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, 1997
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
requiredto 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, 1997
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, 1997, 3,127
Limited Partners owning 500,000 Units of Limited Partnership Interest
of $100 each. The capital contributions of the Partners aggregated
$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 General Partner of CSA Income Fund Limited Partnership III notified
the Limited Partners in the 1996 Annual Report that the Partnership would
begin the wind-up process in 1997. That process did start in 1997 and the
General Partner anticipates a final distribution during 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 exchange (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, 1997, substantially all of the remaining equipment
in the Partnership's portfolio was leased under 85 separate leases to
29 lessees. The lessees providing at least 10% of total revenues
during 1997 were:
K Mart Corporation 14%
Owens-Corning Fiberglass Corporation 11%
Unisys Corporation 10%
Approximately 3% of the Partnership's equipment portfolio (based on
cost) is located outside the United States as of December 31, 1997.
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
1997.
PART II
Item 5. Market for the Registrant's 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 12/31/97
500,000 3,127
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>
<CAPTION>
Years Ended December 31,
(IN THOUSANDS EXCEPT PER UNIT AMOUNTS)
1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Total Revenues $ 10,603 $ 7,606 $ 9,929 $ 13,680 $ 16,257
Net Income (loss) (172) 877 2,111 2,775 2,706
Income (loss) per
Limited
Partnership Unit (.85) 1.74 4.18 5.49 5.36
Total Assets 19,137 25,912 17,910 20,338 26,331
Notes Payable 12,630 16,116 5,609 5,874 11,721
Limited Recourse
Notes Payable - - 38 239 -
Cash Distribution
per Limited
Partnership Unit $ 6.00 $ 6.00 $ 6.00 $ 7.00 $ 9.50
</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, 1997, 1996, and 1995
was $10,315,740, $7,209,039 and $8,821,573, respectively. The
increase in rental income in 1997 is primarily due to the addition of
$19,693,078 of leased equipment during 1996. 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.
Net loss for the year ended December 31, 1997 was $172,262 as compared
to net income of $876,814 and $2,111,130 in the years ended December
31, 1996 and 1995, respectively. The 1997 net loss is primarily
attributable to the increased depreciation and interest expense
associated with the new equipment leases. Net income was also affected
by lower gains recorded on sale of equipment in 1997 and 1996 of
$254,973 and $264,219,respectively, compared to $834,047 in 1995.
Interest income for 1997, 1996 and 1995 was $25,623, $135,348, and
$259,813, respectively. Depreciation expense for 1997, 1996 and 1995
was $8,885,253, $5,566,884 and $6,766,780. The 1997 increase was
primarily due to the additional equipment purchased in 1996, with the
decreases in 1996 primarily due to the sale of equipment such as the
Lloyds Bank PLC lease. Interest expense was $1,185,481, $620,103, and
$372,501 for the years ended December 31, 1997, 1996, and 1995,
respectively. Interest expense increased in 1997 primarily due to
additional leases being financed during the year.
Liquidity and Capital Resources
During 1997, the Partnership generated $8,378,006 in cash flow from
operations, $2,421,808 from the sale of equipment and $5,648,889
from lease financings. The Partnership utilized this cash flow to
reduce outstanding notes payable, purchase equipment and make
distributions to its partners. In 1997, notes payable were reduced by
$9,134,942, equipment purchases totaled &5,661,691 and and cash
distributions were $3,030,303.
As of December 31, 1997, The Partnership did not have any material
amount of equipment off lease and in storage.
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 wind-up of the Partnership 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 70% to 86% of their initial investment,
depending on when the Limited Partner entered the Partnership. As
previously reported, certain 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. Also as previously
reported, the General Partner still 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, 1997 and 1996 are as follows:
<CAPTION>
1997 Quarter Ended: 12/31 9/30 6/30 3/31
<S> <C> <C> <C> <C>
Total Revenues * $2,453,024 $2,614,349 $2,982,854 $2,553,227
Net Income (loss) ** (395,188) (124,696) 198,013 149,609
Net Income (loss)
Per Limited
Partnership Unit (.78) (.34) .11 .16
Cash Distributions
Per Limited
Partnership Unit 1.50 1.50 1.50 1.50
1996 Quarter Ended: 12/31 9/30 6/30 3/31
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
</TABLE>
* Total revenues include the net gains and losses from the sale of
equipment.
** The fourth quarter of 1997 includes a charge to expense of $100,000
for adjustments to anticipated residual values. The corresponding
amount for the fourth quarter of 1996 was $108,863.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
There is no Market Risk related to the Notes Payable of the Partnership
since all Notes are Nonrecourse and have fixed interest rates. There are
no other financial instruments that require Market Risk disclosure.
<PAGE>
Item 8. Financial Statements
CSA Income Fund Limited Partnership III
Index to Financial Statements
<TABLE>
<CAPTION>
Page
Number
<S> <C>
Independent Auditors' Report 8
Statements of Financial Position
as of December 31, 1997 and 1996 9
Statements for the Years Ended
December 31, 1997, 1996 and 1995:
Operations 10
Cash Flows 11
Changes in Partners' Capital (Deficit) 12
Notes to Financial Statements 13
</TABLE>
<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, 1997 and
1996,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
in a wind-up phase. The General Partner anticipates that the Partnership
will complete the wind-up and pay a final distribution 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, 1997 and 1996, 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 12, 1998
<PAGE>
<TABLE>
CSA INCOME FUND LIMITED PARTNERSHIP III
Statements of Financial Position as of
December 31, 1997 and 1996
<CAPTION>
1997 1996
<S> <C> <C>
Assets
Cash and cash equivalents $ 200,328 $ 450,785
Rentals receivable 45,665 128,676
Accounts receivable-affiliates 61,368 1,140,003
Notes receivable-lessee 14,641 39,118
Remarketing receivables 56,010 42,808
Rental equipment, at cost 32,491,943 35,231,829
Less accumulated
depreciation (13,732,945) (11,121,318)
Net rental equipment 18,758,998 24,110,511
Total assets $19,137,010 $25,911,901
Liabilities and Partners' Capital
Accounts payable $ 78,738 $ 25,064
Accrued management fees 35,639 29,853
Deferred income 60,558 206,291
Notes payable 12,629,981 16,116,034
Total liabilities 12,804,916 16,377,242
Partners' Capital (deficit):
General Partner:
Capital contribution 1,000 1,000
Cumulative net income 267,020 12,047
Cumulative cash distributions (391,966) (361,663)
(123,946) (348,616)
Limited Partners (500,000 units):
Capital contributions, net of
offering costs 44,539,778 44,539,778
Cumulative net income 765,477 1,192,712
Cumulative cash
distributions (38,849,215) (35,849,215)
6,456,040 9,883,275
Partners' capital 6,332,094 9,534,659
Total liabilities and
partners' capital $19,137,010 $25,911,901
</TABLE>
See accompanying notes to financial statements.
<PAGE>
CSA INCOME FUND LIMITED PARTNERSHIP III
<TABLE>
Statements of Operations for the
Years ended December 31, 1997 1996 and 1995
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Revenue:
Rental income $10,315,740 $ 7,209,039 $ 8,821,573
Interest income 25,623 135,348 259,813
Gain on sale
of equipment 254,973 264,219 834,047
Gain (loss) on foreign
currency transaction 7,118 (2,563) 13,273
Total revenue 10,603,454 7,606,043 9,928,706
Expenses:
Depreciation 8,885,253 5,566,884 6,766,780
Interest 1,185,481 620,103 372,501
Management fees 515,787 360,452 441,079
General and
administrative 189,195 181,790 237,216
Total expenses 10,775,716 6,729,229 7,817,576
Net income (loss) $ (172,262) $ 876,814 $ 2,111,130
Net income (loss) allocation:
General Partner $ 254,973 $ 8,768 $ 21,111
Limited Partners (427,235) 868,046 2,090,019
$ (172,262) $ 876,814 $ 2,111,130
Net income (loss) per
Limited Partnership Unit $ ( .85) $ 1.74 $ 4.18
Number of Limited
Partnership Units
Outstanding 500,000 500,000 500,000
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
CSA INCOME FUND LIMITED PARTNERSHIP III
Statements of Cash Flows for the
Years ended December 31, 1997, 1996 and 1995
1997 1996 1995
<S> <C> <C> <C>
Cash flows from operations:
Cash received from rental
of equipment $10,208,050 $ 6,876,800 $ 9,218,953
Cash paid for operating
and management expenses (670,186) (573,760) (709,970)
Interest paid (1,185,481) (620,103) (391,354)
Interest received 25,623 150,974 244,187
Net cash from operations 8,378,006 5,833,911 8,361,816
Cash flows from investments:
Value added tax - - 239,724
Advances to/from
affiliates 1,103,299 (977,762) 148,200
Proceeds on notes
receivable 24,477 45,882 -
Purchase of equipment (5,661,691) (19,693,078) (6,420,701)
Sale of equipment 2,421,808 1,592,218 4,406,830
Net cash used for
investments (2,112,107) (19,032,740) (1,625,947)
Cash flows from financing:
A/P equipment purchases - - (98,995)
Proceeds from
notes payable 5,648,889 14,460,070 5,539,397
Repayment of
notes payable (9,134,942) (3,991,138) (6,005,429)
Payment of cash
distributions (3,030,303) (3,030,303) (3,030,303)
Net cash provided by
(used for) financing (6,516,356) 7,438,629 (3,595,330)
Net change in cash and
cash equivalents (250,457) (5,760,200) 3,140,539
Cash and cash equivalents
at beginning of year 450,785 6,210,985 3,070,446
Cash and cash equivalents
at end of year $ 200,328 $ 450,785 $ 6,210,985
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
CSA INCOME FUND LIMITED PARTNERSHIP III
Statement of Changes in Partners' Capital (Deficit)
Years ended December 31, 1997, 1996 and 1995
Limited General
Partners Partner Total
<S> <C> <C> <C>
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
Net income (427,235) 254,973 (172,262)
Cash distributions (3,000,000) (30,303) (3,030,303)
Balance at December 31, 1997 $ 6,456,040 $ (123,946) $ 6,332,094
</TABLE>
See accompanying notes to financial statements.
<PAGE>
CSA INCOME FUND LIMITED PARTNERSHIP III
Notes to Financial Statements
December 31, 1997
(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, 1997, 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 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 wind-up the Partnership 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. As provided by
the Partnership Agreement, pursuant to Section 8.3 (c), accounting
profits from the sale of equipment that results in the dissolution of
the Partnership were allocated to each partner first in the amount
equal to the negative balance in the Capital Account of each partner.
In connection with the wind-up of the Partnership, certain gains on
the disposition of partnership assets were allocated during the year
1997 to the General Partner to reduce its Capital Account negative
balance.
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, 1997, 1996 and 1995, the Partnership recorded
additional charges of $100,000, $108,863 and $144,997 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 1997, 1996 and 1995, the Partnerships book income exceeded federal
taxable income by approximately $1,414,000, $2,414,000 and $3,294,000,
respectively. The differences are primarily due to the differences
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.
A summary of changes in rental equipment owned and its related
accumulated depreciation is as follows:
<TABLE>
<CAPTION>
Beginning Sales/ Ending
Balance Additions Retirements Balance
<S> <C> <C> <C> <C>
Costs for the periods ended:
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
December 31, 1997 $35,231,829 $ 5,661,691 $ 8,401,577 $32,491,943
Accumulated depreciation for the periods ended:
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
December 31, 1997 $11,121,318 $ 8,885,253 $ 6,273,626 $13,732,945
</TABLE>
<PAGE>
CSA INCOME FUND LIMITED PARTNERSHIP III
Notes to Financial Statements
(4) Leases
As of December 31, 1997, substantially all of the Partnership's
equipment was leased under 85 separate leases to 29 lessees.
Approximately 3% of the Partnership's equipment portfolio (based on
cost) is located outside of the United States. Three lessees provided
approximately 35% (14%, 11%, and 10%, respectively) of the
partnership's revenues in 1997 as compared to one lessee providing 19%
in 1996 and three lessees providing 53% (29%, 13% and 11%,
respectively) in 1995.
Minimum annual lease rentals scheduled to be received under existing
noncancellable operating leases are as follows:
<TABLE>
Year Amount
<S> <C> <C>
1998 $ 8,502,986
1999 4,638,051
2000 794,258
2001 88,845
$14,024,140
</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 $27,407,110.
Annual maturities of notes payable at December 31, 1997, are as
follows:
<TABLE>
Year Amount
<S> <C> <C>
1998 $ 7,359,658
1999 4,421,758
2000 773,766
2001 74,799
$12,629,981
</TABLE>
(6) 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.
(7) 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
1997,1996 and 1995 are as follows:
<TABLE>
1997 1996 1995
<S> <C> <C> <C>
Equipment acquisition fees $ 217,076 $ 755,218 $ 246,950
Management fees 515,787 360,452 441,079
Reimbursable operating
expenses 103,157 72,090 88,216
Storage and Refurbishment 5,575 24,000 48,000
$ 841,595 $1,211,760 $ 824,245
</TABLE>
(8) Net Cash Provided from Operations
The reconciliation of net income to net cash from operations for the
years 1997, 1996 and 1995 are as follows:
<TABLE>
1997 1996 1995
<S> <C> <C> <C>
Net income (loss) $ (172,262) $ 876,814 $2,111,130
Gain on sale of equipment (254,973) (264,219) (834,047)
Depreciation and amortization 8,885,253 5,566,884 6,766,780
(Increase) decrease
in receivables 69,809 (69,555) 288,154
Other (63,548) - -
Increase (decrease)
in payables and
deferred income (86,273) (276,013) 29,799
Net cash from operations $ 8,378,006 $ 5,833,911 $ 8,361,816
</TABLE>
(9) 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. As of December 31, 1997, the lessee owed $14,641
on the note held by the Partnership. The lessee has made subsequent payments
in 1998 that has reduced the balance outstanding to $3,618.
<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 61 Director & President 04/01/88
Richard P. Timmons 43 Controller 03/01/95
Trevor A. Keohane 31 Director 05/28/93
</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 7 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, 1997.
Item 13. Certain Relationships and Related Transactions
The General Partner is affiliated with the General Partner for 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>
<CAPTION>
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 ***
27.1 Financial Data Schedule
</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 From 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.
(b) Reports on Form 8-K - There were no reports filed during the
fourth quarter of 1997.
<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/ Christopher R. Guiod
Senior Vice President
Finance and Administration
Date:
/s/ Richard P Timmons
Controller
Principal Accounting and
Finance Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from CSA Income
Fund Limited Partnership III's Statement of Financial Position as of December
31, 1997 and Statement of Operations for the twelve months then ended and is
qualified in its entirely by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 200,328
<SECURITIES> 0
<RECEIVABLES> 177,684
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 32,491,943
<DEPRECIATION> 13,732,945
<TOTAL-ASSETS> 19,137,010
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 6,332,094
<TOTAL-LIABILITY-AND-EQUITY> 19,137,010
<SALES> 0
<TOTAL-REVENUES> 10,603,454
<CGS> 0
<TOTAL-COSTS> 9,401,040
<OTHER-EXPENSES> 189,195
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,185,481
<INCOME-PRETAX> (172,262)
<INCOME-TAX> 0
<INCOME-CONTINUING> (172,262)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (172,262)
<EPS-PRIMARY> (0.85)
<EPS-DILUTED> (0.85)
<FN>
<F1>The Registrant maintains an unclassified Statement of Financial Position.
</FN>
</TABLE>
