<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of The Securities Exchange Act of 1934
For the Quarter ended Commission File Number
September 30, 1996 33-19038
PERSHING LEASE INCOME LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
MISSOURI
(State or other jurisdiction of incorporation or organization)
43-1463913
(I.R.S. Employer Identification No.)
6300 Lamar, Shawnee Mission, Kansas 66202 (913) 236-2000
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
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 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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PERSHING LEASE INCOME LIMITED PARTNERSHIP
(A Missouri Limited Partnership)
Table of Contents
Part I - Financial Information
Financial Statements: Page
Balance Sheet - September 30, 1996 and
December 31, 1995 3
Statements of Income for the Quarters and Nine Months
Ended September 30, 1996 and 1995 4
Statement of Cash Flows for the Nine Months
Ended September 30, 1996 and 1995 5
Notes to Financial Statements 6-8
Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. 12
Item 2. Changes in Securities. 12
Item 3. Default Upon Senior Securities. 12
Item 4. Submission of Matters to a Vote of Security
Holders. 12
Item 5. Other Information. 12
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits 12
(b) Reports on Form 8-K 12
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Pershing Lease Income Limited Partnership
(A Missouri Limited Partnership)
Balance Sheets
September 30, December 31,
1996 1995
Assets (Unaudited)
Investment property:
Cost $ 4,303,190 $ 10,782,881
Less accumulated depreciation 4,150,673 8,972,905
Investment property, net 152,517 1,809,976
Cash and cash equivalents 1,013,096 802,866
Rents and other receivables 7,534 16,553
Due from Pershing Lease Income
Limited Partnership II 25,102 -
Prepaid insurance 3,621 1,870
Total assets $ 1,201,870 $ 2,631,265
========== ===========
Liabilities and Partners' Equity
Liabilities:
Due to affiliates 12,495 $ 17,736
Accounts payable 52,758 96,198
Unearned rental revenue 32,854 5,821
Total liabilities 98,107 119,755
Partners' Equity (Deficit):
General Partner:
Capital contribution 1,000 1,000
Cumulative net income 213,952 188,305
Cumulative cash distributions (1,267,243) (1,229,924)
(1,052,291) (1,040,619)
Limited Partners (62,840 units):
Capital contributions, net of
offering costs 27,738,501 27,738,501
Cumulative net income 5,636,059 4,769,894
Cumulative cash distributions (31,218,506) (28,956,266)
2,156,054 3,552,129
Total partners' equity 1,103,763 2,511,510
Total liabilities and partners'
equity $ 1,201,870 $ 2,631,265
========== ===========
See accompanying notes to financial statements.
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PERSHING LEASE INCOME LIMITED PARTNERSHIP
(A Missouri Limited Partnership)
Statements of Income
(Unaudited)
For the Quarters and Nine Months
Ended September 30, 1996 and 1995
Nine Months Ended Quarters Ended
September 30 September 30
1996 1995 1996 1995
Revenue:
Rental income $ 678,363 $1,481,614 $ 185,661 $ 467,964
Interest income 56,674 38,191 20,915 10,011
Net gain on
sale of equipment 473,602 364,863 237,822 111,451
Total revenue 1,208,639 1,884,668 444,398 589,426
Expenses:
Depreciation 215,378 660,446 66,821 244,868
General and
administrative 101,449 251,235 36,266 37,977
Total expenses 316,827 911,681 103,087 282,845
Net income $ 891,812 $ 972,987 $ 341,311 $ 306,581
========= ========= ========= =========
See accompanying notes to financial statements.
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PERSHING LEASE INCOME LIMITED PARTNERSHIP
(A Missouri Limited Partnership)
Statement of Cash Flows
For the Nine Months Ended September 30, 1996 and 1995
1996 1995
Cash flows from operating activities:
Net income $ 891,812 $ 972,987
Adjustments to reconcile net income
to net cash provided by
(used in) operating activities:
Depreciation and amortization 215,378 660,446
Net (gain) on sale of
investment property (473,602) (364,863)
Changes in assets and liabilities:
Due from Pershing Lease Income II (25,102) (4,031)
Receivables 9,019 45,753
Prepaid insurance (1,751) (503)
Due to affiliates (5,241) (6,640)
Accounts payable (43,440) 60,571
Deferred sales revenue - (19,814)
Unearned rental revenue 27,033 (8,495)
Net cash provided by operating
activities 594,106 1,335,411
Cash flows from investing activities:
Disposition of investment property 1,915,683 420,686
Cash flows from financing activities:
Cash distributions to Partners (2,299,559) (1,962,847)
Net increase (decrease) in cash and
cash equivalents 210,230 (206,750)
Cash and cash equivalents at beginning
of period 802,866 926,557
Cash and cash equivalents at end of
period $ 1,013,096 $ 719,807
========== ==========
See accompanying notes to financial statements.
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PERSHING LEASE INCOME LIMITED PARTNERSHIP
(A Missouri Limited Partnership)
Notes to Financial Statements
(Unaudited)
In the opinion of the General Partner, the accompanying unaudited
financial statements contain all adjustments necessary to present
fairly the financial position, results of operations and cash flows.
(1) Summary of Significant Accounting Policies
Organization
Pershing Lease Income Limited Partnership (the "Partnership") was
organized under the Missouri Revised Uniform Limited Partnership Act on
November 30, 1987. The Partnership was formed to invest primarily in
equipment to be leased to third parties. The Amended Agreement of
Limited Partnership authorized the issuance of up to 60,000 Limited
Partnership units at a price of $500 per unit and up to 20,000
additional units. The Partnership had an initial closing and thirteen
subsequent closings. The closings occurred on May 3, 1988, June 3,
1988, July 8, 1988, August 5, 1988, September 8, 1988, October 7, 1988,
November 7, 1988, December 7, 1988, January 9, 1989, February 7, 1989,
March 7, 1989, April 7, 1989, May 5, 1989, and June 14, 1989 with
10,732, 6,712, 3,984, 4,268, 5,011, 3,822, 2,562, 2,701, 4,001, 3,256,
3,604, 4,014, 3,592, and 4,581 units, respectively.
Pursuant to the terms of the Amended Agreement of Limited
Partnership, distributable cash from operations and profits for federal
income tax purposes from normal operations, as defined, are to be
allocated 95% to the Limited Partners and 5% to the General Partner
until payout has occurred, and 85% to the Limited Partners and 15% to
the General Partner thereafter. "Payout" means the time when the
aggregate amount of all distributions to the Limited Partners of
distributable cash from operations and of distributable cash from sales
or refinancing equals the aggregate amount of the Limited Partners'
original invested capital plus a cumulative 8% annual return on their
aggregate unreturned invested capital (calculated from the beginning of
the first full fiscal quarter following each Limited Partner's
admission to the Partnership). Losses for federal income tax purposes
from the normal operations of the Partnership will be allocated 99% to
the Limited Partners and 1% to the General Partner.
The General Partner, Waddell & Reed Leasing, Inc., contributed
$1,000 for its General Partnership interest. The General Partner is
not required to make any other capital contributions except under
certain limited circumstances upon termination of the Partnership.
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Pershing Lease Income Limited Partnership
(A Missouri Limited Partnership)
Notes to Financial Statements, Continued
(Unaudited)
Basis of Presentation
The Partnership financial statements are presented on the accrual
basis of accounting.
Cash and Cash Equivalents
Cash and cash equivalents in the accompanying statements of cash
flows include cash on hand and short-term investments with original
maturities of less than ninety days.
Investment Property
At September 30, 1996 and December 31, 1995, the Partnership owned
investment property, with a depreciable cost basis of $4,303,190 and
$10,782,881, respectively. The depreciable cost basis at September
30, 1996 and December 31, 1995, includes acquisition fees of $195,129
and $488,958, respectively, which were paid to the General Partner.
$3,529,189 and $9,006,855 of the investment property at September 30,
1996 and December 31, 1995, respectively, was subject to existing
leases and the remainder was being held in inventory.
Depreciation on investment property is provided using accelerated
methods over lives ranging from 3 to 12 years.
Income Taxes
The Partnership is a pass-through entity and, accordingly, taxes on
income, if any, are the responsibility of the individual partners.
Partners' equity at September 30, 1996 as reported herein has been
reduced by sales commissions and other costs of the offering which will
not be deductible by the partners until the Partnership is liquidated
or the partners' units are otherwise disposed of.
<PAGE>
Pershing Lease Income Limited Partnership
(A Missouri Limited Partnership)
Notes to Financial Statements, Continued
(Unaudited)
(2) Leases
The Partnership leases the investment property to unrelated third
parties under operating leases. Rental income is reported when earned.
Minimum lease payments scheduled to be received in the future under
existing noncancelable operating leases follow:
1996 $ 71,774
1997 144,218
1998 15,724
1999 -
$ 231,716
========
(3) Related Party Transactions
Fees, commissions and other expenses paid or payable by the
Partnership to the General Partner or affiliates of the General Partner
for the quarter ending September 30, 1996 follow:
Management fees $ 8,490
Reimbursable operating expenses 14,478
$ 22,968
=======
The following costs were due to (from) affiliates as of September
30, 1996:
Management fees $ 4,205
Reimbursable operating expenses 8,290
Due from Pershing Lease Income
Limited Partnership II 25,102
$ 37,597
=======
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Pershing Lease Income Limited Partnership
(A Missouri Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Partnership Operations
Rental income for the quarter was $185,661, a decrease of
$282,303 from the third quarter 1995. The decrease is due to lease
expirations and the sale of equipment. The amount of equipment on
lease at September 30, 1996 on an original cost basis was $3.5 million
and the original cost basis of equipment in inventory is $774 thousand.
During the remainder of 1996, leases on $2 million of equipment are
scheduled to expire.
Net gain from sales of investment property for the third quarter
of 1996 was $237,822, an increase of $126,371 from last year.
Depreciation for the third quarter declined about $178,047 from
last year because accelerated depreciation methods have been used to
depreciate much of the equipment and equipment has been sold. General
and administrative expenses for the quarter were $36,266, about the
same as the third quarter of 1995.
Liquidity and Capital Resources
Management believes operations will generate adequate cash flow to
fund operations and provide distributions to the partners.
<PAGE>
Pershing Lease Income Limited Partnership
(A Missouri Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Cash and Distributable Cash from Operations and Sales
Shown below is the calculation of Cash and Distributable Cash from
Operations and Sales for the quarter ended September 30, 1996 as
defined by Section 17 of the Amended Agreement of Limited Partnership:
Rental income $ 185,661
Interest income 20,915
Cash from sales 336,103
Total cash inflow 542,679
Operating expenses 27,736
Cash from operations and sales 514,943
Reserve for distributions and operations (7,963)
Partnership management fee (8,490)
Distributable cash from operations and sales $ 498,490
========
Allocations of Distributable Cash from Operations and Sales:
Operations Sales Total
Limited Partners $ 154,268 $332,742 $487,010
General Partner 8,119 3,361 11,480
Total $ 162,387 $336,103 $498,490
========= ======= =======
On August 29, 1996, the Partnership made a $1,256,800 cash
distribution to the Limited Partners of record on June 30, 1996.
<PAGE>
Pershing Lease Income Limited Partnership
(A Missouri Limited Partnership)
Equipment Summary
Lessee
BASF Corporation
Eveleth Taconite Company
Federal Paper Board Company, Inc.
Stone Container Corporation
Toledo Board of Education
USX Corporation
Acquisition
Equipment Description Cost
Heavy Duty Equipment $ 3,582,039
Computer Equipment 136,151
Material Handling Equipment 71,849
Medical Equipment 122,059
Trucks 391,092
$ 4,303,190
===========
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Pershing Lease Income Limited Partnership
(A Missouri Limited Partnership)
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Not applicable.
Item 2. Changes in Securities.
Not applicable.
Item 3. Default Upon Senior Securities.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 5. Other Information.
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits - There are no exhibits.
(b) Form 8-K - An 8-K was filed on July 29, 1996, indicating
under Item 6 that there had been a Resignation of Registrant's
Directors. On July 12, 1996, Robert L. Hechler was appointed
President and Director of Waddell & Reed Leasing, Inc., the
General Partner of Pershing Lease Income Limited Partnership
due to the retirement of George L. Wirkkula, former President
and Director. No financial statement were filed with this
report.
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Pershing Lease Income Limited Partnership
(A Missouri Limited Partnership)
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.
PERSHING LEASE INCOME LIMITED PARTNERSHIP
(Registrant)
By: /s/ Michael D. Strohm
Michael D. Strohm, Executive Vice
President and Assistant Treasurer
of the General Partner
Date: November 26, 1996
By: /s/ Robert L. Hechler
Robert L. Hechler, as President and
Treasurer of the General Partner
(Principal Accounting and Financial
Officer)
Date: November 26, 1996
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