UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended Commission file number 33-21267 December 31, 1998 CSA Income Fund Limited Partnership III (Exact name of registrant as specified in its charter) Massachusetts No. 04-3002909 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 22 Batterymarch Street, Boston, MA 02109 (Address of principal executive Zip Code offices) Registrant's telephone number, including area code: (617) 357-1700 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: 500,000 Units of Limited Partnership Interest Indicate by check whether 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 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. [ X ] Number of shares outstanding of each registrant's classes of securities: Number of Units Title of Each Class at December 31, 1998 Units of Limited Partnership 500,000 Interest: $100 per unit DOCUMENTS INCORPORATED BY REFERENCE Portions of Part IV are incorporated by reference to Amendment No. 1 to Form S-1 and Form S-1, Registration No. 33-21267 The exhibit index is located on pages 18 and 19. Part I Item 1. Business CSA Income Fund Limited Partnership III (the "Partnership") is a limited partnership organized under the provisions of the Massachusetts Uniform Limited Partnership Act. The Partnership is composed of CSA Equity Funds, Inc. (an affiliate of CSA Financial Corp.), the General Partner and, as of December 31, 1998, 3,102 Limited Partners owning 500,000 Units of Limited Partnership Interest of $100 each. The capital contributions of the Partners aggregated $50,000,000. The Partnership was formed on April 8, 1988 and commenced operations on August 31, 1988. The offering period for the Partnership closed December 28, 1989. As previously reported, the General Partner is in the process of winding-up the Partnership. The General Partner will endeavor to complete the wind-up of the Partnership by June 30, 1999, if prevailing market opportunities allow the sale of the remaining leases at fair market value. The Partnership is organized to engage in the business of acquiring income- producing equipment for investment. The Partnership's principal objectives are: 1. To acquire and lease Equipment, primarily through Operating Leases, to generate income during their entire useful life; 2. To provide monthly Distributions of cash to the Limited Partners from leasing revenues and from the proceeds of sale or other disposition of Partnership Equipment; and 3. To reinvest in additional Equipment a portion of lease revenues and a substantial portion of Cash From Sales and Refinancings during the first years of the Partnership's operations. The Partnership is formed primarily for investment purposes and not as a "tax shelter". The Partnership has no direct employees. The General Partner has full and exclusive discretion in management and control of the Partnership. Selection of the Equipment for purchase and lease is based principally on the General Partner's evaluation of the usefulness of the Equipment in commercial or industrial applications and its estimate of the potential demand for the equipment at the end of the initial lease term. The Partnership's equipment may include: 1. New and reconditioned computer peripheral equipment, computer terminal systems and data processing systems manufactured by companies such as Compaq Computer Corporation, Dell Computer Corporation, EMC Corporation and International Business Machines, Inc. (IBM). 2. New telecommunications and telecomputer equipment consisting primarily of private automated branch exchange (PBXs), advanced high-speed digital telephone switching devices, voice/data transmission devices and telephone/computer networks as well as telephone handsets and facsimile transmission products. 3. New office equipment consisting primarily of photocopying and graphic processing equipment. 4. New highway transportation equipment and new and reconditioned transportation equipment consisting primarily of tractors, trailers, trucks, intermodal equipment, railroad rolling stock, passenger vehicles and corporate or commercial aircraft. 5. Miscellaneous other types of equipment which meet the investment objectives of the Partnership. The equipment leasing industry was highly competitive. In initiating its leasing transactions, the Partnership competes with leasing companies, manufacturers that lease their products directly, equipment brokers and dealers and financial institutions, including commercial banks and insurance companies. Many competitors were larger than the Partnership and had access to more favorable financing. Competitive factors in the equipment leasing business primarily involve pricing and other financial arrangements. Marketing capability is also a factor. As of December 31, 1998, substantially all of the remaining equipment in the Partnership's portfolio was leased under 49 separate leases to 25 lessees. The lessees providing at least 10% of total revenues during 1998 were: K Mart Corporation 17% Owens-Corning Fiberglass Corporation 16% Approximately 4% of the Partnership's equipment portfolio (based on cost) is located outside the United States as of December 31, 1998. The Partnership's leases and equipment are described more fully in Notes 3 and 4 to the Financial Statements included in Item 8. Item 2. Properties The Partnership neither owns nor leases office space or equipment for the purpose of managing its day-to-day affairs. The General Partner, CSA Equity Funds, Inc. (CEF), has exclusive control over all aspects of the business of the Partnership, including provision of any necessary office space. As such, CEF will be compensated through Management fees and reimbursement of General and Administrative costs related to managing the Partnership's business. Excluded from the allowable reimbursement to the General Partner, however, will be any of the following: (1) expenditures for rent or utilities; (2) Capital equipment and the related depreciation; and (3) Certain other administrative items. Item 3. Legal Proceedings The Partnership is not a party to any pending legal proceedings. Item 4. Submission of Matters to a Vote of Security Holders No matters were submitted to a vote of security holders, through the solicitation of proxies or otherwise, during the fourth quarter of 1998. PART II Item 5. Market for the Registrant's Equity Securities and Related Security Holder Matters a. The Partnership's limited partnership interests are not publicly traded. There is no active market for the Partnership's limited partnership interests and it is unlikely that one will develop. b. Approximate Number of Equity Security Holders: Title of Class Number of Recordholders Units of Limited Partnership Interests as of 12/31/98 500,000 3,102 c. Distributions are paid at a rate determined by the General Partner. Item 6. Selected Financial Data The following table sets forth selected financial information regarding the Partnership's financial position and operating results. The information should be read in conjunction with the Financial Statements and Notes thereto, and the General Partner's Discussion and Analysis of Financial Condition and Results of Operations, which are included in Item 7 and 8 of this Report. Years Ended December 31, (IN THOUSANDS EXCEPT PER UNIT AMOUNTS) 1998 1997 1996 1995 1994 Total Revenues $ 7,409 $ 10,603 $ 7,606 $ 9,929 $ 13,680 Net Income (Loss) (105) (172) 877 2,111 2,775 Income (Loss) per Limited Partnership Unit (.52) (.85) 1.74 4.18 5.49 Total Assets 5,009 19,137 25,912 17,910 20,338 Notes Payable 1,716 12,630 16,116 5,609 5,874 Limited Recourse Notes Payable - - - 38 239 Cash Distribution per Limited Partnership Unit $ 6.00 $ 6.00 $ 6.00 $ 6.00 $ 7.00 Item 7. General Partner's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Total Revenue for the years ended December 31, 1998, 1997, and 1996 was $7,408,906, $10,603,454, and $7,606,043, respectively. The decrease in 1998 total revenue was primarily due to the Partnership being in the wind-up process. Net loss for the year ended December 31, 1998 was $104,958 as compared to net loss of $172,262 in the year ended December 31, 1997. Net income was $876,814 for the year ended December 31, 1996. The 1998 net loss is primarily attributable to the increased depreciation expense as a percentage of rental income associated with the new equipment leases. Net income was also affected by higher gains recorded on sale of equipment in 1998 of $392,781, compared to $254,973,and $264,219 in 1997 and 1996, respectively. Interest income for 1998, 1997 and 1996 was $4,698, $25,623, and $135,348, respectively.Depreciation expense for 1998, 1997 and 1996 was $6,481,738, $8,885,253, and $5,566,884.The 1998 decrease in depreciation was primarily due to the sale of equipment as part of the wind-up of the Partnership. Interest expense was $535,307, $1,185,481, and $620,103, for the years ended December 31, 1998, 1997, and 1996, respectively. Interest expense decreased in 1998 primarily due to the reduction in financed leases as portions of the portfolio were sold. Liquidity and Capital Resources During 1998, the Partnership generated $5,950,662 in cash flow from operations and $8,157,804 from the sale of equipment. The Partnership utilized this cash flow to reduce outstanding notes payable and make distributions to its partners. In 1998, notes payable were reduced by $10,914,177 and cash distributions were $3,030,302. The General Partner has put in place a year 2000 ("Y2K") compliance plan which is currently in the process of implementation. A review of the company's computer and communication systems was completed. The implementation was started in 1998 and is anticipated to be completed by mid-1999. The General Partner has designated a Y2K implementation and contact person to coordinate all of the third party compliance documentation. The General Partner has confirmed that a significant portion of the third party relationships have or are in the process of completing their individual year 2000 compliance. As of December 31, 1998, The Partnership does not have any material amount of equipment off lease and in storage. As previously reported, The General Partner of CSA Income Fund Limited Partnership III has determined that it is in the best interest of the Partnership and the Limited Partners to wind-up the Partnership. The General Partner will endeavor to complete the wind-up of the Partnership by June 30, 1999, if prevailing market opportunities allow the sale of the remaining leases at or above fair market value to maximize the return to all Limited Partners. To date, the Partnership has made cash distributions to the Limited Partners ranging from 76% to 92% of their initial investment,depending on when the Limited Partner entered the Partnership. As previously reported, certain revenues generated by the Partnership from lease renewals and remarketings after the initial lease terms have been lower than anticipated as a result of rapid technological obsolescence in high technology equipment. Also as previously reported, the General Partner still estimates that the continued cash distributions may not fully return the entire initial investment of the Limited Partners and/or a return thereon. The General Partner will continue to report on the Limited Partners' return of investment with each cash distribution. Quarterly Financial Data - Unaudited Summarized unaudited quarterly financial data for the years ended December 31, 1998 and 1997 are as follows: 1998 Quarter Ended: 12/31 9/30 6/30 3/31 Total Revenues * $1,220,030 $1,668,726 $2,065,109 $2,455,041 Net Income (Loss) (55,711) 65,433 (82,498) (32,182) Net Income (Loss) Per Limited Partnership Unit (.14) .12 (.28) (.22) Cash Distributions Per Limited Partnership Unit 1.50 1.50 1.50 1.50 1997 Quarter Ended: 12/31 9/30 6/30 3/31 Total Revenues * $2,453,024 $2,614,349 $2,982,854 $2,553,227 Net Income (Loss) ** (395,188) (124,696) 198,013 149,609 Net Income (Loss) Per Limited Partnership Unit (.78) (.34) .11 .16 Cash Distributions Per Limited Partnership Unit 1.50 1.50 1.50 1.50 * Total revenues include the net gains and losses from the sale of equipment. ** There were no residual value adjustments booked in 1998. In 1997, the Partnership recorded a $100,000 adjustments to anticipated residual values. Item 7A. Quantitative and Qualitative Disclosures about Market Risk There is no market risk related to the Notes Payable of the Partnership since all notes are nonrecourse and have fixed interest rates. There are no other financial instruments that require market risk disclosure. Item 8. Financial Statements CSA Income Fund Limited Partnership III Index to Financial Statements Page Number Independent Auditors' Report 8 Statements of Financial Position as of December 31, 1998 and 1997 9 Statements for the Years Ended December 31, 1998, 1997 and 1996: Operations 10 Cash Flows 11 Changes in Partners' Capital (Deficit) 12 Notes to Financial Statements 13 INDEPENDENT AUDITORS' REPORT To the Partners of CSA Income Fund Limited Partnership III We have audited the accompanying statements of financial position of CSA Income Fund Limited Partnership III as of December 31, 1998 and 1997,and the related statements of operations, cash flows, and changes in partners capital (deficit) for the three years then ended. 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. As discussed in note 1 to the financial statements, the Partnership is in a wind up phase. The General Partner anticipates that the Partnership will be dissolved by June 30, 1999. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of CSA Income Fund Limited Partnership III as of December 31, 1998 and 1997, and the results of its operations and its cash flows for the three years then ended in conformity with generally accepted accounting principles. \s\ Sullivan Bille, P.C. Boston, Massachusetts March 16, 1999 CSA INCOME FUND LIMITED PARTNERSHIP III Statements of Financial Position as of December 31, 1998 and 1997 Assets 1998 1997 Cash and cash equivalents $ 428,948 $ 200,328 Rentals receivable 786 45,665 Accounts receivable-affiliates 11,376 61,368 Notes receivable-lessee - 14,641 Remarketing receivables 699 56,010 Rental equipment, at cost 16,996,622 32,491,943 Less accumulated depreciation (12,429,074) (13,732,945) Net rental equipment 4,567,548 18,758,998 Total assets $ 5,009,357 $19,137,010 Liabilities and Partners' Capital Accounts payable $ 46,669 $ 78,738 Accrued management fees 18,145 35,639 Deferred income 31,905 60,558 Notes payable 1,715,804 12,629,981 Total liabilities 1,812,523 12,804,916 Partners' Capital (deficit): General Partner: Capital contribution 1,000 1,000 Cumulative net income 421,268 267,020 Cumulative cash distributions (422,268) (391,966) 0 (123,946) Limited Partners (500,000 units): Capital contributions, net of offering costs 44,539,778 44,539,778 Cumulative net income 506,271 765,477 Cumulative cash distributions (41,849,215) (38,849,215) 3,196,834 6,456,040 Partners' capital 3,196,834 6,332,094 Total liabilities and partners' capital $ 5,009,357 $19,137,010 See accompanying notes to financial statements. CSA INCOME FUND LIMITED PARTNERSHIP III Statements of Operations for the Years ended December 31, 1998 1997 and 1996 1998 1997 1996 Revenue: Rental income $7,010,127 $10,315,740 $ 7,209,039 Interest income 4,698 25,623 135,348 Gain on sale of equipment 392,781 254,973 264,219 Gain (Loss) on foreign currency transaction 1,300 7,118 (2,563) Total revenue 7,408,906 10,603,454 7,606,043 Expenses: Depreciation 6,481,738 8,885,253 5,566,884 Interest 535,307 1,185,481 620,103 Management fee 350,506 515,787 360,452 General and administrative 146,313 189,195 181,790 Total expenses 7,513,864 10,775,716 6,729,229 Net Income (Loss) $ (104,958) $ (172,262) $ 876,814 Net Income (Loss) allocation: General Partner $ 154,248 $ 254,973 $ 8,768 Limited Partners (259,206) (427,235) 868,046 $ (104,958) $ (172,262) $ 876,814 Net Income (Loss) per Limited Partnership Unit $ ( .52) $ ( .85) $ 1.74 Number of Limited Partnership Units Outstanding 500,000 500,000 500,000 See accompanying notes to financial statements. CSA INCOME FUND LIMITED PARTNERSHIP III Statements of Cash Flows for the Years ended December 31, 1998, 1997 and 1996 1998 1997 1996 Cash flows from operations: Cash received from rental of equipment $ 7,027,653 $10,208,050 $ 6,876,800 Cash paid for operating and management expenses (546,382) (670,186) (573,760) Interest paid (535,307) (1,185,481) (620,103) Interest received 4,698 25,623 150,974 Net cash from operations 5,950,662 8,378,006 5,833,911 Cash flows from investments: Advances to/from affiliates 49,992 1,103,299 (977,762) Proceeds on notes receivable 14,641 24,477 45,882 Purchase of equipment - (5,661,691) (19,693,078) Sale of equipment 8,157,804 2,421,808 1,592,218 Net cash provided by (used for) investments 8,222,437 (2,112,107) (19,032,740) Cash flows from financing: Proceeds from notes payable - 5,648,889 14,460,070 Reduction of notes payable (10,914,177) (9,134,942) (3,991,138) Payment of cash distributions (3,030,302) (3,030,303) (3,030,303) Net cash provided by (used for) financing (13,944,479) (6,516,356) 7,438,629 Net change in cash and cash equivalents 228,620 (250,457) (5,760,200) Cash and cash equivalents at beginning of year 200,328 450,785 6,210,985 Cash and cash equivalents at end of year $ 428,948 $ 200,328 $ 450,785 See accompanying notes to financial statements. CSA INCOME FUND LIMITED PARTNERSHIP III Statement of Changes in Partners' Capital (Deficit) Years ended December 31, 1998, 1997 and 1996 Limited General Partners Partner Total Balance at December 31, 1995 $ 12,015,229 $ (327,081) $11,688,148 Net Income (Loss) 868,046 8,768 876,814 Cash distributions (3,000,000) (30,303) (3,030,303) Balance at December 31, 1996 9,883,275 (348,616) 9,534,659 Net Income (Loss) (427,235) 254,973 (172,262) Cash distributions (3,000,000) (30,303) (3,030,303) Balance at December 31, 1997 6,456,040 (123,946) 6,332,094 Net Income (Loss) (259,206) $ 154,248 $ (104,958) Cash distributions (3,000,000) (30,302) (3,030,302) Balance at December 31, 1998 $ 3,196,834 $ 0 $ 3,196,834 See accompanying notes to financial statements. CSA INCOME FUND LIMITED PARTNERSHIP III Notes to Financial Statements December 31, 1998 (1) Organization CSA Income Fund Limited Partnership III ("the Partnership") was formed under the Massachusetts Uniform Limited Partnership Act on April 8, 1988 with an initial investment of $1,000, to invest primarily in equipment to be leased to third parties.On August 31, 1988, the Partnership commenced operations. As of December 31, 1998, the Partnership has 500,000 Units of Limited Partnership interests outstanding representing $50,000,000 of contributed capital. CSA Equity Funds Inc., an affiliate of CSA Financial Corp., is the sole General Partner and manages the business and affairs of the Partnership. As previously reported, the General Partner of CSA Income Fund Limited Partnership III has determined that it is in the best interest of the Partnership and the Limited Partners to wind-up the Partnership by June 30, 1999, if prevailing market opportunities allow the sale of the remaining leases at fair market value to maximize the return to all Limited Partners. Distributable cash from operations, sales or refinancings and profits or losses for federal income tax purposes are allocated 99% to the Limited Partners and 1% to the General Partner until Payout has occurred, and thereafter, 85% and 15%, respectively. As provided by the Partnership Agreement, pursuant to Section 8.3 (c), accounting profits from the sale of equipment that results in the dissolution of the Partnership were allocated to each partner first in the amount equal to the negative balance in the Capital Account of each partner. In connection with the wind-up of the Partnership, certain gains on the disposition of partnership assets were allocated during the years 1998 and 1997 to the General Partner to reduce its Capital Account negative balance. In accordance with the Partnership Agreement, the Partnership is liable to the General Partner (or its affiliates) for management fees and reimbursable operating expenses which are calculated in amounts not to exceed 5% and 1%, respectively, of gross rental revenues. (2) Significant Accounting Policies The Partnership records are maintained on the accrual basis of accounting. The Partnership accounts for equipment leases as operating leases; therefore, rental income is reported when earned. Equipment purchases are depreciated on a straight-line basis over the initial term of the lease to estimated realizable value. On a periodic basis, the Partnership conducts a review of the residual values of its equipment as compared to the estimated net realizable values for such equipment upon expiration of the related lease. The Partnership records additional charges to depreciation expense when net book values exceed estimated realizable values. In connection with this review for the years ended December 31, 1998, no additional charges to depreciation expense were made. In 1997 and 1996, the Partnership recorded additional charges of $100,000 and $108,863, respectively, to depreciation expense. CSA INCOME FUND LIMITED PARTNERSHIP III Notes to Financial Statements No provision for income taxes has been made as the liability for such taxes is that of the partners rather than the Partnership. The Partnership's federal tax return is prepared solely to arrive at the Partner's individual taxable income or loss as reported on form K-1. the Partnership's federal taxable income exceeded book income by approximately $2,998,000 in 1998. In 1997 and 1996, the Partnerships book income exceeded federal taxable income by approximately $1,414,000 and $2,414,000, respectively. The differences are primarily due to the differences between tax and book depreciation methods and the related gain (loss) on sales of equipment. The preparation of financial statements in conformity with generally accepted Accounting principles requires the General Partner to make estimates and Assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting year. Actual results could differ from those estimates. The Partnership considers short-term investments with original maturities of three months or less to be cash equivalents. (3) Rental Equipment The Partnership purchases equipment subject to existing leases either directly from CSA Financial Corp. or the manufacturer. The purchase price to the Partnership is equal to the lesser of fair market value or cost as adjusted, if necessary, for rents received and carrying costs, plus an acquisition fee of 4% of cost. A summary of changes in rental equipment owned and its related accumulated depreciation is as follows: Beginning Sales/ Ending Balance Additions Retirements Balance Costs for the periods ended: December 31, 1996 $26,648,802 $19,693,078 $11,110,051 $35,231,829 December 31, 1997 $35,231,829 $ 5,661,691 $ 8,401,577 $32,491,943 December 31, 1998 $32,491,943 $ - $15,495,321 $16,996,622 Accumulated depreciation for the periods ended: December 31, 1996 $15,490,492 $ 5,566,884 $ 9,936,058 $11,121,318 December 31, 1997 $11,121,318 $ 8,885,253 $ 6,273,626 $13,732,945 December 31, 1998 $13,732,945 $ 6,481,738 $ 7,785,609 $12,429,074 CSA INCOME FUND LIMITED PARTNERSHIP III Notes to Financial Statements (4) Leases As of December 31, 1998, substantially all of the Partnership's equipment was leased under 49 separate leases to 25 lessees. Approximately 4% of the Partnership's equipment portfolio (based on cost) is located outside of the United States. Two lessees represented approximately 33% (17% and 16%, respectively) of the partnership revenue in 1998 as compared to three lessees representing 35% (14%,11%, and 10%, respectively) of the partnership's revenues in 1997 and one lessee representing 19% in 1996. Minimum annual lease rentals scheduled to be received under existing noncancellable operating leases as of December 31, 1998, are as follows: Year Amount 1999 $1,948,826 2000 93,695 2001 1,615 $2,044,136 If the Partnership is wound-up in 1999, as contemplated, the rentals beyond the wind-up date may not be received by the Partnership but rather sold as part of the wind-up activity. (5) Notes Payable Notes payable consist of nonrecourse notes due in monthly installments with interest rates that range from 6.90% to 9.25% per annum. Such notes are collateralized by equipment with a cost of $8,827,871. Annual maturities of notes payable at December 31, 1998, are as follows: Year Amount 1999 1,644,479 2000 71,325 $1,715,804 If the Partnership is wound-up in 1999, as contemplated, the leases and underlying nonrecourse financings will be sold as part of the wind-up activity. (6) Fair Values of Financial Instruments The following methods and assumptions were used to estimate the fair value of financial instruments: Cash and Cash Equivalents The carrying amount of cash and cash equivalents approximates its fair value due to their short maturity. Notes Payable The fair value of the Partnership's notes payable is based on the market price for the same or similar debt issues or on the current rates offered to the Partnership for debt with the same remaining maturity. The carrying amount of notes payable approximates fair value. (7) Related Party Transactions Fees and other expenses paid or accrued by the Partnership to the General Partner or affiliates of the General Partner for the years 1998, 1997 and 1996 is are follows: 1998 1997 1996 Equipment acquisition fees $ - $ 217,076 $ 755,218 Management fees 350,506 515,787 360,452 Reimbursable operating expenses 70,101 103,157 72,090 Storage and Refurbishment 8,110 5,575 24,000 $ 428,717 $ 841,595 $1,211,760 (8) Net Cash Provided from Operations The reconciliation of net income to net cash from operations for the years 1998, 1997 and 1996 is as follows: 1998 1997 1996 Net income (loss) $ (104,958) $ (172,262) $ 876,814 Gain on sale of equipment (392,781) (254,973) (264,219) Depreciation and amortization 6,481,738 8,885,253 5,566,884 (Increase) decrease in receivables 44,879 69,809 (69,555) Other - (63,548) - Decrease in payables and deferred income (78,216) (86,273) (276,013) Net cash from operations $5,950,662 $ 8,378,006 $ 5,833,911 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures None. PART III Item 10. Directors and Executive Officers of the Registrant The Partnership has no directors or officers. All management functions are performed by CSA Equity Funds, Inc., the corporate General Partner. The current directors and officers of the corporate General Partner are: Name Age Title(s) Elected J. Frank Keohane 62 Director & President 04/01/88 Richard P. Timmons 44 Controller 03/01/95 Trevor A. Keohane 32 Director 05/28/93 Term of Office: Until a successor is elected. Item 11. Executive Compensation (a), (b), (c), (d) and (e): The Officers and Directors of the General Partner receive no current or proposed direct remuneration in such capacities, pursuant to any standard arrangements or otherwise, from the Partnership. In addition, the Partnership has not paid and does not propose to pay any options, warrants or rights to the Officers and Directors of the General Partner. There exists no remuneration plan or arrangement with any Officer or Director of the General Partner resulting from resignation, retirement or any other termination. See Note 7 of the Notes to Financial Statements included in Item 8 of this report for a description of the remuneration paid by the Partnership to the General Partner and its affiliates. Item 12. Security Ownership of Certain Beneficial Owners and Management By virtue of its organization as a limited partnership, the Partnership has outstanding no securities possessing traditional voting rights. However, as provided for in Section 13.2 of the Agreement of Limited Partnership (subject to Section 13.3), a majority in interest of the Limited Partners have voting rights with respect to: 1. Amendment of the Limited Partnership Agreement. 2. Termination of the Partnership. 3. Removal of the General Partner. 4. Approval or disapproval of the sale of substantially all the assets of the Partnership if such sale occurs prior to December 28, 1996. No person or group is known by the General Partner to own beneficially more than 5% of the Partnership's outstanding Limited Partnership Units as of December 31, 1998. Item 13. Certain Relationships and Related Transactions The General Partner is affiliated with the General Partner for CSA Income Fund IV Limited Partnership. The General Partner or affiliates may act in that capacity for other income fund limited partnerships in the future. PART IV Item 14. Exhibits, Financial Statements, Schedules and Reports on Form 8-K (a) (1) Financial Statements - See accompanying Index to Financial Statements - Item 8. (2) Financial Statement Schedules - All schedules have been omitted as not required, not applicable or the information required to be shown therein is included in the Financial Statements and related notes. (3) Exhibits Index Except as set forth below, all exhibits to Form 10-K, as set forth in item 601 of Regulation S-K are not applicable. Page Number or Exhibit Incorporated by Number Description Reference 4.1 Agreement of Limited Partnership * 4.2 Subscription Agreement ** 4.3 Certificate of Limited Partnership and *** Agreement of Limited Partnership dated April 8, 1988 4.4 First Amended and Restated Certificate **** of Limited Partnership and Agreement of Limited Partnership dated June 22,1988 10.1 Escrow Agreement *** 27.1 Financial Data Schedule * Included as Exhibit A to Amendment No. 1 to Form S-1, Registration Statement No. 33-21267 filed with the Securities and Exchange Commission on June 23, 1988. ** Included as Exhibit C to Amendment No. 1 to From S-1 to Registration Statement No. 33-21267 filed with the Securities and Exchange Commission on June 23, 1988. *** Included with the Exhibit Volume to Form S-1, Registration Statement No. 33-21267 filed with the Securities and Exchange Commission on April 15, 1988. **** Included with the Exhibit Volume to Amendment No. 1 to Form S-1, Registration Statement No. 33-21267 filed with the Securities and Exchange Commission on June 23, 1988. (b) Reports on Form 8-K - There were no reports filed during the fourth quarter of 1998. Signatures Pursuant to the requirements of Section 13 or 15(d) 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. CSA Income Fund Limited Partnership III (Registrant) By its General Partner, CSA Equity Funds, Inc. Date: \s\ J. Frank Keohane, President 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 registrant and in the capacities and on the dates indicated. By its General Partner, CSA Equity Funds, Inc. Date: \s\ J. Frank Keohane President & Director Principal Executive Officer Date: \s\ Richard P Timmons Controller Principal Accounting and Finance Officer