-----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, UAeIWnwFiZpRB8bJYPL1ekpejq/RAhYCNH6Jxd0jtMj4ulBGMgibadMosGGPxi3N ZYWu+A0v5BFTAJIe7BF1uA== 0000912057-96-026455.txt : 19961118 0000912057-96-026455.hdr.sgml : 19961118 ACCESSION NUMBER: 0000912057-96-026455 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN INCOME FUND I-B CENTRAL INDEX KEY: 0000868678 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EQUIPMENT RENTAL & LEASING, NEC [7359] IRS NUMBER: 043106525 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 033-35148 FILM NUMBER: 96665052 BUSINESS ADDRESS: STREET 1: 98 N 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 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 September 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 September 30, 1996 Commission File No. 33-35148 American Income Fund I-B, a Massachusetts Limited Partnership - ------------------------------------------------------------------------------ (Exact name of registrant as specified in its charter) Massachusetts 04-3106525 - ------------------------------- ------------------- (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 FUND I-B, a Massachusetts Limited Partnership FORM 10-Q INDEX Page ---- PART I. FINANCIAL INFORMATION: Item 1. Financial Statements Statement of Financial Position at September 30, 1996 and December 31, 1995 3 Statement of Operations for the three and nine months ended September 30, 1996 and 1995 4 Statement of Cash Flows for the nine months ended September 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 FUND I-B, a Massachusetts Limited Partnership STATEMENT OF FINANCIAL POSITION September 30, 1996 and December 31, 1995 (Unaudited) SEPTEMBER 30, DECEMBER 31, 1996 1995 ---------- ---------- ASSETS Cash and cash equivalents $1,895,011 $ 839,087 Rents receivable 54,310 332,823 Accounts receivable - affiliate 50,806 587,704 Equipment at cost, net of accumulated depreciation of $3,466,236 and $6,097,419 at September 30, 1996 and December 31, 1995, respectively 1,746,687 1,986,861 Organization costs, net of accumulated amortization of $5,000 and $4,833 at September 30, 1996 and December 31, 1995, respectively -- 167 ---------- ---------- Total assets $3,746,814 $3,746,642 ---------- ---------- ---------- ---------- LIABILITIES AND PARTNERS' CAPITAL Notes payable $ 813,012 $1,022,276 Accrued interest 6,864 28,320 Accrued liabilities 18,750 68,610 Accrued liabilities - affiliate 5,062 7,090 Deferred rental income 21,236 -- Cash distributions payable to partners 113,176 113,176 ---------- ---------- Total liabilities 978,100 1,239,472 ---------- ---------- Partners' capital (deficit): General Partner (178,934) (192,012) Limited Partnership Interests (286,711 Units; initial purchase price of $25 each) 2,947,648 2,699,182 ---------- ---------- Total partners' capital 2,768,714 2,507,170 ---------- ---------- Total liabilities and partners' capital $3,746,814 $3,746,642 ---------- ---------- ---------- ---------- The accompanying notes are an integral part of these financial statements. 3 AMERICAN INCOME FUND I-B, a Massachusetts Limited Partnership STATEMENT OF OPERATIONS for the three and nine months ended September 30, 1996 and 1995 (Unaudited)
Three Months Nine Months Ended September 30, Ended September 30, 1996 1995 1996 1995 -------- -------- ---------- ---------- Income: Lease revenue $240,493 $393,614 $ 618,763 $1,220,049 Interest income 22,480 9,463 59,440 30,721 Gain (loss) on sale of equipment 69,011 -- 560,651 (12,906) -------- -------- ---------- ---------- Total income 331,984 403,077 1,238,854 1,237,864 -------- -------- ---------- ---------- Expenses: Depreciation and amortization 111,772 359,758 508,767 1,101,780 Interest expense 17,691 28,385 53,691 99,311 Equipment management fees - affiliate 10,336 14,212 27,911 43,185 Operating expenses - affiliate 20,325 11,890 47,413 50,379 -------- -------- ---------- ---------- Total expenses 160,124 414,245 637,782 1,294,655 -------- -------- ---------- ---------- Net income (loss) $171,860 $(11,168) $ 601,072 $ (56,791) -------- -------- ---------- ---------- -------- -------- ---------- ---------- Net income (loss) per limited partnership unit $ 0.57 $ (0.04) $ 1.99 $ (0.19) -------- -------- ---------- ---------- -------- -------- ---------- ---------- Cash distributions declared per limited partnership unit $ 0.38 $ 0.38 $ 1.13 $ 1.88 -------- -------- ---------- ---------- -------- -------- ---------- ----------
The accompanying notes are an integral part of these financial statements. 4 AMERICAN INCOME FUND I-B, a Massachusetts Limited Partnership STATEMENT OF CASH FLOWS for the nine months ended September 30, 1996 and 1995 (Unaudited) 1996 1995 ---------- ---------- Cash flows from (used in) operating activities: Net income (loss) $ 601,072 $ (56,791) Adjustments to reconcile net income (loss) to net cash from operating activities: Depreciation and amortization 508,767 1,101,780 (Gain) loss on sale of equipment (560,651) 12,906 Changes in assets and liabilities Decrease in: rents receivable 278,513 74,447 accounts receivable - affiliate 536,898 29,628 Increase (decrease) in: accrued interest (21,456) (28,472) accrued liabilities (49,860) 4,588 accrued liabilities - affiliate (2,028) (28,658) deferred rental income 21,236 (4,398) ---------- ---------- Net cash from operating activities 1,312,491 1,105,030 ---------- ---------- Cash flows from investing activities: Proceeds from equipment sales 652,222 25,492 ---------- ---------- Net cash from investing activities 652,222 25,492 ---------- ---------- Cash flows from (used in) financing activities: Proceeds from notes payable -- 737,116 Principal payments - notes payable (569,261) (703,232) Distributions paid (339,528) (679,052) ---------- ---------- Net cash used in financing activities (908,789) (645,168) ---------- ---------- Net increase in cash and cash equivalents 1,055,924 485,354 Cash and cash equivalents at beginning of period 839,087 235,990 ---------- ---------- Cash and cash equivalents at end of period $1,895,011 $ 721,344 ---------- ---------- ---------- ---------- Supplemental disclosure of cash flow information: Cash paid during the period for interest $ 75,147 $ 127,783 ---------- ---------- ---------- ---------- Supplemental disclosure of non-cash investing and financing activities: See Note 4 to the Financial Statements The accompanying notes are an integral part of these financial statements. 5 AMERICAN INCOME FUND I-B, a Massachusetts Limited Partnership Notes to the Financial Statements September 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 September 30, 1996 and December 31, 1995 and results of operations for the three and nine month periods ended September 30, 1996 and 1995, have been made and are reflected. NOTE 2 - CASH At September 30, 1996, the Partnership had $1,715,000 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, 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 $1,158,529 are due as follows: For the year ending September 30, 1997 $525,195 1998 264,916 1999 138,906 2000 112,906 2001 90,001 Thereafter 26,605 ---------- Total $1,158,529 ---------- ---------- 6 AMERICAN INCOME FUND I-B a Massachusetts Limited Partnership Notes to the Financial Statements (Continued) NOTE 4 - EQUIPMENT The following is a summary of equipment owned by the Partnership at September 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 38 $ 2,641,262 Materials handling 4-60 916,362 Trailers/intermodal containers 60-84 620,262 Research & test 24-60 532,779 Construction & mining 48-60 371,529 Communications 22-52 102,953 Motor vehicles 60 27,776 ----------- Total equipment cost 5,212,923 Accumulated depreciation (3,466,236) ----------- Equipment, net of accumulated depreciation $ 1,746,687 ----------- ----------- At September 30, 1996, the Partnership's equipment portfolio included equipment having a proportionate original cost of $2,792,790, representing approximately 54% of total equipment cost. The summary above includes equipment held for re-lease or sale with a cost and net book value of approximately $332,000 and $19,000, respectively, at September 30, 1996. The General Partner is actively seeking the sale or re-lease of all equipment not on lease. During July 1996, the Partnership transferred its ownership interest in certain trailers, previously leased to The Atchison Topeka and Santa Fe Railroad, to a third party for cash consideration of $85,957. The trailers had a net book value of $32,494 at the time of transfer, resulting in a net gain of $53,463. In September 1996, the Partnership replaced these trailers with comparable trailers and leased such to a new lessee. The transaction was accounted for as a like-kind exchange for income tax reporting purposes. The cost of the new trailers, $385,063, was reduced by $41,241, representing the proportionate amount of gain deferred on the original trailers. The Partnership funded this transaction with $66,307 of cash consideration and long-term financing of $359,997. The unused consideration of $19,650 was recognized as proceeds from equipment sales. The associated deferred gain of $12,222 was recognized as Gain on Sale of Equipment on the Statement of Operations for the three months ended September 30, 1996. 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 the nine month periods ended September 30, 1996 and 1995 which were paid or accrued by the Partnership to AFG or its Affiliates, are as follows: 7 AMERICAN INCOME FUND I-B a Massachusetts Limited Partnership Notes to the Financial Statements (Continued) 1996 1995 ------- ------- Equipment management fees $27,911 $43,185 Administrative charges 10,629 10,629 Reimbursable operating expenses due to third parties 36,784 39,750 ------- ------- Total $75,324 $93,564 ------- ------- ------- ------- 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 September 30, 1996, the Partnership was owed $50,806 by AFG for such funds and the interest thereon. These funds were remitted to the Partnership in October 1996. NOTE 6 - NOTES PAYABLE Notes payable at September 30, 1996 consisted of installment notes of $813,012 payable to banks and institutional lenders. All of the installment notes are non-recourse, with interest rates ranging between 7.04% and 10.12% and are collateralized by the equipment and assignment of the related lease payments. The installment notes will be fully amortized by noncancellable rents. The carrying value of notes payable approximates fair value at September 30, 1996. The annual maturities of the installment notes payable are as follows: For the year ending September 30, 1997 $337,490 1998 171,925 1999 88,990 2000 97,645 2001 91,565 Thereafter 25,397 -------- Total $813,012 -------- -------- NOTE 7 - LEGAL PROCEEDINGS In July 1993, Fred Meyer, Inc. (the "Plaintiff"), in anticipation of a declaration of lease default by AFG, filed a complaint against AFG (the "Defendant") in the Circuit Court of the State of Oregon as a result of a dispute which arose between the Plaintiff and the Defendant concerning holdover rents due to the Partnership with respect to certain equipment and the fair market value of such equipment leased by the Partnership to the Plaintiff. The Defendant filed an answer to the Plaintiff's complaint and asserted a counterclaim seeking monetary damages. A Settlement Agreement executed on June 22, 1994, including dismissal of this case, requires the Plaintiff to purchase all equipment it leases pursuant to unexpired rental schedules upon the respective expiration dates of each schedule. During 1996, the Partnership sold all of the affected equipment having a cost of $1,740,599 and recognized a net gain of $477,391 for financial statement purposes. This settlement did not have an adverse effect on the financial position of the Partnership. 8 AMERICAN INCOME FUND I-B, 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. THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1995: OVERVIEW As an equipment leasing partnership, the Partnership was organized to acquire a diversified portfolio of capital equipment subject to lease agreements. The Partnership was designed to progress through three principal phases: acquisitions, operations, and liquidation. During the operations phase, a period of approximately six years, all equipment in the Partnership's portfolio will progress through various stages. Initially, all equipment will generate rental revenues under primary term lease agreements. During the life of the Partnership, these agreements will expire on an intermittent basis and equipment held pursuant to the related leases will be renewed, re-leased or sold, depending on prevailing market conditions and the assessment of such conditions by AFG to obtain the most advantageous economic benefit. Over time, a greater portion of the Partnership's original equipment portfolio will become available for remarketing and cash generated from operations and from sales or refinancings will begin to fluctuate. Ultimately, all equipment will be sold and the Partnership will be dissolved. The Partnership's operations commenced in 1991. RESULTS OF OPERATIONS For the three and nine months ended September 30, 1996, the Partnership recognized lease revenue of $240,493 and $618,763, respectively, compared to $393,614 and $1,220,049 for the same periods in 1995. The decrease in lease revenue from 1995 to 1996 was expected and resulted principally from primary 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 nine months ended September 30, 1996, the Partnership sold equipment having a net book value of $17,336 and $84,143, respectively, to existing lessees and third parties. These sales resulted in net gains for financial statement purposes of $56,789 and $548,429, respectively. During July 1996, the Partnership transferred its ownership interest in certain trailers, previously leased to The Atchison Topeka and Santa Fe Railroad, to a third party for cash consideration of $85,957. The trailers had a net book value of $32,494 at the time of transfer, resulting in a net gain of $53,463 (See Note 4 to the financial statements). In September 1996, the Partnership replaced these trailers with comparable trailers and leased such to a new lessee. The transaction was accounted for as a like-kind exchange for income tax reporting purposes. The cost of the new trailers, $385,063, was reduced by $41,241, representing the proportionate amount of gain 9 AMERICAN INCOME FUND I-B, a Massachusetts Limited Partnership FORM 10-Q PART I. FINANCIAL INFORMATION deferred on the original trailers. The Partnership funded this transaction with $66,307 of cash consideration and long-term financing of $359,997. The unused consideration of $19,650 was recognized as proceeds from equipment sales. The associated deferred gain of $12,222 was recognized as Gain on Sale of Equipment on the Statement of Operations for the three months ended September 30, 1996. During the nine months ended September 30, 1995, the Partnership sold equipment having a net book value of $38,398 to existing lessees and third parties. These sales resulted in a net loss, for financial statement purposes, of $12,906. No sales occurred during the three months ended September 30, 1995. 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 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 revenues 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 and amortization expense for the three and nine months ended September 30, 1996 was $111,772 and $508,767, respectively, compared to $359,758 and $1,101,780 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. Interest expense was $17,691 and $53,691 or 7.4% and 8.7% of lease revenue for the three and nine months ended September 30, 1996, respectively, compared to $28,385 and $99,311 or 7.2% and 8.1% of lease revenue for the same periods in 1995. Interest expense increased as a percentage of lease revenue from 1995 to 1996 due to leveragings obtained subsequent to September 30, 1995. Interest expense in future periods will decline in amount and as a percentage of lease revenue as the principal balance of notes payable is reduced through the application of rent receipts to outstanding debt. Management fees were approximately 4.3% and 4.5% of lease revenue for the three and nine months ended September 30, 1996, respectively, compared to 3.6% and 3.5% of lease revenue for the same periods 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. 10 AMERICAN INCOME FUND I-B, a Massachusetts Limited Partnership FORM 10-Q PART I. FINANCIAL INFORMATION 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 8.5% and 7.7% of lease revenue for the three and nine months ended September 30, 1996, respectively, compared to 3% and 4.1% 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. 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 $1,312,491 and $1,105,030 for the nine months ended September 30, 1996 and 1995, respectively. Future renewal, re-lease and equipment sale activities will cause a gradual decline in the Partnership's lease revenues 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 is reported under investing activities on the accompanying Statement of Cash Flows. During the nine months ended September 30, 1996, the Partnership realized $652,222 in equipment sale proceeds compared to $25,492 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 origination of such indebtedness and the subsequent repayments of principal are reported as components of financing activities. Cash inflows of $737,116 during the nine months ended September 30, 1995 resulted from leveraging a portion of the Partnership's equipment portfolio with third-party lenders. Each note payable is recourse only to the specific equipment financed and to the minimum rental payments contracted to be received during the debt amortization period (which period generally coincides with the lease rental term). As rental payments are collected, a portion or all of the rental payment is used to repay the associated indebtedness. In future periods, the amount of cash used to repay debt obligations will decline as the principal balance of notes payable is reduced through the collection 11 AMERICAN INCOME FUND I-B, a Massachusetts Limited Partnership FORM 10-Q PART I. FINANCIAL INFORMATION and application of rents. In September 1996, the Partnership obtained additional long-term financing in connection with the like-kind exchange transaction involving certain trailers (see Results of Operations). 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 nine months ended September 30, 1996, the Partnership declared total cash distributions of Distributable Cash From Operations and Distributable Cash From Sales and Refinancings of $339,528. In accordance with the Amended and Restated Agreement and Certificate of Limited Partnership, the Limited Partners were allocated 95% of these distributions, or $322,552 and the General Partner was allocated 5%, or $16,976. The third quarter 1996 cash distribution was paid on October 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 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 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. 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 quarterly cash distributions will occur during the life of the Partnership. 12 AMERICAN INCOME FUND I-B, a Massachusetts Limited Partnership FORM 10-Q PART II. OTHER INFORMATION Item 1. Legal Proceedings Response: Refer to Note 7 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 FUND I-B, 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: November 14, 1996 --------------------------------- By: /s/ Gary M. Romano --------------------------------- Gary M. Romano Clerk of AFG Leasing VI Incorporated (Duly Authorized Officer and Principal Financial Officer) Date: November 14, 1996 --------------------------------- 14 EX-27 2 EXHIBIT 27
5 9-MOS DEC-31-1996 JAN-01-1996 SEP-30-1996 1,895,011 0 105,116 0 0 2,000,127 5,212,923 3,466,236 3,746,814 165,088 813,012 0 0 0 2,768,714 3,746,814 618,763 1,238,854 0 0 584,091 0 53,691 601,072 0 601,072 0 0 0 601,072 0 0
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