-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SztsXxJspYpaCIhkBLQOxTdNkg0vU1AfuIwGnobGpW8HyCZYvlLXWTzkRI5QlZry HOVk6A4fsNSkAe+UIsLUuQ== 0000927016-96-000806.txt : 19960814 0000927016-96-000806.hdr.sgml : 19960814 ACCESSION NUMBER: 0000927016-96-000806 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960813 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN INCOME 7 LTD PARTNERSHIP CENTRAL INDEX KEY: 0000780398 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EQUIPMENT RENTAL & LEASING, NEC [7359] IRS NUMBER: 042932747 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-15623 FILM NUMBER: 96610788 BUSINESS ADDRESS: STREET 1: EXCHANGE PL STREET 2: 14TH FLR CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6175421200 MAIL ADDRESS: STREET 1: C/O AMERICAN FINANCE GROUP STREET 2: 53 STATE STREET, 14TH FLOOR CITY: BOSTON STATE: MA ZIP: 02109 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN INCOME 7 LTD PARTNERSHIP AI-7 DATE OF NAME CHANGE: 19870423 10-Q 1 QUARTERLY REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [XX] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1996 ------------------------------------------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ----------------------- ----------------------- ------------------------ For Quarter Ended June 30, 1996 Commission File No. 0-15623 American Income 7 Limited Partnership - ------------------------------------------------------------------------------ (Exact name of registrant as specified in its charter) Massachusetts 04-2932747 - ---------------------------------- ------------------- (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 98 North Washington Street, Boston, MA 02114 - ---------------------------------------- -------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (617) 854-5800 ----------------------------- - -------------------------------------------------------------------------------- (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 ----------- -------- APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court 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 No ------- ------- AMERICAN INCOME 7 LIMITED PARTNERSHIP FORM 10-Q INDEX
Page ---- PART I. FINANCIAL INFORMATION Item 1. Financial Statements Statement of Financial Position at June 30, 1996 and December 31, 1995 3 Statement of Operations for the three and six months ended June 30, 1996 and 1995 4 Statement of Cash Flows for the six months ended June 30, 1996 and 1995 5 Notes to the Financial Statements 6-8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9-12 PART II. OTHER INFORMATION: Items 1 - 6 13
2 AMERICAN INCOME 7 LIMITED PARTNERSHIP STATEMENT OF FINANCIAL POSITION June 30, 1996 and December 31, 1995 (Unaudited)
June 30, December 31, 1996 1995 ----------- ------------ ASSETS - ------- Cash and cash equivalents $ 370,217 $ 316,150 Rents receivable, net of allowance for doubtful accounts of $10,000 at December 31, 1995 4,764 20,124 Accounts receivable - affiliate 164,081 194,735 Equipment at cost, net of accumulated depreciation of $10,471,372 and $9,931,106 at June 30, 1996 and December 31, 1995, respectively 3,124,778 3,679,301 ---------- ---------- Total assets $3,663,840 $4,210,310 ========== ========== LIABILITIES AND PARTNERS' CAPITAL - --------------------------------- Notes payable $ -- $ 65,165 Accrued interest -- 835 Accrued liabilities 11,750 20,000 Accrued liabilities - affiliate 5,995 1,715 Deferred rental income 103,922 252,724 Cash distributions payable to partners 45,080 180,319 ---------- ---------- Total liabilities 166,747 520,758 ---------- ---------- Partners' capital (deficit): General Partner (121,712) (119,787) Limited Partnership Interests (71,406 Units; initial purchase price of $250 each) 3,618,805 3,809,339 ---------- ---------- Total partners' capital 3,497,093 3,689,552 ---------- ---------- Total liabilities and partners' capital $3,663,840 $4,210,310 ========== ==========
The accompanying notes are an integral part of these financial statements. 3 AMERICAN INCOME 7 LIMITED PARTNERSHIP STATEMENT OF OPERATIONS for the three and six months ended June 30, 1996 and 1995 (Unaudited)
Three Months Six Months Ended June 30, Ended June 30, 1996 1995 1996 1995 ----------- --------- ----------- --------- Income: Lease revenue $ 244,485 $401,539 $ 505,381 $800,083 Interest income 4,160 10,423 9,096 22,015 Gain on sale of equipment 381 4,720 881 11,020 --------- -------- --------- -------- Total income 249,026 416,682 515,358 833,118 --------- -------- --------- -------- Expenses: Depreciation 228,170 232,228 454,523 464,456 Write-down of equipment 100,000 -- 100,000 -- Interest expense 84 17,480 581 35,728 Equipment management fees - affiliate 12,224 20,077 25,269 40,004 Operating expenses - affiliate 20,211 18,533 37,284 42,980 --------- -------- --------- -------- Total expenses 360,689 288,318 617,657 583,168 --------- -------- --------- -------- Net income (loss) $(111,663) $128,364 $(102,299) $249,950 ========= ======== ========= ======== Net income (loss) per limited partnership unit $(1.55) $ 1.78 $(1.42) $ 3.47 ========= ========= ======== ========= Cash distributions declared per limited partnership unit $0.63 $ 5.00 $1.25 $ 10.00 ========= ======== ========= ========
The accompanying notes are an integral part of these financial statements. 4 AMERICAN INCOME 7 LIMITED PARTNERSHIP STATEMENT OF CASH FLOWS for the six months ended June 30, 1996 and 1995 (Unaudited)
1996 1995 ----------- ---------- Cash flows from (used in) operating activities: Net income (loss) $(102,299) $ 249,950 Adjustments to reconcile net income (loss) to net cash from operating activities: Depreciation 454,523 464,456 Write-down of equipment 100,000 -- Gain on sale of equipment (881) (11,020) Decrease in allowance for doubtful accounts (10,000) -- Changes in assets and liabilities Decrease in: rents receivable 25,360 884 accounts receivable - affiliate 30,654 1,870 Increase (decrease) in: accrued interest (835) (827) accrued liabilities (8,250) (500) accrued liabilities - affiliate 4,280 (3,528) deferred rental income (148,802) 533 --------- --------- Net cash from operating activities 343,750 701,818 --------- --------- Cash flows from investing activities: Proceeds from equipment sales 881 11,020 --------- --------- Net cash from investing activities 881 11,020 --------- --------- Cash flows used in financing activities: Principal payments - notes payable (65,165) (223,788) Distributions paid (225,399) (721,274) --------- --------- Net cash used in financing activities (290,564) (945,062) --------- --------- Net increase (decrease) in cash and cash equivalents 54,067 (232,224) Cash and cash equivalents at beginning of period 316,150 992,497 --------- --------- Cash and cash equivalents at end of period $ 370,217 $ 760,273 ========= ========= Supplemental disclosure of cash flow information: Cash paid during the period for interest $ 1,416 $ 36,555 ========= =========
The accompanying notes are an integral part of these financial statements. 5 AMERICAN INCOME 7 LIMITED PARTNERSHIP Notes to the Financial Statements June 30, 1996 (Unaudited) NOTE 1 - BASIS OF PRESENTATION - ------------------------------ The financial statements presented herein are prepared in conformity with generally accepted accounting principles and the instructions for preparing Form 10-Q under Rule 10-01 of Regulation S-X of the Securities and Exchange Commission and are unaudited. As such, these financial statements do not include all information and footnote disclosures required under generally accepted accounting principles for complete financial statements and, accordingly, the accompanying financial statements should be read in conjunction with the footnotes presented in the 1995 Annual Report. Except as disclosed herein, there has been no material change to the information presented in the footnotes to the 1995 Annual Report. In the opinion of management, all adjustments (consisting of normal and recurring adjustments) considered necessary to present fairly the financial position at June 30, 1996 and December 31, 1995 and results of operations for the three and six month periods ended June 30, 1996 and 1995 have been made and are reflected. NOTE 2 - CASH - ------------- The Partnership invests excess cash with large institutional banks in reverse repurchase agreements with overnight maturities. The reverse repurchase agreements are secured by U.S. Treasury Bills or interests in U.S. Government securities. NOTE 3 - REVENUE RECOGNITION - ---------------------------- Rents are payable to the Partnership monthly, quarterly or semi-annually and no significant amounts are calculated on factors other than the passage of time. The leases are accounted for as operating leases and are noncancellable. Rents received prior to their due dates are deferred. Future minimum rents of $3,355,452 are due as follows: For the year ending June 30, 1997 $ 850,213 1998 823,072 1999 792,676 2000 792,676 2001 96,815 ---------- Total $3,355,452 ==========
6 AMERICAN INCOME 7 LIMITED PARTNERSHIP Notes to the Financial Statements (Continued) NOTE 4 - EQUIPMENT - ------------------ The following is a summary of equipment owned by the Partnership at June 30, 1996. In the opinion of American Finance Group ("AFG"), the acquisition cost of the equipment did not exceed its fair market value.
Lease Term Equipment Equipment Type (Months) at Cost - -------------- -------------- ------------- Aircraft 36-60 $ 8,179,070 Flight simulators 60 4,290,414 Manufacturing 24-60 598,850 Motor vehicles 12-72 311,192 Communications 36 83,873 Computer and peripherals 12-60 54,612 Tractors and heavy duty trucks 2-60 50,696 Materials handling 2-60 27,443 ------------ Total equipment cost 13,596,150 Accumulated depreciation (10,471,372) ------------ Equipment, net of accumulated depreciation $ 3,124,778 ============
At June 30, 1996, the Partnership's equipment portfolio included equipment having a proportionate original cost of $12,780,726, representing 94% of total equipment cost. The summary above includes fully depreciated equipment with a cost of approximately $40,000 which is not subject to an active lease agreement. During the quarter ended June 30, 1996, the Partnership recorded a write- down, representing an impairment in value, pertaining to its interest in a Lockheed L-1011 aircraft. This adjustment was precipitated by continuing deterioration in the secondary market for wide-body aircraft of this type. Several air carriers have reduced their commitment to the L-1011 and, currently, a major domestic air carrier is expected to retire eleven L-1011 aircraft from its fleet. Further, it appears that future demand for this type of aircraft will be weak, consisting principally of air cargo carriers or operators of passenger charters. In consideration of such circumstances and in accordance with Financial Accounting Standards Board Statement No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of, the Partnership reduced the carrying value of its L-1011 aircraft interest to its estimated current fair market value. This resulted in a write-down of $100,000, representing $1.39 per limited partnership unit. NOTE 5 - RELATED PARTY TRANSACTIONS - ----------------------------------- All operating expenses incurred by the Partnership are paid by AFG on behalf of the Partnership and AFG is reimbursed at its actual cost for such expenditures. Fees and other costs incurred during each of the six month periods ended June 30, 1996 and 1995, which were paid or accrued by the Partnership to AFG or its Affiliates, are as follows: 7 AMERICAN INCOME 7 LIMITED PARTNERSHIP Notes to the Financial Statements (Continued)
1996 1995 -------- -------- Equipment management fees $25,269 $40,004 Administrative charges 7,878 7,878 Reimbursable operating expenses due to third parties 29,406 35,102 ------- ------- Total $62,553 $82,984 ======= =======
All rents and proceeds from the sale of equipment are paid directly to either AFG or to a lender. AFG temporarily deposits collected funds in a separate interest-bearing escrow account prior to remittance to the Partnership. At June 30, 1996, the Partnership was owed $164,081 by AFG for such funds and the interest thereon. These funds were remitted to the Partnership in July 1996. NOTE 6- LEGAL PROCEEDINGS - ------------------------- On March 15, 1993, Herman's Sporting Goods, Inc., a lessee of the Partnership (the "Debtor"), filed for protection under Chapter 11 of the Bankruptcy Code in the United States District Court, Trenton, New Jersey (the "District Court"). Certain unpaid rents due to the Partnership were scheduled by the Debtor as unsecured claims. Upon order of the District Court, renewal rental schedules for all equipment leased to the Debtor by the Partnership were executed and are currently in effect. On August 23, 1994, the District Court confirmed the Debtor's First Modified Plan of Reorganization, as Amended and Modified. On April 26, 1996, the Debtor refiled for protection under Chapter 11 of the Bankruptcy Code in the District Court. Rents due to the Partnership pursuant to the renewal schedules due to expire on June 30, 1996 were scheduled by the Debtor as unsecured claims. At June 30, 1996, the Partnership was due $1,501 from the Debtor with respect to its 1993 and 1996 unsecured claims. The Partnership's equipment portfolio includes equipment on lease to the Debtor with an original cost of approximately $83,873, which is expected to be purchased by the Debtor, and is fully depreciated for financial reporting purposes. This equipment represents less than 1% of the Partnership's aggregate equipment portfolio at June 30, 1996. These bankruptcies did not have a material adverse effect on the financial position of the Partnership. 8 AMERICAN INCOME 7 LIMITED PARTNERSHIP FORM 10-Q PART I. FINANCIAL INFORMATION Item 2. Management's Discussion and Analysis of Financial Condition and Results - -------------------------------------------------------------------------------- of Operations. - -------------- Three and six months ended June 30, 1996 compared to the three and six months - ----------------------------------------------------------------------------- ended June 30, 1995: - -------------------- Overview - -------- The Partnership was organized in 1986 as a direct-participation equipment leasing program to acquire a diversified portfolio of capital equipment subject to lease agreements with third parties. The Partnership's stated investment objectives and policies contemplated that the Partnership would wind-up its operations within approximately seven years of its inception. Accordingly, the General Partner is pursuing the remarketing of all of the Partnership's remaining equipment and has engaged an investment adviser to solicit interested third-party buyers. This effort is being undertaken in conjunction with certain other affiliated partnerships and, if successful, would result in the sale of each affected partnership's assets to a selected buyer. The General Partner believes this approach will (i) maximize the disposition prices of each partnership's assets and (ii) prevent the incidence of future expenses to operate a publicly-registered limited partnership with a declining asset base. The General Partner is evaluating expressions of interest submitted by the investment adviser from a number of potential buyers, but is under no obligation to accept any proposal. If successful, the General Partner anticipates that it would wind-up the operations of the Partnership and make a liquidating distribution to the Partners, net of any cash reserves which the General Partner may consider appropriate, on or before December 31, 1996. Results of Operations - --------------------- For the three and six months ended June 30, 1996 the Partnership recognized lease revenue of $244,485 and $505,381, respectively, compared to $401,539 and $800,083 for the same periods in 1995. The decrease in lease revenue between 1996 and 1995 was expected and resulted principally from renewal lease term expirations and the sale of equipment. The Partnership also earns interest income from temporary investments of rental receipts and equipment sales proceeds in short-term instruments. The Partnership's equipment portfolio includes certain assets in which the Partnership holds a proportionate ownership interest. In such cases, the remaining interests are owned by AFG or an affiliated equipment leasing program sponsored by AFG. Proportionate equipment ownership enables the Partnership to further diversify its equipment portfolio by participating in the ownership of selected assets, thereby reducing the general levels of risk which could result from a concentration in any single equipment type, industry or lessee. The Partnership and each affiliate individually report, in proportion to their respective ownership interests, their respective shares of assets, liabilities, revenues, and expenses associated with the equipment. For the three and six months ended June 30, 1996, the Partnership sold fully depreciated equipment which resulted in net gains, for financial statement purposes, of $381 and $881, respectively. For the three and six months ended June 30, 1995, the Partnership sold fully depreciated equipment which resulted in net gains, for financial statement purposes, of $4,720 and $11,020, respectively. It cannot be determined whether future sales of equipment will result in a net gain or a net loss to the Partnership, as such transactions will be dependent upon the condition and type of equipment being sold and its marketability at the time of sale. In addition, the amount of gain or loss reported for financial statement purposes is partly a function of the amount of accumulated depreciation associated with the equipment being sold. 9 AMERICAN INCOME 7 LIMITED PARTNERSHIP FORM 10-Q PART I. FINANCIAL INFORMATION The ultimate realization of residual value for any type of equipment is dependent upon many factors, including AFG's ability to sell and re-lease equipment. Changing market conditions, industry trends, technological advances, and many other events can converge to enhance or detract from asset values at any given time. AFG attempts to monitor these changes in order to identify opportunities which may be advantageous to the Partnership and which will maximize total cash returns for each asset. The total economic value realized upon final disposition of each asset is comprised of all primary lease term revenue generated from that asset, together with its residual value. The latter consists of cash proceeds realized upon the asset's sale in addition to all other cash receipts obtained from renting the asset on a re-lease, renewal or month-to-month basis. The Partnership classifies such residual rental payments as lease revenue. Consequently, the amount of gain or loss reported in the financial statements is not necessarily indicative of the total residual value the Partnership achieved from leasing the equipment. Depreciation expense was $228,170 and $454,523 for the three and six months ended June 30, 1996, respectively, compared to $232,228 and $464,456 for the same periods in 1995. For financial reporting purposes, to the extent that an asset is held on primary lease term, the Partnership depreciates the difference between (i) the cost of the asset and (ii) the estimated residual value of the asset on a straight-line basis over such term. For purposes of this policy, estimated residual values represent estimates of equipment values at the date of primary lease expiration. To the extent that an asset is held beyond its primary lease term, the Partnership continues to depreciate the remaining net book value of the asset on a straight-line basis over the asset's remaining economic life. During the quarter ended June 30, 1996, the Partnership recorded a write-down, representing an impairment in value, pertaining to its interest in a Lockheed L- 1011 aircraft. This adjustment was precipitated by continuing deterioration in the secondary market for wide-body aircraft of this type. Several air carriers have reduced their commitment to the L-1011 and, currently, a major domestic air carrier is expected to retire eleven L-1011 aircraft from its fleet. Further, it appears that future demand for this type of aircraft will be weak, consisting principally of air cargo carriers or operators of passenger charters. In consideration of such circumstances and in accordance with Financial Accounting Standards Board Statement No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of, the Partnership reduced the carrying value of its L-1011 aircraft interest to its estimated current fair market value. This resulted in a write-down of $100,000, representing $1.39 per limited partnership unit. Interest expense was $84 and $581 or less than 1% of lease revenue for each of the three and six months ended June 30, 1996, respectively, compared to $17,480 and $35,728 or 4.4% and 4.5% of lease revenue for the same periods in 1995. Interest expense is not expected to be incurred in future periods due to the retirement of all of the Partnership's debt obligations. Management fees were 5% of lease revenue during each of the periods ended June 30, 1996 and 1995 and will not change as a percentage of lease revenue in future periods. Operating expenses consist principally of administrative charges, professional service costs, such as audit and legal fees, as well as printing, distribution and remarketing expenses. In certain cases, equipment storage or repairs and maintenance costs may be incurred in connection with equipment being remarketed. Collectively, operating expenses represented approximately 8.3% and 7.4% of lease revenue for the three and six months ended June 30, 1996, respectively, compared to 4.6% and 5.4% of lease revenue for the same periods in 1995. The amount of future operating expenses cannot be predicted with certainty; however, such expenses are usually higher during the acquisition and liquidation phases of a partnership. Other fluctuations typically occur in relation to the volume and timing of remarketing activities. 10 AMERICAN INCOME 7 LIMITED PARTNERSHIP FORM 10-Q PART I. FINANCIAL INFORMATION Liquidity and Capital Resources and Discussion of Cash Flows - ------------------------------------------------------------ The Partnership by its nature is a limited life entity which was established for specific purposes described in the preceding "Overview". As an equipment leasing program, the Partnership's principal operating activities derive from asset rental transactions. Accordingly, the Partnership's principal source of cash from operations is provided by the collection of periodic rents. These cash inflows are used to satisfy debt service obligations associated with leveraged leases, and to pay management fees and operating costs. Operating activities generated net cash inflows of $343,750 and $701,818 for the six months ended June 30, 1996 and 1995, respectively. Future renewal, re-lease and equipment sale activities will cause a gradual decline in the Partnership's lease revenue and corresponding sources of operating cash. Overall, expenses associated with rental activities, such as management fees, and net cash flow from operating activities will decline as the Partnership experiences a higher frequency of remarketing events. The Partnership's lease agreement in connection with its 21.37% ownership interest in a SAAB SF340A aircraft expired in June 1996. The Partnership's proportionate interest in the aircraft had a cost and net book value of $1,676,561 and $523,483, respectively, at June 30, 1996. The lessee has agreed to release the aircraft on a month to month basis at a base rent to the Partnership of $8,014 per month. This agreement may be terminated by either party by giving sixty days notice of the termination. The General Partner is actively pursuing the further remarketing of this aircraft. Ultimately, the Partnership will dispose of all assets under lease. This will occur principally through sale transactions whereby each asset will be sold to the existing lessee or to a third party. Generally, this will occur upon expiration of each asset's primary or renewal/re-lease term. In certain instances, casualty or early termination events may result in the disposal of an asset. Such circumstances are infrequent and usually result in the collection of stipulated cash settlements pursuant to terms and conditions contained in the underlying lease agreements. Cash realized from asset disposal transactions is reported under investing activities on the accompanying Statement of Cash Flows. During the six months ended June 30, 1996, the Partnership realized $881 in equipment sale proceeds compared to $11,020 for the same period in 1995. Future inflows of cash from asset disposals will vary in timing and amount and will be influenced by many factors including, but not limited to, the frequency and timing of lease expirations, the type of equipment being sold, its condition and age, and future market conditions. The Partnership obtained long-term financing in connection with certain equipment leases. The repayments of principal related to such indebtedness are reported as a component of financing activities. All of the Partnership's outstanding debt obligations have been retired. Cash distributions to the General and Limited Partners are declared and generally paid within fifteen days following the end of each calendar quarter. The payment of such distributions is presented as a component of financing activities. For the six months ended June 30, 1996, the Partnership declared total cash distributions of Distributable Cash From Operations and Distributable Cash From Sales and Refinancings of $90,160. In accordance with the Amended and Restated Agreement and Certificate of Limited Partnership, the Limited Partners were allocated 99% of these distributions, or $89,258, and the General Partner was allocated 1%, or $902. The second quarter 1996 cash distribution was paid on July 15, 1996. Cash distributions paid to the Limited Partners consist of both a return of and a return on capital. To the extent that cash distributions consist of Cash From Sales or Refinancings, substantially all of such cash distributions should be viewed as a return of capital. Cash distributions do not represent and are not 11 AMERICAN INCOME 7 LIMITED PARTNERSHIP FORM 10-Q PART I. FINANCIAL INFORMATION indicative of yield on investment. Actual yield on investment cannot be determined with any certainty until conclusion of the Partnership and will be dependent upon the collection of all contracted rents, the generation of renewal and/or re-lease rents, and the residual value realized for each asset at its disposal date. Market conditions, technological changes, the ability of AFG to manage and remarket the assets, and many other events and circumstances, could enhance or detract from individual asset yields and the collective performance of the Partnership's equipment portfolio. 12 AMERICAN INCOME 7 LIMITED PARTNERSHIP FORM 10-Q PART II. OTHER INFORMATION Item 1. Legal Proceedings Response: Refer to Note 6 herein and to Note 7 in the 1995 Annual Report Item 2. Changes in Securities Response: None Item 3. Defaults upon Senior Securities Response: None Item 4. Submission of Matters to a Vote of Security Holders Response: None Item 5. Other Information Response: None Item 6(a). Exhibits Response: None Item 6(b). Reports on Form 8-K Response: None 13 SIGNATURE PAGE Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on behalf of the registrant and in the capacity and on the date indicated. AMERICAN INCOME 7 LIMITED PARTNERSHIP By: AFG Leasing Associates II, a Massachusetts general partnership and the General Partner of the Registrant. By: AFG Leasing Incorporated, a Massachusetts corporation and general partner in such general partnership. By: /s/ Michael J. Butterfield ---------------------------------------------- Michael J. Butterfield Treasurer of AFG Leasing Incorporated (Duly Authorized Officer and Principal Accounting Officer) Date: August 13, 1996 -------------------------------------------- By: /s/ Gary M. Romano ---------------------------------------------- Gary M. Romano Clerk of AFG Leasing Incorporated (Duly Authorized Officer and Principal Financial Officer) Date: August 13, 1996 -------------------------------------------- 14 EX-27 2 FINANCIAL DATA SCHEDULE
5 6-MOS DEC-31-1996 JAN-01-1996 JUN-30-1996 370,217 0 168,845 0 0 539,062 13,596,150 10,471,372 3,663,840 166,747 0 0 0 0 3,497,093 3,663,840 0 515,358 0 0 617,657 0 581 (102,299) 0 (102,299) 0 0 0 (102,299) 0 0
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