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, 1999 ----------------- 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, 1999 ----------------------------------------------- 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, 1999 1999 (Unaudited) (Audited) ASSETS ------------ ---------- INVESTMENTS IN OPERATING PARTNERSHIPS (Note D) $102,836,731 $108,418,478 OTHER ASSETS Cash and cash equivalents 1,826,675 1,693,799 Investments 2,121,657 2,237,166 Notes receivable 1,364,322 1,364,322 Deferred acquisition costs, net of accumulated amortization (Note B) 1,577,796 1,612,244 Organization costs, net of accumulated amortization (Note B) - 170 Other assets 2,764,210 2,459,125 ----------- ----------- $112,491,391 $117,785,304 =========== =========== LIABILITIES Accounts payable & accrued expenses (Note C) $ 9,043 $ 4,553 Accounts payable affiliates 12,979,634 11,385,333 Capital contributions payable (Note D) 1,592,677 1,595,177 ----------- ----------- 14,581,354 12,985,063 ----------- ----------- PARTNERS' CAPITAL Limited Partners Units of limited partnership interest, $10 stated value per BAC; 22,000,000 authorized BACs; 21,996,102 issued and outstanding, as of June 30, 1999 98,820,597 105,641,899 General Partner (910,560) (841,658) ----------- ----------- 97,910,037 104,800,241 ----------- ----------- $112,491,391 $117,785,304 =========== =========== 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, 1999 1999 (Unaudited) (Audited) ASSETS ----------- --------- INVESTMENTS IN OPERATING PARTNERSHIPS (Note D) $13,237,869 $14,142,163 OTHER ASSETS Cash and cash equivalents 289,781 306,884 Investments 135,167 128,028 Notes receivable 32,170 32,170 Deferred acquisition costs, net of accumulated amortization (Note B) 241,768 247,024 Organization costs, net of accumulated amortization (Note B) - - Other assets 836,633 807,527 ---------- ---------- $14,773,388 $15,663,796 ========== ========== LIABILITIES Accounts payable and accrued expenses (Note C) $ 1,928 $ 1,145 Accounts payable affiliates 3,450,387 3,155,784 Capital contributions payable (Note D) 32,922 32,922 ---------- ---------- 3,485,237 3,189,851 ---------- ---------- PARTNERS' CAPITAL Limited Partners Units of limited partnership interest, $10 stated value per BAC; 22,000,000 authorized BACs; 3,870,500 issued and outstanding, as of June 30, 1999 11,507,941 12,681,877 General Partner (219,790) (207,932) ---------- ---------- 11,288,151 12,473,945 ---------- ---------- $14,773,388 $15,663,796 ========== ========== 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, 1999 1999 (Unaudited) (Audited) ASSETS ----------- --------- INVESTMENTS IN OPERATING PARTNERSHIPS (Note D) $25,406,603 $27,165,227 OTHER ASSETS Cash and cash equivalents 179,951 213,451 Investments 894,067 884,449 Notes receivable - - Deferred acquisition costs net of accumulated amortization (Note B) 387,596 396,021 Organization costs, net of accumulated amortization (Note B) - - Other assets 146,512 133,695 ---------- ---------- $27,014,729 $28,792,843 ========== ========== LIABILITIES Accounts payable & accrued expenses (Note C) $ 1,164 $ - Accounts payable affiliates 3,073,056 2,727,066 Capital contributions payable (Note D) 140,006 142,506 ---------- --------- 3,214,226 2,869,572 ---------- --------- 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, 1999 24,029,107 26,130,647 General Partner (228,604) (207,376) Unrealized gain (loss) on securities available for sale, net - - ---------- ---------- 23,800,503 25,923,271 ---------- ---------- $27,014,729 $28,792,843 ========== ========== 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, 1999 1999 (Unaudited) (Audited) ASSETS ----------- --------- INVESTMENTS IN OPERATING PARTNERSHIPS (Note D) $23,539,337 $24,774,196 OTHER ASSETS Cash and cash equivalents 451,130 349,189 Investments - 100,000 Notes receivable 1,332,152 1,332,152 Deferred acquisition costs net of accumulated amortization (Note B) 349,873 357,648 Organization costs, net of accumulated amortization (Note B) - - Other assets 1,692,418 1,425,347 ---------- ---------- $27,364,910 $28,338,532 ========== ========== LIABILITIES Accounts payable & accrued expenses (Note C) $ 928 $ - Accounts payable affiliates 3,592,978 3,035,918 Capital contributions payable (Note D) 1,367,195 1,367,195 ---------- ---------- 4,961,101 4,403,113 ---------- ---------- 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, 1999 22,609,450 24,125,744 General Partner (205,641) (190,325) ---------- ---------- 22,403,809 23,935,419 ---------- ---------- $27,364,910 $28,338,532 ========== ========== 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, 1999 1999 (Unaudited) (Audited) ASSETS ------------ ---------- INVESTMENTS IN OPERATING PARTNERSHIPS (Note D) $18,015,755 $18,832,106 OTHER ASSETS Cash and cash equivalents 298,954 306,065 Investments 233,302 230,531 Notes receivable - - Deferred acquisition costs, new of accumulated amortization (Note B) 263,449 269,156 Organization costs, net of accumulated amortization (Note B) - - Other assets 61,030 56,099 ---------- ---------- $18,872,490 $19,693,957 ========== ========== LIABILITIES Accounts payable & accrued expenses (Note C) $ 856 $ - Accounts payable affiliates 1,545,963 1,354,989 Capital contributions payable (Note D) 18,554 18,554 ---------- --------- 1,565,373 1,373,543 ---------- --------- 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 Septmeber 30, 1999 17,444,273 18,447,437 General Partner (137,156) (127,023) ---------- ---------- 17,307,117 18,320,414 ---------- ---------- $18,872,490 $19,693,957 ========== ========== 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, 1999 1999 (Unaudited) (Audited) ASSETS ------------ ---------- INVESTMENTS IN OPERATING PARTNERSHIPS (Note D) $22,637,167 $23,504,786 OTHER ASSETS Cash and cash equivalents 606,859 518,210 Investments 859,121 894,158 Notes receivables - - Deferred acquisition costs, net of accumulated amortization (Note B) 335,110 342,395 Organization costs, net of accumulated amortization (Note B) - 170 Other assets 27,617 36,457 --------- ---------- $24,465,874 $25,296,176 ========== ========== LIABILITIES Accounts payable & accrued expenses (Note C) $ 4,167 $ 3,408 Accounts payable affiliates 1,317,250 1,111,576 Capital contributions payable (Note D) 34,000 34,000 --------- --------- 1,355,417 1,148,984 --------- --------- 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, 1999 23,229,826 24,256,194 General Partner 				 (119,369) (109,002) ---------- ---------- 23,110,457 24,147,192 ---------- ---------- $24,465,874 $25,296,176 ========== ========== 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) 1999 1998 ---- ---- Income Interest income $ 44,332 $ 52,498 Other Income 12,900 - --------- --------- 57,232 52,498 Share of loss from Operating Partnerships (Note D) (2,831,342) (3,221,843) --------- --------- Expenses Professional fees 110,850 117,330 Fund management fee (Note C) 574,925 613,131 Amortization 17,224 42,963 General and administrative expenses 33,074 41,490 --------- --------- 736,073 814,914 --------- --------- NET LOSS $(3,510,183) $(3,984,259) ========== ========== Net loss allocated to limited partners $(3,475,081) $(3,944,414) ========== ========== Net loss allocated general partner $ (35,102) $ (39,845) ========== ========== Net loss per BAC $ (.77) $ (.09) ========== ========== 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 ----------------------- 1999 1998 ---- ---- Income Interest income $ 6,346 $ 2,344 ------- ------- Share of loss from Operating Partnerships (Note D) (392,273) (540,027) ------- ------- Expenses Professional fees 27,120 30,642 Fund management fee (Note C) 115,958 131,763 Amortization 2,628 2,628 General and administrative expenses 7,553 7,845 ------- ------- 153,259 172,878 ------- ------- NET LOSS $(539,186) $(710,561) ======== ======== Net loss allocated to limited partners $(533,794) $(703,454) ======== ======== Net loss allocated to general partner $ (5,392) $ (7,107) ======== ======== Net loss per BAC $ (.13) $ (.18) ======== ======== 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 ------------------------ 1999 1998 ---- ---- Income Interest income $ 12,421 $ 16,303 Other Income 150 - ------- --------- 12,571 16,303 Share of loss from Operating Partnerships (Note D) (928,850) (744,267) ------- --------- Expenses Professional fees 29,870 30,244 Fund management fee (Note C) 162,551 162,005 Amortization 4,213 4,213 General and administrative expenses 10,241 10,543 ------- -------- 206,875 207,005 ------- -------- NET LOSS $(1,123,154) $ (934,969) ========= ========== Net loss allocated to limited partners $(1,111,922) $ (925,619) ======== ========== Net loss allocated to general partner $ (11,232) $ (9,350) ======== ========== Net loss per BAC $ (.21) $ (.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 ------------------------ 1999 1998 ------ ------ Income Interest income $ 3,302 $ 1,809 Other Income 11,850 - --------- --------- 15,152 1,809 Share of loss from Operating Partnerships (Note D) (625,056) (702,557) --------- --------- Expenses Professional fees 22,120 22,890 Fund management fee (Note C) 125,592 138,342 Amortization 3,887 12,534 General and administrative expenses 1,458 8,822 --------- --------- 153,057 182,588 --------- --------- NET LOSS $ (762,961) $ (883,336) ========== ========== Net loss allocated to limited partners $ (755,331) $ (874,522) ========== ========== Net loss allocated to general partner $ (7,630) $ (8,814) ========== ========== Net loss per BAC $ (.15) $ (.18) ========== ========== 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 ---------------------- 1999 1998 ---- ---- Income Interest income $ 4,556 $ 7,280 ------- ------- Share of loss from Operating Partnerships (Note D) (474,421) (533,849) ------- ------- Expenses Professional fees 17,120 18,052 Fund management fee (Note C) 70,487 80,434 Amortization 2,853 10,542 General and administrative expenses 6,432 6,617 ------- ------- 96,892 115,645 ------- ------- NET LOSS $(566,757) $(642,214) ======== ======== Net loss allocated to limited partners $(561,089) $(635,792) ======== ======== Net loss allocated to general partner $ (5,668) $ (6,422) ======== ======== Net loss per BAC $ (.15) $ (.17) ======== ======== 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 ---------------------- 1999 1998 ---- ---- Income Interest income $ 17,707 $ 24,762 Other income 900 ------- ------- 18,607 Share of loss from Operating Partnerships (Note D) (410,742) (701,123) ------- ------- Expenses Professional fees 14,620 15,502 Fund management fee (Note C) 100,337 100,587 Amortization 3,643 13,045 General and administrative expenses 7,390 7,664 ------- ------- 125,990 136,798 ------- ------- NET LOSS $(518,125) $(813,159) ======== ======== Net loss allocated to limited partners $(512,944) $(805,027) ======== ======== Net loss allocated to general partner $ (5,181) $ (8,132) ======== ======== Net loss per BAC $ (.13) $ (.20) ======== ======== 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) 1999 1998 ---- ---- Income Interest income $ 93,885 $ 129,246 Other Income 23,117 - --------- --------- 117,002 129,246 Share of loss from Operating Partnerships (Note D) (5,545,739) (7,131,081) --------- --------- Expenses Professional fees 163,737 176,679 Fund management fee (Note C) 1,169,952 1,173,969 Amortization 34,618 94,985 General and administrative expenses 93,160 92,978 --------- --------- 1,461,467 1,538,611 --------- --------- NET LOSS $(6,890,204) $(8,540,446) ========== ========== Net loss allocated to limited partners $(6,821,302) $(8,455,041) ========== ========== Net loss allocated general partner $ (68,902) $ (85,405) ========== ========== Net loss per BAC $ (1.53) $ (1.91) ========== ========== 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 ----------------------- 1999 1998 ---- ---- Income Interest income $ 19,840 $ 4,976 ------- --------- Share of loss from Operating Partnerships (Note D) (905,022) (1,138,450) ------- --------- Expenses Professional fees 41,718 46,307 Fund management fee (Note C) 235,474 248,701 Amortization 5,256 5,256 General and administrative expenses 18,164 17,936 ------- --------- 300,612 318,200 ------- --------- NET LOSS $(1,185,794) $(1,451,674) ========= ========= Net loss allocated to limited partners $(1,173,936) $(1,437,157) ========= ========= Net loss allocated to general partner $ (11,858) $ (14,517) ========= ========= Net loss per BAC $ (.30) $ (.37) ========= ========= 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 ------------------------ 1999 1998 ---- ---- Income Interest income $ 24,742 $ 46,053 Other Income 300 - ------- --------- 25,042 46,053 Share of loss from Operating Partnerships (Note D) (1,758,599) (1,825,987) ------- --------- Expenses Professional fees 42,130 44,038 Fund management fee (Note C) 315,377 298,694 Amortization 8,425 8,425 General and administrative expenses 23,279 23,651 ------- -------- 389,211 374,808 ------- -------- NET LOSS $(2,122,768) $(2,154,742) ========= ========== Net loss allocated to limited partners $(2,101,540) $(2,133,195) ========= ========== Net loss allocated to general partner $ (21,228) $ (21,547) ========= ========== Net loss per BAC $ (.39) $ (.39) ========= ========== The accompanying notes are an integral part of these statements. 1 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF OPERATIONS Six Months Ended September 30, (Unaudited) SERIES 17 ------------------------ 1999 1998 ------ ------ Income Interest income $ 7,919 $ 3,556 Other Income 12,000 - --------- --------- 19,919 3,556 Share of loss from Operating Partnerships (Note D) (1,230,720) (1,660,513) --------- --------- Expenses Professional fees 32,931 35,709 Fund management fee (Note C) 258,433 256,509 Amortization 7,775 34,129 General and administrative expenses 21,670 20,628 --------- --------- 320,809 346,975 --------- --------- NET LOSS $(1,531,610) $(2,003,932) ========== ========== Net loss allocated to limited partners $(1,516,294) $(1,983,892) ========== ========== Net loss allocated to general partner $ (15,316) $ (20,040) ========== ========== Net loss per BAC $ (.30) $ (.40) ========== ========== 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 ---------------------- 1999 1998 ---- ---- Income Interest income $ 9,037 $ 25,535 ------- --------- Share of loss from Operating Partnerships (Note D) (815,220) (1,040,838) ------- --------- Expenses Professional fees 26,243 26,350 Fund management fee (Note C) 160,944 169,141 Amortization 5,707 21,084 General and administrative expenses 14,220 13,092 ------- --------- 207,114 229,667 ------- --------- NET LOSS $(1,013,297) $(1,244,970) ========= ========= Net loss allocated to limited partners $(1,003,164) $(1,232,520) ========= ========= Net loss allocated to general partner $ (10,133) $ (12,450) ======== ========= Net loss per BAC $ (.28) $ (.34) ======== ========= 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 ---------------------- 1999 1998 ---- ---- Income Interest income $ 32,347 $ 49,126 Other income 10,817 ------- --------- 43,164 Share of loss from Operating Partnerships (Note D) (836,178) (1,465,293) ------- --------- Expenses Professional fees 20,715 24,275 Fund management fee (Note C) 199,724 200,924 Amortization 7,455 26,091 General and administrative expenses 15,827 17,671 ------- --------- 243,721 268,961 ------- --------- NET LOSS $(1,036,735) $(1,685,128) ========= ========= Net loss allocated to limited partners $(1,026,368) $(1,668,277) ========= ========= Net loss allocated to general partner $ (10,367) $ (16,851) ========= ========= Net loss per BAC $ (.26) $ (.41) ========= ======== The accompanying notes are an integral part of these statements. 1 Boston Capital Tax Credit Fund III L.P. STATEMENT OF CHANGES IN PARTNERS' CAPITAL Six Months Ended September 30, 1999 (Unaudited) Unrealized gain (loss) on securities available General for Assignees Partner sale, net Total --------- ------- --------- ----- Partners' capital (deficit) April 1, 1999 $105,641,899 $(841,658) $ - $104,800,241 Net change in unrealized gain (loss) on secur- ities available for sale - - - - Net income (loss) (6,821,302) (68,902) - (6,890,204) ---------- ------- ------ ---------- Partners' capital (deficit) September 30, 1999 $ 98,820,597 $ (910,560) $ - $ 97,910,037 =========== ======== ======= =========== 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, 1999 (Unaudited) Unrealized gain (loss) on securities available General for Assignees Partner sale,net Total --------- ------- -------- ----- Series 15 - --------- Partners' capital (deficit), April 1, 1999 $12,681,877 $ (207,932) $ - $12,473,945 Net change in unrealized gain (loss) on secur- ities available for sale - - - - Net income (loss) (1,173,936) (11,858) - (1,185,794) --------- ------- --------- ---------- Partners' capital (deficit), September 30, 1999 $11,507,941 $ (219,790) $ - $11,288,151 ========== ======== ========== ========== Series 16 - --------- Partners' capital (deficit), April 1, 1999 $26,130,647 $ (207,376) $ - $25,923,271 Net change in unrealized gain (loss) on secur- ities available for sale - - - - Net income (loss) (2,101,540) (21,228) - (2,122,768) ---------- ------- -------- ---------- Partners' capital (deficit), September 30, 1999 $24,029,107 $ (228,604) $ - $23,800,503 ========== ======== ========= ========== 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, 1999 (Unaudited) Unrealized gain (loss) on securities available General for Assignees Partner sale,net Total --------- ------- -------- ----- Series 17 - --------- Partners' capital (deficit), April 1, 1999 $24,125,744 $(190,325) $ - $23,935,419 Net change in unrealized gain (loss) on secur- ities available for sale - - - - Net income (loss) (1,516,294) (15,316) - (1,531,610) --------- -------- ------- ---------- Partners' capital (deficit), September 30, 1999 $22,609,450 $(205,641) $ - $22,403,809 ========== ======== ========= ========== Series 18 - --------- Partners' capital (deficit), April 1, 1999 $18,447,437 $(127,023) $ - $18,320,414 Net change in unrealized gain (loss) on secur- ities available for sale - - - - Net income (loss) (1,003,164) (10,133) - (1,013,297) ---------- -------- ------- --------- Partners' capital (deficit), September 30, 1999 $17,444,273 $(137,156) $ - $17,307,117 ========== ======= ========= ========== The accompanying notes are an integral part of these statements. 2 Boston Capital Tax Credit Fund III L.P. STATEMENT OF CHANGES IN PARTNERS' CAPITAL Six Months Ended September 30, 1999 (Unaudited) Unrealized gain (loss) on securities available General for Assignees Partner sale,net Total -------- ------- -------- ----- Series 19 - --------- Partners' capital (deficit), April 1, 1999 $24,256,194 $(109,002) $ - $24,147,192 Net change in unrealized gain (loss) on secur- ities available for sale - - - - Net income (loss) (1,026,368) (10,367) - (1,036,735) ---------- ------- -------- --------- Partners' capital (deficit), September 30, 1999 $23,229,826 $(119,369) $ - $23,110,457 ========== ======== ========== ========== The accompanying notes are an integral part of these statements. 22 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Six Months Ended September 30, (Unaudited) 1999 1998 ---- ---- Cash flows from operating activities: Net loss $ (6,890,204) $ (8,540,446) Adjustments Distributions from Operating Partnerships 37,616 15,507 Amortization 34,618 94,985 Share of loss from Operating Partnerships 			 5,545,739 7,131,081 Changes in assets and liabilities (Decrease) Increase in accounts payable and accrued expenses 4,490 47,965 Decrease (Increase) in accounts receivable (306,694) (171,382) Decrease (Increase) in accounts payable affiliates 1,594,302 1,552,651 --------- --------- Net cash (used in) provided by operating activities 19,867 130,361 --------- --------- Cash flows from investing activities: Acquisition costs repaid (paid) for Operating Partnerships acquired or to acquire - - Capital contributions paid to Operating Partnerships (2,500) (156,214) Advances to Operating Partnerships - (79,236) Investments 115,509 225,648 --------- -------- Net cash (used in) provided by investing activities 113,009 (9,802) --------- -------- 2 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Six Months Ended September 30, (Unaudited) 1999 1998 ---- ---- Continued - --------- Cash flows from financing activity: Credit adjusters received from Operating Partnerships - - --------- --------- Net cash (used in) provided by financing activity - - --------- --------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 132,876 120,559 --------- --------- Cash and cash equivalents, beginning 1,693,799 1,653,522 --------- --------- Cash and cash equivalents, ending $ 1,826,675 $ 1,744,081 ========== ========== Supplemental schedule of noncash investing and financing activates: 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. 24 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Six Months Ended September 30, (Unaudited) Series 15 ------------------------- 1999 1998 ---- ---- Cash flows from operating activities: Net loss $(1,185,794) $(1,451,674) Adjustments Distributions from Operating Partnerships 882 874 Amortization 5,256 5,256 Share of loss from Operating Partnerships 905,022 1,138,450 Changes in assets and liabilities (Decrease) increase in accounts payable and accrued expenses 783 322 Decrease (Increase) in accounts receivable (30,716) (444) Decrease (Increase) in accounts payable affiliates 294,603 441,965 ------- ------- Net cash (used in) provided by operating activities (9,964) 134,749 ------- ------- Cash flows from investing activities: Acquisition costs repaid (paid) for Operating Partnerships acquired or to acquire - - Capital contributions paid to Operating Partnerships - - Advances to Operating Partnerships - (186,247) Investments (7,139) (3,028) ------- ------- Net cash (used in) provided by investing activities (7,139) (189,275) ------- ------- 2 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Six Months Ended September 30, (Unaudited) Series 15 ---------------------- 1999 1998 ---- ---- Continued - --------- Cash flows from financing activity: Credit adjusters received from Operating Partnerships - - ------- ------ Net cash (used in) provided by financing activity - - ------- ------ INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (17,103) (54,526) Cash and cash equivalents, beginning 306,884 156,717 ------- ------- Cash and cash equivalents, ending $ 289,781 $ 102,191 ======== ======== 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. 2 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Six Months Ended September 30, (Unaudited) Series 16 ------------------------- 1999 1998 ---- ---- Cash flows from operating activities: Net loss $(2,122,768) $(2,154,742) Adjustments Distributions from Operating Partnerships 25 635 Amortization 8,425 8,425 Share of loss from Operating Partnerships 1,758,599 1,825,987 Changes in assets and liabilities (Decrease) increase in accounts payable and accrued expenses 1,164 457 Decrease (Increase) in accounts receivable (12,817) (20,162) Decrease (Increase) in accounts payable affiliates 345,990 345,985 --------- -------- Net cash (used in) provided by operating activities (21,382) 6,585 --------- -------- Cash flows from investing activities: Acquisition costs repaid (paid) for Operating Partnerships acquired or to acquire - - Capital contributions paid to Operating Partnerships (2,500) (1,500) Advances to Operating Partnerships - - Investments (9,618) 121,291 --------- -------- Net cash (used in) provided by investing activities (12,118) 119,791 --------- -------- 2 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Six Months Ended September 30, (Unaudited) Series 16 ----------------------- 1999 1998 ----- ----- Continued - --------- Cash flows from financing activity: Credit adjusters received from Operating Partnerships - - --------- -------- Net cash (used in) provided by financing activity - - --------- -------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (33,500) 126,376 Cash and cash equivalents, beginning 213,451 199,558 --------- -------- Cash and cash equivalents, ending $ 179,951 $ 325,934 ========== ========== 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. 2 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Six Months Ended September 30, (Unaudited) Series 17 ------------------------- 1999 1998 ---- ---- Cash flows from operating activities: Net loss $(1,531,610) $(2,003,932) Adjustments Distributions from Operating Partnerships 4,139 7,803 Amortization 7,775 34,129 Share of loss from Operating Partnerships 1,230,720 1,660,513 Changes in assets and liabilities (Decrease) increase in accounts payable and accrued expenses 928 46,596 Decrease (Increase) in accounts receivable (267,071) (130,949) Decrease (Increase) in accounts payable affiliates 557,060 368,053 --------- -------- Net cash (used in) provided by operating activities 1,941 (17,787) --------- -------- Cash flows from investing activities: Acquisition costs repaid (paid) for Operating Partnerships acquired or to acquire - - Capital contributions paid to Operating Partnerships - - Advances to Operating Partnerships - - Investments 100,000 - --------- -------- Net cash (used in) provided by investing activates 100,000 - --------- -------- 2 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Six Months Ended September 30, (Unaudited) Series 17 ------------------------ 1999 1998 ---- ---- Continued - --------- Cash flows from financing activity: Credit adjusters received from Operating Partnerships - - --------- -------- Net cash (used in) provided by financing activity - - --------- -------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 101,941 (17,787) Cash and cash equivalents, beginning 349,189 388,024 --------- -------- Cash and cash equivalents, ending $ 451,130 $ 370,237 ========== ========== 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. 3 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Six Months Ended September 30, (Unaudited) Series 18 ------------------------- 1999 1998 ---- ---- Cash flows from operating activities: Net loss $(1,013,297) $(1,244,970) Adjustments Distributions from Operating Partnerships 1,130 6,130 Amortization 5,707 21,084 Share of loss from Operating Partnerships 815,220 1,040,838 Changes in assets and liabilities (Decrease) increase in accounts payable and accrued expenses 856 272 Decrease (Increase) in accounts receivable (4,930) (3,390) Decrease (Increase) in accounts payable affiliates 190,974 190,974 --------- -------- Net cash (used in) provided by operating activities (4,340) 10,938 --------- -------- Cash flows from investing activities: Acquisition costs repaid (paid) for Operating Partnerships acquired or to acquire - - Capital contributions paid to Operating Partnerships - (154,714) Advances to Operating Partnerships - (14,280) Investments (2,771) 119,676 --------- -------- Net cash (used in) provided by investing activities (2,771) (49,318) --------- -------- 3 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Six Months Ended September 30, (Unaudited) Series 18 ----------------------- 1999 1998 ---- ---- Continued - --------- Cash flows from financing activity: Credit adjusters received from Operating Partnerships - - -------- -------- Net cash (used in) provided by financing activity - - -------- -------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (7,111) (38,380) Cash and cash equivalents, beginning 306,065 301,444 -------- -------- Cash and cash equivalents, ending $ 298,954 $ 263,064 ========= ========== 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. 3 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Six Months Ended September 30, (Unaudited) Series 19 ------------------------- 1999 1998 ---- ---- Cash flows from operating activities: Net loss $(1,036,735) $(1,685,128) Adjustments Distributions from Operating Partnerships 31,440 65 Amortization 7,455 26,091 Share of loss from Operating Partnerships 836,178 1,465,293 Changes in assets and liabilities (Decrease) increase in accounts payable and accrued expenses 759 318 Decrease (Increase) in accounts Receivable/ other assets 8,840 (16,437) Decrease (Increase) in accounts payable affiliates 205,675 205,674 --------- -------- Net cash (used in) provided by operating activities 53,612 (4,124) --------- -------- Cash flows from investing activities: Acquisition costs repaid (paid) for Operating Partnerships acquired or to acquire - - Capital contributions paid to Operating Partnerships - - Advances to Operating Partnerships - - Investments 35,037 109,000 --------- -------- Net cash (used in) provided by investing activities 35,037 109,000 --------- -------- 3 Boston Capital Tax Credit Fund III L.P. STATEMENTS OF CASH FLOWS Six Months Ended September 30, (Unaudited) Series 19 ------------------------ 1999 1998 ---- ---- Continued - --------- Cash flows from financing activity: Credit adjusters received from Operating Partnerships - - --------- -------- Net cash (used in) provided by financing activity - - --------- -------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 88,649 104,876 Cash and cash equivalents, beginning 518,210 607,779 --------- -------- Cash and cash equivalents, ending $ 606,859 $ 712,655 ========== ========== 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. 3 Boston Capital Tax Credit Fund III L.P. NOTES TO FINANCIAL STATEMENTS September 30, 1999 (Unaudited) NOTE A - ORGANIZATION Boston Capital Tax Credit Fund III L.P. (the "Fund") was formed under the laws of the State of Delaware as of September 19, 1991 for the purpose of acquiring, holding, and disposing of limited partnership interests in Operating Partnerships which will acquire, develop, rehabilitate, operate and own newly constructed, existing or rehabilitated low-income apartment complexes ("Operating Partnerships"). The general partner of the Fund is Boston Capital Associates III L.P., a Delaware limited partnership. Boston Capital Associates, a Massachusetts general partnership, whose only two partners are Herbert F. Collins and John P. Manning, the principals of Boston Capital Partners, Inc., is the sole general partner of the general partner. The limited partner of the general partner is Capital Investment Holdings, a general partnership whose partners are certain officers and employees of Boston Capital Partners, Inc., and its affiliates. The Assignor Limited Partner is BCTC III Assignor Corp., a Delaware corporation which is wholly-owned by Herbert F. Collins and John P. Manning. Pursuant to the Securities Act of 1933, the Fund filed a Form S-11 Registration Statement with the Securities and Exchange Commission, effective January 24, 1992 which covered the offering (the "Public Offering") of the Fund's beneficial assignee certificates ("BACs") representing assignments of units of the beneficial interest of the limited partnership interest of the Assignor Limited Partner. The Fund registered 20,000,000 BACs at $10 per BAC for sale to the public in one or more series. On September 4, 1993 the Fund filed an amendment to Form S-11 with the Securities and Exchange Commission which registered an additional 2,000,000 BACs at $10 per BAC for sale to the public in one or more series. The registration for the additional BACs became effective on October 6, 1993. Offers and sales of BACs in Series 15 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. 3 Boston Capital Tax Credit Fund III L.P. NOTES TO FINANCIAL STATEMENTS - CONTINUED September 30, 1999 (Unaudited) NOTE B - ACCOUNTING AND FINANCIAL REPORTING POLICIES The condensed financial statements included herein as of September 30, 1999 and for the three 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 an approximate fair market value. The amortized cost of securities available for sale as of June 30, 1999 by contractual maturity are as follows: Amortized Cost --------- Due in one year or less $2,121,657 Due after one year - --------- Total $2,121,657 ========= The fair market value of the securities is $2,121,657. 3 Boston Capital Tax Credit Fund III L.P. NOTES TO FINANCIAL STATEMENTS - CONTINUED September 30, 1999 (Unaudited) NOTE - B ACCOUNTING AND FINANCIAL REPORTING POLICIES - CONTINUED Amortized cost is the face value of the securities and any unamortized premium or discount. The balance sheet reflects the fair market value under investments. Amortization - ------------ The Fund amortizes organizational costs over 60 months. As of September 30, 1999 and 1998 the Fund has accumulated organization amortization totaling $934,428 and $894,093 respectively. The breakdown of accumulated organization amortization within the Fund as of September 30, 1999 and 1998 is as follows: 1999 1998 ---- ---- Series 15 $167,077 $167,077 Series 16 227,909 227,909 Series 17 205,888 205,016 Series 18 150,296 139,212 Series 19 183,258 154,879 ------- ------- $934,428 $894,093 ======= ======= On July 1, 1995, the Fund began amortizing unallocated acquisition costs over 330 months from April 1, 1995. As of September 30, 1999 the Fund has accumulated unallocated acquisition amortization totaling $315,542. The breakdown of accumulated unallocated acquisition amortization within the fund as of September 30, 1999 for Series 15, Series 16, Series 17, Series 18, and Series 19 is $47,402, $75,833, $77,878, $51,490 and $62,939, respectively. NOTE C - RELATED PARTY TRANSACTIONS The Fund has entered into several transactions with various affiliates of the general partner, including Boston Capital Partners, Inc., and Boston Capital Asset Management Limited Partnership as follows: Boston Capital Partners, Inc. is entitled to asset acquisition fees for selecting, evaluating, structuring, negotiating, and closing the Fund's acquisition of interests in the Operating Partnerships. Prior to the quarter ended September 30, 1999 all series had completed payment of all acquisition fees due to Boston Capital Partners, Inc. 3 Boston Capital Tax Credit Fund III L.P. NOTES TO FINANCIAL STATEMENTS - CONTINUED September 30, 1999 (Unaudited) NOTE C - RELATED PARTY TRANSACTIONS - CONTINUED An annual fund management fee based on .5 percent of the aggregate cost of all apartment complexes owned by the Operating Partnerships, has been accrued to Boston Capital Asset Management Limited Partnership. The fund management fees accrued for the quarter ended September 30, 1999 and 1998 are as follows: 1999 1998 ---- ---- Series 15 $137,013 $137,013 Series 16 172,995 172,995 Series 17 141,342 141,342 Series 18 95,487 95,487 Series 19 102,837 102,837 ------- ------- $649,674 $649,674 ======= ======= NOTE D - INVESTMENTS IN OPERATING PARTNERSHIPS At September 30, 1999 and 1998, the Fund had limited partnership interests in 241 Operating Partnerships which own or are constructing apartment complexes. The breakdown of Operating Partnerships within the Fund at September 30, 1999 and 1998 is as follows: Series 15 68 Series 16 64 Series 17 49 Series 18 34 Series 19 26 --- 241 === 38 Boston Capital Tax Credit Fund III L.P. NOTES TO FINANCIAL STATEMENTS - CONTINUED September 30, 1999 (Unaudited) NOTE D - INVESTMENTS IN OPERATING PARTNERSHIPS - CONTINUED Under the terms of the Fund's investment in each Operating Partnership, the Fund is required to make capital contributions to the Operating Partnerships. These contributions are payable in installments over several years upon each Operating Partnership achieving specified levels of construction and/or operations. The contributions payable at September 30, 1999 and 1998 are as follows: 1999 1998 ---- ---- Series 15 $ 32,922 $ 32,922 Series 16 140,006 145,311 Series 17 1,367,195 1,367,195 Series 18 18,554 562,921 Series 19 34,000 463,000 --------- ---------- $1,592,677 $ 2,571,349 ========= ========== 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, 1999. 39 Boston Capital Tax Credit Fund III L.P. NOTES TO FINANCIAL STATEMENTS - CONTINUED September 30, 1999 (Unaudited) NOTE D - INVESTMENTS IN OPERATING PARTNERSHIPS (continued) COMBINED SUMMARIZED STATEMENTS OF OPERATIONS Six months ended June 30, (Unaudited) Series 15 --------------------------- 1999 1998 ---- ---- Revenues Rental $ 4,867,033 $ 4,749,918 Interest and other 169,245 238,332 --------- --------- 5,036,278 4,988,250 --------- --------- Expenses Interest 1,381,481 1,429,297 Depreciation and amortization 1,901,685 1,871,234 Operating expenses 3,041,468 3,025,819 --------- --------- 6,324,634 6,326,350 --------- --------- NET LOSS $(1,288,356) $(1,338,100) ========= ========= Net loss allocated to Boston Capital Tax Credit Fund III L.P. $ (905,022) $(1,138,450) ========= ========= Net loss allocated to other partners $ (12,884) $ (13,381) ========= ========= Net loss suspended $ (370,450) $ (186,269) ========= ========= 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, 1999 (Unaudited) NOTE D - INVESTMENTS IN OPERATING PARTNERSHIPS (continued) COMBINED SUMMARIZED STATEMENTS OF OPERATIONS Six months ended June 30, (Unaudited) Series 16 -------------------------- 1999 1998 ---- ---- Revenues Rental $ 6,136,645 $ 6,012,307 Interest and other 312,806 473,062 --------- --------- 6,449,451 6,485,369 --------- --------- Expenses Interest 1,965,497 2,112,658 Depreciation and amortization 2,391,922 2,277,728 Operating expenses 4,112,999 3,968,244 --------- --------- 8,470,418 8,358,630 --------- --------- NET LOSS $(2,020,967) $(1,873,261) ========== ========== Net loss allocated to Boston Capital Tax Credit Fund III L.P. $(1,758,599) $(1,825,987) ========== ========== Net loss allocated to other partners $ (20,210) $ (18,733) ========== ========== Net loss suspended $ (242,158) $ (28,541) ========== ========== 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. 4 Boston Capital Tax Credit Fund III L.P. NOTES TO FINANCIAL STATEMENTS - CONTINUED September 30, 1999 (Unaudited) NOTE D - INVESTMENTS IN OPERATING PARTNERSHIPS (continued) COMBINED SUMMARIZED STATEMENTS OF OPERATIONS Six Months ended June 30, (Unaudited) Series 17 -------------------------- 1999 1998 Revenues ---- ---- Rental $ 5,449,718 $ 5,385,005 Interest and other 215,841 305,686 --------- --------- 5,665,559 5,690,691 --------- --------- Expenses Interest 1,821,772 2,083,741 Depreciation and amortization 1,922,826 2,104,727 Operating expenses 3,164,113 3,179,509 --------- --------- 6,908,711 7,367,977 --------- --------- NET LOSS $(1,243,152) $(1,677,286) ========== ========= Net loss allocated to Boston Capital Tax Credit Fund III L.P. $(1,230,720) $(1,660,513) ========== ========= Net loss allocated to other partners $ (12,432) $ (16,773) ========== ========= 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. 4 Boston Capital Tax Credit Fund III L.P. NOTES TO FINANCIAL STATEMENTS - CONTINUED September 30, 1999 (Unaudited) NOTE D - INVESTMENTS IN OPERATING PARTNERSHIPS (continued) COMBINED SUMMARIZED STATEMENTS OF OPERATIONS Six months ended June 30, (Unaudited) Series 18 ---------------------------- 1999 1998 Revenues ---- ---- Rental $ 3,222,312 $3,062,836 Interest and other 173,696 116,280 --------- --------- 3,396,008 3,179,116 --------- --------- Expenses Interest 1,053,685 1,105,161 Depreciation and amortization 1,285,615 1,370,740 Operating expenses 1,908,227 1,788,878 --------- --------- 4,247,527 4,264,779 --------- --------- NET LOSS $ (851,519) $(1,085,663) ========= ========= Net loss allocated to Boston Capital Tax Credit Fund III L.P. $ (815,220) $(1,040,838) ========= ========= Net loss allocated to other partners $ (8,515) $ (10,857) ========= ========= Net loss suspended $ (27,784) $ (33,968) ========= ========= 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. 43 Boston Capital Tax Credit Fund III L.P. NOTES TO FINANCIAL STATEMENTS - CONTINUED September 30, 1999 (Unaudited) NOTE D - INVESTMENTS IN OPERATING PARTNERSHIPS (continued) COMBINED SUMMARIZED STATEMENTS OF OPERATIONS Six months ended June 30, (Unaudited) Series 19 -------------------------- 1999 1998 Revenues ---- ---- Rental $ 4,517,530 $ 4,396,231 Interest and other 160,447 155,810 --------- --------- 4,677,977 4,552,041 --------- --------- Expenses Interest 1,672,668 1,765,501 Depreciation and amortization 1,449,178 1,964,599 Operating expenses 2,400,755 2,302,035 --------- --------- 5,522,601 6,032,135 --------- --------- NET LOSS $ (844,624) $(1,480,094) ========= ========= Net loss allocated to Boston Capital Tax Credit Fund III L.P. $ (836,178) $(1,465,293) ========= ========= Net loss allocated to other partners $ (8,446) $ (14,801) ========= ========= 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. 4 Boston Capital Tax Credit Fund III L.P. NOTES TO FINANCIAL STATEMENTS - CONTINUED September 30, 1999 (Unaudited) NOTE D - INVESTMENT IN OPERATING PARTNERSHIPS-CONTINUED When comparing the results of operations from the operating partnerships for the six months ended June 31, 1999 and June 30, 1998 for Series 17 and 19, variances, some material in nature, exist. The variances are the result of a number of factors including an increase in the number of Operating Partnerships which have completed construction, and an increase in the number which have completed the lease-up phase. Smaller variances are anticipated in future years since the Fund has finished acquiring Operating Partnerships, construction is complete on all of the Operating Partnerships and most have completed the lease-up phase. NOTE E - TAXABLE LOSS The Fund's taxable loss for the year ended December 31, 1999 is expected to differ from its loss for financial reporting purposes for the year end March 31, 2000. This is primarily due to accounting differences in depreciation incurred by the Operating Partnerships and also differences between the equity method of accounting and the IRS accounting methods. No provision or benefit for income taxes has been included in these financial statements since taxable income or loss passes through to, and is reportable by, the partners and assignees individually. 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, 1999, none of Series 15 net offering proceeds had been used to pay capital contributions. Series 15 net offering proceeds in the amount of $32,922 remain to be used by the Fund to pay remaining capital contributions to the Operating Partnerships that Series 15 has invested in as of September 30,1999. (Series 16) The Fund commenced offering BACs in Series 16 on July 13, 1992. Offers and sales of BACs in Series 16 were completed on December 28, 1992. The Fund has committed proceeds to pay initial and additional installments of capital contributions to 64 Operating Partnerships in the amount of $39,579,774. 4 During the quarter ended September 30, 1999, $2,506 of Series 16 net offering proceeds had been used to pay capital contributions. Series 16 net offering proceeds in the amount of $140,006 remain to be used by the Fund to pay remaining capital contributions to the Operating Partnerships that Series 16 has invested in as of September 30, 1999. (Series 17) The Fund commenced offering BACs in Series 17 on January 24, 1993. Offers and sales of BACs in Series 17 were completed on June 17, 1993. The Fund has committed proceeds to pay initial and additional installments of capital contributions to 49 Operating Partnerships in the amount of $36,538,204. During the quarter ended September 30, 1999, none of Series 17 net offering proceeds had been used to pay capital contributions. Series 17 net offering proceeds in the amount of $451,130 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, 1999. (Series 18) The Fund commenced offering BACs in Series 18 on June 17, 1993. Offers and sales of BACs in Series 18 were completed on September 22, 1993. The Fund has committed proceeds to pay initial and additional installments of capital contributions to 34 operating Partnerships in the amount of $26,442,202. During the quarter ended September 30, 1999, none of Series 18 net offering proceeds had been used to pay capital contributions. Series 18 net offering proceeds in the amount of $18,554 remain to be used by the Fund to pay remaining capital contributions to the Operating Partnerships that Series 18 has invested in as of September 30, 1999. (Series 19). The Fund commenced offering BACs in Series 19 on October 8, 1993. Offers and sales of BACs in Series 19 were completed on December 17, 1993. The Fund has committed proceeds to pay initial and additional installments of capital contributions to 26 Operating Partnerships in the amount of $29,614,506. During the quarter ended September 30, 1999, none of Series 19 net offering proceeds had been used to pay capital contributions. Series 19 net offering proceeds in the amount of $34,000 remain to be used by the Fund to pay remaining capital contributions to the Operating Partnerships that Series 19 has invested in as of September 30, 1999. Results of Operations - --------------------- As of September 30, 1999 and 1998 the Fund held limited partnership interests in 241 Operating Partnerships. In each instance the Apartment Complex owned by the applicable Operating Partnership is eligible for the 47 Federal Housing Tax Credit. Occupancy of a unit in each Apartment Complex which initially complied with the Minimum Set-Aside Test (i.e., occupancy by tenants with incomes equal to no more than a certain percentage of area median income) and the Rent Restriction Test (i.e., gross rent charged tenants does not exceed 30% of the applicable income standards) is referred to hereinafter as "Qualified Occupancy." Each of the Operating Partnerships and each of the respective Apartment Complexes are described more fully in the Prospectus or applicable report on Form 8-K. The General Partner believes that there is adequate casualty insurance on the properties. The results of operations for future periods are likely to vary from those for the period ended September 30, 1999. The losses from Operating Partnerships reported for this interim period are not necessarily indicative of the results anticipated for future periods as some of these Operating Partnerships are in the lease-up phase. The Fund incurred a fund management fee to Boston Capital Asset Management Limited Partnerships 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 June 30, 1999 for Series 15, Series 16, Series 17, Series 18 and Series 19 were $115,958, $162,551, $125,592, $70,487, and $100,337 respectively. The Fund's investment objectives do not include receipt of significant cash distributions from the Operating Partnerships in which it has invested or intends to invest. The Fund's investments in Operating Partnerships have been made principally with a view towards realization of Federal Housing Tax Credits for allocation to its partners and BAC holders. (Series 15) As of September 30, 1999 and 1998, the average qualified occupancy for the series was 100% for both years. The series had a total of 68 properties at September 30, 1999, all of which were at 100% qualified occupancy. For the six months being reported Series 15 reflects a net loss from Operating Partnerships of $1,288,356. When adjusted for depreciation, which is a non-cash item, the Operating Partnerships reflect positive operations of $613,329. This is an interim period estimate; it is not necessarily indicative of the final year end results. 48 	Hidden Cove Apartments (Hidden Cove) continues to incur operating deficits due to high operating expenses. While the new management company has been successful in reducing expenses and increasing occupancy, the property remains unable to operate above break-even. Major capital improvements items identified by the management company have been completed. The remaining items are to be completed as units turnover and it is anticipated that all of the items will be completed by year end. Average physical occupancy at the property remains at 98%. To date the Operating General Partner has been unsuccessful in securing refinancing through local lenders. Refinancing will be attempted again in 2000 once the property has maintained stabilized occupancy greater than 90% for a significant period of time. The Operating General Partner of School Street I Limited Partnership (School Street Apts. I) hired a new management company in September 1999 in order to improve operations at the property. The average occupancy declined to 68% during the third quarter of 1999 due to management pursuing evictions of delinquent tenants. In addition, the debt was modified in January, 1999 reducing the interest rate to 7.25% and writing down the outstanding principal of the loan. Capital needs were addressed as part of the refinancing package and all repair work is scheduled to be completed by December 31, 1999. (Series 16) As of September 30, 1999 and 1998, the average qualified occupancy for the series was 99.7% for both years. The series had a total of 64 properties at September 30, 1999. Out of the total, 62 had 100% qualified occupancy. For the six months being reported Series 16 reflects a net loss from Operating Partnerships of $2,020,967. When adjusted for depreciation, which is a non-cash item, the Operating Partnerships reflect positive operations of $370,955. This is an interim period estimate; it is not necessarily indicative of the final year end results. The management company assumed the role of Operating General Partner of Mariner's Pointe Limited Partnership I and Mariner's Pointe Limited Partnership II (Mariner's Pointe Apartment and Mariners's Pointe Apartments II) effective January 1, 1999. The new Operating General Partner continues to focus on reducing the property's operating expenses and reducing vacancies. The Operating General Partner completed a loan restructure reducing the interest rate on the mortgage to 8%. In addition, a second mortgage at a 5.5% interest rate was closed. This mortgage was approved by the Investment Limited Partner and will be used to fund capital needs. The third quarter average occupancy was 97%. 49 (Series 17) As of September 30, 1999 and 1998, the average qualified occupancy for the series was 99.7% for both years. The series had a total of 49 properties at September 30, 1999. Out of the total 48 had 100% qualified occupancy. For the six months being reported Series 17 reflects a net loss from Operating Partnerships of $1,243,152. When adjusted for depreciation, which, is a non-cash item, the Operating Partnerships reflect positive operations of $679,674. This is an interim period estimate; it is not necessarily indicative of the final year end results. Annadale Housing Partners (Kingsview Manor & Estates) has reported net losses due to operational issues associated with the property. In order to address these issues, the Operating General Partner has hired a consultant to assist management in aggressively marketing the property. In addition, the management agent has hired a new on-site manager and leasing agent. As a result of these changes, occupancy reached 97% as of September 30, 1999. The rental rates at the property were increased during the quarter. In a step to cut costs even further the Operating General Partner has initiated loan restructure discussions with the first lender for more favorable terms. These talks are currently ongoing and the outcome cannot be determined at this time. The Investment General Partner continues to monitor this situation closely. The property owned by California Investors VI LP (Orchard Park) has reached physical occupancy of 94% as of September 1999. The increased occupancy is the result of the management company's aggressive marketing efforts and the many capital improvements completed at the property, including office renovations and the addition of an activity center. These improvements have been successful in attracting and retaining tenants. In addition, a large recreation facility is expected to be built adjacent to the property at the end of 1999. Once this park is opened, it is expected to further enhance the appeal of Orchard Park Apartments to families. 5 (Series 18) As of September 30, 1999 and 1998 the average qualified occupancy for the series was 100% for both years. The series had a total of 34 properties at September 30, 1999, out of the total all had 100% qualified occupancy. For the six months being reported Series 18 reflects a net loss from Operating Partnerships of $851,519. When adjusted for depreciation, which is a non-cash item, the Operating Partnerships reflect positive operations of $434,096. This is an interim period estimate; it is not necessarily indicative of the final year end results. In August 1996 the Investment General Partner was notified that Virginia Avenue Affordable Limited Partnership (Kristine Apartments) was named as defendant in a land encroachment complaint. A judgment was issued which will remove any uncertainty as to the Operating Partnership's possession of the land. The appropriate title information has been received and is in the process of execution. Additionally, occupancy started to drop in the fourth quarter of 1998, with a year-end physical occupancy of 78%. A new management company, selected by the Investment General Partner, began at the site in mid August. This new management company is focusing on improving occupancy, collections, and tenant retention. Periodic cash shortfalls are anticipated until the occupancy stabilizes and maintenance expenses are reduced. Parvin's Limited Partnership (Parvin's Branch Townhomes) continues to incur operating deficits due to higher than average operating expenses and occupancy issues with its six transitional units. The General Partner and the Management Company have been deferring their respective fees to improve the property's cash flow. In addition, the General Partner continues to fund deficits. The property's 18 non-transitional housing units operate with a strong occupancy, however, the six transitional units incur significant turnover, which results in increased operating expense. The Operating General Partner has taken a more active role in the leasing and day to day management of the six transitional units. The Operating General Partner has been successful in removing the six transitional units from the program. As of 1/1/00, the six units will be available to non-transitional qualified residence. The property manager is in the process of contacting prospective residents on the waiting list as well as families on the waiting list of the Department of Community Affairs to find qualified residents. The manager expects to have the six units ready and occupied by qualified residence by 1/15/00. As of 9/30/99, the property had a 92% occupancy, which is up from 83% recorded at 3/31/99 and the 75% at 6/30/99. Because of the stable occupancy in the third quarter, 100% in July, 96% in August and 92% in September, the operating expenses have been controlled. It is anticipated the expenses will remain under control for the balance of the year. However, repairs and maintenance expenses are expected to increase in January of 2000 as a result of the turnover and conversion of the six transitional units. 5 (Series 19) As of September 30, 1999 and 1998 the average qualified occupancy for the series was 100% and 99.8%, respectively. The series had a total of 26 properties at September 30, 1999, all of which were at 100% qualified occupancy. For the six months being reported Series 19 reflects a net loss from Operating Partnerships of $844,624. When adjusted for depreciation, which is a non-cash item, the Operating Partnerships reflect positive operations of $604,554. This is an interim period estimate; it is not necessarily indicative of the final year end results. Year 2000 Compliance - -------------------- 	As Previously stated in the Partnership's 10-K, Boston Capital and its management have reviewed the potential computer problems that may arise from the century date change known as the "Year 2000" or "Y2K" problem. We are currently in the process of taking the necessary precautions to minimize any disruptions. The majority of Boston Capital's systems are "Y2K" Compliant. For all remaining systems we are working the vendors to make the necessary upgrades and replacements. Boston Capital has no reason to believe that any of its systems will not be fully compliant before the year 2000 and is committed to ensuring that the "Y2K" issue will have no impact on our investors. 52 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 53 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 17, 1999 By: /s/ John P. Manning ------------------- John P. Manning, Partner & Principal Financial Officer 54