-----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, T0iycU8ds52i3yCdUKS77uusMkzI6PTa5E50TiO0roqqKI7M8pBeRlzTOw1puSGQ vs4YnyGJjjwwVJdoGiGHsg== 0001047469-98-031404.txt : 19980817 0001047469-98-031404.hdr.sgml : 19980817 ACCESSION NUMBER: 0001047469-98-031404 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980814 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN INCOME FUND I-A CENTRAL INDEX KEY: 0000868677 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EQUIPMENT RENTAL & LEASING, NEC [7359] IRS NUMBER: 043097216 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 033-35148-01 FILM NUMBER: 98688099 BUSINESS ADDRESS: STREET 1: 98 NORTH WASHINGTON STREET CITY: BOSTON STATE: MA ZIP: 02114 BUSINESS PHONE: 6178545800 MAIL ADDRESS: STREET 1: 98 N WASHINGTON STREET CITY: BOSTON STATE: MA ZIP: 02114 10-Q 1 FORM 10-Q 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, 1998 ------------------------------------------------- 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, 1998 Commission File No. 33-35148 American Income Fund I-A, a Massachusetts Limited Partnership - ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Massachusetts 04-3097216 ------------------------------- ------------------- (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 88 Broad Street, Boston, MA 02110 - ---------------------------------------- ---------- (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 FUND I-A, a Massachusetts Limited Partnership FORM 10-Q INDEX Page ---- PART I. FINANCIAL INFORMATION: Item 1. Financial Statements Statement of Financial Position at June 30, 1998 and December 31, 1997 3 Statement of Operations for the three and six months ended June 30, 1998 and 1997 4 Statement of Cash Flows for the six months ended June 30, 1998 and 1997 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 FUND I-A, a Massachusetts Limited Partnership STATEMENT OF FINANCIAL POSITION June 30, 1998 and December 31, 1997 (Unaudited)
June 30, December 31, 1998 1997 ----------- ----------- ASSETS Cash and cash equivalents $ 1,837,457 $ 1,792,606 Rents receivable 39,830 32,780 Accounts receivable - affiliate 43,964 67,880 Equipment at cost, net of accumulated depreciation of $3,777,162 and $3,720,329 at June 30, 1998 and December 31, 1997, respectively 170,957 250,856 ----------- ----------- Total assets $ 2,092,208 $ 2,144,122 ----------- ----------- ----------- ----------- LIABILITIES AND PARTNERS' CAPITAL Accrued liabilities $ 265,658 $ 9,200 Accrued liabilities - affiliate 2,271 12,923 Deferred rental income 5,512 5,512 Cash distributions payable to partners 56,502 56,502 ----------- ----------- Total liabilities 329,943 84,137 ----------- ----------- Partners' capital (deficit): General Partner (228,772) (213,886) Limited Partnership Interests (286,274 Units; initial purchase price of $25 each) 1,991,037 2,273,871 ----------- ----------- Total partners' capital 1,762,265 2,059,985 ----------- ----------- Total liabilities and partners' capital $ 2,092,208 $ 2,144,122 ----------- ----------- ----------- -----------
The accompanying notes are an integral part of these financial statements. 3 AMERICAN INCOME FUND I-A, a Massachusetts Limited Partnership STATEMENT OF OPERATIONS for the three and six months ended June 30, 1998 and 1997 (Unaudited)
Three Months Six Months Ended June 30, Ended June 30, 1998 1997 1998 1997 --------- --------- --------- --------- Income: Lease revenue $ 120,020 $ 126,104 $ 223,537 $ 251,977 Interest income 23,104 20,171 46,697 40,263 Gain on sale of equipment -- 4,355 1,000 10,578 --------- --------- --------- --------- Total income 143,124 150,630 271,234 302,818 --------- --------- --------- --------- Expenses: Depreciation 39,852 68,647 79,899 142,333 Equipment management fees - affiliate 6,001 6,275 11,177 12,480 Operating expenses - affiliate 336,633 45,990 364,874 142,685 --------- --------- --------- --------- Total expenses 382,486 120,912 455,950 297,498 --------- --------- --------- --------- Net income (loss) $(239,362) $ 29,718 $(184,716) $ 5,320 --------- --------- --------- --------- --------- --------- --------- --------- Net income (loss) per limited partnership unit $ (0.79) $ 0.10 $ (0.61) $ 0.02 --------- --------- --------- --------- --------- --------- --------- --------- Cash distributions declared per limited partnership unit $ 0.19 $ 0.25 $ 0.38 $ 0.50 --------- --------- --------- --------- --------- --------- --------- ---------
The accompanying notes are an integral part of these financial statements. 4 AMERICAN INCOME FUND I-A, a Massachusetts Limited Partnership STATEMENT OF CASH FLOWS for the six months ended June 30, 1998 and 1997 (Unaudited)
1998 1997 ----------- ----------- Cash flows from (used in) operating activities: Net income (loss) $ (184,716) $ 5,320 Adjustments to reconcile net income (loss) to net cash from operating activities: Depreciation 79,899 142,333 Gain on sale of equipment (1,000) (10,578) Changes in assets and liabilities Decrease (increase) in: rents receivable (7,050) (14,680) accounts receivable - affilia 23,916 2,144 Increase (decrease) in: accrued liabilities 256,458 (15,870) accrued liabilities - affiliate (10,652) (12,710) deferred rental income -- (933) ----------- ----------- Net cash from operating activities 156,855 95,026 ----------- ----------- Cash flows from investing activities: Proceeds from equipment sales 1,000 21,376 ----------- ----------- Net cash from investing activities 1,000 21,376 Cash flows used in financing activities: Distributions paid (113,004) (150,670) ----------- ----------- Net cash used in financing activities (113,004) (150,670) ----------- ----------- Net increase (decrease) in cash and cash equivalents 44,851 (34,268) Cash and cash equivalents at beginning of period 1,792,606 1,721,388 ----------- ----------- Cash and cash equivalents at end of period $ 1,837,457 $ 1,687,120 ----------- ----------- ----------- -----------
The accompanying notes are an integral part of these financial statements. 5 AMERICAN INCOME FUND I-A, a Massachusetts Limited Partnership Notes to the Financial Statements June 30, 1998 (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 1997 Annual Report. Except as disclosed herein, there has been no material change to the information presented in the footnotes to the 1997 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, 1998 and December 31, 1997 and results of operations for the three and six month periods ended June 30, 1998 and 1997 have been made and are reflected. NOTE 2 -- CASH At June 30, 1998, the Partnership had $1,731,762 invested in federal agency discount notes and 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 $110,847 are due as follows:
For the year ending June 30, 1999 $ 108,297 2000 2,550 ---------------- Total $ 110,847 ---------------- ----------------
NOTE 4 -- EQUIPMENT The following is a summary of equipment owned by the Partnership at June 30, 1998. Remaining Lease Term (Months), as used below, represents the number of months remaining from June 30, 1998 under contracted lease terms and is presented as a range when more than one lease agreement is contained in the stated equipment category. A Remaining Lease Term equal to zero reflects equipment either held for sale or re-lease or being leased on a month-to-month basis. In the opinion of EFG, the acquisition cost of the equipment did not exceed its fair market value. 6 AMERICAN INCOME FUND I-A, a Massachusetts Limited Partnership Notes to the Financial Statements (Continued)
Remaining Lease Term Equipment Equipment Type (Months) at Cost -------------- ---------- --------- Aircraft 4-7 $ 2,288,254 Materials handling 0-15 1,077,729 Communications 0 383,676 Computers & peripherals 0-6 137,424 Tractors & heavy duty trucks 0 61,036 ----------- Total equipment cost 3,948,119 Accumulated depreciation (3,777,162) ----------- Equipment, net of accumulated depreciation $ 170,957 ----------- -----------
At June 30, 1998, the Partnership's equipment portfolio included equipment having a proportionate original cost of $2,415,273, representing approximately 61% of total equipment cost. The summary above includes equipment held for sale or re-lease which had been fully depreciated with a cost of approximately $26,000 at June 30, 1998. The General Partner is actively seeking the sale or re-lease of all equipment not on lease. In addition, the summary above includes equipment being leased on a month-to-month basis. 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 six month periods ended June 30, 1998 and 1997, which were paid or accrued by the Partnership to EFG or its Affiliates, are as follows:
1998 1997 -------- -------- Equipment management fees $ 11,177 $ 12,480 Administrative charges 28,746 25,260 Reimbursable operating expenses due to third parties 336,128 117,425 -------- -------- Total $376,051 $155,165 -------- -------- -------- --------
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 June 30, 1998, the Partnership was owed $43,964 by EFG for such funds and the interest thereon. These funds were remitted to the Partnership in July 1998. 7 AMERICAN INCOME FUND I-A, a Massachusetts Limited Partnership Notes to the Financial Statements (Continued) NOTE 6 -- LEGAL PROCEEDINGS On or about January 15, 1998, certain plaintiffs (the "Plaintiffs") filed a class and derivative action, captioned Leonard Rosenblum, et al. v. Equis Financial Group Limited Partnership, et al., in the United States District Court for the Southern District of Florida (the "Court") on behalf of a proposed class of investors in 28 equipment leasing programs sponsored by EFG, including the Partnership (collectively, the "Nominal Defendants"), against EFG and a number of its affiliates, including the General Partner, as defendants (collectively, the "Defendants"). Certain of the Plaintiffs, on or about June 24, 1997, had filed an earlier derivative action, captioned Leonard Rosenblum, et al. v. Equis Financial Group Limited Partnership, et al., in the Superior Court of the Commonwealth of Massachusetts on behalf of the Nominal Defendants against the Defendants. Both actions are referred to herein collectively as the "Class Action Lawsuit." The Plaintiffs have asserted, among other things, claims against the Defendants on behalf of the Nominal Defendants for violations of the Securities Exchange Act of 1934, common law fraud, breach of contract, breach of fiduciary duty, and violations of the partnership or trust agreements that govern each of the Nominal Defendants. The Defendants have denied, and continue to deny, that any of them have committed or threatened to commit any violations of law or breached any fiduciary duties to the Plaintiffs or the Nominal Defendants. On July 16, 1998, counsel for the Defendants and the Plaintiffs executed a Stipulation of Settlement setting forth the terms pursuant to which a settlement of the Class Action Lawsuit is intended to be achieved and which, among other things, is expected to reduce the burdens and expenses attendant to continuing litigation. The Stipulation of Settlement was based upon and supersedes a Memorandum of Understanding between the parties dated March 9, 1998 which outlined the terms of a possible settlement. The Stipulation of Settlement was filed with the Court on July 23, 1998 and remains pending. Ultimately, the Court must review and approve the Stipulation of Settlement prior to its becoming effective. The Stipulation of Settlement contemplates various changes that, if effected, would alter the future operations of the Nominal Defendants. With respect to the Partnership and 10 affiliated partnerships (hereafter referred to as the "Exchange Partnerships"), the Stipulation of Settlement provides for the restructuring of their respective business operations into a single successor company whose securities would be listed and traded on a national securities exchange. The partners of the Exchange Partnerships would receive both common stock in the new company and a cash distribution in exchange for their existing partnership interests. Such a transaction would, among other things, allow for the consolidation of the Partnership's operating expenses with other similarly organized equipment leasing programs. The Stipulation of Settlement prescribes certain conditions necessary to effecting the settlement, including providing the partners of the Exchange Partnerships with the opportunity to vote on the participation of their partnership in the restructuring. To the extent that the Stipulation of Settlement is approved by the Court, the complete terms thereof will be communicated to all of the partners of the Exchange Partnerships to enable them to vote on the restructuring. There can be no assurance that the Stipulation of Settlement will be approved by the Court, or that the outcome of the voting by the partners of the Exchange Partnerships, including the Partnership, will result in a settlement finally being effected or in the Partnership being included in the restructuring. The General Partner and its affiliates, in consultation with counsel, concur that there is a reasonable basis to believe that the Stipulation of Settlement will be approved by the Court. In the absence of a Stipulation of Settlement approved by the Court, the Defendants intend to defend vigorously against the claims asserted in the Class Action Lawsuit. The General Partner and its affiliates cannot predict with any degree of certainty the ultimate outcome of such litigation. 8 AMERICAN INCOME FUND I-A, a Massachusetts Limited Partnership FORM 10-Q PART I. FINANCIAL INFORMATION Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Certain statements in this quarterly report of American Income Fund I-A, a Massachusetts Limited Partnership (the "Partnership") that are not historical fact constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to a variety of risks and uncertainties. There are a number of important factors that could cause actual results to differ materially from those expressed in any forward-looking statements made herein. These factors include, but are not limited to, the outcome of the Class Action Lawsuit described in Note 6 to the accompanying financial statements and the ability of Equis Financial Group Limited Partnership (formerly American Finance Group), a Massachusetts limited partnership ("EFG"), to collect all rents due under the attendant lease agreements and successfully remarket the Partnership's equipment upon the expiration of such leases. The Year 2000 Issue is the result of computer programs being written using two digits rather than four digits to define the applicable year. EFG's computer programs were designed and written using four digits to define the applicable year. As a result, EFG does not anticipate system failure or miscalculations causing disruptions of operations. Based on recent assessments, EFG determined that minimal modification of software is required so that its network operating system will function properly with respect to dates in the year 2000 and thereafter. EFG believes that with these modifications to the existing operating system, the Year 2000 Issue will not pose significant operational problems for its computer systems. EFG will utilize internal resources to upgrade software for Year 2000 modifications and anticipates completing the Year 2000 project by December 31, 1998, which is prior to any anticipated impact on its operating system. The total cost of the Year 2000 project is expected to be insignificant and have no effect on the results of operations of the Partnership. Three and six months ended June 30, 1998 compared to the three and six months ended June 30, 1997: 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 value of the Partnership's equipment portfolio decreases over time due to depreciation resulting from age and usage of the equipment, as well as technological changes and other market factors. In addition, the Partnership does not replace equipment as it is sold; therefore, its aggregate investment value in equipment declines from asset disposals occurring in the normal course. The Partnership's stated investment objectives and policies contemplated that the Partnership would wind-up its operations within approximately seven years of its inception. Presently, the Partnership is a Nominal Defendant in a Class Action Lawsuit. The outcome of the Class Action Lawsuit could alter the nature of the Partnership's organization and its future business operations. See Note 6 to the accompanying financial statements. Results of Operations For the three and six months ended June 30, 1998, the Partnership recognized lease revenue of $120,020 and $223,537, respectively, compared to $126,104 and $251,977 for the same periods in 1997. The decrease in lease revenue from 1997 to 1998 was expected and resulted principally from 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 EFG or an affiliated equipment leasing 9 AMERICAN INCOME FUND I-A, a Massachusetts Limited Partnership FORM 10-Q PART I. FINANCIAL INFORMATION 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 June 30, 1997, the Partnership sold equipment having a net book value of $1,145 to existing lessees and third parties. These sales resulted in a net gain, for financial statement purposes, of $4,355. There were no equipment sales during the three months ended June 30, 1998. For the six months ended June 30, 1998, the Partnership sold equipment that had been fully depreciated to existing lessees and third parties. These sales resulted in a net gain, for financial statement purposes, of $1,000 compared to a net gain of $10,578 on equipment having a net book value of $10,798 for the same period in 1997. 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. 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 for the three and six months ended June 30, 1998 was $39,852 and $79,899, respectively, compared to $68,647 and $142,333 for the same periods in 1997. 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. Management fees were approximately 5% of lease revenue for each of the three and six months ended June 30, 1998 and 1997. 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. Operating expenses were $336,633 and $364,874 for the three and six months ended June 30, 1998, respectively, compared to $45,990 and $142,685 for the same period in 1997. During the six months ended June 30, 1998, 10 AMERICAN INCOME FUND I-A, a Massachusetts Limited Partnership FORM 10-Q PART I. FINANCIAL INFORMATION the Partnership incurred or accrued approximately $264,000 for certain legal and administrative expenses related to the Class Action Lawsuit described in Note 6 to the financial statements. The amount of future operating expenses cannot be predicted with certainty; however, such expenses are usually higher during the acquisition and liquidation phases of 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 provided by the collection of periodic rents. These cash inflows are used to pay management fees and operating costs. Operating activities generated net cash inflows of $156,855 compared to $95,026 during the six months ended June 30, 1998 and 1997, 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. 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 are reported under investing activities on the accompanying Statement of Cash Flows. During the six months ended June 30, 1998, the Partnership realized $1,000 in equipment sale proceeds compared to $21,376 for the same period in 1997. 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. 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, 1998, the Partnership declared total cash distributions of Distributable Cash from Operations and Distributable Cash From Sales and Refinancings of $113,004. In accordance with the Amended and Restated Agreement and Certificate of Limited Partnership, the Limited Partners were allocated 95% of these distributions, or $107,354, and the General Partner was allocated 5%, or $5,650. The second quarter 1998 cash distribution was paid on July 14, 1998. Cash distributions paid to the Limited Partners 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. 11 AMERICAN INCOME FUND I-A, a Massachusetts Limited Partnership FORM 10-Q PART I. FINANCIAL INFORMATION The future liquidity of the Partnership will be influenced by the foregoing, as well as the outcome of the Class Action Lawsuit described in Note 6 to the accompanying financial statements. The General Partner anticipates that cash reserves, cash proceeds resulting from the collection of contractual rents and the outcome of residual activities 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. 12 AMERICAN INCOME FUND I-A, a Massachusetts Limited Partnership FORM 10-Q PART II. OTHER INFORMATION Item 1. Legal Proceedings Response: Refer to Note 6 to the financial statements herein. 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 FUND I-A, a Massachusetts Limited Partnership By: AFG Leasing VI Incorporated, a Massachusetts corporation and the General Partner of the Registrant. By: /s/ Michael J. Butterfield ------------------------------------------ Michael J. Butterfield Treasurer of AFG Leasing VI Incorporated (Duly Authorized Officer and Principal Accounting Officer) Date: August 14, 1998 ------------------------------------------ By: /s/ Gary M. Romano ------------------------------------------ Gary M. Romano Clerk of AFG Leasing VI Incorporated (Duly Authorized Officer and Principal Financial Officer) Date: August 14, 1998 ------------------------------------------ 14 EX-27 2 EXHIBIT 27
5 6-MOS DEC-31-1998 JAN-01-1998 JUN-30-1998 1,837,457 0 83,794 0 0 1,921,251 3,948,119 3,777,162 2,092,208 329,943 0 0 0 0 1,762,265 2,092,208 0 271,234 0 0 455,950 0 0 (184,716) 0 (184,716) 0 0 0 (184,716) 0 0
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