Item 1. Business
The Registrant, Inland Mortgage Investors Fund III, L.P. (the "Partnership"), was formed in September 1988 pursuant to the Delaware Revised Uniform Limited Partnership Act. On January 9, 1989, the Partnership commenced an Offering of 40,000 (subject to an increase up to 50,000) Limited Partnership Units ("Units") pursuant to a Registration Statement on Form S-11 under the Securities Act of 1933. The Offering terminated on January 9, 1991, with total sales of 5,675.50 Units resulting in gross offering proceeds of $2,837,749, which includes the General Partner's $500 contribution. All of the holders of these Units were admitted to the Partnership. As of December 31, 1995, the Partnership funded seven loans utilizing $2,302,064 of capital proceeds collected. The Limited Partners of the Partnership share in the benefits of ownership in proportion to the number of Units held. Inland Real Estate Investment Corporation is the General Partner.
The Partnership is engaged solely in the business of making and acquiring loans collateralized by mortgages on improved, income producing properties. As of December 31, 1995, the Partnership made and acquired mortgage loans collateralized by properties located near Chicago, Illinois. The loans are being serviced by Inland Mortgage Servicing Corporation, a subsidiary of the General Partner. The Partnership does not segregate revenues or assets by geographic region, and such a presentation would not be material to an understanding of the Partnership's business taken as a whole.
The Partnership had no employees during 1995.
The terms of transactions between the Partnership and Affiliates of the General Partner of the Partnership are set forth in Item 11 below and Note (2) of the Notes to Financial Statements (Item 8 of this Annual Report) to which reference is hereby made.
Item 2.

Item 2. Properties
The Registrant owns no real properties.
Item 3.

Item 3. Legal Proceedings
The Partnership is not subject to any material pending legal proceedings.
Item 4.

Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders during 1995.
PART II
Item 5.

Item 5. Market for the Partnership's Limited Partnership Units and Related Security Holder Matters
As of December 31, 1995, there were 246 holders of Units of the Partnership. There is no public market for Units nor is it anticipated that any public market for Units will develop. Reference is made to Item 6

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Liquidity and Capital Resources
On January 9, 1989, the Partnership commenced an Offering of 40,000 (subject to an increase to 50,000) Limited Partnership Units pursuant to a Registration Statement on Form S-11 under the Securities Act of 1933. The Offering terminated on January 9, 1991 with a total of 5,675.50 Units being sold to the public at $500 per Unit resulting in gross offering proceeds of $2,837,749, which includes the General Partner's $500 contribution. As of December 31, 1994, the Partnership has funded seven loans utilizing $2,302,064 of capital proceeds collected. As of December 31, 1995, cumulative distributions to the Limited Partners totaled $2,179,347, of which $1,147,815 represents principal amortization and repayments and $306,874 represents Supplemental Capital Contributions from the General Partner.
As of December 31, 1995, the Partnership had cash and cash equivalents of $68,800. The Partnership intends to use such remaining funds to pay distributions and for working capital requirements.
The mortgage receivables of the Partnership are currently generating sufficient cash flow to cover the operating expenses of the Partnership. To the extent that cash flow was insufficient to meet the required minimum 8% annualized return to investors through January 9, 1994, as well as any other financial needs, the Partnership received Supplemental Capital Contributions from the General Partner. The sources of future liquidity and distributions to the Limited and General Partners are expected to be from the collection of interest and repayment of principal of the Partnership's mortgage loan investments. To the extent that these sources are insufficient to meet the Partnership's needs, the Partnership may rely on advances from Affiliates of the General Partner, other short-term financing, or may liquidate certain mortgage loans or other assets.
Results of Operations
The decrease in interest income on mortgage loans for the year ended December 31, 1995, as compared to the year ended December 31, 1994, is due to the payoff of the loan collateralized by the property located at 9617-18 and 9806-12 Mayline in July 1995 and the partial paydowns of the loan collateralized by the property located at 7432 Washington in the second and third quarters of 1995.
The decrease in interest on mortgage loans receivable for the year ended December 31, 1994, as compared to the year ended December 31, 1993, is due to the payoff of the Edgebrook loans in June 1993.
Other income for the year ended December 31, 1993 is due to prepayment penalties received from the prepayment of the Edgebrook loans.
Professional services to non-affiliates increased for the year ended December 31, 1994, as compared to the year ended December 31, 1993, due to accounting fees relating to audits of the loans collateralized by the Mayline Avenue and Washington properties, which were required pursuant to disclosure requirements of the Securities and Exchange commission.
Inflation
To provide a hedge against the effects of inflation, the Partnership invested a portion of its offering proceeds in first mortgage loans with adjustable interest rates, as described in Note (4) of the Notes to Financial Statements (Item 8

Item 8. Financial Statements and Supplementary Data
INLAND MORTGAGE INVESTORS FUND III, L.P. (a limited partnership)
Index Page ----
Report of Independent Accountants........................................ 9
Financial Statements:
Balance Sheets, December 31, 1995 and 1994............................. 10
Statements of Operations, for the years ended December 31, 1995, 1994 and 1993..................................... 11
Statements of Partners' Capital, for the years ended December 31, 1995, 1994 and 1993.................................... 12
Statements of Cash Flows, for the years ended December 31, 1995, 1994 and 1993..................................... 13
Notes to Financial Statements.......................................... 14
Schedules not filed:
All schedules have been omitted as the required information is inapplicable or the information is presented in the financial statements or related notes.
5540 W. 103rd St., Oak Lawn, Illinois:
Report of Independent Certified Public Accountants* Statement of Operating Income and Expenses for the year ended December 31, 1995* Notes to Statement of Operating Income and Expenses for the year ended December 31, 1995*
5009 & 5013 Florence Avenue, Downers Grove, Illinois:
Report of Independent Certified Public Accountants* Statement of Operating Income and Expenses for the year ended December 31, 1995* Notes to Statement of Operating Income and Expenses for the year ended December 31, 1995*
7432 Washington, Forest Park, Illinois:
Report of Independent Certified Public Accountants* Statement of Operating Income and Expenses for the year ended December 31, 1995* Notes to Statement of Operating Income and Expenses for the year ended December 31, 1995*
* The Partnership will subsequently file these reports on or before May 15, 1996.
REPORT OF INDEPENDENT ACCOUNTANTS
The Partners of Inland Mortgage Investors Fund III, L.P.
We have audited the financial statements of Inland Mortgage Investors Fund III, L.P. listed in the index on page 8 of this Form 10-K. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Inland Mortgage Investors Fund III, L.P. as of December 31, 1995 and 1994 and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1995 in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Chicago, Illinois March 25, 1996
INLAND MORTGAGE INVESTORS FUND III, L.P. (a limited partnership)
Balance Sheets
December 31, 1995 and 1994
Assets ------
1995 1994 ---- ----
Cash and cash equivalents (Note 1)................ $ 68,800 99,103 Accrued interest receivable....................... 10,366 14,817 Mortgage loans receivable (Note 4)................ 1,215,249 1,761,698 ----------- ----------- Total assets...................................... $ 1,294,415 1,875,618 ============ ============
Liabilities and Partners' Capital ---------------------------------
Liabilities: Accounts payable................................ $ 1,106 665 Distributions payable........................... 20,588 56,357 Due to Affiliates (Note 2)...................... 2,158 150 ----------- ----------- Total liabilities............................. 23,852 57,172 ----------- -----------
Partners' capital (Notes 1, 2 and 3): General Partner: Capital contribution.......................... 500 500 Supplemental Capital Contributions............ 306,874 306,874 Supplemental distributions to Limited Partners (306,874) (306,874) Cumulative net income......................... 16,623 11,324 Cumulative distributions...................... (11,558) (6,259) ----------- ----------- 5,565 5,565 ----------- ----------- Limited Partners: Units of $500. Authorized 40,000 Units, 5,674.50 Units outstanding at December 31, 1995 and 1994 (net of offering costs of $422,642, of which $115,754 was paid to Affiliates)................................. 2,414,607 2,414,607 Supplemental Capital Contributions from General Partner............................. 306,874 306,874 Cumulative net income......................... 722,864 623,661 Cumulative distributions...................... (2,179,347) (1,532,261) ----------- ----------- 1,264,998 1,812,881 ----------- ----------- Total Partners' capital....................... 1,270,563 1,818,446 ----------- ----------- Total liabilities and Partners' capital........... $ 1,294,415 1,875,618 ============ ============
See accompanying notes to financial statements.
INLAND MORTGAGE INVESTORS FUND III, L.P. (a limited partnership)
Statements of Operations
For the years ended December 31, 1995, 1994 and 1993
1995 1994 1993 ---- ---- ---- Income: Interest on mortgage loans receivable (Note 4)............. $152,051 179,416 203,421 Interest on investments........... 3,110 926 2,870 Other income...................... - - 10,447 -------- -------- -------- 155,161 180,342 216,738 -------- -------- -------- Expenses: Professional services to Affiliates...................... 10,816 13,281 10,636 Professional services to non-affiliates.................. 19,514 20,120 15,457 General and administrative to Affiliates................... 15,622 14,530 13,920 General and administrative to non-affiliates............... 4,707 3,866 3,916 Amortization of deferred organization costs.............. - - 1,030 -------- -------- -------- 50,659 51,797 44,959 -------- -------- -------- Net income.......................... $104,502 128,545 171,779 ======== ======== ========
Net income allocated to (Note 3): General Partner................... $ 5,299 6,259 1,718 Limited Partners.................. 99,203 122,286 170,061 -------- -------- -------- Net income.......................... $104,502 128,545 171,779 ======== ======== ========
Net income allocated to the one General Partner Unit.............. $ 5,299 6,259 1,718 ======== ======== ========
Net income allocated to Limited Partners per weighted average Limited Partnership Units of 5,674.50.......................... $ 17.48 21.55 29.97 ======== ======== ========
See accompanying notes to financial statements.
INLAND MORTGAGE INVESTORS FUND III, L.P. (a limited partnership)
Statements of Partners' Capital
For the years ended December 31, 1995, 1994 and 1993
General Limited Partner Partners Total ------- ---------- ----------
Balance at January 1, 1993............... $ 3,847 2,396,418 2,400,265
Supplemental Capital Contributions made by the General Partner on behalf of the Limited Partners......... - 39,222 39,222 Net Income............................... 1,718 170,061 171,779 Distributions to Partners ($134.87 per weighted average Limited Partnership Units of 5,674.50)......... - (765,348) (765,348) ------- ---------- ----------
Balance at December 31, 1993............. 5,565 1,840,353 1,845,918
Supplemental Capital Contributions made by the General Partner on behalf of the Limited Partners......... - 2,358 2,358 Net Income............................... 6,259 122,286 128,545 Distributions to Partners ($26.81 per weighted average Limited Partnership Units of 5,674.50)......... (6,259) (152,116) (158,375) ------- ---------- ----------
Balance at December 31, 1994............. 5,565 1,812,881 1,818,446
Net Income............................... 5,299 99,203 104,502 Distributions to Partners ($114.03 per weighted average Limited Partnership Units of 5,674.50)......... (5,299) (647,086) (652,385) ------- ---------- ---------- Balance at December 31, 1995............. $ 5,565 1,264,998 1,270,563 ======= ========== ==========
See accompanying notes to financial statements.
INLAND MORTGAGE INVESTORS FUND III, L.P. (a limited partnership)
Statements of Cash Flows
For the years ended December 31, 1995, 1994 and 1993
1995 1994 1993 ---- ---- ---- Cash flows from operating activities: Net income........................ $ 104,502 128,545 171,779 Adjustments to reconcile net income to net cash provided by operating activities: Amortization of deferred organization costs............ - - 1,030 Changes in assets and liabilities: Accrued interest receivable... 4,451 208 4,530 Accounts payable.............. 441 (29) 694 Due to Affiliates............. 2,008 (300) (802) --------- --------- --------- Net cash provided by operating activities........................ 111,402 128,424 177,231 --------- --------- ---------
Cash flows from investing activities: Principal payments collected...... 546,449 28,728 500,816 --------- --------- --------- Net cash provided by investing activities........................ 546,449 28,728 500,816 --------- --------- ---------
Cash flows from financing activities: Distributions paid................ (688,154) (148,966) (777,168) Supplemental Capital Contributions - 13,575 32,425 --------- --------- --------- Net cash used in financing activities........................ (688,154) (135,391) (744,743) --------- --------- --------- Net increase (decrease) in cash and cash equivalents.............. (30,303) 21,761 (66,696) Cash and cash equivalents at beginning of year................. 99,103 77,342 144,038 --------- --------- --------- Cash and cash equivalents at end of year........................... $ 68,800 99,103 77,342 ========= ========= =========
Supplemental schedule of non-cash investing and financing activities:
Supplemental Capital Contribution receivable from General Partner... $ - - 11,217 ========= ========= =========
Accrued distributions payable....... $ 20,588 56,357 46,948 ========= ========= =========
See accompanying notes to financial statements
INLAND MORTGAGE INVESTORS FUND III, L.P. (a limited partnership)
Notes to Financial Statements
For the years ended December 31, 1995, 1994 and 1993
(1) Organization and Basis of Accounting
Inland Mortgage Investors Fund III, L.P. (the "Partnership"), was formed in September 1988 pursuant to the Delaware Revised Uniform Limited Partnership Act to make or acquire loans collateralized by mortgages on improved, income producing properties generally located in or near Chicago and other metropolitan areas. On January 9, 1989, the Partnership commenced an Offering of 40,000 (subject to an increase up to 50,000) Limited Partnership Units ("Units") pursuant to a Registration Statement on Form S-11 under the Securities Act of 1933. The Offering terminated on January 9, 1991, with total sales of 5,675.50 Units resulting in gross offering proceeds of $2,837,749, which includes the General Partner's $500 contribution. All of the holders of these Units were admitted to the Partnership. The Limited Partners of the Partnership share in the benefits of ownership in proportion to the number of Units held. Inland Real Estate Investment Corporation is the General Partner.
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
Deferred organization costs were amortized over a 60-month period. Offering costs have been offset against the Limited Partners' capital accounts.
The Partnership considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents and are carried at cost which approximates fair value due to the short maturity of those instruments.
Interest income on mortgage loans receivable is accrued when earned. The accrual of interest, on loans that are in default, is discontinued when, in the opinion of the General Partner, the borrower has not complied with loan work-out arrangements. Once a loan has been placed on a non-accrual status, all cash received is applied against the outstanding loan balance until such time as the borrower has demonstrated an ability to make payments under the terms of the original or renegotiated loan agreement. The Partnership intends to pursue collection of all amounts currently due from the borrowers.
Disclosure of the estimated fair value of financial instruments is made in accordance with the requirements of Statement of Financial Accounting Standards No. 107, "Disclosures About Fair Value of Financial Instruments." The estimated fair value amounts have been determined by using available market information and appropriate valuation methodologies.
INLAND MORTGAGE INVESTORS FUND III, L.P. (a limited partnership)
Notes to Financial Statements (continued)
The fair value of the mortgage loans receivable and related mortgage interest receivable is based upon contractual payments to be received and current market interest rates for issuance of mortgage loans with similar terms and maturities. The estimated fair value of the mortgage loans receivable at December 31, 1995 approximates their carrying value.
No provision for Federal income taxes has been made as the liability for such taxes is that of the Partners rather than the Partnership.
The Partnership records are maintained on the accrual basis of accounting in accordance with generally accepted accounting principles ("GAAP"). The Federal income tax return has been prepared from such records after making appropriate adjustments to reflect the Partnership's accounts as adjusted for Federal income tax reporting purposes. Such adjustments are not recorded on the records of the Partnership. The net effect of these items is summarized as follows:
1995 1994 ----------------------- ----------------------- GAAP Tax GAAP Tax Basis Basis Basis Basis ----------- ---------- --------- ---------- Total assets................ $ 1,294,415 1,294,415 1,875,618 1,875,618
Partners' capital: General Partner........... 5,565 3,984 5,565 3,984 Limited Partners.......... 1,264,998 1,266,579 1,812,881 1,814,462
Net income (loss): General Partner........... 5,299 5,299 6,259 2,321 Limited Partners.......... 99,203 99,203 122,286 126,224
Net income per weighted average number of Limited Partnership Units......... 17.48 17.48 21.55 22.24
The net income per Limited Partnership Unit is based upon the weighted average number of Units outstanding of 5,674.50.
INLAND MORTGAGE INVESTORS FUND III, L.P. (a limited partnership)
Notes to Financial Statements (continued)
(2) Transactions with Affiliates
The General Partner and its Affiliates are entitled to reimbursement for salaries and expenses of employees of the General Partner and its Affiliates relating to the administration of the Partnership. Such costs are included in the professional services to Affiliates and general and administrative expenses to Affiliates, of which $2,158 and $150 remained unpaid at December 31, 1995 and 1994, respectively.
The General Partner was required to make Supplemental Capital Contributions, if necessary, from time to time in sufficient amounts to allow the Partnership to make cumulative distributions to the Limited Partners amounting to at least 8% per annum on their invested capital through January 9, 1994. The cumulative amount of such Supplemental Capital Contributions is $306,874, all of which has been paid.
The Partnership has arranged for Inland Mortgage Servicing Corporation, a subsidiary of the General Partner, to service the Partnership's mortgage loans receivable. The services include processing mortgage loan collections and escrow deposits and maintaining related records. For these services, the Partnership is obligated to pay fees at an annual rate equal to 1/4 of 1% of the outstanding mortgage loans receivable balance of the Partnership. Such fees of $3,830 in 1995, $4,515 in 1994 and $5,102 in 1993 have been incurred and paid to the subsidiary and are included in the Partnership's general and administrative expenses to Affiliates.
(3) Partnership Agreement
The Partnership Agreement defines the allocation of distributable cash flows and profits and losses. Limited Partners are to receive 95% of Operating Cash Flow then being distributed until the Limited Partners have received a Cumulative Preferred Return of 8% per annum through January 9, 1994 and a 10% Preferential Return for the period commencing January 10, 1994. Thereafter, Operating Cash Flow is to be distributed to the General Partner to the extent of any Supplemental Capital Contributions and then 90% to the Limited Partners and 10% to the General Partner.
INLAND MORTGAGE INVESTORS FUND III, L.P. (a limited partnership)
Notes to Financial Statements (continued)
Distributions of Repayment Proceeds shall first be distributed to the Limited Partners in proportion to their Participating Percentages as of the record dates for such distributions until the Limited Partners shall have received distributions from Repayment Proceeds equal to their Invested Capital plus the amount of any deficiency in the Cumulative Preferred Return of 8% per annum through January 9, 1994 plus any deficiency in the 10% Preferential Return for the period commencing January 10, 1994.
Thereafter, any Repayment Proceeds available shall be distributed to the General Partner in the amount of any Supplemental Capital Contributions made, and any remaining balance shall then be distributed 90% to the Limited Partners and 10% to the General Partner.
The General Partner is to be allocated net operating profits in an amount equal to the greater of 1% of net operating profits or the amount of the General Partner's distributive share of Operating Cash Flow, with the balance of such net operating profits allocated to the Limited Partners. The General Partner is to be allocated net operating profits from repayments in an amount equal to the General Partner's distributive share of Repayment Proceeds, with the balance of such net operating profits allocated to the Limited Partners. Net operating losses are to be allocated 1% to the General Partner and 99% to the Limited Partners.
INLAND MORTGAGE INVESTORS FUND III, L.P. (a limited partnership)
Notes to Financial Statements (continued)
(4) Mortgage Loans Receivable
Mortgage loans receivable are collateralized by first mortgages on improved, income producing properties located in Chicago, Illinois or its surrounding metropolitan area. As additional collateral, the Partnership holds assignments of rents and leases or personal guarantees of the borrowers. Generally, the mortgage notes are payable in equal monthly installments based on 20 or 30 year amortization periods.
Mortgage loans receivable consist of the following:
INLAND MORTGAGE INVESTORS FUND III, L.P. (a limited partnership)
Notes to Financial Statements (continued)
(A) In June 1992, the Partnership purchased two $500,000 interests in first mortgage loans funded by Inland Mortgage Investors Fund, L.P.-II, which is another publicly registered partnership sponsored by the General Partner. The $700,000 first mortgage loans were funded in June 1992 to refinance existing mortgages owed to an Affiliate of the General Partner.
The loans have a fixed interest rate and require monthly payments of interest only. The Partnership will receive its percentage share of all such payments.
In November 1994, the borrower on the loan collateralized by the property located at 7432 Washington made a partial paydown on the mortgage. The Partnership received $23,357, its proportionate share of the total paydown.
In 1995, the borrower on the loan collateralized by the property located at 7432 Washington made additional partial paydowns on the mortgage. The Partnership received $40,500, its proportionate share of the total paydowns.
In 1995, the loan collateralized by the property located at 9716-18 and 9806-12 Mayline was prepaid by the borrower. The Partnership received $501,760, its proportionate share of the total prepayment.
(6) Subsequent Events
During January 1996, the Partnership paid a distribution of $20,588 to the Partners, of which $954 was distributed to the General Partner and $19,634 was distributed to the Limited Partners, including $1,506 of repayment proceeds and $18,128 of net interest income.
Item 9.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
There were no disagreements on accounting or financial disclosure during 1995.
PART III
Item 10.

Item 10. Directors and Executive Officers of the Registrant
The General Partner of the Partnership, Inland Real Estate Investment Corporation, was organized in 1984 for the purpose of acting as general partner of limited partnerships formed to acquire, own and operate real property, and make and acquire loans collateralized by mortgages on improved, income producing multi-family residential properties. The General Partner is a wholly-owned subsidiary of The Inland Group, Inc. In 1990, Inland Real Estate Investment Corporation became the replacement General Partner for an additional 301 privately-offered real estate limited partnerships syndicated by Affiliates. The General Partner has responsibility for all aspects of the Partnership's operations. The relationship of the General Partner to its Affiliates is described under the caption "Conflicts of Interest" at pages 10 and 11 of the Prospectus, incorporated herein by reference.
Officers and Directors
The officers, directors and key employees of The Inland Group, Inc. and its Affiliates ("Inland") that are likely to provide services to the Partnership are as follows:
Functional Title ----------------
Daniel L. Goodwin.......... Chairman and Chief Executive Officer Robert H. Baum............. Executive Vice President-General Counsel G. Joseph Cosenza.......... Senior Vice President-Acquisitions Robert D. Parks............ Senior Vice President-Investments Catherine L. Lynch......... Treasurer Roberta S. Matlin.......... Assistant Vice President-Investments Mark Zalatoris............. Assistant Vice President-Due Diligence Patricia A. Challenger..... Vice President-Asset Management Frances C. Panico.......... Vice President-Mortgage Corporation Raymond E. Petersen........ Vice President-Mortgage Corporation Paul J. Wheeler............ Vice President-Personal Financial Services Group Cynthia M. Hassett......... Assistant Vice President-Partnership Accounting Venton J. Carlston......... Assistant Controller
DANIEL L. GOODWIN (age 52) is Chairman of the Board of Directors of The Inland Group, Inc., a billion-dollar real estate and financial organization located in Oak Brook, Illinois. Among Inland's subsidiaries is the largest property management firm in Illinois and one of the largest commercial real estate and mortgage banking firms in the Midwest.
Mr. Goodwin has served as Director of the Avenue Bank of Oak Park and as a Director of the Continental Bank of Oakbrook Terrace. He was also Chairman of the Bank Holding Company of American National Bank of DuPage. Currently he is the President of Inland Mortgage Investment Corporation.
Mr. Goodwin has been in the housing industry for more than 25 years, and has demonstrated a lifelong interest in housing-related issues. He is a licensed real estate broker and a member of the National Association of Realtors. He has developed thousands of housing units in the Midwest, New England, Florida, and the Southwest. He is also the author of a nationally recognized reference book for the management of residential properties.
Mr. Goodwin serves on the Board of the Illinois State Affordable Housing Trust Fund for the past 6 years. He is an advisor for the Office of Housing Coordination Services of the State of Illinois, and a member of the Seniors Housing Committee of the National Multi-Housing Council. Recently, Governor Edgar appointed him Chairman of the Housing Production Committee for the Illinois State Affordable Housing Conference. He also served as a member of the Cook County Commissioner's Economic Housing Development Committee, and he was the Chairman of the DuPage County Affordable Housing Task Force. The 1992 Catholic Charities Award was presented to Mr. Goodwin for his work in addressing affordable housing needs. The City of Hope designated him as the 1980's Man of the Year for the Illinois construction industry. In 1989, the Chicago Metropolitan Coalition on Aging presented Mr. Goodwin with an award in recognition of his efforts in making housing more affordable to Chicago's Senior Citizens. On May 4, 1995, PADS, Inc. (Public Action to Deliver Shelter) presented Mr. Goodwin with an award, recognizing The Inland Group as the leading corporate provider of transitional housing for the homeless people of DuPage County.
Mr. Goodwin is a product of Chicago-area schools, and obtained his Bachelor's and Master's Degrees from Illinois Universities. Following graduation, he taught for five years in Chicago Public Schools. His commitment to education has continued through his work with the Better Boys Foundation's Pilot Elementary School in Chicago, and the development of the Inland Vocational Training Center for the Handicapped located at Little City in Palatine, Illinois. He personally established an endowment which funds a perpetual scholarship program for inner- city disadvantaged youth. In 1990 he received the Northeastern Illinois University President's Meritorious Service Award. Mr. Goodwin holds a Master's Degree in Education from Northern Illinois University, and in 1986, he was awarded an Honorary Doctorate from Northeastern Illinois University College of Education. He served as a member of the Board of Governors of Illinois State Colleges and Universities, and he is currently a trustee of Illinois Benedictine College. He was elected Chairman of Northeastern Illinois University Board of Trustees in January 1996.
Mr. Goodwin served as a member of Governor Jim Edgar's Transition Team. In 1988 he received the Outstanding Business Leader Award from the Oak Brook Jaycees. He also serves as the Chairman of the Illinois Speaker of the House of Representatives Club, and has been the General Chairman of the National Football League Players Association Mackey Awards for the benefit of inner-city youth. In March 1994, he won the Excellence in Business Award from the DuPage Area Association of Business and Industry. Additionally, he was honored by Little Friends on May 17, 1995 for rescuing their Parent-Handicapped Infant Program when they lost their lease last year, and on June 9, he received the 1995 March of Dimes Birth Defects Foundation Life Achievement Award.
ROBERT H. BAUM (age 52) has been with Inland since 1968 and is one of the four original principals. Mr. Baum is Vice Chairman and Executive Vice President-General Counsel of The Inland Group, Inc. In his capacity as General Counsel, Mr. Baum is responsible for the supervision of the legal activities of The Inland Group, Inc. and its affiliates. This responsibility includes the supervision of The Inland Law Department and serving as liaison with all outside counsel. Mr. Baum has served as a member of the North American Securities Administrators Association Real Estate Advisory Committee and as a member of the Securities Advisory Committee to the Secretary of State of Illinois. He is a member of the American Corporation Counsel Association, as well as a member of several bar associations. Mr. Baum has been admitted to practice before the Supreme Courts of the United States and the State of Illinois, as well as the bars of several federal courts of appeals and federal district courts. He received his B.S. Degree from the University of Wisconsin and his J.D. Degree from Northwestern University School of Law. Mr. Baum has served as a director of American National Bank of DuPage and is a member of the Governing Council of Wellness House, a charitable organization that provides emotional support for cancer patients and their families.
G. JOSEPH COSENZA (age 52) joined Inland in 1968. Mr. Cosenza, is a director, Vice Chairman and Chief Executive Officer of the Inland Group Inc. Mr. Cosenza oversees, coordinates and directs Inland's many enterprises and, in addition, immediately supervises a staff of five persons who engage in property acquisition. Mr. Cosenza has been a consultant to other real estate entities and lending institutions on property appraisal methods. Mr. Cosenza received his B.A. degree from Northeastern Illinois University and his M.S. degree from Northern Illinois University. From 1967 to 1968, Mr. Cosenza taught at the LaGrange School District in Hodgkins, and from 1968 to 1972, he served as Assistant Principal and teacher in the Wheeling School District. He has been a licensed real estate broker since 1968 and an active member of various national and local real estate associations, including the National Association of Realtors and the Urban Land Institute. Mr. Cosenza has also been Chairman of the Board of American National Bank of DuPage and part owner of American National Bank of DuPage and Burbank State Bank, and has served on the Board of Directors of Continental Bank of Oakbrook Terrace.
ROBERT D. PARKS (age 52) joined Inland in 1968. He is Director of The Inland Group, Inc. and is President, Chairman and Chief Executive Officer of Inland Real Estate Investment Corporation and is Director of Inland Securities Corporation. Mr. Parks is responsible for the ongoing administration of existing partnerships, corporate budgeting and administration for Inland Real Estate Investment Corporation. He oversees and coordinates the marketing of all limited partnership interests nationwide and has overall responsibility for the portfolio management of all partnership investments and investor relations. Mr. Parks received his B.A. degree from Northeastern Illinois University and M.A. degree from the University of Chicago. He is a registered Direct Participation Program Principal with the National Association of Securities Dealers, Inc., and a licensed real estate broker. He is a member of the Real Estate Investment Association and a member of the board of NAREIT.
CATHERINE L. LYNCH (age 37) joined Inland in 1989 and is the Treasurer of Inland Real Estate Investment Corporation. Ms. Lynch is responsible for managing the Corporate Accounting Department. Prior to joining Inland, Ms. Lynch worked in the field of public accounting for KPMG Peat Marwick since 1980. She received her B.S. degree in Accounting from Illinois State University. Ms. Lynch is a Certified Public Accountant and a member of the American Institute of Certified Public Accountants. She is registered with the National Association of Securities Dealers as a Financial Operations Principal.
ROBERTA S. MATLIN (age 51) joined Inland in 1984 as Director of Investor Administration and currently serves as Senior Vice President-Investments. Prior to that, Ms. Matlin spent 11 years with the Chicago Region of the Social Security Administration of the United States Department of Health and Human Services. As Senior Vice President-Investments, she directs the day-to-day internal operations of the General Partner. Ms. Matlin received her B.A. degree from the University of Illinois. She is registered with the National Association of Securities Dealers, Inc. as a General Securities Principal.
MARK ZALATORIS (age 38) joined Inland in 1985 and currently serves as Vice President of Inland Real Estate Investment Corporation. His responsibilities include the coordination of due diligence activities by selling broker/dealers and is also involved with limited partnership asset management including the mortgage funds. Mr. Zalatoris is a graduate of the University of Illinois where he received a Bachelors degree in Finance and a Masters degree in Accounting and Taxation. He is a Certified Public Accountant and holds a General Securities License with Inland Securities Corporation.
PATRICIA A. CHALLENGER (age 43) joined Inland in 1985. Ms. Challenger serves as Senior Vice President of Inland Real Estate Investment Corporation in the area of Asset Management. As head of the Asset Management Department, she develops operating and disposition strategies for all investment-owned properties. Ms. Challenger received her bachelor's degree from George Washington University and her master's from Virginia Tech University. Ms. Challenger was selected and served from 1980-1984 as Presidential Management Intern, where she was part of a special government-wide task force to eliminate waste, fraud and abuse in government contracting and also served as Senior Contract Specialist responsible for capital improvements in 109 government properties. Ms. Challenger is a licensed real estate salesperson, NASD registered securities sales representative and is a member of the Urban Land Institute.
FRANCES C. PANICO (age 46) joined Inland in 1972 and is currently President of Inland Mortgage Servicing Corporation. Ms. Panico oversees the operation of loan services, which has a loan portfolio in excess of $612 million. She previously supervised the origination, processing and underwriting of single- family mortgages, and she packaged and sold mortgages to secondary markets. Ms. Panico's other primary duties at Inland have included coordinating collection procedures and overseeing the default analysis and resolution process. Ms. Panico received her B.A. in Business and Communication from Northern Illinois University in 1972.
RAYMOND E. PETERSEN (age 56) joined Inland in 1981. Mr. Petersen is responsible for the selection and approval of all corporate and limited partnership financing, as well as for the daily supervision of the commercial lending activity of Inland Mortgage Corporation, where he is President. For the six years prior to joining Inland, Mr. Petersen was affiliated with the mortgage banking firm of Downs, Mohl Mortgage Corporation, serving as President and Chief Executive Officer. Previously he was also associated with the mortgage banking houses of B.B. Cohen & Company and Percy Wilson Mortgage and Finance Corporation. Mr. Petersen's professional credentials include a B.A. degree from DePaul University, senior membership in the National Association of Review Appraisers, state license as a real estate broker and licensed securities representative. Mr. Petersen was also a Director and Chairman of the Asset and Liability Committee of American National Bank of Downers Grove.
PAUL J. WHEELER (age 43) joined Inland in 1982 and is currently the President of Inland Property Sales, Inc. and President of Inland Securities Corporation, Inland's broker/dealer. Mr. Wheeler received his B.A. degree in Economics from DePauw University and an M.B.A. in Finance/Accounting from Northwestern University. Mr. Wheeler is a Certified Public Accountant, a licensed real estate broker and is registered with the National Association of Securities Dealers, Inc. as a General Securities Principal. For three years prior to joining Inland, Mr. Wheeler was Vice President/Finance at the real estate brokerage firm of Quinlan & Tyson, Inc.
CYNTHIA M. HASSETT (age 37) joined Inland in 1983 and is a Vice President of Inland Real Estate Investment Corporation. Ms. Hassett is responsible for the Investment Accounting Department which includes all public partnership accounting functions along with quarterly and annual SEC filings. Prior to joining Inland, Ms. Hassett was on the audit staff of Altschuler, Melvoin and Glasser since 1980. She received her B.S. degree in Accounting from Illinois State University. Ms. Hassett is a Certified Public Accountant and a member of the American Institute of Certified Public Accountants.
VENTON J. CARLSTON (age 38) joined Inland in 1985 and is the Assistant Controller of Inland Real Estate Investment Corporation where he supervises the corporate bookkeeping staff and is responsible for financial statement preparation and budgeting for Inland Real Estate Investment Corporation and its subsidiaries. Prior to joining Inland, Mr. Carlston was a partnership accountant with JMB Realty. He received his B.S. degree in Accounting from Southern Illinois University. Mr. Carlston is a Certified Public Accountant and a member of the American Institute of Certified Public Accountants and the Illinois CPA Society. He is registered with the National Association of Securities Dealers, Inc. as a Financial Operations Principal.
Item 11.

Item 11. Executive Compensation
The General Partner is entitled to receive a share of cash distributions, when and as cash distributions are made to the Limited Partners, and a share of profits or losses as described under the caption "Cash Distributions" at pages 34 and 35, "Allocation of Profits or Losses" on page 34 of the Prospectus and at pages A-6 through A-8 of the Partnership Agreement, included as an exhibit to the Prospectus, incorporated herein by reference. Reference is also made to Note (3) of the Notes to Financial Statements (Item 8 of this Annual Report) for a description of such distributions and allocations.
The Partnership is permitted to engage in various transactions involving Affiliates of the General Partner of the Partnership, as described under the captions "Compensation and Fees" on pages 7 through 9, "Conflicts of Interest" on pages 9 through 11 of the Prospectus and at pages A-10 through A-19 of the Partnership Agreement, included as an exhibit to the Prospectus, which is hereby incorporated herein by reference. The relationship of the General Partner (and its directors and officers) to its Affiliates is set forth above in Item 10.
The General Partner may be reimbursed for salaries and direct expenses of employees of the General Partner and its Affiliates for the administration of the Partnership. In 1995, costs relating to such services were $22,608, of which $2,158 is unpaid at December 31, 1995.
A subsidiary of the General Partner earned mortgage servicing fees of $3,830 in 1995, in connection with servicing the Partnership's mortgage loans receivable.
Item 12.

Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) No person or group is known by the Partnership to own beneficially more than 5% of the outstanding Units of the Partnership.
(b) The officers and directors of the General Partner of the Partnership own as a group the following Units of the Partnership as of December 31, 1995:
Amount and Nature of Beneficial Percentage Title of Class Ownership of Class -------------- ----------------- ----------
Limited Partnership One Unit directly Less than 1% Units
No officer or director of the General Partner of the Partnership possesses a right to acquire beneficial ownership of Units of the Partnership.
All of the outstanding shares of the General Partner of the Partnership are owned by an Affiliate of its officers and directors as set forth in Item 10.
(c) There exists no arrangement, known to the Partnership, the operation of which may at a subsequent date result in a change in control of the Partnership.
Item 13.

Item 13. Certain Relationships and Related Transactions
There were no significant transactions or business relationships with the General Partner, Affiliates or their management other than those described in Items 10 and 11 above. Reference is made to Note (2) of the Notes to Financial Statements (Item 8 of this Annual Report).
PART IV
Item 14.

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) The Financial Statements listed in the index on page 8 of this Annual Report are filed as part of this Annual Report.
(b) Exhibits. The following documents are filed as part of this Report:
3 Amended and Restated Agreement of Limited Partnership and Certificate of Limited Partnership, included as Exhibit A and B to the Prospectus dated January 9, 1989, as supplemented, are incorporated herein by reference thereto.
4 Form of Certificate of Ownership representing interests in the registrant filed as Exhibit 4 to Registration Statement on Form S-11, File No. 33-24994, is incorporated herein by reference thereto.
28 Prospectus dated January 9, 1989, as supplemented, included in Post- effective Amendment No. 1 to Form S-11 Registration Statement, File No. 33-24994, is incorporated herein by reference thereto.
(c) Financial Statement Schedules:
All schedules have been omitted as the required information is inapplicable or the information is presented in the financial statements or related notes.
(d) Reports on Form 8-K:
None
No Annual Report or proxy material for the year 1995 has been sent to the Partners of the Partnership. An Annual Report will be sent to the Partners subsequent to this filing and the Partnership will furnish copies of such report to the Commission when it is sent to the Partners.
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
INLAND MORTGAGE INVESTORS FUND III, L.P. Inland Real Estate Investment Corporation General Partner
By: Robert D. Parks Chairman of the Board and Chief Executive Officer Date: March 28, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
By: Inland Real Estate Investment Corporation General Partner
By: Robert D. Parks Chairman of the Board and Chief Executive Officer Date: March 28, 1996
By: Mark Zalatoris Vice President Date: March 28, 1996
By: Cynthia M. Hassett Principal Financial Officer and Principal Accounting Officer Date: March 28, 1996
By: Daniel L. Goodwin Director Date: March 28, 1996
By: Robert H. Baum Director Date: March 28, 1996


ITEM 1 - BUSINESS
Fluke Corporation (the Company), was founded in 1948 and was incorporated under the laws of the State of Washington on October 7, 1953. In August, 1993, the Company changed its name from John Fluke Mfg. Co., Inc. to Fluke Corporation. The Company is engaged in the design, manufacture and marketing of compact, professional electronic test tools. The Company's principal products are portable instruments that measure the magnitude of voltage, current, power quality, frequency, temperature, pressure and other key functional parameters of electronic equipment.
The Company believes that there are a number of key trends occurring throughout the world that are driving the need for portable electronic test tools: increasing device complexity, growing electronic content in existing and new applications, decentralization of electronic systems and increasing reliance on mission critical electronic systems. In addition, the increasing need for companies to improve quality, document compliance with regulatory or industrial standards, and maintain a safe working environment has further increased the need for electronic test tools. These general trends have greatly increased the need for trained technicians to be able to install, maintain and diagnose electrical systems at widespread locations. These trained technicians are responsible for enhancing the up-time of electrical systems and have a new set of needs in the tools they use to perform their jobs. These tools need to be portable, precise, rugged and easy to use. These technicians use these tools to measure electrical parameters across a wide variety of fields and industries.
Fluke's targeted end-users are service, installation and maintenance professionals who use the Company's tools to identify, diagnose and solve electrical problems. Fluke's portable digital multimeters, ScopeMeter (Registered Trademark) test tools and calibration equipment, which have substantial and leading market shares, are used for field testing and verification of a broad range of electronic equipment. The Company has leveraged its competencies and market presence by offering new products for emerging applications. These include products that address local area networks (LANs), process control, data acquisition (temperature control, counting and other unattended data gathering), power analyzers and automotive electronics. The Company also manufactures and markets traditional bench test and measurement instruments, such as bench oscilloscopes.
PRODUCTS AND SERVICES
PRODUCTS
The Company is in a single line of business, the manufacturing and selling of electronic test tools. Although the products vary in capability, sophistication, use, size and price, they all fundamentally test and measure electrical parameters such as voltage, current, resistance, etc. As of May 1995, the Company offered over 200 product models with over 1,300 options and accessories. These products are divided into two product classes: handheld service tools and benchtop test instruments. Handheld service tools are typically used in field service applications by technicians to install and troubleshoot electronic and electrical equipment. Most of these tools are sold through indirect distribution channels. Representative products include handheld digital multimeters, ScopeMeter test tools, and LAN testers. Benchtop test instruments are used primarily by engineers and are most often sold through Fluke direct sales channels. Products include bench oscilloscopes, calibrators, data acquisition systems, and generators.
Handheld service tools were approimately 55 percent of the business in 1995, 49 percent in 1994, 50 percent in 1993 and 48 percent in 1992. Benchtop test instruments were approximately 36 percent of the business in 1995, 42 percent in 1994, 41 percent in 1993 and 43 percent in 1992. The remaining business consisted of service and parts for products that the Company sells.
NEW PRODUCTS
Fluke Corporation introduced the following major products in fiscal 1995.
ScopeMeter Series II. Four new models were introduced. ScopeMeter (registered trademark) test tools combine the functions of an oscilloscope with that of a digital multimeter in a handheld instrument.
701/702 Documenting Process Calibrators. These are the first handheld, multifunction calibrators with full documentation capabilities designed specifically for the calibration, troubleshooting and maintenance of process instrumentation.
5500A Multi-Product Calibrator. This is a new class of multifunction calibrator designed for today's increasingly broad calibration needs. It is used to calibrate a wide range of dc/low frequency instrumentation.
860 Series Graphical(Trademark) Multimeters. These test tools combine digital multimeter capabilities with analog, digital and graphical displays. The 860 Series is a family of three instruments.
DSP-100 LAN CableMeter(Trademark). This handheld test tool is designed to meet the soon to be announced standards for testing installed Category 5, ISO and IEC local area networks (LAN) cabling to 100 MHz. The DSP-100 uses a patented digital signal processing (DSP) technology.
NetDAQ(Trademark). These networked data acquisition units are portable, 20- measurement channel front-end data acquisition instruments that connect directly to a PC, or can transmit data via an Ethernet network.
PM3380A CombiScope(Trademark). This is a full function low-cost two channel oscilloscope designed for the engineer.
PM3394A CombiScope(Trademark). This is another oscilloscope in the CombiScope family of instruments that combine digital storage and an analog oscilloscope.
PM 6685R Rubidium Timebase Frequency Counter. This frequency counter has a new atomic reference that makes it the most accurate frequency counter on the market in its price range.
SALES AND DISTRIBUTION
The Company currently markets its products in more than 80 countries through both indirect and direct sales channels. The Company's indirect sales channels, those in which the Company does not invoice the end-user, include industrial distributors, catalog houses, automotive warehouses and electrical wholesalers. The Company's direct sales channels include both the Company's internal sales force, which the Company has in Western Europe, Canada, Japan and Singapore and independent manufacturer's representatives located in the U.S. and many other international markets. Direct and indirect sales channels will typically serve different customers in the same geographic areas.
The Company generally uses indirect distribution for its hand-held service tools. The Company has found that the end-users purchasing these tools often do not require ongoing product support or specific instructions on tool applications. This distribution channel more effectively serves the customers purchasing needs for these products.
The Company uses its direct sales channels primarily for its benchtop test instruments. These products are generally more technically complex products where the customer may require a greater amount of direct contact to close or support a sale. Direct sales channels are also used effectively in 1) those markets in which a substantial knowledge of the end-user's business is required, such as among potential customers for the LANMeter, and 2) in those geographic areas which do not have fully developed indirect distribution channels or where the customer still expects to purchase hand- held service tools through a direct sales force. In May 1995, the Company shifted all of its direct sales responsibilities in the U.S. from an internal sales force to fifteen manufacturer's representatives.
The Company's marketing effort consists principally of advertising in trade publications, appearing at trade shows, and to a lesser extent, utilizing direct mail campaigns.
SUPPLIERS
The Company generally uses standard parts and assemblies available from a number of suppliers. However, some components are only available from a single source. The Company has not experienced significant problems in obtaining sole-source components but typically carries extra inventory of any critical sole-sourced components. Fluke works closely as partners with its suppliers in an effort to assure a continuity of supply even during difficult allocation times. The Company is not aware of any facts which would result in a reduction, interruption or termination in the supply of its sole-sourced components.
PATENTS AND TRADEMARKS
The Company regards elements of its products as proprietary and relies primarily on a combination of patent, copyright, trademark and trade secret laws, confidentiality procedures, license agreements and other intellectual property protection methods to protect its proprietary technology. The Company holds or has pending United States and foreign patents to protect product designs, processes and techniques for the duration of their value to the Company. No significant patents have been formally upheld in court and no representation is made as to the validity or the degree of protection afforded by any patent. While the Company considers its existing and pending patents to be important and expects to defend and to continue to apply for patents with respect to any significant developments it regards as patentable, it does not consider its business as dependent to any material extent upon any one or more of such patents, nor would its present business be materially adversely affected if any of the patents were held invalid.The Company also owns trademarks, copyrights and proprietary information, which are considered by the Company to have significant value.
SEASONAL TRENDS AND WORKING CAPITAL REQUIREMENTS
While the Company is subject to minor seasonality effects associated with conducting business in various regions of the world, the impact of these seasonal trends is immaterial to the Company as a whole. The Company does not have any extraordinary working capital requirements.
CUSTOMERS
The Company's customers are generally involved in the installation, service, repair, or calibration of electronic or electrical equipment. They are also involved in research and development activities.
No one customer accounted for more than five percent of the Company's sales in fiscal year 1995.
BACKLOG
The Company's backlog of unfilled orders amounted to $45.1 million as of April 28, 1995, and $37.0 million as of April 29, 1994. The Company expects to satisfy nearly all such unfilled orders in fiscal 1996. The backlog consists of many different customer orders with no one customer being a material component.
COMPETITION
The market for electronic test tools is widely fragmented, consisting of a large number of companies, generally focused on one or a few products or markets. Fluke maintains a broad product offering targeted to many different applications and markets. The Company believes that its products compete principally on the basis of performance, service and warranty, and to a lesser extent, price. While there are numerous firms engaged in the production of electronic test tools, no single company competes with the Company across a substantial portion of its markets. It does, however, have competitors that are substantially larger than the Company and have greater financial resources.
RESEARCH AND DEVELOPMENT
The Company's research activities are directed toward the development of new products that will complement and expand the present product line, and toward the creation of new manufacturing techniques. Research and development expense was $37.7 million for the year ended April 28, 1995 which was 10.0 percent of the Company's fiscal 1995 revenues. Research and development expense was $34.9 million for the year ended April 29, 1994, $13.7 million for the seven months ended ended April 30, 1993 and $22.5 million for the year ended September 1992 which were 9.8, 10.3 and 8.3 percent of the Company's total revenues, respectively. No research contracts are obtained from customers, nor does the Company conduct any research work under government development contracts.
ENVIRONMENTAL CONTROLS
The Company does not anticipate any material effects upon its capital expenditures, earnings or competitive position as a result of compliance with federal, state and local provisions regulating the discharge of materials into the environment or otherwise relating to the protection of the environment.
EMPLOYEES
The Company had 2,516 full-time employees as of April 28, 1995.
FOREIGN OPERATIONS AND EXPORT SALES
Information related to foreign operations and export sales is incorporated herein by reference to Note 10 of the Consolidated Financial Statements on page 52 of the Company's 1995 Annual Report to Stockholders, a copy of which is filed as Exhibit 13 to this report.
The Company has significant revenues from outside of the United States which increase the complexity and risk to the Company. These risks include increased exposure to the risk of foreign currency fluctuations and the potential economic and political impacts from doing business in foreign countries including changes in labor and tax laws, import and export controls and changes in governmental policies.
EXECUTIVE OFFICERS OF THE REGISTRANT
The Executive Officers, who serve at the pleasure of the Board of Directors of the Company, as of June 23, 1995, are as follows:
WILLIAM G. PARZYBOK, JR.
Mr. Parzybok, age 53, has been Chairman of the Board, Chief Executive Officer and a Director of the Company since 1991. He previously had been employed for 22 years by the Hewlett-Packard Company where his most recent position was Vice President and General Manager of Engineering Applications Group from 1988 to 1991. Mr. Parzybok serves on the Executive Committee of the Board. He is also a Director of PENWEST, Ltd.
GEORGE M. WINN
Mr. Winn, age 51, has been President, Chief Operating Officer and a Director of the Company since 1982. He previously served as Chief Executive Officer of the Company from 1987 to 1991. Mr. Winn serves on the Executive Committee of the Board. He is also a Director of Heart Technology, Inc.
RICHARD W. VAN SAUN
Mr. Van Saun, age 57, has been a Senior Vice President of the Company and General Manager of the Service Tools Division since 1994. He previously served as Senior Vice President and Group Manager of the Diagnostic Tools Division from 1992 to 1994 and as Vice President and Group Manager of the Service Equipment Group from 1986 to 1992.
RONALD R. WAMBOLT
Mr. Wambolt, age 60, has been a Senior Vice President of the Company and Director of Worldwide Sales and Service since 1991. He previously served as Senior Vice President and Director of Worldwide Sales from 1987 to 1991.
WILLIAM R. HOFFMAN
Mr. Hoffman, age 59, is a Vice President of the Company and Manager of Corporate Services. He is also General Manager of Calibration for the Verification Tools Division. He previously served as Vice President of Marketing Services and the Philips T&M Group from 1991 to 1992, and as Vice President of the Company and Group Manager of the Philips T&M Group from 1987 to 1991.
DAVID E. KATRI
Mr. Katri, age 45, has been a Vice President of the Company and General Manager of the Verification Tools Division since 1992. He previously served as Vice President of the Company and Group Manager of the Manufacturing/R&D Group from 1991 to 1992, and as Group Manager of the Manufacturing/R&D Group from 1988 to 1990.
DOUGLAS G. MCKNIGHT
Mr. McKnight, age 46, has served as Vice President, General Counsel of the Company since 1986 and as Corporate Secretary since 1983.
PATRICK J. O'HARA
Mr. O'Hara, age 42, has been Vice President, Human Resources and Facilities Manager of the Company since September, 1994. He previously served as Deputy Director of Human Resources at the Los Alamos National Laboratory from 1993 to 1994, and prior to that, as Site Human Resources Manager of the T.J. Watson Research Center of IBM Corporation from 1990 to 1993.
BARRY L. ROWAN
Mr. Rowan, age 38, has been Vice President and Chief Financial Officer of the Company since 1992. He previously had been employed by Comlinear Corporation where he served as President from 1989 to 1991.
JOHN R. SMITH
Mr. Smith, age 54, has been Vice President, Treasurer of the Company since 1987.
ITEM 2

ITEM 2 - PROPERTIES
The Company owns approximately 162 acres of real estate near Everett, Washington, the site of its corporate headquarters and U.S. manufacturing, warehousing and distribution facilities. These facilities are housed in six separate facilities consisting of approximately 480,000 square feet, 200,000 square feet and four smaller facilities totaling 77,800 square feet. The Company also owns a 25,000 square foot service facility situated on 1.5 acres in Paramus, New Jersey and a 27,000 square foot service facility situated on 4.8 acres in Palatine, Illinois. All facilities owned by the Company are insured at their estimated replacement cost.
The Company leases three facilities in The Netherlands, consisting of a 138,400 square foot engineering and manufacturing facility located at Almelo, a 17,600 square foot European headquarters and a 10,700 square foot service facility both located at Eindhoven. These properties could be duplicated, if necessary, with some disruption to operations. The Company has approximately 189,300 square feet of additional leased facilities throughout the world which are utilized for sales and service. The Company believes that its existing facilities are in good condition and are suitable and adequate for its business.
ITEM 3

ITEM 3 - LEGAL PROCEEDINGS
Not applicable.
ITEM 4

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
ITEM 5

ITEM 5 - MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The information required by this Item is incorporated herein by reference to Stock Price Information on page 58 of the Company's 1995 Annual Report to Stockholders, a copy of which is filed as Exhibit 13 to this Report.
ITEM 6

ITEM 6 - SELECTED FINANCIAL DATA
The information required by this Item is incorporated herein by reference to the Financial Summary on pages 56 and 57 of the Company's 1995 Annual Report to Stockholders, a copy of which is filed as Exhibit 13 to this Report.
ITEM 7

ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information required by this Item is incorporated herein by reference to pages 28 through 33 of the Company's 1995 Annual Report to Stockholders, a copy of which is filed as Exhibit 13 to this Report.
ITEM 8

ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item is incorporated herein by reference to pages 34 through 53 and the Selected Quarterly Financial Data (unaudited) on page 58 of the Company's 1995 Annual Report to Stockholders, a copy of which is filed as Exhibit 13 to this Report.
ITEM 9

ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10

ITEM 10 - DIRECTORS OF THE REGISTRANT
The information required by this Item relating to Directors is incorporated herein by reference to pages 3 through 7 of the Company's proxy statement dated July 25, 1995, to be filed with the Securities and Exchange Commission pursuant to Section 14(a) of the Securities Exchange Act of 1934.
ITEM 11

ITEM 11 - EXECUTIVE COMPENSATION
The information required by this Item is incorporated herein by reference to pages 7 through 9 of the Company's proxy statement dated July 25, 1995, to be filed with the Securities and Exchange Commission pursuant to Section 14(a) of the Securities Exchange Act of 1934.
ITEM 12

ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is incorporated herein by reference to pages 2 and 3 of the Company's proxy statement dated July 25, 1995, to be filed with the Securities and Exchange Commission pursuant to Section 14(a) of the Securities Exchange Act of 1934.
ITEM 13

ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is incorporated herein by reference to page 11 of the Company's proxy statement dated July 25, 1995, to be filed with the Securities and Exchange Commission pursuant to Section 14(a) of the Securities Exchange Act of 1934.
PART IV
ITEM 14

ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) Financial Statements of the Company
The following financial statements of Fluke Corporation and Subsidiaries are incorporated herein by reference to pages 34 through 58 of the Company's 1995 Annual Report to Stockholders, a copy of which is filed as Exhibit 13 to this report.
1. Consolidated Balance Sheets as of April 28, 1995 and April 29, 1994.
2. Consolidated Statements of Income for the year ended April 28, 1995, the year ended April 29, 1994, for the seven months ended April 30, 1993 and the year ended September 25, 1992.
3. Consolidated Statements of Cash Flows for the year ended April 28, 1995, the year ended April 29, 1994, for the seven months ended April 30, 1993 and the year ended September 25, 1992.
4. Consolidated Statements of Stockholders' Equity for the year ended April 28, 1995, the year ended April 29, 1994, for the seven months ended April 30, 1993 and the year ended September 25, 1992.
5. Notes to Consolidated Financial Statements.
(a)(2) Financial Statement Schedules
The following additional information should be read in conjunction with the Consolidated Financial Statements of the Company described in Item 14 (a)(1):
Schedule II Valuation and Qualifying Accounts
Schedules other than those listed above are omitted because they are not required or are not applicable, or because the information is furnished elsewhere in the financial statements or the notes thereto.
(a)(3) Index to Exhibits
Exhibit Page No. No. Exhibit Sequential Numbering System
3. Articles of Incorporation and Bylaws
3.1 Restated copy of Articles of Incorporation as amended on August 11, 1993 (incorporated by reference to Exhibit 3.1 of the Company's Form 10-K Report for the Fiscal Year ended April 29, 1994).
3.2 Conformed Copy of Bylaws as amended through January 16, 1995
4. Instruments Defining the Rights of Security Holders, Including Indentures
4.1 Stockholders Rights Plan (incorporated by reference to the Company's Form 8A Report dated July 11, 1988), the First Amendment to the Stockholders Rights Plan (incorporated by reference to the Company's Form 8A Report dated May 2, 1989) and the Second Amendment to the Stockholders Rights Plan (incorporated by reference to the Company's Form 8A report dated February 15, 1990).
10. Material Contracts
10.1 1990 Stock Incentive Plan of the Company (incorporated by reference to Exhibit 10.11 of the Company's Form 10-K Report for the Fiscal Year ended September 27, 1991).
10.2 Stock Option Plan for Outside Directors (incorporated by reference to Exhibit 10.12 of the Company's Form 10-K Report for the Fiscal Year ended September 27, 1991).
10.3 Employment Agreement dated September 5, 1991 between the Company and William G. Parzybok, Jr. (incorporated by reference to Exhibit 10.7 of the Company's Form 10K Report for the Fiscal Year ended September 27, 1992).
10.4 Employment Agreement dated September 5, 1991 between the Company and George M. Winn (incorporated by reference to Exhibit 10.8 of the Company's Form 10K Report for the Fiscal Year ended September 27, 1992).
10.5 Employment Agreement dated September 5, 1991 between the Company and Ronald R. Wambolt (incorporated by reference to Exhibit 10.9 of the Company's Form 10K Report for the Fiscal Year ended September 27, 1992).
10.6 Employment Agreement dated September 5, 1991 between the Company and Richard W. Van Saun (incorporated by reference to Exhibit 10.10 of the Company's Form 10K Report for the Fiscal Year ended September 27, 1992).
10.7 Change of Control Agreement dated September 5, 1991 between the Company and John R. Smith. Other executive officers of the Company have identical change of control agreements with the Company (incorporated by reference to Exhibit 10.12 of the Company's Form 10-K Report for the Fiscal Year ended April 30, 1993).
10.8 Annual Variable Compensation Policy (incorporated by reference to Exhibit 10.17 of the Company's Form 10-K Report for the Fiscal Year ended April 30, 1993).
10.9 Purchase Agreement between the Company and Philips Electronics N.V. dated February 26, 1993 (incorporated by reference to Exhibit 10.18 of the Company's Form 10-K Report for the Fiscal Year ended April 30, 1993).
10.10 Stock Purchase Agreement between the Company and Philips Electronics N.V. dated May 26, 1993 (incorporated by reference to Exhibit 10.19 of the Company's Form 10-K Report for the Fiscal Year ended April 30, 1993).
10.11 Fluke Corporation 1988 Stock Incentive Plan of the Company as amended on June 10, 1993 by stockholders on September 29, 1993 (incorporated by reference to Exhibit 10.11 of the Company's Form 10-K Report for the Fiscal Year ended April 29, 1994
10.12 Deferred Compensation Plan for Directors of Fluke Corporation as amended on April 29, 1994 (incorporated by reference to Exhibit 10.12 of the Company's Form 10-K Report for the Fiscal Year ended April 29, 1994).
10.13 Fluke Corporation Supplemental Retirement Income Plan as amended on June 22, 1994 (incorporated by reference to Exhibit 10.13 of the Company's Form 10-K Report for the Fiscal Year ended April 29, 1994).
11 Computation of Earnings Per Share
13 1995 Annual Report to Stockholders
18 Preferability letter from Ernst and Young, independent auditors, dated July 22, 1993 regarding Change in Accounting Principle (incorporated by reference to Exhibit 18 of the Company's Form 10-K Report for the Fiscal Year ended April 30, 1993).
21 Subsidiaries
23.1 Consent of Ernst & Young LLP, independent auditors, dated July 27,
Item 14 (b)Reports on Form 8-K.
No reports on Form 8-K were filed during the last quarter of the Company's Fiscal Year ended April 28, 1995.
Item 14 (c)Exhibits: See "Index to Exhibits" at Item 14(a)(3) above.
Item 14 (d)Financial Statement Schedules: Schedules required to be filed in response to this portion of Item 14 are listed above in Item 14 (a)(2).
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
FLUKE CORPORATION (Registrant)
/s/ George M. Winn President George M. Winn Chief Operating Officer July 25, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated.
Signature Title Date /s/ William G. Parzybok, Jr. Chairman of the Board July 25, 1995 William G. Parzybok, Jr. Chief Executive Officer /s/ George M. Winn President, Chief Operating July 25, 1995 George M. Winn Officer and Director /s/ Barry L. Rowan Vice President July 25, 1995 Barry L. Rowan Chief Financial Officer /s/ John R. Smith Vice President, Treasurer July 25, 1995 John R. Smith Chief Accounting Officer /s/ J. Peter Bingham Director July 25, 1995 J. Peter Bingham /s/ Philip M. Condit Director July 25, 1995 Philip M. Condit /s/ John D. Durbin Director July 25, 1995 John D. Durbin /s/ David L. Fluke Director July 25, 1995 David L. Fluke /s/ John M. Fluke, Jr. Director July 25, 1995 John M. Fluke, Jr. /s/ Robert S. Miller, Jr. Director July 25, 1995 Robert S. Miller, Jr. /s/ William H. Neukom Director July 25, 1995 William H. Neukom /s/ Dr. David S. Potter Director July 25, 1995 Dr. David S. Potter /s/ N. Stewart Rogers Director July 25, 1995 N. Stewart Rogers /s/ Stephen C. Tumminello Director July 25, 1995 Stephen C. Tumminello /s/ James E. Warjone Director July 25, 1995 James E. Warjone