UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended Commission file number 33-21267
December 31, 1996
CSA Income Fund Limited Partnership III
(Exact name of registrant as specified in its charter)
Massachusetts No. 04-3002909
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
22 Batterymarch Street, Boston, MA 02109
(Address of principal executive Zip Code
offices)
Registrant's telephone number, including area code: (617) 357-1700
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: 500,000
Units of Limited Partnership Interest
Indicate by check whether 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
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ X ]
Number of shares outstanding of each registrant's classes of securities:
Number of Units
Title of Each Class at December 31, 1996
Units of Limited Partnership 500,000
Interest: $100 per unit
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Part IV are incorporated by reference
to Amendment No. 1 to Form S-1 and Form S-1,
Registration No. 33-21267
The exhibit index is located on pages 18 and 19
<PAGE>
Part I
Item 1. Business
CSA Income Fund Limited Partnership III (the "Partnership") is a limited
partnership organized under the provisions of The Massachusetts Uniform
Limited Partnership Act. The Partnership is composed of CSA Equity
Funds, Inc. (an affiliate of CSA Financial Corp.), the General Partner
and, as of December 31, 1996, 3,133 Limited Partners owning 500,000
Units of Limited Partnership Interest of $100 each, the capital
contributions of which aggregated to $50,000,000. The Partnership was
formed on April 8, 1988 and commenced operations on August 31, 1988.
The offering period for the Partnership closed December 28, 1989.
The intended life of the Partnership contained in the original
prospectus was five to seven years. The Partnership has been in
operation seven years and the General Partner of CSA Income Fund
Limited Partnership III has determined that it is in the best interest
of the Partnership and the Limited Partners to begin a wind-up of the
Partnership in 1997, which is currently anticipated to be completed in 1998.
The Partnership was organized to engage in the business of acquiring
income-producing equipment for investment. The Partnership's principal
objectives are:
1. To acquire and lease Equipment, primarily through Operating
Leases, to generate income during its entire useful life;
2. To provide monthly Distributions of cash to the Limited
Partners from leasing revenues and from the proceeds of sale
or other disposition of Partnership Equipment; and
3. To reinvest in additional Equipment a portion of lease revenues
and a substantial portion of Cash from Sales and Refinancings
during the first years of the Partnership's operations.
The Partnership was formed primarily for investment purposes and not
as a "tax shelter".
The Partnership has no direct employees. The General Partner has full
and exclusive discretion in management and control of the Partnership.
Selection of the Equipment for purchase and lease is based principally
on the General Partner's evaluation of the usefulness of the Equipment
in commercial or industrial applications and its estimate of the
potential demand for the equipment at the end of the initial lease term.
The Partnership's equipment may include:
1. New and reconditioned computer peripheral equipment, computer
terminal systems and data processing systems primarily
manufactured by International Business Machines, Inc. (IBM) and
qualified for IBM maintenance.
<PAGE>
2. New telecommunications and telecomputer equipment consisting
primarily of private automated branch exchanges (PBXs), advanced
high-speed digital telephone switching devices, voice/data
transmission devices and telephone/computer networks as well as
telephone handsets and facsimile transmission products.
3. New office equipment consisting primarily of photocopying and
graphic processing equipment.
4. New highway transportation equipment and new and reconditioned
air transportation equipment consisting primarily of tractors,
trailers, trucks, intermodal equipment, railroad rolling stock,
passenger vehicles and corporate or commercial aircraft.
5. Miscellaneous other types of equipment which meet the investment
objectives of the Partnership.
The equipment leasing industry is highly competitive. In initiating its
leasing transactions, the Partnership competes with leasing companies,
manufacturers that lease their products directly, equipment brokers and
dealers and financial institutions, including commercial banks and
insurance companies. Many competitors are larger than the Partnership
and have access to more favorable financing. Competitive factors in the
equipment leasing business primarily involve pricing and other financial
arrangements. Marketing capability is also a factor.
As of December 31, 1996, substantially all of the remaining equipment
in the Partnership's portfolio was leased under 72 separate leases to
37 lessees. The lessee providing at least 10% of total revenues
during 1996 was:
K Mart Corporation 19%
Approximately 8% of the Partnership's equipment portfolio (based on
cost) is located outside the United States as of December 31, 1996. The
Partnership's leases and equipment are described more fully in Notes 3
and 4 to the Financial Statements included in Item 8.
Item 2. Properties
The Partnership neither owns nor leases office space or equipment for
The purpose of managing its day-to-day affairs. The General Partner,
CSA Equity Funds, Inc. (CEF), has exclusive control over all aspects of
the business of the Partnership, including provision of any necessary
office space. As such, CEF will be compensated through Management fees
and reimbursement of General and Administrative costs related to
managing the Partnership's business. Excluded from the allowable
reimbursement to the General Partner, however, will be any of the
following: (1) Expenditures for rent or utilities; (2) Capital
equipment and the related depreciation; and (3) Certain other
administrative items.
<PAGE>
Item 3. Legal Proceedings
The Partnership is not a party to any pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the fourth quarter of 1996.
PART II
Item 5. Market for the Registrant' Equity Securities and Related
Security Holder Matters
a. The Partnership's limited partnership interests are not publicly
traded. There is no active market for the Partnership's limited
partnership interests and it is unlikely that one will develop.
b. Approximate Number of Equity Security Holders:
Title of Class Number of Recordholders
Units of Limited Partnership Interests as of 12/31/96
500,000 3,133
c. Distributions are paid at a rate determined by the General
Partner.
Item 6. Selected Financial Data - Unaudited
The following table sets forth selected financial information regarding
the Partnership's financial position and operating results. The
information should be read in conjunction with the Financial Statements
and Notes thereto, and the General Partner's Discussion and Analysis of
Financial Condition and Results of Operations, which are included in
Item 7 and 8 of this Report.
<TABLE>
Years Ended December 31,
(IN THOUSANDS EXCEPT PER UNIT AMOUNTS)
<CAPTION>
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Total Revenues $ 7,606 $ 9,929 $ 13,680 $ 16,257 $ 17,656
Net Income 877 2,111 2,775 2,706 2,994
Income per
Limited Partnership
Unit 1.74 4.18 5.49 5.36 5.93
Total Assets 25,912 17,910 20,338 26,331 22,713
Notes Payable 16,116 5,609 5,874 11,721 5,572
Limited Recourse
Notes Payable 38 239
Cash Distribution
per Limited
Partnership Unit $ 6.00 $ 6.00 $7.00 $ 9.50 $ 12.00
</TABLE>
<PAGE>
Item 7. General Partner's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
Rental income for the years ended December 31, 1996, 1995, and 1994 was
$7,209,039, $8,821,573 and $12,580,964, respectively. The decrease in
rental income is due to expiring leases and the resulting reduced
rental rates for re-leased equipment and the sale of equipment from the
Partnership's portfolio. The decrease in 1996 rental income was primarily
the result of the expiration and sale of a Lloyds Bank PLC lease during
September 1995, which lease represented 29% of the rental revenue in 1995.
However, the Partnership continued to actively seek out additional lease
opportunities and acquired $19,693,078 of equipment during 1996.
Net income for the year ended December 31, 1996 was $876,814 as compared
to net income of $2,111,130 and $2,775,040 in the years ended December
31, 1995 and 1994, respectively. Net income was also affected by a
lower gain recorded on sale of equipment in 1996 of $264,219, compared to
$834,047, and $877,266 in 1995, and 1994.
Interest income for 1996, 1995 and 1994 was $135,348, $259,813, and
$159,840, respectively. Depreciation expense for 1996, 1995 and 1994
was $5,566,884, $6,766,780 and $9,207,097, respectively, with the
decreases primarily due to expiring leases and the high level of
equipment sales in each of the last three years. Interest expense was
$620,103, $372,501, and $827,538 for the years ended December 31, 1996,
1995, and 1994, respectively. Interest expense increased in 1996
primarily due to the additional leases financed during the year.
Liquidity and Capital Resources
During 1996, the Partnership generated $5,833,911 in cash flow from
operations and $1,592,218 from the sale of equipment. The Partnership
utilized this cash flow to reduce outstanding notes payable, make
distributions to its partners and purchase equipment. In 1996, notes
payable were reduced by $3,991,138 and cash distributions were
$3,030,303. The Partnership purchased $19,693,078 of additional
equipment utilizing $5,233,008 of cash and $14,460,070 of notes
payable.
As of December 31, 1996, the Partnership did not have any material
amount of equipment off lease and in storage.
The intended life of the Partnership contained in the original
prospectus was five to seven years. The Partnership has been in
operation seven years and the General Partner of CSA Income Fund
Limited Partnership III has determined that it is in the best
interest of the Partnership and the Limited Partners to begin a
wind-up of the Partnership in 1997, which is currently anticipated to
be completed in 1998. The General Partner will endeavor to maximize the
sale value of the remaining leases and equipment owned by the Partnership.
<PAGE>
To date, the Partnership has made cash distributions to the Limited
Partners ranging from 64% to 80% of their initial investment, depending
on when the Limited Partner entered the Partnership. The objective of
the Partnership is to return the Limited Partners' investment through
current cash distributions and provide a return on this investment by
continued distributions as long as the equipment continues to be leased.
However, revenues generated by the Partnership from lease renewals and
remarketings after the initial lease terms have been lower than
anticipated as a result of rapid technological obsolescence in high
technology equipment. Based on an analysis of the remaining assets in
the Partnership's portfolio, the General Partner presently estimates
that the continued cash distributions may not fully return the entire
initial investment of the Limited Partners and/or a return thereon.
The General Partner will continue to report on the Limited Partners'
return of investment with each cash distribution.
Quarterly Financial Data - Unaudited
<TABLE>
Summarized unaudited quarterly financial data for the years ended
December 31, 1996 and 1995 are as follows:
<CAPTION>
1996 Quarter Ended: 12/31 9/30 6/30 3/31
<S> <C> <C> <C> <C>
Total Revenues * $1,912,997 $2,010,630 $2,036,000 $1,646,416
Net Income (loss) ** (5,069) 245,226 391,870 244,787
Net Income (loss)
Per Limited
Partnership Unit (.01) .49 .78 .48
Cash Distributions
Per Limited
Partnership Unit 1.50 1.50 1.50 1.50
1995 Quarter Ended: 12/31 9/30 6/30 3/31
Total Revenues * $1,707,328 $2,526,217 $2,680,590 $3,014,571
Net Income ** 464,793 604,892 515,753 525,692
Net Income
Per Limited
Partnership Unit .92 1.20 1.02 1.04
Cash Distributions
Per Limited
Partnership Unit 1.50 1.50 1.50 1.50
</TABLE>
* Total revenues include the net gains and losses from the sale of
equipment.
** The fourth quarter of 1996 includes a charge to expense of $108,863
for adjustments to anticipated residual values. The corresponding
amount for the fourth quarter of 1995 was $144,997.
<PAGE>
Item 8. Financial Statements
CSA Income Fund Limited Partnership III
Index to Financial Statements
Independent Auditors' Report
Statements of Financial Position
as of December 31, 1996 and 1995
Statements for the Years Ended
December 31, 1996, 1995 and 1994:
Operations
Cash Flows
Changes in Partners' Capital (Deficit)
Notes to Financial Statements
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Partners of CSA Income Fund Limited Partnership III
We have audited the accompanying statements of financial position of CSA
Income Fund Limited Partnership III as of December 31, 1996 and 1995,
and the related statements of operations, cash flows, and changes in
partners capital (deficit) for the three years then ended. 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.
As discussed in note 1 to the financial statements, the Partnership is
entering a wind up phase in 1997. The General Partner anticipates
that the Partnership will be dissolved in 1998.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of CSA Income
Fund Limited Partnership III as of December 31, 1996 and 1995, and the
results of its operations and its cash flows for the three years then
ended in conformity with generally accepted accounting principles.
\s\ Sullivan Bille P.C.
Boston, Massachusetts
March 20, 1997
<PAGE>
<TABLE>
CSA INCOME FUND LIMITED PARTNERSHIP III
Statements of Financial Position as of
December 31, 1996 and 1995
<CAPTION>
Assets 1996 1995
<S> <C> <C>
Cash and cash equivalents $ 450,785 $ 6,210,985
Rentals receivable 128,676 5,928
Accounts receivable-affiliates 1,140,003 200,169
Interest receivable 15,626
Notes receivable-lessee 39,118 85,000
Remarketing receivables 42,808 234,381
Rental equipment, at cost 35,231,829 26,648,802
Less accumulated depreciation (11,121,318) (15,490,492)
Net rental equipment 24,110,511 11,158,310
Total assets $25,911,901 $17,910,399
Liabilities and Partners' Capital
Accounts payable-affiliates $ $ 37,928
Accounts payable 25,064 36,803
Accrued management fees 29,853 49,632
Deferred income 206,291 450,786
Notes payable 16,116,034 5,609,093
Limited recourse notes payable 38,009
Total liabilities 16,377,242 6,222,251
Partners' Capital (deficit):
General Partner:
Capital contribution 1,000 1,000
Cumulative net income 12,047 3,279
Cumulative cash distributions (361,663) (331,360)
(348,616) (327,081)
Limited Partners (500,000 units):
Capital contributions, net of
offering costs 44,539,778 44,539,778
Cumulative net income 1,192,712 324,666
Cumulative cash distributions (35,849,215) (32,849,215)
9,883,275 12,015,229
Partners' capital 9,534,659 11,688,148
Total liabilities and
partners' capital $25,911,901 $17,910,399
See accompanying notes to financial statements.
</TABLE>
<PAGE>
CSA INCOME FUND LIMITED PARTNERSHIP III
<TABLE>
Statements of Operations for the
Years ended December 31, 1996, 1995 and 1994
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Revenue:
Rental income $ 7,209,039 $ 8,821,573 $12,580,964
Interest income 135,348 259,813 159,840
Gain on sale
of equipment 264,219 834,047 877,266
Gain (loss) on foreign
currency transaction (2,563) 13,273 62,041
Total revenue 7,606,043 9,928,706 13,680,111
Expenses:
Depreciation and
amortization 5,566,884 6,766,780 9,207,097
Interest 620,103 372,501 827,538
Management fee 360,452 441,079 629,048
General and
administrative 181,790 237,216 241,388
Total expenses 6,729,229 7,817,576 10,905,071
Net income $ 876,814 $ 2,111,130 $ 2,775,040
Net income allocation:
General Partner $ 8,768 $ 21,111 $ 27,750
Limited Partners 868,046 2,090,019 2,747,290
$ 876,814 $ 2,111,130 $ 2,775,040
Net income per
Limited Partnership
Unit $ 1.74 $ 4.18 $ 5.49
Number of Limited
Partnership Units
Outstanding 500,000 500,000 500,000
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
CSA INCOME FUND LIMITED PARTNERSHIP III
Statements of Cash Flows for the
Years ended December 31, 1996, 1995 and 1994
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Cash flows from operations:
Cash received from rental
of equipment $ 6,876,800 $ 9,218,953 $12,531,846
Cash paid for operating
and management expenses (573,760) (709,970) (370,437)
Interest paid (620,103) (391,354) (808,685)
Interest received 150,974 244,187 159,840
Net cash from operations 5,833,911 8,361,816 11,512,564
Cash flows from investments:
Value added tax 239,724 (216,891)
Advances to/from
affiliates (977,762) 148,200 378,149
Proceeds on notes receivable 45,882
Purchase of equipment (19,693,078) (6,420,701) (6,732,789)
Sale of equipment 1,592,218 4,406,830 1,023,145
Net cash used for
investments (19,032,740) (1,625,947) (5,548,386)
Cash flows from financing:
A/P equipment purchases (98,995) 98,995
Proceeds from notes payable 14,460,070 5,539,397 2,361,453
Repayment of notes payable (3,991,138) (6,005,429) (7,969,217)
Payment of cash
distributions (3,030,303) (3,030,303) (3,535,354)
Net cash provided by
(used for) financing 7,438,629 (3,595,330) (9,044,123)
Net change in cash and
cash equivalents (5,760,200) 3,140,539 (3,079,945)
Cash and cash equivalents
at beginning of year 6,210,985 3,070,446 6,150,391
Cash and cash equivalents
at end of year $ 450,785 $ 6,210,985 $ 3,070,446
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
CSA INCOME FUND LIMITED PARTNERSHIP III
Statement of Changes in Partners' Capital (Deficit)
Years ended December 31, 1996, 1995 and 1994
<CAPTION>
Limited General
Partners Partner Total
<S> <C> <C> <C>
Balance at December 31, 1993 $13,677,920 $ (310,285) $13,367,635
Net income 2,747,290 27,750 2,775,040
Cash distributions (3,500,000) (35,354) (3,535,354)
Balance at December 31, 1994 12,925,210 (317,889) 12,607,321
Net income 2,090,019 21,111 2,111,130
Cash distributions (3,000,000) (30,303) (3,030,303)
Balance at December 31, 1995 12,015,229 (327,081) 11,688,148
Net income 868,046 8,768 876,814
Cash distributions (3,000,000) (30,303) (3,030,303)
Balance at December 31, 1996 $ 9,883,275 $ (348,616) $ 9,534,659
</TABLE>
See accompanying notes to financial statements.
<PAGE>
CSA INCOME FUND LIMITED PARTNERSHIP III
Notes to Financial Statements
December 31, 1996
(1) Organization
CSA Income Fund Limited Partnership III ("the Partnership") was formed
under the Massachusetts Uniform Limited Partnership Act on April 8, 1988
with an initial investment of $1,000, to invest primarily in equipment
to be leased to third parties. On August 31, 1988, the Partnership
commenced operations. As of December 31, 1996, the Partnership has
500,000 Units of Limited Partnership interests outstanding representing
$50,000,000 of contributed capital.
CSA Equity Funds Inc., an affiliate of CSA Financial Corp., is the sole
General Partner and manages the business and affairs of the Partnership.
The intended life of the Partnership contained in the original
prospectus was five to seven years. The Partnership has been in
operation seven years and the General Partner of CSA Income Fund Limited
Partnership III has determined that it is in the best interest of the
Partnership and the Limited Partners to begin a wind-up of the Partnership
in 1997, which is currently anticipated to be completed in 1998.
Distributable cash from operations, sales or Refinancings and profits
or losses for federal income tax purposes are allocated 99% to the
Limited Partners and 1% to the General Partner until Payout has
occurred, and thereafter, 85% and 15%, respectively. Payout is achieved
when the aggregate amount of all distributions to the Limited Partners
equals the amount of the Limited Partners' original invested capital
plus a cumulative 9% annual return (compounded daily) on unreturned
invested capital.
In accordance with the Partnership Agreement, the Partnership is liable
to the General Partner (or its affiliates) for management fees and
reimbursable operating expenses, which are calculated in amounts not to
exceed 5% and 1%, respectively, of gross rental revenues.
(2) Significant Accounting Policies
The Partnership records are maintained on the accrual basis of
accounting.
The Partnership accounts for equipment leases as operating leases;
therefore, rental income is reported when earned. Equipment purchases
are depreciated on a straight-line basis over the initial term of the
lease to estimated realizable value. On a periodic basis, the
Partnership conducts a review of the residual values of its equipment as
compared to the estimated net realizable values for such equipment upon
expiration of the related lease. The Partnership records additional
charges to depreciation expense when net book values exceed estimated
realizable values. In connection with this review for the years ended
December 31, 1996, 1995 and 1994, the Partnership recorded additional
charges of $108,863, $144,997 and $615,789 respectively, to
depreciation expense.
<PAGE>
CSA INCOME FUND LIMITED PARTNERSHIP III
Notes to Financial Statements
No provision for income taxes has been made as the liability for such
taxes is that of the partners rather than the Partnership. The
Partnership's federal tax return is prepared solely to arrive at the
Partner's individual taxable income or loss as reported on form K-1. In
1996 and 1995, the Partnerships book income exceeded federal taxable
income by approximately $2,414,000 and $3,294,000, respectively. In 1994, the
Partnership's federal taxable income exceeded book income by
approximately $1,212,000. The differences are primarily due to the difference
between tax and book depreciation methods and the related gain (loss) on sales
of equipment.
The preparation of financial statements in conformity with generally
accepted accounting principles requires the General Partner to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities as
of the date of the financial statements and the reported amounts of
revenue and expenses during the reporting year. Actual results could
differ from those estimates.
The Partnership considers short-term investments with original
maturities of three months or less to be cash equivalents.
(3) Rental Equipment
The Partnership purchases equipment subject to existing leases either
directly from CSA Financial Corp. or the manufacturer. The purchase
price to the Partnership is equal to the lesser of fair market value
or cost as adjusted, if necessary, for rents received and carrying
costs, plus an acquisition fee of 4% of cost.
During 1994, CSA Financial Corp. acquired TIC Leasing Corp. (TIC)
from Turner Broadcasting System Inc. TIC's only asset was an
interest in partnerships which owned a portfolio of equipment
subject to leases consisting primarily of computer equipment. CSA
Financial Corp. has assigned the beneficial interest in certain of
the underlying equipment and the related leases to the Partnership.
Accordingly, the Partnership is accounting for it's interest in TIC as a
purchase from CSA Financial Corp. of equipment and related
debt, subject to the leases. The total cost to the Partnership
for this equipment was $1,089,163 consisting of $447,531 in cash
and $641,632 of debt assumed.
A summary of changes in rental equipment owned and its related
accumulated depreciation is as follows:
<TABLE>
Beginning Sales/ Ending
Balance Additions Retirements Balance
<S> <C> <C> <C> <C>
Costs for
the periods
ended:
December 31, 1994 $ 58,795,379 $ 6,732,789 $ 15,800,135 $ 49,728,033
December 31, 1995 $ 49,728,033 $ 6,420,701 $ 29,499,932 $ 26,648,802
December 31, 1996 $ 26,648,802 $19,693,078 $ 11,110,051 $ 35,231,829
Accumulated depreciation
for the periods ended:
December 31, 1994 $ 40,975,195 $ 9,207,097 $ 15,654,256 $ 34,528,036
December 31, 1995 $ 34,528,036 $ 6,766,780 $ 25,804,324 $ 15,490,492
December 31, 1996 $ 15,490,492 $ 5,566,884 $ 9,936,058 $ 11,121,318
</TABLE>
<PAGE>
CSA INCOME FUND LIMITED PARTNERSHIP III
Notes to Financial Statements
(4) Leases
As of December 31, 1996, substantially all of the Partnership's
equipment was leased under 72 separate leases to 37 lessees. Approximately
8% of the Partnership's equipment portfolio (based on cost) is located outside
of the United States. One lessee provided approximately 19% of the
Partnership's revenues in 1996 as compared to three lessees providing
53% (29%, 13% and 11%, respectively) in 1995 and three lessees providing
56% (27%, 16% and 13%, respectively) in 1994.
Minimum annual lease rentals scheduled to be received under existing
noncancellable operating leases are as follows:
<TABLE>
Year Amount
<S> <C> <C>
1997 $ 9,057,962
1998 7,063,157
1999 2,797,112
2000 515,088
2001 163,690
$19,597,009
</TABLE>
(5) Notes Payable
Notes payable consist of nonrecourse notes due in monthly installments,
with interest rates that range from 6.00% to 10.12% per annum. Such
notes are collateralized by equipment with a cost of $26,912,994.
Annual maturities of notes payable at December 31, 1996, are as
follows:
<TABLE>
Year Amount
<S> <C> <C>
1997 $ 7,099,441
1998 5,944,716
1999 2,521,816
2000 475,270
2001 74,791
$16,116,034
</TABLE>
(6) Limited Recourse Notes Payable
Limited recourse notes payable of $38,009 as of December 31, 1995,
were paid off on the original maturity date of the applicable lease
during 1996. All of the Partnership's limited recourse notes payable
were incurred as part of the acquisition of equipment subject to lease
interests, obtained in connection with CSA Financial Corp.'s acquisition
of TIC Leasing Corp. (See note 3).
<PAGE>
(7) Fair Values of Financial Instruments
The following methods and assumptions were used to estimate the fair
value of financial instruments:
Cash and Cash Equivalents
The carrying amount of cash and cash equivalents approximates its fair
value due to their short maturity.
Notes Payable
The fair value of the Partnership's notes payable is based on the market
price for the same or similar debt issues or on the current rates
offered to the Partnership for debt with the same remaining maturity. The
carrying amount of notes payable approximates fair value.
(8) Related Party Transactions
Fees and other expenses paid or accrued by the Partnership to the
General Partner or affiliates of the General Partner for the years 1996, 1995
and 1994 are as follows:
<TABLE>
1996 1995 1994
<S> <C> <C> <C>
Equipment acquisition fees $ 755,218 $ 246,950 $ 280,083
Management fee 360,452 441,079 629,048
Reimbursable operating expenses 72,090 88,216 125,810
Storage and Refurbishment 24,000 48,000 41,898
$ 1,211,760 $ 824,245 $ 1,076,839
</TABLE>
(9) Net Cash Provided from Operations
The reconciliation of net income to net cash from operations for the
years 1996, 1995 and 1994 are as follows:
<TABLE>
1996 1995 1994
<S> <C> <C> <C>
Net income $ 876,814 $ 2,111,130 $ 2,775,040
(Gain) on sale of equipment (264,219) (834,047) (877,266)
Depreciation and amortization 5,566,884 6,766,780 9,207,097
(Increase) decrease
in receivables (69,555) 288,154 277,253
Increase (decrease) in payables
and deferred income (276,013) 29,799 130,440
Net cash from operations $ 5,833,911 $ 8,361,816 $11,512,564
</TABLE>
(10) Notes Receivable - Lessee
In November 1995, the Partnership settled its claims against a lessee
for past and future amounts due under its lease for cash plus a note
receivable of $85,000. The lessee paid half of the note in November
1996 and is making monthly payments to pay off the remaining balance
by November 1997.
(11) Reclassification of Amounts
Certain amounts in the financial statements for the years ended
December 31, 1995 and December 31, 1994 have been reclassified to be
consistent with the current year's presentation.
<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosures
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
The Partnership has no directors or officers. All management
functions are performed by CSA Equity Funds, Inc., the corporate
General Partner. The current directors and officers of the
corporate General Partner are:
<TABLE>
Name Age Title(s) Elected
<S> <C> <C> <C>
J. Frank Keohane 60 Director & President 04/01/88
Richard P. Timmons 42 Controller 03/01/95
Trevor A. Keohane 30 Director 05/28/93
Claudine A. Aquillon 31 Clerk 08/30/95
</TABLE>
Term of Office: Until a successor is elected.
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 General Partner. There exists no remuneration
plan or arrangement with any Officer or Director of the General
Partner resulting from resignation, retirement or any other
termination. See Note 8 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.
<PAGE>
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.
4. Approval or disapproval of the sale of substantially all
the assets of the Partnership if such sale occurs prior to
December 28, 1996.
No person or group is known by the General Partner to own beneficially
more than 5% of the Partnership's outstanding Limited Partnership Units as of
December 31, 1996.
Item 13. Certain Relationships and Related Transactions
The General Partner is affiliated with the General Partner for CSA
Income Fund Limited Partnership II and CSA Income Fund IV Limited Partnership.
The General Partner or affiliates may act in that capacity for other income
fund limited partnerships in the future.
PART IV
Item 14. Exhibits, Financial Statements, Schedules and Reports
on Form 8-K
(a) (1) Financial Statements - See accompanying Index to
Financial Statements - Item 8.
(2) Financial Statement Schedules - All schedules have
been omitted as not required, not applicable or the
information required to be shown therein is included
in the Financial Statements and related notes.
(3) Exhibits Index
Except as set forth below, all exhibits to Form 10-K, as
set forth in item 601 of Regulation S-K are not
applicable.
<PAGE>
<TABLE>
Page Number or
Exhibit Incorporated by
Number Description Reference
<S> <C> <C>
4.1 Agreement of Limited Partnership *
4.2 Subscription Agreement **
4.3 Certificate of Limited Partnership and ***
Agreement of Limited Partnership dated
April 8, 1988
4.4 First Amended and Restated Certificate ****
of Limited Partnership and Agreement
of Limited Partnership dated June 22,
1988
10.1 Escrow Agreement ***
11.0 Information regarding a change in the
Registrant's Certifying Accountant *****
</TABLE>
* Included as Exhibit A to Amendment No. 1 to Form S-1, Registration
Statement No. 33-21267 filed with the Securities and Exchange
Commission on June 23, 1988.
** Included as Exhibit C to Amendment No. 1 to Form S-1 to Registration
Statement No. 33-21267 filed with the Securities and Exchange
Commission on June 23, 1988.
*** Included with the Exhibit Volume to Form S-1, Registration
Statement No. 33-21267 filed with the Securities and Exchange
Commission on April 15, 1988.
**** Included with the Exhibit Volume to Amendment No. 1 to Form S-1,
Registration Statement No. 33-21267 filed with the Securities
and Exchange Commission on June 23, 1988.
***** Included in reports on Form 8-K filed on October 26, 1994 and
January 6, 1995.
(b) Reports on Form 8-K There were no reports filed during the
fourth quarter of 1996.
<PAGE>
Signatures
Pursuant to the requirements of Section 13 or 15(d) 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.
CSA Income Fund Limited
Partnership III (Registrant)
By its General Partner,
CSA Equity Funds, Inc.
Date:
/S/ J. Frank Keohane, President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated.
By its General Partner,
CSA Equity Funds, Inc.
Date:
/S/ J. Frank Keohane
President & Director
Principal Executive Officer
Date:
/S/ Richard P Timmons
Controller
Principal Accounting and
Finance Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from CSA Income
Fund Limited Partnership III's Statement of Financial Position as of
December 31, 1996 and Statement of Operations for the twelve months then
ended and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 450,785
<SECURITIES> 0
<RECEIVABLES> 1,350,605
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 35,231,829
<DEPRECIATION> 11,121,318
<TOTAL-ASSETS> 25,911,901
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 9,534,659
<TOTAL-LIABILITY-AND-EQUITY> 25,911,901
<SALES> 0
<TOTAL-REVENUES> 7,606,043
<CGS> 5,927,336
<TOTAL-COSTS> 6,729,229
<OTHER-EXPENSES> 181,790
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 620,103
<INCOME-PRETAX> 876,814
<INCOME-TAX> 0
<INCOME-CONTINUING> 876,814
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 876,814
<EPS-PRIMARY> 1.74
<EPS-DILUTED> 1.74
<FN>
<F1>The Registrant maintains an unclassified Statement of Financial Position.
</FN>
</TABLE>
