-----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, JIZb18i7c/rNvJubKCzojxsUh7zYQB+jGNmZ+bCekkd6qFYCv6B3W5c6l4ku9HYw Fp1JWoFX9+nqY7DeRM7HtA== 0000927016-96-000844.txt : 19960816 0000927016-96-000844.hdr.sgml : 19960816 ACCESSION NUMBER: 0000927016-96-000844 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AFG INVESTMENT TRUST C CENTRAL INDEX KEY: 0000879496 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EQUIPMENT RENTAL & LEASING, NEC [7359] IRS NUMBER: 043157232 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-21444 FILM NUMBER: 96612461 BUSINESS ADDRESS: STREET 1: 98 N WASHINGTON ST CITY: BOSTON STATE: MA ZIP: 02114 BUSINESS PHONE: 6178545800 MAIL ADDRESS: STREET 1: 98 N WASHINGTON ST CITY: BOSTON STATE: MA ZIP: 02114 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. 0-21444 AFG Investment Trust C - ----------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 04-3157232 - ------------ ---------- (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 --- --- AFG Investment Trust C 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 AFG Investment Trust C STATEMENT OF FINANCIAL POSITION June 30, 1996 and December 31, 1995 (Unaudited)
June 30, December 31, 1996 1995 ------------ ------------ ASSETS - ------ Cash and cash equivalents $ 4,594,788 $ 279,116 Rents receivable 2,152,567 2,949,192 Accounts receivable - affiliate 552,175 101,258 Equipment at cost, net of accumulated depreciation of $39,103,371 and $33,214,195 at June 30, 1996 and December 31, 1995, respectively 53,840,747 65,137,539 Organization costs, net of accumulated amortization of $3,583 and $3,083 at June 30, 1996 and December 31, 1995, respectively 1,417 1,917 ----------- ----------- Total assets $61,141,694 $68,469,022 =========== =========== LIABILITIES AND PARTICIPANTS' CAPITAL - ------------------------------------- Notes payable $22,727,467 $29,517,713 Accrued interest 299,346 354,297 Accrued liabilities 12,500 20,000 Accrued liabilities - affiliate 54,503 -- Deferred rental income 290,485 305,117 Cash distributions payable to participants 232,679 232,679 ----------- ----------- Total liabilities 23,616,980 30,429,806 ----------- ----------- Participants' capital (deficit): Managing Trustee (78,814) (73,669) Special Beneficiary (657,472) (615,026) Beneficiary Interests (2,011,014 Interests; initial purchase price of $25 each) 38,261,000 38,727,911 ----------- ----------- Total participants' capital 37,524,714 38,039,216 ----------- ----------- Total liabilities and participants' capital $61,141,694 $68,469,022 =========== ===========
The accompanying notes are an integral part of these financial statements. 3 AFG Investment Trust C 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 $5,149,521 $5,422,352 $10,614,823 $10,727,174 Interest income 88,422 28,833 97,115 38,261 Loss on sale of equipment (89,278) (207,989) (531,398) (207,989) ---------- ---------- ----------- ----------- Total income 5,148,665 5,243,196 10,180,540 10,557,446 ---------- ---------- ----------- ----------- Expenses: Depreciation and amortization 3,879,128 3,572,408 7,878,387 7,030,679 Interest expense 420,073 579,906 885,535 1,162,969 Interest expense - affiliate -- 1,790 -- 2,439 Equipment management fees - affiliate 203,102 204,503 420,700 404,911 Operating expenses - affiliate 79,888 61,640 114,345 122,433 ---------- ---------- ----------- ----------- Total expenses 4,582,191 4,420,247 9,298,967 8,723,431 ---------- ---------- ----------- ----------- Net income $ 566,474 $ 822,949 $ 881,573 $ 1,834,015 ========== ========== =========== =========== Net income per Beneficiary Interest $ 0.26 $0.37 $ 0.40 $ 0.83 ========== ========== =========== =========== Cash distributions declared per Beneficiary Interest $ 0.31 $0.63 $ 0.63 $ 1.26 ========== ========== =========== ===========
The accompanying notes are an integral part of these financial statements. 4 AFG Investment Trust C 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 $ 881,573 $ 1,834,015 Adjustments to reconcile net income to net cash from operating activities: Depreciation and amortization 7,878,387 7,030,679 Loss on sale of equipment 531,398 207,989 Changes in assets and liabilities Decrease (increase) in: rents receivable 796,625 42,757 accounts receivable - affiliate (450,917) 71,525 Increase (decrease) in: accrued interest (54,951) (19,213) accrued liabilities (7,500) (500) accrued liabilities - affiliate 54,503 407,213 deferred rental income (14,632) 10,107 ----------- ----------- Net cash from operating activities 9,614,486 9,584,572 ----------- ----------- Cash flows from (used in) investing activities: Purchase of equipment (1,239,741) (5,892,015) Proceeds from equipment sales 4,127,248 4,102,763 ----------- ----------- Net cash from (used in) investing activities 2,887,507 (1,789,252) ----------- ----------- Cash flows from (used in) financing activities: Proceeds from notes payable 997,888 3,622,137 Proceeds from notes payable - affiliate -- 6,636,800 Principal payments - notes payable (7,788,134) (7,272,769) Principal payments - notes payable - affiliate -- (6,612,392) Distributions paid (1,396,075) (2,792,152) ----------- ----------- Net cash used in financing activities (8,186,321) (6,418,376) ----------- ----------- Net increase in cash and cash equivalents 4,315,672 1,376,944 Cash and cash equivalents at beginning of period 279,116 214,260 ----------- ----------- Cash and cash equivalents at end of period $ 4,594,788 $ 1,591,204 =========== =========== Supplemental disclosure of cash flow information: Cash paid during the period for interest $ 940,486 $ 1,184,621 =========== ===========
Supplemental schedule of non-cash investing and financing activities: During 1995, the Trust sold equipment to a lessee which assumed debt and interest of $308,476 and $1,988, respectively. The accompanying notes are an integral part of these financial statements 5 AFG Investment Trust C 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 Trust 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 Trust 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 $39,684,484 are due as follows: For the year ending June 30, 1997 $17,195,439 1998 13,089,890 1999 6,421,493 2000 2,311,300 2001 430,760 Thereafter 235,602 ----------- Total $39,684,484 ===========
During March 1996, the Trust acquired an 8.86% proportionate ownership interest in an MD-87 jet aircraft leased by Reno Air, Inc. (the "Reno Aircraft") - - See Note 4 herein. The Trust will receive approximately $157,000 of rental revenue in each of the years in the period ending June 30, 2002 and $79,000 in the year ending June 30, 2003. Rents from the Reno Aircraft, as provided for in the lease agreement, are adjusted monthly for changes of the London Inter-Bank Offered Rate ("LIBOR"). Future rents from the Reno Aircraft included above reflect the most recent LIBOR effected rental payment. 6 AFG Investment Trust C Notes to the Financial Statements (Continued) NOTE 4 - EQUIPMENT - ------------------ The following is a summary of equipment owned by the Trust 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 48-81 $ 16,504,999 Computers & peripherals 12-72 15,066,078 Vessels 72-73 13,014,544 Retail store fixtures 36-60 11,233,766 Locomotives 36-84 9,438,818 Construction & mining 36-72 7,584,573 Materials handling 12-84 7,568,936 Manufacturing 60-72 3,815,155 Commercial printing 66 3,542,761 Communications 30-40 2,004,394 Research & test 36-60 1,667,223 Tractors and heavy duty trucks 18-60 714,107 Trailers/intermodal containers 51-60 342,029 Furniture & fixtures 60 239,785 Photocopying 36-60 140,373 Energy systems 36 63,900 Medical 36 2,206 ----- ------------ Miscellaneous 36 471 ------------ Total equipment cost 92,944,118 Accumulated depreciation (39,103,371) ------------ Equipment, net of accumulated depreciation $ 53,840,747 ============
On September 29, 1995, the Trust entered into an agreement with United Air Lines, Inc. ("United") to sell the Trust's proportionate ownership interest in a Boeing 747-SP aircraft (the "United Aircraft"), to United for cash consideration of $4,679,924 including unpaid rents through the date of sale, which event concluded in February 1996. In March 1996, the Trust acquired an 8.86% ownership interest in the Reno Aircraft, pursuant to the reinvestment provisions of the Trust's prospectus, at a cost of $1,239,741. To acquire the interest in the Reno Aircraft, the Trust obtained leveraging of $997,888 from a third-party lender and utilized cash proceeds of $241,853 from the sale of the United Aircraft. The Managing Trustee intends to reinvest the remaining proceeds from the sale of the United Aircraft in other equipment in 1996. At June 30, 1996, the Trust's equipment portfolio included equipment having a proportionate original cost of $41,603,638, representing approximately 45% of total equipment cost. At June 30, 1996, the cost and net book value of equipment held for sale or re-lease was approximately $552,000 and $249,000, respectively. The Managing Trustee is actively seeking the sale or re-lease of all equipment not on lease. 7 NOTE 5 - RELATED PARTY TRANSACTIONS - ----------------------------------- All operating expenses incurred by the Trust are paid by AFG on behalf of the Trust 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 Trust to AFG or its Affiliates, are as follows:
1996 1995 --------- --------- Equipment acquisition fees $ 36,109 $132,823 Equipment management fees 420,700 404,911 Administrative charges 10,500 10,500 Reimbursable operating expenses due to third parties 103,845 111,933 Interest on notes payable - affiliate -- 2,439 -------- -------- Total $571,154 $662,606 ======== ========
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 Trust. At June 30, 1996, the Trust was owed $552,175 by AFG for such funds, and the interest thereon. These funds were remitted to the Trust in July 1996. NOTE 6 - NOTES PAYABLE - ---------------------- Notes payable at June 30, 1996 consisted of installment notes of $22,727,467 payable to banks and institutional lenders. The notes bear interest rates ranging between 5.1% and 11.75%, except for one note which bears a fluctuating interest rate based on LIBOR plus a margin (5.5% at June 30, 1996). All of the installment notes are non-recourse and are collateralized by the equipment and assignment of the related lease payments. Generally, the installment notes will be fully amortized by noncancellable rents. However, the Trust has balloon payment obligations at the expiration of the primary lease term related to the Reno Aircraft. The carrying amount of notes payable approximates fair value at June 30, 1996. The annual maturities of the notes payable are as follows: For the year ending June 30, 1997 $11,625,979 1998 7,477,099 1999 2,674,743 2000 338,600 2001 118,875 Thereafter 492,171 ----------- Total $22,727,467 ===========
8 AFG Investment Trust C 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 - -------- As an equipment leasing trust, the Trust was organized to acquire a diversified portfolio of capital equipment subject to lease agreements with third parties. The Trust 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 Trust's portfolio will progress through various stages. Initially, all equipment will generate rental revenues under primary term lease agreements. During the life of the Trust, 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 Trust'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 Trust will be dissolved. The Trust's operations commenced in 1992. Results of Operations - --------------------- For the three and six months ended June 30, 1996, the Trust recognized lease revenue of $5,149,521 and $10,614,823, respectively, compared to $5,422,352 and $10,727,174 for the same periods in 1995. The decrease in lease revenue from 1995 to 1996 is due primarily to the Trust's sale of its interest in the United Aircraft in February 1996, as discussed below. The Trust's original equipment acquisition and leveraging processes were completed in 1995. Future remarketing activities will cause rental revenues to decline. However, in 1996, the Trust's aggregate rental revenues are expected to be consistent with 1995 due to the recognition of a full year's revenue related to equipment acquired during 1995 and reinvestment, in 1996, of the cash proceeds realized from the Trust's sale of its proportionate interest in an aircraft (see below). The Trust also earns interest income from temporary investments of rental receipts and equipment sales proceeds in short-term instruments. The Trust's equipment portfolio includes certain assets in which the Trust 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 Trust 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 Trust 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. On February 5, 1996, the Trust concluded the sale of its interest in a Boeing 747-SP to the lessee, United Air Lines, Inc., as reported in Note 3 to the Trust's 1995 Annual Report. The Trust recognized a net loss of $1,313,122 in connection with this transaction, of which $880,717 was recognized as Write- Down of Equipment in 1995. The remainder of $432,405 was recognized as a loss on sale of equipment on the accompanying financial statements for the six months ended June 30, 1996. In addition to lease rents, the Trust received net sale proceeds of $4,048,779 from United for the aircraft. The Trust plans to reinvest substantially all of such proceeds in other equipment in 1996, a portion of which was completed in March 1996 through the acquisition of an 8.86% ownership interest in the Reno Aircraft at an aggregate cost of $1,239,741. To acquire the interest in the Reno Aircraft, the Trust obtained long-term financing of $997,888 from a third-party lender and utilized cash proceeds of $241,853 from the sale of the United Aircraft. During the three and six months ended June 30, 1996, the Trust sold other equipment having a net book value of 9 $150,327 and $177,462, respectively, to existing lessees and third parties. These sales resulted in net losses, for financial statement purposes, of $89,278 and $98,993, respectively. During the three and six months ended June 30, 1995, the Trust sold equipment having a net book value of $4,621,216 to an existing lessee and a third party. These sales resulted in a net loss, for financial statement purposes, of $207,989. The equipment sales included the Trust's interest in a vessel with an original cost and net book value of $6,199,161 and $4,612,874, respectively, which the Trust sold to an existing lessee in June 1995. In connection with this sale, the Trust realized sale proceeds of $4,091,193 and the purchaser assumed related debt and interest of $308,476 and $1,988, respectively, which resulted in a net loss, for financial statement purposes, of $211,217. This equipment was sold prior to the expiration of the related lease term. It cannot be determined whether future sales of equipment will result in a net gain or net loss to the Trust, 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 Trust and to 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 which may be obtained from renting the asset on a re-lease, renewal or month-to-month basis. The Trust 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 Trust achieved from leasing the equipment. Depreciation and amortization expense for the three and six months ended June 30, 1996 was $3,879,128 and $7,878,387, respectively, compared to $3,572,408 and $7,030,679 for the same periods in 1995. For financial reporting purposes, to the extent that an asset is held on primary lease term, the Trust 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 Trust continues to depreciate the remaining net book value of the asset on a straight-line basis over the asset's remaining economic life. The increase in depreciation expense from 1995 to 1996 was due to the acquisition of equipment subsequent to June 30, 1995. Interest expense was $420,073 and $885,535, or 8.2% and 8.3% of lease revenue for the three and six months ended June 30, 1996, respectively, compared to $581,696 and $1,165,408, or 10.7% and 10.9% of lease revenue for the same periods in 1995. Interest expense in the near-term is expected to increase due to anticipated leveraging to be obtained to finance the acquisition of reinvestment equipment discussed above. Thereafter, interest expense 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 3.9% and 4% of lease revenue for the three and six months ended June 30, 1996, respectively, compared to 3.8% of lease revenue for each of the same periods in 1995. Management fees 10 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, insurance and legal fees, as well as printing, distribution and remarketing expenses. Collectively, operating expenses represented 1.6% and 1.1% of lease revenue for the three and six months ended June 30, 1996, respectively, compared to 1.1% of lease revenue for each of 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 trust. Other fluctuations typically occur in relation to the volume and timing of remarketing activities. Liquidity and Capital Resources and Discussion of Cash Flows - ------------------------------------------------------------ The Trust 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 Trust's principal operating activities derive from asset rental transactions. Accordingly, the Trust'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 $9,614,486 and $9,584,572 for the six months ended June 30, 1996 and 1995, respectively. In the near-term, net cash inflows generated from operating activities are expected to increase due to additional reinvestment of the cash proceeds from the United transaction previously discussed. Thereafter, renewal, re-lease and equipment sale activities will cause the Trust's lease revenue and corresponding sources of operating cash to decline. Overall, expenses associated with rental activities, such as management fees, and net cash flow from operating activities will decline as the Trust experiences a higher frequency of remarketing events. Ultimately, the Trust 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 expended for equipment acquisitions and cash realized from asset disposal transactions are reported under investing activities on the accompanying Statement of Cash Flows. During the six month periods ended June 30, 1996 and 1995, the Trust expended $1,239,741 and $5,892,015, respectively, to acquire equipment, including reinvestment equipment discussed above. During the six months ended June 30, 1996, the Trust realized $4,127,248 in equipment sale proceeds compared to $4,102,763 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 Trust 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 $997,888 and $3,622,137 during the six months ended June 30, 1996 and 1995, respectively, resulted from leveraging a portion of the Trust's equipment portfolio with third-party lenders. AFG also provided interim financing of $6,636,800 to the Trust during the six months ended June 30, 1995. No interim financing was provided during the same period in 1996. 11 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. The amount of cash used to repay debt in 1996 increased as a result of leveraging obtained in 1996 and 1995. The amount of cash used to repay debt obligations in the near-term will increase as a result of new financings. Over time, the principal balance of notes payable will be reduced through the collection and application of rents. Cash distributions to the Managing Trustee, the Special Beneficiary, and the Beneficiaries are declared and generally paid within fifteen days following the end of each month. The payment of such distributions is presented as a component of financing activities. For the six months ended June 30, 1996, the Trust declared total cash distributions of Distributable Cash From Operations and Distributable Cash From Sales and Refinancings of $1,396,075. In accordance with the Amended and Restated Declaration of Trust, the Beneficiaries were allocated 90.75% of these distributions, or $1,266,938, the Special Beneficiary was allocated 8.25%, or $115,176, and the Managing Trustee was allocated 1%, or $13,961. Cash distributions paid to the Participants 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 Trust 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 Trust's equipment portfolio. The future liquidity of the Trust will be influenced by the foregoing and will be greatly dependent upon the collection of contractual rents and the outcome of residual activities. The Managing Trustee anticipates that cash proceeds resulting from these sources will satisfy the Trust'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 Trust's net cash from operating activities to diminish over time; and equipment sale proceeds will vary in amount and period of realization. Accordingly, fluctuations in the level of monthly cash distributions will occur during the life of the Trust. 12 AFG Investment Trust C FORM 10-Q PART II. OTHER 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 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. AFG Investment Trust C By: AFG ASIT Corporation, a Massachusetts corporation and the Managing Trustee of the Registrant. By: /s/ Michael J. Butterfield _________________________________________ Michael J. Butterfield Treasurer of AFG ASIT Corporation (Duly Authorized Officer and Principal Accounting Officer) Date: August 14, 1996 _________________________________________ By: /s/ Gary M. Romano _________________________________________ Gary M. Romano Clerk of AFG ASIT Corporation (Duly Authorized Officer and Principal Financial Officer) Date: August 14, 1996 _________________________________________ 14 EX-27 2 FINANCIAL DATA SCHEDULE
5 6-MOS DEC-31-1996 JAN-01-1996 JUN-30-1996 4,594,788 0 2,704,742 0 0 7,300,947 92,945,118 39,103,371 61,141,694 889,513 22,727,467 0 0 0 37,524,714 61,141,694 0 10,614,823 0 0 9,298,967 0 885,535 881,573 0 881,573 0 0 0 881,573 0 0
-----END PRIVACY-ENHANCED MESSAGE-----