SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal year ended December 31, 1996
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission file number 33-44158
CAPITAL PREFERRED YIELD FUND-III
(Exact name of registrant as specified in its charter)
DELAWARE 84-1248907
(State of organization) (I.R.S. Employer Identification Number)
7175 W. JEFFERSON AVENUE, LAKEWOOD, COLORADO 80235
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 980-1000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
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
--- ---
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. [ ]
State the aggregate market value of the voting stock held by non-affiliates of
the registrant. Not applicable.
Exhibit Index Appears on Page 45
PAGE 1 OF 46 PAGES
<PAGE>
Item 1. Business
--------
Capital Preferred Yield Fund-III, L.P., a Delaware limited partnership (the
"Partnership"), was organized on November 2, 1993 and is engaged in the business
of owning and leasing equipment. CAI Equipment Leasing IV Corp., a Colorado
corporation and an affiliate of Capital Associates, Inc. ("CAI"), is the general
partner of the Partnership.
Capital Associates International, Inc. ("CAII"), an affiliate of the general
partner, is the sole Class B limited partner of the Partnership. In exchange for
the Class B limited partner interest, the Class B limited partner was required
to contribute cash in the amount of $10,000 for each $1,000,000 of investors'
capital contribution (i.e., cash investments in the Partnership) to the
Partnership. In addition, the Class B limited partner's interest in
Distributable Cash is subordinated to the Class A limited partners' interest.
The contributions of the Class B limited partner were made simultaneously with
the purchase of equipment by the Partnership. As of December 31, 1996, CAII
contributed $500,000 to the Partnership making CAII the largest single investor
in the Partnership.
The Partnership commenced business operations on June 14, 1994. The Partnership
reached its goal of selling a maximum of 500,000 Class A limited partner units
on April 10, 1996. A summary of the Partnership's offering activities is
presented below:
<TABLE>
<CAPTION>
Class A Sales
Limited Number Gross Commissions Net
Partner of Offering and Offering Offering
Units Sold Investors Proceeds Expenses Proceeds
---------- --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1994 130,993 990 $ 13,099,253 $ 1,888,566 $ 11,210,687
Year ended December 31, 1995 252,777 1,300 25,277,699 3,607,116 21,670,583
Year ended December 31, 1996 116,230 2,685 11,623,048 1,688,920 9,934,128
------- ----- ------------- ------------ --------------
Totals 500,000 4,975 $ 50,000,000 $ 7,184,602 $ 42,815,398
======= ===== ============ =========== ============
</TABLE>
The Partnership's overall investment objectives are to (i) raise the maximum
allowable capital from investors for investment in accordance with the
Partnership's investment objectives described in the Prospectus; (ii) invest
such capital and related indebtedness in a diversified portfolio of equipment
subject to leases to creditworthy businesses with terms ranging from two to
seven years; (iii) if funds are available for distribution, make monthly cash
distributions to the Class A limited partners during the reinvestment period (a
period that ends approximately June 30, 2000); (iv) re-invest all available
undistributed cash from operations and cash from sales in additional equipment
during the reinvestment period to increase the Partnership's portfolio of
revenue- generating equipment, provided that suitable equipment can be
identified and acquired; and (v) sell or otherwise dispose of the Partnership's
equipment and other assets in an orderly manner and promptly distribute cash
from sales thereof to the Partners within one to three years of the end of the
reinvestment period.
-2-
<PAGE>
Item 1. Business, continued
--------
During 1996, the Partnership acquired capital equipment of various types under
lease to third parties. All of the equipment was purchased by CAII directly from
manufacturers or from other independent third parties and sold to the
Partnership. The equipment was generally comprised of (among others), material
handling equipment, computer and peripheral equipment, industrial equipment,
furniture and fixtures, telecommunications equipment, and research and
development equipment. See Item 13 of this report, "Certain Relationships and
Related Transactions" for the detail listing of equipment purchased during 1996.
The Partnership expects that a majority of the equipment purchased during 1997
will be similar in nature to that mentioned above.
The Partnership may assign the rentals from leases to financial institutions, or
acquire leases subject to such assignments, at fixed interest rates on a
nonrecourse basis. This non-recourse debt financing will be utilized to finance
the purchase of equipment under lease or to invest the proceeds therefrom in
additional equipment under lease. In the event of default by a lessee, the
financial institution has a first lien on the underlying leased equipment, with
no further recourse against the Partnership. Cash proceeds from such financings,
or financings assumed in the acquisition of leases, are recorded on the balance
sheet as discounted lease rentals. As lessees make payments to financial
institutions, leasing revenue and interest expense are recorded.
During 1996, the Partnership leased equipment to investment grade lessees in
diverse industries including the financial services, retail, telecommunications,
energy and manufacturing industries. Approximately 69% of the Partnership's
total equipment under lease was leased to investment grade lessees as of
December 31, 1996. Pursuant to the Partnership Agreement, an investment grade
lessee is a company (i) with a net worth in excess of $100,000,000 (and no debt
issues that are rated), or (ii) with a credit rating of not less than Baa as
determined by Moody's Investor Services, Inc. or comparable credit rating, as
determined by another recognized credit rating service; or a lessee, all of
whose lease payments have been unconditionally guaranteed or supported by a
letter of credit issued by a company meeting one of the above requirements. The
Partnership may limit its credit risk through selective use of non-recourse debt
financing of future lease rentals, as described above.
The Partnership only acquires equipment that is on lease at the time of
acquisition. After the initial term of its lease, each item of equipment will be
expected to provide additional investment income from its re-lease or ultimate
sale. Upon expiration of the initial lease, the Partnership attempts to re-lease
or sell the equipment to the existing lessee. If a re-lease or sale to the
lessee cannot be negotiated, the Partnership will attempt to lease or sell the
equipment to a third party.
The Partnership's business is not subject to seasonal variations.
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.
-3-
<PAGE>
Item 1. Business, continued
--------
The Partnership has no employees. The officers, directors and employees of the
general partner and its affiliates perform services on behalf of the
Partnership. The general partner is entitled to receive certain fees and expense
reimbursements in connection with the performance of these services. See Item 10
of this Report, "Directors and Executive Officers of the Partnership" and Item
13 of this Report, "Certain Relationships and Related Transactions," which are
incorporated herein by reference.
The Partnership competes in the leasing marketplace as a lessor with a
significant number of other companies, including equipment manufacturers,
leasing companies and financial institutions. The Partnership competes mainly on
the basis of the expertise of its general partner in remarketing equipment,
terms offered in its transactions, pricing and service. Although the Partnership
does not account for a significant percentage of the leasing market, the general
partner believes that the Partnership's marketing strategies and financing
capabilities will enable it to continue to compete effectively in the equipment
leasing and remarketing markets.
The Partnership leases equipment to a significant number of lessees. No one
lessee and its affiliates accounted for more than 10% of total rental revenue of
Partnership during 1996.
The Partnership is required to dissolve and distribute all of its assets no
later than December 31, 2011. However, the general partner anticipates that all
equipment will be sold prior to that date and that the Partnership will be
liquidated earlier.
Item 2. Properties
----------
Per the Partnership Agreement, the Partnership does not own or lease any
physical properties other than the equipment discussed in Item 1 of this Report,
"Business," which is incorporated herein by reference.
Item 3. Legal Proceedings
-----------------
Neither the Partnership nor any of the Partnership's equipment is the subject of
any material pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
No matters were submitted to a vote of the limited partners of the Partnership,
through the solicitation of proxies or otherwise, during the fourth quarter
ended December 31, 1996.
-4-
<PAGE>
Item 5. Market for the Partnership's Common Equity and Related Stockholder
----------------------------------------------------------------------
Matters
-------
(a) The Partnership's limited partner units and general partner units
are not publicly traded. There is no established public trading
market for such units and none is expected to develop.
(b) As of December 31, 1996, the number of limited partners was 4,968.
(c) Distributions
-------------
During 1996, the Partnership made twelve (12) distributions (a
substantial portion of which constituted a return of capital) to
Class A limited partners as follows:
<TABLE>
<CAPTION>
Distributions Per
$100 Investment
For the Payment (computed on Total
Period Ended made during weighted average) Distributions
------------ ----------- ----------------- -------------
<S> <C> <C> <C>
December 31, 1995 January 1996 $ 0.875 $ 313,566
January 31, 1996 February 1996 0.875 345,254
February 28, 1996 March 1996 0.875 376,218
March 31, 1996 April 1996 0.875 414,345
April 30, 1996 May 1996 0.875 434,253
May 31, 1996 June 1996 0.875 435,339
June 30, 1996 July 1996 0.875 436,957
July 31, 1996 August 1996 0.875 435,339
August 31, 1996 September 1996 0.875 434,827
September 30, 1996 October 1996 0.875 436,228
October 31, 1996 November 1996 0.875 434,346
November 30, 1996 December 1996 0.875 433,908
------- ------------
$ 10.50 $ 4,930,580
======= ============
</TABLE>
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 for accounting
purposes. However, the total percentage of a leasing partnership's
return on capital over its life can 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.
-5-
<PAGE>
Item 5. Market for the Partnership's Common Equity and Related Stockholder
----------------------------------------------------------------------
Matters, continued
-------
The distribution for the month ended December 31, 1996, totaling
$435,790, was paid to the Class A limited partners on January 4,
1997. Distributions to the general partner and Class B limited
partner during 1996 are discussed in Item 13 of this Report,
"Certain Relationships and Related Transactions."
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.
During 1995, the Partnership made twelve (12) distributions (a
substantial portion of which constituted a return of capital) to
Class A limited partners as follows:
<TABLE>
<CAPTION>
Distributions Per
$100 Investment
For the Payment (computed on Total
Period Ended made during weighted average) Distributions
------------ ----------- ----------------- -------------
<S> <C> <C> <C>
December 31, 1994 January 1995 $ 0.875 $ 100,629
January 31, 1995 February 1995 0.875 120,915
February 28, 1995 March 1995 0.875 141,950
March 31, 1995 April 1995 0.875 164,318
April 30, 1995 May 1995 0.875 180,853
May 31, 1995 June 1995 0.875 199,626
June 30, 1995 July 1995 0.875 217,423
July 31, 1995 August 1995 0.875 232,032
August 31, 1995 September 1995 0.875 246,432
September 30, 1995 October 1995 0.875 260,734
October 31, 1995 November 1995 0.875 279,394
November 30, 1995 December 1995 0.875 296,927
------- ------------
$ 10.50 $ 2,441,233
======= ============
</TABLE>
-6-
<PAGE>
Item 6. Selected Financial Data
-----------------------
The following selected financial data relates to 1996, 1995 and 1994. The data
should be read in conjunction with Item 7, "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and the financial statements
and notes thereto appearing elsewhere herein.
<TABLE>
<CAPTION>
Years ended December 31,
----------------------------------------
1996 1995 1994*
---- ---- ----
<S> <C> <C> <C>
Total revenue $ 17,245,131 $ 8,195,180 $ 512,864
Net income 2,074,001 553,710 42,939
Net income per weighted average Class A
limited partner unit outstanding 4.13 1.91 0.27
Total assets 63,125,629 48,463,584 12,365,947
Discounted lease rentals 23,437,868 16,863,892 1,159,380
Distributions declared to Class A limited partners 5,052,804 2,660,332 451,009
Distributions declared per weighted average
Class A limited partner unit outstanding 10.52 10.48 5.88
</TABLE>
*For the period from June 14, 1994 (commencement of operations) to
December 31, 1994
Item 7. 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 income statement
categories and analyses of changes in those condensed categories derived from
the Statements of Income.
<TABLE>
<CAPTION>
Condensed Condensed
Statements of Income Statements of Income
for the years The effect on for the years The effect on
ended December 31, net income of ended December 31, net income of
------------------------- changes ------------------------- changes
1996 1995 between years 1995 1994* between years
----------- ----------- ------------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Leasing margin $ 2,442,000 $ 1,044,113 $ 1,397,887 $ 1,044,113 $ 66,108 $ 978,005
Equipment sales margin 110,831 - 110,831 - - -
Interest income 320,679 238,293 82,386 238,293 102,583 135,710
Provision for losses (50,000) (275,000) 225,000 (275,000) - (275,000)
Management fees paid to general
partner (390,559) (156,351) (234,208) (156,351) (7,056) (149,295)
Direct services from general partner (93,690) (93,598) (92) (93,598) (36,875) (56,723)
General and administrative (265,260) (203,747) (61,513) (203,747) (81,821) (121,926)
----------- ----------- ----------- ----------- ----------- -----------
Net income $ 2,074,001 $ 553,710 $ 1,520,291 $ 553,710 $ 42,939 $ 510,771
=========== =========== =========== =========== =========== ===========
</TABLE>
*For the period from June 14, 1994 (commencement of operations) to
December 31, 1994
-7-
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
-----------------------------------------------------------------------
of Operations, continued
-------------
Results of Operations, continued
- ---------------------
LEASING MARGIN
Leasing margin consists of the following:
<TABLE>
<CAPTION>
Years ended December 31,
----------------------------------------------
1996 1995 1994*
---- ---- ----
<S> <C> <C> <C>
Operating lease rentals $ 16,399,312 $ 7,683,820 $ 402,415
Direct finance lease income 414,309 273,067 7,866
Depreciation and amortization (12,585,981) (5,895,602) (321,561)
Interest expense on discounted lease rentals (1,785,640) (1,017,172) (22,612)
------------ ------------ ------------
Leasing margin $ 2,442,000 $ 1,044,113 $ 66,108
============ ============ ============
Leasing margin ratio 15% 13% 16%
============ ============ ============
</TABLE>
* For the period from June 14, 1994 (commencement of operations) to
December 31, 1994.
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:
Year ended December 31, 1996
----------------------------
Equipment sale revenue $ 454,045
Cost of equipment sales (343,214)
-----------
Equipment sales margin $ 110,831
===========
The Partnership is in the reinvestment period. Currently, a portion of the
Partnership's initial leases are expiring and equipment is being remarketed
(i.e., re-leased or sold to either the original lessee or a third party) and,
accordingly, the timing and amount of equipment sales cannot be projected
accurately.
-8-
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
-----------------------------------------------------------------------
of Operations, continued
-------------
Results of Operations, continued
- ---------------------
INTEREST INCOME
Interest income increased 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, direct services from general partner and general and
administrative expenses increased due to growth in the Partnership's lease
portfolio.
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.
The provision for losses recorded during the fourth quarter of 1996 was
primarily for a deficiency resulting from a lessee default under a note secured
by a high pressure cleaning unit under lease to the lessee. Although the lessee
has not filed for bankruptcy, they have discontinued their operations and have
ceased making rental payments. The equipment was repossessed and sold by the
lender pursuant to the terms of the non-recourse debt agreement. The sale of the
equipment went toward retiring the debt and the general partner believes it is
unlikely that the deficiency will be recovered.
The provision for losses recorded during 1995 was related to two lessees that
filed for bankruptcy protection.
-9-
<PAGE>
Liquidity and Capital Resources
- -------------------------------
The Partnership reached its goal of $50 million in unit sales to Class A limited
partners on April 10, 1996.
A summary of the Partnership's offering activities for the year ended December
31, 1996 is presented below:
<TABLE>
<CAPTION>
Offering activities for the
year ended December 31, 1996
----------------------------
<S> <C>
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
=============
</TABLE>
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 December 31, 1996 is presented below:
<TABLE>
<CAPTION>
Offering activities from the
Commencement of Operations
(June 14, 1994)
to December 31, 1996
----------------------------
<S> <C>
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 (184,602)
-------------
Net offering proceeds $ 42,815,398
============
Class B limited partner (CAII) cash contribution $ 500,000
============
</TABLE>
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. Available cash and cash reserves of the Partnership are
invested in short-term government securities pending the acquisition of
equipment or distribution to the partners.
-10-
<PAGE>
Liquidity & Capital Resources, continued
- -----------------------------
During 1996, 1995 and 1994, the Partnership acquired equipment subject to leases
with a total equipment purchase price of $35,688,393, $36,496,213, and
$11,067,496, respectively. Also, during 1996 and 1995 the Partnership discounted
future rental payments from certain leases to non-recourse lenders and received
proceeds of $4,767,017 and $15,969,859, respectively. Non-recourse borrowing
against unleveraged leases in the Partnership's lease portfolio may occur in the
future as well, when the general partner, in its discretion, determines that
such non-recourse financing is in the best interest of the Partnership.
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 December 31, 1996 were $10.3 million for the
Partnership.
During 1996, 1995 and 1994 the Partnership declared distributions to the
partners of $5,154,680, $2,712,186 and $453,996, respectively. 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 for accounting purposes.
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 1997, 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.
-11-
<PAGE>
Item 8. Financial Statements and Supplementary Data
-------------------------------------------
Index to Financial Statements and
Financial Statement Schedule
Page
Number
------
Financial Statements
--------------------
Independent Auditors' Report 13
Balance Sheets at December 31, 1996 and 1995 14
Statements of Income for the years ended December 31,
1996, 1995 and the period from June 14, 1994
(commencement of operations)
through December 31, 1994 15
Statements of Partners' Capital for the years ended
December 31, 1996, 1995 and the period from
June 14, 1994 (commencement of operations)
through December 31, 1994 16
Statements of Cash Flows for the years ended December
31, 1996, 1995 and the period from June 14, 1994
(commencement of operations)
through December 31, 1994 17-18
Notes to Financial Statements 19-29
Financial Statement Schedule
----------------------------
Independent Auditors' Report 30
Schedule II - Valuation and Qualifying Accounts 31
-12-
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------
THE PARTNERS
CAPITAL PREFERRED YIELD FUND-III, L.P.:
We have audited the accompanying balance sheets of Capital Preferred Yield
Fund-III, L.P. as of December 31, 1996 and 1995, and the related statements of
income, partners' capital, and cash flows for each of the years in the two-year
period ended December 31, 1996 and the period from June 14, 1994 (commencement
of operations) to December 31, 1994. 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.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Capital Preferred Yield
Fund-III, L.P. as of December 31, 1996 and 1995, and the results of its
operations and its cash flows for each of the years in the two-year period ended
December 31, 1996 and the period from June 14, 1994 (commencement of operations)
to December 31, 1994 and in conformity with generally accepted accounting
principles.
/s/KPMG Peat Marwick LLP
--------------------------
KPMG PEAT MARWICK LLP
Denver, Colorado
January 31, 1997
-13-
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
December 31, December 31,
1996 1995
------------ ------------
<S> <C> <C>
Cash and cash equivalents $ 798,140 $ 6,774,071
Accounts receivable 883,201 1,366,351
Receivable from affiliates 42,691 -
Net investment in direct finance leases 5,479,265 4,294,046
Leased equipment, net 55,261,435 35,943,402
Deferred financing costs 6,577 85,714
----------- -----------
Total assets $62,471,309 $48,463,584
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and accrued liabilities $ 684,684 $ 401,786
Payable to affiliates 54,351 106,196
Rents received in advance 461,450 236,186
Distributions payable to partners 444,611 319,907
Discounted lease rentals 23,437,868 16,863,892
----------- -----------
Total liabilities 25,082,964 17,927,967
----------- -----------
Partners' capital:
General partner - -
Limited partners:
Class A 500,000 units authorized; 496,660 and 382,115 units
issued and outstanding in 1996 and 1995, respectively 36,936,407 30,183,575
Class B 451,938 352,042
----------- -----------
Total partners' capital 37,388,345 30,535,617
----------- -----------
Total liabilities and partners' capital $62,471,309 $48,463,584
=========== ===========
</TABLE>
See accompanying notes to financial statements.
-14-
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
For the period
from June 14, 1994
(commencement of
operations) to
December 31, December 31, December 31,
1996 1995 1994
------------ ------------ ------------------
<S> <C> <C> <C>
REVENUE:
Operating lease rentals $16,399,312 $ 7,683,820 $ 402,415
Direct finance lease income 414,309 273,067 7,866
Equipment sales margin 110,831 - -
Interest income 320,679 238,293 102,583
----------- ----------- -----------
Total revenue 17,245,131 8,195,180 512,864
----------- ----------- -----------
EXPENSES:
Depreciation and amortization 12,585,981 5,895,602 321,561
Management fees payable to general partner 390,559 156,351 7,056
Direct services from general partner 93,690 93,598 36,875
General and administrative 265,260 203,747 81,821
Interest on discounted lease rentals 1,785,640 1,017,172 22,612
Provision for losses 50,000 275,000 -
----------- ----------- -----------
Total expenses 15,171,130 7,641,470 469,925
----------- ----------- -----------
Net income $ 2,074,001 $ 553,710 $ 42,939
=========== =========== ===========
Net income allocated:
To the general partner $ 68,376 $ 64,746 $ 21,772
To the Class A limited partners 1,985,340 483,976 20,934
To the Class B limited partner 20,285 4,988 233
----------- ----------- -----------
$ 2,074,001 $ 553,710 $ 42,939
=========== =========== ===========
Net income per weighted average Class A limited
partner unit outstanding $ 4.13 $ 1.91 $ 0.27
=========== =========== ===========
Weighted average Class A limited partner
units outstanding 480,456 253,759 76,646
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
-15-
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
STATEMENTS OF PARTNERS' CAPITAL
For the year ended December 31, 1996, 1995 and the period from
June 14, 1994 (commencement of operations)
through December 31, 1994
<TABLE>
<CAPTION>
Class A
Limited Class A Class B
General Partner Limited Limited
Partner Units Partners Partner Total
------- ------- -------- ------- -----
<S> <C> <C> <C> <C> <C>
Capital contributions $ 100 130,993 $ 13,099,253 $ 130,000 $ 13,229,353
Commissions and offering costs on
sale of Class A limited partner units (18,885) - (1,869,681) - (1,888,566)
Net income 21,772 - 20,934 233 42,939
Distributions declared to partners (2,987) - (451,009) - (453,996)
------------ ------------ ------------ ------------ ------------
Partners' capital, December 31, 1994 - 130,993 10,799,497 130,233 10,929,730
Capital contributions - 252,777 25,277,699 240,000 25,517,699
Commissions and offering costs on
sale of Class A limited partner units (36,071) - (3,571,045) - (3,607,116)
Redemptions - (1,655) (146,220) - (146,220)
Net income 64,746 - 483,976 4,988 553,710
Distributions declared to partners (28,675) - (2,660,332) (23,179) (2,712,186)
------------ ------------ ------------ ------------ ------------
Partners' capital, December 31, 1995 - 382,115 30,183,575 352,042 30,535,617
Capital contributions - 116,230 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 - (1,685) (130,721) - (130,721)
Net income 68,376 - 1,985,340 20,285 2,074,001
Distributions declared to partners (51,487) - (5,052,804) (50,389) (5,154,680)
------------ ------------ ------------ ------------ ------------
Partners' capital, December 31, 1996 $ - 496,660 $ 36,936,407 $ 451,938 $ 37,388,345
============ ============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
-16-
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the period from
June 14, 1994
(commencement of
operations)
December 31, December 31, to December 31,
1996 1995 1994
------------ ----------- -------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,074,001 $ 553,710 $ 42,939
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 12,585,981 5,895,602 321,561
Provision for losses 50,000 275,000 -
Cost of equipment sales 343,214 - -
Recovery of investment in direct finance leases 2,204,916 737,285 32,107
Changes in assets and liabilities:
(Increase) decrease in accounts receivable 484,435 (1,231,163) (76,646)
(Increase) decrease in receivable from affiliates (42,691) 19,917 (19,917)
Increase in accounts payable and accrued liabilities 282,898 282,983 118,803
Increase (decrease) in payable to affiliates (51,845) 16,301 13,924
Increase in rents received in advance 225,264 229,446 6,740
(Increase) decrease in deferred financing costs 79,137 (85,714) -
------------ ------------ ------------
Net cash provided by operating activities 18,235,310 6,693,367 439,511
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of equipment on operating leases from affiliate (23,483,867) (29,208,749) (9,546,159)
Investment in direct financing leases, acquired from affiliates (836,057) (4,602,039) (287,857)
------------ ------------ ------------
Net cash used in investing activities (24,319,924) (33,810,788) (9,834,016)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Class A capital contributions 11,623,048 25,277,699 13,099,353
Proceeds from Class B capital contributions 130,000 240,000 130,000
Proceeds from discounted lease rentals 4,767,017 15,969,859 -
Principal payments on discounted lease rentals (9,561,511) (2,950,770) (74,100)
Redemptions (130,721) (146,220) -
Commissions paid to affiliate in connection with the sale of
Class A limited partner units (1,162,305) (2,500,740) (1,294,805)
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) (1,064,160) (560,006)
Distributions to partners (5,030,230) (2,489,733) (350,380)
------------ ------------ ------------
Net cash provided by financing activities 108,683 32,335,935 10,950,062
------------ ------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (5,975,931) 5,218,514 1,555,557
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 6,774,071 1,555,557 -
------------ ------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 798,140 $ 6,774,071 $ 1,555,557
============ ============ ============
</TABLE>
-17-
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
STATEMENTS OF CASH FLOWS
(continued)
<TABLE>
<CAPTION>
For the period from
June 14, 1994
(commencement of
operations)
December 31, December 31, to December 31,
1996 1995 1994
------------ ----------- -------------------
<S> <C> <C> <C>
Supplemental disclosure of cash flow information:
Interest paid on discounted lease rentals $ 1,785,640 $ 1,017,172 $ 22,612
Supplemental disclosure of noncash investing and
financing activities:
Reduction in Partner's capital accounts for commissions
and offering costs payable to affiliates - 42,217 33,754
Discounted lease rentals assumed in equipment acquisitions 11,368,469 2,685,425 1,233,480
</TABLE>
See accompanying notes to financial statements.
-18-
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
NOTES TO FINANCIAL STATEMENTS
1. Organization and Summary of Significant Accounting Policies
-----------------------------------------------------------
Organization
Capital Preferred Yield Fund-III, L.P. (the "Partnership") was organized
on November 2, 1993 as a limited partnership under the laws of the State
of Delaware pursuant to an Agreement of Limited Partnership (the
"Partnership Agreement"). The Partnership was formed for the purpose of
acquiring and leasing a diversified portfolio of equipment to
unaffiliated third parties. The Partnership will continue until December
31, 2011 unless terminated earlier in accordance with the terms of the
Partnership Agreement. All Partnership equipment is expected to be sold
and the Partnership liquidated between 2000 and 2003. The general partner
of the Partnership is CAI Equipment Leasing IV Corp., a wholly owned
subsidiary of Capital Associates, Inc. ("CAI").
The general partner manages the Partnership, including investment of
funds, purchase and sale of equipment, lease negotiation and other
administrative duties. The Partnership commenced business operations on
June 14, 1994, and from the date of commencement of operations through
December 31, 1996, 500,000 Class A limited partner units were sold to
4,968 investors at a price of $100 per Class A limited partner unit.
Capital Associates International, Inc. ("CAII"), a wholly owned
subsidiary of CAI, is the Class B limited partner. The Class B limited
partner is required to contribute cash, upon acquisition of equipment, in
an amount equal to 1% of gross offering proceeds received from the sale
of Class A limited partner units. As of December 31, 1996, CAII has
contributed $500,000 to the Partnership.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expenses
during the reporting period. For leasing entities, this includes the
estimate of residual values, as discussed below. Actual results could
differ from those estimates.
Partnership Allocations
Cash Distributions
------------------
During the Reinvestment Period (as defined in the Partnership
Agreement), available cash is distributed to the partners as follows:
-19-
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
NOTES TO FINANCIAL STATEMENTS, continued
1. Organization and Summary of Significant Accounting Policies, continued
-----------------------------------------------------------
Partnership Allocations, continued
Cash Distributions, continued
------------------
First, 1.0% to the general partner and 99.0% to the Class A
limited partners until the class A limited partners receive
annual, non-compounded cumulative distributions equal to 10.5% of
their contributed capital.
Second, 1.0% to the general partner and 99.0% to the Class B
limited partner until the Class B limited partner receives annual
non-compounded cumulative distributions equal to 10.5% of its
contributed capital.
Third, any remaining available cash will be reinvested or
distributed to the partners as specified in the Partnership
Agreement.
After the Reinvestment Period (as defined in the Partnership
Agreement), available cash will be distributed to the partners as
follows:
First, in accordance with the first and second allocations during
the Reinvestment Period as described above.
Second, 99.0% to the Class A limited partners and 1.0% to the
general partner, until the Class A limited partners achieve Payout
(as defined in the Partnership Agreement).
Third, 99.0% to the Class B limited partner, 1.0% to the general
partner, until the Class B limited partner achieves Payout (as
defined in the Partnership Agreement).
Fourth, 99.0% to the Class A and Class B limited partners (as a
class) and 1.0% to the general partner, until the Class A and
Class B limited partners receive cash distributions equal to 170%
of their capital contributions.
Thereafter, 90% to the Class A and Class B limited partners (as a
class) and 10% to the general partner.
Profits and Losses
------------------
There are several special allocations that precede the general
allocations of profits and losses to the partners. The most
significant special allocations are as follows:
-20-
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
NOTES TO FINANCIAL STATEMENTS, continued
1. Organization and Summary of Significant Accounting Policies, continued
-----------------------------------------------------------
Profits and Losses (continued)
------------------
First, commissions and expenses paid in connection with the sale
of Class A limited partner units are allocated 1.0% to the general
partner and 99.0% to the Class A limited partners.
Second, depreciation relating to Partnership equipment and any
losses resulting from the sale of equipment are generally
allocated 1.0% to the general partner and 99.0% to the limited
partners (shared 99.0%/1.0% by the Class A and Class B limited
partners, respectively) until the cumulative amount of such
depreciation and such losses allocated to each limited partner
equals such limited partner's contributed capital reduced by
commissions and other expenses paid in connection with the sale of
Class A limited partner units allocated to such partner.
Thereafter, gain on sale of equipment, if any, will be allocated
to the general partner in an amount equal to the sum of
depreciation and loss on sale of equipment previously allocated to
the general partner.
Third, notwithstanding anything in the Partnership Agreement to
the contrary, and before any other allocation is made, items of
income and gain for the current year (or period) shall be
allocated, as quickly as possible, to the general partner to the
extent of any deficit balance existing in the general partner's
capital account as of the close of the immediately preceding year,
in order to restore the balance in the general partner's capital
account to zero.
After giving effect to special allocations, profits (as defined in the
Partnership Agreement) are first allocated in proportion to, and to
the extent of, any previous losses, in reverse chronological order and
priority. Any remaining profits are allocated in the same order and
priority as cash distributions.
After giving effect to special allocations, losses (as defined in the
Partnership Agreement) are allocated in proportion to, and to the
extent of, any previous profits, in reverse chronological order and
priority. Any remaining losses are allocated 1.0% to the general
partner and 99.0% to the limited partners (shared 99.0%/1.0% by the
Class A and Class B limited partners, respectively).
Financial Reporting
-------------------
For financial reporting purposes, net income is allocated to the
partners in a manner consistent with the allocation of cash
distributions.
Recently Issued Financial Accounting Standards
The Partnership adopted Statement of Financial Accounting Standards
No. 121, Accounting for the Impairment of Long-lived Assets and for
Long-lived Assets to be Disposed Of ("SFAS No. 121"), effective
January 1, 1996. SFAS No. 121 requires that long-lived assets,
including operating leases, and certain identifiable intangibles to be
held and used by an entity be reviewed for impairment whenever
-21-
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
NOTES TO FINANCIAL STATEMENTS, continued
1. Organization and Summary of Significant Accounting Policies, continued
-----------------------------------------------------------
Recently Issued Financial Accounting Standards, continued
events or changes in circumstances indicate that the carrying amount
of an asset may not be recoverable. In performing the review for
recoverability, the entity should estimate the future cash flows
expected to result from the use of the asset and its eventual
disposition. If the sum of the expected future cash flows
(undiscounted and without interest charges) is less than the carrying
amount of the asset, an impairment loss is recognized. Otherwise, an
impairment loss is not recognized. Measurement of an impairment loss
for long-lived assets, including operating leases, and identifiable
intangibles held by the Partnership is based on the fair value of the
asset calculated by discounting the expected future cash flows at an
appropriate interest rate. The adoption of this statement did not have
a material effect on the Partnership's financial condition or results
of operations.
Lease Accounting
Statement of Financial Accounting Standards No. 13, Accounting for
Leases, requires that a lessor account for each lease by the direct
finance, sales-type or operating lease method. The Partnership
currently utilizes the direct financing and operating methods for all
of the Partnership's equipment under lease. Direct finance leases are
defined as those leases which transfer substantially all of the
benefits and risks of ownership of the equipment to the lessee. For
all types of leases, the determination of profit considers the
estimated value of the equipment at lease termination, referred to as
the residual value. After the inception of a lease, the Partnership
may engage in financing of lease receivables on a nonrecourse basis
(i.e., "non-recourse debt" or "discounted lease rentals") and/or
equipment sale transactions to reduce or recover its investment in the
equipment.
The Partnership's accounting methods and their financial reporting
effects are described below.
Net Investment in Direct Financing Leases ("DFLs")
The cost of the equipment, including acquisition fees paid to the
general partner, is recorded as net investment in DFLs on the
accompanying balance sheet. Leasing revenue, which is recognized over
the term of the lease, consists of the excess of lease payments plus
the estimated residual value over the equipment's cost. Earned income
is recognized monthly to provide a constant yield and is recorded as
direct finance lease income on the accompanying income statements.
Residual values are established at lease inception equal to the
estimated value to be received from the equipment following
termination of the initial lease (which in certain circumstances
includes anticipated re-lease proceeds), as determined by the general
partner. In estimating such values, the general partner considers all
relevant information regarding the equipment and the lessee.
-22-
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
NOTES TO FINANCIAL STATEMENTS, continued
1. Organization and Summary of Significant Accounting Policies, continued
-----------------------------------------------------------
Equipment on Operating Leases ("OLs")
The cost of equipment, including acquisition fees paid to the general
partner, is recorded as leased equipment in the accompanying balance
sheets and is depreciated on a straight-line basis over the lease term
to an amount equal to the estimated residual value at the lease
termination date. Leasing revenue consists principally of monthly
rents and is recognized as operating lease rentals in the accompanying
income statements. Residual values are established at lease inception
equal to the estimated value to be received from the equipment
following termination of the initial lease (which in certain
circumstances includes anticipated re-lease proceeds), as determined
by the general partner. In estimating such values, the general partner
considers all relevant information and circumstances regarding the
equipment and the lessee. Because revenue, depreciation expense and
the resultant profit margin before interest expense are recorded on a
straight-line basis, and interest expense on discounted lease rentals
(discussed below) is recorded on the interest method, lower returns
are realized in the early years of the term of an OL and higher
returns in later years.
Nonrecourse Discounting of Rentals
The Partnership may assign the future rentals from leases to financial
institutions, or acquire leases subject to such assignments, at fixed
interest rates on a nonrecourse basis. In return for such assigned
future rentals, the Partnership receives the discounted value of the
rentals in cash. In the event of default by a lessee, the financial
institution has a first lien on the underlying leased equipment, with
no further recourse against the Partnership. Cash proceeds from such
financings, or the assumption of such financings, are recorded on the
balance sheet as discounted lease rentals. As lessees make payments to
financial institutions, leasing revenue and interest expense are
recorded.
Allowance for Losses
An allowance for losses is maintained at levels determined by the
general partner to adequately provide for any other-than-temporary
declines in asset values. In determining losses, economic conditions,
the activity in the used equipment markets, the effect of actions by
equipment manufacturers, the financial condition of lessees, the
expected courses of action by lessees with regard to leased equipment
at termination of the initial lease term, and other factors which the
general partner believes are relevant, are considered. Asset
chargeoffs are recorded upon the termination or remarketing of the
underlying assets. The lease portfolio is reviewed quarterly to
determine the adequacy of the allowance for losses.
-23-
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
NOTES TO FINANCIAL STATEMENTS, continued
1. Organization and Summary of Significant Accounting Policies, continued
-----------------------------------------------------------
Transactions Subsequent to Initial Lease Termination
After the initial term of equipment under lease expires, the equipment
is either sold or re-leased to the existing lessee or another third
party. The remaining net book value of equipment sold is removed and
gain or loss recorded when equipment is sold. The accounting for
re-leased equipment is consistent with the accounting described under
"Net Investment in Direct Financing Leases" and "Equipment on
Operating Leases" above.
Income Taxes
No provision for income taxes has been made in the financial
statements since taxable income or loss is recorded in the tax return
of the individual partners.
Cash Equivalents
The Partnership considers short-term, highly liquid investments that
are readily convertible to known amounts of cash to be cash
equivalents.
Cash equivalents of $746,511 and $6,129,000 at December 31, 1996 and
1995, respectively, are comprised of an investment in a mutual fund
which invests solely in U.S. Government treasury bills having
maturities of 90 days or less.
Deferred Financing Costs
Deferred financing costs, which were incurred by the Partnership in
connection with an agreement with a lender to debt finance lease
rentals, are charged ratably to operations as additional interest
expense over the expected life of the underlying indebtedness.
Net Income Per Class A Limited Partner Unit
Net income per Class A limited partner unit is computed by dividing
the net income allocated to the Class A limited partners by the
weighted average number of Class A limited partner units outstanding
during the period.
-24-
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
NOTES TO FINANCIAL STATEMENTS, continued
2. Net Investment in Direct Financing Leases
-----------------------------------------
The components of the net investment in direct finance leases as of
December 31, 1996 and 1995 were:
1996 1995
----------- -----------
Minimum lease payments receivable $ 5,340,323 $ 4,578,583
Estimated residual values 749,760 399,190
Less unearned income (610,818) (683,727)
----------- -----------
Total $ 5,479,265 $ 4,294,046
=========== ===========
3. Leased Equipment
----------------
The Partnership's investment in equipment on operating leases by major
classes as of December 31, 1996 and 1995 were:
1996 1995
-------------- ------------
Transportation and industrial equipment $ 47,672,965 $ 28,559,213
Computers and peripherals 12,437,727 8,385,064
Furniture, fixtures and equipment 13,329,611 4,976,613
Other 657,330 514,675
-------------- ------------
74,097,633 42,435,565
Less accumulated depreciation (18,658,399) (6,217,163)
Allowance for losses (177,799) (275,000)
-------------- -------------
$ 55,261,435 $ 35,943,402
============== ============
Depreciation expense for 1996, 1995 and 1994 was $12,585,981, $5,895,602
and $321,561, respectively.
4. Future Minimum Lease Payments
-----------------------------
Future minimum lease payments receivable from noncancelable leases as of
December 31, 1996 are:
Years Ending December 31 DFLs OLs
------------------------ ---- ---
1997 $ 2,559,652 $ 17,185,667
1998 1,506,699 12,021,012
1999 1,138,012 7,313,606
2000 134,024 2,805,128
2001 1,936 782,883
Thereafter - 640,214
---------- -------------
Total $ 5,340,323 $ 40,748,510
=========== ============
-25-
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
NOTES TO FINANCIAL STATEMENTS, continued
5. Discounted Lease Rentals
------------------------
Discounted lease rentals outstanding at December 31, 1996 bear interest
at rates primarily ranging between 6.00% and 10.75%. Aggregate maturities
of such non-recourse obligations are:
Years Ending December 31
------------------------
1997 $ 11,016,766
1998 7,266,530
1999 4,348,795
2000 716,761
2001 81,534
Thereafter 7,482
------------
Total $ 23,437,868
============
6. 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 are
paid to participating broker-dealers. During 1996, 1995 and 1994, CAI
Securities Corporation earned commissions and fees in the amount of
$1,162,305, $2,527,770 and $1,309,925, of which $991,974, $2,188,649
and $1,124,052, respectively, was paid to participating
broker-dealers.
As provided in the Partnership Agreement, the general partner earned
$464,922, $1,011,108 and $523,970, as reimbursement for expenses
incurred during 1996, 1995 and 1994, respectively, in connection with
the organization of the Partnership and the offering of Class A
limited partner units. The general partner also received $61,693,
$68,238 and $54,672, as reimbursement for due diligence expenses
incurred during 1996, 1995 and 1994, respectively.
Capital Contributions
---------------------
Under terms of the Partnership Agreement, the Class B limited partner
made capital contributions to the Partnership of $130,000, $240,000
and $130,000, during 1996, 1995 and 1994, respectively.
-26-
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
NOTES TO FINANCIAL STATEMENTS, continued
6. Transactions With the General Partner and Affiliates, continued
----------------------------------------------------
Origination Fee and Evaluation Fee
----------------------------------
The general partner receives a fee equal to 3.5% of the sales price of
equipment sold to the Partnership (up to a maximum cumulative amount
as specified in the Partnership Agreement), 1.5% of which represents
compensation for selecting, negotiating and consummating the
acquisition of the equipment and 2% of which represents reimbursement
for services rendered in connection with evaluating the suitability of
the equipment and the credit worthiness of the lessees. Origination
and evaluation fees totaled $1,184,888, $1,209,816 and $374,040 in
1996, 1995 and 1994, respectively, all of which were capitalized by
the Partnership as part of the cost of equipment on operating leases
and net investment in direct financing leases.
Management Fees
---------------
The general partner receives management fees as compensation for
services performed in connection with managing the Partnership's
equipment equal to 2% of gross rentals received as permitted under
terms of the Partnership Agreement. Such fees totaled $390,559,
$156,351 and 7,056 for 1996, 1995 and 1994, respectively.
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 $93,690, $93,598 and $36,875 during 1996, 1995
and 1994, respectively.
Equipment Purchases
-------------------
The Partnership purchased equipment from CAII, with a total purchase
price of $35,688,393, $36,496,213 and $11,067,496 (including
$11,368,469, $2,685,425 and $1,233,480 of discounted lease rentals)
during 1996, 1995 and 1994, respectively. The Partnership purchased
the equipment at CAII's historical cost plus reimbursement of other
net acquisition costs, as provided for in the Partnership Agreement.
-27-
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
NOTES TO FINANCIAL STATEMENTS, continued
6. Transactions With the General Partner and Affiliates, continued
----------------------------------------------------
Payable to Affiliates
---------------------
Payable to affiliates of $54,351 and $106,196 during 1996 and 1995,
respectively, consists of direct services, management fees, sales
commissions, wholesaling fees and organization and offering expense
reimbursements with respect to Class A limited partner units payable
to the general partner and its affiliates.
Receivable from Affiliates
--------------------------
Receivable from affiliates represents deferred financing costs for a
lender financing agreement charged proportionately to affiliates.
7. Tax Information (Unaudited)
---------------------------
The following reconciles net income for financial reporting purposes to
the income for federal income tax purposes for the year and period ended
December 31,:
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Net income per financial statements $ 2,074,001 $ 553,710
Direct financing leases 2,192,802 737,287
Depreciation (6,587,214) (3,820,726)
Provision for losses 50,000 275,000
Other 595,201 (24,469)
------------ ------------
Partnership income for federal income tax purposes $ (1,675,210) $ (2,279,198)
============ ============
</TABLE>
The following reconciles partners' capital for financial reporting
purposes to partners' capital for federal income tax purposes for the
year and period ended December 31,:
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Partners' capital per financial statements $ 37,388,345 $ 30,535,617
Commissions and offering costs 7,184,603 5,495,683
Direct financing leases 2,962,196 769,394
Depreciation (10,906,852) (4,319,638)
Provision for losses 325,000 275,000
Other 582,258 (8,487)
------------ ------------
Partners' capital for federal income tax purposes $ 37,535,550 $ 32,747,569
============ ============
</TABLE>
-28-
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
NOTES TO FINANCIAL STATEMENTS, continued
8. Concentration of Credit Risk
----------------------------
Approximately 69% of the Partnership's equipment under lease was leased
to investment grade companies. Pursuant to the Partnership Agreement, an
investment grade lessee is a company (i) with a net worth in excess of
$100,000,000 (and no debt issues that are rated), or (ii) with a credit
rating of not less than Baa as determined by Moody's Investor Services,
Inc. or comparable credit rating as determined by another recognized
credit rating service; or a lessee, all of whose lease payments have been
unconditionally guaranteed or supported by a letter of credit issued by a
company meeting one of the above requirements.
The Partnership's cash balance is maintained with a high credit quality
financial institution. At times, such balances may be in excess of the
FDIC insurance limit due to the receipt of lockbox amounts that have not
cleared the presentment bank (generally for less than two days). As the
funds become available, they are invested in a money market mutual fund.
9. Bankrupt Lessee
---------------
Anchor Glass filed for protection under Chapter 11 of the bankruptcy code
on September 13, 1996. The aggregate net book value with this lessee was
$232,887 at December 31, 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 December 31, 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.
10. Disclosures about Fair Value of Financial Instruments
-----------------------------------------------------
Statement of Financial Standards No. 107 ("SFAS No. 107"), Disclosures
about Fair Value of Financial Instruments specifically excludes certain
items from its disclosure requirements such as the Company's investment
in leased assets. The carrying amounts at December 31, 1996 for cash and
cash equivalents, accounts receivable, accounts payable and accrued
liabilities, payable to affiliates, rents and sale proceeds received in
advance and distributions payable to partners approximate their fair
values due to the short maturity of these instruments.
As of December 31, 1996, discounted lease rentals of $23,437,868 had a
fair value of $22,995,187. The fair value was estimated utilizing market
rates of comparable debt having similar maturities and credit quality as
of December 31, 1996.
-29-
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------
THE PARTNERS
CAPITAL PREFERRED YIELD FUND-III, L.P.:
Under date of January 31, 1997, we reported on the balance sheets of Capital
Preferred Yield Fund-III, L.P. as of December 31, 1996 and 1995, and the related
statements of income, partners' capital, and cash flows for each of the years in
the two-year period ended December 31, 1996 and the period from June 14, 1994
(commencement of operations) to December 31, 1994, as contained in the
Partnership's annual report on Form 10-K for the year 1996. In connection with
our audits and of the aforementioned financial statements, we have also audited
the related financial statement Schedule II, as listed in the accompanying
index. This financial statement schedule is the responsibility of the
Partnership's management. Our responsibility is to express an opinion on this
financial statement schedule based on our audits.
In our opinion, the related financial statement schedule, when considered in
relation to the basic financial statements taken as a whole, presents fairly, in
all material respects, the information set forth therein.
/s/KPMG Peat Marwick LLP
--------------------------
KPMG PEAT MARWICK LLP
Denver, Colorado
January 31, 1997
-30-
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Year and Period Ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- -------- -------- ----------------------------- -------- --------
Additions
Balance at Additions (deductions) Balance
beginning charged to charged to at end
Classification of period expenses other accounts Deductions of period
- -------------- ---------- ---------- -------------- ---------- ---------
<S> <C> <C> <C> <C> <C>
1996
- ---------------------
Allowance for losses:
Equipment on operating leases $ 275,000 $ 50,000 $ 1,331 $ (148,532) $ 177,799
========= ========= =========== ============ =========
1995
- ---------------------
Allowance for losses:
Equipment on operating leases $ - $ 275,000 $ - $ - $ 275,000
========= ========= =========== ============ =========
</TABLE>
See accompanying independent auditor's report
-31-
<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
-----------------------------------------------------------------------
Financial Disclosure
--------------------
None.
Item 10. Directors and Executive Officers of the Partnership
---------------------------------------------------
The Partnership has no officers and directors. The general partner manages and
controls the affairs of the Partnership and has general responsibility and
authority in all matters affecting its business. Information concerning the
directors and executive officers of the general partner is as follows:
CAI Equipment Leasing IV Corporation
Name Positions Held
---- --------------
John F. Olmstead President and Director
Dennis J. Lacey Senior Vice President and Director
John E. Christensen Senior Vice President, Principal Financial and
Chief Administrative Officer and Director
Anthony M. DiPaolo Senior Vice President, Assistant Secretary and
Director
Robert A. Golden Vice President and Director
Daniel J. Waller Vice President and Director
Richard H. Abernethy Vice President and Director
John A. Reed Vice President, Assistant Secretary and Director
David J. Anderson Chief Accounting Officer and Secretary
JOHN F. OLMSTEAD, age 52, joined CAII as Vice President in December, 1988, is a
Senior Vice President of CAI and CAII and is head of CAII's Public Equity
division. He has served as Chairman of the Board for Neo-kam Industries, Inc.,
Matchless Metal Polish Company, Inc. and ACL, Inc. for more than 5 years. He has
over 20 years of experience holding various positions of responsibility in the
leasing industry. Mr. Olmstead holds a Bachelor of Science degree from Indiana
University and a Juris Doctorate degree from Indiana Law School.
-32-
<PAGE>
Item 10. Directors and Executive Officers of the Partnership, continued
---------------------------------------------------
DENNIS J. LACEY, age 43, joined CAI as Vice President, Operations, in October
1989. Mr. Lacey was appointed Treasurer on January 1, 1991, Chief Financial
Officer on April 11, 1991, a director on July 19, 1991, and President and Chief
Executive Officer on September 6, 1991. Prior to joining CAI, Mr. Lacey was an
audit partner for the public accounting firm of Coopers & Lybrand. Mr. Lacey is
also a director and senior officer of CAII, CAI Equipment Leasing I Corp., CAI
Equipment Leasing II Corp., CAI Equipment Leasing III Corp., CAI Equipment
Leasing IV Corp., CAI Equipment Leasing V Corp., CAI Leasing Canada, Ltd., CAI
Partners Management Company, CAI Securities Corporation, CAI Lease
Securitization I Corp. and Capital Equipment Corporation (collectively referred
to herein as the "CAI Affiliates"), all of which are first- or second-tier
wholly-owned subsidiaries of CAI.
JOHN E. CHRISTENSEN, age 49, joined CAII as Vice President and Treasurer in
November 1988. He now serves as Senior Vice President, Finance and Chief
Financial Officer of CAI and CAII. Mr. Christensen previously held senior
management positions at Maxicare Health Plans, Inc., Global Marine, Inc. and
Santa Fe International, Inc. Mr. Christensen obtained his MBA in Finance from
the University of Michigan and his Bachelor of Arts degree from Michigan State
University.
ANTHONY M. DIPAOLO, age 37, joined CAII in July 1990 as an Assistant Treasurer
and is currently Senior Vice President-Business Development. He has also held
the positions of Senior Vice President-Controller and Assistant Vice
President-Credit Administration for the Company. Mr. DiPaolo has held financial
management positions as Chief Financial Officer for Mile High Kennel Club, Inc.
from 1988 to 1990 and was Vice President/Controller for VICORP Restaurants, Inc.
from 1986 through 1988. Mr. DiPaolo holds a Bachelor of Science degree in
Accounting from the University of Denver.
ROBERT A. GOLDEN, age 51, is Vice President and the National Sales Manager of
the Company. Mr. Golden joined the Company in 1993 as a Branch Manager. He was
promoted to his current position in September 1994. Prior to joining the
Company, he was an Executive Vice President with the U.S. Funds Group, President
of BoCon Capital Group and Vice President with Ellco/GE Capital for fifteen
years. Mr. Golden is an officer, but not a director, of CAII.
DANIEL J. WALLER, age 38, joined CAII in July 1990, as a manager of Investor
Relations. Mr. Waller assumed the responsibility for the asset management
department a short time later, and is currently Vice President, Capital Markets
Group. Prior to joining CAII, Mr. Waller was an audit manager with Coopers &
Lybrand for over three years and gained considerable experience in the leasing
industry. While at Coopers & Lybrand, Mr. Waller held positions with the
International Accounting and Auditing Committee as well as the national Auditing
Directorate. Mr. Waller holds a Bachelor of Arts degree in accounting from the
University of Northern Iowa.
RICHARD H. ABERNETHY, age 42, joined CAII in April 1992 as Equipment Valuation
Manager and currently serves as Vice President of Asset Management. Mr.
Abernethy has thirteen years experience in the leasing industry, including prior
positions with Barclays Leasing Inc., from November 1986 to February 1992, and
Budd Leasing Corporation, from January 1981 to November 1986. Mr. Abernethy
holds a Bachelor of Arts in Business Administration from the University of North
Carolina at Charlotte.
-33-
<PAGE>
Item 10. Directors and Executive Officers of the Partnership, continued
---------------------------------------------------
JOHN A. REED, age 41, joined CAII in January 1990 as the Tax Director and
Assistant Secretary. Mr. Reed is currently the Vice President of Marketing and
is responsible for all lease documentation and management of transaction
structuring and processing. Prior to joining the Marketing Department, Mr. Reed
was Vice President of Credit and Debt Administration. He spent seven and one
half years with Coopers & Lybrand in the Tax Department and served on CAII's tax
consulting engagement during that time. Mr. Reed holds a Bachelor of Arts degree
in Social Sciences and Masters of Science in Accounting, from Colorado State
University.
DAVID J. ANDERSON, age 43, joined CAII in August 1990 as Manager of Billing &
Collections and currently serves as Assistant Vice-President/Chief Accounting
Officer. Prior to joining CAII, Mr. Anderson was Vice- President/Controller for
Systems Marketing, Inc., from 1985 to 1990, and previous to that working in
several senior staff positions at the Los Alamos National Laboratory and with
Ernst & Whinney. Mr. Anderson holds a Bachelor of Business Administration degree
in Accounting from the University of Wisconsin.
Item 11. Executive Compensation
----------------------
No compensation was paid by the Partnership to the officers and directors of the
general partner. See Item 13 of this Report, "Certain Relationships and Related
Transactions," which is incorporated herein by reference, for a description of
the compensation and fees paid to the general partner and its affiliates by the
Partnership during 1996.
Item 12. Security Ownership of Certain Beneficial Owners and Management
--------------------------------------------------------------
(a) As of the date hereof, no person is known by the Partnership to be
the beneficial owner of more than 5% of the Class A limited
partner units of the Partnership. The Partnership has no directors
or officers, and neither the general partner nor the Class B
limited partner of the Partnership own any Class A limited partner
units.
CAII, an affiliate of the general partner, owns 100% of the
Partnership's Class B units.
CAI Partners Management Company owns 100% of the Partnership's
general partner units.
The names and addresses of the general partner and the Class B
limited partner are as follows:
General Partner
---------------
CAI Equipment Leasing IV Corp.
7175 West Jefferson Avenue
Suite 4000
Lakewood, Colorado 80235
-34-
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management
--------------------------------------------------------------
Class B Limited Partner
-----------------------
Capital Associates International, Inc.
7175 West Jefferson Avenue
Suite 4000
Lakewood, Colorado 80235
(b) No directors or officers of the general partner or the Class B
limited partner owned any Class A limited partner units as of
December 31, 1996.
(c) The Partnership knows of no arrangements, the operation of which
may at a subsequent date result in a change in control of the
Partnership.
Item 13. Certain Relationships and Related Transactions
----------------------------------------------
The general partner and its affiliates receive certain types of compensation,
fees or other distributions in connection with the operations of the
Partnership.
Following is a summary of the amounts paid or payable to the general partner and
its affiliates during 1996:
Sales Commissions
- -----------------
CAI Securities Corporation (the "Dealer-Manager"), an affiliate of the general
partner, earned commissions of 10% of the sales price of Class A limited partner
units sold, up to 9% of which was paid to participating broker-dealers. During
1996, the Dealer-Manager earned commissions totaling $1,162,305 (all of which
was paid in 1996) of which $991,974 was paid to broker-dealers.
Due Diligence Expense Reimbursement
- -----------------------------------
The Dealer-Manager is reimbursed for due diligence expenses which it incurs up
to a maximum of 1/2% of gross offering proceeds. The Dealer-Manager incurred
$61,693 for due diligence expenses during 1996 (all of which was paid in 1996).
Organization and Offering Expense Reimbursement
- -----------------------------------------------
The general partner is reimbursed for the organization and offering expenses it
incurs in organizing the Partnership and offering Class A limited partner units
for sale to the public. The general partner earned $464,922 for organization and
offering expenses during 1996 (all of which was paid in 1996).
-35-
<PAGE>
Item 13. Certain Relationships and Related Transactions, continued
----------------------------------------------
ACQUISITION AND OPERATING STAGES
Acquisition Fee and Acquisition Cost Reimbursement
- --------------------------------------------------
The general partner receives a fee equal to 3.5% of the sales price of equipment
sold to the Partnership, 1.5% of which represents compensation for selecting,
negotiating and consummating the acquisition of the equipment and 2% of which
represents reimbursement for services rendered in connection with evaluating the
suitability of the equipment and the credit worthiness of the Lessee.
Origination and evaluation fees totaled $1,184,888 in 1996, all of which were
capitalized by the Partnership as part of the cost of equipment on operating
leases and net investment in direct financing leases.
Management Fees
- ---------------
The general partner receives management fees as compensation for services
rendered in connection with managing the Partnership's equipment equal to 2% of
gross rentals received. Such fees totaled $390,559 for 1996 (of which $47,591
will be paid during 1997).
Accountable General and Administrative Expenses
- -----------------------------------------------
The general partner is entitled to reimbursement of certain expenses paid on
behalf of the Partnership which are incurred in connection with the
Partnership's operations. Such reimbursable expenses amounted to $93,690 during
1996, $86,930 of which were reimbursed during 1996 ($6,760 were reimbursed in
January 1997).
Additionally, the general partner is allocated 1% of Partnership cash
distributions and net income relating to its general partner interest in the
Partnership. Distributions and net income allocated to the general partner
totaled $51,487 and $68,376, respectively, for 1996. Distributions and net
income allocated to the Class B limited partner totaled $50,389 and $20,285,
respectively, for 1996.
During 1996, the Partnership acquired the equipment described below from CAII:
<TABLE>
<CAPTION>
Cost to
Partnership
Including
Date Cost to Acquisition Debt Annual
Purchased Lessee Term Equipment Description CAII Fees* Assumed Rents
- --------- ------ ---- --------------------- --------- ------------ --------- --------
<C> <C> <C> <C> <C> <C> <C> <C>
01/12/96 Thompson Saginaw 60 Material handling equipment $ 77,164 $ 79,838 $ 0 $ 14,769
01/12/96 ICI Americas 60 Forklifts 38,913 40,261 0 8,464
01/12/96 Cerplex 48 Semiconductor 557,437 576,753 0 156,089
02/02/96 Television City 48 Environmental monitoring equip. 171,735 177,686 0 53,337
01/04/96 Thomson Saginaw 60 Material handling equipment 59,880 61,955 0 11,461
04/17/96 HK Systems 60 Lift truck 575,731 595,680 0 123,897
02/13/96 Consolidated Diesel 60 Forklifts 59,719 61,788 0 12,111
02/26/96 Brown Strauss 48 Forklifts 83,000 85,876 0 18,077
02/28/96 Wayne Farms 60 Spiral freezer 502,758 512,713 0 102,224
02/29/96 Brown Strauss 36 Forklifts 90,795 93,941 0 23,776
-36-
<PAGE>
Item 13. Certain Relationships and Related Transactions, continued
----------------------------------------------
Cost to
Partnership
Including
Date Cost to Acquisition Debt Annual
Purchased Lessee Term Equipment Description CAII Fees* Assumed Rents
- --------- ------ ---- --------------------- --------- ------------ --------- --------
03/12/96 Lever Brothers 42 HP Server 47,070 48,701 0 14,798
03/08/96 Louisiana Workers 26 Memory board 6,531 6,757 0 3,387
03/08/96 Honeywell 36 Sequencer 264,699 273,194 0 78,096
03/12/96 In Home Health 60 Modular furniture 120,339 124,508 0 24,642
03/22/96 General Motors 36 Lift truck 36,120 37,372 0 12,088
03/28/96 NBC 24 Video equipment 259,730 268,729 0 113,323
03/29/96 Atlantic Steel 59 Mill equipment 971,059 1,004,707 0 207,511
04/02/96 Thomson Saginaw 60 Industrial machinery 60,130 62,214 0 11,509
04/08/96 Lever Brothers 42 HP 9000 20,828 21,550 0 5,940
04/02/96 HK Systems 60 Phone system 150,000 155,198 0 32,280
04/18/96 General Motors 36 Lift truck 76,161 78,800 0 25,494
04/19/96 Xerox 40 Forklifts 137,740 142,513 0 33,252
04/22/96 Xerox 44 Lift truck 120,660 124,841 0 28,104
05/10/96 ITT Automotive 60 Mailing equipment 20,362 21,068 0 4,850
05/10/96 General Motors 36 Material handling equipment 59,208 61,260 0 19,710
05/10/96 General Motors 36 Material handling equipment 59,343 61,399 0 19,710
05/14/96 General Motors 36 Material handling equipment 17,486 18,092 0 5,853
05/17/96 Barber-Colman 50 Machine tools 82,905 85,778 77,666 17,721
05/17/96 Barber-Colman 19 Machine tools 12,401 12,831 11,735 7,744
05/17/96 Barber-Colman 55 Machine tools 218,375 225,942 203,849 43,642
05/17/96 Barber-Colman 22 Machine tools 30,966 32,039 29,208 16,814
05/17/96 Barber-Colman 22 Machine tools 9,351 9,675 8,821 5,078
05/17/96 Barber-Colman 22 Machine tools 6,320 6,539 5,962 3,432
05/17/96 Barber-Colman 22 Machine tools 3,039 3,144 2,866 1,650
05/17/96 Barber-Colman 24 Manufacturing equipment 22,908 23,702 21,551 11,086
05/17/96 Barber-Colman 22 Machine tools 13,801 14,279 13,017 7,494
05/17/96 Barber-Colman 22 Machine tools 5,352 5,537 5,048 2,906
05/17/96 Barber-Colman 23 Machine tools 21,362 22,102 20,038 11,114
05/17/96 Barber-Colman 23 Machine tools 10,661 11,030 10,000 5,547
05/17/96 Barber-Colman 23 Machine tools 1,999 2,068 1,875 1,040
05/17/96 Barber-Colman 23 Machine tools 20,858 21,581 19,565 10,852
05/17/96 Barber-Colman 23 Peripheral controllers 26,189 27,096 24,458 13,566
05/17/96 Barber-Colman 24 Machine tools 73,855 76,414 67,591 31,835
05/17/96 Barber-Colman 24 Machine tools 38,952 40,302 35,648 16,790
05/17/96 Barber-Colman 24 Machine tools 28,382 29,365 25,975 12,234
05/17/96 Barber-Colman 23 PC's networking 24,351 25,195 23,194 11,332
05/17/96 Barber-Colman 52 Machine tools 176,593 182,712 163,653 37,141
05/17/96 Barber-Colman 31 PC's networking 68,069 70,428 63,103 25,550
05/17/96 Barber-Colman 57 Manufacturing equipment 79,286 82,033 75,047 17,806
05/17/96 Barber-Colman 45 PC's networking 87,826 90,869 83,802 24,132
05/17/96 Foxboro Company 41 PC's networking 94,680 97,961 91,092 30,683
05/17/96 Foxboro Company 42 Furniture and fixtures 32,831 33,969 31,094 10,334
05/17/96 Foxboro Company 44 PC's networking 60,796 62,903 58,483 18,702
05/17/96 Foxboro Company 42 PC's networking 60,022 62,102 57,729 19,161
05/17/96 Foxboro Company 44 PC's networking 64,671 66,912 62,202 19,728
-37-
<PAGE>
Item 13. Certain Relationships and Related Transactions, continued
----------------------------------------------
Cost to
Partnership
Including
Date Cost to Acquisition Debt Annual
Purchased Lessee Term Equipment Description CAII Fees* Assumed Rents
- --------- ------ ---- --------------------- --------- ------------ --------- --------
05/17/96 Foxboro Company 28 Manufacturing equipment 22,961 23,757 21,990 10,193
05/17/96 Foxboro Company 53 PC's networking 125,644 129,998 121,471 32,010
05/17/96 Foxboro Company 44 PC's networking 105,586 109,245 101,633 31,437
05/17/96 Foxboro Company 32 PC's networking 539,488 558,181 516,882 191,770
05/17/96 Foxboro Company 32 PC's networking 28,650 29,643 27,450 10,184
05/17/96 Foxboro Company 56 Furniture and fixtures 31,018 32,093 29,388 7,005
05/17/96 Foxboro Company 32 Furniture and fixtures 66,268 68,564 64,320 26,019
05/17/96 Foxboro Company 32 Research equipment 42,146 43,606 40,698 16,572
05/17/96 Foxboro Company 56 Manufacturing equipment 74,091 76,658 70,196 16,732
05/17/96 Foxboro Company 57 Manufacturing equipment 212,775 220,148 201,590 47,311
05/17/96 Foxboro Company 34 PC's networking 785,128 812,333 752,701 268,617
05/17/96 Foxboro Company 34 Manufacturing equipment 183,511 189,870 184,152 68,613
05/17/96 Foxboro Company 34 Furniture and fixtures 2,444 2,529 2,377 918
05/17/96 Foxboro Company 58 Forklifts 6,305 6,523 5,967 1,408
05/17/96 Foxboro Company 58 Furniture and fixtures 10,198 10,551 9,652 2,278
05/17/96 Keystone Investments 21 Office automation equipment 5,780 5,980 5,301 3,254
05/17/96 Keystone Investments 23 Peripheral printers 17,533 18,141 16,275 9,168
05/17/96 Keystone Investments 27 PC's networking 312,217 323,035 298,486 132,369
05/17/96 Keystone Investments 33 PC's networking 120,227 124,393 114,148 43,624
05/17/96 Keystone Investments 27 PC's networking 1,086,011 1,123,641 1,038,394 461,971
05/17/96 Keystone Investments 57 Furniture and fixtures 32,414 33,537 30,925 7,783
05/17/96 Keystone Investments 34 Peripheral printers 33,613 34,778 32,198 11,972
05/17/96 Lucas Industries 38 Furniture and fixtures 47,329 48,969 43,389 14,213
05/17/96 Lucas Industries 39 Manufacturing equipment 44,119 45,648 40,485 12,975
05/17/96 Lucas Industries 41 Furniture and fixtures 30,228 31,275 27,409 8,539
05/17/96 Lucas Industries 41 Furniture and fixtures 163,330 168,989 147,284 46,137
05/17/96 Lucas Industries 19 PC's networking 24,190 25,028 21,925 13,924
05/17/96 Lucas Industries 45 PC's networking 147,931 153,057 127,030 40,013
05/17/96 Lucas Industries 22 CPU's - DEC 51,904 53,702 47,026 26,140
05/17/96 Lucas Industries 48 Research equipment 78,475 81,194 72,324 19,530
05/17/96 Lucas Industries 31 PC's networking 381,594 394,816 359,625 134,680
05/17/96 Rawlings Sporting 18 Peripheral printers 5,474 5,664 5,175 3,636
05/17/96 Rawlings Sporting 19 PC's networking 54,894 56,796 52,863 35,303
05/17/96 Rawlings Sporting 19 PC's networking 114,439 118,404 108,260 72,171
05/17/96 Rawlings Sporting 19 PC's networking 153,110 158,415 147,425 98,280
05/17/96 Rawlings Sporting 19 PC's networking 35,431 36,659 34,118 22,743
05/17/96 Rawlings Sporting 19 PC's networking 6,042 6,251 5,716 3,810
05/17/96 Rawlings Sporting 19 CPU's 197,668 204,517 190,324 126,795
05/17/96 Rawlings Sporting 26 Peripheral printers 2,218 2,295 2,101 1,038
05/17/96 Stop & Shop 37 PC's networking 26,588 27,509 25,188 9,225
05/17/96 Stop & Shop 37 PC's networking 8,214 8,499 7,782 2,850
05/17/96 Stop & Shop 37 PC's networking 3,451 3,571 3,269 1,197
05/17/96 Stop & Shop 37 PC's networking 3,440 3,559 3,259 1,193
05/17/96 Stop & Shop 37 PC's networking 3,296 3,410 3,122 1,143
05/17/96 Stop & Shop 37 PC's networking 1,260 1,304 1,193 437
-38-
<PAGE>
Item 13. Certain Relationships and Related Transactions, continued
----------------------------------------------
Cost to
Partnership
Including
Date Cost to Acquisition Debt Annual
Purchased Lessee Term Equipment Description CAII Fees* Assumed Rents
- --------- ------ ---- --------------------- --------- ------------ --------- --------
05/17/96 Stop & Shop 37 PC's networking 5,923 6,128 5,611 2,055
05/17/96 Stop & Shop 37 PC's networking 5,923 6,128 5,611 2,055
05/17/96 Stop & Shop 37 PC's networking 5,923 6,128 5,611 2,055
05/17/96 Stop & Shop 37 PC's networking 5,923 6,128 5,611 2,055
05/17/96 Stop & Shop 37 PC's networking 5,923 6,128 5,611 2,055
05/17/96 Stop & Shop 37 PC's networking 6,496 6,721 6,154 2,254
05/17/96 Stop & Shop 37 PC's networking 5,923 6,128 5,611 2,055
05/17/96 Stop & Shop 37 PC's networking 6,496 6,721 6,154 2,254
05/17/96 Stop & Shop 37 PC's networking 6,496 6,721 6,154 2,254
05/17/96 Stop & Shop 37 PC's networking 5,923 6,128 5,611 2,055
05/17/96 Stop & Shop 37 PC's networking 5,923 6,128 5,611 2,055
05/17/96 Stop & Shop 31 PC's networking 50,271 52,013 47,837 20,518
05/17/96 Stop & Shop 38 PC's networking 7,756 8,025 7,346 2,631
05/17/96 Stop & Shop 38 PC's networking 7,756 8,025 7,346 2,631
05/17/96 Stop & Shop 38 PC's networking 7,756 8,025 7,346 2,631
05/17/96 Stop & Shop 39 PC's networking 32,958 34,100 31,198 10,929
05/17/96 Stop & Shop 39 PC's networking 10,880 11,257 10,298 3,608
05/17/96 Stop & Shop 39 PC's networking 5,005 5,178 4,738 1,660
05/17/96 Stop & Shop 39 PC's networking 10,767 11,140 10,192 3,571
05/17/96 Stop & Shop 39 Furniture and fixtures 55,090 56,999 51,292 15,935
05/17/96 Stop & Shop 40 PC's networking 5,092 5,268 4,803 1,651
05/17/96 Stop & Shop 40 PC's networking 7,452 7,710 7,029 2,416
05/17/96 Stop & Shop 40 PC's networking 5,092 5,268 4,803 1,651
05/17/96 Stop & Shop 40 PC's networking 5,259 5,441 4,961 1,705
05/17/96 Stop & Shop 40 PC's networking 6,427 6,650 6,062 2,084
05/17/96 Stop & Shop 40 PC's networking 1,335 1,381 1,259 433
05/17/96 Stop & Shop 40 PC's networking 178,944 185,144 168,792 58,024
05/17/96 Stop & Shop 40 PC's networking 11,011 11,393 10,387 3,571
05/17/96 Stop & Shop 40 Furniture and fixtures 39,556 40,927 36,686 11,225
05/17/96 Stop & Shop 40 Furniture and fixtures 50,749 52,507 47,067 14,401
05/17/96 Stop & Shop 40 Furniture and fixtures 39,548 40,918 36,679 11,222
05/17/96 Stop & Shop 41 PC's networking 11,276 11,667 10,631 3,594
05/17/96 Stop & Shop 41 PC's networking 11,276 11,667 10,631 3,594
05/17/96 Stop & Shop 41 PC's networking 11,276 11,667 10,631 3,594
05/17/96 Stop & Shop 41 PC's networking 11,276 11,667 10,631 3,594
05/17/96 Stop & Shop 41 PC's networking 38,529 39,864 36,325 12,280
05/17/96 Stop & Shop 42 PC's networking 49,471 51,185 46,630 15,576
05/17/96 Stop & Shop 42 PC's networking 11,202 11,590 10,559 3,527
05/17/96 Stop & Shop 42 PC's networking 11,626 12,029 10,958 3,660
05/17/96 Stop & Shop 42 PC's networking 11,626 12,029 10,958 3,660
05/17/96 Stop & Shop 42 PC's networking 6,916 7,156 6,519 2,178
05/17/96 Stop & Shop 42 PC's networking 11,638 12,041 10,970 3,664
05/17/96 Stop & Shop 42 PC's networking 5,450 5,639 5,137 1,716
05/17/96 Stop & Shop 42 PC's networking 5,330 5,515 5,024 1,678
05/17/96 Stop & Shop 42 PC's networking 11,556 11,956 10,893 3,639
-39-
<PAGE>
Item 13. Certain Relationships and Related Transactions, continued
----------------------------------------------
Cost to
Partnership
Including
Date Cost to Acquisition Debt Annual
Purchased Lessee Term Equipment Description CAII Fees* Assumed Rents
- --------- ------ ---- --------------------- --------- ------------ --------- --------
05/17/96 Stop & Shop 42 PC's networking 11,556 11,956 10,893 3,639
05/17/96 Stop & Shop 42 PC's networking 11,556 11,956 10,893 3,639
05/17/96 Stop & Shop 42 PC's networking 11,556 11,956 10,893 3,639
05/17/96 Stop & Shop 41 PC's networking 3,428 3,547 3,233 1,102
05/17/96 Stop & Shop 41 PC's networking 3,428 3,547 3,233 1,102
05/17/96 Stop & Shop 41 PC's networking 3,428 3,547 3,233 1,102
05/17/96 Stop & Shop 41 PC's networking 3,428 3,547 3,233 1,102
05/17/96 Stop & Shop 41 PC's networking 3,428 3,547 3,233 1,102
05/17/96 Stop & Shop 41 PC's networking 3,428 3,547 3,233 1,102
05/17/96 Stop & Shop 41 PC's networking 6,544 6,771 6,171 2,104
05/17/96 Stop & Shop 41 PC's networking 6,544 6,771 6,171 2,104
05/17/96 Stop & Shop 41 PC's networking 6,544 6,771 6,171 2,104
05/17/96 Stop & Shop 41 PC's networking 6,544 6,771 6,171 2,104
05/17/96 Stop & Shop 41 PC's networking 6,544 6,771 6,171 2,104
05/17/96 Stop & Shop 41 PC's networking 6,544 6,771 6,171 2,104
05/17/96 Stop & Shop 41 PC's networking 6,544 6,771 6,171 2,104
05/17/96 Stop & Shop 41 PC's networking 6,544 6,771 6,171 2,104
05/17/96 Stop & Shop 41 PC's networking 6,544 6,771 6,171 2,104
05/17/96 Stop & Shop 41 PC's networking 6,544 6,771 6,171 2,104
05/17/96 Stop & Shop 41 PC's networking 3,428 3,547 3,233 1,102
05/17/96 Stop & Shop 41 PC's networking 6,544 6,771 6,171 2,104
05/17/96 Stop & Shop 41 PC's networking 3,428 3,547 3,233 1,102
05/17/96 Stop & Shop 41 PC's networking 3,428 3,547 3,233 1,102
05/17/96 Stop & Shop 41 PC's networking 3,428 3,547 3,233 1,102
05/17/96 United Artists 43 Furniture and fixtures 168,696 174,541 158,296 49,556
05/17/96 United Artists 43 Furniture and fixtures 124,630 128,948 116,946 36,611
05/17/96 United Artists 43 Furniture and fixtures 123,970 128,266 116,328 36,417
05/17/96 United Artists 43 Furniture and fixtures 128,896 133,362 120,950 37,864
05/17/96 United Artists 43 Furniture and fixtures 116,699 120,743 109,505 34,281
05/17/96 United Artists 43 Furniture and fixtures 122,292 126,529 114,753 35,924
05/17/96 General Motors 60 Forklifts 76,077 78,713 0 14,792
05/17/96 General Motors 60 Forklifts 116,620 120,661 0 21,818
05/17/96 Alloy Polymers 30 Manufacturing equipment 95,296 98,598 0 30,934
05/17/96 Alterations Plus 20 Manufacturing equipment 31,375 32,463 0 15,180
05/17/96 Applied Radiological Control 26 Manufacturing equipment 106,993 110,700 0 45,615
05/17/96 Autry Greer & Sons, Inc. 36 Furniture and fixtures 78,119 80,825 0 24,468
05/17/96 Bojangles' Restaurants, Inc. 27 Furniture and fixtures 239,536 247,836 0 94,656
05/17/96 C & H Knit Products, Inc. 16 Manufacturing equipment 213,101 220,485 0 101,111
05/17/96 C & H Knit Products, Inc. 32 Manufacturing equipment 86,111 89,095 0 28,862
05/17/96 Country Cupboard Food Stores 42 Office automation equipment 148,317 153,456 0 42,955
05/17/96 C. T. Harris, Inc. 11 Forklifts 366,146 378,288 0 188,656
05/17/96 Envirosafe Service, Inc. 30 Forklifts 56,110 57,999 0 19,162
05/17/96 Floyd Marine Storage, Inc. 17 Forklifts 58,932 60,974 0 25,182
05/17/96 Freestate Petroleum Corp. 37 Furniture and fixtures 83,827 86,732 0 28,618
05/17/96 Freestate Petroleum Corp. 37 Furniture and fixtures 95,782 99,101 0 32,446
-40-
<PAGE>
Item 13. Certain Relationships and Related Transactions, continued
----------------------------------------------
Cost to
Partnership
Including
Date Cost to Acquisition Debt Annual
Purchased Lessee Term Equipment Description CAII Fees* Assumed Rents
- --------- ------ ---- --------------------- --------- ------------ --------- --------
05/17/96 Freestate Petroleum Corp. 39 Furniture and fixtures 117,961 122,048 0 36,964
05/17/96 Freestate Petroleum Corp. 39 Furniture and fixtures 127,676 132,100 0 40,116
05/17/96 Hokkins Systemation, Inc. 16 Furniture and fixtures 151,534 156,785 0 69,642
05/17/96 Hough Petroleum 19 Furniture and fixtures 140,741 145,617 0 82,912
05/17/96 Hough Petroleum 16 Furniture and fixtures 70,782 73,234 0 43,958
05/17/96 Hough Petroleum 15 Furniture and fixtures 45,985 47,579 0 29,808
05/17/96 Kessel Food Markets Inc. 43 Furniture and fixtures 1,046,603 1,082,868 0 296,530
05/17/96 Kop-Flex, Inc. 8 Manufacturing equipment 122,553 126,799 0 66,528
05/17/96 Lykins Oil Company, Inc. 29 Furniture and fixtures 35,292 36,515 0 12,992
05/17/96 Lykins Oil Company, Inc. 19 Furniture and fixtures 86,044 89,026 0 38,848
05/17/96 Madden Services, Inc. 16 Misc. warehouse equipment 599,055 619,812 0 281,814
05/17/96 Madden Services, Inc. 17 Misc. warehouse equipment 81,901 84,739 0 40,408
05/17/96 Mcgavren Guild Inc. 28 Furniture and fixtures 69,826 72,246 0 25,059
05/17/96 Mcgavren Guild Inc. 28 Furniture and fixtures 231,485 239,506 0 83,076
05/17/96 Mt Pleasant Publish 54 PC's networking 45,732 47,317 0 12,066
05/17/96 Mt Pleasant Publish 52 PC's networking 27,006 27,941 0 7,326
05/17/96 Perimeter Oil Company 40 Furniture and fixtures 96,437 99,778 0 29,797
05/17/96 Quality Oil Company, Inc. 17 Furniture and fixtures 58,006 59,937 0 27,373
05/17/96 Quality Oil Company, Inc. 19 Furniture and fixtures 8,580 8,865 0 3,953
05/17/96 Rainbow Marketers, Inc. 29 Furniture and fixtures 160,637 166,203 0 60,732
05/17/96 Recycled Materials Construction equipment 174,469 180,514 0 71,815
05/17/96 Rogers Petroleum, Inc. 42 Research equipment 55,122 57,032 0 16,256
05/17/96 Shapiro Packing Company 15 Food processing equipment 59,914 61,990 0 33,398
05/17/96 Shapiro Packing Company 21 Food processing equipment 53,048 54,886 0 23,613
05/17/96 Shapiro Packing Company 25 Food processing equipment 174,073 180,105 0 66,933
05/17/96 Shapiro Packing Company 18 Food processing equipment 72,353 74,860 0 32,720
05/17/96 Shoex, Inc. 27 Furniture and fixtures 243,501 251,939 0 89,088
05/17/96 Sos Transport, Inc. 6 Transport trucks 85,239 88,192 0 47,962
05/17/96 Tennessee River, Inc. 13 Manufacturing equipment 55,362 57,281 0 24,784
05/17/96 The Hanson-Whitney Co. 40 Machine tools 79,202 81,946 0 23,847
05/17/96 Trammell Crow Distribution 9 Above ground mining equip 405,893 419,957 0 220,032
05/17/96 Valley Innovative Mgmt Svcs 22 Furniture and fixtures 91,888 95,072 0 44,925
05/17/96 Vfl Technology Corporation 10 Forklifts 442,178 457,500 0 220,681
05/17/96 Vision Art Design & Animation 17 Communication equipment 27,568 28,523 0 16,500
05/17/96 White Consolidated 6 Manufacturing equipment 85,246 88,199 0 54,000
05/21/96 System One 36 PC's networking 160,207 165,758 0 56,970
05/15/96 Thomson Industries 60 Machine tools 43,248 44,747 0 7,864
05/17/96 Home Depot 35 Transport trucks 74,690 77,221 0 20,018
05/17/96 Home Depot 35 Forklifts 739,889 764,981 0 188,646
05/17/96 USS Kobe 84 Forklifts 102,722 106,281 0 17,053
05/17/96 USS Kobe 84 Forklifts 29,283 30,298 0 16,861
05/17/96 Thomson Industries 60 Machine tools 199,798 206,721 0 36,328
06/06/96 Ball Foster 36 Trucks 259,065 267,850 0 66,485
06/18/96 System One 36 Relay System 89,224 92,315 0 31,771
06/20/96 Ball Foster 60 Forklifts 177,381 183,528 0 36,528
-41-
<PAGE>
Item 13. Certain Relationships and Related Transactions, continued
----------------------------------------------
Cost to
Partnership
Including
Date Cost to Acquisition Debt Annual
Purchased Lessee Term Equipment Description CAII Fees* Assumed Rents
- --------- ------ ---- --------------------- --------- ------------ --------- --------
06/20/96 Ball Foster 36 Forklifts 63,364 65,560 0 1,343
06/20/96 Ball Foster 36 Forklifts 41,780 43,228 0 882
06/28/96 Allied Signal 39 Computer/semiconductor equip 146,832 151,865 0 2,987
07/08/96 Staples, Inc. 28 Copiers 333,585 345,144 0 138,807
07/08/96 Staples, Inc. 27 Copiers 129,475 133,961 0 55,302
07/08/96 Staples, Inc. 26 Copiers 125,946 130,310 0 55,302
07/08/96 Staples, Inc. 25 Copiers 205,014 212,118 0 92,723
07/08/96 Staples, Inc. 24 Copiers 337,593 349,291 0 157,241
07/08/96 Staples, Inc. 23 Copiers 38,393 39,724 0 18,434
07/09/96 Ball Foster 36 Forklifts 85,388 88,221 0 21,914
07/09/96 Ball Foster 60 Front end loader 58,476 60,398 0 12,078
07/09/96 Ball Foster 36 Lift Trucks 111,692 115,543 0 28,664
07/09/96 Ball Foster 36 Forklifts 17,064 17,643 0 4,379
07/11/96 Ball Foster 36 Lift Trucks 47,169 48,795 0 12,105
07/15/96 Brown Strauss 36 Forklift 90,641 93,782 0 23,736
07/16/96 Pacific Coast 60 Forklift 46,826 48,449 0 9,159
07/19/96 General Motors 60 Material handling equipment 15,259 15,787 0 2,875
07/19/96 General Motors 60 Material handling equipment 30,414 31,467 0 5,888
07/19/96 General Motors 60 Material handling equipment 30,199 31,246 0 5,888
07/19/96 General Motors 60 Material handling equipment 463,511 479,572 0 89,750
07/19/96 General Motors 60 Material handling equipment 37,297 38,589 0 7,232
07/29/96 Compsource 48 Furniture and fixtures 232,855 240,268 0 56,796
07/29/96 In Home Health 60 Furniture and fixtures 18,013 18,637 0 3,966
07/31/96 In Home Health 60 Telephone System 34,585 35,783 0 11,375
07/31/96 International Paper 57 Sweepers 272,213 281,645 0 59,607
07/31/96 International Paper 57 Forklift 35,045 36,259 0 7,642
07/31/96 International Paper 33 Loaders 52,138 53,945 0 14,396
08/09/96 Xerox 36 Forklift 4,285 4,433 0 1,320
08/09/96 Georgetown Steel 36 Forklift 26,796 27,724 0 7,803
08/02/96 In Home Health 36 Personal Computers 26,553 27,473 0 9,263
08/05/96 Ball Foster 60 Scrubber 8,659 8,948 0 1,788
08/06/96 In Home Health 36 FF&E 86,900 89,912 0 30,116
08/09/96 General Motors 60 Material handling equipment 632,280 654,189 0 121,954
08/09/96 General Motors 60 Material handling equipment 214,665 222,103 0 41,637
08/09/96 General Motors 60 Material handling equipment 70,727 73,177 0 13,836
08/15/96 General Motors 60 Material handling equipment 59,984 62,063 0 11,775
08/15/96 General Motors 60 Material handling equipment 176,911 183,041 0 34,728
08/29/96 Ball Foster 36 Forklifts 53,428 55,240 0 13,711
09/16/96 Merritt Ford, Inc. 60 Auto alignment equipment 25,335 26,212 22,858 6,816
09/16/96 Lakeland Chrysler/Plymouth 60 Auto alignment equipment 36,071 37,321 33,040 9,541
09/16/96 E & R, Inc. 60 Auto alignment equipment 29,145 30,155 26,588 7,560
09/16/96 Bickerstaff Imports, Inc. 60 Auto alignment equipment 13,837 14,317 11,571 4,935
09/16/96 Southway Tire and Auto, Inc. 60 Auto alignment equipment 8,897 9,205 6,319 4,524
09/16/96 Kelley, Donald 48 Auto alignment equipment 12,068 12,486 5,207 9,156
09/16/96 David Tire Company 60 Auto alignment equipment 22,241 23,011 18,210 8,466
-42-
<PAGE>
Item 13. Certain Relationships and Related Transactions, continued
----------------------------------------------
Cost to
Partnership
Including
Date Cost to Acquisition Debt Annual
Purchased Lessee Term Equipment Description CAII Fees* Assumed Rents
- --------- ------ ---- --------------------- --------- ------------ --------- --------
09/16/96 Bob King Pontiac-GMC, Inc. 60 Auto alignment equipment 29,767 30,799 22,036 13,692
09/16/96 Decamps, William L 60 Auto alignment equipment 17,854 18,473 13,500 8,040
09/16/96 Feurer, Dennis R 60 Auto alignment equipment 8,732 9,035 6,629 3,948
09/16/96 Feurer, Dennis R 60 Auto alignment equipment 7,624 7,888 6,246 2,904
09/16/96 Tom's Tire & Service Center 60 Auto alignment equipment 17,158 17,752 13,834 6,852
09/16/96 Crystal Ford and Mercury, Inc. 60 Auto alignment equipment 17,865 18,484 14,805 6,492
09/16/96 KOVCO 36 Auto alignment equipment 15,069 15,591 7,091 10,956
09/16/96 Smoky Jennings Chevrolet, Inc. 60 Auto alignment equipment 29,539 30,563 24,561 10,476
09/16/96 Whaley, Jane C 60 Auto alignment equipment 19,463 20,137 16,119 7,068
09/16/96 McKay, Dane 60 Auto alignment equipment 19,752 20,437 16,872 6,660
09/16/96 Riverside Chrysler Plymouth 60 Auto alignment equipment 14,750 15,261 12,815 4,716
09/16/96 Three Rivers Motor Car Co 60 Auto alignment equipment 12,251 12,676 10,666 3,840
09/16/96 Brickhouse Enterprises, Inc. 60 Auto alignment equipment 20,420 21,128 17,972 6,204
09/16/96 Foote & Davies, Inc. 73 Printing press equipment 770,154 796,840 411,226 267,178
09/16/96 Foote & Davies, Inc. 73 Printing press equipment 997,537 1,032,102 532,638 346,061
09/16/96 J.J. Collins' Sons, Inc. 82 Printing press equipment 603,325 624,231 380,696 150,275
09/16/96 Champion Business Forms, Inc. 89 Printing press equipment 1,223,706 1,266,108 847,274 311,796
09/16/96 D.L. Phillips Investment Build 36 Forklifts 6,769 7,004 1,991 4,068
09/16/96 D.L. Phillips Investment Build 36 Forklifts 7,748 8,016 3,666 3,840
09/16/96 Hyplains Beef, L.C 36 Forklifts 9,342 9,665 3,915 5,399
09/16/96 Hyplains Beef, L.C 36 Forklifts 10,696 11,067 3,750 6,594
09/16/96 Keystone Consolidated Ind 36 Forklifts 74,037 76,603 48,453 28,856
09/16/96 National Beef Packing Co., L.P. 36 Forklifts 39,604 40,976 11,841 24,188
09/16/96 Scott Company of California 36 Forklifts 18,370 19,006 10,516 8,400
09/16/96 Scott Company of California 36 Forklifts 35,859 37,101 18,239 19,104
09/16/96 Scott Company of California 36 Forklifts 36,948 38,229 19,676 19,104
09/16/96 Stampede Meat, Inc. 36 Forklifts 5,590 5,783 3,579 3,240
09/16/96 Stampede Meat, Inc. 36 Forklifts 3,290 3,404 2,647 1,356
09/16/96 Stampede Meat, Inc. 36 Forklifts 2,898 2,998 2,028 1,620
09/16/96 Lane Steel, Inc. 48 Forklifts 31,775 32,876 26,048 8,813
09/16/96 Major Brands, Inc. 48 Forklifts 3,312 3,427 1,728 2,154
09/16/96 Pretech Corporation 48 Forklifts 37,187 38,476 26,537 10,225
09/16/96 Roadmaster Corporation 48 Forklifts 12,572 13,007 8,827 4,683
09/16/96 Stampede Meat, Inc. 48 Forklifts 19,663 20,344 14,137 6,780
09/16/96 Stampede Meat, Inc. 48 Forklifts 22,056 22,820 16,753 6,780
09/16/96 Acme Battery Manufacturing Co. 60 Forklifts 8,437 8,729 3,622 4,122
09/16/96 American Laminates, Inc. 60 Forklifts 17,506 18,112 13,528 4,870
09/16/96 Canoak USA, Inc. 60 Forklifts 15,910 16,461 8,600 6,492
09/16/96 Central Air Freight Services 60 Forklifts 12,410 12,840 8,956 4,164
09/16/96 Ceradyne, Inc. 60 Forklifts 16,316 16,882 12,631 5,112
09/16/96 Elmore-Pisgah, Inc. 60 Forklifts 10,890 11,267 7,757 3,720
09/16/96 Esselte Pendaflex Corporation 60 Forklifts 33,313 34,467 25,787 11,307
09/16/96 Esselte Pendaflex Corporation 60 Forklifts 32,920 34,060 27,389 9,087
09/16/96 Esselte Pendaflex Corporation 60 Forklifts 45,743 47,328 38,484 12,299
09/16/96 Esselte Pendaflex Corporation 60 Forklifts 32,920 34,060 27,389 9,087
-43-
<PAGE>
Item 13. Certain Relationships and Related Transactions, continued
----------------------------------------------
Cost to
Partnership
Including
Date Cost to Acquisition Debt Annual
Purchased Lessee Term Equipment Description CAII Fees* Assumed Rents
- --------- ------ ---- --------------------- --------- ------------ --------- --------
09/16/96 Esselte Pendaflex Corporation 60 Forklifts 43,945 45,467 33,508 14,292
09/16/96 Esselte Pendaflex Corporation 60 Forklifts 35,736 36,975 27,340 11,065
09/16/96 Esselte Pendaflex Corporation 60 Forklifts 54,959 56,863 45,454 15,379
09/16/96 Esselte Pendaflex Corporation 60 Forklifts 14,635 15,142 10,004 5,507
09/16/96 Esselte Pendaflex Corporation 60 Forklifts 26,601 27,523 18,475 9,803
09/16/96 Esselte Pendaflex Corporation 60 Forklifts 29,250 30,264 19,988 11,002
09/16/96 Esselte Pendaflex Corporation 60 Forklifts 37,774 39,083 25,811 14,207
09/16/96 Haldex Corporation 60 Forklifts 11,214 11,603 6,291 4,749
09/16/96 IAMS Company-Heartland PLT 60 Forklifts 15,690 16,234 11,806 5,328
09/16/96 Interactive Marketing Services 60 Forklifts 16,639 17,215 10,356 5,700
09/16/96 Kansas Oxide Corporation 60 Forklifts 19,511 20,187 15,701 5,420
09/16/96 Midstate Construction & Maint 60 Forklifts 79,433 82,185 64,991 19,380
09/16/96 North Amer. Packaging Corp 60 Forklifts 9,954 10,299 6,132 3,984
09/16/96 Schroeders Wholesale, Inc. 60 Forklifts 12,712 13,153 11,178 3,228
09/16/96 Sea-Lect Wholesale Seafood 60 Forklifts 16,154 16,714 13,987 3,918
09/16/96 Silverado Foods, Inc. 60 Forklifts 11,005 11,386 8,249 3,256
09/16/96 Straight-Line Water Sports, Inc. 60 Forklifts 19,472 20,147 14,440 5,700
09/16/96 United States Mineral Prod 60 Forklifts 52,712 54,538 41,315 15,204
09/16/96 Warehouse, Inc. 60 Forklifts 16,904 17,490 13,800 4,332
09/04/96 Basic Vegetable 60 Forklifts 206,842 214,009 0 39,341
09/05/96 Thomson Saginaw 60 Material handling equipment 35,420 36,647 0 6,779
09/06/96 In Home Health 36 Computer equipment 36,228 37,483 0 12,733
09/24/96 Basic Vegetable 60 Lift truck 15,698 16,242 0 3,015
09/23/96 In Home Health 60 Furniture, fixtures & equip 5,297 5,481 0 1,144
09/24/96 Lucent Technologies 36 Semiconductor 1,410,646 1,459,524 0 383,178
09/18/96 Ball Foster 36 Forklifts 94,287 97,554 0 24,277
09/18/96 Ball Foster 60 Forklifts 87,385 90,413 0 18,107
10/21/96 HK Systems 48 Phone system 10,495 10,859 0 9,645
11/14/96 HK Systems 48 Phone system 42,475 43,947 0 12,697
12/13/96 Basic Vegetable 60 Forklifts 75,564 78,182 0 14,372
12/18/96 In Home Health 60 Computer equipment 101,943 105,475 0 22,008
12/30/96 TRW 31 Furniture, fixtures & equip 214,207 221,629 0 69,356
12/30/96 Thomson Industries 60 Machine tools 257,215 266,128 0 3,885
---------- ----------- ----------- -----------
Total equipment sold to the partnership $34,503,505 $35,688,393 $11,368,469 $11,127,878
=========== =========== =========== ===========
</TABLE>
* The lower of (a) the price for the equipment plus all costs incurred
in maintaining the equipment (including, without limitation, the
reasonable, necessary and actual expenses, as determined in
accordance with generally accepted accounting principles, of
storage, carrying, warehousing, repair, marketing, financing and
taxes) from the date of acquisition thereof, provided that any
proceeds accrued from the first basic rent date thereof and retained
by the general partner or an affiliate thereof from leasing the
equipment or any other arrangement with respect to the equipment
shall be deemed a credit towards the purchase price paid by the
Partnership, or (b) the fair market value of such equipment, as
determined by an independent nationally recognized appraiser
selected by the general partner.
-44-
<PAGE>
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
---------------------------------------------------------------
(a)
and
(d) The following documents are filed as part of this Report:
1. Financial Statements: (Incorporated by reference to Item 8 of
this Report, "Financial Statements and Supplementary Data").
2. Financial Statement Schedule: (Incorporated by reference to
Item 8 of this Report, "Financial Statements and Supplementary
Data").
(b) The Partnership did not file any reports on Form 8-K during the
quarter ended December 31, 1996.
(c) Exhibits required to be filed.
Exhibit Exhibit
Number Name
4.1* Capital Preferred Yield Fund-III Limited Partnership
Agreement
4.2* First Amendment to Limited Partnership Agreement
dated June 14, 1994
4.3* Amended and Restated Agreement of Limited Partnership
of Capital Preferred Yield Fund-III, L.P.
* Not filed herewith. In accordance with Rule 12b-32 of
the General Rules and Regulations under the
Securities Exchange Act of 1934, reference is made to
the document previously filed with the Commission.
-45-
<PAGE>
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: March 10, 1997 Capital Preferred Yield Fund-III, L.P.
By: CAI Equipment Leasing IV Corporation
By: /s/John F. Olmstead
---------------------
John F. Olmstead
President and Director
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 general partner
of the Partnership and in the capacities indicated on March 10, 1997.
Signature Title
- --------- -----
/s/John F. Olmstead
- ------------------------
John F. Olmstead President and Director
/s/Dennis J. Lacey
- ------------------------
Dennis J. Lacey Senior Vice President and Director
/s/John E. Christensen
- ------------------------
John E. Christensen Senior Vice President, Principal Financial and
Chief Administrative Officer and Director
/s/Anthony M. DiPaolo
- ------------------------
Anthony M. DiPaolo Senior Vice President, Assistant Secretary and
Director
/s/Robert A. Golden Vice President and Director
- ------------------------
Robert A. Golden
/s/Daniel J. Waller
- ------------------------
Daniel J. Waller Vice President and Director
/s/Richard H. Abernethy
- ------------------------
Richard H. Abernethy Vice President and Director
/s/John A. Reed
- ------------------------
John A. Reed Vice President, Assistant Secretary and Director
/s/David J. Anderson
- ------------------------
David J. Anderson Chief Accounting Officer and Secretary
-46-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
consolidated balance sheets and consolidated statements of income and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 798,140
<SECURITIES> 0
<RECEIVABLES> 883,201
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 55,261,435
<DEPRECIATION> 0
<TOTAL-ASSETS> 62,471,309
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 37,388,345
<TOTAL-LIABILITY-AND-EQUITY> 62,471,309
<SALES> 110,831
<TOTAL-REVENUES> 17,245,131
<CGS> 0
<TOTAL-COSTS> 15,171,130
<OTHER-EXPENSES> 484,249
<LOSS-PROVISION> 50,000
<INTEREST-EXPENSE> 1,785,640
<INCOME-PRETAX> 2,074,001
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,074,004
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,074,001
<EPS-PRIMARY> 4.13
<EPS-DILUTED> 4.13
</TABLE>
