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, 1998
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, 1998
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,
1998, 3,102 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.
As previously reported, the General Partner is in the process of winding-up the
Partnership. The General Partner will endeavor to complete the wind-up of the
Partnership by June 30, 1999, if prevailing market opportunities allow the
sale of the remaining leases at fair market value.
The Partnership is 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 their 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 is 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 manufactured by companies
such as Compaq Computer Corporation, Dell Computer Corporation, EMC
Corporation and International Business Machines, Inc. (IBM).
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.
<PAGE>
3. New office equipment consisting primarily of photocopying and
graphic processing equipment.
4. New highway transportation equipment and new and reconditioned
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 was 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 were larger than the Partnership and had 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, 1998, substantially all of the remaining equipment in the
Partnership's portfolio was leased under 49 separate leases to 25 lessees.
The lessees providing at least 10% of total revenues during 1998 were:
<TABLE>
<S> <C>
K Mart Corporation 17%
Owens-Corning Fiberglass Corporation 16%
</TABLE>
Approximately 4% of the Partnership's equipment portfolio (based on cost) is
located outside the United States as of December 31, 1998. 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.
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 1998.
<PAGE>
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 12/31/98
500,000 3,102
c. Distributions are paid at a rate determined by the General
Partner.
Item 6. Selected Financial Data
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)
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Total Revenues $ 7,409 $ 10,603 $ 7,606 $ 9,929 $ 13,680
Net Income (Loss) (105) (172) 877 2,111 2,775
Income (Loss) per
Limited
Partnership Unit (.52) (.85) 1.74 4.18 5.49
Total Assets 5,009 19,137 25,912 17,910 20,338
Notes Payable 1,716 12,630 16,116 5,609 5,874
Limited Recourse
Notes Payable - - - 38 239
Cash Distribution
per Limited
Partnership Unit $ 6.00 $ 6.00 $ 6.00 $ 6.00 $ 7.00
</TABLE>
<PAGE>
Item 7. General Partner's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
Total Revenue for the years ended December 31, 1998, 1997, and 1996 was
$7,408,906, $10,603,454, and $7,606,043, respectively. The decrease in 1998
total revenue was primarily due to the Partnership being in the wind-up
process.
Net loss for the year ended December 31, 1998 was $104,958 as compared to net
loss of $172,262 in the year ended December 31, 1997. Net income was $876,814
for the year ended December 31, 1996. The 1998 net loss is primarily
attributable to the increased depreciation expense as a percentage of rental
income associated with the new equipment leases. Net income was also affected
by higher gains recorded on sale of equipment in 1998 of $392,781, compared to
$254,973,and $264,219 in 1997 and 1996, respectively.
Interest income for 1998, 1997 and 1996 was $4,698, $25,623, and $135,348,
respectively.Depreciation expense for 1998, 1997 and 1996 was $6,481,738,
$8,885,253, and $5,566,884.The 1998 decrease in depreciation was primarily
due to the sale of equipment as part of the wind-up of the Partnership.
Interest expense was $535,307, $1,185,481, and $620,103, for the years
ended December 31, 1998, 1997, and 1996, respectively. Interest expense
decreased in 1998 primarily due to the reduction in financed leases as
portions of the portfolio were sold.
Liquidity and Capital Resources
During 1998, the Partnership generated $5,950,662 in cash flow from operations
and $8,157,804 from the sale of equipment. The Partnership utilized this cash
flow to reduce outstanding notes payable and make distributions to its
partners. In 1998, notes payable were reduced by $10,914,177 and cash
distributions were $3,030,302.
The General Partner has put in place a year 2000 ("Y2K") compliance plan which
is currently in the process of implementation. A review of the company's
computer and communication systems was completed. The implementation was
started in 1998 and is anticipated to be completed by mid-1999. The General
Partner has designated a Y2K implementation and contact person to coordinate
all of the third party compliance documentation. The General Partner has
confirmed that a significant portion of the third party relationships have or
are in the process of completing their individual year 2000 compliance.
As of December 31, 1998, The Partnership does not have any material
amount of equipment off lease and in storage.
As previously reported, 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. The
General Partner will endeavor to complete the wind-up of the Partnership
by June 30, 1999, if prevailing market opportunities allow the sale of the
remaining leases at or above fair market value to maximize the return to all
Limited Partners.
<PAGE>
To date, the Partnership has made cash distributions to the Limited Partners
ranging from 76% to 92% 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
Summarized unaudited quarterly financial data for the years ended
December 31, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
1998 Quarter Ended: 12/31 9/30 6/30 3/31
<S> <C> <C> <C> <C>
Total Revenues * $1,220,030 $1,668,726 $2,065,109 $2,455,041
Net Income (Loss) (55,711) 65,433 (82,498) (32,182)
Net Income (Loss)
Per Limited
Partnership Unit (.14) .12 (.28) (.22)
Cash Distributions
Per Limited
Partnership Unit 1.50 1.50 1.50 1.50
1997 Quarter Ended: 12/31 9/30 6/30 3/31
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
</TABLE>
* Total revenues include the net gains and losses from the sale of equipment.
** There were no residual value adjustments booked in 1998. In 1997, the
Partnership recorded a $100,000 adjustments to anticipated residual
values.
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>
Page
Number
<S> <C>
Independent Auditors' Report 8
Statements of Financial Position
as of December 31, 1998 and 1997 9
Statements for the Years Ended
December 31, 1998, 1997 and 1996:
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, 1998 and
1997,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 be dissolved by June 30, 1999.
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, 1998 and 1997, 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 16, 1999
<PAGE>
<TABLE>
<CAPTION>
CSA INCOME FUND LIMITED PARTNERSHIP III
Statements of Financial Position as of
December 31, 1998 and 1997
Assets 1998 1997
<S> <C> <C>
Cash and cash equivalents $ 428,948 $ 200,328
Rentals receivable 786 45,665
Accounts receivable-affiliates 11,376 61,368
Notes receivable-lessee - 14,641
Remarketing receivables 699 56,010
Rental equipment, at cost 16,996,622 32,491,943
Less accumulated
depreciation (12,429,074) (13,732,945)
Net rental equipment 4,567,548 18,758,998
Total assets $ 5,009,357 $19,137,010
Liabilities and Partners' Capital
Accounts payable $ 46,669 $ 78,738
Accrued management fees 18,145 35,639
Deferred income 31,905 60,558
Notes payable 1,715,804 12,629,981
Total liabilities 1,812,523 12,804,916
Partners' Capital (deficit):
General Partner:
Capital contribution 1,000 1,000
Cumulative net income 421,268 267,020
Cumulative cash distributions (422,268) (391,966)
0 (123,946)
Limited Partners (500,000 units):
Capital contributions, net of
offering costs 44,539,778 44,539,778
Cumulative net income 506,271 765,477
Cumulative cash
distributions (41,849,215) (38,849,215)
3,196,834 6,456,040
Partners' capital 3,196,834 6,332,094
Total liabilities and
partners' capital $ 5,009,357 $19,137,010
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
CSA INCOME FUND LIMITED PARTNERSHIP III
Statements of Operations for the
Years ended December 31, 1998 1997 and 1996
1998 1997 1996
<S> <C> <C> <C>
Revenue:
Rental income $7,010,127 $10,315,740 $ 7,209,039
Interest income 4,698 25,623 135,348
Gain on sale
of equipment 392,781 254,973 264,219
Gain (Loss) on foreign
currency transaction 1,300 7,118 (2,563)
Total revenue 7,408,906 10,603,454 7,606,043
Expenses:
Depreciation 6,481,738 8,885,253 5,566,884
Interest 535,307 1,185,481 620,103
Management fee 350,506 515,787 360,452
General and
administrative 146,313 189,195 181,790
Total expenses 7,513,864 10,775,716 6,729,229
Net Income (Loss) $ (104,958) $ (172,262) $ 876,814
Net Income (Loss) allocation:
General Partner $ 154,248 $ 254,973 $ 8,768
Limited Partners (259,206) (427,235) 868,046
$ (104,958) $ (172,262) $ 876,814
Net Income (Loss) per
Limited Partnership Unit $ ( .52) $ ( .85) $ 1.74
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, 1998, 1997 and 1996
1998 1997 1996
<S> <C> <C> <C>
Cash flows from operations:
Cash received from rental
of equipment $ 7,027,653 $10,208,050 $ 6,876,800
Cash paid for operating
and management expenses (546,382) (670,186) (573,760)
Interest paid (535,307) (1,185,481) (620,103)
Interest received 4,698 25,623 150,974
Net cash from operations 5,950,662 8,378,006 5,833,911
Cash flows from investments:
Advances to/from
affiliates 49,992 1,103,299 (977,762)
Proceeds on notes
receivable 14,641 24,477 45,882
Purchase of equipment - (5,661,691) (19,693,078)
Sale of equipment 8,157,804 2,421,808 1,592,218
Net cash provided by (used
for) investments 8,222,437 (2,112,107) (19,032,740)
Cash flows from financing:
Proceeds from
notes payable - 5,648,889 14,460,070
Reduction of
notes payable (10,914,177) (9,134,942) (3,991,138)
Payment of cash
distributions (3,030,302) (3,030,303) (3,030,303)
Net cash provided by
(used for) financing (13,944,479) (6,516,356) 7,438,629
Net change in cash and
cash equivalents 228,620 (250,457) (5,760,200)
Cash and cash equivalents
at beginning of year 200,328 450,785 6,210,985
Cash and cash equivalents
at end of year $ 428,948 $ 200,328 $ 450,785
</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, 1998, 1997 and 1996
Limited General
Partners Partner Total
<S> <C> <C> <C>
Balance at December 31, 1995 $ 12,015,229 $ (327,081) $11,688,148
Net Income (Loss) 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 (Loss) (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
Net Income (Loss) (259,206) $ 154,248 $ (104,958)
Cash distributions (3,000,000) (30,302) (3,030,302)
Balance at December 31, 1998 $ 3,196,834 $ 0 $ 3,196,834
</TABLE>
See accompanying notes to financial statements.
<PAGE>
CSA INCOME FUND LIMITED PARTNERSHIP III
Notes to Financial Statements
December 31, 1998
(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, 1998, 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.
As previously reported, 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 by June 30,
1999, if prevailing market opportunities allow the sale of the remaining
leases at fair market value to maximize the return to all Limited Partners.
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 years 1998
and 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, 1998, no additional charges to depreciation expense were made.
In 1997 and 1996, the Partnership recorded additional charges of $100,000 and
$108,863, 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. the Partnership's federal taxable
income exceeded book income by approximately $2,998,000 in 1998. In 1997 and
1996, the Partnerships book income exceeded federal taxable income by
approximately $1,414,000 and $2,414,000, 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>
Beginning Sales/ Ending
Balance Additions Retirements Balance
<S> <C> <C> <C> <C>
Costs for the periods ended:
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
December 31, 1998 $32,491,943 $ - $15,495,321 $16,996,622
Accumulated depreciation for the periods ended:
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
December 31, 1998 $13,732,945 $ 6,481,738 $ 7,785,609 $12,429,074
</TABLE>
<PAGE>
CSA INCOME FUND LIMITED PARTNERSHIP III
Notes to Financial Statements
(4) Leases
As of December 31, 1998, substantially all of the Partnership's equipment was
leased under 49 separate leases to 25 lessees. Approximately 4% of the
Partnership's equipment portfolio (based on cost) is located outside of the
United States. Two lessees represented approximately 33% (17% and 16%,
respectively) of the partnership revenue in 1998 as compared to three
lessees representing 35% (14%,11%, and 10%, respectively) of the partnership's
revenues in 1997 and one lessee representing 19% in 1996.
Minimum annual lease rentals scheduled to be received under existing
noncancellable operating leases as of December 31, 1998, are as follows:
<TABLE>
Year Amount
<S> <C>
1999 $1,948,826
2000 93,695
2001 1,615
$2,044,136
</TABLE>
If the Partnership is wound-up in 1999, as contemplated, the rentals beyond
the wind-up date may not be received by the Partnership but rather sold as
part of the wind-up activity.
(5) Notes Payable
Notes payable consist of nonrecourse notes due in monthly installments with
interest rates that range from 6.90% to 9.25% per annum. Such notes are
collateralized by equipment with a cost of $8,827,871.
Annual maturities of notes payable at December 31, 1998, are as follows:
<TABLE>
Year Amount
<S> <C>
1999 1,644,479
2000 71,325
$1,715,804
</TABLE>
If the Partnership is wound-up in 1999, as contemplated, the leases and
underlying nonrecourse financings will be sold as part of the wind-up
activity.
(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.
<PAGE>
(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
1998, 1997 and 1996 is are follows:
<TABLE>
1998 1997 1996
<S> <C> <C> <C>
Equipment acquisition fees $ - $ 217,076 $ 755,218
Management fees 350,506 515,787 360,452
Reimbursable operating
expenses 70,101 103,157 72,090
Storage and Refurbishment 8,110 5,575 24,000
$ 428,717 $ 841,595 $1,211,760
</TABLE>
(8) Net Cash Provided from Operations
The reconciliation of net income to net cash from operations for the
years 1998, 1997 and 1996 is as follows:
<TABLE>
1998 1997 1996
<S> <C> <C> <C>
Net income (loss) $ (104,958) $ (172,262) $ 876,814
Gain on sale of equipment (392,781) (254,973) (264,219)
Depreciation and amortization 6,481,738 8,885,253 5,566,884
(Increase) decrease
in receivables 44,879 69,809 (69,555)
Other - (63,548) -
Decrease in payables and
deferred income (78,216) (86,273) (276,013)
Net cash from operations $5,950,662 $ 8,378,006 $ 5,833,911
</TABLE>
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosures
None.
<PAGE>
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 62 Director & President 04/01/88
Richard P. Timmons 44 Controller 03/01/95
Trevor A. Keohane 32 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, 1998.
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>
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 1998.
<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
<PAGE>
<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, 1998 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-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 428,948
<SECURITIES> 0
<RECEIVABLES> 12,861
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 16,996,622
<DEPRECIATION> 12,429,074
<TOTAL-ASSETS> 5,009,357
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 3,196,834
<TOTAL-LIABILITY-AND-EQUITY> 5,009,357
<SALES> 0
<TOTAL-REVENUES> 7,408,906
<CGS> 0
<TOTAL-COSTS> 6,832,244
<OTHER-EXPENSES> 146,313
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 535,307
<INCOME-PRETAX> (104,958)
<INCOME-TAX> 0
<INCOME-CONTINUING> (104,958)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (104,958)
<EPS-PRIMARY> (0.52)
<EPS-DILUTED> (0.52)
<FN>
<F1>The registrant maintains an unclassified Statement of Financial Position.
</FN>
</TABLE>
