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, 1995
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, 1995 Commission File No. 0-14414
American Income 3 Limited Partnership
(Exact name of registrant as specified in its charter)
Massachusetts 04-2809323
(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 3 LIMITED PARTNERSHIP
FORM 10-Q
INDEX
Page
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Statement of Net Assets in Liquidation
at June 30, 1995 and December 31, 1994 3
Statement of Changes in Net Assets in Liquidation
for the six months ended June 30, 1995 4
Statement of Operations
for the three and six months ended June 30, 1994 5
Statement of Cash Flows
for the six months ended June 30, 1994 6
Notes to the Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II. OTHER INFORMATION:1
Items 1 - 6 9
[CAPTION]
AMERICAN INCOME 3 LIMITED PARTNERSHIP
STATEMENT OF NET ASSETS IN LIQUIDATION
June 30, 1995 and December 31, 1994
(Unaudited)
<TABLE>
<S> <C> <C>
June 30, December 31,
ASSETS 1995 1994
Cash and cash equivalents $ 179,206 $ 604,724
Accounts receivable - affiliate -- 5,618
Total assets $ 179,206 $ 610,342
LIABILITIES
Accrued liabilities $ 8,000 $ 3,000
Accrued liabilities - affiliate 1,707 5,271
Cash distributions payable to partners -- 204,255
Total liabilities 9,707 212,526
NET ASSETS $ 169,499 $ 397,816
</TABLE>
[CAPTION]
AMERICAN INCOME 3 LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION
for the six months ended June 30, 1995
(Unaudited)
<TABLE>
<S> <C>
Interest income $ 8,415
Cash distribution (204,255)
Operating expenses - affiliate (32,477)
Net decrease in net assets in
liquidation during the period (228,317)
Net assets in liquidation at
the beginning of the period 397,816
Net assets in liquidation at
the end of the period $169,499
Cash distribution declared
per limited partnership unit $ 2.50
</TABLE>
[CAPTION]
AMERICAN INCOME 3 LIMITED PARTNERSHIP
STATEMENT OF OPERATIONS
for the three and six months ended June 30, 1994
(Unaudited)
<TABLE>
<S> <C> <C>
Three Months Six Months
Ended Ended
June 30, 1994 June 30, 1994
Income:
Lease revenue $ 32,769 $ 144,495
Interest income 5,771 6,069
Gain on sale of equipment 69,436 71,736
Total income 107,976 222,300
Expenses:
Depreciation 109,128 288,052
Equipment management fees - affiliate 1,639 7,225
Operating expenses - affiliate 56,431 77,760
Total expenses 167,198 373,037
Net loss $ (59,222) $(150,737)
Net loss
per limited partnership unit $ (0.72) $ (1.84)
Cash distributions declared
per limited partnership unit $ 2.50 $ 12.50
</TABLE>
[CAPTION]
AMERICAN INCOME 3 LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
for the six months ended June 30, 1994
(Unaudited)
<TABLE>
<S> <C>
Cash flows from (used in) operating activities:
Net loss $(150,737)
Adjustments to reconcile net loss to net
cash from operating activities:
Depreciation 288,052
Gain on sale of equipment (71,736)
Changes in assets and liabilities
Decrease in:
rents receivable 5,833
accounts receivable - affiliate 34,815
Increase (decrease) in:
accrued liabilities 3,250
accrued liabilities - affiliate (2,467)
deferred rental income (30,322)
Net cash from operating activities 76,688
Cash flows from investing activities:
Proceeds from equipment sales 1,458,799
Net cash from investing activities 1,458,799
Cash flows used in financing activities:
Distributions paid (1,072,339)
Net cash used in financing activities (1,072,339)
Net increase in cash and cash equivalents 463,148
Cash and cash equivalents at beginning of period 106,303
Cash and cash equivalents at end of period $ 569,451
</TABLE>
AMERICAN INCOME 3 LIMITED PARTNERSHIP
Notes to the Financial Statements
June 30, 1995
(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 1994
Annual Report. Except as disclosed herein, there has been no
material change to the information presented in the footnotes to
the 1994 Annual Report.
Beginning July 1, 1994, the General Partner initiated the
liquidation of the Partnership in accordance with the Amended and
Restated Agreement and Certificate of Limited Partnership (the
"Restated Agreement, as amended"). Accordingly, the financial
statements herein for the six months ended June 30, 1995
have been prepared on a liquidation basis of accounting.
In the opinion of management, all adjustments (consisting of
normal and recurring adjustments) considered necessary to present
fairly the Partnership's net assets in liquidation at June 30,
1995 and December 31, 1994, its changes in net assets in
liquidation for the six months ended June 30, 1995, its results of
operations for the three and six months ended June 30, 1994 and
its cash flows for the six months ended June 30, 1994 have been
made and are reflected.
NOTE 2 - CASH
At June 30, 1995, the Partnership had $175,000 invested in
reverse repurchase agreements secured by U.S. Treasury Bills or
interests in U.S. Government securities.
NOTE 3 - REVENUE RECOGNITION
All of the Partnership's primary and renewal leases had
expired and all of the associated equipment was sold as of
December 31, 1994. No future rents are due.
NOTE 4 - RELATED PARTY TRANSACTIONS
All operating expenses incurred by the Partnership are paid by
American Finance Group ("AFG") on behalf of the Partnership and
AFG is reimbursed at its actual cost for such expenditures. Fees
and other costs incurred during the six months ended June 30, 1995
and 1994, which were paid or accrued by the Partnership to AFG or
its Affiliates, are as follows:
1995 1994
Equipment management fees -- $ 7,225
Reimbursable operating expenses
due to third parties $ 24,773 6,000
Administrative charges 7,704 71,760
Total $ 32,477 $ 84,985
All rents and proceeds from the sale of equipment were paid
directly to either AFG or to a lender. AFG temporarily deposited
collected funds in a separate interest bearing escrow account
prior to remittance to the Partnership. The Partnership was owed
no such funds at June 30, 1995.
AMERICAN INCOME 3 LIMITED PARTNERSHIP
FORM 10-Q
PART I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Overview
On July 1, 1994, the General Partner initiated the liquidation
of the Partnership. The Partnership was organized in 1986 to
acquire and lease a diversified portfolio of capital equipment to
third-party lessees and to distribute the net proceeds from
operating and remarketing activities, after satisfaction of all
expenses and debt service obligations, to the Partners. The
Partnership was capitalized with $20,221,250 of equity from the
Limited Partners and $50,000 of equity from the General Partner and
acquired $34,595,921 of equipment, subject to related indebtedness.
All of the Partnership's equipment has been sold. Dissolution of
the Partnership is anticipated on or before September 30, 1995.
Results of Operations
The Statement of Changes in Net Assets in Liquidation is
presented for the six months ended June 30, 1995 and reflects
the liquidation of assets during the period. As a result, a
comparison between current and prior year reporting periods is not
meaningful.
For the period ended June 30, 1995, the Partnership recognized
$8,415 of interest income generated from the temporary investment
of cash. Operating expenses consisted principally of
administrative charges, professional service costs, such as audit
and legal fees, as well as printing and distribution expenses.
These charges amounted to $32,477 during the period ended June 30,
1995. The Partnership will continue to incur accounting and
administrative costs until the Partnership is dissolved.
Liquidity and Capital Resources
The Partnership will have limited cash activities for the
remainder of its existence. Prior to its dissolution, cash
transactions are expected to result from the receipt of interest
income on short-term investments and the payment of operating
expenses, discussed above. At June 30, 1995, the Partnership had
$179,206 of cash, substantially all of which was invested in
interest-bearing investments. See Note 2 to the financial
statements herein.
In the third quarter of 1995, the General Partner will initiate
an action of dissolution and transfer all undistributed cash held
by the Partnership at the date of dissolution into a trust account
(the Trust Account) established and maintained solely to satisfy
expenses of the Partnership during the wind-down period and any
other liabilities of the Partnership which may arise. To the
extent that the balance of the Trust Account exceeds the ultimate
liabilities of the Partnership, the General Partner will distribute
such remaining balance to the beneficiaries of the Trust Account,
which beneficiaries will consist of the General Partner and the
Limited Partners in accordance with their respective percentage
ownership interests in the Partnership as at the dissolution date.
At June 30, 1995, the Partnership had net assets of $169,499 or
$2.07 per limited partnership unit.
For the six months ended June 30, 1995, the Partnership
declared total distributions of $204,255. In accordance with the
Restated Agreement, as amended, the Limited Partners were allocated
99% of these distributions, or $202,212 and the General Partner was
allocated 1%, or $2,043. Since inception, the Partnership has
distributed $21,002,832 to the Limited Partners and $212,150 to the
General Partner.
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 will
be determined coincident with the final cash distribution payment
to the Partners.
AMERICAN INCOME 3 LIMITED PARTNERSHIP
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
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 3 LIMITED PARTNERSHIP
By: AFG Leasing Associates, a Massachusetts
general partnership and the General Partner
of the Registrant.
By: AFG Leasing Incorporated, a Massachusetts
corporation and general partner in such
general partnership.
By: /s/ Gary M. Romano
Gary M. Romano
Vice President and Controller
(Duly Authorized Officer and
Principal Accounting Officer)
Date: August 11, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 179,206
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 179,206
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 179,206
<CURRENT-LIABILITIES> 9,707
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 9,707
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 32,477
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (24,062)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (24,062)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
