<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)of The Securities
Exchange Act of 1934 [Fee Required]
For the Fiscal Year ended December 31, 1996
Commission File Number 33-19038
PERSHING LEASE INCOME LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
MISSOURI 43-1463913
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6300 LAMAR, SHAWNEE MISSION, KANSAS 66202
(Address principal executive offices)
Registrant's telephone number, including area code (913) 236-2000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on
which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
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
State the aggregate market value of the voting stock held by
non-affiliates of the registrant.
Not applicable, since securities are non-voting.
<PAGE>
Part I
Item 1. Business
Pershing Lease Income Limited Partnership (the "Partnership") is a
limited partnership organized under the provisions of the Missouri
Revised Uniform Limited Partnership Act on November 30, 1987. As of
December 31, 1996, the Partnership consisted of a General Partner and
3,708 Limited Partners owning 62,840 Units of limited partnership
interest of $500 each (the "Units"), except that employees of the
General Partner and employees and securities representatives of the
affiliates purchased Units for a net price of $460 per Unit, and the
Partnership incurred no obligation to pay any sales commissions with
respect to such sales. The Units were sold commencing February 22,
1988, pursuant to a Registration Statement on Form S-1 under the
Securities Act of 1933. As set forth more fully at Item 10 of this
Report, the General Partner is Waddell & Reed Leasing, Inc., a
Missouri corporation.
The Partnership was organized to engage in the business of acquiring
diversified types of equipment and leasing such equipment to others
on a short-term basis under operating leases. The Partnership's
principal objectives are:
1. To provide quarterly distributions of cash to the Limited
Partners from leasing revenues and from the proceeds of sale or
other disposition of Partnership Equipment; and
2. To maintain equipment residual values for ultimate sale or other
disposition.
The Partnership was formed primarily for investment purposes and not
as a "tax shelter".
The life of the Partnership shall terminate on December 31, 2005,
unless sooner dissolved or terminated as provided in Section 11 of
the Amended Agreement of Limited Partnership.
The Partnership had a total of fourteen 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 subscribers purchasing
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, being
admitted on such dates.
<PAGE>
Total equipment purchased through December 31, 1996 was $50,459,580
including acquisition fees. The Partnership had sold $46,156,390 of
equipment as of December 31, 1996 and had a balance of $4,303,190
invested in equipment. At the end of 1996, there were 6 leases in
place with 6 lessees. The acquisition of these leases and equipment
is described more fully in Item 2 of this Report and Notes 1 and 2 to
the financial statements included in Item 8.
Under the Amended Limited Partnership Agreement, the General Partner,
Waddell & Reed Leasing, Inc., is solely responsible for the
management of the Partnership's business. Waddell & Reed Leasing,
Inc. is a wholly owned subsidiary of Waddell & Reed, Inc. and was
incorporated in Missouri in October 1987 to serve as the General
Partner, and to manage and control the business and affairs, of the
Partnership.
The General Partner has also entered into an agreement dated as of
December 1, 1987 (the "Agency Agreement") with NEMLC Leasing
Corporation (the "Agent") which was acquired by BOT Services
Corporation, a wholly owned subsidiary of The Bank of Tokyo Trust
Company which is a subsidiary of The Bank of Tokyo Limited. Pursuant
to the Agency Agreement, the Agent will assist the General Partner in
performance of certain of its responsibilities on behalf of the
Partnership, including identification, evaluation and negotiation of
specific equipment investments suitable for the Partnership,
management of the Equipment while it is under lease and remarketing
of equipment coming off lease.
The Partnership's investments in capital equipment which are and will
continue to be subject to various risk factors. The principal
business risk associated with ownership and operation of the
equipment is the uncertainty of keeping all of the equipment fully
leased at rentals which, after payment of operating expenses and debt
service on Partnership borrowings, provide, together with any
anticipated sale proceeds or salvage value, an acceptable rate of
return. Other risk factors include:
1. Technological and economic equipment obsolescence, physical
deterioration and malfunction, risks attendant upon defaults by
lessees and credit losses.
2. Residual values of equipment. The Partnership's return on its
investment in equipment will depend in part upon the continuing
value of such equipment, which in turn depends among other things
upon (1) the quality of the equipment; (2) the condition of the
equipment; (3) the timing of the equipment's acquisition; (4) the
demand for used equipment; (5) the cost of comparable new
equipment; (6) the technological obsolescence of the equipment;
(7) the General Partner's ability to forecast technological
changes which may reduce the value of equipment; and (8) market
factors.
<PAGE>
3. Competition from full payout lessors. In connection with
operating leases, the Partnership will encounter considerable
competition from those offering full payout leases, which are
written for a longer term and a lower rate than the Partnership's
operating leases will offer.
4. Competition from manufacturers. Leases offered by the
Partnership will compete with operating leases and full payout
leases offered by the manufacturers in their lease programs. In
addition to attractive financial terms, manufacturers may also
provide certain ancillary services which the Partnership cannot
offer directly, such as maintenance service (including possible
equipment substitution rights), warranty services and trade-in
privileges.
5. Other competition. There are numerous other potential investors,
including limited partnerships organized and managed similarly to
the Partnership, seeking to purchase equipment subject to either
operating leases or full payout leases, many of which will have
greater financial resources than the Partnership and more
experience than the General Partner. The Partnership will
compete in the leasing marketplace with many non-manufacturing
firms, including other equipment dealers, brokers and leasing
companies, as well as with financial institutions.
6. Defaults by lessees. Default by a lessee may cause equipment to
be returned to the Partnership at a time when the General Partner
may be unable to promptly arrange for its re-leasing (at the
rental rate previously received or otherwise) or sale (with or
without a loss), thus resulting in the loss of anticipated
revenues and the inability to recover the Partnership's
investment and repay related debt. Any related debt may be
secured by the returned equipment and, in some cases, by the
Partnership's other equipment. If the debt is not paid in a
timely manner, the lender may foreclose and acquire ownership of
all equipment which secures the debt, resulting in economic loss
and adverse tax consequences to the Partners.
7. Changes in technology. The General Partner intends to establish
lease rates to the Partnership's lessees which take into account
the risk of technological advances which may reduce the value of
equipment owned by the Partnership. However, the introduction of
an entirely new technology could lead to a radical reduction in
the value of certain equipment and make such Equipment difficult
to re-lease.
The Partnership, during 1996 had five primary types of equipment; (1)
aircraft; (2) construction equipment; (3) forklifts; (4) computer
equipment; (5) transportation equipment; and leased the equipment to
corporations under operating leases. Rental income generated in
1996 from the five equipment types was $58,000, $657,247, $24,595,
$8,256, and $60,120, respectively.
<PAGE>
Item 2. Properties.
At December 31, 1996, the Partnership owned capital equipment, with a
cost of $4,303,190, subject to 6 leases with 6 different lessees.
All purchases of capital equipment were subject to a 4.75%
acquisition fee paid to the General Partner.
Item 3. Legal Proceedings.
There are no material pending legal proceedings to which the
Partnership is a party or of which any of its equipment or leases is
the subject.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
<PAGE>
Part II
Item 5. Market for the Partnership's Securities and Related Security
Holder Matters.
(a) Market Information
The Partnership's outstanding securities consist of Units of Limited
Partnership Interest ("Units) which were sold for $500 each. As of
December 31, 1996, 62,840 Units had been sold to the public at a
price of $500 per Unit (except for 693 Units which were sold for a
net price of $460 per Unit to employees of affiliates of the General
Partner and securities representatives of its affiliates).
There is no public market for the Units, and it is not anticipated
that such a public market will develop.
(b) Approximate Number of Security Holders
Number of Number of Units
Unit holders as of
Title of Class as of 12/31/96 12/31/96
Units of Limited
Partnership
Interest 3,717 62,840
(c) Dividend History and Restrictions
During the years ended December 31, 1989 and 1988 and the two months
ended December 31, 1987, the Partnership had an initial closing and
thirteen subsequent closings admitting partners holding a total of
62,840 units. The final admission date to admit partners into the
Partnership was June 14, 1989. Pursuant to Section 8 of the Amended
Limited Partnership Agreement, the Partnership's Distributable Cash
from Operations for each year will be determined and will be
distributed to the Partners. The Partnership distributions were:
Distributions Distributions
To The To The
Limited Partners General Partner
1988 $ 477,031 $ 25,107
1989 2,827,947 148,840
1990 3,468,767 182,568
1991 3,468,769 182,567
1992 4,166,292 178,649
1993 6,441,100 243,562
1994 5,718,440 169,453
1995 2,387,920 99,178
1996 2,749,250 48,798
The Partnership did not make a distribution in 1987.
<PAGE>
"Cash from Operations" means the net cash provided by the
Partnership's normal operations after the general expenses and
current liabilities of the Partnership (other than the equipment
management fee) are paid, as reduced by any reserves for working
capital and contingent liabilities to the extent deemed reasonable by
the General Partner, and increased by any portion of such reserves
then deemed by the General Partner not to be required for Partnership
operations.
Each distribution of Distributable Cash from Operations of the
Partnership shall be made 95% to the Limited Partners and 5% to the
General Partner. For rendering services in connection with the
normal operations of the Partnership, the Partnership will pay to
the General Partner a partnership management fee equal to 5% of the
cash received from rents.
Any distributable cash from sales or refinancing will be distributed
99% to the Limited Partners and 1% to the General Partner until
Payout. Payout is 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 equal
the aggregate cumulative 8% annual return on their aggregate
unreturned Invested Capital. After payout has occurred, any
distributable cash from sales or refinancing will be distributed 15%
to the General Partner, and the remainder to the Limited Partners.
Any Distributable Cash from Operations will be distributed within 60
days after the completion of each of the first three fiscal quarters
of each Partnership fiscal year, and within 120 days after the
completion of each fiscal year, beginning after the first full fiscal
quarter following the Partnership's first closing date. Each such
distribution will be described in a statement sent to the Limited
Partners.
<PAGE>
Items 6. Selected Financial Data.
The following table sets forth selected financial information
regarding the Partnership's financial position and operating results.
This information should be read in conjunction with the Management's
Discussion and Analysis of Financial Condition and Results of
Operations and Financial Statements and Notes thereto, which are
included in Items 7 and 8 of this report.
As of and for As of and for As of and for
the Year Ended the Year Ended the Year Ended
12/31/96 12/31/95 12/31/94
Operating Data
Rental Income $ 808,218 $ 1,863,506 $ 3,037,422
Interest Income 65,911 47,992 71,592
Net Income 1,047,419 1,337,147 2,892,968
Balance Sheet Data
Cash and Cash
Equivalents 639,226 802,866 926,557
Investment Property 123,888 1,809,976 2,744,992
Total Assets 769,746 2,631,265 3,741,270
Partners' Equity 760,881 2,511,510 3,661,461
Per Unit Data 1996 1995 1994
Net Income $ 16.18 $ 20.67 $44.97
Distributions 43.75 38.00 91.00
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
General
On May 3, 1988, the Partnership had its first closing and received
from the escrow account $5,356,940 representing 10,731 Units of
Limited Partnership Interest. During 1989 and 1988, the Partnership
had an additional thirteen closings and received from the escrow
account $26,034,840 representing 52,108 Units of Limited Partnership
Interest. Of these amounts, the Partnership received proceeds from
the sale of 693 Units at a price net of sales commission for sales to
employees and securities representatives of affiliates of the General
Partners, who are allowed to purchase units for a net price of $460
per Unit.
Results of Operation
For the years ended December 31, 1996, 1995 and 1994, the net income
was $1,047,419, $1,337,147, and $2,892,968, respectively, and net
income per unit was $16.18, $20.67, and $44,97. Total distributions
for the years ended December 31, 1996, 1995, and 1994, were
$2,798,048, $2,487,098, and $5,887,893, respectively, and
distributions per unit were $43.75, $38.00, and $91.00.
Total revenue decreased $1.2 million in 1996 from the prior year due
to lower rental income and lower gain from sales of investment
property. Rental income will continue to decline due to lease
expirations and equipment sales. Depreciation expense declined as a
result of equipment sales and the use of accelerated depreciation
methods.
In 1995, total revenue had decreased $2.4 million from 1994. As in
1996, this was due to lower rental income as the result of lease
expirations and equipment sales.
As of December 31, 1996, the Partnership held $4.3 million of
equipment of which $3.4 million was on lease. During 1997, leases on
$2.7 million of equipment will expire. As a result, rental income is
expected to decline due to lease expirations. Future cash
distributions will depend on the remarketing of this property.
Liquidity and Capital Resources
The Partnership believes it has sufficient liquidity to pay operating
expenses and fund cash distributions. The Partnership also believes
that rental income and cash from equipment sales will provide
sufficient resources to meet obligations. The Partnership does not
anticipate borrowing funds in 1997.
<PAGE>
Item 8. Financial Statements and Supplementary Data.
INDEPENDENT AUDITORS' REPORT
To the Partners of Pershing Lease Income
Limited Partnership:
We have audited the financial statements of Pershing Lease Income
Limited Partnership as listed in Item 14(a)1 on page 23. These
financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Pershing
Lease Income Limited Partnership as of December 31, 1996 and 1995 and
the results of its operations and its cash flows for each of the
years in the three-year period ended December 31, 1996 in conformity
with generally accepted accounting principles.
KPMG Peat Marwick LLP
Kansas City, Missouri
February 7, 1997
<PAGE>
Pershing Lease Income Limited Partnership
(A Missouri Limited Partnership)
Balance Sheets
December 31, 1996 and 1995
Assets 1996 1995
Investment property:
Cost $ 4,303,190 $ 10,782,881
Less accumulated depreciation 4,179,302 8,972,905
Investment property, net 123,888 1,809,976
Cash and cash equivalents 639,226 802,866
Rents and other receivables 3,374 16,553
Prepaid insurance 3,258 1,870
Total assets $ 769,746 $ 2,631,265
=========== ===========
Liabilities and Partners' Equity
Liabilities:
Due to affiliates (Note 3) $ 8,865 $ 17,736
Accounts payable - 96,198
Unearned rental revenue - 5,821
Total liabilities 8,865 119,755
Partners' Equity (Deficit):
General Partner:
Capital contribution 1,000 1,000
Cumulative net income 219,002 188,305
Cumulative cash distributions (1,278,722) (1,229,924)
(1,058,720) (1,040,619)
Limited Partners (62,840 units):
Capital contributions, net of
offering costs 27,738,501 27,738,501
Cumulative net income 5,786,616 4,769,894
Cumulative cash distributions (31,705,516) (28,956,266)
1,819,601 3,552,129
Total partners' equity 760,881 2,511,510
Total liabilities and partners'
equity $ 769,746 $ 2,631,265
=========== ===========
See accompanying notes to financial statements.
<PAGE>
PERSHING LEASE INCOME LIMITED PARTNERSHIP
Statements of Operations
For the Years Ended December 31, 1996, 1995 and 1994
1996 1995 1994
Revenue:
Rental income (Note 2) $ 808,218 $ 1,863,506 $ 3,037,422
Interest income 65,911 47,992 71,592
Net gain on sale of
investment property 541,841 723,692 1,942,012
Total revenue 1,415,970 2,635,190 5,051,026
Expenses:
Depreciation 244,007 876,121 1,759,309
General and administrative 124,544 421,922 398,749
Total expenses 368,551 1,298,043 2,158,058
Net income $ 1,047,419 $ 1,337,147 $ 2,892,968
========== ========== ==========
Net income attributable to
Limited Partners $ 1,016,722 $ 1,299,237 $ 2,826,000
========== ========== ==========
Net income per Limited
Partnership Unit $ 16.18 $ 20.67 $ 44.97
========== ========== ==========
See accompanying notes to financial statements.
<PAGE>
PERSHING LEASE INCOME LIMITED PARTNERSHIP
Statements of Partners' Equity
For the Years Ended December 31, 1996, 1995 and 1994
General Limited
Partner Partners Total
Partners' Equity (Deficit)
at December 31, 1993 $ (876,865) $ 7,533,251 $ 6,656,386
Net income 66,967 2,826,001 2,892,968
Cash distributions (169,453) (5,718,440) (5,887,893)
Partners' Equity (Deficit)
at December 31, 1994 $ (979,351) $ 4,640,812 $ 3,661,461
Net income 37,910 1,299,237 1,337,147
Cash distributions (99,178) (2,387,920) (2,487,098)
Partners' Equity (Deficit)
at December 31, 1995 $(1,040,619) $ 3,552,129 $ 2,511,510
Net income 30,697 1,016,722 1,047,419
Cash distributions (48,798) (2,749,250) (2,798,048)
Partners' Equity (Deficit)
at December 31, 1996 $(1,058,720) $ 1,819,601 $ 760,881
========== ========== ==========
See accompanying notes to financial statements.
<PAGE>
PERSHING LEASE INCOME LIMITED PARTNERSHIP
Statements of Cash Flows
For the Years Ended December 31, 1996, 1995 and 1994
1996 1995 1994
Cash flows from operating activities:
Net income $ 1,047,419 $ 1,337,147 $ 2,892,968
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 244,007 876,121 1,759,309
Net gain on sale of investment
property ( 541,841) ( 723,692) (1,942,012)
Changes in assets and liabilities:
Receivables 13,179 50,913 5,299
Prepaid insurance (1,388) 385 485
Due from/to affiliates (8,871) (3,774) (3,516)
Accounts payable (96,198) 79,443 (120,426)
Unearned rental revenue (5,821) (15,909) (69,901)
Net cash provided by operating
activities 650,486 1,600,634 2,522,206
Cash flows from investing
activities:
Disposition of investment
property 1,983,922 762,773 3,155,402
Cash flows from financing
activities:
Cash distributions to Partners (2,798,048) (2,487,098) (5,887,893)
Repayment of debt - - (19,627)
Net cash used in financing
activities (2,798,048) (2,487,098) (5,907,520)
Net decrease in cash and
cash equivalents (163,640) (123,691) (229,912)
Cash and cash equivalents at
beginning of year 802,866 926,557 1,156,469
Cash and cash equivalents at end
of year $ 639,226 $ 802,866 $ 926,557
========== ========== ===========
Cash Paid for interest $ - $ - $ 248
========== ========== ===========
See accompanying notes to financial statements.
<PAGE>
PERSHING LEASE INCOME LIMITED PARTNERSHIP
(A Missouri Limited Partnership)
Notes to Financial Statements
(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. Any distributable cash
from sales shall be distributed 99% to the Limited Partners and 1% 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.
<PAGE>
Pershing Lease Income Limited Partnership
(A Missouri Limited Partnership)
Notes to Financial Statements, Continued
Basis of Presentation
The Partnership financial statements are presented on the accrual
basis of accounting.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand and short-term
investments with original maturities of less than ninety days.
Investment Property
Investment property consists primarily of construction equipment,
forklifts, and transportation equipment. At December 31, 1996 and
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 December 31, 1996 and 1995 includes
acquisition fees of $195,202 and $488,958, respectively, which were
paid to the General Partner. At December 31, 1996 and 1995,
$3,483,851 and $9,006,855, 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. At December 31, 1996, the Partnership had
equipment with an original cost of $819 thousand which was not under
a lease agreement.
The Partnership implemented SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of" in 1996. There was no effect of implementation.
Use of Estimates
The Partnership has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the
disclosure of contingent assets and liabilities to prepare these
financial statements in conformity with generally accepted accounting
principles. Actual results could differ from those estimates.
<PAGE>
Pershing Lease Income Limited Partnership
(A Missouri Limited Partnership)
Notes to Financial Statements, Continued
Income Taxes
The Partnership is a pass-through entity and, accordingly, taxes
on income, if any, are the responsibility of the individual partners.
Income for financial reporting was more or (less) than that reported
for income tax purposes for the three years ended December 31, 1996,
1995 and 1994 by $5,821, $(35,722), and $(848,253), respectively.
The difference between income for financial reporting and income tax
purposes is principally due to depreciation, gain on sale of
investment property, prepaid rents and bad debt expense.
Partners' equity at December 31, 1996 and 1995 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. Limited
Partner's equity for income tax purposes was $5,528,346 as of
December 31, 1996.
(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:
Year Amount
1997 $ 217,227
1998 15,390
$ 232,617
=========
(3) Related Party Transactions
Equipment acquisition fees, management fees and other expenses
paid or payable by the Partnership to the General Partner or
affiliates of the General Partner for the years ended December 31,
1996, 1995 and 1994 are as follows:
1996 1995 1994
Management fees $ 40,410 $ 94,138 $138,472
Reimbursable operating expenses 49,695 50,472 63,853
$ 90,105 $144,610 $202,325
======= ======= =======
At December 31, 1996 and 1995, the following costs were due to
the General Partner or affiliates:
1996 1995
Management fees $ 3,750 $ 9,988
Reimbursable operating expenses 5,115 7,748
$ 8,865 $17,736
====== ======
<PAGE>
Pershing Lease Income Limited Partnership
(A Missouri Limited Partnership)
Item 9. Changes in and Disagreements with Accountants on Accounting
And Financial Disclosure.
None.
Part III
Item 10. Directors and Executive Officers of the Partnership.
(a-b) Identification of Directors and Executive Officers
The Partnership has no Directors or Officers. As indicated in Item 1
of this report, the General Partner of the Partnership is Waddell &
Reed Leasing, Inc. Under the Partnership Agreement, the General
Partner is solely responsible for the leasing of the Partnership's
equipment, and the Limited Partners have no right to participate in
the control of such operations. The names and ages of the Directors
and Executive Officers of the General Partner at December 31, 1995
are as follows:
Name Title Age
Robert L. Hechler President, Treasurer and Director 60
Michael D. Strohm Executive Vice President and
Assistant Treasurer 45
Sharon K. Pappas Secretary and General Counsel 38
David R. Burford Assistant Secretary and Assistant
General Counsel 39
(c) Identification of certain significant persons
See Item 10. (a-b)
(d) Family relationship
No family relationship exists between any of the foregoing Directors
or Officers.
<PAGE>
Pershing Lease Income Limited Partnership
(A Missouri Limited Partnership)
(e) Business experience
Robert L. Hechler is also President, Chief Executive Officer and a
Director of Waddell & Reed, Inc. and President and Director of
Waddell & Reed Services Company. He has been employed by Waddell &
Reed Services Company and affiliated companies since December 1977
and has also been a Vice President of each Fund in the United Group
of Mutual Funds, TMK/United Funds, Inc., and Waddell & Reed Funds,
Inc. since December 1977. Mr. Hechler holds a B.S. (1958) from the
University of Illinois and an M.B.A. (1967) from the University of
Chicago.
Michael D. Strohm is also Senior Vice President and Controller of
Waddell & Reed, Inc. He has been employed by Waddell & Reed, Inc. and
affiliated companies since June 1972. Mr. Strohm holds a B.S. (1973)
and an M.B.A. (1979) from Rockhurst College.
Sharon K. Pappas is also Senior Vice President, Secretary and General
Counsel of Waddell & Reed, Inc. She has been employed by Waddell &
Reed, Inc. and affiliated companies since July 1989 and has also been
Secretary of each Fund in the United Group of Mutual Funds, TMK,
United Funds, Inc., and Waddell & Reed Funds, Inc. since January
1990, and Vice President of these Funds since December, 1992. Ms.
Pappas holds a B.S. (1981) from Kansas State University and a J.D.
(1984) from the University of Kansas School of Law.
David R. Burford is also Assistant Secretary and Associate General
Counsel of Waddell & Reed, Inc. He has been employed by Waddell &
Reed, Inc. and affiliated companies since May 1985 and has also been
Assistant Secretary of each Fund in the United Group of Mutual Funds
since February 1987. Mr. Burford holds a B.S. (1979) from the
University of Missouri and a J.D. (1982) from Duke University School
of Law.
<PAGE>
Pershing Lease Income Limited Partnership
(A Missouri Limited Partnership)
(f) Involvement in certain legal proceedings
The Partnership is not aware of any legal proceedings against any
Director or Executive Officer of the Corporate General Partner which
may be important for the evaluation of any such person's ability and
integrity.
Item 11. Executive Compensation
(a), (b), (c), (d), and (e): The Officers and Directors of the
General Partner receive no current or proposed direct remuneration in
such capacities, pursuant to any standard arrangements or otherwise,
from the Partnership. In addition, the Partnership has not paid and
does not propose to pay any options, warrants or rights to the
Officers and Directors of the Corporate General Partners. There
exists no remuneration plan or arrangement with any Officer or
Director of the General Partner resulting from the resignation,
retirement or any other termination. See Note 3 of the Notes to
Financial Statements included in Item 8 of this report for a
description of the remuneration paid by the Partnership to the
General Partner and its affiliates during 1996, 1995 and 1994.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
By virtue of its organization as a limited partnership, the
Partnership has outstanding no securities possessing traditional
voting rights. However, as provided for in Section 13.2 of the
Agreement of Limited Partnership (subject to Section 13.3), a
majority in interest of the Limited Partners have voting rights with
respect to:
1. Amendment of the Limited Partnership Agreement;
2. Termination of the Partnership;
3. Removal of the General Partner; and
4. Approval or disapproval of the sale of substantially all the
assets of the Partnership.
No person or group is known by the General Partner to own
beneficially more than 5% of the Partnership's 62,840 outstanding
Limited Partnership Units as of December 31, 1996.
<PAGE>
Pershing Lease Income Limited Partnership
(A Missouri Limited Partnership)
By virtue of its organization as a limited partnership, the
Partnership has no Officers or Directors. Employees of the General
Partners and securities representatives of its affiliates may
purchase Units for a net price of $460 per unit, and the Partnership
incurs no obligation to pay any sales commission with respect to
those sales.
Item 13. Certain Relationships and Related Transactions.
(a), (b), and (c): The General Partner of the Partnership is Waddell
& Reed Leasing, Inc. The identification of the General Partners'
Directors and Executive Officers is indicated in Item 10 of this
report. The Partnership was not involved in any transaction
involving any of these Directors or Officers of the Corporation or
any member of the immediate family of these individuals, nor did any
of these persons provide services to the Partnership for which they
received direct or indirect remuneration. Similarly, there exists no
business relationship between the Partnership and any of the
Directors or Officers of the Corporate General partners, nor were any
of the individuals indebted to the Partnership.
Waddell & Reed, Inc. acted as dealer-manager in connection with the
offering of units by the Partnership during the years ended December
31, 1989 and 1988 and the period ended December 31, 1987. The
dealer-manager was entitled to receive commissions in connection
therewith from the Partnership. Amounts paid or accrued for these
commissions during the years ended December 31, 1989 and 1988 totaled
$914,920 and $1,570,960, respectively.
Waddell & Reed Leasing, Inc. incurred certain expenses in connection
with the organization of the Partnership, including preparing the
Partnership for qualification under the federal and state securities
laws and subsequently offering and distributing the Units to the
public. Included in these organizational and offering expenses are
legal, accounting, printing costs, filing and qualification fees and
disbursements necessary for the organization of the Partnership and
the registration and marketing of the Units of Partnership interests.
The General Partner was reimbursed an amount equal to up to 4% of the
gross proceeds of the Partnership's offering for organizational and
offering expenses. Waddell & Reed, Inc. marketed the Units and will
provide all administrative functions of the Partnership and will
supply substantially all of the General Partner's capital resources.
In consideration of the services and capital commitments provided by
Waddell & Reed, Inc., they received 2% of the 4% of the offering and
organizational expenses received by the General Partner. Waddell &
Reed Leasing, Inc. was reimbursed those costs in the amount of
$460,960 and $795,840 during the years ended December 31, 1989 and
1988, respectively.
<PAGE>
Pershing Lease Income Limited Partnership
(A Missouri Limited Partnership)
The General Partner has the responsibility for acquiring, financing,
leasing and selling of equipment for the Partnership. The General
Partner received an acquisition fee of 4.75% for acquiring equipment
to be purchased for the Partnerships portfolio and receives a
management fee equal to 5% of gross lease rentals collected for
managing the leasing and financing of the Partnership's equipment.
BOT Financial Corporation proposes equipment acquisitions, leasing
transactions, financing and refinancing transactions, and sale
transactions for the Partnership, and oversees the operation,
management and use of the equipment. BOT will receives 60% of the
acquisition fee amount, 40% of all equipment management fee amounts
and 100% of all subordinated remarketing fee amounts, respectively,
received by the General Partner from the Partnership, and 40% of all
cash distributed by the Partnership to the General Partner as its
distributive share of such cash. During the years ended December 31,
1996, 1995 and 1994, the Partnership incurred no acquisition fees and
paid or accrued management fees of $40,410, $94,138, and $138,472, to
the General Partner.
<PAGE>
Pershing Lease Income Limited Partnership
(A Missouri Limited Partnership)
Part IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K
Table of Contents
(a) 1. Financial Statements: Page
Report of the Independent Auditors' 10
Balance Sheets - December 31, 1996 and 1995 11
Statements of Operations-For the Years Ended
December 31, 1996, 1995 and 1994 12
Statements of Partners' Equity - For the Years
Ended December 31, 1996, 1995 and 1994 13
Statements of Cash Flows - For the Years Ended
December 31, 1996, 1995 and 1994 14
Notes to Financial Statements: 15-17
2. Exhibit Index
All other schedules are omitted as the information is not
applicable or is included in the financial statements or related
footnotes.
Exhibit Page Number or
Numbers Description Incorporation by Reference
4. Amended Agreement of Limited Partnership *
*Included with Amendment No. 1 to Form S-1, Registration No.
33-19038, filed with the Securities and Commission on February
11, 1988.
(b) Reports on Form 8-K
None.
<PAGE>
Pershing Lease Income Limited Partnership
(A Missouri Limited Partnership)
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: March 4, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1995
<PERIOD-END> DEC-31-1996 DEC-31-1995
<CASH> 639226 802866
<SECURITIES> 0 0
<RECEIVABLES> 6632 18423
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 645858 821289
<PP&E> 4303190 10782881
<DEPRECIATION> 4179302 8972905
<TOTAL-ASSETS> 769746 2631265
<CURRENT-LIABILITIES> 8865 119755
<BONDS> 0 0
0 0
0 0
<COMMON> 0 0
<OTHER-SE> 760881 2511510
<TOTAL-LIABILITY-AND-EQUITY> 769746 2631265
<SALES> 0 0
<TOTAL-REVENUES> 1415970 2635190
<CGS> 0 0
<TOTAL-COSTS> 368551 1298043
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 1047419 1337147
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 1047419 1337147
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
