<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
.
For Quarter Ended March 31, 1995 Commission file number 2-99435.
Leastec Income Fund III, A California Limited Partnership
---------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 68-0066209
---------- ----------
(State or other jurisdiction of (I.R.S. Employer Identifi-
incorporation or organization) cation Number)
2855 Mitchell Drive, Suite 215, Walnut Creek, California 94598
--------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (510) 938-3443
_______________________________________________________________________
(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 __
-
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS: N/A
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13, or 15 (d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes ___ No ___
APPLICABLE ONLY TO CORPORATE ISSUERS: N/A
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
1
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Part 1. Financial Information
-----------------------------
Item I
------
LEASTEC INCOME FUND III
A CALIFORNIA LIMITED PARTNERSHIP
CONDENSED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
March 31 December 31
-------- -----------
1995 1994
---- ----
<S> <C> <C>
ASSETS:
Cash $ 486,465 $ 645,072
Accounts receivable 80,935 49,871
Net investment in direct financing leases 1,943,891 2,300,767
Equipment on operating leases, net of
accumulated depreciation of $1,816,712
in 1995 and $2,169,621 in 1994 -0- -0-
Equipment held for sale or lease, net of
accumulated depreciation of $33,106 in
1995 and $0 in 1994 -0- -0-
---------- ----------
Total assets $2,511,291 $2,995,710
========== ==========
LIABILITIES AND PARTNERS' CAPITAL:
LIABILITIES:
Payables to affiliates $ 56,522 $ 71,257
Accounts payable 49,763 105,393
Deposits 255,941 264,829
Prepaid rental income 1,887 4,609
Distributions payable 315,790 468,421
Notes payable 27,210 44,864
---------- ----------
Total liabilities 707,113 959,373
---------- ----------
Partners' Capital:
Partners' capital 1,804,178 2,036,337
---------- ----------
Total partners' capital 1,804,178 2,036,337
---------- ----------
Total liabilities &
partners' capital $2,511,291 $2,995,710
========== ==========
</TABLE>
The accompanying notes are an integral
part of these condensed financial statements.
2
<PAGE>
LEASTEC INCOME FUND III
A CALIFORNIA LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months
Ended
March 31
--------
1995 1994
---- ----
<S> <C> <C>
REVENUE:
Rental income $ 68,165 $214,548
Direct financing lease income 87,548 130,785
Gain on sale of equipment 13,836 7,954
Interest income 4,776 2,603
Other income 2,987 2,933
-------- --------
Total revenues 177,312 358,823
-------- --------
EXPENSES:
Depreciation -0- 65,009
Management fees 35,885 50,480
General & administrative 47,104 43,678
Data processing 8,673 11,886
Interest expense 2,020 11,148
-------- --------
Total expenses 93,682 182,201
-------- --------
Net income $ 83,630 $176,622
======== ========
Net income per limited
partnership unit $ 1.06 $ 2.24
======== ========
</TABLE>
The accompanying notes are an integral
part of these condensed financial statements.
3
<PAGE>
LEASTEC INCOME FUND III
A CALIFORNIA LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months
Ended
March 31
--------
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 83,630 $ 176,622
Adjustments to reconcile net income to
net cash provided by operating activities:
Accumulated depreciation -0- 65,009
Gain on disposition of equipment (13,836) (7,954)
Other income -0- (2,802)
Change in assets and liabilities:
Increase in accounts receivable (31,064) (39,774)
Decrease in payables to affiliates (14,735) (1,994)
Decrease in accounts payable (55,630) (62,716)
Decrease in deposits (8,888) (9,087)
Decrease in prepaid rental income (2,722) (12,799)
Decrease in distributions payable (152,631) (147,250)
--------- ---------
Net cash used by operating activities (195,876) (42,745)
--------- ---------
Cash flows from investing activities
Proceeds from disposition of equipment 13,836 13,510
Decrease in net investment in direct
financing leases 356,876 403,158
--------- ---------
Net cash provided by investing
activities 370,712 416,668
--------- ---------
Cash flows from financing activities:
Repayment of notes payable (17,654) (83,270)
Net distributions to partners (315,789) (484,596)
--------- ---------
Net cash used in financing activities (333,443) (567,866)
--------- ---------
Net decrease in cash (158,607) (193,943)
Cash at beginning of period 645,072 726,178
--------- ---------
Cash at end of period $ 486,465 $ 532,235
========= =========
</TABLE>
The accompanying notes are an integral
part of these condensed financial statements
4
<PAGE>
LEASTEC INCOME FUND III
A CALIFORNIA LIMITED PARTNERSHIP
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 1995, MARCH 31, 1994 AND DECEMBER 31, 1994
(UNAUDITED)
1. Basis of Condensed Financial Statement Preparation
--------------------------------------------------
In the opinion of the General Partner, the accompanying unaudited condensed
financial statements contain all adjustments (consisting principally of normal,
recurring accruals) necessary to present fairly the financial position of
Leastec Income Fund III (the Partnership) as of March 31, 1995, March 31, 1994
and December 31, 1994.
As provided for in the Partnership agreement and offering document, the
Partnership engaged in leasing activities which intended to be completed in
approximately ten years from its inception at which time all remaining cash is
to be distributed to the partners. The Partnership has presented its 1995
financial statements to reflect its leasing activities on a basis consistent
with prior periods.
2. Wind Down Phase
---------------
The Registrant has ceased acquisition of new capital equipment and is in the
process of liquidating its lease portfolio. It is intended that the Registrant
will be fully liquidated at the end of its tenth full year of operation,
December 1996.
5
<PAGE>
ITEM II
-------
LEASTEC INCOME FUND III
A CALIFORNIA LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operation
- --------------------
The Registrant has been winding down operations since 1993 by
discontinuing new leasing activities and returning cash available from
operations to the Registrant's Partners. Although the Registrant has until
December 1997 to liquidate operations, the Registrant intends to be fully
liquidated by December 1996.
The majority of the operating leases have terminated with the remaining
operating lease equipment being fully depreciated. As the operating leases
terminate, the equipment is sold. The balance of the lease portfolio is invested
in Direct Finance leases which terminate with the lessees contractually required
purchase of equipment. The income and expenses of the Registrant are steadily
declining as the lease portfolio declines in size. The cash balances and related
interest income fluctuate according to the cash amounts received from equipment
sales and finance lease purchases during each quarter. Cash is distributed to
the Partners according to their respective tax basis capital accounts.
The Registrant reported net income of $83,630 or $1.06 per Limited
Partnership Unit for the three months ended March 31, 1995 as compared to net
income of $176,622 or $2.24 per Limited Partnership Unit for the three months
ended March 31, 1994.
Total revenues for the three months ended March 31, 1995 were $177,312
compared to $358,823 for the same period in the prior year. As leases terminated
during the year, the majority of the equipment was not re-leased and was sold.
This decrease reflects the gradual liquidation of the Registrants lease
portfolio. Revenue derived from the Fund's equipment management activities
comprised 97% of the total income for the period, with the remaining 3% being
interest income.
Direct financing lease income decreased from March 31, 1994 to March 31,
1995 ($130,785 to $87,548 respectively). The net investment in direct financing
leases decreased from $2,300,267 at March 31, 1994 to $1,943,891 at March 31,
1995.
Other income remained relatively unchanged from March 31, 1994 to March 31,
1995 ($2,933 to $2,987 respectively).
Total expenses for the three months ended March 31, 1995 were $93,682
compared to $182,201 for the same period in the prior year. This decrease is
caused primarily by a reduction in depreciation expense which reflects the
complete depreciation of operating lease equipment portfolio. Management fees,
interest, and general and administrative costs comprised 91% of the total
expenses. The original cost of the equipment subject to operating leases
declined from $2,169,621 at year end 1994 to $1,816,712 at March 31, 1995.
6
<PAGE>
The gain on sale of equipment for the three months ended March 31, 1995 was
$13,836 an increase from $7,954 in the same period of 1994.
General and administrative costs increased slightly to $47,104 for the
first three months of 1995 from $43,678 for the same period in 1994.
Liquidity and Capital Resources
- -------------------------------
Cash used by operating activities for the three months ended March 31, 1995
was $195,876 compared to cash used of $42,745 for the same period in the prior
year. The decrease in cash from operating activities reflects the continued
winding down of the operating lease portfolio.
Cash from investing activities decreased from $416,668 in the first
quarter of 1994 to $370,172 in the first quarter of 1995 reflecting primarily
the decline in rental receipts from the direct finance lease portfolio. As
rental payment on finance leases are received, the cash is broken up into income
and return of principal. As finance leases are completed, the rental payments
received by the Registrant decline, and the related components of income and
return of principal decline as well. The decreasing return of principal is
reflected as a smaller decrease in net investment in direct financing leases
from $403,158 in 1994 to $356,876 in 1995.
Cash from financing activities was used to repay $17,654 of debt during the
three months ended March 31, 1995 as compared to $83,270 for the same period in
the prior year.
As of March 31, 1995, investors were allocated cash distributions of
$315,790 payable on April 14, 1995. Investor distributions depend on the timing
of equipment sales and collections of rents. As a result this amount can be
expected to decrease during 1995 and 1996 and to be variable in amount from
quarter to quarter depending on the timing of equipment sales.
The cash balance decreased from $726,178 at December 31, 1993, to $532,235
at March 31, 1994, and increased to $645,072 at December 31, 1994, and then
decreased to $486,465 at March 31, 1995.
The cash position as of March 31, 1995, was $486,465. The General Partner
anticipates that funds from operations will be adequate to cover all operating
expenses and future needs of the Partnership during 1995.
7
<PAGE>
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
None.
8
<PAGE>
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.
LEASTEC INCOME FUND III (Registrant)
LEASTEC CORPORATION, GENERAL PARTNER
Dated: May 10, 1995 By:_____________________________________
Ernest V. Lavagetto, President
9
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 486,465
<SECURITIES> 0
<RECEIVABLES> 2,024,826
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,511,291
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,511,291
<CURRENT-LIABILITIES> 707,113
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 1,804,178
<TOTAL-LIABILITY-AND-EQUITY> 2,511,291
<SALES> 0
<TOTAL-REVENUES> 177,312
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 91,662
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,020
<INCOME-PRETAX> 83,630
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 83,630
<EPS-PRIMARY> 1.06
<EPS-DILUTED> 0
</TABLE>
