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 December 31, 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 DECEMBER 31, 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 December 31, March 31, 1996 1996 (Unaudited) (Audited) ASSETS ------------ ------------ INVESTMENTS IN OPERATING PARTNERSHIPS (Note D) $138,824,448 $147,259,013 OTHER ASSETS Cash and cash equivalents 3,264,706 4,958,860 Investments 2,503,779 5,141,767 Notes receivable 2,081,333 4,962,160 Deferred acquisition costs, net of accumulated amortization (Note B) 1,775,033 2,144,343 Organization costs, net of accumulated amortization (Note B) 264,823 399,040 Other assets 2,018,517 2,420,327 ----------- ----------- $150,732,639 $167,285,510 =========== =========== LIABILITIES Accounts payable & accrued expenses (Note C) $ 4,682 $ 75,208 Accounts payable affiliates 6,387,444 4,454,405 Capital contributions payable (Note D) 3,782,043 9,539,884 ----------- ----------- 10,174,169 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 December 31, 1996 141,032,530 153,561,702 General Partner (484,177) (357,619) Unrealized gain (loss) on securities available for sale, net 10,117 11,930 ----------- ----------- 140,558,470 153,216,013 ----------- ----------- $150,732,639 $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 ---------------------------- December 31, March 31, 1996 1996 (Unaudited) (Audited) ASSETS ----------- --------- INVESTMENTS IN OPERATING PARTNERSHIPS (Note D) $19,498,587 $21,718,070 OTHER ASSETS Cash and cash equivalents 249,948 163,428 Investments - 151,943 Notes receivable 135,000 185,000 Deferred acquisition costs, net of accumulated amortization (Note B) 270,675 281,199 Organization costs, net of accumulated amortization (Note B) 6,558 26,232 Other assets 451,744 292,164 ---------- ---------- $20,612,512 $22,818,036 ========== ========== LIABILITIES Accounts payable and accrued expenses (Note C) $ 1,144 $ 68,856 Accounts payable affiliates 1,675,674 1,264,641 Capital contributions payable (Note D) 189,312 202,750 ---------- ---------- 1,866,130 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 December 31, 1996 18,891,590 21,401,297 General Partner (145,208) (119,857) Unrealized gain (loss) on securities available for sale, net - 349 ---------- ---------- 18,746,382 21,281,789 ---------- ---------- $20,612,512 $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 ---------------------------- December 31, March 31, 1996 1996 (Unaudited) (Audited) ASSETS ----------- --------- INVESTMENTS IN OPERATING PARTNERSHIPS (Note D) $34,825,175 $37,074,575 OTHER ASSETS Cash and cash equivalents 1,321,108 1,429,491 Investments 318,877 394,836 Notes receivable - 483,464 Deferred acquisition costs net of accumulated amortization (Note B) 433,934 445,554 Organization costs, net of accumulated amortization (Note B) 55,788 89,261 Other assets 9,529 38,197 ---------- ---------- $36,964,411 $39,955,378 ========== ========== LIABILITIES Accounts payable & accrued expenses (Note C) $ - $ 100 Accounts payable affiliates 1,770,041 1,251,118 Capital contributions payable (Note D) 155,225 900,481 ---------- ---------- 1,925,266 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 December 31, 1996 35,154,454 37,891,343 General Partner (116,226) (88,581) Unrealized gain (loss) on securities available for sale, net 917 917 ---------- ---------- 35,039,145 37,803,679 ---------- ---------- $36,964,411 $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 ---------------------------- December 31, March 31, 1996 1996 (Unaudited) (Audited) ASSETS ----------- --------- INVESTMENTS IN OPERATING PARTNERSHIPS (Note D) $31,290,112 $34,318,721 OTHER ASSETS Cash and cash equivalents 540,652 285,417 Investments - 629,950 Notes receivable 1,409,982 1,658,475 Deferred acquisition costs net of accumulated amortization (Note B) 400,410 415,482 Organization costs, net of accumulated amortization (Note B) 60,465 90,262 Other assets 1,322,906 1,245,840 ---------- ---------- $35,024,527 $38,644,147 ========== ========== LIABILITIES Accounts payable & accrued expenses (Note C) $ - $ - Accounts payable affiliates 1,452,612 1,021,686 Capital contributions payable (Note D) 1,849,192 2,312,721 ---------- ---------- 3,301,804 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 December 31, 1996 31,835,175 35,384,872 General Partner (112,452) ( 76,596) Unrealized gain (loss) on securities available for sale, net - 1,464 ---------- ---------- 31,722,723 35,309,740 ---------- ---------- $35,024,527 $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 ---------------------------- December 31, March 31, 1996 1996 (Unaudited) (Audited) ASSETS ------------ ---------- INVESTMENTS IN OPERATING PARTNERSHIPS (Note D) $24,495,683 $26,102,954 OTHER ASSETS Cash and cash equivalents 796,880 529,400 Investments 196,019 647,930 Notes receivable 536,351 536,351 Deferred acquisition costs, new of accumulated amortization (Note B) 294,836 305,861 Organization costs, net of accumulated amortization (Note B) 57,215 80,280 Other assets 3,475 8,052 ---------- ---------- $26,380,459 $28,210,828 ========== ========== LIABILITIES Accounts payable & accrued expenses (Note C) $ 132 $ 1,751 Accounts payable affiliates 720,435 434,163 Capital contributions payable (Note D) 756,295 861,315 ---------- ---------- 1,476,862 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 December 31, 1996 24,963,302 26,953,204 General Partner (61,206) (41,106) Unrealized gain (loss) on securities available for sale, net 1,501 1,501 ---------- ---------- 24,903,597 26,913,599 ---------- ---------- $26,380,459 $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 ---------------------------- December 31, March 31, 1996 1996 (Unaudited) (Audited) ASSETS ------------ ---------- INVESTMENTS IN OPERATING PARTNERSHIPS (Note D) $28,714,891 $28,044,693 OTHER ASSETS Cash and cash equivalents 356,118 2,551,124 Investments 1,988,883 3,317,108 Notes receivables - 2,098,870 Deferred acquisition costs, net of accumulated amortization (Note B) 375,178 696,247 Organization costs, net of accumulated amortization (Note B) 84,797 113,005 Other assets 230,863 836,074 ---------- ---------- $31,750,730 $37,657,121 ========== ========== LIABILITIES Accounts payable & accrued expenses (Note C) $ 3,406 $ 4,501 Accounts payable affiliates 768,682 482,797 Capital contributions payable (Note D) 832,019 5,262,617 ---------- ---------- 1,604,107 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 December 31, 1996 30,188,009 31,930,986 General Partner (49,085) (31,479) Unrealized gain (loss) on securities available for sale, net 7,699 7,699 ---------- ---------- 30,146,623 31,907,206 ---------- ---------- $31,750,730 $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 December 31, (Unaudited) 1996 1995 ---- ---- Income Interest income $ 117,138 $ 292,452 ---------- ---------- Share of loss from Operating Partnerships (Note D) (3,339,896) (2,324,418) ---------- ---------- Expenses Professional fees 14,445 40,818 Fund management fee (Note C) 596,591 633,826 Amortization 61,573 61,650 General and administrative expenses 84,289 130,505 ---------- ---------- 756,898 866,799 ---------- ---------- NET LOSS $(3,979,656) $(2,898,765) ========== ========== Net loss allocated to limited partners $(3,939,859) $(2,869,777) ========== ========== Net loss allocated general partner $ (39,797) $ (28,988) ========== ========== Net loss per BAC $ (.88) $ ( .63) ========== ========== 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 December 31, (Unaudited) SERIES 15 ----------------------- 1996 1995 ---- ---- Income Interest income $ 168,304 $ 171,208 -------- -------- Share of loss from Operating Partnerships (711,062) (736,916) -------- -------- Expenses Professional fees 659 366 Fund management fee (Note C) 126,640 134,135 Amortization 9,186 9,211 General and administrative expenses 12,433 13,868 -------- -------- 148,918 157,580 -------- -------- NET LOSS $(691,676) $(723,288) ======== ======== Net loss allocated to limited partners $(684,759) $(716,055) ======== ======== Net loss allocated to general partner $ (6,917) $ (7,233) ======== ======== Net loss per BAC $ (.18) $ (.19) ======== ======== 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 December 31, (Unaudited) SERIES 16 ------------------------ 1996 1995 ---- ---- Income Interest income $ (8,822) $ 34,819 -------- -------- Share of loss from Operating Partnerships (639,191) (596,311) -------- -------- Expenses Professional fees 1,754 4,417 Fund management fee (Note C) 162,767 164,995 Amortization 15,370 15,362 General and administrative expenses 18,412 37,922 -------- -------- 198,303 222,696 -------- -------- NET LOSS $(846,316) $(784,188) ======== ======== Net loss allocated to limited partners $(837,853) $(776,346) ======== ======== Net loss allocated to general partner $ (8,463) $ (7,842) ======== ======== Net loss per BAC $ (.15) $ (.14) ======== ======== 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 December 31, (Unaudited) SERIES 17 ------------------------ 1996 1995 ---- ---- Income Interest income $ (40,891) $ (25,418) ---------- -------- Share of loss from Operating Partnerships (1,051,704) (545,098) ---------- -------- Expenses Professional fees 4,412 22,866 Fund management fee (Note C) 127,702 132,847 Amortization 13,820 13,819 General and administrative expenses 20,486 26,777 ---------- -------- 166,420 196,309 ---------- -------- NET LOSS $(1,259,015) $(766,825) ========== ======== Net loss allocated to limited partners $(1,246,425) $(759,157) ========== ======== Net loss allocated to general partner $ (12,590) $ (7,668) ========== ======== Net loss per BAC $ (.25) $ (.15) ========== ======== 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 December 31, (Unaudited) SERIES 18 ---------------------- 1996 1995 ---- ---- Income Interest income $ (32,822) $ 592 -------- -------- Share of loss from Operating Partnerships (372,618) (128,685) -------- -------- Expenses Professional fees 2,396 2,228 Fund management fee (Note C) 76,999 96,396 Amortization 10,542 10,576 General and administrative expenses 11,813 17,961 -------- -------- 101,750 127,161 -------- -------- NET LOSS $(507,190) $(255,254) ======== ======== Net loss allocated to limited partners $(502,118) $(252,701) ======== ======== Net loss allocated to general partner $ (5,072) $ (2,553) ======== ======== Net loss per BAC $ (.14) $ (.07) ======== ======== 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 December 31, (Unaudited) SERIES 19 ---------------------- 1996 1995 ---- ---- Income Interest income $ 31,369 $ 111,251 -------- -------- Share of loss from Operating Partnerships (565,321) (317,408) -------- -------- Expenses Professional fees 5,224 10,941 Fund management fee (Note C) 102,483 105,453 Amortization 12,655 12,682 General and administrative expenses 21,145 33,977 -------- -------- 141,507 163,053 -------- -------- NET LOSS $(675,459) $(369,210) ======== ======== Net loss allocated to limited partners $(668,704) $(365,518) ======== ======== Net loss allocated to general partner $ (6,755) $ (3,692) ======== ======== Net loss per BAC $ (.16) $ (.08) ======== ======== The accompanying notes are an integral part of these statements. 12 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF OPERATIONS Nine Months Ended December 31, (Unaudited) 1996 1995 ---- ---- Income Interest income $ 342,091 $ 765,837 ---------- ---------- Share of loss from Operating Partnerships (Note D) (10,607,400) (8,381,673) ---------- ---------- Expenses Professional fees 275,382 248,045 Fund management fee (Note C) 1,702,502 1,862,539 Amortization 184,676 185,029 General and administrative expenses 227,861 294,899 ---------- ---------- 2,390,421 2,590,512 ---------- ---------- NET LOSS $(12,655,730) $(10,206,348) ========== ========== Net loss allocated to limited partners $(12,529,172) $(10,104,283) ========== ========== Net loss allocated general partner $ (126,558) $ (102,065) ========== ========== Net loss per BAC $ (2.84) $ (2.27) ========== ========== The accompanying notes are an integral part of these statements. 13 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF OPERATIONS Nine Months Ended December 31, (Unaudited) SERIES 15 ----------------------- 1996 1995 ---- ---- Income Interest income $ 172,187 $ 189,084 --------- --------- Share of loss from Operating Partnerships (2,219,355) $(2,231,498) --------- --------- Expenses Professional fees 59,452 44,905 Fund management fee (Note c) 371,714 387,191 Amortization 27,557 27,632 General and administrative expenses 29,167 33,309 --------- --------- 487,890 493,037 --------- --------- NET LOSS $(2,535,058) $(2,535,451) ========= ========= Net loss allocated to limited partners $(2,509,707) $(2,510,096) ========= ========= Net loss allocated to general partner $ (25,351) $ (25,355) ========= ========= Net loss per BAC $ (.65) $ (.65) ========= ========= The accompanying notes are an integral part of these statements. 14 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF OPERATIONS Nine Months Ended December 31, (Unaudited) SERIES 16 ------------------------ 1996 1995 ---- ---- Income Interest income $ 23,285 $ 80,342 ---------- ---------- Share of loss from Operating Partnerships (2,216,096) (2,170,632) ---------- ---------- Expenses Professional fees 52,081 61,843 Fund management fee (Note C) 424,522 485,838 Amortization 46,068 46,170 General and administrative expenses 49,052 63,982 ---------- ---------- 571,723 657,833 ---------- ---------- NET LOSS $(2,764,534) $(2,748,123) ========= ========== Net loss allocated to limited partners $(2,736,889) $(2,720,641) ========== ========== Net loss allocated to general partner $ (27,645) $ (27,482) ========== ========== Net loss per BAC $ (.50) $ (.50) ========== ========== The accompanying notes are an integral part of these statements. 15 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF OPERATIONS Nine Months Ended December 31, (Unaudited) SERIES 17 ------------------------ 1996 1995 ---- ---- Income Interest income $ (17,040) $ 75,176 ---------- --------- Share of loss from Operating Partnerships (3,020,274) (1,945,522) ---------- --------- Expenses Professional fees 73,499 64,063 Fund management fee (Note C) 392,641 396,312 Amortization 41,459 41,458 General and administrative expenses 40,640 60,407 ---------- --------- 548,239 562,240 ---------- --------- NET LOSS $(3,585,553) $(2,432,586) ========== ========= Net loss allocated to limited partners $(3,549,697) $(2,408,260) ========== ========= Net loss allocated to general partner $ (35,856) $ (24,326) ========== ========= Net loss per BAC $ (.71) $ (.49) ========== ========= The accompanying notes are an integral part of these statements. 16 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF OPERATIONS Nine Months Ended December 31, (Unaudited) SERIES 18 ---------------------- 1996 1995 ---- ---- Income Interest income $ (9,021) $ 126,517 ---------- --------- Share of loss from Operating Partnerships (1,655,730) (907,253) ---------- --------- Expenses Professional fees 31,620 37,186 Fund management fee (Note C) 251,969 281,839 Amortization 31,626 31,724 General and administrative expenses 30,036 50,195 ---------- --------- 345,251 400,944 ---------- --------- NET LOSS $(2,010,002) $(1,181,680) ========== ========= Net loss allocated to limited partners $(1,989,902) $(1,169,863) ========== ========= Net loss allocated to general partner $ (20,100) $ (11,817) ========== ========= Net loss per BAC $ (.55) $ (.32) ========== ========= The accompanying notes are an integral part of these statements. 17 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF OPERATIONS Nine Months Ended December 31, (Unaudited) SERIES 19 ---------------------- 1996 1995 ---- ---- Income Interest income $ 172,680 $ 294,718 ---------- --------- Share of loss from Operating Partnerships (1,495,945) (1,126,768) ---------- --------- Expenses Professional fees 58,730 40,048 Fund management fee (Note C) 261,656 311,359 Amortization 37,966 38,045 General and administrative expenses 78,966 87,006 ---------- --------- 437,318 476,458 ---------- --------- NET LOSS $(1,760,583) $(1,308,508) ========== ========= Net loss allocated to limited partners $(1,742,977) $(1,295,423) ========== ========= Net loss allocated to general partner $ (17,606) $ (13,085) ========== ========= Net loss per BAC $ (.43) $ (.31) ========== ========= 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 Nine Months Ended December 31, 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) (12,529,172) (126,558) - (12,655,730) ----------- -------- --------- ----------- Partners' capital (deficit), December 31, 1996 $141,032,530 $(484,177) $ 10,117 $140,558,470 =========== ======== ========== =========== 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 Nine Months Ended December 31, 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) (2,509,707) (25,351) - (2,535,058) ---------- -------- ---------- ---------- Partners' capital (deficit), December 31, 1996 $18,891,590 $ (145,208) $ - $18,746,382 ========== ======== ========== ========== 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) (2,736,889) (27,645) - $(2,764,534) ---------- -------- --------- ---------- Partners' capital (deficit), December 31, 1996 $35,154,454 $(116,226) $ 917 $35,039,145 ========== ======== ========= ========== 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 Nine Months Ended December 31, 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) (3,549,697) (35,856) - (3,585,553) ---------- -------- --------- ---------- Partners' capital (deficit), December 31, 1996 $31,835,175 $(112,452) $ - $31,722,723 ========== ======== ========= ========== 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) (1,989,902) (20,100) - (2,010,002) --------- ------- --------- ---------- Partners' capital (deficit), December 31, 1996 $24,963,302 $(61,206) $ 1,501 $24,903,597 ========== ======= ========= ========== 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 Nine Months Ended December 31, 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) (1,742,977) (17,606) - (1,760,583) ---------- -------- ---------- ---------- Partners' capital (deficit), December 31, 1996 $30,188,009 $ (49,085) $ 7,699 $30,146,623 ========== ======== ========== ========== 22 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Nine Months Ended December 31, (Unaudited) 1996 1995 ---- ---- Cash flows from operating activities: Net loss $(12,655,730) $(10,206,348) Adjustments Distributions from Operating Partnerships 9,322 10,487 Amortization 184,676 185,029 Share of loss from Operating Partnerships 10,607,400 8,381,673 Changes in assets and liabilities (Decrease) Increase in accounts payable and accrued expenses (70,525) 55,524 Decrease (Increase) in accounts receivable 357,937 2,585,887 Decrease (Increase) in accounts payable affiliates 1,933,039 2,136,739 ---------- ---------- Net cash (used in) provided by operating activities 366,119 3,148,991 ---------- ---------- Cash flows from investing activities: Acquisition costs repaid (paid) for Operating Partnerships acquired or to acquire 14,930 (66,583) Capital contributions paid to Operating Partnerships (7,592,998) (18,410,229) Advances to Operating Partnerships 2,880,827 334,485 Investments 2,636,175 10,428,343 ---------- ----------- Net cash (used in) provided by investing activities (2,061,066) (7,713,984) ---------- ---------- 23 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Nine Months Ended December 31, (Unaudited) 1996 1995 ---- ---- Continued - --------- Cash flows from financing activity: Credit adjusters received from Operating Partnerships 793 1,547 ---------- ---------- Net cash (used in) provided by financing activity 793 1,547 ---------- ---------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (1,694,154) (4,563,446) ---------- ---------- Cash and cash equivalents, beginning 4,958,860 10,181,096 ---------- ---------- Cash and cash equivalents, ending $ 3,264,706 $ 5,617,650 ========== ========== 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 $ 33,504 ========== ========== The accompanying notes are an integral part of these statements. 24 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Nine Months Ended December 31, (Unaudited) Series 15 ------------------------- 1996 1995 ---- ---- Cash flows from operating activities: Net loss $(2,535,058) $(2,535,451) Adjustments Distributions from Operating Partnerships 1,396 6,328 Amortization 27,557 27,632 Share of loss from Operating Partnerships 2,219,355 2,231,498 Changes in assets and liabilities (Decrease) increase in accounts payable and accrued expenses (67,712) - Decrease (Increase) in accounts receivable (159,580) 176,395 Decrease (Increase) in accounts payable affiliates 411,033 411,012 -------- -------- Net cash (used in) provided by operating activities (103,009) 317,414 -------- -------- 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) (1,200,904) Advances to Operating Partnerships 50,000 67,500 Investments 151,594 185,161 -------- -------- Net cash (used in) provided by investing activities 189,529 (855,704) -------- -------- 25 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Nine Months Ended December 31, (Unaudited) Series 15 ---------------------- 1996 1995 ---- ---- Continued - --------- Cash flows from financing activity: Credit adjusters received from Operating Partnerships - 804 -------- -------- Net cash (used in) provided by financing activity - 804 -------- -------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 86,520 (537,486) Cash and cash equivalents, beginning 163,428 976,876 -------- -------- Cash and cash equivalents, ending $ 249,948 $ 439,390 ======== ======== 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 Nine Months Ended December 31, (Unaudited) Series 16 ------------------------- 1996 1995 ---- ---- Cash flows from operating activities: Net loss $(2,764,534) $(2,748,123) Adjustments Distributions from Operating Partnerships 1,321 2,349 Amortization 46,068 46,170 Share of loss from Operating Partnerships 2,216,096 2,170,632 Changes in assets and liabilities (Decrease) increase in accounts payable and accrued expenses (100) (833) Decrease (Increase) in accounts receivable 23,472 74,712 Decrease (Increase) in accounts payable affiliates 518,923 518,760 ---------- ---------- Net cash (used in) provided by operating activities 41,246 63,667 ---------- ---------- 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) (2,528,078) Advances to Operating Partnerships 483,464 1,000 Investments 75,959 819,110 ---------- ---------- Net cash (used in) provided by investing activities (149,629) (1,597,746) ---------- ---------- 27 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Nine Months Ended December 31 (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 (108,383) (1,534,079) Cash and cash equivalents, beginning 1,429,491 2,757,494 ---------- ---------- Cash and cash equivalents, ending $ 1,321,108 $ 1,223,415 ========== ========== Supplemental schedule of noncash investing and financing activities: The Fund has increased its investments for unpaid capital contributions due to the Operating Partnerships $ - $ 32,504 ========== ========== The accompanying notes are an integral part of these statements. 28 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Nine Months Ended December 31, (Unaudited) Series 17 ------------------------- 1996 1995 ---- ---- Cash flows from operating activities: Net loss $(3,585,553) $(2,432,586) Adjustments Distributions from Operating Partnerships 1,824 (363) Amortization 41,459 41,458 Share of loss from Operating Partnerships 3,020,274 1,945,522 Changes in assets and liabilities (Decrease) increase in accounts payable and accrued expenses - 13,902 Decrease (Increase) in accounts receivable (81,058) (287,089) Decrease (Increase) in accounts payable affiliates 430,926 604,338 ---------- ---------- Net cash (used in) provided by operating activities (172,128) (114,818) ---------- ---------- Cash flows from investing activities: Acquisition costs repaid (paid) for Operating Partnerships acquired or to acquire 3,410 77,263 Capital contributions paid to Operating Partnerships (453,026) (2,848,769) Advances to Operating Partnerships 248,493 327,390 Investments 628,486 1,976,808 ---------- ---------- Net cash (used in) provided by investing activates 427,363 (467,308) ---------- ---------- 29 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Nine Months Ended December 31, (Unaudited) Series 17 ------------------------ 1996 1995 ---- ---- Continued - --------- Cash flows from financing activity: Credit adjusters received from Operating Partnerships - 743 ---------- ---------- Net cash (used in) provided by financing activity - 743 ---------- ---------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 255,235 (581,383) Cash and cash equivalents, beginning 285,417 1,690,922 ---------- ---------- Cash and cash equivalents, ending $ 540,652 $ 1,109,539 ========== ========== 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 Nine Months Ended December 31, (Unaudited) Series 18 ------------------------- 1996 1995 ---- ---- Cash flows from operating activities: Net loss $(2,010,002) $(1,181,680) Adjustments Distributions from Operating Partnerships 2,468 2,173 Amortization 31,626 31,724 Share of loss from Operating Partnerships 1,655,730 907,253 Changes in assets and liabilities (Decrease) increase in accounts payable and accrued expenses (1,619) 180 Decrease (Increase) in accounts receivable 4,577 1,489,870 Decrease (Increase) in accounts payable affiliates 286,272 286,272 ---------- ---------- Net cash (used in) provided by operating activities (30,948) 1,535,792 ---------- ---------- Cash flows from investing activities: Acquisition costs repaid (paid) for Operating Partnerships acquired or to acquire 2,465 (60,639) Capital contributions paid to Operating Partnerships (155,948) (6,306,738) Advances to Operating Partnerships - 78,595 Investments 451,911 4,266,323 ---------- ---------- Net cash (used in) provided by investing activities 298,428 (2,022,459) ---------- ---------- 31 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Nine Months Ended December 31, (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 267,480 (486,667) Cash and cash equivalents, beginning 529,400 1,813,653 --------- ---------- Cash and cash equivalents, ending $ 796,880 $ 1,326,986 ========= ========== 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 Nine Months Ended December 31, (Unaudited) Series 19 ------------------------- 1996 1995 ---- ---- Cash flows from operating activities: Net loss $(1,760,583) $(1,308,508) Adjustments Distributions from Operating Partnerships 2,313 - Amortization 37,966 38,045 Share of loss from Operating Partnerships 1,495,945 1,126,768 Changes in assets and liabilities (Decrease) increase in accounts payable and accrued expenses (1,094) 42,275 Decrease (Increase) in accounts receivable 570,526 1,131,999 Decrease (Increase) in accounts payable affiliates 285,885 316,357 ---------- ---------- Net cash (used in) provided by operating activities 630,958 1,346,936 ---------- ---------- Cash flows from investing activities: Acquisition costs repaid (paid) for Operating Partnerships acquired or to acquire 2,715 (285,968) Capital contributions paid to Operating Partnerships (6,256,567) (5,525,740) Advances to Operating Partnerships 2,098,870 (140,000) Investments 1,328,225 4,331,397 ---------- ---------- Net cash (used in) provided by investing activities (2,826,757) (1,620,311) ---------- --------- 33 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Nine Months Ended December 31, (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 (2,195,006) (273,375) Cash and cash equivalents, beginning 2,551,124 2,942,151 ---------- ---------- Cash and cash equivalents, ending $ 356,118 $ 2,668,776 ========== ========== 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 $ - ========== ========== The accompanying notes are an integral part of these statements. 34 Boston Capital Tax Credit Fund III L.P. NOTES TO FINANCIAL STATEMENTS December 31, 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 Fund 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 December 31, 1996 (Unaudited) NOTE B - ACCOUNTING AND FINANCIAL REPORTING POLICIES The condensed financial statements included herein as of December 31, 1996 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 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 December 31, 1996 by contractual maturity are as follows: Amortized Cost ----------- Due in one year or less $2,493,662 Due after one year - --------- Total $2,493,662 ========= The fair market value of the securities is $2,503,779. The difference being an unrealized gain on securities available for sale of $10,117, as of December 31, 1996. 36 Boston Capital Tax Credit Fund III L.P. NOTES TO FINANCIAL STATEMENTS - CONTINUED December 31, 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 December 31, 1996 and 1995 the Fund has accumulated organization amortization totalling $669,605 and $490,648 respectively. The breakdown of accumulated organization amortization within the Fund as of December 31, 1996 and 1995 is as follows: 1996 1995 ---- ---- Series 15 $160,519 $134,287 Series 16 172,121 127,491 Series 17 145,422 105,693 Series 18 93,081 62,327 Series 19 98,462 60,850 ------- ------- $669,605 $490,648 ======= ======= On July 1, 1995, the Fund began amortizing unallocated acquisition costs over 330 months from April 1, 1995. As of December 31, 1996 the Fund has accumulated unallocated acquisition amortization totalling $118,306. The breakdown of accumulated unallocated acquisition amortization within the fund as of December 31, 1996 for Series 15, Series 16, Series 17, Series 18, and Series 19 is $18,495, $29,495, $27,341, $20,104 and $22,871, 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 December 31, 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 December 31, 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 December 31, 1996 and 1995 are as follows: 1996 1995 ---- ---- Series 15 $137,013 $134,135 Series 16 172,968 164,995 Series 17 141,348 132,847 Series 18 95,424 96,396 Series 19 97,050 105,453 ------- ------- $643,803 $633,826 ======= ======= NOTE D - INVESTMENTS IN OPERATING PARTNERSHIPS At December 31, 1996 and 1995, 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, 1996 and 1995 is as follows: 1996 1995 ---- ---- Series 15 68 68 Series 16 64 65 Series 17 49 48 Series 18 34 34 Series 19 26 26 --- --- 241 241 === === 38 Boston Capital Tax Credit Fund III L.P. NOTES TO FINANCIAL STATEMENTS - CONTINUED December 31, 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 December 31, 1996 and 1995 are as follows: 1996 1995 ---- ---- Series 15 $ 189,312 $ 276,715 Series 16 155,225 1,182,714 Series 17 1,849,192 1,874,202 Series 18 756,295 1,081,078 Series 19 832,019 8,161,217 --------- ---------- $3,782,043 $12,575,926 ========= ========== 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, 1996. 39 Boston Capital Tax Credit Fund III L.P. NOTES TO FINANCIAL STATEMENTS - CONTINUED December 31, 1996 (Unaudited) NOTE D - INVESTMENTS IN OPERATING PARTNERSHIPS (continued) COMBINED SUMMARIZED STATEMENTS OF OPERATIONS Nine months ended Septemer 30, (Unaudited) Series 15 --------------------------- 1996 1995 ---- ---- Revenues Rental $ 6,849,761 $ 6,451,631 Interest and other 381,604 288,820 --------- --------- 7,231,365 6,740,451 --------- --------- Expenses Interest 2,382,528 2,310,898 Depreciation and amortization 2,991,845 2,859,272 Operating expenses 4,141,526 3,824,320 --------- --------- $ 9,515,899 8,994,490 --------- --------- NET LOSS $(2,284,534) $(2,254,039) ========= ========= Net loss allocated to Boston Capital Tax Credit Fund III L.P. $(2,219,355) $(2,231,498) ========= ========= Net loss allocated to other partners $ (22,845) $ (22,541) ========= ========= Net loss suspended $ (42,334) $ - ========= ========= 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 December 31, 1996 (Unaudited) NOTE D - INVESTMENTS IN OPERATING PARTNERSHIPS (continued) COMBINED SUMMARIZED STATEMENTS OF OPERATIONS Nine months ended September 30, (Unaudited) Series 16 -------------------------- 1996 1995 ---- ---- Revenues Rental $ 8,906,847 $ 8,517,500 Interest and other 673,696 601,047 ---------- ---------- 9,580,543 9,118,547 ---------- ---------- Expenses Interest 2,980,379 2,922,950 Depreciation and amortization 3,645,623 3,528,528 Operating expenses 5,193,791 4,859,626 ---------- ---------- 11,819,793 11,311,104 ---------- ---------- NET LOSS $(2,239,250) $(2,192,557) ========== ========== Net loss allocated to Boston Capital Tax Credit Fund III L.P. $(2,216,857) $(2,170,632) ========== ========== Net loss allocated to other partners $ (22,393) $ (21,925) ========== ========== 41 Boston Capital Tax Credit Fund III L.P. NOTES TO FINANCIAL STATEMENTS - CONTINUED December 31, 1996 (Unaudited) NOTE D - INVESTMENTS IN OPERATING PARTNERSHIPS (continued) COMBINED SUMMARIZED STATEMENTS OF OPERATIONS Nine Months ended September 30, (Unaudited) Series 17 -------------------------- 1996 1995 Revenues ---- ---- Rental $ 8,154,824 $ 7,174,788 Interest and other 306,634 649,076 ---------- --------- 8,461,458 7,823,864 ---------- --------- Expenses Interest 3,436,522 3,109,032 Depreciation and amortization 2,848,043 2,406,584 Operating expenses 5,227,674 4,273,420 ---------- --------- 11,512,239 9,789,036 ---------- --------- NET LOSS $(3,050,781) $(1,965,172) ========== ========= Net loss allocated to Boston Capital Tax Credit Fund III L.P. $(3,020,274) $(1,945,522) ========== ========= Net loss allocated to other partners $ (30,507) $ (19,650) ========== ========= 42 Boston Capital Tax Credit Fund III L.P. NOTES TO FINANCIAL STATEMENTS - CONTINUED December 31, 1996 (Unaudited) NOTE D - INVESTMENTS IN OPERATING PARTNERSHIPS (continued) COMBINED SUMMARIZED STATEMENTS OF OPERATIONS Nine months ended September 30, (Unaudited) Series 18 ---------------------------- 1996 1995 Revenues ---- ---- Rental $ 4,433,556 $3,952,988 Interest and other 219,751 219,534 --------- --------- 4,653,307 4,172,522 --------- --------- Expenses Interest 1,541,187 1,095,984 Depreciation and amortization 2,086,747 1,815,428 Operating expenses 2,697,827 2,177,527 --------- --------- 6,325,761 5,088,939 --------- --------- NET LOSS $(1,672,454) $ (916,417) ========= ========= Net loss allocated to Boston Capital Tax Credit Fund III L.P. $(1,655,730) $ (907,253) ========= ========= Net loss allocated to other partners $ (16,724) $ (9,164) ========= ========= 43 Boston Capital Tax Credit Fund III L.P. NOTES TO FINANCIAL STATEMENTS - CONTINUED December 31, 1996 (Unaudited) NOTE D - INVESTMENTS IN OPERATING PARTNERSHIPS (continued) COMBINED SUMMARIZED STATEMENTS OF OPERATIONS Nine months ended September 30, (Unaudited) Series 19 -------------------------- 1996 1995 Revenues ---- ---- Rental $ 6,166,967 $ 2,747,473 Interest and other 204,419 100,231 --------- --------- 6,371,386 2,847,704 --------- --------- Expenses Interest 2,365,788 1,356,372 Depreciation and amortization 1,755,100 900,653 Operating expenses 3,761,554 1,728,828 --------- --------- 7,882,442 3,985,853 --------- --------- NET LOSS $(1,511,056) $(1,138,149) ========= ========= Net loss allocated to Boston Capital Tax Credit Fund III L.P. $(1,144,815) $(1,126,768) ========= ========= Net loss allocated to other partners $ (366,241) $ (11,381) ========= ========= 44 Boston Capital Tax Credit Fund III L.P. NOTES TO FINANCIAL STATEMENTS - CONTINUED December 31, 1996 (Unaudited) NOTE D - INVESTMENT IN OPERATING PARTNERSHIPS-CONTINUED In the prior year 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 December 31, 1995. When comparing the results of operations from the operating partnerships for the nine months ended September 30, 1996 and September 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 December 31, 1996, none of Series 15 net offering proceeds had been used to pay capital contributions. Series 15 net offering proceeds in the amount of $189,312 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, 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 December 31, 1996, none 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 December 31, 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 $36,538,204. During the quarter ended December 31, 1996, $235,849 of Series 17 net offering proceeds had been used to pay capital contributions. Series 17 net offering proceeds in the amount of $540,652 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, 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 December 31, 1996 none 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 December 31, 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 $29,614,506. During the quarter ended December 31, 1996 $1,745,348 of Series 19 net offering proceeds had been used to pay capital contributions. Series 19 net offering proceeds in the amount of $832,019 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, 1996. Results of Operations - --------------------- As of December 31, 1996 and 1995 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 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 December 31, 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 General Partner determined that in prior fiscal years interest income was not allocated accurately across all series in the Fund. As of December 31, 1996 a reallocation has been done to more accurately reflect interest earned in relation to each series sources and uses of funds. Since the reallocation is occurring in a new fiscal year, some series will reflect a negative interest amount for the current fiscal year. 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, 1996 for Series 15, Series 16, Series 17, Series 18 and Series 19 were $126,640, $162,767, $127,702, $76,999, and $102,483, 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 December 31, 1996 and 1995, the average qualified occupancy for the series was 100% and 99.3%, respectively. The series had a total of 68 properties at December 31, 1996 all of which were at 100% qualified occupancy. For the nine months being reported Series 15 reflects a net loss from Operating Partnerships of $2,284,534. When adjusted for depreciation, which is a non-cash item, the Operating Partnerships reflect positive operations of $707,311. This is an interim period estimate; it is not necessarily indicative of the final year end results. 48 California Investors VII Limited Partnership was operating at a deficit due to higher than projected operating expenses. Operating shortfalls caused the accrual of accounts payable. The Operating Partnership closed on a debt refinancing in the fourth quarter of 1996. The favorable interest rate enabled the Operating Partnership to payoff the accrued accounts payable and reduced the monthly debt payment. The refinancing should also create increased operating stability for the Operating Partnership. The General Partner is continuing to monitor the operations of Hidden Cove Associates. The Operating General hired a new management company which has completed a capital improvement program. As a result the tenant base has improved significantly and occupancy is 92% as of December 31, 1996. The Operating General Partner of School Street Limited Partnership I pledged his general partnership interest to an unaffiliated lending institution in violation of the partnership agreement. The management agent, an affiliate of the Operating General Partner, has been replaced. Legal research is being conducted in order to determine the best course of action regarding the General Partner interests. (Series 16) As of December 31, 1996 and 1995, the average qualified occupancy for the series was 100% and 99.9%, respectively. The series had a total of 64 properties at December 31, 1996 all of which were at 100% qualified occupancy. For the nine months being reported Series 16 reflects a net loss from Operating Partnerships of $2,239,250. When adjusted for depreciation, which is a non-cash item, the Operating Partnerships reflect positive operations of $1,406,373. This is an interim period estimate; it is not necessarily indicative of the final year end results. The Operating General Partner of Mariner's Pointe Limited Partnership I and Mariner's Pointe Limited Partnership II pledged his general partnership interest to an unaffiliated lending institution in violation of the partnership agreement. The management agent, an affiliate of the Operating General Partner, has been replaced. Legal research is being conducted in order to determine the best course of action regarding the General Partner interests. (Series 17) As of December 31, 1996 and 1995, the average qualified occupancy for the series was 99.6% and 98.0%, respectively. The series had a total of 49 properties at December 31, 1996. Out of the total 47 had 100% qualified occupancy. For the nine months being reported Series 17 reflects a net loss from Operating Partnerships of $3,050,781. When adjusted for depreciation, which is a non-cash item, the Operating Partnerships reflect a net loss of $202,738. This is an interim period estimate; it is not necessarily indicative of the final year end results. 49 Annadale Housing Partners has reported net losses due to operational issues associated with the property. The Operating Partnership has stabilized since the completion of rehabilitation and occupancy has shown steady improvement. Occupancy is at 88% as of December 31, 1996. California Investors VII Limited Partnership was operating at a deficit due to higher than projected operating expenses. Operating shortfalls caused the accrual of accounts payable. The Operating Partnership closed on a debt refinancing in the fourth quarter of 1996. The favorable interest rate enabled the Operating Partnership to payoff the accrued accounts payable and reduced the monthly debt payment. The refinancing should also create increased operating stability for the Operating Partnership. (Series 18) As of December 31, 1996 and 1995 the average qualified occupancy for the series was 100% and 97.0% respectively. The series had a total of 34 properties at December 31, 1996 all of which were at 100% qualified occupancy. For the nine months being reported Series 18 reflects a net loss from Operating Partnerships of $1,672,454. When adjusted for depreciation, which is a non-cash item, the Operating Partnerships reflect positive operations of $414,293. 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 Operating 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 December 31, 1996 and 1995 the average qualified occupancy for the series was 99.9% and 98.3% respectively. The series had a total of 26 properties at December 31, 1996. Out of the total 25 had 100% qualified occupancy. For the nine months being reported Series 19 reflects a net loss from Operating Partnerships of $1,511,056. When adjusted for depreciation, which is a non-cash item, the Operating Partnerships reflect positive operations of $244,044. 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 24, 1997 By: /s/ John P. Manning ------------------- John P. Manning, Partner & Principal Financial Officer 52