1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) (X) QUARTERLY REPORT PERSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended December 31, 1999 or ( ) TRANSITION REPORT PERSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission file number 0-21718 BOSTON CAPITAL TAX CREDIT FUND III L.P. (Exact name of registrant as specified in its charter) Delaware 52-1749505 (State or other jurisdiction (I.R.S. Employer of incorporation or Identification No.) organization) One Boston Place, Suite 2100, Boston, Massachusetts 02108 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (617)624-8900 (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 preceeding 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 _ BOSTON CAPITAL TAX CREDIT FUND III L.P. QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED DECEMBER 31, 1999 TABLE OF CONTENTS FOR THE QUARTER ENDED DECEMBER 31, 1999 2 BALANCE SHEETS 4 SERIES 15 5 SERIES 16 6 SERIES 17 7 SERIES 18 8 SERIES 19 9 STATEMENTS OF OPERATIONS 10 THREE MONTHS ENDED DECEMBER 31, 10 SERIES 15 11 SERIES 16 12 SERIES 17 13 SERIES 18 14 SERIES 19 15 NINE MONTHS ENDED DECEMBER 31, 16 SERIES 15 17 SERIES 16 18 SERIES 17 19 SERIES 18 20 SERIES 19 21 STATEMENTS OF CHANGES IN PARTNERS' CAPITAL 22 SERIES 15 23 SERIES 16 23 SERIES 17 24 SERIES 18 24 SERIES 19 25 STATEMENTS OF CASH FLOWS 26 NINE MONTHS ENDED DECEMBER 31, 26 SERIES 15 28 SERIES 16 30 SERIES 17 32 SERIES 18 34 SERIES 19 36 NOTES TO FINANCIAL STATEMENTS 38 NOTE A - ORGANIZATION 38 NOTE B - ACCOUNTING AND FINANCIAL REPORTING POLICIES 39 INVESTMENT SECURITIES 39 COST ERROR! BOOKMARK NOT DEFINED. NOTE C - RELATED PARTY TRANSACTIONS 40 NOTE D - INVESTMENTS IN OPERATING PARTNERSHIPS 41 COMBINED SUMMARIZED STATEMENTS OF OPERATIONS 43 SERIES 15 43 SERIES 16 44 SERIES 17 45 SERIES 18 46 SERIES 19 47 LIQUIDITY 49 CAPITAL RESOURCES 49 RESULTS OF OPERATIONS 50 YEAR 2000 COMPLIANCE 54 PART II - OTHER INFORMATION 55 SIGNATURES 56 Boston Capital Tax Credit Fund III L.P. BALANCE SHEETS December 31, March 31, 1999 1999 (Audited) (Audited) ASSETS INVESTMENTS IN OPERATING $100,346,022 $108,418,478 PARTNERSHIPS (Note D) OTHER ASSETS Cash and cash equivalents 2,511,540 1,693,799 Investments 1,510,884 2,237,166 Notes receivable 1,364,322 1,364,322 Deferred acquisition costs, net of accumulated amortization (Note B) 1,560,572 1,612,244 Organization costs, net of accumulated amortization (Note B) - 170 Other assets 2,852,066 2,459,125 $110,145,406 $117,785,304 LIABILITIES Accounts payable & accrued expenses (Note C) $ 4,553 $ 4,553 Accounts payable affiliates 13,729,214 11,385,333 Capital contributions payable 1,592,677 1,595,177 15,326,444 12,985,063 PARTNERS' CAPITAL Limited Partners Units of limited partnership interest, $10 stated value per BAC; 22,000,000 authorized BACs; 21,996,102 issued and 105,641,899 outstanding, 95,760,433 as of December 31, 1999 General Partner (941,471) (841,658) 94,818,962 104,800,241 $110,145,406 $117,785,304 The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. BALANCE SHEETS Series 15 December 31, March 31, 1999 1999 (Audited) (Audited) ASSETS INVESTMENTS IN OPERATING PARTNERSHIPS(Note D) $12,784,228 $14,142,163 OTHER ASSETS Cash and cash equivalents 301,698 306,884 Investments 135,167 128,028 Notes receivable 32,170 32,170 Deferred acquisition costs, net of accumulated amortization (Note B) 239,140 247,024 Organization costs, net of accumulated amortization (Note B) - - Other assets 851,347 807,527 $14,343,750 $15,663,796 LIABILITIES Accounts payable & accrued expenses (Note C) $ 1,146 $ 1,145 Accounts payable affiliates 3,597,400 3,155,784 Capital contributions payable 32,922 32,922 3,631,468 3,189,851 PARTNERS' CAPITAL Limited Partners Units of limited partnership interest, $10 stated value per BAC; 22,000,000 authorized BACs; 3,870,500 issued and 10,937,831 12,681,877 outstanding, as of December 31, 1999 General Partner (225,549) (207,932) 10,712,282 12,473,945 $14,343,750 $15,663,796 The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. BALANCE SHEETS Series 16 December 31, March 31, 1999 1999 (Audited) (Audited) ASSETS INVESTMENTS IN OPERATING PARTNERSHIPS (Note D) $24,636,301 $27,165,227 OTHER ASSETS Cash and cash equivalents 470,851 213,451 Investments 640,088 884,449 Notes receivable - - Deferred acquisition costs, net of accumulated amortization (Note B) 383,383 396,021 Organization costs, net of accumulated amortization (Note B) - - Other assets 135,592 133,695 $26,266,215 $28,792,843 LIABILITIES Accounts payable & accrued expenses (Note C) $ - $ - Accounts payable affiliates 3,246,051 2,727,066 Capital contributions payable 140,006 142,506 3,386,057 2,869,572 PARTNERS' CAPITAL Limited Partners Units of limited partnership Interest, $10 stated value per BAC; 22,000,000 authorized BACs; 23,117,965 26,130,647 5,429,402 issued and outstanding, as of December 31, 1999 General Partner (237,807) (207,376) 22,880,158 25,923,271 $26,266,215 $28,792,843 The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. BALANCE SHEETS Series 17 December 31, March 31, 1999 1999 (Audited) (Audited) ASSETS INVESTMENTS IN OPERATING PARTNERSHIPS (Note D) $23,026,216 $24,774,196 OTHER ASSETS Cash and cash equivalents 445,854 349,189 Investments - 100,000 Notes receivable 1,332,152 1,332,152 Deferred acquisition costs, net of accumulated amortization (Note B) 345,985 357,648 Organization costs, net of accumulated Amortization (Note B) - - Other assets 1,782,324 1,425,347 $26,932,531 $28,338,532 LIABILITIES Accounts payable & accrued expenses (Note C) $ - $ - Accounts payable affiliates 3,824,226 3,035,918 Capital contributions payable 1,367,195 1,367,195 5,191,421 4,403,113 PARTNERS' CAPITAL Limited Partners Units of limited partnership Interest, $10 stated value per BAC; 22,000,000 authorized BACs; 21,953,378 24,125,744 5,000,000 issued and outstanding, as of December 31, 1999 General Partner (212,268) (190,325) 21,741,110 23,935,419 $26,932,531 $28,338,532 The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. BALANCE SHEETS Series 18 December 31, March 31, 1999 1999 (Audited) (Audited) ASSETS INVESTMENTS IN OPERATING PARTNERSHIPS (NOTE D) $ 17,638,507 $ 18,832,106 OTHER ASSETS Cash and cash equivalents 435,352 306,065 Investments 102,771 230,531 Notes receivable - - Deferred acquisition costs, net of accumulated amortization(Note B) 260,596 269,156 Organization costs, net of accumulated amortization (Note B) - - Other assets 60,736 56,099 $ 18,497,962 $ 19,693,957 LIABILITIES Accounts payable & accrued expenses (Note C) $ - $ - Accounts payable affiliates 1,641,450 1,354,989 Capital contributions payable 18,554 18,554 1,660,004 1,373,543 PARTNERS' CAPITAL Limited Partners Units of limited partnership Interest, $10 stated value per BAC; 22,000,000 authorized BACs; 16,979,806 18,447,437 3,616,200 issued and outstanding, as of December 31, 1999 General Partner (141,848) (127,023) 16,837,958 18,320,414 $ 18,497,962 $ 19,693,957 The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. BALANCE SHEETS Series 19 December 31, March 31, 1999 1999 (Audited) (Audited) ASSETS INVESTMENTS IN OPERATING PARTNERSHIPS (NOTE D) $22,260,770 $ 23,504,786 OTHER ASSETS Cash and cash equivalents 857,785 518,210 Investments 632,858 894,158 Notes receivable - - Deferred acquisition costs, net of accumulated amortization (Note B) 331,468 342,395 Organization costs, net of accumulated amortization (Note B) - 170 Other assets 22,067 36,457 $24,104,948 $ 25,296,176 LIABILITIES Accounts payable & accrued expenses (Note C) $ 3,407 $ 3,408 Accounts payable affiliates 1,420,087 1,111,576 Capital contributions payable 34,000 34,000 1,457,494 1,148,984 PARTNERS' CAPITAL Limited Partners Units of limited partnership Interest, $10 stated value per BAC; 22,000,000 authorized BACs; 22,771,453 24,256,194 4,080,000 issued and outstanding, as of December 31, 1999 General Partner (123,999) (109,002) 22,647,454 24,147,192 $24,104,948 $ 25,296,176 The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. STATEMENTS OF OPERATIONS Three Months Ended December 31, (Unaudited) 1999 1998 Income Interest income $ 42,383 $ 53,901 Other income 13,040 - 55,423 53,901 Share of loss from Operating Partnerships(Note D) (2,488,170) (2,889,612) Expenses Professional fees 21,357 14,922 Fund management fee (Note C) 578,028 587,164 Amortization 17,224 37,796 General and administrative 41,721 32,300 expenses 658,330 672,182 NET LOSS $(3,091,077) $(3,507,893) Net loss allocated to limited $(3,060,166) $(3,472,814) partners Net loss allocated general partner $ (30,911) $ (35,079) Net loss per BAC $ (.66) $ (.76) The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. STATEMENTS OF OPERATIONS Three Months Ended December 31, (Unaudited) Series 15 1999 1998 Income Interest income $ 7,381 $ 171,668 Other income - - 7,381 171,668 Share of loss from Operating Partnerships(Note D) (453,642) (614,979) Expenses Professional fees 283 10,966 Fund management fee 118,637 121,266 Amortization 2,628 2,628 General and administrative 8,061 5,483 expenses 129,609 140,343 NET LOSS $ (575,870) $ (583,654) Net loss allocated to limited $ (570,111) $ (577,817) partners Net loss allocated general partner $ (5,759) $ (5,837) Net loss per BAC $ (.14) $ (.15) The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. STATEMENTS OF OPERATIONS Three Months Ended December 31, (Unaudited) Series 16 1999 1998 Income Interest income $ 11,149 $ (9,618) Other income 7,790 - (9,618) 18,939 Share of loss from Operating Partnerships(Note D) (769,098) (727,184) Expenses Professional fees 283 632 Fund management fee 154,922 170,151 Amortization 4,213 4,213 General and administrative 10,768 9,444 expenses 170,186 184,440 NET LOSS $ (920,345) $ (921,242) Net loss allocated to limited $ (911,142) $ (912,030) partners Net loss allocated general partner $ (9,203) $ (9,212) Net loss per BAC $ (.16) $ (.16) The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. STATEMENTS OF OPERATIONS Three Months Ended December 31, (Unaudited) Series 17 1999 1998 Income Interest income $ 3,045 $ (50,809) Other income 300 - 3,345 (50,809) Share of loss from Operating Partnerships(Note D) (513,121) (838,567) Expenses Professional fees 1,432 2,444 Fund management fee 138,451 126,864 Amortization 3,887 11,662 General and administrative 9,153 6,345 expenses 152,923 147,315 NET LOSS $ (662,699) $(1,036,691) Net loss allocated to limited $ (656,072) $(1,026,324) partners Net loss allocated general partner $ (6,627) $ (10,367) Net loss per BAC $ (.13) $ (.21) The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. STATEMENTS OF OPERATIONS Three Months Ended December 31, (Unaudited) Series 18 1999 1998 Income Interest Income $ 6,589 $ (38,108) - - 6,589 (38,108) Share of loss from Operating Partnerships(Note D) (375,912) - Expenses Professional fees 4,376 412 Fund management fee 86,189 73,119 Amortization 2,853 6,248 General and administrative 6,419 5,709 expenses 99,837 85,488 NET LOSS $ (469,160) $ (123,596) Net loss allocated to limited $ (464,468) $ (122,360) partners Net loss allocated general partner $ (4,692) $ (1,236) Net loss per BAC $ (.12) $ (.03) The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. STATEMENTS OF OPERATIONS Three Months Ended December 31, (Unaudited) Series 19 1999 1998 Income Interest income $ 14,219 $ (19,232) Other income 4,950 - 19,169 (19,232) Share of loss from Operating Partnerships(Note D) (376,397) (708,882) Expenses Professional fees 14,983 468 Fund management fee 79,829 95,764 Amortization 3,643 13,045 General and administrative 7,320 5,319 expenses 105,775 114,596 NET LOSS $ (463,003) $ (842,710) Net loss allocated to limited $ (458,373) $ (834,283) partners Net loss allocated general partner $ (4,630) $ (8,427) Net loss per BAC $ (.11) $ (.21) The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. STATEMENTS OF OPERATIONS Nine Months Ended December 31, (Unaudited) 1999 1998 Income Interest income $ 136,270 $ 183,145 Other income 36,156 - 172,426 183,145 Share of loss from Operating Partnerships(Note D) (8,033,909) (10,020,693) Expenses Professional fees 185,093 191,599 Fund management fee 1,747,980 1,761,133 Amortization 51,842 132,781 General and administrative 134,881 123,520 expenses 2,119,796 2,209,033 NET LOSS $ (9,981,279) $(12,046,581) Net loss allocated to limited $ (9,881,466) $(11,926,115) partners Net loss allocated general partner $ (99,813) $ (120,466) Net loss per BAC $ (2.19) $ (2.67) The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. STATEMENTS OF OPERATIONS Nine Months Ended December 31, (Unaudited) Series 15 1999 1998 Income Interest income $ 27,221 $ 176,643 Other income - - 27,221 176,643 Share of loss from Operating Partnerships(Note D) (1,358,664) (1,753,429) Expenses Professional fees 42,000 57,272 Fund management fee 354,111 369,967 Amortization 7,884 7,884 General and administrative 26,225 23,098 expenses 430,220 458,221 NET LOSS $ (1,761,663) $(2,035,007) Net loss allocated to limited $ (1,744,046) $(2,014,657) partners Net loss allocated general partner $ (17,617) $ (20,350) Net loss per BAC $ (.44) $ (.52) The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. STATEMENTS OF OPERATIONS Nine Months Ended December 31, (Unaudited) Series 16 1999 1998 Income Interest Income $ 35,892 $ 36,435 Other Income 8,090 - 43,982 36,435 Share of loss from Operating Partnerships(Note D) (2,527,697) (2,553,171) Expenses Professional fees 42,413 44,670 Fund management fee 470,299 468,845 Amortization 12,638 12,638 General and administrative 34,048 32,637 expenses 559,398 558,790 NET LOSS $(3,043,113) $(3,075,526) Net loss allocated to limited $(3,012,682) $(3,044,771) partners Net loss allocated general partner $ (30,431) $ (30,755) Net loss per BAC $ (.56) $ (.56) The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. STATEMENTS OF OPERATIONS Nine Months Ended December 31, (Unaudited) Series 17 1999 1998 Income Interest income $ 10,964 $ (47,254) Other income 12,300 - 23,264 (47,254) Share of loss from Operating Partnerships(Note D) (1,743,841) (2,499,080) Expenses 34,363 38,153 Professional fees 396,884 383,373 Fund management fee 11,662 45,791 Amortization 30,823 26,584 General and administrative 473,732 493,901 expenses NET LOSS $(2,194,309) $(3,040,235) Net loss allocated to limited $(2,172,366) $(3,009,833) partners Net loss allocated general partner $ (21,943) $ (30,402) Net loss per BAC $ (.44) $ (.60) The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. STATEMENTS OF OPERATIONS Nine Months Ended December 31, (Unaudited) Series 18 1999 1998 Income Interest income $ 15,626 $ (12,574) Other income - - 15,626 (12,574) Share of loss from Operating Partnerships(Note D) (1,191,132) (1,040,838) Expenses 30,619 26,761 Professional fees 247,133 242,260 Fund management fee 8,560 27,332 Amortization 20,638 18,529 General and administrative 306,950 314,882 expenses NET LOSS $(1,482,456) $(1,368,294) Net loss allocated to limited $(1,467,631) $(1,354,611) partners Net loss allocated general partner $ (14,825) $ (13,683) Net loss per BAC $ (.39) $ (.37) The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. STATEMENTS OF OPERATIONS Nine Months Ended December 31, (Unaudited) Series 19 1999 1998 Income Interest income $ 46,567 $ 29,895 Other income 15,766 - 62,333 29,895 Share of loss from Operating Partnerships(Note D) (1,212,575) (2,174,175) Expenses Professional fees 35,698 24,743 Fund management fee 279,553 296,688 Amortization 11,098 39,136 General and administrative 23,147 22,672 expenses 349,496 383,239 NET LOSS $(1,499,738) $(2,527,519) Net loss allocated to limited $(1,484,741) $(2,502,244) partners Net loss allocated general partner $ (14,997) $ (25,275) Net loss per BAC $ (.36) $ (.62) The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CHANGES IN PARTNERS' CAPITAL Nine Months Ended December 31, (Unaudited) General Partner Assignees Total Partners' Capital (deficit) April 1, 1999 $105,641,89 $ (841,658) $104,800,241 9 Net income (loss) (9,881,466) (99,813) (9,981,279) Partners' capital (deficit), December 31, 1999 $ $ (941,471) $ 94,818,962 95,760,433 The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CHANGES IN PARTNERS' CAPITAL Nine Months Ended December 31, (Unaudited) Assignees General Total Partner Series 15 Partners' Capital (deficit) April 1, 1999 $12,681,877 $ (207,932) $12,473,945 Net income (loss) (1,744,046) (17,617) (1,761,663) Partners' capital (deficit), December 31, 1999 $10,937,831 $ (225,549) $10,712,282 Series 16 Partners' Capital (deficit) April 1, 1999 $26,130,647 $ (207,376) $25,923,271 Net income (loss) (3,012,682) (30,431) (3,043,113) Partners' capital (deficit), December 31, 1999 $ $ (237,807) $ 22,880,158 23,117,965 The accompanying notes are an integral part of these statements. Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CHANGES IN PARTNERS' CAPITAL Nine Months Ended December 31, (Unaudited) Assignees General Total Partner Series 17 Partners' Capital (deficit) April 1, 1999 $24,125,744 $ (190,325) $23,935,419 Net income (loss) (2,172,366) (21,943) (2,194,309) Partners' capital (deficit), December 31, 1999 $ $ (212,268) $ 21,741,110 21,953,378 Series 18 Partners' Capital (deficit) April 1, 1998 $ $ (127,023) $ 18,320,414 18,447,437 Net income (loss) (1,467,631) (14,825) (1,482,456) Partners' capital (deficit), December 31, 1999 $ $ (141,848) $ 16,837,958 16,979,806 The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CHANGES IN PARTNERS' CAPITAL Nine Months Ended December 31, (Unaudited) Assignees General Total Partner Series 19 Partners' Capital (deficit) April 1, 1999 $24,256,194 $ (109,002) $24,147,192 Net income (loss) (1,484,741) (14,997) (1,499,738) Partners' capital (deficit), December 31, 1999 $ $ (123,999) $ 22,647,454 22,771,453 The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Nine Months Ended December 31, (Unaudited) 1999 1998 Cash Flows from operating activities: Net Loss $(9,981,279) $(12,046,581) Adjustments Distributions from Operating Partnerships 40,155 17,273 Amortization 51,842 97,794 Share of Loss from Operating Partnerships 8,033,909 10,020,693 Changes in assets and liabilities (Decrease) Increase in accounts - 108,208 payable and accrued expenses Decrease (Increase) in accounts (394,551) (527,502) Receivable Decrease (Increase) in accounts 2,343,883 2,255,716 payable affiliates Net cash (used in) provided by 93,959 (74,399) operating activities Cash Flows from investing activities: Acquisition cost repaid (paid) for Operating Partnerships - 34,987 acquired or to acquire Capital contributions paid to Operating Partnerships (2,500) (692,564) Advances in Operating - 692,011 Partnerships Investments 726,282 549,404 Net cash (used in) provided by investing activities 723,782 583,838 The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Nine Months Ended December 31, (Unaudited) 1999 1998 Continued Cash flows from financing activity: Credit adjusters received from Operating Partnerships - - Net cash (used in)provided by - - financing activity INCREASE (DECREASE) IN CASH AND 817,741 509,439 CASH EQUIVALENTS Cash and cash equivalents, 1,693,799 1,653,522 beginning Cash and cash equivalents, ending $ 2,511,540 $2,162,961 The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Nine Months Ended December 31, (Unaudited) Series 15 1999 1998 Cash Flows from operating activities: Net Loss $ (1,761,663) $ (2,035,007) Adjustments Distributions from Operating Partnerships 882 874 Amortization 7,884 7,884 Share of Loss from Operating Partnerships 1,358,664 1,753,429 Changes in assets and liabilities (Decrease) Increase in accounts - - payable and accrued expenses Decrease (Increase) in accounts (45,430) (241,878) Receivable Decrease (Increase) in accounts 441,616 632,362 payable affiliates Net cash (used in) provided by 1,953 117,664 operating activities Cash Flows from investing activities: Acquisition cost repaid (paid) for Operating Partnerships - - acquired or to acquire Capital contributions paid to Operating Partnerships - - Advances in Operating - 77,830 Partnerships Investments (7,139) (3,028) Net cash (used in) provided by investing activities (7,139) 74,802 The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Nine Months Ended December 31, (Unaudited) Series 15 1999 1998 Continued Cash flows from financing activity: Credit adjusters received from Operating Partnerships - - Net cash (used in)provided by - - financing activity INCREASE (DECREASE) IN CASH AND (5,186) 192,466 CASH EQUIVALENTS Cash and cash equivalents, 306,884 156,717 beginning Cash and cash equivalents, ending $ 301,698 $ 349,183 The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Nine Months Ended December 31, (Unaudited) Series 16 1999 1998 Cash Flows from operating activities: Net Loss $(3,043,113) $(3,075,526) Adjustments Distributions from Operating Partnerships 1,229 1,064 Amortization 12,638 12,638 Share of Loss from Operating Partnerships 2,527,697 2,553,171 Changes in assets and liabilities (Decrease) Increase in accounts - - payable and accrued expenses Decrease (Increase) in accounts (1,897) (53,221) Receivable Decrease (Increase) in accounts 518,986 payable affiliates 518,985 Net cash (used in) provided by 15,539 (42,888) operating activities Cash Flows from investing activities: Acquisition cost repaid (paid) for Operating Partnerships - - acquired or to acquire Capital contributions paid to Operating Partnerships (2,500) (1,500) Advances in Operating - - Partnerships Investments 244,361 104,793 Net cash (used in) provided by investing activities 241,861 103,293 The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Nine Months Ended December 31, (Unaudited) Series 16 1999 1998 Continued Cash flows from financing activity: Credit adjusters received from Operating Partnerships - - Net cash (used in)provided by - - financing activity INCREASE (DECREASE) IN CASH AND 257,400 60,405 CASH EQUIVALENTS Cash and cash equivalents, 213,451 199,558 beginning Cash and cash equivalents, ending $ 470,851 $ 259,963 The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Nine Months Ended December 31, (Unaudited) Series 17 1999 1998 Cash Flows from operating activities: Net Loss $(2,194,309) $(3,040,235) Adjustments Distributions from Operating Partnerships 4,140 7,804 Amortization 11,662 10,804 Share of Loss from Operating Partnerships 1,743,841 2,499,080 Changes in assets and liabilities (Decrease) Increase in accounts - 108,208 payable and accrued expenses (Decrease) Increase in accounts (356,977) (192,949) receivable Decrease (Increase) in accounts 788,308 509,395 payable affiliates Net cash (used in) provided by (3,335) (97,893) operating activities Cash Flows from investing activities: Acquisition cost repaid (paid) for Operating Partnerships - 34,987 acquired or to acquire Capital contributions paid to Operating Partnerships - - Advances in Operating - 77,830 Partnerships Investments 100,000 - Net cash (used in) provided by Investing activities 100,000 112,817 The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Nine Months Ended December 31, (Unaudited) Series 17 1999 1998 Continued Cash flows from financing activity: Credit adjusters received from Operating Partnerships - - Net cash (used in)provided by - - financing activity INCREASE (DECREASE) IN CASH AND 96,665 14,924 CASH EQUIVALENTS Cash and cash equivalents, 349,189 388,024 beginning Cash and cash equivalents, ending $ 445,854 $ 402,948 The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Nine Months Ended December 31, (Unaudited) Series 18 1999 1998 Cash Flows from operating activities: Net Loss $(1,482,456) $(1,368,294) Adjustments Distributions from Operating Partnerships 2,466 7,466 Amortization 8,560 27,332 Share of Loss from Operating Partnerships 1,191,132 1,040,838 Changes in assets and liabilities (Decrease) Increase in accounts - - payable and accrued expenses Decrease (Increase) in accounts (4,637) (9,121) Receivable Decrease (Increase) in accounts 286,462 286,462 payable affiliates Net cash (used in) provided by 1,527 (15,317) operating activities Cash Flows from investing activities: Acquisition cost repaid (paid) for Operating Partnerships - - acquired or to acquire Capital contributions paid to Operating Partnerships - (691,064) Advances in Operating - 536,351 Partnerships Investments 127,760 343,469 Net cash (used in) provided by investing activities 127,760 188,756 The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Nine Months Ended December 31, (Unaudited) 1999 1998 Continued Cash flows from financing activity: Credit adjusters received from Operating Partnerships - - Net cash (used in)provided by - - financing activity INCREASE (DECREASE) IN CASH AND 129,287 173,439 CASH EQUIVALENTS Cash and cash equivalents, 306,065 301,444 beginning Cash and cash equivalents, ending $ 435,352 $ 474,883 The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Nine Months Ended December 31, (Unaudited) Series 19 1999 1998 Cash Flows from operating activities: Net Loss (1,499,738) $(2,527,519) Adjustments Distributions from Operating Partnerships 31,438 65 Amortization 11,098 39,136 Share of Loss from Operating Partnerships 1,212,575 2,174,175 Changes in assets and liabilities (Decrease) Increase in accounts - - payable and accrued expenses (Decrease) Increase in accounts 14,390 (30,333) receivable/ other assets Decrease (Increase) in accounts 308,512 308,511 payable affiliates Net cash (used in) provided by 78,275 (35,965) operating activities Cash Flows from investing activities: Acquisition cost repaid (paid) for Operating Partnerships - - acquired or to acquire Capital contributions paid to Operating Partnerships - - Advances in Operating - - Partnerships Investments 261,300 104,170 Net cash (used in) provided by investing activities 261,300 104,170 The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Nine Months Ended December 31, (Unaudited) Series 19 1999 1998 Continued Cash flows from financing activity: Credit adjusters received from Operating Partnerships - - Net cash (used in)provided by - - financing activity INCREASE (DECREASE) IN CASH AND 339,575 68,205 CASH EQUIVALENTS Cash and cash equivalents, 518,210 607,779 beginning Cash and cash equivalents, ending $ 857,785 $ 675,984 The accompanying notes are an integral part of this statement Boston Capital Tax Credit Fund III L.P. NOTES TO FINANCIAL STATEMENTS December 31, 1999 (Unaudited) NOTE A - ORGANIZATION Boston Capital Tax Credit Fund III L.P. (the "Fund") was formed under the laws of the State of Delaware as of September 19, 1991 for the purpose of acquiring, holding, and disposing of limited partnership interests in Operating Partnerships which will acquire, develop, rehabilitate, operate and own newly constructed, existing or rehabilitated low-income apartment complexes ("Operating Partnerships"). The general partner of the Fund is Boston Capital Associates III L.P., a Delaware limited partnership. Boston Capital Associates, a Massachusetts general partnership, whose only two partners are Herbert F. Collins and John P. Manning, the principals of Boston Capital Partners, Inc., is the sole general partner of the general partner. The limited partner of the general partner is Capital Investment Holdings, a general partnership whose partners are certain officers and employees of Boston Capital Partners, Inc., and its affiliates. The Assignor Limited Partner is BCTC III Assignor Corp., a Delaware corporation which is wholly-owned by Herbert F. Collins and John P. Manning. Pursuant to the Securities Act of 1933, the Fund filed a Form S-11 Registration Statement with the Securities and Exchange Commission, effective January 24, 1992 which covered the offering (the "Public Offering") of the Fund's beneficial assignee certificates ("BACs") representing assignments of units of the beneficial interest of the limited partnership interest of the Assignor Limited Partner. The Fund registered 20,000,000 BACs at $10 per BAC for sale to the public in one or more series. On September 4, 1993 the Fund filed an amendment to Form S-11 with the Securities and Exchange Commission which registered an additional 2,000,000 BACs at $10 per BAC for sale to the public in one or more series. The registration for the additional BACs became effective on October 6, 1993. Offers and sales of BACs in Series 15 through19 of the Fund were completed and the last of the BACs in Series 15, 16, 17, 18 and 19 were issued by the Fund on June 26, 1992, December 28, 1992, June 17, 1993, September 22, 1993, and December 17, 1993, respectively. The Fund sold 3,870,500 of Series 15 BACs, for a total of $38,705,000; 5,429,402 of Series 16 BACs, for a total of $54,293,000; 5,000,000 of Series 17 BACs, for a total of $50,000,000; 3,616,200 of Series 18 BACs, for a total of $36,162,000; and 4,080,000 of Series 19 BACs, for a total of $4,080,000. The Fund issued the last BACs in Series 19 on December 17, 1993. This concluded the Public Offering of the Fund. Boston Capital Tax Credit Fund III L.P. NOTES TO FINANCIAL STATEMENTS - CONTINUED December 31, 1999 (Unaudited) NOTE B - ACCOUNTING AND FINANCIAL REPORTING POLICIES The condensed financial statements included herein as of December 31, 1999 and for the three and nine months then ended have been prepared by the Fund, without audit. The Fund accounts for its investments in Operating Partnerships using the equity method, whereby the Fund adjusts its investment cost for its share of each Operating Partnership's results of operations and for any distributions received or accrued. Costs incurred by the Fund in acquiring the investments in the Operating Partnerships are capitalized to the investment account. The Fund's accounting and financial reporting policies are in conformity with generally accepted accounting principles and include adjustments in interim periods considered necessary for a fair presentation of the results of operations. Such adjustments are of a normal recurring nature. Investment The Fund has included in investments Certificates of Deposit with original materities of one year or less. These investments are carried at costs. Bston Capital Tax Credit Fund III L.P. NOTES TO FINANCIAL STATEMENTS - CONTINUED December 31, 1999 (Unaudited) NOTE - B ACCOUNTING AND FINANCIAL REPORTING POLICIES - CONTINUED Amortized cost is the face value of the securities and any unamortized premium or discount. The balance sheet reflects the fair market value under investments. Amortization The Fund amortized organizational costs over 60 months. As of December 31, 1999 and 1998 the Fund had accumulated organization amortization totaling $934,428 and $924,855 respectively. As of December 31, 1999 all costs had been fully amortized. The breakdown of accumulated organization amortization within the Fund as of December 31, 1999 and 1998 is as follows: 1999 1998 Series 15 $167,077 $167,077 Series 16 227,909 227,909 Series 17 205,888 205,888 Series 18 150,296 150,296 Series 19 183,258 173,685 $934,428 $924,855 On July 1, 1995, the Fund began amortizing unallocated acquisition costs over 330 months from April 1, 1995. As of December 31, 1999 the Fund has accumulated unallocated acquisition amortization totaling $332,766. The breakdown of accumulated unallocated acquisition amortization within the fund as of December 31, 1999 for Series 15, Series 16, Series 17, Series 18, and Series 19 is $50,030, $80,046, $81,765, $54,344 and $66,581, respectively. NOTE C - RELATED PARTY TRANSACTIONS The Fund has entered into several transactions with various affiliates of the general partner, including Boston Capital Partners, Inc., and Boston Capital Asset Management Limited Partnership as follows: Boston Capital Partners, Inc. is entitled to asset acquisition fees for selecting, evaluating, structuring, negotiating, and closing the Fund's acquisition of interests in the Operating Partnerships. Prior to the quarter ended December 31, 1999 all series had completed payment of all acquisition fees due to Boston Capital Partners, Inc. Boston Capital Tax Credit Fund III L.P. NOTES TO FINANCIAL STATEMENTS - CONTINUED December 31, 1999 (Unaudited) NOTE C - RELATED PARTY TRANSACTIONS - CONTINUED An annual fund management fee based on .5 percent of the aggregate cost of all apartment complexes owned by the Operating Partnerships, has been accrued to Boston Capital Asset Management Limited Partnership. The fund management fees accrued for the quarter ended December 31, 1999 and 1998 are as follows: 1999 1998 Series 15 $137,013 $137,013 Series 16 172,995 172,995 Series 17 141,342 141,342 Series 18 95,487 95,487 Series 19 102,837 102,837 $649,674 $649,674 NOTE D - INVESTMENTS IN OPERATING PARTNERSHIPS At December 31, 1999 and 1998, the Fund had limited partnership interests in 241 Operating Partnerships which own or are constructing apartment complexes. The breakdown of Operating Partnerships within the Fund at December 31, 1999 and 1998 is as follows: Series 15 68 Series 16 64 Series 17 49 Series 18 34 Series 19 26 241 Boston Capital Tax Credit Fund III L.P. NOTES TO FINANCIAL STATEMENTS - CONTINUED December 31, 1999 (Unaudited) NOTE D - INVESTMENTS IN OPERATING PARTNERSHIPS - CONTINUED Under the terms of the Fund's investment in each Operating Partnership, the Fund is required to make capital contributions to the Operating Partnerships. These contributions are payable in installments over several years upon each Operating Partnership achieving specified levels of construction and/or operations. The contributions payable at December 31, 1999 and 1998 are as follows: 1999 1998 Series 15 $ 32,922 $ 32,922 Series 16 140,006 143,811 Series 17 1,367,195 1,367,195 Series 18 18,554 18,554 Series 19 34,000 463,000 $1,592,677 $2,025,482 The Fund's fiscal year ends March 31st of each year, while all the Operating Partnerships' fiscal years are the calendar year. Pursuant to the provisions of each Operating Partnership Agreement, financial results for each of the Operating Partnerships are provided to the Fund within 45 days after the close of each Operating Partnership's quarterly period. Accordingly, the current financial results available for the Operating Partnerships are for the nine months ended September 30, 1999. Boston Capital Tax Credit Fund III L.P. NOTES TO FINANCIAL STATEMENTS December 31, 1999 (Unaudited) NOTE D - INVESTMENTS IN OPERATING PARTNERSHIPS (continued) COMBINED SUMMARIZED STATEMENTS OF OPERATIONS Nine months ended September 30, (Unaudited) Series 15 1999 1998 Revenues Rental $ 7,302,945 $ 7,129,846 Interest and other 258,165 360,905 7,561,110 7,490,751 Expenses Interest 2,060,724 2,125,796 Depreciation and 2,843,706 2,815,661 amortization Operating expenses 4,519,367 4,562,959 9,423,797 9,504,416 NET LOSS $(1,862,687) $(2,013,665) Net loss allocation to Boston Capital Tax Credit Fund $(1,358,664) $(1,753,429) III L.P. Net loss allocated to other Partners $ (18,627) $ (20,137) Net loss suspended $ (485,396) $ (240,099) Boston Capital Tax Credit Fund III L.P. NOTES TO FINANCIAL STATEMENTS December 31, 1999 (Unaudited) NOTE D - INVESTMENTS IN OPERATING PARTNERSHIPS (continued) COMBINED SUMMARIZED STATEMENTS OF OPERATIONS Nine months ended September 30, (Unaudited) Series 16 1999 1998 Revenues Rental $ 9,172,061 $ 9,194,077 Interest and other 424,262 713,264 9,596,323 9,907,341 Expenses Interest 2,801,642 3,153,195 Depreciation and 3,568,883 3,396,748 amortization Operating expenses 6,116,299 5,982,373 12,486,824 12,532,316 NET LOSS $(2,890,501) $(2,624,975) Net loss allocation to Boston Capital Tax Credit Fund $(2,527,697) $(2,553,171) III L.P. Net loss allocated to other Partners $ (28,905) $ (26,250) Net loss suspended $ (333,899) $ (45,554) Boston Capital Tax Credit Fund III L.P. NOTES TO FINANCIAL STATEMENTS December 31, 1999 (Unaudited) NOTE D - INVESTMENTS IN OPERATING PARTNERSHIPS (continued) COMBINED SUMMARIZED STATEMENTS OF OPERATIONS Nine months ended September 30, (Unaudited) Series 17 1999 1998 Revenues Rental $ 8,193,157 $ 8,198,413 Interest and other 355,221 423,235 8,548,378 8,621,648 Expenses Interest 2,720,696 3,046,408 Depreciation and 2,831,561 3,203,030 amortization Operating expenses 4,757,578 4,896,534 10,309,835 11,145,972 NET LOSS $(1,761,457) $(2,524,324) Net loss allocation to Boston Capital Tax Credit Fund $(1,743,842) $(2,499,080) III L.P. Net loss allocated to other Partners $ (17,615) $ (25,244) Boston Capital Tax Credit Fund III L.P. NOTES TO FINANCIAL STATEMENTS December 31, 1999 (Unaudited) NOTE D - INVESTMENTS IN OPERATING PARTNERSHIPS (continued) COMBINED SUMMARIZED STATEMENTS OF OPERATIONS Nine months ended September 30, (Unaudited) Series 18 1999 1998 Revenues Rental $ 4,816,803 $ 4,598,802 Interest and other 250,981 175,593 5,067,784 4,774,395 Expenses Interest 1,627,954 1,661,453 Depreciation and 1,877,451 2,058,573 amortization Operating expenses 2,815,808 2,679,420 6,321,213 6,399,446 NET LOSS $(1,253,429) $(1,625,051) Net loss allocation to Boston Capital Tax Credit Fund $(1,191,132) $(1,563,941) III L.P. Net loss allocated to other Partners $ (12,534) $ (16,251) Net loss suspended $ (49,763) $ (44,859) Boston Capital Tax Credit Fund III L.P. NOTES TO FINANCIAL STATEMENTS December 31, 1999 (Unaudited) NOTE D - INVESTMENTS IN OPERATING PARTNERSHIPS (continued) COMBINED SUMMARIZED STATEMENTS OF OPERATIONS Nine months ended September 30, (Unaudited) Series 19 1999 1998 Revenues Rental $ 6,821,870 $ 6,674,217 Interest and other 257,471 235,939 7,079,341 6,910,156 Expenses Interest 2,497,461 2,632,402 Depreciation and 2,158,694 2,937,007 amortization Operating expenses 3,648,009 3,536,884 8,304,164 9,106,293 NET LOSS $(1,224,823) $(2,196,137) Net loss allocation to Boston Capital Tax Credit Fund $(1,212,575) $(2,174,175) III L.P. Net loss allocated to other Partners $ (12,248) $ (21,962) Boston Capital Tax Credit Fund III L.P. NOTES TO FINANCIAL STATEMENTS December 31, 1999 (Unaudited) NOTE D - INVESTMENT IN OPERATING PARTNERSHIPS-CONTINUED When comparing the results of operations from the operating partnerships for the nine months ended September 30, 1999 and September 30, 1998 for Series 17 and 19, variances, some material in nature, exist. The variances are the result of a number of factors including an increase in the number of Operating Partnerships which have completed construction, and an increase in the number which have completed the lease-up phase. Smaller variances are anticipated in future years since the Fund has finished acquiring Operating Partnerships, construction is complete on all of the Operating Partnerships and most have completed the lease-up phase. NOTE E - TAXABLE LOSS The Fund's taxable loss for the year ended December 31, 1999 is expected to differ from its loss for financial reporting purposes for the year end March 31, 2000. This is primarily due to accounting differences in depreciation incurred by the Operating Partnerships and also differences between the equity method of accounting and the IRS accounting methods. No provision or benefit for income taxes has been included in these financial statements since taxable income or loss passes through to, and is reportable by, the partners and assignees individually. Item 2. Management's Discussions and Analysis of Financial Condition and Results of Operations Liquidity The Fund's primary source of funds is the proceeds of its Public Offering. Other sources of liquidity will include (i) interest earned on capital contributions held pending investment and on Working Capital Reserves and (ii) cash distributions from operations of the operating Partnerships in which the Fund has and will invest. Interest income is expected to decrease over the life of the Fund as capital contributions are paid to the Operating Partnerships and Working Capital Reserves are expended. The Fund does not anticipate significant cash distributions from operations of the Operating Partnerships. The Fund is currently accruing the fund management fee. Pursuant to the Partnership Agreement, such liabilities will be deferred until the Fund receives sales of refinancing proceeds from Operating Partnerships which will be used to satisfy such liabilities. The Fund's working capital and sources of liquidity coupled with affiliated party liability accruals allow sufficient levels of liquidity to meet the third party obligations of the Fund. The Fund is currently unaware of any trends which would create insufficient liquidity to meet future third party obligations. Capital Resources The Fund offered BACs in a Public Offering declared effective by the Securities and Exchange Commission on January 24, 1992. The Fund received $38,705,000, $54,293,000, $50,000,000, $36,162,000 and $40,800,000 representing 3,870,500, 5,429,402, 5,000,000, 3,616,200 and 4,080,000 BACs from investors admitted as BAC Holders in Series 15, Series 16, Series 17, Series 18, and Series 19, respectively. The Public Offering was completed on December 17, 1993. (Series 15) The Fund commenced offering BACs in Series 15 on January 24, 1992. Offers and sales of BACs in Series 15 were completed on June 26, 1992. The Fund has committed proceeds to pay initial and additional installments of capital contributions to 68 Operating Partnerships in the amount of $28,257,701. During the quarter ended December 31, 1999, none of Series 15 net offering proceeds had been used to pay capital contributions. Series 15 net offering proceeds in the amount of $32,922 remain to be used by the Fund to pay remaining capital contributions to the Operating Partnerships that Series 15 has invested in as of December 31, 1999. (Series 16) The Fund commenced offering BACs in Series 16 on July 13, 1992. Offers and sales of BACs in Series 16 were completed on December 28, 1992. The Fund has committed proceeds to pay initial and additional installments of capital contributions to 64 Operating Partnerships in the amount of $39,579,774. During the quarter ended December 31, 1999, none of Series 16 net offering proceeds had been used to pay capital contributions. Series 16 net offering proceeds in the amount of $140,006 remain to be used by the Fund to pay remaining capital contributions to the Operating Partnerships that Series 16 has invested in as of December 31, 1999. (Series 17) The Fund commenced offering BACs in Series 17 on January 24, 1993. Offers and sales of BACs in Series 17 were completed on June 17, 1993. The Fund has committed proceeds to pay initial and additional installments of capital contributions to 49 Operating Partnerships in the amount of $36,538,204. During the quarter ended December 31, 1999, none of Series 17 net offering proceeds had been used to pay capital contributions. Series 17 net offering proceeds in the amount of $445,854 remain to be used by the Fund to pay remaining capital contributions to the Operating Partnerships that Series 17 has invested in as of December 31, 1999. (Series 18) The Fund commenced offering BACs in Series 18 on June 17, 1993. Offers and sales of BACs in Series 18 were completed on September 22, 1993. The Fund has committed proceeds to pay initial and additional installments of capital contributions to 34 operating Partnerships in the amount of $26,442,202. During the quarter ended December 31, 1999, none of Series 18 net offering proceeds had been used to pay capital contributions. Series 18 net offering proceeds in the amount of $18,554 remain to be used by the Fund to pay remaining capital contributions to the Operating Partnerships that Series 18 has invested in as of December 31, 1999. (Series 19). The Fund commenced offering BACs in Series 19 on October 8, 1993. Offers and sales of BACs in Series 19 were completed on December 17, 1993. The Fund has committed proceeds to pay initial and additional installments of capital contributions to 26 Operating Partnerships in the amount of $29,614,506. During the quarter ended December 31, 1999, none of Series 19 net offering proceeds had been used to pay capital contributions. Series 19 net offering proceeds in the amount of $34,000 remain to be used by the Fund to pay remaining capital contributions to the Operating Partnerships that Series 19 has invested in as of December 31, 1999. Results of Operations As of December 31, 1999 and 1998 the Fund held limited partnership interests in 241 Operating Partnerships. In each instance the Apartment Complex owned by the applicable Operating Partnership is eligible for the Federal Housing Tax Credit. Occupancy of a unit in each Apartment Complex which initially complied with the Minimum Set-Aside Test (i.e., occupancy by tenants with incomes equal to no more than a certain percentage of area median income) and the Rent Restriction Test (i.e., gross rent charged tenants does not exceed 30% of the applicable income standards) is referred to hereinafter as "Qualified Occupancy." Each of the Operating Partnerships and each of the respective Apartment Complexes are described more fully in the Prospectus or applicable report on Form 8-K. The General Partner believes that there is adequate casualty insurance on the properties. The results of operations for future periods are likely to vary from those for the period ended December 31, 1999. The losses from Operating Partnerships reported for this interim period are not necessarily indicative of the results anticipated for future periods as some of these Operating Partnerships are in the lease-up phase. The Fund incurred a fund management fee to Boston Capital Asset Management Limited Partnerships (formerly Boston Capital Communications Limited Partnership) in an amount equal to .5 percent of the aggregate cost of the apartment complexes owned by the Operating Partnerships, less the amount of certain asset management and reporting fees paid by the Operating Partnerships. The fund management fees incurred for the quarter ended December 31, 1998 for Series 15, Series 16, Series 17, Series 18 and Series 19 were $118,637, $154,922, $138,451, $86,189, and $79,829 respectively. The Fund's investment objectives do not include receipt of significant cash distributions from the Operating Partnerships in which it has invested or intends to invest. The Fund's investments in Operating Partnerships have been made principally with a view towards realization of Federal Housing Tax Credits for allocation to its partners and BAC holders. (Series 15) As of December 31, 1999 and 1998, the average qualified occupancy for the series was 100%. The series had a total of 68 properties at December 31, 1999, all of which were at 100% qualified occupancy. For the nine months being reported Series 15 reflects a net loss from Operating Partnerships of $1,862,687. When adjusted for depreciation, which is a non-cash item, the Operating Partnerships reflect positive operations of $981,019. This is an interim period estimate; it is not necessarily indicative of the final year end results. Hidden Cove Apartments (Hidden Cove) continues to incur operating deficits due to significant turnover expenditures. While the new management company has been successful in reducing the deficits by reducing expenses and increasing occupancy, the property remains unable to operate above break-even. The property has been able to fund operating expenses and current debt service, but due to high turnover costs, cannot support required capital improvements and the funding of the security deposit account, although major capital improvements items identified by the management company have been completed. Average physical occupancy at the property remains at 98%. To date the Operating General Partner has been unsuccessful in securing refinancing through local lenders. Refinancing will be attempted again in 2000 once the property has maintained stabilized occupancy greater than 90% for a significant period of time. As part of the January 1999 debt restructure of School Street I LP, the lender instituted a capital improvements project to be completed by December 1999. At year end most of the required improvements were completed. The lender has agreed to extend the deadline for the remaining items. In an effort to further improve operations at the property the Operating General Partner hired a new management company in September 1999. The new management company has been pursuing evictions of delinquent tenants, and as a result the average occupancy of the property declined to 50% in the fourth quarter of 1999. The Operating General Partner is continuing to actively participate with the new management company in the partnership's operations in order to achieve stabile high occupancy and positive cash flow at the property. (Series 16) As of December 31, 1999 and 1998, the average qualified occupancy for the series was 99.7% for both years. The series had a total of 64 properties at December 31, 1999. Out of the total, 62 had 100% qualified occupancy. For the nine months being reported Series 16 reflects a net loss from Operating Partnerships of $2,890,501. When adjusted for depreciation, which is a non-cash item, the Operating Partnerships reflect positive operations of $678,382. This is an interim period estimate; it is not necessarily indicative of the final year end results. The management company assumed the role of Operating General Partner of Mariner's Pointe Limited Partnership I and Mariner's Pointe Limited Partnership II (Mariner's Pointe Apartments and Mariner's Pointe Apartments II) effective January 1, 1999. The new Operating General Partner continues to focus on reducing the property's operating expenses. The Operating General Partner completed a loan restructure reducing the interest rate on the mortgage to 8%. In addition, a second mortgage at a 5.5% interest rate was closed. The second mortgage was used to fund capital improvement needs at the property. These capital improvements are now complete and have greatly improved curb appeal. The fourth quarter average occupancy was 95%. Cass Partners, L.P. (Fitzgerald Apartments) operated below breakeven in 1999 as a result of low occupancy. An increasing supply of affordable housing in the area has hampered marketing efforts and made tenant retention difficult. At this time, the Operating General Partner is examining market strategies and outreach efforts and continues to provide financial support to the operating partnership. (Series 17) As of December 31, 1999 and 1998, the average qualified occupancy for the series was 99.7% for both years. The series had a total of 49 properties at December 31, 1999. Out of the total 48 had 100% qualified occupancy. For the nine months being reported Series 17 reflects a net loss from Operating Partnerships of $1,761,457. When adjusted for depreciation, which, is a non-cash item, the Operating Partnerships reflect positive operations of $1,070,104. This is an interim period estimate; it is not necessarily indicative of the final year end results. Annadale Housing Partners (Kingsview Manor & Estates) has reported net losses due to operational issues associated with the property. In order to address these issues, the Operating General Partner has hired a consultant to assist management in aggressively marketing the property. In addition, the management agent has hired a new on-site manager and leasing agent. As a result of these changes, occupancy reached 92% as of December 31, 1999. The rental rates at the property were increased. In a step to cut costs even further the Operating General Partner has initiated loan restructure discussions with the first lender for more favorable terms. The loan restructure was finalized with more favorable terms. In exchange for payment by the Operating General Partner of $620,457, monthly mortgage payments were reduced by 79%, thereby alleviating the property of a large monthly cash obligation. With the additional cash available, property operations are anticipated to improve significantly over prior years. The Investment General Partner continues to monitor this situation closely. The property owned by California Investors VI LP (Orchard Park) has sustained a physical occupancy of 92% in December 1999. The increased occupancy is the result of the management company's aggressive marketing efforts and the many capital improvements completed at the property, including office renovations and the addition of an activity center. These improvements have been successful in attracting and retaining tenants. In addition, the property's surrounding area is experiencing economic growth. A major public sports park, currently being developed next to Orchard Park is scheduled to be completed in the fall of 2000. Once this park is opened, it is expected to further enhance the appeal of Orchard Park Apartments. (Series 18) As of December 31, 1999 and 1998 the average qualified occupancy for the series was 100% for both years. The series had a total of 34 properties at December 31, 1999, out of the total all had 100% qualified occupancy. For the nine months being reported Series 18 reflects a net loss from Operating Partnerships of $1,253,429. When adjusted for depreciation, which is a non-cash item, the Operating Partnerships reflect positive operations of $624,022. This is an interim period estimate; it is not necessarily indicative of the final year end results. In August 1996 the Investment General Partner was notified that Virginia Avenue Affordable Limited Partnership (Kristine Apartments) was named as defendant in a land encroachment complaint. A judgment was issued which will remove any uncertainty as to the Operating Partnership's possession of the land. The appropriate executed title information has been received. At the request of the Investment General Partner, a new management company began at the site in August, 1999. As of December 31, 1999, occupancy has risen to 98% and tenant collections and retention have improved. Periodic cash shortfalls are anticipated until the occupancy stabilizes and maintenance expenses are reduced. Parvin's Limited Partnership (Parvin's Branch Townhomes) continues to incur operating deficits due to higher than average operating expenses and occupancy issues with its six transitional units. The Operating General Partner and the Management Company have been deferring their respective fees to improve the property's cash flow. In addition, the Operating General Partner continues to fund deficits. The property's 18 non-transitional housing units operate with a strong occupancy, however, the six transitional units incur significant turnover, which results in increased operating expense. The Operating General Partner has taken a more active role in the leasing and day to day management of the six transitional units. It was previously reported that the Operating General Partner was successful in removing the six transitional units from the program and that as of 1/1/00, all six units would be available to non-transitional qualified residence. However, the Investment Limited Partner was recently informed that two units will remain in the Transitional Housing program. As of 12/31/99, the occupancy at the property has improved to 96%. Now that the occupancy has begun to stabilize the Operating General Partner and the management company are reviewing the property's expenses, including real estate taxes and debt service, in an effort to reduce the expenses. Series 19) As of December 31, 1999 and 1998 the average qualified occupancy for the series was 100% and 99.8%, respectively. The series had a total of 26 properties at December 31, 1999, all of which were at 100% qualified occupancy. For the nine months being reported Series 19 reflects a net loss from Operating Partnerships of $1,224,823. When adjusted for depreciation, which is a non-cash item, the Operating Partnerships reflect positive operations of $933,871. This is an interim period estimate; it is not necessarily indicative of the final year end results. Year 2000 Compliance As previously stated in the Partnership's 10-K, Boston Capital and its management have reviewed the potential computer problems that may arise from the century date change known as the "Year 2000" or "Y2K" problem. We are happy to announce that we did not experience any computer-related problems as a result of this date change and therefore, there was no impact on our investors. PART II - OTHER INFORMATION Item 1. Legal Proceedings None Item 2. Changes in Securities None Item 3. Defaults upon Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders None Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K (a) Exhibits None (b) Reports on Form 8-K SIGNATURES 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 hereunto duly authorized. BOSTON CAPITAL TAX CREDIT FUND III L.P. By: Boston Capital Associates III L.P. By: C&M Associates d/b/a Boston Capital Associates Date: February 22, 2000 By: /s/ John P. Manning ------------------- John P. Manning, Partner & Principal Financial Officer