UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the United States Securities Exchange Act of 1934
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For Quarter Ended March 31, 1996 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
WELLESLEY LEASE INCOME LIMITED PARTNERSHIP A
(A Massachusetts Limited Partnership)
INDEX Page No.
Part I. FINANCIAL INFORMATION
Financial Statements
Balance Sheets as of March 31, 1996 and December 31, 1995 3
Statements of Operations For the Quarters Ended
March 31, 1996 and 1995 4
Statements of Cash Flows For the Quarters Ended
March 31, 1996 and 1995 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
PART I. FINANCIAL INFORMATION
WELLESLEY LEASE INCOME LIMITED PARTNERSHIP A
(A Massachusetts Limited Partnership)
Balance Sheets
Assets
(Unaudited) (Audited)
3/31/96 12/31/95
Investment property, at cost (note 3):
Computer equipment $ 508,534 $ 509,398
Less accumulated depreciation 508,534 509,398
--------------- ---------------
Investment property, net - -
Cash and cash equivalents 28,565 41,170
Rents receivable, net (note 2) 24,499 18,460
Accounts receivable - affiliates, net (notes 2 & 4) 10,696 13,135
--------------- ---------------
Total assets $ 63,760 $ 72,765
=============== ===============
Liabilities and Partners' Equity
Liabilities:
Accounts payable and accrued expenses - affiliates (note 4) $ 9,301 $ 4,478
Accounts payable and accrued expenses 25,374 25,165
Unearned rental revenue - 206
Distribution payable 1,980 -
--------------- ---------------
Total liabilities 36,655 29,849
--------------- ---------------
Partners' equity:
General Partner:
Capital contribution 1,000 1,000
Cumulative net income 546,874 544,894
Cumulative cash distributions (547,874) (545,894)
--------------- ---------------
- -
--------------- ---------------
Limited Partners (15,050 units):
Capital contribution, net of
offering costs 6,710,991 6,710,991
Cumulative net income 3,725,753 3,703,939
Cumulative cash distributions (10,409,639) (10,372,014)
--------------- ---------------
27,105 42,916
--------------- ---------------
Total partners' equity 27,105 42,916
--------------- ---------------
Total liabilities and partners' equity $ 63,760 $ 72,765
=============== ===============
See accompanying notes to financial statements.
WELLESLEY LEASE INCOME LIMITED PARTNERSHIP A
(A Massachusetts Limited Partnership)
Statements of Operations
For the Quarters Ended March 31, 1996 and 1995
(Unaudited)
1996 1995
--------------- ---------------
Revenue:
Rental income $ 36,023 $ 31,429
Interest income 218 3,117
Net gain on sale of equipment 231 13,625
Recovery of net unsecured pre-petition claim (note 5) 123 -
--------------- ---------------
Total revenue 36,595 48,171
--------------- ---------------
Costs and expenses:
Interest - 1,120
Related party expenses (note 4):
Management fees 2,312 6,095
General and administrative 10,489 9,639
--------------- ---------------
Total costs and expenses 12,801 16,854
--------------- ---------------
Net income $ 23,794 $ 31,317
=============== ===============
Net income per Limited Partnership Unit $ 1.45 $ 1.75
=============== ===============
See accompanying notes to financial statements.
WELLESLEY LEASE INCOME LIMITED PARTNERSHIP A
(A Massachusetts Limited Partnership)
Statements of Cash Flows
For the Quarters Ended March 31, 1996 and 1995
(Unaudited)
1996 1995
---- ----
Cash flows from operating activities:
Net income $ 23,794 $ 31,317
--------------- ---------------
Adjustments to reconcile net income to net cash provided by operating
activities:
Net gain on sale of equipment (231) (13,625)
Net (increase) decrease in current assets (3,600) 99,252
Net increase (decrease) in current liabilities 4,826 (4,208)
--------------- ---------------
Total adjustments 995 81,419
--------------- ---------------
Net cash provided by operating activities 24,789 112,736
--------------- ---------------
Cash flows from investing activities:
Proceeds from sales of investment property 231 24,541
--------------- ---------------
Net cash provided by investing activities 231 24,541
--------------- ---------------
Cash flows from financing activities:
Cash distributions to partners (37,625) (94,063)
--------------- ---------------
Net cash used in financing activities (37,625) (94,063)
--------------- ---------------
Net (decrease) increase in cash and cash equivalents (12,605) 43,214
Cash and cash equivalents at beginning of period 41,170 232,893
--------------- ---------------
Cash and cash equivalents at end of period $ 28,565 $ 276,107
=============== ===============
Supplemental cash flow information:
Interest paid during the period $ - $ 1,120
=============== ===============
See accompanying notes to financial statements.
WELLESLEY LEASE INCOME LIMITED PARTNERSHIP A
(A Massachusetts Limited Partnership)
Notes to Financial Statements
For the Quarters Ended March 31, 1996 and March 31, 1995
(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, 1995.
(2) Summary of Significant Accounting Policies
Allowance for Doubtful Accounts
The financial statements include an allowance for estimated losses on receivable
balances. The allowance for doubtful accounts is 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 March 31, 1996 and December 31, 1995, the
allowance for doubtful accounts included in rents receivable was $2,035. The
allowance for doubtful accounts included in accounts receivable-affiliates was
$674 and $797, at March 31, 1996 and December 31, 1995, respectively, both of
which pertain to net unsecured pre-petition claim balance.
(3) Investment Property
At March 31, 1996, the Partnership owned capital equipment with a cost basis of
$508,534, subject to existing leases, awaiting re-lease or sale. All purchases
of computer equipment are subject to a 3% acquisition fee paid to the General
Partner.
WELLESLEY LEASE INCOME LIMITED PARTNERSHIP A
(A Massachusetts Limited Partnership)
Notes to Financial Statements
For the Quarters Ended March 31, 1996 and March 31, 1995
(Unaudited)
(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
March 31, 1996 and 1995 are as follows:
1996 1995
---- ----
Management fees $ 2,312 $ 6,095
Reimbursable expenses paid 13,082 10,247
------------ --------------
$ 15,394 $ 16,342
============ ==============
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) Bankruptcy of Continental Information Systems Corporation
On January 19, 1996, the Partnership received the fourth distribution from the
Trustee of the Liquidating Estate, et al, ("the Trustee") with respect to the
net unsecured pre-petition claim. The distribution consisted of cash proceeds of
$123. Following the Trustee's fourth distribution, the Partnership has a
remaining unsecured pre-petition claim balance of $674 as of March 31, 1996 (see
note 6).
(6) Subsequent Events
On April 19, 1996, the Partnership received the fifth distribution from the
Trustee with respect to the net unsecured pre-petition claim. The distribution
consisted of cash proceeds of $233. Following the Trustee's fifth distribution,
the Partnership has a remaining unsecured pre-petition claim balance of $441 as
of April 19, 1996. 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.
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
ended March 31, 1996 in comparison to the quarter ended March 31, 1995.
The Partnership realized net income of $23,794 and $31,317 for the quarters
ended March 31, 1996 and 1995, respectively. Rental income increased $4,594 or
15%. The increase in rental income relates to a sale of equipment previously on
lease to Halliburton. The sale was executed in January, 1995 with a sale date of
December, 1994, causing a $4,600 adjustment to rental income for the quarter
ended March 31, 1995. Interest income decreased $2,899 as a result of lower
average short-term investment balances held during the current quarter. The
decrease in net gain on the sale of equipment is primarily due to fewer
equipment sales in the quarter ended March 31, 1996. The recovery of net
unsecured pre-petition claim of $123 for the quarter ended March 31, 1996 was
the result of the receipt of the Trustee's fourth distribution on the fully
reserved unsecured pre-petition receivable.
Total costs and expenses decreased $4,053 or 24% in 1996 primarily as a result
of lower management fees expense. Management fees have decreased with the
overall rise in outstanding rent receivables. General and administrative
expenses remained relatively flat between the two periods.
The Partnership recorded net income per Limited Partnership Unit of $1.45 and
$1.75 for the quarters ended March 31, 1996 and 1995, respectively. The
allocation for the quarters ended March 31, 1996 and 1995, includes a cost
recovery allocation of profit and loss among the General and Limited Partners
which results in an allocation of net profit and loss to the Limited Partners.
This cost recovery allocation is required to maintain capital accounts
consistent with the distribution provisions of the Partnership Agreement. In
certain periods, the cost recovery of profit and loss may result in an
allocation of net loss to the Limited Partners in instances when the
Partnership's operations were profitable for the period.
Liquidity and Capital Resources
For the quarter ended March 31, 1996, 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 lower rate obtained due to the remarketing of existing equipment upon the
expiration of the original lease. 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. Future rental revenues
amount to $33,002 and are to be received during the current year.
WELLESLEY LEASE INCOME LIMITED PARTNERSHIP A
(A Massachusetts Limited Partnership)
Management's Discussion and Analysis of
Financial Condition and Results of Operations
(Unaudited)
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 had reevaluated its decision to close the Partnership in 1995 based on
the Partnership's forecasted cash flows for 1995 and 1996. The General Partner
currently expects to wind down the operations of the Partnership in 1996. 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 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 year resulted in equipment sales
with a cost basis of $864, generating $231 in proceeds. 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 during 1996.
Cash distributions are currently at an annual level of 1% per Limited
Partnership Unit, or $1.25 per Limited Partnership Unit on a quarterly basis.
For the quarter ended March 31, 1996, the Partnership declared a cash
distribution of $19,803, of which $990 is allocated to the General Partner and
$18,813 is allocated to the Limited Partners. The distribution will be made on
May 29, 1996. The Partnership expects distributions to continue paying at or
near this level in the future. The effects of inflation have not been
significant to the Partnership and are not expected to have any material impact
in future periods.
On January 9, 1996, TLP Holding LLC purchased all the common stock of TLP
Leasing Programs, Inc. from CMI Holding Co. Under the new ownership, it is
expected that TLP Leasing Programs, Inc. will continue to operate in the same
manner of business as it has in the past.
WELLESLEY LEASE INCOME LIMITED PARTNERSHIP A
(A Massachusetts Limited Partnership)
Computer Equipment Portfolio (Unaudited)
March 31, 1996
Lessee
Allied Signal Corporation
Apprise Corporation
Carlon, Incorporated
Halliburton Company
Hughes Aircraft Company, Incorporated
Maryland Casualty Insurance, Incorporated
Snap on Tools, Incorporated
Equipment Description Acquisition Price
Computer Peripherals $ 508,534
================
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
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
By: Arthur P. Beecher,
President
Date: May 14, 1996