<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
March 31, 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 - March 31, 1997 and
December 31, 1996 3
Statements of Operations for the Quarters
Ended March 31, 1997 and 1996 4
Statement of Cash Flows for the Quarters
Ended March 31, 1997 and 1996 5
Notes to Financial Statements 6-8
Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-10
Equipment Summary 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
March 31, December 31,
1997 1996
Assets (Unaudited)
Investment property:
Cost $ 4,148,511 $ 4,303,190
Less accumulated depreciation 4,053,231 4,179,302
Investment property, net 95,280 123,888
Cash and cash equivalents 565,072 639,226
Rents and other receivables 5,443 3,374
Prepaid insurance 2,896 3,258
Total assets $ 668,691 $ 769,746
========== ===========
Liabilities and Partners' Equity
Liabilities:
Due to affiliates 9,425 $ 8,865
Unearned rental revenue 36,100 -
Total liabilities 45,525 8,865
Partners' Equity (Deficit):
General Partner:
Capital contribution 1,000 1,000
Cumulative net income 219,638 219,002
Cumulative cash distributions (1,289,079) (1,278,722)
(1,068,441) (1,058,720)
Limited Partners (62,840 units):
Capital contributions, net of
offering costs 27,738,501 27,738,501
Cumulative net income 5,909,982 5,786,616
Cumulative cash distributions (31,956,876) (31,705,516)
1,691,607 1,819,601
Total partners' equity 623,166 760,881
Total liabilities and partners'
equity $ 668,691 $ 769,746
========== ===========
See accompanying notes to financial statements.
<PAGE>
PERSHING LEASE INCOME LIMITED PARTNERSHIP
(A Missouri Limited Partnership)
Statements of Operations
(Unaudited)
For the Quarters Ended March 31, 1997 and 1996
1997 1996
Revenue:
Rental income $ 129,858 $ 284,903
Interest income 6,212 11,909
Net gain on sale of investment property 47,500 461,080
Total revenue 183,570 757,892
Expenses:
Depreciation 28,609 105,012
General and administrative 30,960 35,884
Total expenses 59,569 140,896
Net income $ 124,001 $ 616,996
========= =========
See accompanying notes to financial statements.
<PAGE>
PERSHING LEASE INCOME LIMITED PARTNERSHIP
(A Missouri Limited Partnership)
Statement of Cash Flows
(Unaudited)
For the Quarters Ended March 31, 1997 and 1996
1997 1996
Cash flows from operating activities:
Net income $ 124,001 $ 616,996
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation 28,609 105,013
Net gain on sale of investment
property (47,500) (461,080)
Changes in assets and liabilities:
Receivables (2,069) 8,467
Prepaid insurance 362 525
Due to affiliates 560 (7,105)
Accounts payable - 18,304
Unearned rental revenue 36,100 19,993
Deferred sales revenue - (5,821)
Net cash provided by operating
activities 140,063 295,292
Cash flows from investing activities:
Disposition of investment property 47,500 461,080
Cash flows from financing activities:
Cash distributions to Partners (261,717) (513,941)
Net increase (decrease) in cash and
cash equivalents (74,154) 242,431
Cash and cash equivalents at beginning
of period 639,226 802,866
Cash and cash equivalents at end of
period $ 565,072 $ 1,045,297
========== ==========
See accompanying notes to financial statements.
<PAGE>
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. 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.
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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 March 31, 1997 and December 31, 1996, the Partnership owned
investment property, with a depreciable cost basis of $4,148,511 and
$4,303,190, respectively. The depreciable cost basis at March 31, 1997
and December 31, 1996, includes acquisition fees of $188,115 and
$192,202, respectively, which were paid to the General Partner.
$2,682,513 and $3,483,851 of the investment property at March 31, 1997
and December 31, 1996, 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 March 31, 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.
Minimum lease payments scheduled to be received in the future under
existing noncancelable operating leases follow:
1997 $ 110,519
1998 15,390
1999 -
$ 125,909
========
(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 March 31, 1997 follow:
Management fees $ 6,493
Reimbursable operating expenses 10,851
$ 17,344
=======
The following costs were due to (from) affiliates as of March 31,
1997:
Management fees $ 3,114
Reimbursable operating expenses 6,311
$ 9,425
=======
<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 $129,858, $155,045 less than
the first quarter of 1996. The decrease is due to lease expirations
and the sale of equipment. The amount of equipment on lease at March
31, 1997 on an original cost basis was $2.7 million. The original
cost basis of equipment in inventory is $1.4 million. During the
remainder of 1997, leases on $2 million of equipment are scheduled to
expire. Because a significant amount of equipment will be off lease
during 1997, it is possible that the Partnership may sell all of its
equipment and cease operations during the year.
Net gain from sales of investment property for the first quarter
of 1997 was $47,500, a decrease of $413,580 from last year due to fewer
equipment sales.
Depreciation was $28,609 for the period, down about $76,403 from
last year because accelerated depreciation methods have been used to
depreciate much of the equipment and the sale of equipment. General
and administrative expenses for the quarter were $30,960 down $4,924
compared to the first quarter of 1996 due primarily to lower management
fees.
Liquidity and Capital Resources
Management believes operations will generate adequate cash flow to
fund operations and provide distributions to the partners. As
discussed above, it is possible that the Partnership may sell all of
its equipment and cease operations during 1997.
<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 March 31, 1997 as defined by
Section 17 of the Amended Agreement of Limited Partnership:
Rental income $ 129,858
Interest income 6,212
Cash from sales 47,500
Total cash inflow 183,570
Operating expenses (24,467)
Cash from operations and sales 159,103
Reserve for distributions and operations 109,979
Partnership management fee (6,493)
Distributable cash from operations and sales $ 262,589
========
Allocations of Distributable Cash from Operations and Sales:
Operations Sales Total
Limited Partners $ 204,335 $ 47,025 $251,360
General Partner 10,754 475 11,229
Total $ 215,089 $ 47,500 $262,589
========= ======= =======
On February 28, 1997, the Partnership made a $251,360 cash
distribution to the Limited Partners of record on December 31, 1996.
<PAGE>
Pershing Lease Income Limited Partnership
(A Missouri Limited Partnership)
Equipment Summary
Lessee
Federal Paper Board Company, Inc.
Stone Container Corporation
Toledo Board of Education
USX Corporation
Acquisition
Equipment Description Cost
Heavy Duty Equipment $ 3,427,361
Computer Equipment 136,151
Material Handling Equipment 71,848
Medical Equipment 122,059
Trucks 391,092
$ 4,148,511
===========
<PAGE>
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: May 27, 1997
By: /s/ Robert L. Hechler
Robert L. Hechler, as President,
and Treasurer of the General Partner
(Principal Accounting and Financial
Officer)
Date: May 27, 1997
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