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Previous: EVEREST REINSURANCE HOLDINGS INC, 10-Q, 1996-10-31 |
Next: DSP GROUP INC /DE/, 10-Q/A, 1996-10-31 |
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
--------------------------------------------
OR
[x] 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 33-44158
----------------------------------------------------
Capital Preferred Yield Fund-III, L.P.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 84-1248907
- ----------------------- ------------------------------------
(State of organization) (I.R.S. Employer Identification No.)
7175 West Jefferson Avenue, Suite 4000
Lakewood, Colorado 80235
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (303) 980-1000
--------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 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 .
--- ---
Exhibit Index appears on Page 23
Page 1 of 24 Pages
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
Quarterly Report on Form 10-Q
For the Quarter Ended
September 30, 1996
Table of Contents
-----------------
PART I. FINANCIAL INFORMATION PAGE
----
Item 1. Financial Statements (Unaudited)
Balance Sheet - September 30, 1996 and December 31, 1995 3
Statements of Income - Three and nine months ended
September 30, 1996 and 1995 4
Statement of Partners' Capital - January 1, 1996 -
September 30, 1996 5
Statements of Cash Flows - Nine months ended
September 30, 1996 and 1995 6
Notes to Financial Statements 7-17
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 18-22
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 23
Item 6. Exhibits and Reports on Form 8-K 23
Signature 24
2
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
BALANCE SHEETS
(Unaudited)
September 30, December 31,
1996 1995
------------ ------------
ASSETS
Cash and cash equivalents $ 879,832 $ 6,774,071
Accounts receivable 690,011 1,366,351
Net investment in direct finance leases 5,772,571 4,294,046
Leased equipment, net 58,869,694 35,943,402
Deferred financing costs 64,286 85,714
----------- -----------
Total assets $66,276,394 $48,463,584
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Accounts payable and accrued liabilities $ 769,382 $ 401,786
Payable to affiliates 44,323 106,196
Rents paid in advance 373,183 236,186
Distributions payable to partners 445,053 319,907
Discounted lease rentals 26,394,446 16,863,892
----------- -----------
Total liabilities 28,026,387 17,927,967
----------- -----------
PARTNERS' CAPITAL:
General partner - -
Limited Partners:
Class A 37,790,118 30,183,575
Class B 459,889 352,042
----------- -----------
Total partners' capital 38,250,007 30,535,617
----------- -----------
Total liabilities and partners' capital $66,276,394 $48,463,584
=========== ===========
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine months Ended
--------------------------- ----------------------------
September 30, September 30,
1996 1995 1996 1995
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
REVENUE:
Operating lease rentals $ 4,747,128 $ 2,869,053 $ 11,281,147 $ 4,993,205
Direct finance lease income 114,170 77,543 303,996 190,005
Equipment sales margin - - 110,831 -
Interest income 46,896 64,670 296,484 183,026
----------- ----------- ------------ -----------
Total revenue 4,908,194 3,011,266 11,992,458 5,366,236
----------- ----------- ------------ -----------
EXPENSES:
Depreciation and amortization 3,712,368 2,120,689 8,639,565 3,760,780
Management fees paid to general partner 109,378 54,518 262,126 94,765
Direct services from general partner 23,134 22,445 71,698 70,544
General and administrative 69,717 38,197 213,163 120,841
Interest on discounted lease rentals 537,780 425,273 1,257,052 652,869
Provision for losses - - - 100,000
----------- ----------- ------------ -----------
Total expenses 4,452,377 2,661,122 10,443,604 4,799,799
----------- ----------- ------------ -----------
NET INCOME $ 455,817 $ 350,144 $ 1,548,854 $ 566,437
=========== =========== ============ ===========
NET INCOME ALLOCATED:
To the general partner $ 13,329 $ 15,074 $ 55,072 $ 45,026
To the Class A limited partners 438,014 331,678 1,478,672 516,113
To the Class B limited partner 4,474 3,392 15,110 5,298
----------- ----------- ------------ ----------
$ 455,817 $ 350,144 $ 1,548,854 $ 566,437
=========== =========== ============ ==========
Net income per weighted average Class A
limited partner unit outstanding $ .88 $ 1.29 $ 3.12 $ 2.31
=========== =========== ============ ==========
Weighted average Class A limited
partner units outstanding 497,874 256,406 474,939 223,910
=========== =========== ============ ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
STATEMENT OF PARTNERS' CAPITAL
(Unaudited)
<TABLE>
<CAPTION>
Class A Class B
General Limited Limited
Partner Partners Partner Total
------- -------- ------- -----
<S> <C> <C> <C> <C>
Partners' capital, January 1, 1996 $ - $ 30,183,575 $ 352,042 $ 30,535,617
Capital contributions 11,623,048 130,000 11,753,048
Commissions and offering costs on
sale of Class A limited partner units (16,889) (1,672,031) - (1,688,920)
Redemptions - (74,386) - (74,386)
Net income 55,072 1,478,672 15,110 1,548,854
Distributions to partners (38,183) (3,748,760) (37,263) (3,824,206)
--------- ------------ --------- ------------
Partners' capital, September 30, 1996 $ - $ 37,790,118 $ 459,889 $ 38,250,007
========= ============ ========= ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine months Ended
September 30,
------------------------------------
1996 1995
-------------- -------------
<S> <C> <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 13,242,641 $ 4,190,483
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of equipment on operating leases from affiliate (22,813,728) (26,389,032)
Investment in direct finance leases, acquired from affiliate (776,599) (4,602,038)
------------- -------------
Net cash used in investing activities (23,590,327) (30,991,070)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Class A capital contributions 11,623,048 17,840,402
Proceeds from Class B capital contributions 130,000 170,000
Proceeds from discounted lease rentals 4,767,017 15,969,859
Principal payments on discounted lease rentals (6,610,159) (1,506,171)
Redemptions of Class A limited partner units (74,386) (133,398)
Commissions paid to affiliate in connection
with the sale of Class A limited partner units (1,162,305) (1,799,160)
Non-accountable organization and offering expenses
reimbursement paid to the general partner in connection
with the sale of Class A limited partner units (526,615) (772,035)
Distributions to partners (3,693,153) (1,635,863)
------------- -------------
Net cash provided by financing activities 4,453,447 28,133,634
------------- -------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (5,894,239) 1,333,047
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 6,774,071 1,555,557
------------- -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 879,832 $ 2,888,604
============= =============
Supplemental disclosure of cash flow information:
Interest paid on discounted lease rentals $ 1,257,052 $ 652,869
Supplemental disclosure of noncash investing and
financing activities:
Discounted lease rentals assumed in equipment acquisitions 11,373,696 2,685,425
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
---------------------
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
disclosures required by generally accepted accounting principles for annual
financial statements. In the opinion of the general partner, all
adjustments (consisting only of normal recurring adjustments) considered
necessary for a fair presentation have been included. The balance sheet at
December 31, 1995 has been derived from the audited financial statements
included in the Partnership's 1995 Form 10-K. For further information,
refer to the financial statements of Capital Preferred Yield Fund-III, L.P.
(the "Partnership"), and the related notes, included in the Partnership's
Annual Report on Form 10-K for the year ended December 31, 1995, previously
filed with the Securities and Exchange Commission.
2. Transactions With the General Partner and Affiliates
----------------------------------------------------
SALES COMMISSIONS AND OFFERING COSTS
Under the terms of the Partnership Agreement, CAI Securities Corporation,
an affiliate of the general partner, is entitled to receive sales
commissions and wholesaling fees equal to 10% of the Class A limited
partners' capital contributions, up to 9% of which is paid to participating
broker-dealers. During the nine months ended September 30, 1996 CAI
Securities Corporation earned commissions and fees in the amount of
$1,162,305, $991,974 of which was paid to participating broker-dealers.
As provided in the Partnership Agreement, the general partner earned
$464,922 as reimbursement for expenses incurred during the nine months
ended September 30, 1996 in connection with the organization of the
Partnership and the offering of Class A limited partner units. The general
partner also received $61,693 as reimbursement for due diligence expenses
incurred during the nine months ended September 30, 1996.
DIRECT SERVICES
The general partner and its affiliates provide accounting, investor
relations, billing, collecting, asset management, and other administrative
services to the Partnership. The Partnership reimburses the general partner
for these services performed on its behalf as permitted under the terms of
the Partnership Agreement. Such reimbursements totaled $71,698 ($7,682 of
which will be paid in the third quarter) during the nine months ended
September 30, 1996.
7
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
2. Transactions With the General Partner and Affiliates, continued
----------------------------------------------------
PAYABLE TO AFFILIATES
Payable to affiliates consists of direct services, management fees and
amounts relating to general and administrative expenses during the period
ended September 30, 1996 due to the general partner and its affiliates.
3. Equipment Purchases
-------------------
During the nine months ended September 30, 1996, the Partnership purchased
from Capital Associates International, Inc. ("CAII"), the Class B limited
partner and an affiliate of the general partner, the equipment under lease
listed below. The Partnership purchased the equipment at cost to CAII,
including reimbursement of other acquisition costs and acquisition fees as
provided for in the Partnership Agreement.
<TABLE>
<CAPTION>
Acquisition Total
Equipment Cost of Fees and Equipment
Lessee Description Equipment Reimbursements Purchase Price
------ ----------- --------- -------------- --------------
<S> <C> <C> <C> <C>
Thomson Saginaw Material handling equipment $ 77,164 $ 2,674 $ 79,838
ICI Americas Forklifts 38,913 1,348 40,261
Cerplex Semiconductor 557,438 19,315 576,753
Television City Environmental monitoring equipment 167,083 5,951 173,034
Thomson Saginaw Material handling equipment 59,880 2,075 61,955
Consolidated Diesel Forklifts 59,719 2,069 61,788
Brown Strauss Forklifts 83,000 2,876 85,876
Wayne Farms Spiral freezer 502,758 9,955 512,713
Brown Strauss Forklifts 90,795 3,146 93,941
Lever Brothers HP Server 47,070 1,631 48,701
Louisiana Workers Memory board 6,531 226 6,757
Honeywell Sequencer 264,699 8,495 273,194
In Home Health Modular furniture 113,501 3,933 117,434
General Motors Lift truck 36,120 1,252 37,372
NBC Video equipment 259,730 9,000 268,730
Atlantic Steel Mill equipment 971,059 33,647 1,004,706
Thomson Saginaw Machine tools 60,130 2,084 62,214
Lever Brothers PC's networking 20,828 722 21,550
HK Systems Communication 150,000 5,198 155,198
General Motors Forklifts 76,161 2,639 78,800
Xerox Forklifts 137,740 4,773 142,513
Xerox Forklifts 120,660 4,181 124,841
ITT Automotive Office automation equipment 20,362 706 21,068
8
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
3. Equipment Purchases, continued
-------------------
Acquisition Total
Equipment Cost of Fees and Equipment
Lessee Description Equipment Reimbursements Purchase Price
------ ----------- --------- -------------- --------------
General Motors Forklifts $ 59,208 $ 2,052 $ 61,260
General Motors Forklifts 59,343 2,056 61,399
General Motors Forklifts 17,486 606 18,092
Barber-Colman Machine tools 82,905 2,873 85,778
Barber-Colman Machine tools 12,401 430 12,831
Barber-Colman Machine tools 218,375 7,567 225,942
Barber-Colman Machine tools 30,966 1,073 32,039
Barber-Colman Machine tools 9,351 324 9,675
Barber-Colman Machine tools 6,320 219 6,539
Barber-Colman Machine tools 3,039 105 3,144
Barber-Colman Manufacturing equipment 22,908 794 23,702
Barber-Colman Machine tools 13,801 478 14,279
Barber-Colman Machine tools 5,352 185 5,537
Barber-Colman Machine tools 21,362 740 22,102
Barber-Colman Machine tools 10,661 369 11,030
Barber-Colman Machine tools 1,999 69 2,068
Barber-Colman Machine tools 20,858 723 21,581
Barber-Colman Peripheral controllers 26,189 907 27,096
Barber-Colman Machine tools 73,855 2,559 76,414
Barber-Colman Machine tools 38,952 1,350 40,302
Barber-Colman Machine tools 28,382 983 29,365
Barber-Colman PC's networking 24,351 844 25,195
Barber-Colman Machine tools 176,593 6,119 182,712
Barber-Colman PC's networking 68,069 2,359 70,428
Barber-Colman Manufacturing equipment 79,286 2,747 82,033
Barber-Colman PC's networking 87,826 3,043 90,869
Foxboro Company PC's networking 94,680 3,281 97,961
Foxboro Company Furniture and fixtures 32,831 1,138 33,969
Foxboro Company PC's networking 60,796 2,107 62,903
Foxboro Company PC's networking 60,022 2,080 62,102
Foxboro Company PC's networking 64,671 2,241 66,912
Foxboro Company Manufacturing equipment 22,961 796 23,757
Foxboro Company PC's networking 125,644 4,354 129,998
Foxboro Company PC's networking 105,586 3,659 109,245
Foxboro Company PC's networking 539,488 18,693 558,181
Foxboro Company PC's networking 28,650 993 29,643
Foxboro Company Furniture and fixtures 31,018 1,075 32,093
Foxboro Company Furniture and fixtures 66,268 2,296 68,564
Foxboro Company Research equipment 42,146 1,460 43,606
Foxboro Company Manufacturing equipment 74,091 2,567 76,658
9
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
3. Equipment Purchases, continued
-------------------
Acquisition Total
Equipment Cost of Fees and Equipment
Lessee Description Equipment Reimbursements Purchase Price
------ ----------- --------- -------------- --------------
Foxboro Company Manufacturing equipment $ 212,775 $ 7,373 $ 220,148
Foxboro Company PC's networking 785,128 27,205 812,333
Foxboro Company Manufacturing equipment 183,511 6,359 189,870
Foxboro Company Furniture and fixtures 2,444 85 2,529
Foxboro Company Forklifts 6,305 218 6,523
Foxboro Company Furniture and fixtures 10,198 353 10,551
Keystone Invest Office automation equipment 5,780 200 5,980
Keystone Invest Peripheral printers 17,533 608 18,141
Keystone Invest PC's networking 312,217 10,818 323,035
Keystone Invest PC's networking 120,227 4,166 124,393
Keystone Invest PC's networking 1,086,011 37,630 1,123,641
Keystone Invest Furniture and fixtures 32,414 1,123 33,537
Keystone Invest Peripheral printers 33,613 1,165 34,778
Lucas Industries Furniture and fixtures 47,329 1,640 48,969
Lucas Industries Manufacturing equipment 44,119 1,529 45,648
Lucas Industries Furniture and fixtures 30,228 1,047 31,275
Lucas Industries Furniture and fixtures 163,330 5,659 168,989
Lucas Industries PC's networking 24,190 838 25,028
Lucas Industries PC's networking 147,931 5,126 153,057
Lucas Industries CPU's - DEC 51,904 1,798 53,702
Lucas Industries Research equipment 78,475 2,719 81,194
Lucas Industries PC's networking 381,594 13,222 394,816
Rawlings Sporting Peripheral printers 5,474 190 5,664
Rawlings Sporting PC's networking 54,894 1,902 56,796
Rawlings Sporting PC's networking 114,439 3,965 118,404
Rawlings Sporting PC's networking 153,110 5,305 158,415
Rawlings Sporting PC's networking 35,431 1,228 36,659
Rawlings Sporting PC's networking 6,042 209 6,251
Rawlings Sporting CPU's 197,668 6,849 204,517
Rawlings Sporting Peripheral printers 2,218 77 2,295
Stop & Shop PC's networking 26,588 921 27,509
Stop & Shop PC's networking 8,214 285 8,499
Stop & Shop PC's networking 3,451 120 3,571
Stop & Shop PC's networking 3,440 119 3,559
Stop & Shop PC's networking 3,296 114 3,410
Stop & Shop PC's networking 1,260 44 1,304
Stop & Shop PC's networking 5,923 205 6,128
Stop & Shop PC's networking 5,923 205 6,128
Stop & Shop PC's networking 5,923 205 6,128
Stop & Shop PC's networking 5,923 205 6,128
10
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
3. Equipment Purchases, continued
-------------------
Acquisition Total
Equipment Cost of Fees and Equipment
Lessee Description Equipment Reimbursements Purchase Price
------ ----------- --------- -------------- --------------
Stop & Shop PC's networking $ 5,923 $ 205 $ 6,128
Stop & Shop PC's networking 6,496 225 6,721
Stop & Shop PC's networking 5,923 205 6,128
Stop & Shop PC's networking 6,496 225 6,721
Stop & Shop PC's networking 6,496 225 6,721
Stop & Shop PC's networking 5,923 205 6,128
Stop & Shop PC's networking 5,923 205 6,128
Stop & Shop PC's networking 50,271 1,742 52,013
Stop & Shop PC's networking 7,756 269 8,025
Stop & Shop PC's networking 7,756 269 8,025
Stop & Shop PC's networking 7,756 269 8,025
Stop & Shop PC's networking 32,958 1,142 34,100
Stop & Shop PC's networking 10,880 377 11,257
Stop & Shop PC's networking 5,005 173 5,178
Stop & Shop PC's networking 10,767 373 11,140
Stop & Shop Furniture and fixtures 55,090 1,909 56,999
Stop & Shop PC's networking 5,092 176 5,268
Stop & Shop PC's networking 7,452 258 7,710
Stop & Shop PC's networking 5,092 176 5,268
Stop & Shop PC's networking 5,259 182 5,441
Stop & Shop PC's networking 6,427 223 6,650
Stop & Shop PC's networking 1,335 46 1,381
Stop & Shop PC's networking 178,944 6,200 185,144
Stop & Shop PC's networking 11,011 382 11,393
Stop & Shop Furniture and fixtures 39,556 1,371 40,927
Stop & Shop Furniture and fixtures 50,749 1,758 52,507
Stop & Shop Furniture and fixtures 39,548 1,370 40,918
Stop & Shop PC's networking 11,276 391 11,667
Stop & Shop PC's networking 11,276 391 11,667
Stop & Shop PC's networking 11,276 391 11,667
Stop & Shop PC's networking 11,276 391 11,667
Stop & Shop PC's networking 38,529 1,335 39,864
Stop & Shop PC's networking 49,471 1,714 51,185
Stop & Shop PC's networking 11,202 388 11,590
Stop & Shop PC's networking 11,626 403 12,029
Stop & Shop PC's networking 11,626 403 12,029
Stop & Shop PC's networking 6,916 240 7,156
Stop & Shop PC's networking 11,638 403 12,041
Stop & Shop PC's networking 5,450 189 5,639
Stop & Shop PC's networking 5,330 185 5,515
11
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
3. Equipment Purchases, continued
-------------------
Acquisition Total
Equipment Cost of Fees and Equipment
Lessee Description Equipment Reimbursements Purchase Price
------ ----------- --------- -------------- --------------
Stop & Shop PC's networking $ 11,556 $ 400 $ 11,956
Stop & Shop PC's networking 11,556 400 11,956
Stop & Shop PC's networking 11,556 400 11,956
Stop & Shop PC's networking 11,556 400 11,956
Stop & Shop PC's networking 3,428 119 3,547
Stop & Shop PC's networking 3,428 119 3,547
Stop & Shop PC's networking 3,428 119 3,547
Stop & Shop PC's networking 3,428 119 3,547
Stop & Shop PC's networking 3,428 119 3,547
Stop & Shop PC's networking 3,428 119 3,547
Stop & Shop PC's networking 6,544 227 6,771
Stop & Shop PC's networking 6,544 227 6,771
Stop & Shop PC's networking 6,544 227 6,771
Stop & Shop PC's networking 6,544 227 6,771
Stop & Shop PC's networking 6,544 227 6,771
Stop & Shop PC's networking 6,544 227 6,771
Stop & Shop PC's networking 6,544 227 6,771
Stop & Shop PC's networking 6,544 227 6,771
Stop & Shop PC's networking 6,544 227 6,771
Stop & Shop PC's networking 6,544 227 6,771
Stop & Shop PC's networking 3,428 119 3,547
Stop & Shop PC's networking 6,544 227 6,771
Stop & Shop PC's networking 3,428 119 3,547
Stop & Shop PC's networking 3,428 119 3,547
Stop & Shop PC's networking 3,428 119 3,547
United Artists Furniture and fixtures 168,696 5,845 174,541
United Artists Furniture and fixtures 124,630 4,318 128,948
United Artists Furniture and fixtures 123,970 4,296 128,266
United Artists Furniture and fixtures 128,896 4,466 133,362
United Artists Furniture and fixtures 116,699 4,044 120,743
United Artists Furniture and fixtures 122,292 4,237 126,529
General Motors Forklifts 76,077 2,636 78,713
General Motors Forklifts 116,620 4,041 120,661
Alloy Polymers Manufacturing equipment 95,296 3,302 98,598
Alterations Plus Manufacturing equipment 31,375 1,087 32,463
Applied Radiological Control Manufacturing equipment 106,993 3,707 110,700
Autry Greer & Sons, Inc. Furniture and fixtures 78,119 2,707 80,825
Bojangles' Restaurants, Inc. Furniture and fixtures 239,536 8,300 247,836
C & H Knit Products, Inc. Manufacturing equipment 213,101 7,384 220,485
C & H Knit Products, Inc. Manufacturing equipment 86,111 2,984 89,095
12
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
3. Equipment Purchases, continued
-------------------
Acquisition Total
Equipment Cost of Fees and Equipment
Lessee Description Equipment Reimbursements Purchase Price
------ ----------- --------- -------------- --------------
Country Cupboard Food Stores Office automation equipment $ 148,317 $ 5,139 $ 153,456
C. T. Harris, Inc. Forklifts 366,146 12,142 378,288
Envirosafe Service, Inc. Forklifts 56,110 1,889 57,999
Floyd Marine Storage, Inc. Forklifts 58,932 2,042 60,974
Freestate Petroleum Corp. Furniture and fixtures 83,827 2,905 86,732
Freestate Petroleum Corp. Furniture and fixtures 95,782 3,319 99,101
Freestate Petroleum Corp. Furniture and fixtures 117,961 4,087 122,048
Freestate Petroleum Corp. Furniture and fixtures 127,676 4,424 132,100
Hokkins Systemation, Inc. Furniture and fixtures 151,534 5,251 156,785
Hough Petroleum Furniture and fixtures 140,741 4,877 145,617
Hough Petroleum Furniture and fixtures 70,782 2,453 73,234
Hough Petroleum Furniture and fixtures 45,985 1,593 47,579
Kessel Food Markets Inc. Furniture and fixtures 1,046,603 36,265 1,082,868
Kop-Flex, Inc. Manufacturing equipment 122,553 4,246 126,799
Lykins Oil Co., Inc. Furniture and fixtures 35,292 1,223 36,515
Lykins Oil Co., Inc. Furniture and fixtures 86,044 2,981 89,026
Madden Services, Inc. Misc. warehouse equipment 599,055 20,757 619,812
Madden Services, Inc. Misc. warehouse equipment 81,901 2,838 84,739
McGavren Guild Inc. Furniture and fixtures 69,826 2,419 72,246
McGavren Guild Inc. Furniture and fixtures 231,485 8,021 239,506
Mt Pleasant Publishing PC's networking 45,732 1,585 47,317
Mt Pleasant Publishing PC's networking 27,006 936 27,941
Perimeter Oil Company Furniture and fixtures 96,437 3,342 99,778
Quality Oil Company, Inc. Furniture and fixtures 58,006 1,931 59,937
Quality Oil Company, Inc. Furniture and fixtures 8,580 286 8,865
Rainbow Marketers, Inc. Furniture and fixtures 160,637 5,566 166,203
Recycled Materials Construction equipment 174,469 6,045 180,514
Rogers Petroleum, Inc. Research equipment 55,122 1,910 57,032
Shapiro Packing Company Food processing equipment 59,914 2,076 61,990
Shapiro Packing Company Food processing equipment 53,048 1,838 54,886
Shapiro Packing Company Food processing equipment 174,073 6,032 180,105
Shapiro Packing Company Food processing equipment 72,353 2,507 74,860
Shoex, Inc. Furniture and fixtures 243,501 8,437 251,939
SOS Transport, Inc. Transport-trucks 85,239 2,954 88,192
Tennessee River, Inc. Manufacturing equipment 55,362 1,918 57,281
The Hanson-Whitney Company Machine tools 79,202 2,744 81,946
Trammell Crow Distribution Above ground mining equipment 405,893 14,064 419,957
Valley Innovative Mgmt. Ser Furniture and fixtures 91,888 3,184 95,072
Vfl Technology Corporation Forklifts 442,178 15,321 457,500
Vision Art Design & Animation Communication equipment 27,568 955 28,523
13
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
3. Equipment Purchases, continued
-------------------
Acquisition Total
Equipment Cost of Fees and Equipment
Lessee Description Equipment Reimbursements Purchase Price
------ ----------- --------- -------------- --------------
White Consolidated Manufacturing equipment $ 85,246 $ 2,954 $ 88,199
System One PC's networking 160,207 5,551 165,758
Thomson Industries Machine tools 43,248 1,499 44,747
Home Depot Transport trucks 74,690 2,530 77,221
Home Depot Forklifts 739,889 25,092 764,981
USS Kobe Forklifts 102,722 3,559 106,281
USS Kobe Forklifts 29,283 1,015 30,298
Thomson Industries Machine tools 43,248 1,499 44,748
Thomson Industries Lathe 199,798 6,923 206,721
Ball Foster Trucks 259,065 8,785 267,850
System One Relay system 89,224 3,092 92,315
Ball Foster Forklifts 177,381 6,146 183,528
Ball Foster Forklifts 63,364 2,196 65,560
Ball Foster Forklifts 41,780 1,448 43,228
Allied Signal Computer/semiconductor equipment 146,832 5,033 151,865
Staples, Inc. Copiers 333,585 11,559 345,144
Staples, Inc. Copiers 129,475 4,486 133,961
Staples, Inc. Copiers 125,946 4,364 130,310
Staples, Inc. Copiers 205,014 7,104 212,118
Staples, Inc. Copiers 337,593 11,698 349,291
Staples, Inc. Copiers 38,393 1,330 39,724
Ball Foster Forklifts 85,388 2,832 88,221
Ball Foster Front end loader 58,476 1,922 60,398
Ball Foster Lift trucks 111,692 3,851 115,543
Ball Foster Forklifts 17,064 579 17,643
Ball Foster Lift trucks 47,169 1,626 48,795
Brown Strauss Forklift 90,641 3,141 93,782
Pacific Coast Forklift 46,826 1,623 48,449
General Motors Material handling 15,259 529 15,787
General Motors Material handling 30,414 1,054 31,467
General Motors Material handling 30,199 1,046 31,246
General Motors Material handling 463,511 16,061 479,572
General Motors Material handling 37,297 1,292 38,589
Compsource Office furniture 232,855 7,412 240,268
In Home Health Office furniture & fixtures 18,013 624 18,637
In Home Health Telephone system 34,585 1,198 35,783
International Paper Sweepers 272,213 9,432 281,645
International Paper Forklift 35,045 1,214 36,259
International Paper Loaders 52,138 1,807 53,945
Xerox Forklift 4,285 148 4,433
14
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
3. Equipment Purchases, continued
-------------------
Acquisition Total
Equipment Cost of Fees and Equipment
Lessee Description Equipment Reimbursements Purchase Price
------ ----------- --------- -------------- --------------
Georgetown Steel Forklift $ 26,796 $ 928 $ 27,724
In Home Health Personal computers 26,553 920 27,473
Ball Foster Scrubber 8,659 290 8,948
In Home Health Furniture, fixtures & equipment 86,900 3,011 89,912
General Motors Material handling 632,280 21,909 654,189
General Motors Material handling 214,665 7,438 222,103
General Motors Material handling 70,727 2,451 73,177
General Motors Material handling 59,984 2,078 62,063
General Motors Material handling 176,911 6,130 183,041
Ball Foster Forklifts 53,428 1,812 55,240
Merritt Ford, Inc. Auto alignment equipment 25,335 878 26,212
Lakeland Chrysler/Plymouth Auto alignment equipment 36,071 1,250 37,321
E & R, Inc. Auto alignment equipment 29,145 1,010 30,155
Bickerstaff Imports, Inc. Auto alignment equipment 13,837 479 14,317
Southway Tire and Auto., Inc. Auto alignment equipment 8,897 308 9,205
Kelley, Donald Auto alignment equipment 12,068 418 12,486
David Tire Company Auto alignment equipment 22,241 771 23,011
Bob King Pontiac-GMC, Inc. Auto alignment equipment 29,767 1,031 30,799
Decamps, William L Auto alignment equipment 17,854 619 18,473
Feurer, Dennis R Auto alignment equipment 8,732 303 9,035
Feurer, Dennis R Auto alignment equipment 7,624 264 7,888
Tom's Tire & Service Center Auto alignment equipment 17,159 595 17,752
Tom's Tire & Service Center Auto alignment equipment 6,285 219 6,503
Crystal Ford and Mercury, Inc. Auto alignment equipment 17,865 619 18,484
Kovco Auto alignment equipment 15,069 522 15,591
Smoky Jennings Chevrolet, Inc. Auto alignment equipment 29,539 1,024 30,563
Whaley, Jane C Auto alignment equipment 19,463 674 20,137
McKay, Dane Auto alignment equipment 19,752 684 20,437
Riverside Chrysler Plymouth Auto alignment equipment 14,750 511 15,261
Three Rivers Motor Car Company Auto alignment equipment 12,251 425 12,676
Brickhouse Enterprises, Inc. Auto alignment equipment 20,420 708 21,128
Foote & Davies, Inc. Printing press equipment 770,154 26,686 796,840
Foote & Davies, Inc. Printing press equipment 997,537 34,565 1,032,102
J.J. Collins' Sons, Inc. Printing press equipment 603,325 20,905 624,231
Champion Business Forms, Inc. Printing press equipment 1,223,706 42,401 1,266,108
D.L. Phillips Investment Build Forklifts 6,769 235 7,004
D.L. Phillips Investment Build Forklifts 7,748 268 8,016
Hyplains Beef, L.C Forklifts 9,342 324 9,665
Hyplains Beef, L.C Forklifts 10,696 371 11,067
Keystone Consolidated Industries Forklifts 74,037 2,565 76,603
15
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
3. Equipment Purchases, continued
-------------------
Acquisition Total
Equipment Cost of Fees and Equipment
Lessee Description Equipment Reimbursements Purchase Price
------ ----------- --------- -------------- --------------
National Beef Packing Co.,L.P Forklifts $ 39,604 $ 1,372 $ 40,976
Scott Company of California Forklifts 18,370 637 19,006
Scott Company of California Forklifts 35,859 1,243 37,101
Scott Company of California Forklifts 36,948 1,280 38,229
Stampede Meat, Inc. Forklifts 5,590 194 5,783
Stampede Meat, Inc. Forklifts 3,290 114 3,404
Stampede Meat, Inc. Forklifts 2,898 100 2,998
Lane Steel, Inc. Forklifts 31,775 1,101 32,876
Major Brands, Inc. Forklifts 3,312 115 3,427
Pretech Corporation Forklifts 37,187 1,289 38,476
Roadmaster Corporation Forklifts 12,572 436 13,007
Stampede Meat, Inc. Forklifts 19,663 681 20,344
Stampede Meat, Inc. Forklifts 22,056 764 22,820
Acme Battery Manufacturing Co. Forklifts 8,437 292 8,729
American Laminates, Inc. Forklifts 17,506 607 18,112
Canoak USA, Inc. Forklifts 15,910 551 16,461
Central Air Freight Services Forklifts 12,410 430 12,840
Ceradyne, Inc. Forklifts 16,316 565 16,882
Elmore-Pisgah, Inc. Forklifts 10,890 377 11,267
Esselte Pendaflex Corporation Forklifts 33,313 1,154 34,467
Esselte Pendaflex Corporation Forklifts 32,920 1,141 34,060
Esselte Pendaflex Corporation Forklifts 45,743 1,585 47,328
Esselte Pendaflex Corporation Forklifts 32,920 1,141 34,060
Esselte Pendaflex Corporation Forklifts 43,945 1,523 45,467
Esselte Pendaflex Corporation Forklifts 35,736 1,238 36,975
Esselte Pendaflex Corporation Forklifts 54,959 1,904 56,863
Esselte Pendaflex Corporation Forklifts 14,635 507 15,142
Esselte Pendaflex Corporation Forklifts 26,601 922 27,523
Esselte Pendaflex Corporation Forklifts 29,250 1,014 30,264
Esselte Pendaflex Corporation Forklifts 37,774 1,309 39,083
Haldex Corporation Forklifts 11,214 389 11,603
Iams Company-Heartland Plt Forklifts 15,690 544 16,234
Interactive Marketing Services Forklifts 16,639 577 17,215
Kansas Oxide Corporation Forklifts 19,511 676 20,187
Midstate Construction & Maintenance Forklifts 79,433 2,752 82,185
North American Packaging Corp. Forklifts 9,952 345 10,299
Schroeders Wholesale, Inc. Forklifts 12,712 440 13,153
Sea-lect Wholesale Seafood Forklifts 16,154 560 16,714
Silverado Foods, Inc. Forklifts 11,005 381 11,386
Straight-line Water Sports, Inc Forklifts 19,472 675 20,147
16
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
3. Equipment Purchases, continued
-------------------
Acquisition Total
Equipment Cost of Fees and Equipment
Lessee Description Equipment Reimbursements Purchase Price
------ ----------- --------- -------------- --------------
United States Mineral Products Forklifts $ 52,712 $ 1,826 $ 54,538
The Warehouse, Inc. Forklifts 16,904 586 17,490
Basic Vegetable Forklifts 206,842 7,167 214,009
Thomson Saginaw Material handling 35,420 1,227 36,647
In Home Health Computer equipment 36,228 1,255 37,483
Basic Vegetable Lift truck 15,698 544 16,242
In Home Health Furniture, fixtures & equipment 5,297 184 5,481
Lucent Technologies Semiconductor 1,410,646 48,879 1,459,524
Ball Foster Forklifts 94,287 3,267 97,554
Ball Foster Forklifts 87,384 3,028 90,412
------------ ----------- ------------
$ 33,803,238 $ 1,160,785 $ 34,964,023
============ =========== ============
</TABLE>
As of September 30, 1996, the general partner had identified $2.2 million
of additional equipment that satisfied the Partnership's acquisition
criteria that is expected to be acquired during the balance of 1996.
4. Bankrupt Lessee
---------------
Anchor Glass filed for protection under Chapter 11 of the bankruptcy code
on September 13, 1996. The aggregate net book value under one lease with
this lessee was $232,798 at September 30, 1996. Potential outcomes are (i)
the lessee affirms its lease and the Partnership collects all rents due
under the lease or (ii) the lessee rejects the lease and returns the
underlying equipment to the Partnership. If the lease is rejected and the
equipment is returned to the Partnership or sold to a third party, it is
possible that remarketing proceeds will be less than the net book value of
the equipment. However, if the lessee affirms the lease, the Partnership
would not be subject to a loss. The lessee has not made its intentions
known at this time and, accordingly, the amount of loss, if any, cannot be
determined as of September 30, 1996. Regardless of the lessee's decision to
accept or reject the lease, the general partner believes that the ultimate
outcome will not have a material adverse impact on the Partnership's
financial position or results of operations.
17
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
- ---------------------
Presented below are schedules (prepared solely to facilitate the discussion of
results of operations that follows) showing condensed statements of income
categories and analyses of changes in those condensed categories derived from
the Statements of Income:
<TABLE>
<CAPTION>
Condensed Statements of Condensed Statements of
Income for the three months The effect on Income for the nine months The effect on
ended September 30, net income of ended September 30, net income of
---------------------------- changes between ---------------------------- changes between
1996 1995 periods 1996 1995 periods
------------ ------------- ---------------- -------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Leasing margin $ 611,150 $ 400,634 $ 210,516 $ 1,688,526 $ 769,561 $ 918,965
Equipment sales margin - - - 110,831 - 110,831
Interest income 46,896 64,670 (17,774) 296,484 183,026 113,458
Management fees paid to
general partner (109,378) (54,518) (54,860) (262,126) (94,765) (167,361)
Direct services from general
partner (23,134) (22,445) (689) (71,698) (70,544) (1,154)
General and administrative (69,717) (38,197) (31,520) (213,163) (120,841) (92,322)
Provision for losses - - - - (100,000) 100,000
---------- ---------- ------------ ----------- ----------- -----------
Net income $ 455,817 $ 350,144 $ 105,673 $ 1,548,854 $ 566,437 $ 982,417
========== ========== ============ =========== =========== ===========
</TABLE>
LEASING MARGIN
Leasing margin consists of the following:
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
-------------------------------- -------------------------------
1996 1995 1996 1995
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Operating lease rentals $ 4,747,128 $ 2,869 053 $ 11,281,147 $ 4,993,205
Direct finance lease income 114,170 77,543 303,996 190,005
Depreciation and amortization (3,712,368) (2,120,689) (8,639,565) (3,760,780)
Interest expense on discounted
lease rentals (537,780) (425,273) (1,257,052) (652,869)
------------- ------------- ------------- -------------
Leasing margin $ 611,150 $ 400,634 $ 1,688,526 $ 769,561
============= ============ ============= =============
Leasing margin ratio 13% 14% 15% 15%
== == == ==
</TABLE>
18
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations, continued
- ---------------------
LEASING MARGIN, continued
All components of leasing margin increased due to growth in the Partnership's
lease portfolio.
The ultimate rate of return on leases depends, in part, on the general level of
interest rates at the time the leases are originated. Because leasing is an
alternative to financing equipment purchases with debt, lease rates tend to rise
and fall with interest rates (although lease rate movements generally lag
interest rate changes in the capital markets). Interest rates have fluctuated
over the past several years as follows: (i) rates decreased from 1990 until the
early part of 1994, (ii) rates then increased through the early part of 1995,
and (iii) rates have decreased to the present time. It is unclear whether
interest rates will continue to decrease, and what effect, if any, such interest
rate decreases will have on lease rates.
EQUIPMENT SALES MARGIN
Equipment sales margin consists of the following:
Three months ended Nine months ended
September 30, September 30,
----------------------- ---------------------
1996 1995 1996 1995
---------- ---------- ---------- --------
Equipment sales revenue $ - $ - $ 454,045 $ -
Cost of equipment sales - - (343,214) -
---------- --------- --------- --------
Equipment sales margin $ - $ - $ 110,831 $ -
========== ========= ========= ========
INTEREST INCOME
Interest income increased for the nine months ended September 30, 1996 compared
to the corresponding period in 1995, due to an increase in invested cash from
sales of Class A investment units pending the Partnership's initial acquisition
of equipment.
EXPENSES
Management fees and general and administrative expenses increased due to growth
in the Partnership's lease portfolio.
19
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations, continued
- ---------------------
PROVISION FOR LOSSES
The remarketing of equipment for an amount greater than its book value is
reported as equipment sales margin (if the equipment is sold) or leasing margin
(if the equipment is re-leased). The realization of less than the carrying value
of equipment (which is typically not known until remarketing subsequent to the
initial lease termination has occurred) is recorded as provision for losses.
Residual values are established equal to the estimated value to be received from
the equipment following termination of the lease. In estimating such values, the
Partnership considers all relevant facts regarding the equipment and the lessee,
including, for example, the likelihood that the lessee will re-lease the
equipment. The nature of the Partnership's leasing activities is that it has
credit exposure and residual value exposure and, accordingly, in the ordinary
course of business, it will incur losses from those exposures. The Partnership
performs on-going quarterly assessments of its assets to identify any
other-than-temporary losses in value.
No provisions for losses were recorded during either the three and nine months
ended September 30, 1996 or the three months ended September 30, 1995 because no
other-than-temporary losses in the value of equipment were identified in the
quarterly assessments of the Partnership's assets.
The provision for losses recorded during the nine months ended September 30,
1995 was related to Grand Palais Riverboat, Inc., a lessee that defaulted under
its lease agreement with the Partnership by failing to make a lease payment due
on June 1, 1995 and then declared Chapter 11 bankruptcy in July 1995. A
provision for loss of $100,000 was recorded during the second quarter of 1995.
The Partnership settled its bankruptcy litigation with Grand Palais Riverboat,
Inc. effective June 8, 1996. The settlement agreement provides for the full
recovery of the cost of the equipment under lease, as well as legal fees, plus
interest. The Partnership has not reversed the $100,000 reserve for this
litigation recorded during 1995. Instead, the Partnership has included the
$100,000 in an allowance for losses maintained to provide for any future
other-than-temporary declines in asset values.
Liquidity & Capital Resources
- -----------------------------
The Partnership intended to continue offering Class A limited partner units for
sale and admitting additional Class A limited partners through April 15, 1996,
or until $50 million in units have been sold. The Partnership reached its goal
of $50 million in unit sales on April 10, 1996.
20
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Liquidity & Capital Resources, continued
- -----------------------------
A summary of the Partnership's offering activities for the first nine months of
1996 is presented below:
Offering activities for
the nine months ended
September 30, 1996
-----------------------
Class A limited partner units sold 116,230
============
Gross offering proceeds $ 11,623,048
Sales commissions (1,162,305)
Non-accountable organization and offering expenses
reimbursement (464,922)
Due diligence expenses (61,693)
------------
Net offering proceeds $ 9,934,128
============
Class B limited partner (CAII) cash contribution $ 130,000
============
The Partnership was formed on November 2, 1993. On April 18, 1994, the
Partnership commenced offering 500,000 Class A limited partner units at $100 per
unit. On June 14, 1994, the Partnership held its initial closing, receiving
gross offering proceeds of $1,200,000 from the sale of 12,000 Class A limited
partner units. A summary of the Partnership's offering activities from the
commencement of operations to September 30, 1996 is presented below:
Offering activities from the
Commencement of Operations
(June 14, 1994)
to September 30, 1996
----------------------------
Class A limited partner units sold 500,000
============
Gross offering proceeds $ 50,000,000
Sales commissions (5,000,000)
Non-accountable organization and offering expenses
reimbursement (2,000,000)
Due diligence expenses (184,603)
------------
Net offering proceeds $ 42,815,397
============
Class B limited partner (CAII) cash contribution $ 500,000
============
21
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Liquidity & Capital Resources, continued
- -----------------------------
The Partnership funds its operating activities principally with cash from rents,
discounted lease rentals (non-recourse debt), interest income, and sales of
off-lease equipment. Cash available for purchases of equipment under lease and
cash reserves of the Partnership are invested in short-term government
securities pending the acquisition of equipment or distribution to the partners.
The Partnership purchased equipment under lease during the nine months ended
September 30, 1996 with a total acquisition cost of $34,964,023. All such
equipment was purchased from Capital Associates International, Inc. ("CAII"),
the Class B limited partner and an affiliate of the general partner. As of
September 30, 1996, the general partner had identified $2.2 million of
additional equipment that satisfied the Partnership's acquisition criteria that
is expected to be acquired during the remainder of 1996.
During June 1995, CAII and the Partnership entered into an agreement with a
lender to debt finance up to $50 million of lease receivables as part of a lease
securitization program. Under this program, the Partnership's financing
obligations are collateralized by the leased equipment and related rentals, and
the Partnership has no recourse liability to the lender for repayment of debt.
In addition, this securitized debt vehicle provides an attractive interest rate.
Aggregate closings through September 30, 1996 were $10.2 million for the
Partnership.
During the nine months ended September 30, 1996, the Partnership declared
distributions to the partners of $3,781,058 ($445,053 of which was paid during
October 1996). A substantial portion of such distributions is expected to
constitute a return of capital. Distributions may be characterized for tax,
accounting and economic purposes as a return of capital, a return on capital or
a portion of both. The portion of each cash distribution by a partnership which
exceeds its net income for the fiscal period may be deemed a return of capital.
However, the total percentage of a partnership's return on capital over its life
will only be determined after all residual cash flows (which include proceeds
from the re-leasing and sale of equipment) have been realized at the termination
of the Partnership.
The general partner believes that the Partnership will generate sufficient cash
flows from operations during 1996, to (1) meet current operating requirements,
(2) enable it to fund cash distributions to both the Class A and Class B limited
partners at annualized rates of 10.5% (substantial portions of which are
expected to constitute returns of capital), on their capital contributions, and
(3) reinvest in additional equipment under leases, provided that suitable
equipment can be identified and acquired.
22
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
The Partnership is involved in routine legal proceedings incidental
to the conduct of its business. The general partner believes none of
these legal proceedings will have a material adverse effect on the
financial condition or operations of the Partnership.
Item 6. Exhibits and Reports on Form 8-K
(a) None.
(b) The Partnership did not file any reports on Form 8-K during the
quarter ended September 30, 1996.
23
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Partnership has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CAPITAL PREFERRED YIELD FUND-III, L.P.
By: CAI Equipment Leasing IV Corp.
Dated: October 30, 1996 By: /s/John E. Christensen
----------------------
John E. Christensen
Senior Vice President,
Chief Administrative Officer and Director
24
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the balance
sheets and statements of income and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 879,832
<SECURITIES> 0
<RECEIVABLES> 690,011
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 58,869,694
<DEPRECIATION> 0
<TOTAL-ASSETS> 66,276,394
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 38,250,007
<TOTAL-LIABILITY-AND-EQUITY> 66,276,394
<SALES> 110,831
<TOTAL-REVENUES> 11,992,458
<CGS> 0
<TOTAL-COSTS> 10,443,604
<OTHER-EXPENSES> 333,824
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,257,052
<INCOME-PRETAX> 1,548,854
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,548,854
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,548,854
<EPS-PRIMARY> 3.12
<EPS-DILUTED> 3.12
</TABLE>
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