<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, 1998 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, 1998 and
December 31, 1997 3
Statements of Income for the Three Months and Six
Months Ended June 30, 1998 and 1997 4
Statement of Cash Flows for the Six Months
Ended June 30, 1998 and 1997 5
Notes to Financial Statements 6-8
Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-10
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. 11
Item 2. Changes in Securities. 11
Item 3. Default Upon Senior Securities. 11
Item 4. Submission of Matters to a Vote of Security
Holders. 11
Item 5. Other Information. 11
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits 11
(b) Reports on Form 8-K 11
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Pershing Lease Income Limited Partnership
(A Missouri Limited Partnership)
Balance Sheets
June 30, December 31,
1998 1997
Assets (Unaudited)
Investment property:
Cost $ 801,339 $ 801,339
Less accumulated depreciation 799,054 791,882
Investment property, net 2,285 9,457
Cash and cash equivalents 234,162 137,247
Rents and other receivables 6,741 9,227
Prepaid insurance 683 1,270
Total assets $ 243,871 $ 157,201
========== ===========
Liabilities and Partners' Equity
Liabilities:
Due to affiliates 4,320 $ 4,562
Accounts Payable 1,850 -
Total liabilities 6,170 4,562
Partners' Equity (Deficit):
General Partner:
Capital contribution 1,000 1,000
Cumulative net income 1,221,860 1,104,430
Cumulative cash distributions (1,316,610) (1,316,610)
(93,750) (211,180)
Limited Partners (62,840 units):
Capital contributions, net of
offering costs 27,738,501 27,738,501
Cumulative net income 5,555,266 5,587,634
Cumulative cash distributions (32,962,316) (32,962,316)
331,451 363,819
Total partners' equity 237,701 152,639
Total liabilities and partners'
equity $ 243,871 $ 157,201
========== ===========
See accompanying notes to the financial statements.
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PERSHING LEASE INCOME LIMITED PARTNERSHIP
(A Missouri Limited Partnership)
Statements of Income
(Unaudited)
Six Months Ended Three Months Ended
June 30 June 30
1998 1997 1998 1997
Revenue:
Rental income $ 116,805 $ 214,645 $ 116,805 $ 84,787
Interest income 625 10,497 322 4,285
Net gain on
sale of equipment - 155,900 - 108,400
Total revenue 117,430 381,042 117,127 197,472
Expenses:
Depreciation 7,172 57,216 3,586 28,608
General and
administrative 25,196 56,824 12,198 25,863
Total expenses 32,368 114,040 15,784 54,471
Net income $ 85,062 $ 267,002 $ 101,343 $ 143,001
========= ========= ======== ========
See accompanying notes to financial statements.
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PERSHING LEASE INCOME LIMITED PARTNERSHIP
(A Missouri Limited Partnership)
Statement of Cash Flows
(Unaudited)
For the Six Months
Ended June 30,
1998 1997
Cash flows from operating activities: $ 85,062 $ 267,002
Net income
Adjustments to reconcile net income
to net cash provided by
(used in) operating activities:
Depreciation and amortization 7,172 57,216
Net gain on sale of investment
property - (155,900)
Changes in assets and liabilities:
Receivables 2,486 (2,590)
Prepaid insurance 587 1,009
Due to affiliates (242) (4,608)
Accounts payable 1,850 332
Unearned rental revenue - 11,030
Net cash provided by operating
activities 96,915 173,491
Cash flows from investing activities:
Disposition of investment property - 155,900
Cash flows from financing activities:
Cash distributions to Partners - (524,306)
Net increase (decrease) in cash and
cash equivalents 96,915 (194,915)
Cash and cash equivalents at beginning
of period 137,247 639,226
Cash and cash equivalents at end of
period $ 234,162 $ 444,311
========== ==========
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. In addition, special cost
recovery allocations may be required to reflect the differing initial
capital contributions of the General Partner and the Limited Partners.
The Partnership's books and records are in accordance with the terms of
the Amended Agreement of Limited Partnership.
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Pershing Lease Income Limited Partnership
(A Missouri Limited Partnership)
Notes to Financial Statements, Continued
(Unaudited)
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.
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, 1998 and December 31, 1997, the Partnership owned min-
ing equipment, with a depreciable cost basis of $801,339. The depre-
ciable cost basis at June 30, 1998 and December 31, 1997, includes
acquisition fees of $36,337, which were paid to the General Partner.
Depreciation is provided using an accelerated method. The equipment is
being marketed for sale.
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, 1998 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) 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, 1998 follow:
Reimbursable operating expenses $11,159
The following costs were due to affiliates as of June 30, 1998:
Reimbursable operating expenses $ 4,320
(3) Subsequent Event
Proceeds from the sale of the last piece of equipment that the
Partnership owned in the amount of $127,500 were received on July 31,
1998.
<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 of the second quarter of 1998 was $116,805, an
increase of $32,018 over the same period in 1997. The rental income
represents past due rents that were received as the result of the Part-
nership's claim against the assets of a lessee that filed for bank-
ruptcy in 1993. Rental income for the first six months of 1998 was
$116,805, a decrease of $97,840 from 1997 due to lease expirations.
The Partnership did not sell any equipment during the first six months
of 1998. As a result, the net gain from sales of equipment for the
first three months and the first six months of 1998 was $108,400 and
$155,900, respectively, lower than the amounts for the same periods in
1997.
The use of accelerated depreciation methods combined with the sale
of some of the equipment resulted in a decline in depreciation of
$25,022 from the second quarter of 1998 as compared to 1997. Deprecia-
tion for the first six months of 1998 was $7,172, a decrease of $50,044
from 1997. General and administrative expenses for the quarter were
$12,198, a decrease of $13,665 compared to the second quarter of 1997
due primarily to lower management fees and accounting fees. General and
administrative expenses for the first six months of 1998 were $25,196,
a decrease of $31,628 from 1997. Most of the decrease is related to
lower management fees and accounting fees.
Proceeds from the sale of the Partnership's last piece of equipment in
the amount of $127,500 were received on July 31, 1998. The Partnership
plans to make its final distribution of cash and cease operations by
December 31, 1998.
Liquidity and Capital Resources
Management believes the Partnership has sufficient cash to fund
operations until it ceases operations and provide for a final cash dis-
tribution 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, 1998 as defined by
Section 17 of the Amended Agreement of Limited Partnership:
Rental income $ 116,805
Interest income 322
Cash from sales -
Total cash inflow 117,127
Operating expenses (12,198)
Cash from operations and sales 104,929
Reserve for distributions and operations 104,929
Partnership management fee -
Distributable cash from operations and sales $ -
=========
There were no distributions made to the Limited Partners of record on
March 31, 1998.
Equipment Summary
Acquisition
Equipment Description Cost
Construction/Mining $801,339
<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.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 5. Other Information.
The Partnership disposed of the last of its equipment on July
31, 1998. This equipment consisted of mining equipment for
which the Partnership received $127,500 from an unrelated
third party. The Partnership plans to make its final distri-
bution of cash and cease operations by December 31, 1998.
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:
Michael D. Strohm, Executive Vice
President and Assistant Treasurer
of the General Partner
Date: August 13, 1998
By:
Robert L. Hechler, as President and
Treasurer of the General Partner
(Principal Accounting and Financial
Officer)
Date: August 13, 1998
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<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 234162
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<RECEIVABLES> 7424
<ALLOWANCES> 0
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<CURRENT-ASSETS> 241586
<PP&E> 801339
<DEPRECIATION> 799054
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0
0
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<OTHER-SE> 237701
<TOTAL-LIABILITY-AND-EQUITY> 243871
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<INCOME-PRETAX> 85062
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