and 1994, respectively.
Rental income increased due to new lease
transactions generated in late 1994 and the first
half of 1995. As discussed in the quarter
analysis above, the decrease in interest income
between 1995 and 1994 can be attributed to the
lower average short-term investment balances. The
large 1994 net gain on sale of equipment is due to
the large number of equipment sales of equipment
carrying low net book values.
Total costs and expenses increased $9,751 or 2%
between the six month periods. The slight
increase in total costs and expenses is primarily
attributable to higher interest expense, an
increase in general and administrative expenses
and a slight increase in depreciation expense,
which together more than offset the reversal of
provision for doubtful accounts. As discussed
above, for the quarter ended June 30, 1995,
interest expense increased due to new debt
leveraged at the end of 1994 and the first six
months of 1995. The increase in general and
administrative expenses is in correlation with the
increase in rental income. The minimal increase
in depreciation expense can be attributed to the
new acquisitions made in 1995. Management fees
have increased due to management fees incurred on
rentals received from new equipment acquisitions
and the related leases. The reversal of provision
for doubtful accounts for the six months is due to
successful collection efforts of delinquent rents
receivable.
The Partnership recorded net income per Limited
Partnership Unit of $17.60 and $28.95 for the six
months ended June 30, 1995 and 1994, respectively.
(Page 9)
Liquidity and Capital Resources
For the six months ended June 30, 1995, rental
revenue generated from operating leases was the
primary source of funds for the Partnership. As
equipment leases terminate, the General Partner
determines if the equipment will be extended to
the same lessee, remarketed to another lessee, or
if it is less marketable, sold. This decision is
made upon analyzing which options would generate
the most favorable results.
Rental income will begin to decrease in 1995 due
to two factors. The first factor is the rate
obtained when the original leases expire and are
remarketed at a lower rate. Typically the
remarketed rates are lower due to the decrease in
useful life of the equipment. Secondly, the
increasing change of technology in the computer
industry usually decreases the demand for older
equipment, thus increasing the possibility of
obsolescence. Both of these factors together will
cause remarketed rates to be lower than original
rates and will cause certain leases to terminate
upon expiration. This decrease however, should
not affect the partnership's ability to meet its
future cash requirements, including its long-term
debt and notes payable - affiliates obligations.
To the extent that future cash flows should be
insufficient to meet the Partnership's operating
expenses and liabilities, additional funds could
be obtained through the sale of equipment, or a
reduction in the rate of cash distributions.
Future rental revenues amount to $3,044,881 and
are to be received over the next five years.
In the first six months of 1995, the Partnership's
investing activities resulted in equipment
purchases of $1,353,163 and equipment sales with a
depreciated cost basis of $93,586, generating
$93,141 in proceeds. Associated with the
equipment sales were $11,699 of loss charge offs
against the reserve, initially set up in prior
periods for estimated losses on the ultimate
disposition of equipment. The Partnership has no
material capital expenditure commitments and will
not purchase equipment in the future as the
Partnership has reached the end of its
reinvestment period.
The Partnership's financing activities resulted in
the paydown on long-term debt in the amount of
$203,851 and proceeds from borrowing on long-term
debt of $643,906 for the six months ended June 30,
1995. The Partnership will payoff its remaining
long-term debt of $806,800 by 1998. Total long-
term debt assumed by the Partnership from
inception is $6,529,065, for a total leverage of
23%. The Partnership's financing activities also
resulted in proceeds from the borrowing on notes
payable - affiliates in the amount of $139,047 and
the paydown on the installment note during the
first six months of 1995 in the amount of $38,322.
Such notes payable - affiliates will be paid off
in 1995.
Cash distributions are currently at an annual
level of 8% per Limited Partnership Unit, or
$10.00 per Limited Partnership Unit on a quarterly
basis. For the quarter ended June 30, 1995, the
Partnership declared a cash distribution of
$212,474, of which $10,624 was allocated to the
General Partner and $201,850 was allocated to the
Limited Partners. The distribution will be made
on August 28, 1995. The Partnership expects to
continue paying at or near this level in the
future.
The effects of inflation have not been significant
to the Partnership and are not expected to have
any material impact in future periods.
(Page 10)
WELLESLEY LEASE INCOME LIMITED PARTNERSHIP III-D
(A Massachusetts Limited Partnership)
Computer Equipment Portfolio (Unaudited)
June 30, 1995
Lessee
American Telephone & Telegraph Company,
Incorporated
Applied Magnetics Corporation
Caterpillar, Incorporated
Champs Software, Incorporated
Coulter Leasing Corporation
Dan River Corporation
Delphi Internet Services Corporation
Exxon Company, U.S.A.
George Melhado and Company
Halliburton Company
Hughes Aircraft Company, Incorporated
Integrated Systems Technology Corporation
Invetech Company
J. Walter Thompson, U.S.A., Incorporated
Magnavox Electronic Systems Company, Incorporated
Maryland Casualty Insurance, Incorporated
Merchants Association of Florida, Incorporated
Mercury Marine, Division of Brunswick Corporation
Mobil Oil Corporation
New England Mutual Life Insurance Company
New York Life Insurance Company
NYNEX National, Incorporated
ON Technology Corporation
Owens Corning Fiberglass, Incorporated
Packard Hughes Interconnect, Incorporated
Simmons Market Research Bureau, Incorporated
Thomas James Associates, Incorporated
Troll Associates, Incorporated
Western Atlas Company, Incorporated
Xerox Corporation
<TABLE>
<CAPTION>
Equipment Description Acquisition Price
<S> <C>
Computer peripherals $ 3,200,400
Processors & upgrades 3,446,584
Other 1,559,169
-----------
$ 8,206,153
-----------
-----------
</TABLE>
(Page 11)
PART II. OTHER INFORMATION
WELLESLEY LEASE INCOME LIMITED PARTNERSHIP III-D
(A Massachusetts Limited Partnership)
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
(Page 12)
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 III-D
(Registrant)
By: Wellesley Leasing Partnership,
its General Partner
By: TLP Leasing Programs, Inc.,
one of its Corporate General Partners
Date: August 11, 1995
By: Arthur P. Beecher,
President
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000760386
<NAME> WELLESLEY III-D
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 191,722
<SECURITIES> 0
<RECEIVABLES> 420,662
<ALLOWANCES> 39,170
<INVENTORY> 0
<CURRENT-ASSETS> 573,214
<PP&E> 8,206,153
<DEPRECIATION> 5,052,191
<TOTAL-ASSETS> 3,727,176
<CURRENT-LIABILITIES> 219,537
<BONDS> 907,525
<COMMON> 8,988,039
0
0
<OTHER-SE> (6,387,925)
<TOTAL-LIABILITY-AND-EQUITY> 3,727,176
<SALES> 1,228,637
<TOTAL-REVENUES> 1,248,334
<CGS> 0
<TOTAL-COSTS> 78,405
<OTHER-EXPENSES> 793,819
<LOSS-PROVISION> (20,348)
<INTEREST-EXPENSE> 13,169
<INCOME-PRETAX> 383,289
<INCOME-TAX> 0
<INCOME-CONTINUING> 383,289
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 383,289
<EPS-PRIMARY> 17.60
<EPS-DILUTED> 0
</TABLE>
