<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
-------------------------------------------------
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________________ to ________________________
Commission file number 33-44158
------------------------
Capital Preferred Yield Fund-III, L.P.
--------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 84-1248907
- ---------------------------- -------------------------------------------
(State of organization) (I.R.S. Employer Identification No.)
7175 West Jefferson Avenue, Suite 4000
Lakewood, Colorado 80235
- ------------------------------------ ------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (303) 980-1000
---------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No_____.
-----
Exhibit Index appears on Page 17
Page 1 of 18 Pages
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
Quarterly Report on Form 10-Q
For the Quarter Ended
March 31, 2000
Table of Contents
-----------------
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE
----
<S> <C>
Item 1. Financial Statements (Unaudited)
Balance Sheets - March 31, 2000 and December 31, 1999 3
Statements of Income - Three Months Ended
March 31, 2000 and 1999 4
Statements of Cash Flows - Three Months Ended
March 31, 2000 and 1999 5
Notes to Financial Statements 6-9
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 10-14
Item 3. Quantitative and Qualitative Disclosures About Market Risk 15
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 16
Item 6. Exhibits and Reports on Form 8-K 16
Exhibit Index 17
Signature 18
</TABLE>
2
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
----------- -----------
(Unaudited)
<S> <C> <C>
Cash and cash equivalents $ 2,005,633 $ 4,382,378
Accounts receivable 939,196 1,404,792
Receivable from affiliates 608,512 715,524
Equipment held for sale or re-lease 1,592,594 1,470,585
Net investment in direct finance leases 2,235,348 1,916,677
Leased equipment, net 35,550,476 32,213,785
----------- -----------
Total assets $42,931,759 $42,103,741
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and accrued liabilities $ 1,158,220 $ 2,337,411
Payables to affiliates 106,741 60,405
Rents received in advance 432,060 471,353
Distributions payable to partners 435,821 442,346
Discounted lease rentals 12,154,973 9,257,171
----------- -----------
Total liabilities 14,287,815 12,568,686
----------- -----------
Partners' capital:
General partner - -
Limited partners:
Class A 28,275,927 29,158,012
Class B 368,017 377,043
----------- -----------
Total partners' capital 28,643,944 29,535,055
----------- -----------
Total liabilities and partners' capital $42,931,759 $42,103,741
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------
2000 1999
---------- ---------
<S> <C> <C>
Revenue:
Operating lease rentals $3,849,022 $4,334,349
Direct finance lease income 43,632 71,751
Equipment sales margin 110,606 271,781
Interest income 50,078 42,093
---------- ----------
Total revenue 4,053,338 4,719,974
---------- ----------
Expenses:
Depreciation 3,072,098 3,114,342
Management fees to general partner 128,245 103,537
Direct services from general partner 73,955 41,744
General and administrative 72,784 58,183
Interest on discounted lease rentals 233,242 203,357
Provision for losses 50,000 50,000
---------- ----------
Total expenses 3,630,324 3,571,163
---------- ----------
Net income $ 423,014 $1,148,811
========== ==========
Net income allocated:
To the general partner $ 13,162 $ 13,181
To the Class A limited partners 405,753 1,124,167
To the Class B limited partner 4,099 11,463
---------- ----------
$ 423,014 $1,148,811
========== ==========
Net income per weighted average Class A
limited partner unit outstanding $ .83 $ 2.30
========== ==========
Weighted average Class A limited
partner units outstanding 491,795 489,801
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------
2000 1999
----------- -----------
<S> <C> <C>
Net cash provided by operating activities $ 3,903,702 $ 5,178,045
----------- -----------
Cash flows from investing activities:
Purchases of equipment on operating leases from affiliate (2,839,081) (2,530,565)
Investment in direct finance leases, acquired from affiliate (503,062) (44,079)
----------- -----------
Net cash used in investing activities (3,342,143) (2,574,644)
----------- -----------
Cash flows from financing activities:
Principal payments on discounted lease rentals (1,617,653) (2,382,847)
Redemptions of Class A limited partner units - (22,126)
Distributions to partners (1,320,651) (1,318,060)
----------- -----------
Net cash used in financing activities (2,938,304) (3,723,033)
----------- -----------
Net decrease in cash and cash equivalents (2,376,745) (1,119,632)
Cash and cash equivalents at beginning of period 4,382,378 2,723,454
----------- -----------
Cash and cash equivalents at end of period $ 2,005,633 $ 1,603,822
=========== ===========
Supplemental disclosure of cash flow information:
Interest paid on discounted lease rentals $ 233,242 $ 201,463
Supplemental disclosure of noncash investing and
financing activities:
Discounted lease rentals assumed in equipment acquisitions 4,515,454 -
Discounted lease rental for bankrupt lessee written-off
as uncollectible - 57,104
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
---------------------
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
disclosures required by generally accepted accounting principles for annual
financial statements. In the opinion of the General Partner, all adjustments
(consisting of normal recurring adjustments) considered necessary for a fair
presentation have been included. The balance sheet at December 31, 1999 was
derived from the audited financial statements included in the Partnership's
1999 Form 10-KA. For further information, refer to the financial statements
of Capital Preferred Yield Fund-III, L.P. (the "Partnership"), and the
related notes, included in the Partnership's Annual Report on Form 10-KA for
the year ended December 31, 1999, previously filed with the Securities and
Exchange Commission.
Recently Issued Financial Accounting Standards
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities ("Statement
133"). Statement 133 establishes accounting and reporting standards for
derivative instruments and for hedging activities. It requires that an entity
recognize all derivatives as either assets or liabilities in the statement of
financial position and measure those instruments at fair value. Statement 133
is effective for fiscal years beginning after June 15, 1999, with earlier
application permitted. In June 1999, the Financial Accounting Standards Board
issued SFAS No. 137, Accounting for Derivative Instruments and Hedging
Activities - Deferral of the Effective Date of FASB Statement 133, an
Amendment of FASB Statement 133. Statement 137 effectively extends the
required application of Statement 133 to fiscal years beginning after June
15, 2000, with earlier application permitted. The Partnership adopted
Statement 133 in the first quarter of 1999. The General Partner does not
expect the adoption of Statement 133 or Statement 137 to have an impact on
its financial reporting.
2. Transactions With the General Partner and Affiliates
----------------------------------------------------
Management Fees to General Partner
In accordance with the Partnership Agreement, the General Partner earns a
management fee in connection with its management of the equipment, calculated
as a percentage of the monthly gross rentals received, and paid monthly in
arrears. At March 31, 2000, management fees of $75,708 are included in
payables to affiliates.
6
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
2. Transactions With the General Partner and Affiliates, continued
----------------------------------------------------
Direct Services from General Partner
The General Partner and an affiliate 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. At March 31, 2000, direct services from the General
Partner of $31,033 are included in payables to affiliates.
Receivable From Affiliates
The General Partner collects rents from lessees and applies these rental
payments to the lessee's account with the Partnership. The General Partner
then transfers the collected rental payments to the Partnership, eliminating
the receivable from related party balance.
7
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
2. Transactions With the General Partner and Affiliates, continued
----------------------------------------------------
Equipment Purchases
During the three months ended March 31, 2000, the Partnership acquired the
equipment described below from Capital Associates International, Inc.
("CAII"):
<TABLE>
<CAPTION>
Acquisition Total
Cost of Fees and Equipment
Lessee Equipment Description Equipment Reimbursements Purchase Price
-------------------------- ---------------------- ------------- ---------------- --------------
<S> <C> <C> <C> <C>
Alliant Tech PC's 96,199 3,333 99,532
BOC PC's 154,366 5,349 159,715
Daimler Chrysler Pallet Trucks 58,463 58,463
EEX PC's 167,345 5,798 173,143
EMC Computer Equipment 490,184 16,985 507,169
EMC Servers 470,637 470,637
Geico Networking 10,970 380 11,350
Geico Servers 192,556 6,672 199,228
General Motors Corporation Fork Lift 57,234 1,983 59,217
General Motors Corporation Platform Truck 554,070 554,070
General Motors Corporation Rider Die Handler 282,215 282,215
General Motors Corporation Scrubber 42,351 1,467 43,819
General Motors Corporation Sweeper 107,149 3,713 110,862
General Motors Corporation Utility Carts 185,004 185,004
Louisiana Pacific Crawler 248,507 248,507
Louisiana Workers Copiers 119,409 4,137 123,546
Lucent Fork Lift 58,800 58,800
Matsushita Servers 191,910 6,650 198,560
McGraw Hill Computer Equipment 18,934 18,934
Nabisco Lift Truck 33,302 33,302
New York Life Copiers 179,926 179,926
New York Presbyterian Hosp Medical Equipment 409,060 409,060
Otis Elevator Workstations 55,854 1,935 57,789
Thompson Machine Tool 127,773 4,379 132,152
Thomson Tool Cart 44,495 1,542 46,037
Thomson Industries Machine Tools 63,182 63,182
TRW Semiconductor 2,353,462 0 2,353,462
U-Haul Servers 127,134 127,134
Williams Sonoma POS 831,994 28,829 860,823
Xerox Computer Equipment 31,959 31,959
---------- ------------ -------------
7,764,445 93,152 7,857,597
========== ============ =============
</TABLE>
At March 31, 2000, the General Partner had identified approximately $1.5
million of additional equipment that satisfied the Partnership's acquisition
criteria. The Partnership expects to acquire this equipment during the
remainder of 2000.
8
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
3. General Partner Matters
-----------------------
According to the records of CAII, an affiliate of the general partner, as of
March 31, 2000, CAII owes the Partnership approximately $600,000, for rents,
remarketing proceeds and other amounts (collectively, the "Prior Rents")
collected by CAII on behalf of the Partnership during periods prior to
February 1, 2000 (the "Prior Periods"). According to its own records, CAII
owes approximately $3.9 million to other investors and creditors as of March
31, 2000 (who, along with the Partnership, are referred to herein as the
"Payees"), for Prior Rents collected by CAII on their behalf during the Prior
Periods. CAII, which presently does not have the funds to repay all of the
Prior Rents, is in negotiations with the Payees to develop a plan for
repayment of the Prior Rents owed to all Payees over time. The Partnership is
withholding acquisition fees and managements fees otherwise payable to the
general partner and crediting such withheld fees (the "Fees") against the
Prior Rents owing from CAII. The Partnership intends to continue to withhold
future Fees until such time as it recovers all Prior Rents.
The amount stated on the Balance Sheet as Receivable from affiliates is net
of a $300,000 allowance recorded at December 31, 1999.
The Partnership relies upon the services of CAII for origination of leases,
administrative and accounting services and remarketing of leases and
equipment, among other services. Should CAII be unable to develop a plan for
repayment with it's Payees, the Partnership may be required to contract with
another party for these services. In such event, there is no assurance that
another provider of these services can be identified.
9
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
- ---------------------
Presented below are schedules (prepared solely to facilitate the discussion of
results of operations that follows) showing items of income and expense and
changes in those items derived from the Statements of Income:
<TABLE>
<CAPTION>
Three Months
Ended March 31,
-------------------------
2000 1999 Change
----------- ----------- ----------
<S> <C> <C> <C>
Leasing margin $ 587,314 $ 1,088,401 $ (501,087)
Equipment sales margin 110,606 271,781 (161,175)
Interest income 50,078 42,093 7,985
Management fees to general partner (128,245) (103,537) (24,708)
Direct services from general partner (73,955) (41,744) (32,211)
General and administrative (72,784) (58,183) (14,601)
Provision for losses (50,000) (50,000) -
----------- ----------- ----------
Net income $ 423,014 $ 1,148,811 $ (725,797)
=========== =========== ==========
</TABLE>
Leasing Margin
Leasing margin consists of the following:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------------
2000 1999
----------- ----------
<S> <C> <C>
Operating lease rentals $ 3,849,022 $4,334,349
Direct finance lease income 43,632 71,751
Depreciation (3,072,098) (3,114,342)
Interest expense on discounted lease rentals (233,242) (203,357)
------------ ----------
Leasing margin $ 587,314 $1,088,401
============ ==========
Leasing margin ratio 15% 25%
== ==
</TABLE>
10
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations, continued
Results of Operations, continued
- ---------------------
Leasing Margin, continued
Leasing margin ratio will vary due to changes in the portfolio, including, among
other things, the mix of operating leases versus direct finance leases, the
average maturity of leases comprising the portfolio, the average residual value
of leases in the portfolio, and the amount of discounted lease rentals financing
the portfolio.
Leasing margin and the related leasing margin ratio for an operating lease
financed with non-recourse debt increases during the term of the lease since
rents and depreciation are typically fixed while interest expense declines as
the related non-recourse debt principle is repaid. Leasing margin and leasing
margin ratio decreased for the three months ended March 31, 2000 compared to the
three months ended March 31, 1999 in part due to the increase in interest
expense associated with the operating leases financed with non-recourse debt
added to the portfolio during the period. In addition, operating lease rentals
decreased for the three months ended March 31, 2000 as compared to the three
months ended March 31, 1999 primarily due to a decrease in interim rent
proceeds.
The ultimate rate of return on leases depends, in part, on interest rates at the
time the leases are originated, as well as future equipment values and on-going
lessee creditworthiness. 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).
Equipment Sales Margin
Equipment sales margin consists of the following:
Three Months Ended
March 31,
----------------------
2000 1999
--------- --------
Equipment sales revenue $ 707,036 $ 631,780
Cost of equipment sales (596,430) (359,999)
--------- ---------
Equipment sales margin $ 110,606 $ 271,781
========= =========
Currently, a portion of the Partnership's initial leases have expired and the
equipment is either being re-leased or sold to the lessee or a third party.
Equipment sales margin is affected by the volume and composition of equipment
that become available for sale. Equipment sales margin was higher for the
three months ended March 31, 1999 compared to the three months ended March 31,
2000 primarily due to a one time recognition of gain from the receipt of funds
pursuant to the sale of a note receivable representing settlement with a
bankrupt lessee in the amount of $206,360.
11
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P
Item 2. 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 the amount of invested cash
during the three months ended March 31, 2000 as compared to the three months
ended March 31, 1999. Interest income varies due to (1) the amount of cash
available for investment (pending distribution or equipment purchases) and (2)
the interest rate on such invested cash.
Expenses
Management fees are earned on gross rents received and will fluctuate due to
variances in cash flow. Management fees paid to general partner for the three
months ended March 31, 2000 were higher than the three months ended March 31,
1999 primarily due to an increase in rents collected.
Direct services from general partner increased for the three months ended March
31, 2000 compared to the three months ended March 31, 1999 primarily due to a
change in the method in which the general partner charges for its asset
management services. The Partnership pays a refurbishing charge to the general
partner at the time computer equipment is returned by the lessee to the
Partnership. The refurbishing charge includes all services necessary to prepare
the equipment for re-sale. Computer equipment returned to the Partnership for
the three months ended March 31, 2000 generated refurbishing charges in the
amount of $42,922.
General and administrative charges increased for the three months ended March
31, 2000 compared to the three months ended March 31, 1999 primarily due to an
increase in storage charges for equipment returned to the Partnership at lease
maturity.
Provision for Losses
The remarketing of equipment for an amount greater than its book value is
reported with 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 occurs when the equipment is remarketed
subsequent to the termination of the initial lease) 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 such that it
has credit and residual value exposure and will incur losses from those
exposures in the ordinary course of business. The Partnership performs
12
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations, continued
Results of Operations, continued
- ---------------------
Provision for Losses, continued
assessments of the estimated residual values of its assets to identify any
other-than-temporary losses in value.
A provision for loss of $50,000 was recorded for the three months ended March
31, 2000 primarily due to lessees returning equipment to the Partnership at
lease maturity.
Liquidity & Capital Resources
- -----------------------------
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.
During the three months ended March 31, 2000, the Partnership acquired equipment
subject to leases with a total equipment purchase price of $7,857,597. At March
31, 2000, the General Partner had identified approximately $1.5 million of
additional equipment that satisfied the Partnership's acquisition criteria. The
Partnership expects to acquire this equipment during the remainder of 2000.
During the three months ended March 31, 2000, the Partnership declared
distributions to the partners of $1,314,126 ($435,821 of which was paid during
April 2000). 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 which exceeds its net
income for the fiscal period may be deemed a return of capital for accounting
purposes. However, the total percentage of the 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 the remainder of 2000, to (1) meet current
operating requirements, (2) fund cash distributions to Class A and Class B
limited partners at annualized rates of 10.5% (portions of which are expected to
constitute returns of capital), and (3) reinvest in additional equipment under
leases, provided that suitable equipment can be identified and acquired.
The Partnership will enter its liquidation period (as defined in the Partnership
Agreement) on approximately July 1, 2000. At that time, except for commitments
to purchase made during the reinvestment period, the Partnership will no longer
reinvest in additional equipment under leases.
13
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations, continued
Liquidity & Capital Resources, continued
- -----------------------------
According to the records of CAII, an affiliate of the general partner, as of
March 31, 2000, CAII owes the Partnership approximately $600,000 for rents,
remarketing proceeds and other amounts (collectively, the "Prior Rents")
collected by CAII on behalf of the Partnership during periods prior to February
1, 2000 (the "Prior Periods"). According to its own records, CAII owes
approximately $3.9 million to other investors and creditors at March 31, 2000
(who, along with the Partnership, are referred to herein as the "Payees"), for
Prior Rents collected by CAII on their behalf during the Prior Periods. CAII,
which presently does not have the funds to repay all of the Prior Rents, is in
negotiations with the Payees to develop a plan for repayment of the Prior Rents
owed to all Payees over time. The Partnership is withholding acquisition fees
and managements fees otherwise payable to the general partner and crediting such
withheld fees (the "Fees") against the Prior Rents owing from CAII.
The amount stated on the balance sheet as Receivable from affiliates is net of a
$300,000 allowance recorded at December 31, 1999.
The Partnership relies upon the services of CAII for origination of leases,
administrative and accounting services and remarketing of leases and equipment,
among other services. Should CAII be unable to develop a plan for repayment with
it's Payees, the Partnership may be required to contract with another party for
these services. In such event, there is no assurance that another provider of
these services can be identified.
New Accounting Pronouncements
- -----------------------------
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities ("Statement 133").
Statement 133 establishes accounting and reporting standards for derivative
instruments and for hedging activities. It requires that an entity recognize
all derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. Statement 133 is
effective for fiscal years beginning after June 15, 1999, with earlier
application permitted. In June 1999, the Financial Accounting Standards Board
issued SFAS No. 137, Accounting for Derivative Instruments and Hedging
Activities - Deferral of the Effective Date of FASB Statement 133, an Amendment
of FASB Statement 133. Statement 137 effectively extends the required
application of Statement 133 to fiscal years beginning after June 15, 2000, with
earlier application permitted. The Partnership adopted Statement 133 in the
first quarter of 1999. The General Partner does not expect the adoption of
Statement 133 or Statement 137 to have an impact on its financial reporting.
14
<PAGE>
"Safe Harbor" Statement Under the Private Securities Litigation Reform Act of
- -----------------------------------------------------------------------------
1995
- ----
The statements contained in this report which are not historical facts may be
deemed to contain forward-looking statements with respect to events, the
occurrence of which involve risks and uncertainties, and are subject to factors
that could cause actual future results to differ both adversely and materially
from currently anticipated results, including, without limitation, the level of
lease originations, realization of residual values, the availability and cost of
financing sources and the ultimate outcome of any contract disputes. Certain
specific risks associated with particular aspects of the Partnership's business
are discussed under Results of Operations in this report and under Results of
Operations in the 1999 Form 10-KA when and where applicable.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The partnership's leases with equipment users are non-cancelable and have lease
rates which are fixed at lease inception. The partnership finances its leases,
in part, with discounted lease rentals at a fixed debt rate. The partnership's
other assets and liabilities are also at fixed rates. Consequently the
partnership has no significant interest rate risk or other market risk exposure.
15
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
The Partnership is involved in routine legal proceedings incidental to
the conduct of its business. The General Partner believes none of these
legal proceedings will have a material adverse effect on the financial
condition or operations of the Partnership.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(b) The Partnership did not file any reports on Form 8-K during the
quarter ended March 31, 2000.
16
<PAGE>
Item No. Exhibit Index
27 Financial Data Schedule
17
<PAGE>
CAPITAL PREFERRED YIELD FUND-III, L.P.
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Partnership has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CAPITAL PREFERRED YIELD FUND-III, L.P.
By: CAI Equipment Leasing IV Corp.
Dated:___________________, 2000 By: /s/Joseph F. Bukofski
------------------------
Joseph F. Bukofski
Vice President
Chief Accounting Officer
Principal Financial Officer and Director
18
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 2,005,633
<SECURITIES> 0
<RECEIVABLES> 1,547,708
<ALLOWANCES> 0
<INVENTORY> 1,592,594
<CURRENT-ASSETS> 0
<PP&E> 37,785,824
<DEPRECIATION> 0
<TOTAL-ASSETS> 42,931,759
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 28,643,944
<TOTAL-LIABILITY-AND-EQUITY> 42,931,759
<SALES> 110,606
<TOTAL-REVENUES> 4,053,338
<CGS> 0
<TOTAL-COSTS> 3,630,324
<OTHER-EXPENSES> 202,200
<LOSS-PROVISION> 50,000
<INTEREST-EXPENSE> 659,115
<INCOME-PRETAX> 423,014
<INCOME-TAX> 0
<INCOME-CONTINUING> 423,014
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 423,014
<EPS-BASIC> 0.83
<EPS-DILUTED> 0.83
</TABLE>
