UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the United States Securities Exchange Act of
1934
_______________________
For The Quarter Ended June 30, 1995 Commission File No. 2-84106
WELLESLEY LEASE INCOME LIMITED PARTNERSHIP A
(Exact name of registrant as specified in its charter)
Massachusetts 04-2791213
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Financial Center, 21st Floor, Boston, MA 02111
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 482-8000
Not Applicable
(Former name, former address and former fiscal
year, if changed since last report)
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
--- ---
There are no Exhibits.
Page 1 of 12
(Page 2)
WELLESLEY LEASE INCOME LIMITED PARTNERSHIP A
(A Massachusetts Limited Partnership)
INDEX Page No.
Part I. FINANCIAL INFORMATION
Financial Statements
Balance Sheets as of June 30, 1995
and December 31, 1994 3
Statements of Operations For the
Quarters Ended June 30, 1995 and 1994 and the
Six Months Ended June 30, 1995 and 1994 4
Statements of Cash Flows For the Six
Months Ended June 30, 1995 and 1994 5
Notes to Financial Statements 6 - 7
Management's Discussion and Analysis of
Financial Condition and Results of Operations 8 - 9
Computer Equipment Portfolio 10
Part II. OTHER INFORMATION
Items 1 - 6 11
Signature 12
(Page 3)
PART I. FINANCIAL INFORMATION
WELLESLEY LEASE INCOME LIMITED PARTNERSHIP A
(A Massachusetts Limited Partnership)
Balance Sheets
Assets
(Unaudited) (Audited)
6/30/95 12/31/94
Investment property, at cost (note 3):
Computer equipment $ 525,145 $ 727,048
Less accumulated depreciation 525,145 716,132
---------------------------
Investment property, net - 10,916
Cash and cash equivalents 192,127 232,893
Marketable securities (note 2) 493 -
Rents receivable, net (note 2) 17,400 61,312
Accounts receivable - affiliates, net (note 2) 4,975 48,978
---------------------------
Total assets $ 214,995 $ 354,099
---------------------------
---------------------------
Liabilities and Partners' Equity
Liabilities:
Accounts payable and accrued
expenses - affiliates (note 4) $ 7,217 $ 8,873
Accrued expenses 3,190 7,269
Accounts payable 4,888 7,947
Distribution payable 4,951 -
Unearned rental revenue 103 -
---------------------------
Total liabilities 20,349 24,089
---------------------------
Partners' equity:
General Partner:
Capital contribution 1,000 1,000
Cumulative net income 534,994 525,093
Cumulative cash distributions (535,994) (526,093)
--------------------------
- -
--------------------------
Limited Partners (15,050 units):
Capital contribution, net of
offering costs 6,710,991 6,710,991
Cumulative net income 3,667,542 3,614,781
Cumulative cash distributions (10,183,887) (9,995,762)
----------------------------
194,646 330,010
---------------------------
Total partners' equity 194,646 330,010
---------------------------
Total liabilities and partners' equity $ 214,995 $ 354,099
---------------------------
---------------------------
See accompanying notes to financial statements.
(Page 4)
WELLESLEY LEASE INCOME LIMITED PARTNERSHIP A
(A Massachusetts Limited Partnership)
Statements of Operations
(Unaudited)
Quarters Ended Six Months Ended
June 30, June 30,
---------------- ------------------
1995 1994 1995 1994
---------------- ------------------
Revenue:
Rental income $ 43,165 $ 61,410 $ 74,594 $142,787
Interest income 2,241 2,315 5,358 2,554
Recovery of net unsecured
pre-petition claim (note 2) 493 - 493 -
Net gain on sale
of equipment - 109,270 13,625 121,235
--------------------- ---------------------
Total revenue 45,899 172,995 94,070 266,576
--------------------- ---------------------
Costs and expenses:
Depreciation - 30,681 - 74,536
Interest (1,077) 575 43 1,274
Related party expenses
(note 4):
Management fees 2,464 3,108 8,559 8,559
General and administrative 11,380 2,482 21,019 8,929
Provision for
doubtful accounts 1,787 - 1,787 -
--------------------- ---------------------
Total costs and expenses 14,554 36,846 31,408 93,298
--------------------- ---------------------
Net income $ 31,345 $ 136,149 $ 62,662 $173,278
--------------------- ---------------------
--------------------- ---------------------
Net income per Limited
Partnership Unit $ 1.76 $ 5.82 $ 3.51 $ 4.42
--------------------- ---------------------
--------------------- ---------------------
See accompanying notes to financial statements.
(Page 5)
WELLESLEY LEASE INCOME LIMITED PARTNERSHIP A
(A Massachusetts Limited Partnership)
Statements of Cash Flows
For the Six Months Ended June 30, 1995 and 1994
(Unaudited)
1995 1994
Cash flows from operation activities:
Net income $ 62,662 $173,278
-------------------------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation - 74,536
Provision for doubtful accounts 1,787 -
Net gain on sale of equipment (13,625) (121,235)
Net decrease in current assets 85,635 20,605
Net decrease in current liabilities (8,691) (18,610)
-------------------------
Total adjustments 65,106 (44,704)
------------------------
Net cash provided
by operating activities 127,768 128,574
------------------------
Cash flows from investing activities:
Proceeds from sales of investment property 24,541 189,463
-------------------------
Cash provided by investing activities 24,541 189,463
-------------------------
Cash flows from financing activities:
Principal payments on notes payable - affiliate - (16,695)
Principal payments on long-term debt - (24,315)
Cash distributions to partners (193,075) (79,210)
-------------------------
Net cash used in financing activities (193,075) (120,220)
--------------------------
Net (decrease) increase in cash and cash
equivalents (40,766) 197,817
--------------------------
Cash and cash equivalents at beginning of period 232,893 41,758
--------------------------
Cash and cash equivalents at end of period $ 192,127 $239,575
--------------------------
--------------------------
Supplemental cash flow information:
Interest paid during the period $ 1,120 $ 1,571
--------------------------
--------------------------
See accompanying notes to financial statements.
(Page 6)
WELLESLEY LEASE INCOME LIMITED PARTNERSHIP A
(A Massachusetts Limited Partnership)
Notes to Financial Statements
(Unaudited)
(1) Organization and Partnership Matters
The foregoing financial statements of Wellesley
Lease Income Limited Partnership A (the
"Partnership") have been prepared in accordance
with the rules and regulations of the Securities
and Exchange Commission for Form 10-Q and reflect
all adjustments which are, in the opinion of
management, necessary for a fair presentation of
the results for the interim periods presented.
Pursuant to such rules and regulations, certain
note disclosures which are normally required under
generally accepted accounting principles have been
omitted. It is recommended that these financial
statements be read in conjunction with the
Partnership's Annual Report on Form 10-K for the
year ended December 31, 1994.
(2) Summary of Significant Accounting Policies
Allowance for Doubtful Accounts
The financial statements include allowances for
estimated losses on receivable balances. The
allowances for doubtful accounts are based on past
write off experience and an evaluation of
potential uncollectible accounts within the
current receivable balances. Receivable balances
which are determined to be uncollectible are
charged against the allowance and subsequent
recoveries, if any, are credited to the allowance.
At June 30, 1995 and December 31, 1994, the
allowance for doubtful accounts included in rents
receivable was $7,501 and $5,715, respectively.
The allowance for doubtful accounts included in
accounts receivable-affiliates was $1,900 at June
30, 1995 and December 31, 1994 respectively, which
was related to the net unsecured pre-petition
bankruptcy claim.
Marketable Securities
The marketable securities consist of common stock
in Continental Information Systems Corporation
received by the Partnership in the distribution
made December 27, 1994 by the Trustee of the
Liquidating Estate of CIS Corporation, et al with
respect to the outstanding net unsecured pre-
petition claim. During the second quarter of
1995, the stock began trading, thereby providing
an objective valuation measure for establishing
the cost basis which approximates fair market
value at the balance sheet date.
Reclassifications
Certain prior year financial statement items have
been reclassified to conform with the current
year's financial statement presentation.
(3)
Investment Property
At June 30, 1995, the Partnership owned computer
equipment with a cost basis of $525,145, subject
to existing leases. All purchases of computer
equipment are subject to a 3% acquisition fee paid
to the General Partner.
(Page 7)
(4) Related Party Transactions
Fees, commissions and other expenses paid or
accrued by the Partnership to the General Partner
or affiliates of the General Partner for the
quarters ended June 30, 1995 and 1994 are as
follows:
1995
1994
Management fees $ 8,559 $ 8,559
Reimbursable expenses paid 22,298 13,705
---------------------
$ 30,857 $ 22,264
---------------------
---------------------
Under the terms of the Partnership Agreement, the
General Partner is entitled to an equipment
acquisition fee of 3% of the purchase price paid
by the Partnership for the equipment. The General
Partner is also entitled to a management fee equal
to 7% of the monthly rental billings collected.
In addition, the Partnership reimburses the
General Partner and its affiliates for certain
expenses incurred by them in connection with the
operation of the Partnership.
(5) Subsequent Events
On July 20, 1995, the Partnership received the
second distribution from the Trustee of the
Liquidating Estate of CIS Corporation, et al, with
respect to the net unsecured pre-petition claim.
The distribution consisted of cash proceeds of
$922. The cash will be reflected in the financial
statements for the third quarter of 1995.
Following the Trustee's second distribution, the
Partnership has a remaining net unsecured pre-
petition claim of $978 as of July 20, 1995. The
General Partner anticipates that the Liquidating
Estate will make future distributions on the
remaining outstanding claim balance, although it
is not possible at this time to determine when
these distributions will be made.
(Page 8)
WELLESLEY LEASE INCOME LIMITED PARTNERSHIP A
(A Massachusetts Limited Partnership)
Management's Discussion and Analysis of
Financial Condition and Results of Operations
(Unaudited)
Results of Operations
The following discussion relates to the
Partnership's operations for the quarter and six
month periods ended June 30, 1995 in comparison to
the same periods in the prior year.
The Partnership realized net income of $31,345 and
$136,149 for the quarters ended June 30, 1995 and
1994, respectively. Rental income decreased
$18,245 or 30% primarily due to lower rental rates
obtained on equipment lease extensions and
remarketings resulting after the initial lease
term expires and due to a decrease in the overall
size of the equipment portfolio. The recovery of
net unsecured pre-petition claim was the result of
the establishment of the carrying value of the
stock received in the December 27, 1994
distribution from the Trustee of the Liquidating
Estate of CIS Corporation, et al. The receivables
associated with the stock settlement had been
fully reserved in a prior year; accordingly, the
Partnership was able to show a recovery on those
receivables as of June 30, 1995 at which time an
objective stock value could be determined due to
the stock's trading activities. There were no
equipment sales in the current quarter; however,
the Partnership will realize gains on future sales
since the equipment has been fully depreciated.
Total costs and expenses decreased 61% between the
three month periods primarily as a result of lower
depreciation expense. Depreciation expense
decreased due to the equipment portfolio becoming
fully depreciated. Interest expense decreased
between the three month periods primarily due to a
current period adjustment for an overaccrual of
interest expense. Management fees have decreased
from 1994 in relation to the decline in rental
income. General and administrative expenses were
lower in 1994 due to the receipt of a refund
related to a sales tax audit assessment that was
paid in 1990 and included in general and
administrative expenses at that time. During the
quarter ended June 30, 1995, the Partnership
increased its provision for doubtful accounts by
$1,787.
The Partnership realized net income of $62,662 and
$173,278 and rental income of $74,594 and $142,787
for the six months ended June 30, 1995 and 1994,
respectively. The 48% decrease in rental income
can be attributed to lower rental rates obtained
on equipment lease extensions and remarketings
resulting after the initial lease term expires and
due to an overall reduction in the equipment
portfolio, as mentioned above. As discussed in
the quarter analysis above, there were fewer
equipment sales in 1995; however, all future sales
will result in gains since the equipment is fully
depreciated.
Total costs and expenses decreased 66% primarily
as a result of lower depreciation expense. As
discussed above, depreciation expense decreased
between 1995 and 1994 due to the equipment
portfolio becoming fully depreciated and a
reduction in the overall equipment portfolio. The
increase in general and administrative expenses is
attributable to the sales tax assessment refund in
1994, as mentioned above.
The Partnership recorded net income per Limited
Partnership Unit of $3.51 and $4.42 for the six
months ended June 30, 1995 and 1994, respectively.
(Page 9)
Liquidity and Capital Resources
For the six months ended June 30, 1995, rental
revenue generated from operating leases was the
primary source of funds for the Partnership. As
equipment leases terminate, the General Partner
determines if the equipment will be extended to
the same lessee, remarketed to another lessee, or
if it is less marketable, sold. This decision is
made upon analyzing which options would generate
the most favorable results.
Rental income will continue to decrease due to two
factors. The first factor is the rate obtained
when the original leases expire and are remarketed
at a lower rate. Typically the remarketed rates
are lower due to the decrease in useful life of
the equipment. Secondly, the increasing change of
technology in the computer industry usually
decreases the demand for older equipment, thus
increasing the possibility of obsolescence. Both
of these factors together will cause remarketed
rates to be lower than original rates and will
cause certain leases to terminate upon expiration.
During the fourth quarter of 1993, the General
Partner announced its intentions of winding down
the operations of the Partnership beginning in
1994. The General Partner currently expects to
wind down the operations of the Partnership by the
end of 1995. It is anticipated that substantially
all of the assets will be liquidated and the
proceeds will be used to settle all outstanding
liabilities and to make a final distribution. The
Partnership will not be terminated until the net
unsecured pre-petition claim against CIS has been
settled and the remaining proceeds have been
distributed to the Partners.
The Partnership's investing activities for the six
months ended June 30, 1995 resulted in equipment
sales with a depreciated cost basis of $28,115,
generating $24,541 in proceeds. Associated with
the equipment sales were $17,199 of loss charge
offs against the reserve, initially set up in
prior periods for estimated losses on the ultimate
disposition of equipment. The Partnership has no
material capital expenditure commitments and will
not purchase equipment in the future as the
Partnership has reached the end of its
reinvestment period and has announced its
intentions of winding down the Partnership.
Cash distributions are currently at an annual
level of 5% per Limited Partnership Unit, or $6.25
per Limited Partnership Unit on a quarterly basis.
For the quarter ended June 30, 1995, the
Partnership declared a cash distribution of
$99,013, of which $4,950 is allocated to the
General Partner and $94,063 is allocated to the
Limited Partners. The distribution will be made
on August 28, 1995. The Partnership expects
distributions to be more volatile as its
operations are winding down.
The effects of inflation have not been significant
to the Partnership and are not expected to have
any material impact in future periods.
(Page 10)
WELLESLEY LEASE INCOME LIMITED PARTNERSHIP A
(A Massachusetts Limited Partnership)
Computer Equipment Portfolio (Unaudited)
June 30, 1995
Lessee
Allied Signal Corporation
Apprise Corporation
Carlon, Incorporated
Halliburton Company
Hughes Aircraft Company, Incorporated
Ladd Furniture, Incorporated
Maryland Casualty Insurance, Incorporated
Nissan Motor Corporation
Snap on Tools, Incorporated
Equipment Description Acquisition Price
Computer Peripherals $ 525,145
----------
----------
(Page 11)
PART II. OTHER INFORMATION
WELLESLEY LEASE INCOME LIMITED PARTNERSHIP A
(A Massachusetts Limited Partnership)
Item 1. Legal Proceedings
Response: None
Item 2. Changes in the Rights of the
Partnership's Security Holders
Response: None
Item 3. Defaults by the Partnership on its Senior
Securities
Response: None
Item 4. Results of Votes of Security Holders
Response: None
Item 5. Other Information
Response: None
Item 6. Exhibits and Reports on Form 8-K
Response:
A. None
B. None
(Page 12)
SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
WELLESLEY LEASE INCOME LIMITED PARTNERSHIP A
(Registrant)
By: Wellesley Leasing Partnership,
its General Partner
By: TLP Leasing Programs, Inc.,
one of its Corporate General Partners
Date: August 11, 1995
By: Arthur P. Beecher,
President