<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
June 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 - June 30, 1997 and
December 31, 1996 3
Statements of Income for the Quarters and Six Months
Ended June 30, 1997 and 1996 4
Statement of Cash Flows for the Six Months
Ended June 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
June 30, December 31,
1997 1996
Assets (Unaudited)
Investment property:
Cost $ 3,251,447 $ 4,303,190
Less accumulated depreciation 3,184,775 4,179,302
Investment property, net 66,672 123,888
Cash and cash equivalents 444,311 639,226
Rents and other receivables 5,964 3,374
Prepaid insurance 2,249 3,258
Total assets $ 519,196 $ 769,746
========== ===========
Liabilities and Partners' Equity
Liabilities:
Due to affiliates 4,257 $ 8,865
Accounts payable 332 -
Unearned rental revenue 11,030 -
Total liabilities 15,619 8,865
Partners' Equity (Deficit):
General Partner:
Capital contribution 1,000 1,000
Cumulative net income 600,045 219,002
Cumulative cash distributions (1,300,308) (1,278,722)
(699,263) (1,058,720)
Limited Partners (62,840 units):
Capital contributions, net of
offering costs 27,738,501 27,738,501
Cumulative net income 5,672,575 5,786,616
Cumulative cash distributions (32,208,236) (31,705,516)
1,202,840 1,819,601
Total partners' equity 503,577 760,881
Total liabilities and partners'
equity $ 519,196 $ 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 Six Months
Ended June 30, 1997 and 1996
Six Months Ended Quarters Ended
June 30 June 30
1997 1996 1997 1996
Revenue:
Rental income $ 214,645 $ 492,702 $ 84,787 $ 207,798
Interest income 10,497 35,759 4,285 23,851
Net gain on
sale of equipment 155,900 235,780 108,400 (225,300)
Total revenue 381,042 764,241 197,472 6,349
Expenses:
Depreciation 57,216 148,557 28,608 43,545
General and
administrative 56,824 65,183 25,863 29,300
Total expenses 114,040 213,740 54,471 72,845
Net income (loss) $ 267,002 $ 550,501 $ 143,001 $ (66,496)
========= ========= ======== ========
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 Six Months Ended June 30, 1997 and 1996
1997 1996
Cash flows from operating activities:
Net income $ 267,002 $ 550,501
Adjustments to reconcile net income
to net cash provided by
(used in) operating activities:
Depreciation and amortization 57,216 148,557
Net (gain) on sale of
investment property (155,900) (235,780)
Changes in assets and liabilities:
Due to Pershing Lease Partnership II - 3,669
Receivables (2,590) 5,056
Prepaid insurance 1,009 887
Due to affiliates (4,608) (7,856)
Accounts payable 332 2,945
Unearned rental revenue 11,030 13,997
Net cash provided by operating
activities 173,491 481,976
Cash flows from investing activities:
Disposition of investment property 155,900 1,579,580
Cash flows from financing activities:
Cash distributions to Partners (524,306) (1,023,706)
Net increase (decrease) in cash and
cash equivalents (194,915) 1,037,850
Cash and cash equivalents at beginning
of period 639,226 802,866
Cash and cash equivalents at end of
period $ 444,311 $ 1,840,716
========== ==========
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. Special allocations of taxable income
may be required to reduce or eliminate the deficit account balances of
Partners according to Treasury Regulations and the partnership
agreement. "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 June 30, 1997 and December 31, 1996, the Partnership owned
investment property, with a depreciable cost basis of $3,251,447 and
$4,303,190, respectively. The depreciable cost basis at June 30, 1997
and December 31, 1996, includes acquisition fees of $147,301 and
$192,202, respectively, which were paid to the General Partner.
$1,336,893 and $3,483,851 of the investment property at June 30, 1997
and December 31, 1996, respectively, was subject to existing leases
and the remainder was being held in inventory. In August 1997,
$1,877,204 of equipment, on a depreciable cost basis, was sold. About
$1,294,209 of the equipment sold was subject to leases.
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 June 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 June 30, 1997 follow:
Management fees $ 4,239
Reimbursable operating expenses 10,854
$15,093
======
The following costs were due to (from) affiliates as of June 30,
1997:
Management fees $ 1,435
Reimbursable operating expenses 2,822
$ 4,257
======
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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 $84,787, a decrease of
$123,011 from the second quarter 1996. The decrease is due to lease
expirations and the sale of equipment. The amount of equipment on
lease at June 30, 1997 on an original cost basis was $1.3 million.
The original cost basis of equipment in inventory is $1.9 million.
During the remainder of 1997, leases on $592 thousand of equipment are
scheduled to expire. Net gain from sales of investment property for
the second quarter of 1997 was $108 thousand.
Depreciation declined about $15,000 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 down $3,437 compared to the second
quarter of 1996 due primarily to lower management fees.
The Partnership believes it is more likely than not that the remaining
equipment will be sold rather than leased. When the last piece of
equipment is sold, Partnership operations will cease and the remaining
cash will be distributed. Although it is not known when this will
occur, it is possible it may occur in 1997.
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 June 30, 1997 as defined by
Section 17 of the Amended Agreement of Limited Partnership:
Rental income $ 84,787
Interest income 4,285
Cash from sales 108,400
Total cash inflow 197,472
Operating expenses (21,624)
Cash from operations and sales 175,848
Reserve for distributions and operations 88,416
Partnership management fee (4,239)
Distributable cash from operations and sales $ 260,025
=========
Allocations of Distributable Cash from Operations and Sales:
Operations Sales Total
Limited Partners $ 144,044 $ 107,316 $ 251,360
General Partner 7,581 1,084 8,665
Total $ 151,625 $ 108,400 $ 260,025
========= ========= =========
On May 30, 1997, the Partnership made a $251,360 cash distribution
to the Limited Partners of record on March 31, 1997.
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Pershing Lease Income Limited Partnership
(A Missouri Limited Partnership)
Equipment Summary
Lessee
Federal Paper Board Company, Inc.
Stone Container Corporation
Acquisition
Equipment Description Cost
Heavy Duty Equipment $ 2,788,507
Material Handling Equipment 71,848
Trucks 391,092
$ 3,251,447
===========
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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.
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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: August 25, 1996
By: /s/ Robert L. Hechler
Robert L. Hechler, as President and
Treasurer of the General Partner
(Principal Accounting and Financial
Officer)
Date: August 25, 1996
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<CIK> 0000826407
<NAME> MARY KAYE COBB
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 444311
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<RECEIVABLES> 8213
<ALLOWANCES> 0
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<CURRENT-ASSETS> 452524
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<DEPRECIATION> 3184775
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<TOTAL-LIABILITY-AND-EQUITY> 519196
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<INCOME-PRETAX> 267002
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