-----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, A+AopWLrkd15hKhxaou9esBUJaUBuCK+k5ixgkOrYHn/gqL7hG2RaK1Id6ABExXh ELTjop7FwN67CygIjzJnFw== 0000912057-97-017994.txt : 19970520 0000912057-97-017994.hdr.sgml : 19970520 ACCESSION NUMBER: 0000912057-97-017994 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970515 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN INCOME PARTNERS V C LTD PARTNERSHIP CENTRAL INDEX KEY: 0000847559 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EQUIPMENT RENTAL & LEASING, NEC [7359] IRS NUMBER: 043077437 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-19134 FILM NUMBER: 97608015 BUSINESS ADDRESS: STREET 1: 98 NORTH WASHINGTON ST. CITY: BOSTON STATE: MA ZIP: 02114 BUSINESS PHONE: 6175421200 MAIL ADDRESS: STREET 1: 98 N WASHINGTON STREET CITY: BOSTON STATE: MA ZIP: 02114 10-Q 1 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1997 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 March 31, 1997 Commission File No. 0-19134 American Income Partners V-C Limited Partnership (Exact name of registrant as specified in its charter) Massachusetts 04-3077437 (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 PARTNERS V-C LIMITED PARTNERSHIP FORM 10-Q INDEX Page ------ PART I. FINANCIAL INFORMATION: Item 1. Financial Statements Statement of Financial Position at March 31, 1997 and December 31, 1996 3 Statement of Operations for the three months ended March 31, 1997 and 1996 4 Statement of Cash Flows for the three months ended March 31, 1997 and 1996 5 Notes to the Financial Statements 6-8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9-11 PART II. OTHER INFORMATION: Items 1 - 6 12 2 AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP STATEMENT OF FINANCIAL POSITION March 31, 1997 and December 31, 1996 (Unaudited) March 31, December 31, 1997 1996 --------- ------------ ASSETS Cash and cash equivalents $1,438,131 $1,584,360 Rents receivable, net of allowance for doubtful accounts of $15,000 11,834 37,611 Accounts receivable - affiliate 103,242 76,774 Equipment at cost, net of accumulated depreciation of $7,840,688 and $7,893,295 at March 31, 1997 and December 31, 1996, respectively 718,532 943,331 ---------- ---------- Total assets $2,271,739 $2,642,076 ---------- ---------- ---------- ---------- LIABILITIES AND PARTNERS' CAPITAL Notes payable $ -- $ 329,370 Accrued interest -- 2,609 Accrued liabilities 26,670 26,950 Accrued liabilities - affiliate 18,724 14,814 Deferred rental income 9,750 33,634 Cash distributions payable to partners 110,184 110,184 ---------- ---------- Total liabilities 165,328 517,561 ---------- ---------- Partners' capital (deficit): General Partner (926,189) (925,284) Limited Partnership Interests (930,443 Units; initial purchase price of $25 each) 3,032,600 3,049,799 ---------- ---------- Total partners' capital 2,106,411 2,124,515 ---------- ---------- Total liabilities and partners' capital $2,271,739 $2,642,076 ---------- ---------- ---------- ---------- The accompanying notes are an integral part of these financial statements. 3 AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP STATEMENT OF OPERATIONS for the three months ended March 31, 1997 and 1996 (Unaudited) 1997 1996 ---- ----- Income: Lease revenue $287,759 $724,023 Interest income 19,878 14,748 Gain on sale of equipment 18,276 78,602 -------- -------- Total income 325,913 817,373 -------- -------- Expenses: Depreciation 146,509 359,664 Interest expense 4,587 13,318 Equipment management fees - affiliate 11,551 40,593 Operating expenses - affiliate 71,186 81,713 -------- -------- Total expenses 233,833 495,288 -------- -------- Net income $92,080 $322,085 -------- -------- -------- -------- Net income per limited partnership unit $0.09 $0.33 -------- -------- -------- -------- Cash distribution declared er limited partnership unit $0.11 $0.37 -------- -------- -------- -------- The accompanying notes are an integral part of these financial statements. 4 AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP STATEMENT OF CASH FLOWS for the three months ended March 31, 1997 and 1996 (Unaudited) 1997 1996 ---- ---- Cash flows from (used in) operating activities: Net income $ 92,080 $ 322,085 Adjustments to reconcile net income to net cash from operating activities: Depreciation 146,509 359,664 Gain on sale of equipment (18,276) (78,602) Changes in assets and liabilities Decrease (increase) in: rents receivable 25,777 (30,798) accounts receivable - affiliate (26,468) (183,365) Increase (decrease) in: accrued interest (2,609) (874) accrued liabilities (280) 35,750 accrued liabilities - affiliate 3,910 28,391 deferred rental income (23,884) 114,681 ---------- ---------- Net cash from operating activities 196,759 566,932 ---------- ---------- Cash flows from investing activities: Proceeds from equipment sales 96,566 102,230 ---------- ---------- Net cash from investing activities 96,566 102,230 ---------- ---------- Cash flows used in financing activities: Principal payments - notes payable (329,370) (78,149) Distributions paid (110,184) (489,707) ---------- ---------- Net cash used in financing activities (439,554) (567,856) ---------- ---------- Net increase (decrease) in cash and cash equivalents (146,229) 101,306 Cash and cash equivalents at beginning of period 1,584,360 1,173,376 ---------- ---------- Cash and cash equivalents at end of period $1,438,131 $1,274,682 ---------- ---------- ---------- ---------- Supplemental disclosure of cash flow information: Cash paid during the period for interest $ 7,196 $ 14,192 ---------- --------- ---------- --------- The accompanying notes are an integral part of these financial statements. 5 AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP Notes to the Financial Statements March 31, 1997 (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 1996 Annual Report. Except as disclosed herein, there has been no material change to the information presented in the footnotes to the 1996 Annual Report. In the opinion of management, all adjustments (consisting of normal and recurring adjustments) considered necessary to present fairly the financial position at March 31, 1997 and December 31, 1996 and results of operations for the three month periods ended March 31, 1997 and 1996 have been made and are reflected. NOTE 2 - CASH At March 31, 1997, the Partnership had $1,325,000 invested in reverse repurchase agreements secured by U.S. Treasury Bills or interests in U.S. Government securities. NOTE 3 - REVENUE RECOGNITION Rents are payable to the Partnership monthly or quarterly 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 $ 982,918 are due as follows: For the year ending March 31, 1998 $730,312 1999 189,310 2000 31,648 2001 31,648 -------- Total $982,918 -------- -------- NOTE 4 - EQUIPMENT The following is a summary of equipment owned by the Partnership at March 31, 1997. In the opinion of Equis Financial Group Limited Partnership ("EFG"), (formerly American Finance Group), the acquisition cost of the equipment did not exceed its fair market value. 6 AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP Notes to the Financial Statements (Continued) Lease Term Equipment Equipment Type (Months) at Cost - ---------------------------- ---------- --------- Construction and mining 6-84 $ 2,550,457 Aircraft 1-36 2,132,292 Communications 12-84 1,737,032 Retail store fixtures 12-72 1,144,958 Materials handling 1-60 750,338 Motor vehicles 36 238,583 Computers and peripherals 12-60 5,560 ----------- Total equipment cost 8,559,220 Accumulated depreciation (7,840,688) ----------- Equipment, net of accumulated depreciation $ 718,532 ----------- ----------- At March 31, 1997, the Partnership's equipment portfolio included equipment having a proportionate original cost of $2,132,292, representing approximately 25% of total equipment cost. The summary above includes equipment held for re-lease or sale with a cost and net book value of approximately $845,000 and $83,000, respectively, at March 31, 1997. The equipment includes the Partnership's proportionate interest in a Boeing 727-251 Advanced aircraft (the "Aircraft"), formerly leased to Northwest Airlines, Inc., having a cost and net book value of approximately $649,000 and $83,000, respectively, at March 31, 1997. This aircraft was returned upon expiration of its lease term on November 30, 1995 and is currently undergoing heavy maintenance expected to cost the Partnership approximately $77,000, all of which was accrued or incurred at March 31, 1997. The Partnership has experienced delays in the completion of the Aircraft's heavy maintenance. The Partnership entered into a new 18-month lease agreement with Transmeridian Airlines, to re-lease the Aircraft at a base monthly rent to the Partnership of $4,800 for 8 months and $4,200 for 10 months, effective upon completion of heavy maintenance. NOTE 5 - RELATED PARTY TRANSACTIONS All operating expenses incurred by the Partnership are paid by EFG on behalf of the Partnership and EFG is reimbursed at its actual cost for such expenditures. Fees and other costs incurred during each of the three month periods ended March 31, 1997 and 1996, which were paid or accrued by the Partnership to EFG or its Affiliates, are as follows: 1997 1996 ----- ---- Equipment management fees $11,551 $ 40,593 Administrative charges 8,187 5,250 Reimbursable operating expenses due to third parties 62,999 76,463 ------- -------- Total $82,737 $122,306 ------- -------- ------- -------- 7 AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP Notes to the Financial Statements (Continued) All rents and proceeds from the sale of equipment are paid directly to either EFG or to a lender. EFG temporarily deposits collected funds in a separate interest-bearing escrow account prior to remittance to the Partnership. At March 31, 1997, the Partnership was owed $103,242 by EFG for such funds and the interest thereon. These funds were remitted to the Partnership in April 1997. 8 AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP FORM 10-Q PART I. FINANCIAL INFORMATION ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THE THREE MONTHS ENDED MARCH 31, 1996: OVERVIEW The Partnership was organized in 1990 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 expects to engage an investment advisor to provide assistance and evaluate alternative remarketing strategies. Currently, the General Partner anticipates that it will 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, within the next twelve months and possibly by December 31, 1997. RESULTS OF OPERATIONS For the three months ended March 31, 1997, the Partnership recognized lease revenue of $287,759 compared to $724,023 for the same period in 1996. The decrease in lease revenue from 1996 to 1997 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 an affiliated equipment leasing program sponsored by EFG. 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 months ended March 31, 1997, the Partnership sold equipment having a net book value of $78,290 to existing lessees and third parties. These sales resulted in a net gain, for financial statement purposes, of $18,276 compared to a net gain of $78,602 on equipment having a net book value of $23,628 for the same period in 1996. 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. The ultimate realization of residual value for any type of equipment is dependent upon many factors, including EFG'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. EFG 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. 9 AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP FORM 10-Q PART I. FINANCIAL INFORMATION 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 $146,509 and $359,664 for the three months ended March 31, 1997 and 1996, respectively. 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. Interest expense was $4,587 or 1.6% of lease revenue for the three months ended March 31, 1997 compared to $13,318 or 1.8% of lease revenue for the same period in 1996. The Partnership's notes payable were fully amortized during the three months ended March 31, 1997. Management fees were approximately 4% of lease revenue for the three months ended March 31, 1997 compared to 5.6% for the same period in 1996. Management fees during the three months ended March 31, 1996 included $7,731, resulting from an underaccrual in 1995. Management fees are based on 5% of gross lease revenue generated by operating leases and 2% of gross lease revenue generated by full payout leases. 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. Significant operating expenses were incurred in 1996 and 1997 due to heavy maintenance and airframe overhaul costs incurred or accrued in connection with the Partnership's interests in two Boeing 727 aircraft. Certain of the costs incurred in the first quarter of 1996 were subsequently reimbursed by the former lessee of the related aircraft. In 1996, the Partnership entered into a new 36-month lease agreement with Sunworld International Airlines, Inc. to re-lease one of the aircraft at a base rent to the Partnership of $3,900 per month (see discussion below relating to the second aircraft). 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. 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 generally 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 $196,759 and $566,932 for the three months ended March 31, 1997 and 1996, respectively. Future renewal, re-lease and equipment sale activities will cause a 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 also decline as the Partnership experiences a higher frequency of remarketing events. 10 AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP FORM 10-Q PART I. FINANCIAL INFORMATION 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 three months ended March 31, 1997, the Partnership realized $96,566 in equipment sale proceeds compared to $102,230 for the same period in 1996. 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. On November 30, 1995, upon the expiration of its lease term, Northwest Airlines, Inc., returned a Boeing 727-251 Advanced aircraft (the "Aircraft") in which the Partnership has a 6% ownership interest. The aircraft had a cost and net book value to the Partnership of approximately $649,000 and $83,000, respectively, at March 31, 1997. The Aircraft is currently undergoing heavy maintenance expected to cost the Partnership approximately $77,000, all of which was incurred or accrued at March 31, 1997. The Partnership has experienced delays in the completion of the Aircraft's heavy maintenance. The Partnership entered into a new 18-month lease agreement with Transmeridian Airlines, to re-lease the Aircraft at a base monthly rent to the Partnership of $4,800 for 8 months and $4,200 for 10 months, effective upon completion of heavy maintenance. 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. The Partnership's notes payable were fully amortized during the three months ended March 31, 1997. Cash distributions to the General Partner and Recognized Owners 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 three months ended March 31, 1997, the Partnership declared total cash distributions of Distributable Cash From Operations and Distributable Cash From Sales and Refinancings of $110,184. In accordance with the Amended and Restated Agreement and Certificate of Limited Partnership, the Recognized Owners were allocated 95% of these distributions, or $104,675, and the General Partner was allocated 5%, or $5,509. The first quarter 1997 cash distribution was paid on April 14, 1997. Cash distributions paid to the Recognized Owners consist of both a return of and a return on capital. Cash distributions do not represent and are not 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 future contracted rents, the generation of renewal and/or re-lease rents, and the residual value realized for each asset at its disposal date. Future market conditions, technological changes, the ability of EFG 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. The future liquidity of the Partnership will be influenced by the foregoing and will be greatly dependent upon the collection of contractual rents and the outcome of residual activities. The General Partner anticipates that cash proceeds resulting from these sources will satisfy the Partnership's future expense obligations. However, the amount of cash available for distribution in future periods will fluctuate. Equipment lease expirations and asset disposals will cause the Partnership's net cash from operating activities to diminish over time; and equipment sale proceeds will vary in amount and period of realization. In addition, the Partnership may be required to incur asset refurbishment or upgrade costs in connection with future remarketing activities. Accordingly, fluctuations in the level of future quarterly cash distributions are anticipated. 11 AMERICAN INCOME PARTNERS V-C LIMITED PARTNERSHIP FORM 10-Q PART II. FINANCIAL INFORMATION Item 1. Legal Proceedings Response: None 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 12 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 PARTNERS V-C LIMITED PARTNERSHIP By: AFG Leasing IV Incorporated, a Massachusetts corporation and the General Partner of the Registrant. By: /s/ Michael J. Butterfield --------------------------------------- Michael J. Butterfield Treasurer of AFG Leasing IV Incorporated (Duly Authorized Officer and Principal Accounting Officer) Date: May 15, 1997 --------------------------------------- By: /s/ Gary Romano --------------------------------------- Gary M. Romano Clerk of AFG Leasing IV Incorporated (Duly Authorized Officer and Principal Financial Officer) Date: May 15, 1997 --------------------------------------- 13 EX-27 2 EXHIBIT 27 FINANCIAL DATA SCHEDULE
5 3-MOS DEC-31-1997 JAN-01-1997 MAR-31-1997 1,438,131 0 130,076 15,000 0 1,553,207 8,559,220 7,840,688 2,271,739 165,328 0 0 0 0 2,106,411 2,271,739 287,759 325,913 0 0 229,246 0 4,587 92,080 0 92,080 0 0 0 92,080 0 0
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