<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, 1997 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, 1997 and
December 31, 1996 3
Statements of Income for the Quarters and Nine Months
Ended September 30, 1997 and 1996 4
Statement of Cash Flows for the Nine Months
Ended September 30, 1997 and 1996 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,
1997 1996
Assets (Unaudited)
Investment property:
Cost $ 1,106,889 $ 4,303,190
Less accumulated depreciation 1,068,825 4,179,302
Investment property, net 38,064 123,888
Cash and cash equivalents 625,241 639,226
Rents and other receivables 7,557 3,374
Prepaid insurance 1,622 3,258
Total assets $ 672,484 $ 769,746
========== ===========
Liabilities and Partners' Equity
Liabilities:
Due to affiliates 3,998 $ 8,865
Accounts payable 26 -
Unearned rental revenue 686 -
Total liabilities 4,710 8,865
Partners' Equity (Deficit):
General Partner:
Capital contribution 1,000 1,000
Cumulative net income 1,065,596 219,002
Cumulative cash distributions (1,308,972) (1,278,722)
(242,376) (1,058,720)
Limited Partners (62,840 units):
Capital contributions, net of
offering costs 27,738,501 27,738,501
Cumulative net income 5,631,245 5,786,616
Cumulative cash distributions (32,459,596) (31,705,516)
910,150 1,819,601
Total partners' equity 667,774 760,881
Total liabilities and partners'
equity $ 672,484 $ 769,746
========== ===========
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, 1997 and 1996
Nine Months Ended Quarters Ended
September 30 September 30
1997 1996 1997 1996
Revenue:
Rental income $ 227,381 $ 678,363 $ 12,736 $ 185,661
Interest income 16,313 56,674 5,816 20,915
Net gain on
sale of equipment 602,900 473,602 447,000 237,822
Total revenue 846,594 1,208,639 465,552 444,398
Expenses:
Depreciation 85,824 215,378 28,608 66,821
General and
administrative 69,547 101,449 12,723 36,266
Total expenses 155,371 316,827 41,331 103,087
Net income $ 691,223 $ 891,812 $ 424,221 $ 341,311
========= ========= ========= =========
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, 1997 and 1996
1997 1996
Cash flows from operating activities:
Net income $ 691,223 $ 891,812
Adjustments to reconcile net income
to net cash provided by
(used in) operating activities:
Depreciation and amortization 85,824 215,378
Net (gain) on sale of
investment property (602,900) (473,602)
Changes in assets and liabilities:
Due from Pershing Lease Income II - (25,102)
Receivables (4,183) 9,019
Prepaid insurance 1,636 (1,751)
Due to affiliates (4,867) (5,241)
Accounts payable 26 (43,440)
Unearned rental revenue 686 27,033
Net cash provided by operating
activities 167,444 594,106
Cash flows from investing activities:
Disposition of investment property 602,900 1,915,683
Cash flows from financing activities:
Cash distributions to Partners (784,330) (2,299,559)
Net increase (decrease) in cash and
cash equivalents (13,986) 210,230
Cash and cash equivalents at beginning
of period 639,226 802,866
Cash and cash equivalents at end of
period $ 625,240 $ 1,013,096
========== ==========
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, 1997 and December 31, 1996, the Partnership owned
investment property, with a depreciable cost basis of $1,106,889 and
$4,303,190, respectively. The depreciable cost basis at September 30,
1997 and December 31, 1996, includes acquisition fees of $50,193 and
$195,129, respectively, which were paid to the General Partner.
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, 1997 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.
(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, 1997 follow:
Management fees $ 638
Reimbursable operating expenses 6,583
$ 7,221
=======
The following costs were due to (from) affiliates as of September
30, 1997:
Management fees $ (691)
Reimbursable operating expenses 4,689
$ 3,998
=======
<PAGE>
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 $12,736, a decrease of
$172,925 from the third quarter 1996. The decrease is due to lease
expirations and the sale of equipment. The original cost basis of
equipment in inventory is $1,106,889. In October 1997, $305,552 of
equipment was sold.
Net gain from sales of investment property for the third quarter
of 1997 was $447,000, an increase of $209,178 from last year.
Depreciation for the third quarter declined about $38,213 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 $12,723, down $23,543
from the third quarter of 1996.
As of September 30, 1997, there were no leases in effect. The
Partnership has a mining equipment remaining that is being remarketed.
The Partnership believes that it is more likely than not that the
remaining equipment will be sold rather than leased and the Partnership
liquidated. Although the Partnership does not know when this will
occur, it is possible it may occur during 1997.
Liquidity and Capital Resources
At September 30, 1997 the Partnership had sufficient cash to pay
operating expenses. As discussed above, the last piece of equipment
is being marketed. When it is sold, the Partnership plans to cease
operations and make its final cash distribution to the limited
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, 1997 as
defined by Section 17 of the Amended Agreement of Limited Partnership:
Rental income $ 12,736
Interest income 5,816
Cash from sales 447,000
Total cash inflow 465,552
Operating expenses 12,085
Cash from operations and sales 453,467
Reserve for distributions and operations 57,529
Partnership management fee (638)
Distributable cash from operations and sales $ 510,358
========
Allocations of Distributable Cash from Operations and Sales:
Operations Sales Total
Limited Partners $ 60,190 $442,530 $502,720
General Partner 3,168 4,470 7,638
Total $ 63,358 $447,000 $510,358
========= ======= =======
On August 29, 1997, the Partnership made a $251,360 cash
distribution to the Limited Partners of record on June 30, 1997.
<PAGE>
Pershing Lease Income Limited Partnership
(A Missouri Limited Partnership)
Equipment Summary
Lessee
Acquisition
Equipment Description Cost
Heavy Duty Equipment $1,035,040
Material Handling Equipment 71,849
$1,106,889
=========
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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 - There have been no reports on Form 8-K.
<PAGE>
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 24, 1997
By: /s/ Robert L. Hechler
Robert L. Hechler, as President and
Treasurer of the General Partner
(Principal Accounting and Financial
Officer)
Date: November 24, 1997
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<PERIOD-END> SEP-30-1997
<CASH> 625241
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<RECEIVABLES> 9179
<ALLOWANCES> 0
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<PP&E> 1106889
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<CURRENT-LIABILITIES> 4710
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0
0
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<OTHER-SE> 667774
<TOTAL-LIABILITY-AND-EQUITY> 672484
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<TOTAL-REVENUES> 846594
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<TOTAL-COSTS> 155371
<OTHER-EXPENSES> 0
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<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 691223
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<NET-INCOME> 691223
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