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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
----------------------------------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
------------------------- -----------------------
Commission file number
0-20151
PARTICIPATING INCOME PROPERTIES III LIMITED PARTNERSHIP
and
FFCA/PIP III INVESTOR SERVICES CORPORATION
- --------------------------------------------------------------------------------
(Exact Name of Co-Registrants as Specified in Their
Organizational Documents)
Delaware 86-0665681
- --------------------------------------------------------------------------------
(Partnership State of Organization) (Partnership I.R.S. Employer
Identification Number)
Delaware 86-0555605
- --------------------------------------------------------------------------------
(Corporation State of Incorporation) (Corporation I.R.S. Employer
Identification Number)
The Perimeter Center
17207 North Perimeter Drive
Scottsdale, Arizona 85255
- --------------------------------------------------------------------------------
(Address of principal executive offices) (zip code)
Co-Registrants' telephone number including area code (602) 585-4500
-----------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for 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
----- -----
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item l. Financial Statements.
------- ---------------------
PARTICIPATING INCOME PROPERTIES III LIMITED PARTNERSHIP
BALANCE SHEETS
SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
------------ ------------
ASSETS
------
<S> <C> <C>
CASH AND CASH EQUIVALENTS $ 635,660 $ 638,406
RECEIVABLES FROM LESSEES 43,570 39,257
MORTGAGE LOAN INTEREST RECEIVABLE 45,208 45,208
MORTGAGE LOAN RECEIVABLE 7,750,000 7,750,000
PROPERTY SUBJECT TO OPERATING LEASES, at cost
Land 2,684,138 2,684,138
Buildings 11,010,862 11,010,862
Equipment 947,838 947,838
------------ ------------
Total 14,642,838 14,642,838
Less-Accumulated depreciation 1,936,907 1,599,633
------------ ------------
12,705,931 13,043,205
------------ ------------
Total assets $ 21,180,369 $ 21,516,076
============ ============
LIABILITIES AND PARTNERS' CAPITAL
---------------------------------
DISTRIBUTION PAYABLE TO LIMITED PARTNERS $ 579,612 $ 579,556
RENTAL DEPOSITS AND OTHER 253,031 251,520
------------ ------------
Total liabilities 832,643 831,076
------------ ------------
PARTNERS' CAPITAL (DEFICIT):
General partner (16,090) (12,718)
Limited partners 20,363,816 20,697,718
------------ ------------
Total partners' capital 20,347,726 20,685,000
------------ ------------
Total liabilities and partners' capital $ 21,180,369 $ 21,516,076
============ ============
</TABLE>
<PAGE>
PARTICIPATING INCOME PROPERTIES III LIMITED PARTNERSHIP
STATEMENTS OF INCOME
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
9/30/96 9/30/95 9/30/96 9/30/95
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUES:
Rental $ 394,870 $ 394,870 $1,184,610 $1,184,610
Participating rentals 124,377 132,483 380,590 380,788
Mortgage loan interest 135,625 135,625 406,875 406,875
Investment interest and other 5,351 5,169 16,688 18,266
---------- ---------- ---------- ----------
660,223 668,147 1,988,763 1,990,539
---------- ---------- ---------- ----------
EXPENSES:
General partner fees 52,500 61,020 167,668 167,316
Depreciation 111,934 112,817 337,274 338,452
Operating 22,446 21,846 65,259 67,312
---------- ---------- ---------- ----------
186,880 195,683 570,201 573,080
---------- ---------- ---------- ----------
NET INCOME $ 473,343 $ 472,464 $1,418,562 $1,417,459
========== ========== ========== ==========
NET INCOME ALLOCATED TO:
General partner $ 4,733 $ 4,725 $ 14,186 $ 14,175
Limited partners 468,610 467,739 1,404,376 1,403,284
---------- ---------- ---------- ----------
$ 473,343 $ 472,464 $1,418,562 $1,417,459
========== ========== ========== ==========
NET INCOME PER LIMITED
PARTNERSHIP UNIT (based on
26,709 units held by limited partners) $ 17.55 $ 17.51 $ 52.58 $ 52.54
========== ========== ========== ==========
</TABLE>
<PAGE>
PARTICIPATING INCOME PROPERTIES III LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Limited Partners
General -----------------------------
Partner Number Total
Amount of Units Amount Amount
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
BALANCE, December 31, 1995 $ (12,718) 26,709 $ 20,697,718 $ 20,685,000
Net income 14,186 -- 1,404,376 1,418,562
Distributions to partners (17,558) -- (1,738,278) (1,755,836)
------------ ------------ ------------ ------------
BALANCE, September 30, 1996 $ (16,090) 26,709 $ 20,363,816 $ 20,347,726
============ ============ ============ ============
</TABLE>
<PAGE>
PARTICIPATING INCOME PROPERTIES III LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,418,562 $ 1,417,459
Adjustments to net income:
Depreciation 337,274 338,452
Change in assets and liabilities:
Increase in receivables from lessees (4,313) --
Increase (decrease) in rental deposits and other 1,511 (20,721)
----------- -----------
Net cash provided by operating
activities 1,753,034 1,735,190
CASH FLOWS FOR FINANCING ACTIVITIES:
Distributions to partners (1,755,780) (1,756,047)
----------- -----------
NET DECREASE IN CASH AND
CASH EQUIVALENTS (2,746) (20,857)
CASH AND CASH EQUIVALENTS, beginning of period 638,406 654,948
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 635,660 $ 634,091
=========== ===========
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
- --------------------------------
Item 2. Management's Discussion and Analysis of
- ------- Financial Condition and Results of Operations
---------------------------------------------
As of September 30, 1996, Participating Income Properties III Limited
Partnership, a Delaware limited partnership, (the Registrant), had
received $26,709,000 in gross proceeds from its offering of Units. Net
funds available for investment, after payment of sales commissions,
organization costs and acquisition fees, amounted to $23,012,902. The
offering of Units is the Registrant's sole source of capital, and since
the final closing of limited partnership units was held on February 28,
1992, the Registrant will not receive additional funds from the offering.
The Registrant was fully invested in travel plaza properties and mortgages
by June 30, 1993 and does not anticipate any further capital expenditures.
The Registrant declared a cash distribution to the limited partners of
$579,424 for the quarter ended September 30, 1996 (the period), which,
combined with the first and second quarterly distributions of $1,158,854
amounts to $1,738,278 year to date. During the period, all net proceeds
not invested in travel plaza property and the mortgage loan were invested
in Government Agency discount notes and bank repurchase agreements (which
are secured by United States Treasury and Government obligations).
During the period, the Registrant received base rental revenue and
mortgage loan interest income pursuant to its travel plaza lease and loan
arrangements in the amount of $530,495, which remains unchanged from the
prior year. In addition, the Registrant received or accrued participating
rentals of $124,377 for the period which is lower than the comparable
quarter in 1995; however, participating rentals for the nine months ended
September 30, 1996 remain unchanged from the same period in 1995. Total
expenses of $186,880 for the period were lower than expenses for the
quarter ended September 30, 1995 due to lower general partner fees; such
fees are calculated based on revenues net of operating expenses. Net
income for the period is comparable to the same period in 1995.
The decrease in total assets reflected in the Registrant's financial
statements filed with this Report is mainly attributable to the
depreciation allowance, which is deducted for accounting purposes from the
cost of the assets on the Registrant's books.
In the opinion of management, the financial information included in this
report reflects all adjustments necessary for fair presentation. All such
adjustments are of a normal recurring nature.
<PAGE>
FFCA/PIP III INVESTOR SERVICES CORPORATION
------------------------------------------
BALANCE SHEET - SEPTEMBER 30, 1996
----------------------------------
<TABLE>
ASSETS
<S> <C>
Cash $100
Investment in Participating Income Properties III Limited Partnership, at cost 100
----
Total Assets $200
====
LIABILITY
Payable to Parent $100
STOCKHOLDER'S EQUITY
Common Stock; $l par value; 100 shares authorized,
issued and outstanding 100
----
Liability and Stockholder's Equity $200
====
</TABLE>
Note: FFCA/PIP III Investor Services Corporation (the Corporation) was
incorporated on December 5, 1988, and amended on July 9, 1990 to act as the
assignor limited partner in Participating Income Properties III Limited
Partnership (PIP III).
The assignor limited partner is the owner of record of the limited
partnership units of PIP III. All rights and powers of the Corporation have been
assigned to the holders, who are the registered and beneficial owners of the
units. Other than to serve as assignor limited partner, the Corporation has no
other business purpose and will not engage in any other activity or incur any
debt.
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have caused this report to be signed on their behalf by the
undersigned thereunto duly authorized.
PARTICIPATING INCOME PROPERTIES III LIMITED
PARTNERSHIP
By FFCA PARTICIPATING MANAGEMENT COMPANY
LIMITED PARTNERSHIP
Managing General Partner
By FRANCHISE FINANCE CORPORATION OF AMERICA III
Corporate General Partner
Date: October 7, 1996 By /s/ John R. Barravecchia
-------------------------------------------------
John R. Barravecchia, Chief Financial Officer
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
co-registrant has caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FFCA/PIP III INVESTOR SERVICES CORPORATION
Date: October 7, 1996 By /s/ John R. Barravecchia
-------------------------------------------
John R. Barravecchia, President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE BALANCE SHEET AS OF SEPTEMBER 30, 1996 AND
THE STATEMENT OF INCOME FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000865828
<NAME> PARTICIPATING INCOME PROPERTIES III LIMITED PARTNERSHIP
<MULTIPLIER> 1
<CURRENCY> U. S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 635,660
<SECURITIES> 0
<RECEIVABLES> 43,570
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 14,642,838
<DEPRECIATION> 1,936,907
<TOTAL-ASSETS> 21,180,369
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 20,347,726
<TOTAL-LIABILITY-AND-EQUITY> 21,180,369
<SALES> 0
<TOTAL-REVENUES> 1,988,763
<CGS> 0
<TOTAL-COSTS> 570,201
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,418,562
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,418,562
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,418,562
<EPS-PRIMARY> 52.58
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE BALANCE SHEET AS OF SEPTEMBER 30, 1996
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
BALANCE SHEET.
</LEGEND>
<CIK> 0000865829
<NAME> FFCA/PIP III INVESTOR SERVICES CORPORATION
<MULTIPLIER> 1
<CURRENCY> U. S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 100
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 200
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 100
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 200
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
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