FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1996 ------------------ or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to -------- -------- Commission file number 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 of (I.R.S. Employer incorporation or organization) Identification No.) 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 preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)has been subject to such filing requirements for the past 90 days. Yes X No ------ ------ BOSTON CAPITAL TAX CREDIT FUND III L.P. -------------------------------------------------- QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1996 ----------------------------------------------- TABLE OF CONTENTS ----------------- PART I - FINANCIAL INFORMATION Item 1. Financial Statements.............................. Balance Sheets.................................... Statements of Operations.......................... Statement of Changes in Partners' Capital......... Statements of Cash Flows.......................... Notes to Financial Statements..................... Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations..................................... PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K.................. Signatures........................................ Boston Capital Tax Credit Fund III L.P. BALANCE SHEETS September 30, March 31, 1996 1996 (Unaudited) (Audited) ASSETS ------------ ------------ INVESTMENTS IN OPERATING PARTNERSHIPS (Note D) $142,458,729 $147,259,013 OTHER ASSETS Cash and cash equivalents 3,847,193 4,958,860 Investments 3,429,115 5,141,767 Notes receivable 2,364,826 4,962,160 Deferred acquisition costs, net of accumulated amortization (Note B) 1,791,865 2,144,343 Organization costs, net of accumulated amortization (Note B) 309,562 399,040 Other assets 1,855,337 2,420,327 ----------- ----------- $156,056,627 $167,285,510 =========== =========== LIABILITIES Accounts payable & accrued expenses (Note C) $ 6,054 $ 75,208 Accounts payable affiliates 5,743,638 4,454,405 Capital contributions payable (Note D) 5,768,810 9,539,884 ----------- ----------- 11,518,502 14,069,497 ----------- ----------- PARTNERS' CAPITAL Limited Partners Units of limited partnership interest, $10 stated value per BAC; 22,000,000 authorized BACs; 21,996,102 issued and outstanding, as of September 30, 1996 144,972,387 153,561,702 General Partner (444,379) (357,619) Unrealized gain (loss) on securities available for sale, net 10,117 11,930 ----------- ----------- 144,538,125 153,216,013 ----------- ----------- $156,056,627 $167,285,510 =========== =========== The accompanying notes are an integral part of these statements. 1 Boston Capital Tax Credit Fund III L.P. BALANCE SHEETS SERIES 15 ---------------------------- September 30, March 31, 1996 1996 (Unaudited) (Audited) ASSETS ----------- --------- INVESTMENTS IN OPERATING PARTNERSHIPS (Note D) $20,209,949 $21,718,070 OTHER ASSETS Cash and cash equivalents 149,429 163,428 Investments - 151,943 Notes receivable 185,000 185,000 Deferred acquisition costs, net of accumulated amortization (Note B) 273,303 281,199 Organization costs, net of accumulated amortization (Note B) 13,116 26,232 Other assets 336,379 292,164 ---------- ---------- $21,167,176 $22,818,036 ========== ========== LIABILITIES Accounts payable and accrued expenses (Note C) $ 1,145 $ 68,856 Accounts payable affiliates 1,538,661 1,264,641 Capital contributions payable (Note D) 189,312 202,750 ---------- ---------- 1,729,118 1,536,247 ---------- ---------- PARTNERS' CAPITAL Limited Partners Units of limited partnership interest, $10 stated value per BAC; 22,000,000 authorized BACs; 3,870,500 issued and outstanding, as of September 30, 1996 19,576,349 21,401,297 General Partner (138,291) (119,857) Unrealized gain (loss) on securities available for sale, net - 349 ---------- ---------- 19,438,058 21,281,789 ---------- ---------- $21,167,176 $22,818,036 ========== ========== The accompanying notes are an integral part of these statements. 2 Boston Capital Tax Credit Fund III L.P. BALANCE SHEETS SERIES 16 ---------------------------- September 30, March 31, 1996 1996 (Unaudited) (Audited) ASSETS ----------- --------- INVESTMENTS IN OPERATING PARTNERSHIPS (Note D) $35,465,009 $37,074,575 OTHER ASSETS Cash and cash equivalents 1,343,065 1,429,491 Investments 315,771 394,836 Notes receivable - 483,464 Deferred acquisition costs net of accumulated amortization (Note B) 438,146 445,554 Organization costs, net of accumulated amortization (Note B) 66,946 89,261 Other assets 8,819 38,197 ---------- ---------- $37,637,756 $39,955,378 ========== ========== LIABILITIES Accounts payable & accrued expenses (Note C) $ - $ 100 Accounts payable affiliates 1,597,070 1,251,118 Capital contributions payable (Note D) 155,225 900,481 ---------- ---------- 1,752,295 2,151,699 ---------- ---------- PARTNERS' CAPITAL Limited Partners Units of limited partnership interest, $10 stated value per BAC; 22,000,000 authorized BACs; 5,429,402 issued and outstanding, as of September 30, 1996 35,992,307 37,891,343 General Partner (107,763) (88,581) Unrealized gain (loss) on securities available for sale, net 917 917 ---------- ---------- 35,885,461 37,803,679 ---------- ---------- $37,637,756 $39,955,378 ========== ========== The accompanying notes are an integral part of these statements. 3 Boston Capital Tax Credit Fund III L.P. BALANCE SHEETS SERIES 17 ---------------------------- September 30, March 31, 1996 1996 (Unaudited) (Audited) ASSETS ----------- --------- INVESTMENTS IN OPERATING PARTNERSHIPS (Note D) $32,348,043 $34,318,721 OTHER ASSETS Cash and cash equivalents 669,493 285,417 Investments - 629,950 Notes receivable 1,643,475 1,658,475 Deferred acquisition costs net of accumulated amortization (Note B) 404,297 415,482 Organization costs, net of accumulated amortization (Note B) 70,397 90,262 Other assets 1,247,908 1,245,840 ---------- ---------- $36,383,613 $38,644,147 ========== ========== LIABILITIES Accounts payable & accrued expenses (Note C) $ - $ - Accounts payable affiliates 1,311,264 1,021,686 Capital contributions payable (Note D) 2,090,611 2,312,721 ---------- ---------- 3,401,875 3,334,407 ---------- ---------- PARTNERS' CAPITAL Limited Partners Units of limited partnership interest, $10 stated value per BAC; 22,000,000 authorized BACs; 5,000,000 issued and outstanding, as of September 30, 1996 33,081,599 35,384,872 General Partner (99,861) ( 76,596) Unrealized gain (loss) on securities available for sale, net - 1,464 ---------- ---------- 32,981,738 35,309,740 ---------- ---------- $36,383,613 $38,644,147 ========== ========== The accompanying notes are an integral part of these statements. 4 Boston Capital Tax Credit Fund III L.P. BALANCE SHEETS SERIES 18 ---------------------------- September 30, March 31, 1996 1996 (Unaudited) (Audited) ASSETS ------------ ---------- INVESTMENTS IN OPERATING PARTNERSHIPS (Note D) $24,868,298 $26,102,954 OTHER ASSETS Cash and cash equivalents 829,327 529,400 Investments 193,938 647,930 Notes receivable 536,351 536,351 Deferred acquisition costs, new of accumulated amortization (Note B) 297,689 305,861 Organization costs, net of accumulated amortization (Note B) 64,903 80,280 Other assets 1,716 8,052 ---------- ---------- $26,792,222 $28,210,828 ========== ========== LIABILITIES Accounts payable & accrued expenses (Note C) $ 130 $ 1,751 Accounts payable affiliates 625,011 434,163 Capital contributions payable (Note D) 756,295 861,315 ---------- ---------- 1,381,436 1,297,229 ---------- ---------- PARTNERS' CAPITAL Limited Partners Units of limited partnership interest, $10 stated value per BAC; 22,000,000 authorized BACs; 3,616,200 issued and outstanding, as of September 30, 1996 25,465,419 26,953,204 General Partner (56,134) (41,106) Unrealized gain (loss) on securities available for sale, net 1,501 1,501 ---------- ---------- 25,410,786 26,913,599 ---------- ---------- $26,792,222 $28,210,828 ========== ========== The accompanying notes are an integral part of these statements. 5 Boston Capital Tax Credit Fund III L.P. BALANCE SHEETS SERIES 19 ---------------------------- September 30, March 31, 1996 1996 (Unaudited) (Audited) ASSETS ------------ ---------- INVESTMENTS IN OPERATING PARTNERSHIPS (Note D) $29,567,430 $28,044,693 OTHER ASSETS Cash and cash equivalents 855,879 2,551,124 Investments 2,919,406 3,317,108 Notes receivables - 2,098,870 Deferred acquisition costs, net of accumulated amortization (Note B) 378,430 696,247 Organization costs, net of accumulated amortization (Note B) 94,200 113,005 Other assets 260,515 836,074 ---------- ---------- $34,075,860 $37,657,121 ========== ========== LIABILITIES Accounts payable & accrued expenses (Note C) $ 4,779 $ 4,501 Accounts payable affiliates 671,632 482,797 Capital contributions payable (Note D) 2,577,367 5,262,617 ---------- ---------- 3,253,778 5,749,915 ---------- ---------- PARTNERS' CAPITAL Limited Partners Units of limited partnership interest, $10 stated value per BAC; 22,000,000 authorized BACs; 4,080,000 issued and outstanding, as of September 30, 1995 30,856,713 31,930,986 General Partner (42,330) (31,479) Unrealized gain (loss) on securities available for sale, net 7,699 7,699 ---------- ---------- 30,822,082 31,907,206 ---------- ---------- $34,075,860 $37,657,121 ========== ========= The accompanying notes are an integral part of these statements. 6 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF OPERATIONS Three Months Ended September 30, (Unaudited) 1996 1995 ---- ---- Income Interest income $ 82,820 $ 257,904 ---------- ---------- Share of loss from Operating Partnerships (Note D) (3,406,060) (2,861,502) ---------- ---------- Expenses Professional fees 171,115 183,392 Fund management fee (Note C) 558,446 609,863 Amortization 61,575 78,640 General and administrative expenses 70,524 60,541 ---------- ---------- 861,660 932,436 ---------- ---------- NET LOSS $(4,184,900) $(3,536,034) ========== ========== Net loss allocated to limited partners $(4,143,051) $(3,500,674) ========== ========== Net loss allocated general partner $ (41,849) $ (35,360) ========== ========== Net loss per BAC $ (.93) $ ( .66) ========== ========== The accompanying notes are an integral part of these statements. 7 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF OPERATIONS Three Months Ended September 30, (Unaudited) SERIES 15 ----------------------- 1996 1995 ---- ---- Income Interest income $ 1,120 $ 10,531 -------- -------- Share of loss from Operating Partnerships (708,211) (719,819) -------- -------- Expenses Professional fees 37,105 42,673 Fund management fee (Note C) 125,913 126,173 Amortization 9,186 11,863 General and administrative expenses 8,582 6,190 -------- -------- 180,786 186,899 -------- -------- NET LOSS $(887,877) $(896,187) ======== ======== Net loss allocated to limited partners $(878,998) $(887,225) ======== ======== Net loss allocated to general partner $ (8,879) $ (8,962) ======== ======== Net loss per BAC $ (.22) $ (.23) ======== ======== The accompanying notes are an integral part of these statements. 8 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF OPERATIONS Three Months Ended September 30, (Unaudited) SERIES 16 ------------------------ 1996 1995 ---- ---- Income Interest income $ 14,142 $ 24,164 -------- -------- Share of loss from Operating Partnerships (645,998) (700,127) -------- -------- Expenses Professional fees 33,908 54,372 Fund management fee (Note C) 131,130 162,195 Amortization 15,372 19,651 General and administrative expenses 16,582 9,161 -------- -------- 196,992 245,379 -------- -------- NET LOSS $(828,848) $(921,342) ======== ======== Net loss allocated to limited partners $(820,560) $(912,129) ======== ======== Net loss allocated to general partner $ (8,288) $ (9,213) ======== ======== Net loss per BAC $ (.15) $ (.17) ======== ======== The accompanying notes are an integral part of these statements. 9 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF OPERATIONS Three Months Ended September 30, (Unaudited) SERIES 17 ------------------------ 1996 1995 ---- ---- Income Interest income $ 4,710 $ 54,601 ---------- -------- Share of loss from Operating Partnerships (1,082,278) (644,895) ---------- -------- Expenses Professional fees 41,418 35,380 Fund management fee (Note C) 116,959 128,618 Amortization 13,820 17,706 General and administrative expenses 10,190 13,162 ---------- -------- 182,387 194,866 ---------- -------- NET LOSS $(1,259,955) $(785,160) ========== ======== Net loss allocated to limited partners $(1,247,355) $(777,308) ========== ======== Net loss allocated to general partner $ (12,600) $ (7,852) ========== ======== Net loss per BAC $ (.25) $ (.02) ========== ======== The accompanying notes are an integral part of these statements. 10 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF OPERATIONS Three Months Ended September 30, (Unaudited) SERIES 18 ---------------------- 1996 1995 ---- ---- Income Interest income $ 9,297 $ 66,411 -------- -------- Share of loss from Operating Partnerships (618,443) (391,052) -------- -------- Expenses Professional fees 19,874 28,146 Fund management fee (Note C) 88,144 92,424 Amortization 10,542 13,460 General and administrative expenses 8,713 11,490 -------- -------- 127,273 145,520 -------- -------- NET LOSS $(736,419) $(470,161) ======== ======== Net loss allocated to limited partners $(729,055) $(465,459) ======== ======== Net loss allocated to general partner $ (7,364) $ (4,702) ======== ======== Net loss per BAC $ (.20) $ (.13) ======== ======== The accompanying notes are an integral part of these statements. 11 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF OPERATIONS Three Months Ended September 30, (Unaudited) SERIES 19 ---------------------- 1996 1995 ---- ---- Income Interest income $ 53,551 $ 102,197 -------- -------- Share of loss from Operating Partnerships (351,130) (405,609) -------- -------- Expenses Professional fees 38,810 22,821 Fund management fee (Note C) 96,300 100,453 Amortization 12,655 15,960 General and administrative expenses 26,457 20,538 -------- -------- 174,222 159,772 -------- -------- NET LOSS $(471,801) $(463,184) ======== ======== Net loss allocated to limited partners $(467,083) $(458,552) ======== ======== Net loss allocated to general partner $ (4,718) $ (4,632) ======== ======== Net loss per BAC $ (.11) $ (.11) ======== ======== The accompanying notes are an integral part of these statements. 12 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF OPERATIONS Six Months Ended September 30, (Unaudited) 1996 1995 ---- ---- Income Interest income $ 224,955 $ 473,386 ---------- ---------- Share of loss from Operating Partnerships (Note D) (7,267,504) (6,057,255) ---------- ---------- Expenses Professional fees 260,940 207,226 Fund management fee (Note C) 1,105,911 1,228,713 Amortization 123,103 123,379 General and administrative expenses 143,572 164,392 ---------- ---------- 1,633,526 1,723,710 ---------- ---------- NET LOSS $(8,676,075) $(7,307,579) ========== ========== Net loss allocated to limited partners $(8,589,314) $(7,234,502) ========== ========== Net loss allocated general partner $ (86,761) $ (73,077) ========== ========== Net loss per BAC $ (1.95) $ (1.34) ========== ========== The accompanying notes are an integral part of these statements. 13 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF OPERATIONS Six Months Ended September 30, (Unaudited) SERIES 15 ----------------------- 1996 1995 ---- ---- Income Interest income $ 3,883 $ 17,876 --------- --------- Share of loss from Operating Partnerships (1,508,293) $(1,494,582) --------- --------- Expenses Professional fees 58,793 44,540 Fund management fee (Note c) 245,074 253,056 Amortization 18,371 18,421 General and administrative expenses 16,734 19,441 --------- --------- 338,972 335,458 --------- --------- NET LOSS $(1,843,382) $(1,812,164) ========= ========= Net loss allocated to limited partners $(1,824,948) $(1,794,042) ========= ========= Net loss allocated to general partner $ (18,434) $ (18,122) ========= ========= Net loss per BAC $ (.47) $ (.46) ========= ========= The accompanying notes are an integral part of these statements. 14 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF OPERATIONS Six Months Ended September 30, (Unaudited) SERIES 16 ------------------------ 1996 1995 ---- ---- Income Interest income $ 32,107 $ 45,523 ---------- ---------- Share of loss from Operating Partnerships (1,576,905) (1,574,321) ---------- ---------- Expenses Professional fees 50,327 57,426 Fund management fee (Note C) 261,755 320,843 Amortization 30,698 30,808 General and administrative expenses 30,640 26,059 ---------- ---------- 373,420 435,136 ---------- ---------- NET LOSS $(1,918,218) $(1,963,934) ========= ========== Net loss allocated to limited partners $(1,899,036) $(1,944,294) ========== ========== Net loss allocated to general partner $ (19,182) $ (19,640) ========== ========== Net loss per BAC $ (.35) $ (.36) ========== ========== The accompanying notes are an integral part of these statements. 15 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF OPERATIONS Six Months Ended September 30, (Unaudited) SERIES 17 ------------------------ 1996 1995 ---- ---- Income Interest income $ 23,852 $ 100,595 ---------- --------- Share of loss from Operating Partnerships (1,968,570) (1,400,424) ---------- --------- Expenses Professional fees 69,088 41,197 Fund management fee (Note C) 264,939 263,465 Amortization 27,639 27,639 General and administrative expenses 20,154 33,629 ---------- --------- 381,820 365,930 ---------- --------- NET LOSS $(2,326,538) $(1,665,759) ========== ========= Net loss allocated to limited partners $(2,303,273) $(1,649,101) ========== ========= Net loss allocated to general partner $ (23,265) $ (16,658) ========== ========= Net loss per BAC $ (.46) $ (.03) ========== ========= The accompanying notes are an integral part of these statements. 16 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF OPERATIONS Six Months Ended September 30, (Unaudited) SERIES 18 ---------------------- 1996 1995 ---- ---- Income Interest income $ 23,801 $ 125,925 ---------- -------- Share of loss from Operating Partnerships (1,283,112) (778,568) ---------- -------- Expenses Professional fees 29,225 34,957 Fund management fee (Note C) 174,970 185,443 Amortization 21,084 21,148 General and administrative expenses 18,223 32,234 ---------- -------- 243,502 273,782 ---------- -------- NET LOSS $(1,502,813) $(926,425) ========== ======== Net loss allocated to limited partners $(1,487,785) $(917,161) ========== ======== Net loss allocated to general partner $ (15,028) $ (9,264) ========== ======== Net loss per BAC $ (.41) $ (.26) ========== ======== The accompanying notes are an integral part of these statements. 17 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF OPERATIONS Six Months Ended September 30, (Unaudited) SERIES 19 ---------------------- 1996 1995 ---- ---- Income Interest income $ 141,312 $ 183,467 ---------- -------- Share of loss from Operating Partnerships (930,624) (809,360) ---------- -------- Expenses Professional fees 53,507 29,106 Fund management fee (Note C) 159,173 205,906 Amortization 25,311 25,363 General and administrative expenses 57,821 53,029 ---------- -------- 295,812 313,404 ---------- -------- NET LOSS $(1,085,124) $(939,297) ========== ======== Net loss allocated to limited partners $(1,074,273) $(929,904) ========== ======== Net loss allocated to general partner $ (10,851) $ (9,393) ========== ======== Net loss per BAC $ (.26) $ (.23) ========== ======== The accompanying notes are an integral part of these statements. 18 Boston Capital Tax Credit Fund III L.P. STATEMENT OF CHANGES IN PARTNERS' CAPITAL Six Months Ended September 30, 1996 (Unaudited) Unrealized gain (loss) on securities available General for Assignees Partner sale, net Total --------- ------- --------- ----- Partners' capital (deficit) April 1, 1996 $153,561,702 $(357,619) $ 11,930 $153,216,013 Net change in unrealized gain (loss) on secur- ities available for sale - - (1,813) (1,813) Net income (loss) (8,589,315) (86,760) - (8,676,075) ----------- -------- --------- ----------- Partners' capital (deficit), September 30, 1996 $144,972,387 $(444,379) $ 10,117 $144,538,125 =========== ======== ========== =========== The accompanying notes are an integral part of these statements. 19 Boston Capital Tax Credit Fund III L.P. STATEMENT OF CHANGES IN PARTNERS' CAPITAL Six Months Ended September 30, 1996 (Unaudited) Unrealized gain (loss) on securities available General for Assignees Partner sale,net Total --------- ------- -------- ----- Series 15 - --------- Partners' capital (deficit), April 1, 1996 $21,401,297 $ (119,857) $ 349 $21,281,789 Net change in unrealized gain (loss) on secur- ities available for sale - - (349) (349) Net income (loss) (1,824,948) (18,434) - (1,843,382) ---------- -------- ---------- ---------- Partners' capital (deficit), September 30, 1996 $19,576,349 $ (138,291) $ - $19,438,058 ========== ======== ========== ========== Series 16 - --------- Partners' capital (deficit), April 1, 1996 $37,891,343 $ (88,581) $ 917 $37,803,679 Net change in unrealized gain (loss) on secur- ities available for sale - - - - Net income (loss) (1,899,036) (19,182) - $(1,918,218) ---------- -------- --------- ---------- Partners' capital (deficit), September 30, 1996 $35,992,307 $(107,763) $ 917 $35,885,461 ========== ======== ========= ========== The accompanying notes are an integral part of these statements. 20 Boston Capital Tax Credit Fund III L.P. STATEMENT OF CHANGES IN PARTNERS' CAPITAL Six Months Ended September 30, 1996 (Unaudited) Unrealized gain (loss) on securities available General for Assignees Partner sale,net Total --------- ------- -------- ----- Series 17 - --------- Partners' capital (deficit), April 1, 1996 $35,384,872 $ (76,596) $ 1,464 $35,309,740 Net change in unrealized gain (loss) on secur- ities available for sale - - (1,464) (1,464) Net income (loss) (2,303,273) (23,265) - (2,326,538) ---------- -------- --------- ---------- Partners' capital (deficit), September 30, 1996 $33,081,599 $ (99,861) $ - $32,981,738 ========== ======== ========= ========== Series 18 - --------- Partners' capital (deficit), April 1, 1996 $26,953,204 $ (41,106) $ 1,501 $26,913,599 Net change in unrealized gain (loss) on secur- ities available for sale - - - - Net income (loss) (1,487,785) (15,028) - (1,502,813) --------- ------- --------- ---------- Partners' capital (deficit), September 30, 1996 $25,465,419 $(56,134) $ 1,501 $25,410,786 ========== ======= ========= ========== The accompanying notes are an integral part of these statements. 21 Boston Capital Tax Credit Fund III L.P. STATEMENT OF CHANGES IN PARTNERS' CAPITAL Six Months Ended September 30, 1996 (Unaudited) Unrealized gain (loss) on securities available General for Assignees Partner sale,net Total --------- ------- -------- ----- Series 19 - --------- Partners' capital (deficit), April 1, 1996 $31,930,986 $ (31,479) $ 7,699 $31,907,206 Net change in unrealized gain (loss) on secur- ities available for sale - - - - Net income (loss) (1,074,273) (10,851) - (1,085,124) ---------- -------- ---------- ---------- Partners' capital (deficit), September 30, 1996 $30,856,713 $ (42,330) $ 7,699 $30,822,082 ========== ======== ========== ========== 22 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Six Months Ended September 30, 1996 (Unaudited) 1996 1995 ---- ---- Cash flows from operating activities: Net loss $(8,676,075) $(7,307,579) Adjustments Distributions from Operating Partnerships 5,412 11,265 Amortization 123,103 123,379 Share of loss from Operating Partnerships 7,267,504 6,057,255 Changes in assets and liabilities (Decrease) Increase in accounts payable and accrued expenses (69,153) 1,958 Decrease (Increase) in accounts receivable 555,176 1,794,884 Decrease (Increase) in accounts payable affiliates 1,289,233 1,491,018 ---------- ---------- Net cash (used in) provided by operating activities 495,200 2,172,180 ---------- ---------- Cash flows from investing activities: Acquisition costs repaid (paid) for Operating Partnerships acquired or to acquire 15,000 (66,545) Capital contributions paid to Operating Partnerships (5,930,833) (14,790,626) Advances to Operating Partnerships 2,597,334 787,423 Investments 1,710,839 7,818,394 ---------- ----------- Net cash (used in) provided by investing activities 1,607,660 (6,251,354) ---------- ---------- 23 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Six Months Ended September 30, (Unaudited) 1996 1995 ---- ---- Continued - --------- Cash flows from financing activity: Credit adjusters received from Operating Partnerships 793 - ---------- ---------- Net cash (used in) provided by financing activity 793 - ---------- ---------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,111,667 (4,079,174) ---------- ---------- Cash and cash equivalents, beginning 4,958,860 10,181,096 ---------- ---------- Cash and cash equivalents, ending $ 3,847,193 $ 6,101,922 ========== ========== Supplemental schedule of noncash investing and financing activates: The fund has increased its investments for unpaid capital contributions due to the Operating Partnerships $ 429,000 $ 169,780 ========== ========== The accompanying notes are an integral part of these statements. 24 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Six Months Ended September 30, (Unaudited) Series 15 ------------------------- 1996 1995 ---- ---- Cash flows from operating activities: Net loss $(1,843,382) $(1,812,164) Adjustments Distributions from Operating Partnerships 1,096 6,329 Amortization 18,371 18,421 Share of loss from Operating Partnerships 1,508,293 1,494,582 Changes in assets and liabilities (Decrease) increase in accounts payable and accrued expenses (67,711) 236 Decrease (Increase) in accounts receivable (44,215) 223,767 Decrease (Increase) in accounts payable affiliates 274,020 274,008 -------- -------- Net cash (used in) provided by operating activities (153,528) 205,179 -------- -------- Cash flows from investing activities: Acquisition costs repaid (paid) for Operating Partnerships acquired or to acquire 2,640 92,539 Capital contributions paid to Operating Partnerships (14,705) (808,463) Advances to Operating Partnerships - 67,500 Investments 151,594 (426) -------- -------- Net cash (used in) provided by investing activities 139,529 (648,850) -------- -------- 25 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Six Months Ended September 30, (Unaudited) Series 15 ---------------------- 1996 1995 ---- ---- 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 CASH EQUIVALENTS (13,999) (446,671) Cash and cash equivalents, beginning 163,428 976,876 -------- -------- Cash and cash equivalents, ending $ 149,429 $ 530,205 ======== ======== Supplemental schedule of noncash investing and financing activities The Fund has increased its investments for unpaid capital contributions due to the Operating Partnerships $ - $ - ======== ========= The accompanying notes are an integral part of these statements. 26 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Six Months Ended September 30, (Unaudited) Series 16 ------------------------- 1996 1995 ---- ---- Cash flows from operating activities: Net loss $(1,918,218) $(1,963,934) Adjustments Distributions from Operating Partnerships 678 2,349 Amortization 30,698 30,808 Share of loss from Operating Partnerships 1,576,905 1,574,321 Changes in assets and liabilities (Decrease) increase in accounts payable and accrued expenses (100) 1,559 Decrease (Increase) in accounts receivable 24,182 44,752 Decrease (Increase) in accounts payable affiliates 345,952 345,765 ---------- ---------- Net cash (used in) provided by operating activities 60,097 35,620 ---------- ---------- Cash flows from investing activities: Acquisition costs repaid (paid) for Operating Partnerships acquired or to acquire 3,700 110,222 Capital contributions paid to Operating Partnerships (712,752) (1,911,839) Advances to Operating Partnerships 483,464 - Investments 79,065 910,075 ---------- ---------- Net cash (used in) provided by investing activities (146,523) (891,542) ---------- ---------- 27 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Six Months Ended September 30, (Unaudited) Series 16 ----------------------- 1996 1995 ---- ----- 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 CASH EQUIVALENTS (86,426) (855,922) Cash and cash equivalents, beginning 1,429,491 2,757,494 ---------- ---------- Cash and cash equivalents, ending $ 1,343,065 $ 1,901,572 ========== ========== Supplemental schedule of noncash investing and financing activities: The Fund has increased its investments for unpaid capital contributions due to the Operating Partnerships $ - $ 107,000 ========== ========== The accompanying notes are an integral part of these statements. 28 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Six Months Ended September 30, (Unaudited) Series 17 ------------------------- 1996 1995 ---- ---- Cash flows from operating activities: Net loss $(2,326,538) $(1,665,759) Adjustments Distributions from Operating Partnerships 1,166 189 Amortization 27,639 27,639 Share of loss from Operating Partnerships 1,968,570 1,400,424 Changes in assets and liabilities (Decrease) increase in accounts payable and accrued expenses - (115) Decrease (Increase) in accounts receivable (6,058) (221,333) Decrease (Increase) in accounts payable affiliates 289,578 469,491 ---------- ---------- Net cash (used in) provided by operating activities (45,643) 10,536 ---------- ---------- Cash flows from investing activities: Acquisition costs repaid (paid) for Operating Partnerships acquired or to acquire 3,410 77,262 Capital contributions paid to Operating Partnerships (217,177) (2,510,990) Advances to Operating Partnerships 15,000 781,328 Investments 628,486 327,390 ---------- ---------- Net cash (used in) provided by investing activates 429,719 (1,325,010) ---------- ---------- 29 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Six Months Ended September 30, (Unaudited) Series 17 ------------------------ 1996 1995 ---- ---- 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 CASH EQUIVALENTS 384,076 (1,314,474) Cash and cash equivalents, beginning 285,417 1,690,922 ---------- ---------- Cash and cash equivalents, ending $ 669,493 $ 376,448 ========== ========== Supplemental schedule of noncash investing and financing activities: The Fund has increased its investments for unpaid capital contributions due to the Operating Partnerships $ - $ - ========== ========== The accompanying notes are an integral part of these statements. 30 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Six Months Ended September 30, (Unaudited) Series 18 ------------------------- 1996 1995 ---- ---- Cash flows from operating activities: Net loss $(1,502,813) $ (926,425) Adjustments Distributions from Operating Partnerships 2,472 2,398 Amortization 21,084 21,148 Share of loss from Operating Partnerships 1,283,112 778,568 Changes in assets and liabilities (Decrease) increase in accounts payable and accrued expenses (1,621) 278 Decrease (Increase) in accounts receivable 6,336 1,494,898 Decrease (Increase) in accounts payable affiliates 190,848 190,848 ---------- ---------- Net cash (used in) provided by operating activities (582) 1,561,713 ---------- ---------- Cash flows from investing activities: Acquisition costs repaid (paid) for Operating Partnerships acquired or to acquire 2,465 (60,600) Capital contributions paid to Operating Partnerships (155,948) (5,443,645) Advances to Operating Partnerships - 78,595 Investments 453,992 2,814,142 ---------- ---------- Net cash (used in) provided by investing activities 300,509 (2,611,508) ---------- ---------- 31 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Six Months Ended September 30, (Unaudited) Series 18 ----------------------- 1996 1995 ---- ---- 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 CASH EQUIVALENTS 299,927 (1,049,795) Cash and cash equivalents, beginning 529,400 1,813,653 --------- ---------- Cash and cash equivalents, ending $ 829,327 $ 763,858 ========= ========== Supplemental schedule of noncash investing and financing activities: The Fund has increased its investments for unpaid capital contributions due to the Operating Partnerships $ - $ - ========= ========= The accompanying notes are an integral part of these statements. 32 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Six Months Ended September 30, (Unaudited) Series 19 ------------------------- 1996 1995 ---- ---- Cash flows from operating activities: Net loss $(1,085,124) $ (939,297) Adjustments Distributions from Operating Partnerships - - Amortization 25,311 25,363 Share of loss from Operating Partnerships 930,624 809,360 Changes in assets and liabilities (Decrease) increase in accounts payable and accrued expenses 279 - Decrease (Increase) in accounts receivable 574,931 252,800 Decrease (Increase) in accounts payable affiliates 188,835 210,906 ---------- ---------- Net cash (used in) provided by operating activities 634,856 359,132 ---------- ---------- Cash flows from investing activities: Acquisition costs repaid (paid) for Operating Partnerships acquired or to acquire 2,785 (285,968) Capital contributions paid to Operating Partnerships (4,830,251) (4,115,689) Advances to Operating Partnerships 2,098,870 (140,000) Investments 397,702 3,767,213 ---------- ---------- Net cash (used in) provided by investing activities (2,330,894) (774,444) ---------- --------- 33 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Six Months Ended September 30, (Unaudited) Series 19 ------------------------ 1996 1995 ---- ---- Continued - --------- Cash flows from financing activity: Credit adjusters received from Operating Partnerships 793 - ---------- ---------- Net cash (used in) provided by financing activity 793 - ---------- ---------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (1,695,245) (415,312) Cash and cash equivalents, beginning 2,551,124 2,942,151 ---------- ---------- Cash and cash equivalents, ending $ 855,879 $ 2,526,839 ========== ========== Supplemental schedule of noncash investing and financing activities: The Fund has increased its investments for unpaid capital contributions due to the Operating Partnerships $ 429,000 $ 62,780 ========== ========== The accompanying notes are an integral part of these statements. 34 Boston Capital Tax Credit Fund III L.P. NOTES TO FINANCIAL STATEMENTS September 30, 1996 (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 through 19 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 $40,800,000. The partnership issued the last BACs in Series 19 on December 17, 1993. This concluded the Public Offering of the Fund. 35 Boston Capital Tax Credit Fund III L.P. NOTES TO FINANCIAL STATEMENTS - CONTINUED September 30, 1996 (Unaudited) NOTE B - ACCOUNTING AND FINANCIAL REPORTING POLICIES The condensed financial statements included herein as of September 30, 1996 and for the three and six 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 Securities - --------------------- The Fund has determined that all of it's investment securities are to be categorized as securities available for sale. Securities classified as available for sale are those debt securities that the Fund purchased that may be liquidated prior to the maturity date should the need arise. These securities are carried at approximate fair market value. All of the investments held by the Fund are tax-exempt municipal bonds. The amortized cost of securities available for sale as of September 30, 1996 by contractual maturity are as follows: Amortized Cost ----------- Due in one year or less $3,418,998 Due after one year - --------- Total $3,418,998 ========= The fair market value of the securities is $3,429,115. The difference being an unrealized gain on securities available for sale of $10,117, as of September 30, 1996. 36 Boston Capital Tax Credit Fund III L.P. NOTES TO FINANCIAL STATEMENTS - CONTINUED September 30, 1996 (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 amortizes organizational costs over 60 months. As of September 30, 1996 and 1995 the Fund has accumulated organization amortization totalling $624,866 and $445,909 respectively. The breakdown of accumulated organization amortization within the Fund as of September 30, 1996 and 1995 is as follows: 1996 1995 ---- ---- Series 15 $153,961 $127,730 Series 16 160,964 116,333 Series 17 135,490 95,761 Series 18 85,392 54,638 Series 19 89,059 51,447 ------- ------- $624,866 $445,909 ======= ======= On July 1, 1995, the Fund began amortizing unallocated acquisition costs over 330 months from April 1, 1995. As of September 30, 1996 the Fund has accumulated unallocated acquisition amortization totalling $101,473. The breakdown of accumulated unallocated acquisition amortization within the fund as of September 30, 1996 for Series 15, Series 16, Series 17, Series 18, and Series 19 is $15,867, $25,283, $23,453, $17,251 and $19,619, 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 (formerly Boston Capital Communications 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 September 30, 1996 all series had completed payment of all acquisition fees due to Boston Capital Partners, Inc. 37 Boston Capital Tax Credit Fund III L.P. NOTES TO FINANCIAL STATEMENTS - CONTINUED September 30, 1996 (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 (formerly Boston Capital Communications Limited Partnership). The fund management fees accrued for the quarter ended September 30, 1996 and 1995 are as follows: 1996 1995 ---- ---- Series 15 $137,013 $126,173 Series 16 172,968 162,195 Series 17 141,348 128,618 Series 18 95,424 92,424 Series 19 96,300 100,453 ------- ------- $643,053 $609,863 ======= ======= NOTE D - INVESTMENTS IN OPERATING PARTNERSHIPS At September 30, 1996 and 1995, the Fund had limited partnership interests in 241 and 240 Operating Partnerships, respectively, which own or are constructing apartment complexes. The breakdown of Operating Partnerships within the Fund at September 30, 1996 and 1995 is as follows: 1996 1995 ---- ---- Series 15 68 68 Series 16 64 64 Series 17 49 48 Series 18 34 34 Series 19 26 26 --- --- 241 240 === === 38 Boston Capital Tax Credit Fund III L.P. NOTES TO FINANCIAL STATEMENTS - CONTINUED September 30, 1996 (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 September 30, 1996 and 1995 are as follows: 1996 1995 ---- ---- Series 15 $ 189,312 $ 666,188 Series 16 155,255 1,764,662 Series 17 2,090,611 2,051,745 Series 18 756,295 1,996,134 Series 19 2,577,367 9,569,265 --------- ---------- $5,768,840 $16,047,994 ========= ========== 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 six months ended June 30, 1996. 39 Boston Capital Tax Credit Fund III L.P. NOTES TO FINANCIAL STATEMENTS - CONTINUED September 30, 1996 (Unaudited) NOTE D - INVESTMENTS IN OPERATING PARTNERSHIPS (continued) COMBINED SUMMARIZED STATEMENTS OF OPERATIONS Six months ended June 30, (Unaudited) Series 15 --------------------------- 1996 1995 ---- ---- Revenues Rental $ 4,513,330 $ 4,320,492 Interest and other 252,380 192,728 --------- --------- 4,765,710 4,513,220 --------- --------- Expenses Interest 1,593,940 1,532,865 Depreciation and amortization 2,018,829 1,937,034 Operating expenses 2,703,877 2,553,000 --------- --------- $ 6,316,646 6,022,899 --------- --------- NET LOSS $(1,550,936) $(1,509,679) ========= ========= Net loss allocated to Boston Capital Tax Credit Fund III L.P. $(1,508,293) $(1,494,582) ========= ========= Net loss allocated to other partners $ (15,510) $ (15,097) ========= ========= Net loss suspended $ (27,133) $ - ========= ========= The Fund accounts for its investments using the equity method of accounting. Under the equity method of accounting, the partnership adjusts its investment cost for its share of each Operating Partnership's results of operations and for any distributions received or accrued. However, the Partnership recognizes individual operating losses only to the extent of capital contributions. Excess losses are suspended for use in future years to offset excess income. 40 Boston Capital Tax Credit Fund III L.P. NOTES TO FINANCIAL STATEMENTS - CONTINUED September 30, 1996 (Unaudited) NOTE D - INVESTMENTS IN OPERATING PARTNERSHIPS (continued) COMBINED SUMMARIZED STATEMENTS OF OPERATIONS Six months ended June 30, (Unaudited) Series 16 -------------------------- 1996 1995 ---- ---- Revenues Rental $ 5,926,919 $ 5,627,312 Interest and other 464,389 350,392 --------- --------- 6,391,308 5,977,704 --------- --------- Expenses Interest 2,022,957 1,949,971 Depreciation and amortization 2,463,062 2,423,304 Operating expenses 3,498,891 3,194,652 --------- --------- 7,984,910 7,567,927 --------- --------- NET LOSS $(1,593,602) $(1,590,223) ========= ========= Net loss allocated to Boston Capital Tax Credit Fund III L.P. $(1,577,666) $(1,574,321) ========= ========= Net loss allocated to other partners $ (15,936) $ (15,902) ========= ========= 41 Boston Capital Tax Credit Fund III L.P. NOTES TO FINANCIAL STATEMENTS - CONTINUED September 30, 1996 (Unaudited) NOTE D - INVESTMENTS IN OPERATING PARTNERSHIPS (continued) COMBINED SUMMARIZED STATEMENTS OF OPERATIONS Six Months ended June 30, (Unaudited) Series 17 -------------------------- 1996 1995 Revenues ---- ---- Rental $ 5,408,971 $ 4,677,370 Interest and other 195,250 517,411 --------- --------- 5,604,221 5,194,781 --------- --------- Expenses Interest 2,370,100 2,064,687 Depreciation and amortization 1,892,667 1,603,652 Operating expenses 3,329,909 2,941,012 --------- --------- 7,592,676 6,609,351 --------- --------- NET LOSS $(1,988,455) $(1,414,570) ========= ========= Net loss allocated to Boston Capital Tax Credit Fund III L.P. $(1,968,570) $(1,400,424) ========= ========= Net loss allocated to other partners $ (19,885) $ (14,146) ========= ========= 42 Boston Capital Tax Credit Fund III L.P. NOTES TO FINANCIAL STATEMENTS - CONTINUED September 30, 1996 (Unaudited) NOTE D - INVESTMENTS IN OPERATING PARTNERSHIPS (continued) COMBINED SUMMARIZED STATEMENTS OF OPERATIONS Six months ended June 30, (Unaudited) Series 18 ---------------------------- 1996 1995 Revenues ---- ---- Rental $ 2,880,998 $2,266,492 Interest and other 116,979 143,350 --------- --------- 2,997,977 2,409,842 --------- --------- Expenses Interest 1,022,766 680,921 Depreciation and amortization 1,484,915 1,190,733 Operating expenses 1,786,368 1,324,621 --------- --------- 4,294,049 3,196,275 --------- --------- NET LOSS $(1,296,072) $ (786,433) ========= ========= Net loss allocated to Boston Capital Tax Credit Fund III L.P. $(1,283,112) $ (778,568) ========= ========= Net loss allocated to other partners $ (12,960) $ (7,865) ========= ========= 43 Boston Capital Tax Credit Fund III L.P. NOTES TO FINANCIAL STATEMENTS - CONTINUED September 30, 1996 (Unaudited) NOTE D - INVESTMENTS IN OPERATING PARTNERSHIPS (continued) COMBINED SUMMARIZED STATEMENTS OF OPERATIONS Six months ended June 30, (Unaudited) Series 19 -------------------------- 1996 1995 Revenues ---- ---- Rental $4,002,983 $1,645,262 Interest and other 123,221 80,537 --------- --------- 4,126,204 1,725,799 --------- --------- Expenses Interest 1,463,473 811,952 Depreciation and amortization 1,151,242 336,470 Operating expenses 2,451,513 1,394,912 --------- --------- 5,066,228 2,543,334 --------- --------- NET LOSS $ (940,024) $(817,535) ========= ======== Net loss allocated to Boston Capital Tax Credit Fund III L.P. $ (930,624) $(809,360) ========= ======== Net loss allocated to other partners $ (9,400) $ (8,175) ========= ======== 44 Boston Capital Tax Credit Fund III L.P. NOTES TO FINANCIAL STATEMENTS - CONTINUED September 30, 1996 (Unaudited) NOTE D - INVESTMENT IN OPERATING PARTNERSHIPS-CONTINUED In a prior quarter an Operating Partnership was admitted to Series 16 without an initial outlay of capital. This short form admission was an agreement between the Operating Partnership's General Partner and the General Partner, that upon further due diligence, the Fund had the option to purchase the Operating Partnership if it was in the best interest of the Fund. Subsequent studies indicated that the Operating Partnership would not generate the originally anticipated amount of credits, and the General Partner elected to have the Fund's interest repurchased. As a result the number of Operating Partnerships has decreased by one for Series 16 from the quarter ended June 30, 1996. When comparing the results of operations from the operating partnerships for the six months ended June 30, 1996 and June 30, 1995 numerous 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 owned, an increase in the number 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 fiscal year ended March 31, 1997 is expected to differ from its loss for financial reporting purposes primarily due to accounting differences in depreciation incurred by the Operating Partnerships. 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. 45 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 September 30, 1996, $1,267 of Series 15 net offering proceeds had been used to pay capital contributions. Series 15 net offering proceeds in the amount of $149,429 remain to be used by the Fund to pay remaining capital contributions to the Operating Partnerships that Series 15 has invested in as of September 30, 1996. (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. 46 During the quarter ended September 30, 1996, $142,150 of Series 16 net offering proceeds had been used to pay capital contributions. Series 16 net offering proceeds in the amount of $155,225 remain to be used by the Fund to pay remaining capital contributions to the Operating Partnerships that Series 16 has invested in as of September 30, 1996. (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 $36,543,773. During the quarter ended September 30, 1996, $66,807 of Series 17 net offering proceeds had been used to pay capital contributions. Series 17 net offering proceeds in the amount of $669,493 remain to be used by the Fund to pay remaining capital contributions to the Operating Partnerships that Series 17 has invested in as of September 30, 1996. (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 September 30, 1996 $81,579 of Series 18 net offering proceeds had been used to pay capital contributions. Series 18 net offering proceeds in the amount of $756,295 remain to be used by the Fund to pay remaining capital contributions to the Operating Partnerships that Series 18 has invested in as of September 30, 1996. (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 $29,563,370. During the quarter ended September 30, 1996 $2,957,365 of Series 19 net offering proceeds had been used to pay capital contributions. Series 19 net offering proceeds in the amount of $2,577,367 remain to be used by the Fund to pay remaining capital contributions to the Operating Partnerships that Series 19 has invested in as of September 30, 1996. Results of Operations - --------------------- As of September 30, 1996 and 1995 the Fund held limited partnership interests in 241 and 240 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 47 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 September 30, 1996. 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 or payable by the Operating Partnerships. The fund management fees incurred for the quarter ended September 30, 1996 for Series 15, Series 16, Series 17, Series 18 and Series 19 were $125,913, $131,130, $116,959, $88,144, and $96,300, 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 and will be made principally with a view towards realization of Federal Housing Tax Credits for allocation to its partners and BAC holders. (Series 15) As of September 30, 1996 and 1995, the average qualified occupancy for the series was 100% and 97.8%, respectively. The series had a total of 68 properties at September 30, 1996 all of which were at 100% qualified occupancy. For the six months being reported Series 15 reflects a net loss from Operating Partnerships of $1,508,293. When adjusted for depreciation, which is a non-cash item, the Operating Partnerships reflect positive operations of $510,536. This is an interim period estimate; it is not necessarily indicative of the final year end results. California Investors VII Limited Partnership has completed a debt refinancing. The Operating Partnership was operating at a deficit due to higher than projected operating expenses. Operating shortfalls caused the acccrual of accounts payable. The Operating General Partner has been working with the first mortgage lender to obtain a waiver of the prepayment penalty to allow for a refinancing. The first mortgagee recently agreed to this waiver. The current interest rate climate enabled the Operating Partnership to obtain a refinancing rate that allowed for the payoff of the accrued accounts payable and reduced the monthly debt payment. 48 The General Partner is closely monitoring the operations of Hidden Cove Associates in an effort to improve its operations. The Operating General Partner recently completed the process of hiring a new management company. The new management company is concentrating on completing its capitalimprovement program and improving the tenant base. The goal of the new management company, through improved tenant screening and strong on site management is to improve and stabilize occupancy. (Series 16) As of September 30, 1996 and 1995, the average qualified occupancy for the series was 100% and 99.6%, respectively. The series had a total of 65 properties at September 30, 1996 all of which were at 100% qualified occupancy. For the six months being reported Series 16 reflects a net loss from Operating Partnerships of $1,508,293. When adjusted for depreciation, which is a non-cash item, the Operating Partnerships reflect positive operations of $885,396. This is an interim period estimate; it is not necessarily indicative of the final year end results. (Series 17) As of September 30, 1996 and 1995, the average qualified occupancy for the series was 99.6% and 98.5%, respectively. The series had a total of 49 properties at September 30, 1996. Out of the total 47 had 100% qualified occupancy. For the six months being reported Series 17 reflects a net loss from Operating Partnerships of $1,968,570. When adjusted for depreciation, which is a non-cash item, the Operating Partnerships reflect a net loss of $75,903. This is an interim period estimate; it is not necessarily indicative of the final year end results. California Investors VII Limited Partnership has negotiated a debt refinancing. The Operating Partnership was operating at a deficit due to higher than projected operating expenses. Operating shortfalls caused the acccrual of accounts payable. The Operating General Partner has been working with the first mortgage lender to obtain a waiver of the prepayment penalty to allow for a refinancing. The first mortgagee recently agreed to this waiver. The current interest rate climate enabled the Operating Partnership to obtain a refinancing rate that allowed for the payoff of the accrued accounts payable and reduced the monthly debt payment. Annadale Housing Partners has reported net losses due to operational issues associated with the property. The Partnership continues to stabilize since the completion of rehabilitation and occupancy has continued its steady improvement. Operations have recently funded the purchase of furniture and equipment for the common area lounges and outside seating area. While the initial impact of these expenses will be to delay breakeven operations, the long term effect on tenant retention and occupancy should be positive. The Operating General Partner anticipates full stabilization in the first quarter of 1997. 49 (Series 18) As of September 30, 1996 and 1995 the average qualified occupancy for the series was 100% and 95.4% respectively. The series had a total of 34 properties at September 30, 1996 all of which were at 100% qualified occupancy. For the six months being reported Series 18 reflects a net loss from Operating Partnerships of $1,296,073. When adjusted for depreciation, which is a non-cash item, the Operating Partnerships reflect positive operations of $188,842. This is an interim period estimate; it is not necessarily indicative of the final year end results. In August 1996 the General Partner was notified that Virginia Avenue Housing Limited Partnership was named as defendant in a land encroachment complaint. The Operating General Partner and its council are confident that the partnership owns a clean title to all property in question, however, research is being conducted into the title and title insurance. (Series 19) As of September 30, 1996 and 1995 the average qualified occupancy for the series was 99.9% and 86.7% respectively. The series had a total of 26 properties at September 30, 1996. Out of the total 25 had 100% qualified occupancy. For the six months being reported Series 19 reflects a net loss from Operating Partnerships of $940,024. When adjusted for depreciation, which is a non-cash item, the Operating Partnerships reflect a gain of $211,218. This is an interim period estimate; it is not necessarily indicative of the final year end results. 50 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 None 51 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: November 14, 1996 By: /s/ John P. Manning ------------------- John P. Manning, Partner & Principal Financial Officer 52