<PAGE>
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 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. 0-15622
American Income 6 Limited Partnership
- -----------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Massachusetts 04-2928487
- ------------------------------- -------------------
(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
---- ----
<PAGE>
AMERICAN INCOME 6 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 6-10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 11-14
PART II. OTHER INFORMATION
ITEMS 1-6 15
<PAGE>
AMERICAN INCOME 6 LIMITED PARTNERSHIP
STATEMENT OF FINANCIAL POSITION
SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
1996 1995
<S> <C> <C>
ASSETS:
Cash and cash equivalents $ 456,496 $ 211,897
Rents receivable, net of allowance for doubtful accounts
of $21,000 at December 31, 1995 - 15,724
Due from Buyer 2,781,767 -
Accounts receivable--affiliate 43,615 198,811
Equipment at cost, net of accumulated depreciation
of $9,855,443 at December 31, 1995 - 2,321,599
---------- ----------
Total assets $3,281,878 $2,748,031
---------- ----------
---------- ----------
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Notes payable $ - $ 66,261
Accrued interest - 770
Accrued liabilities 67,005 20,000
Accrued liabilities--affiliate 11,033 3,115
Deferred rental income - 248,585
Cash distributions payable to partners 2,877,708 152,827
---------- ----------
Total liabilities 2,955,746 491,558
---------- ----------
PARTNERS' CAPITAL (DEFICIT):
General Partner (129,374) (110,071)
Limited Partnership Interests (60,519 Units;
initial purchase price of $250 each) 455,506 2,366,544
---------- ----------
Total partners' capital 326,132 2,256,473
---------- ----------
Total liabilities and partners' capital $3,281,878 $2,748,031
---------- ----------
---------- ----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
3
<PAGE>
AMERICAN INCOME 6 LIMITED PARTNERSHIP
STATEMENT OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
INCOME:
Lease revenue $ 271,850 $346,909 $ 713,961 $1,041,693
Interest income 5,248 3,175 11,802 13,464
Gain on sale of equipment 1,086,045 - 1,086,045 29,196
---------- -------- ---------- ----------
Total income 1,363,143 350,084 1,811,808 1,084,353
---------- -------- ---------- ----------
EXPENSES:
Depreciation 158,376 244,430 625,877 733,288
Interest expense - 4,190 590 23,007
Equipment management fees--affiliate 13,592 17,346 35,698 52,085
Operating expenses--affiliate 90,672 9,622 125,864 49,139
---------- -------- ---------- ----------
Total expenses 262,640 275,588 788,029 857,519
---------- -------- ---------- ----------
NET INCOME $1,100,503 $ 74,496 $1,023,779 $ 226,834
---------- -------- ---------- ----------
---------- -------- ---------- ----------
NET INCOME PER LIMITED PARTNERSHIP UNIT $ 18.00 $ 1.22 $ 16.75 $ 3.71
-------- ------- -------- -------
-------- ------- -------- -------
CASH DISTRIBUTIONS DECLARED PER LIMITED
PARTNERSHIP UNIT $ 47.07 $ 1.88 $ 48.32 $ 10.63
-------- ------- -------- -------
-------- ------- -------- -------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
4
<PAGE>
AMERICAN INCOME 6 LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
----------- -----------
Net income $ 1,023,779 $ 226,834
Adjustments to reconcile net income to cash from operating activities:
Depreciation 625,877 733,288
Gain on sale of equipment (1,086,045) (29,196)
Decrease in allowance for doubtful accounts (21,000) -
Changes in assets and liabilities-
Decrease in-
Rents receivable 36,724 935
Accounts receivable--affiliate 155,196 1,034
Increase (decrease) in-
Accrued interest (770) (1,162)
Accrued liabilities 47,005 (1,673)
Accrued liabilities--affiliate 7,918 (3,442)
Deferred rental income (248,585) (90,822)
----------- -----------
Cash from operating activities 540,099 835,796
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from equipment sales - 29,196
----------- -----------
Cash from investing activities - 29,196
----------- -----------
CASH FLOWS USED IN FINANCING ACTIVITIES:
Principal payments--notes payable (66,261) (422,929)
Distributions paid (229,239) (802,335)
----------- -----------
Cash used in financing activities (295,500) (1,225,264)
----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 244,599 (360,272)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 211,897 476,848
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 456,496 $ 116,576
----------- -----------
----------- -----------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest $ 1,360 $ 24,169
----------- -----------
----------- -----------
</TABLE>
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING ACTIVITIES:
As discussed in Note 1, the Partnership entered into a sale transaction to
dispose of its equipment portfolio. This transaction was closed on
September 30, 1996. The Partnership received net sales proceeds of
$2,781,767 that were deposited into an escrow account and transferred to
the Partnership on October 3, 1996. This amount has been reflected as Due
from Buyer on the Statement of Financial Position at September 30, 1996.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
5
<PAGE>
AMERICAN INCOME 6 LIMITED PARTNERSHIP
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(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.
On September 30, 1996, the Partnership sold all of its remaining
equipment assets for $2,781,767 (see Notes 4 and 5). In October 1996,
the Partnership filed Form 8-K, which provided a description of the
remarketing process and the terms of sale. The entire remarketing
effort was undertaken jointly by 15 individual equipment leasing
programs, consisting of the Partnership and 14 affiliated partnerships,
each of which individually executed separate purchase and sale
agreements with RSL Finance Limited Partnership II (the Buyer) for all
or a portion of their equipment assets (the Sale Assets).
The General Partner anticipates that the Partnership will be dissolved
on or before December 31, 1996 in accordance with the Partnership's
Amended and Restated Agreement and Certificate of Limited Partnership.
Prior to December 31, 1996, the General Partner will wind up the
operations of the Partnership and make a liquidating distribution of
$2,877,708 to the Partners. The distribution approximates all of the
Partnership's available cash net of estimated wind up costs and a
contingency reserve. In November 1996, the contingency reserve of
$325,000 was deposited in a separate account to cover any unforeseen
liabilities that may arise in future periods. At such time as the
General Partner considers appropriate, any balance in the reserve
account will be distributed to the Partners according to their
respective ownership interests in the Partnership at the date of its
dissolution (see Note 6).
The financial statements presented have been prepared on a going-concern
basis through September 30, 1996. Due to the imminent dissolution of
the Partnership requiring liquidation and distribution of its net
assets, a statement of net assets in liquidation as of September 30,
1996 is presented below. This statement is prepared based on
anticipated liquidating values of assets and liabilities. Management
has determined the liquidating values of amounts receivable based on
6
<PAGE>
AMERICAN INCOME 6 LIMITED PARTNERSHIP
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(Continued)
(1) BASIS OF PRESENTATION (Continued)
collectibility of balances prior to any final distribution and
termination of the Partnership. Accrued liabilities have been estimated
based on the existing obligations and anticipated fees and costs
associated with the sales transaction and the wind-up effort. Cash
distributions to partners, including contingency reserves, may vary
depending upon the realization of the amounts estimated by management.
Values estimated by management may be different from actual amounts.
Assets:
Cash and cash equivalents $ 456,496
Due from Buyer 2,781,767
Accounts receivable--affiliate 43,615
----------
Total assets $3,281,878
----------
----------
Liabilities:
Accrued liabilities $ 67,005
Accrued liabilities--affiliate 11,033
Cash distributions payable to partners,
including contingency reserve 3,203,840
----------
Total liabilities $3,281,878
----------
----------
Net assets $ -
----------
----------
(2) CASH
The Partnership 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. At September 30, 1996, the Partnership had
$455,000 invested in reverse repurchase agreements.
(3) REVENUE RECOGNITION
Rents were payable to the Partnership monthly, quarterly or
semiannually, and no significant amounts were calculated on factors
other than the passage of time. The leases were accounted for as
operating leases and were noncancelable. Rents received prior to their
due dates were deferred.
7
<PAGE>
AMERICAN INCOME 6 LIMITED PARTNERSHIP
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(Continued)
(4) EQUIPMENT
The following is a summary of equipment owned by the Partnership
immediately prior to the sales transaction described in Note 1.
LEASE TERM EQUIPMENT,
EQUIPMENT TYPE (MONTHS) AT COST
Aircraft 36-60 $ 7,147,830
Flight simulators 108 4,923,250
Materials handling 12-60 61,629
Tractors & heavy duty trucks 24-60 44,333
------------
Total equipment cost 12,177,042
Accumulated depreciation (10,481,320)
------------
Equipment, net of accumulated depreciation $ 1,695,722
------------
------------
As discussed in Note 1, on September 30, 1996, the Partnership sold all
of the foregoing equipment for $2,781,767.
(5) 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 each of 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:
1996 1995
Equipment management fees $ 35,698 $ 52,085
Administrative charges 13,380 10,035
Reimbursable operating expenses due to third parties 112,484 39,104
-------- --------
Total $161,562 $101,224
-------- --------
-------- --------
Administrative charges and reimbursable operating expenses due to third
parties in 1996 include all costs anticipated in connection with the
Partnership's wind-up and dissolution.
All rents and proceeds from the sale of equipment, including the sales
transaction described in Note 1, 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
8
<PAGE>
AMERICAN INCOME 6 LIMITED PARTNERSHIP
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(Continued)
(5) RELATED PARTY TRANSACTIONS (Continued)
Partnership was owed $43,615 by AFG for such funds and the interest
thereon. These funds were remitted to the Partnership in October 1996.
The sales proceeds due from the Buyer were deposited into the escrow
account subsequent to September 30, 1996.
The remarketing effort described in Note 1 was undertaken jointly by 15
individual equipment leasing programs, consisting of the Partnership and
14 affiliated partnerships (Other Affected Partnerships). Collectively,
the Partnership and the Other Affected Partnerships offered for sale all
or a portion of their equipment assets. Thirteen of the programs,
including the Partnership, sold all of their equipment assets and are
expected to wind up business operations by December 31, 1996; the
remaining two programs, which will continue their business operations
beyond December 31, 1996, sold only their interest in assets owned
jointly with one or more of the 13 programs anticipating wind-up by
December 31, 1996. Substantially all of the Partnership's equipment
assets of material value represented partial ownership interests whereby
the Partnership owned less than a 100% interest in the equipment it
sold. The remaining interests in such assets were owned by one or more
of the Other Affected Partnerships. Ultimately, the Sale Assets were
sold for an aggregate adjusted sale price of approximately $32,997,000,
of which the Partnership's proportionate share, net of associated costs,
was determined to be $2,781,767. The Partnership's proportionate share
in this transaction is net of certain third-party advisory fees incurred
in connection with the sale.
The Buyer is a limited partnership established to acquire the Sale
Assets and has no direct affiliation with the Partnership, the Other
Affected Partnerships, the General Partner or AFG. The sole general
partner of the Buyer is RSL Holdings, Inc. (RSL). An affiliate of RSL
purchased a significant limited partnership interest in a
direct-participation equipment leasing program co-sponsored by AFG in
1992. AFG acquired this interest in 1993 for cash and assumption of
indebtedness. There have been no other business dealings between the
Buyer and AFG and their affiliates.
(6) SUBSEQUENT EVENTS
On October 10, 1996, the General Partner entered into a Cross
Partnership Agreement with general partners of certain other affiliated
partnerships. Under this agreement, each of the general partners has
agreed to set aside a contingency reserve amount for future liabilities
and deposit that amount into an account that may be accessed by any of
the general partners to fund any and all obligations contemplated under
the Cross Partnership Agreement. Any obligation of the Partnership that
is not associated with the sales transaction (see Note 1) will directly
reduce the Partnership's reserve amount. All costs arising as a result
of the sales transaction will be allocated against the reserve amount of
the Partnership and other affiliated partnerships. If the reserve
amount contributed by the Partnership is reduced below zero, the reserve
amounts contributed by the general partners of the other affiliated
9
<PAGE>
AMERICAN INCOME 6 LIMITED PARTNERSHIP
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(Continued)
(6) SUBSEQUENT EVENTS (Continued)
partnerships shall be debited on a pro rata basis to cover the deficit.
If the reserve amount contributed by one of the affiliated partnerships
is reduced below zero, the reserve amounts of the Partnership and the
other affiliated Partnerships shall be debited on a pro rata basis to
cover the deficit. Upon termination of the contingency reserve account,
any monies remaining will be distributed to those partnerships with
positive balances. The Partnership's reserve amount under this
agreement was determined to be $325,000 and was deposited in the reserve
account in November 1996.
In connection with the wind-up effort, certain general partner interests
in AFG Leasing Associates II, the General Partner of the Partnership,
[including the general partner interest owned by Geoffrey A. MacDonald]
were transferred to AFG Leasing IV Incorporated, resulting in AFG
Leasing IV Incorporated and AFG Leasing Incorporated being the two
general partners of AFG Leasing Associates II. AFG Leasing Incorporated
then merged with and into AFG Leasing IV Incorporated effective October
17, 1996. Accordingly, AFG Leasing IV Incorporated became the sole
General Partner of the Partnership commencing October 17, 1996. AFG
Leasing IV Incorporated was established in 1987 and is also the general
partner or managing general partner of certain other affiliated
partnerships sponsored by AFG.
10
<PAGE>
AMERICAN INCOME 6 LIMITED PARTNERSHIP
FORM 10-Q
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Three and Nine Months Ended September 30, 1996 Compared To the Three and
Nine Months Ended September 30, 1995:
OVERVIEW
The Partnership was organized in 1986 as a direct-participation equipment
leasing program to acquire a diversified portfolio of capital equipment
subject to lease agreements with third parties. The Partnership's stated
investment objectives and policies contemplated that the Partnership would
wind up its operations within approximately seven years of its inception.
On September 30, 1996, the Partnership sold all of its remaining equipment
assets. The remarketing effort described in Note 1 was undertaken jointly by
15 individual equipment leasing programs, consisting of the Partnership and
14 affiliated partnerships (Other Affected Partnerships). Collectively, the
Partnership and the Other Affected Partnerships offered for sale all or a
portion of their equipment assets (Sale Assets). Thirteen of the programs,
including the Partnership, sold all their equipment assets and are expected
to wind up business operations by December 31, 1996; the remaining two
programs, which will continue their business operations beyond December 31,
1996, sold only their interest in assets owned jointly with one or more of
the 13 programs anticipating wind-up by December 31, 1996. Substantially all
of the Partnership's equipment assets of material value represented partial
ownership interests whereby the Partnership owned less than a 100% interest
in the equipment it sold. The remaining interests in such assets were owned
by one or more of the Other Affected Partnerships. Ultimately, the Sale
Assets were sold for an aggregate adjusted sale price of approximately
$32,997,000, of which the Partnership's proportionate share, net of
associated costs, was determined to be $2,781,767. The Partnership's
proportionate share in this transaction is net of certain third-party
advisory fees incurred in connection with the sale.
The General Partner anticipates that the Partnership will be dissolved on or
before December 31, 1996 in accordance with the Partnership's Amended and
Restated Agreement and Certificate of Limited Partnership (Partnership
Agreement). Prior to December 31, 1996, the General Partner will wind up the
operations of the Partnership and make a liquidating distribution of
$2,877,708 to the Partners. The distribution approximates all of the
Partnership's available cash, net of estimated wind-up costs and a
contingency reserve. In November 1996, the contingency reserve of $325,000
was deposited in a separate account to cover any unforeseen liabilities that
may arise in future periods. At such time as the General Partner considers
appropriate, any balance in the reserve account will be distributed to the
Partners according to their respective ownership interests in the Partnership
at the date of its dissolution (see Note 6 to the financial statements).
11
<PAGE>
AMERICAN INCOME 6 LIMITED PARTNERSHIP
FORM 10-Q
PART I. FINANCIAL INFORMATION
(Continued)
OVERVIEW (Continued)
The financial statements presented have been prepared on a going-concern
basis through September 30, 1996. Due to the imminent dissolution of the
Partnership requiring liquidation and distribution of its net assets,
management has determined the liquidating values of amounts receivable based
on collectibility of balances prior to any final distribution and termination
of the Partnership. Accrued liabilities have been estimated based on the
existing obligations and anticipated fees and costs associated with the sales
transaction and the wind-up effort. Cash distributions to partners,
including contingency reserves, may vary depending upon the realization of
the amounts estimated by management. Values estimated by management may be
different from actual amounts.
RESULTS OF OPERATIONS
For the three and nine months ended September 30, 1996, the Partnership
recognized lease revenue of $271,850 and $713,961, respectively, compared to
$346,909 and $1,041,693 for the same periods in 1995. The decrease in lease
revenue from 1995 to 1996 was expected and resulted principally from lease
term expirations and the sale of equipment. The Partnership also earned
interest income from temporary investments of rental receipts and equipment
sales proceeds in short-term instruments.
Prior to the sale of the Partnership's assets, the Partnership's equipment
portfolio included certain assets in which the Partnership held a
proportionate ownership interest. In such cases, the remaining interests
were 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 that could
result from a concentration in any single equipment type, industry or lessee.
The Partnership and each affiliate individually reported, in proportion to
their respective ownership interests, their respective shares of assets,
liabilities, revenues and expenses associated with the equipment.
During the nine months ended September 30, 1995, the Partnership sold fully
depreciated equipment in the normal course of business that resulted in a net
gain, for financial statement purposes, of $29,196. In connection with the
September 30, 1996 sales transaction discussed above, the Partnership
realized a net gain of $1,086,045.
12
<PAGE>
AMERICAN INCOME 6 LIMITED PARTNERSHIP
FORM 10-Q
PART I. FINANCIAL INFORMATION
(Continued)
RESULTS OF OPERATIONS (Continued)
Depreciation expense for the three and nine months ended September 30, 1996
was $158,376 and $625,877, respectively, compared to $244,430 and $733,288
for the same periods in 1995. For financial reporting purposes, to the
extent that an asset was held on primary lease term, the Partnership
depreciated 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. To the extent that equipment was held beyond its primary lease term,
the Partnership continued 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 5% of lease revenue during each of the periods ended
September 30, 1996 and 1995.
Operating expenses consisted 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 were incurred in connection with
equipment being remarketed. Collectively, operating expenses represented
33.3% and 17.6% of lease revenue for the three and nine month periods ended
September 30, 1996, respectively, compared to 2.8% and 4.7% of lease revenue
for the same periods in 1995. Operating expenses for the three and nine month
periods ended September 30, 1996 included all costs anticipated in connection
with the Partnership's wind-up and dissolution.
LIQUIDITY AND CAPITAL RESOURCES AND DISCUSSION OF CASH FLOWS
The Partnership, by its nature, is a limited-life entity that was established
for specific purposes described in the preceding "Overview." As an equipment
leasing program, the Partnership's principal operating activities have been
derived from asset rental transactions. Accordingly, the Partnership's
principal source of cash from operations has been provided from the
collection of periodic rents. These cash inflows were 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
$540,099 and $835,796 for the nine months ended September 30, 1996 and 1995,
respectively.
Cash realized from asset disposal transactions, excluding the sales
transaction on September 30, 1996, is reported under investing activities on
the accompanying Statement of Cash Flows. During the nine months ended
September 30, 1995, the Partnership realized $29,196 in equipment sale
proceeds during the normal course of business. No such proceeds were
realized in 1996.
The Partnership obtained long-term financing in connection with certain
equipment leases. The repayments of principal related to such indebtedness
are reported as a component of financing activities. All the Partnership's
outstanding debt obligations were retired in 1996.
13
<PAGE>
AMERICAN INCOME 6 LIMITED PARTNERSHIP
FORM 10-Q
PART I. FINANCIAL INFORMATION
(Continued)
LIQUIDITY AND CAPITAL RESOURCES AND DISCUSSION OF CASH FLOWS (Continued)
On September 30, 1996, the Partnership recorded a receivable of $2,781,767 in
connection with the sale all of its remaining equipment assets. These
proceeds were deposited into an escrow account and transferred to the
Partnership on October 3, 1996. In conjunction with this transaction, the
General Partner has commenced the dissolution and liquidation of the
Partnership. The aggregate funds from the sale transaction and liquidation
will be used to fund existing obligations, including estimated costs
resulting from the wind-up effort and sale transaction, and to establish a
contingency reserve to cover any unforeseen liabilities. The remaining
funds, including any unutilized contingency reserves, will be distributed to
the Partners in accordance with the terms of the Partnership Agreement and
related agreements.
14
<PAGE>
AMERICAN INCOME 6 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.
15
<PAGE>
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 6 LIMITED PARTNERSHIP
By: AFG Leasing IV Incorporated, a Massachusetts
corporation and the General Partner of the Registrant.
By: /S/ Michael J. Butterfield
--------------------------
Michael J. Butterfield
Treasurer of AFG Leasing IV Incorporated
(Duly Authorized Officer and
Principal Accounting Officer)
Date: November 19, 1996
-----------------
By: /S/ Gary M. Romano
------------------
Gary M. Romano
Clerk of AFG Leasing IV Incorporated
(Duly Authorized Officer and
Principal Financial Officer)
Date: November 19, 1996
-----------------
16
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 456,496
<SECURITIES> 0
<RECEIVABLES> 2,825,382
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,281,878
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,281,878
<CURRENT-LIABILITIES> 2,955,746
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 326,132
<TOTAL-LIABILITY-AND-EQUITY> 3,281,878
<SALES> 713,961
<TOTAL-REVENUES> 1,811,808
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 787,439
<LOSS-PROVISION> 0
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