<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 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. 0-18364
American Income Partners V-A Limited Partnership
- ------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Massachusetts 04-3057303
- ------------------------------------- ----------------
(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 PARTNERS V-A LIMITED PARTNERSHIP
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
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
</TABLE>
2
<PAGE>
AMERICAN INCOME PARTNERS V-A LIMITED PARTNERSHIP
STATEMENT OF FINANCIAL POSITION
June 30, 1996 and December 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
----------- ------------
<S> <C> <C>
ASSETS
- ------
Cash and cash equivalents $1,493,452 $1,832,111
Rents receivable, net of allowance for
doubtful accounts of $5,000 262,770 179,945
Accounts receivable - affiliate 269,615 134,441
Equipment at cost, net of accumulated
depreciation of $22,878,710 and
$22,974,327 at June 30, 1996
and December 31, 1995, respectively 6,962,982 7,833,576
---------- ----------
Total assets $8,988,819 $9,980,073
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
- ---------------------------------
Notes payable $ 1,845,743 $ 2,231,365
Accrued interest 27,678 31,667
Accrued liabilities 86,551 20,000
Accrued liabilities - affiliate 19,235 9,546
Deferred rental income 11,543 8,363
Cash distributions payable to partners 544,998 726,664
----------- -----------
Total liabilities 2,535,748 3,027,605
----------- -----------
Partners' capital (deficit):
General Partner (1,208,317) (1,183,347)
Limited Partnership Interests
(1,380,661 Units; initial purchase
price of $25 each) 7,661,388 8,135,815
----------- -----------
Total partners' capital 6,453,071 6,952,468
----------- -----------
Total liabilities and partners'
capital $ 8,988,819 $ 9,980,073
=========== ===========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
3
<PAGE>
AMERICAN INCOME PARTNERS V-A LIMITED PARTNERSHIP
STATEMENT OF OPERATIONS
for the three and six months ended June 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
1996 1995 1996 1995
-------------- -------------- ----------- -----------
<S> <C> <C> <C> <C>
Income:
Lease revenue $ 917,320 $1,069,419 $1,841,805 $2,097,520
Interest income 27,010 34,273 48,013 71,147
Gain on sale of equipment 71,952 130,390 190,927 347,656
---------- ---------- ---------- ----------
Total income 1,016,282 1,234,082 2,080,745 2,516,323
---------- ---------- ---------- ----------
Expenses:
Depreciation 520,837 819,380 1,050,742 1,679,455
Interest expense 34,526 136,441 64,340 208,762
Equipment management fees
- affiliate 44,485 49,636 95,393 100,627
Operating expenses - affiliate 72,703 27,080 279,671 70,970
---------- ---------- ---------- ----------
Total expenses 672,551 1,032,537 1,490,146 2,059,814
---------- ---------- ---------- ----------
Net income $ 343,731 $ 201,545 $ 590,599 $ 456,509
========== ========== ========== ==========
Net income
per limited partnership unit $ 0.24 $ 0.14 $ 0.41 $ 0.31
========== ========== ========== ==========
Cash distributions declared
per limited partnership unit $ 0.38 $ 0.50 $ 0.75 $ 1.00
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
4
<PAGE>
AMERICAN INCOME PARTNERS V-A LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
for the six months ended June 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Cash flows from (used in) operating
activities:
Net income $ 590,599 $ 456,509
Adjustments to reconcile net income
to net cash from operating
activities:
Depreciation 1,050,742 1,679,455
Gain on sale of equipment (190,927) (347,656)
Changes in assets and liabilities
Decrease (increase) in:
rents receivable (82,825) 24,501
accounts receivable - affiliate (135,174) 223,200
Increase (decrease) in:
accrued interest (3,989) (979)
accrued liabilities 66,551 4,600
accrued liabilities - affiliate 9,689 (26,456)
deferred rental income 3,180 (4,231)
----------- -----------
Net cash from operating activities 1,307,846 2,008,943
----------- -----------
Cash flows from (used in) investing
activities:
Purchase of equipment (245,280) --
Proceeds from equipment sales 256,059 529,978
----------- -----------
Net cash from investing activities 10,779 529,978
----------- -----------
Cash flows used in financing activities:
Principal payments - notes payable (385,622) (1,272,114)
Distributions paid (1,271,662) (1,453,328)
----------- -----------
Net cash used in financing activities (1,657,284) (2,725,442)
----------- -----------
Net decrease in cash and cash
equivalents (338,659) (186,521)
Cash and cash equivalents at beginning
of period 1,832,111 2,571,287
----------- -----------
Cash and cash equivalents at end of
period $ 1,493,452 $ 2,384,766
=========== ===========
Supplemental disclosure of cash flow
information:
Cash paid during the period for
interest $ 68,329 $ 209,741
=========== ===========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
5
<PAGE>
AMERICAN INCOME PARTNERS V-A LIMITED PARTNERSHIP
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
- -------------
At June 30, 1996, the Partnership had $1,485,000 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 $8,437,956 are due as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
For the year ending June 30, 1997 $2,748,097
1998 1,735,076
1999 1,176,262
2000 617,449
2001 617,449
Thereafter 1,543,623
----------
Total $8,437,956
==========
</TABLE>
NOTE 4 - EQUIPMENT
- ------------------
The following is a summary of equipment owned by the Partnership 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.
6
<PAGE>
AMERICAN INCOME PARTNERS V-A LIMITED PARTNERSHIP
Notes to the Financial Statements
(Continued)
<TABLE>
<CAPTION>
Lease Term Equipment
Equipment Type (Months) at Cost
------------------ ---------------------- -------------
<S> <C> <C>
Aircraft 10-72 $ 12,218,680
Vessels 57 5,496,476
Locomotives 21-120 4,692,031
Computers and peripherals 3-48 2,385,586
Materials handling 6-60 1,754,713
Tractors and heavy duty trucks 1-84 1,220,030
Trailers/intermodal containers 1-66 788,329
Construction and mining 6-60 594,774
Retail store fixtures 48-60 247,961
Communications 12-60 226,017
Research and test 60 108,304
Furniture and fixtures 60 80,376
Photocopying 12-36 28,415
------------
</TABLE>
<TABLE>
<S> <C>
Total equipment cost 29,841,692
Accumulated depreciation (22,878,710)
------------
Equipment, net of accumulated depreciation $ 6,962,982
============
</TABLE>
At June 30, 1996, the Partnership's equipment portfolio included equipment
having a proportionate original cost of $24,206,682, representing
approximately 81% of total equipment cost.
The summary above includes equipment held for sale or re-lease with a cost
and net book value of approximately $4,072,000 and $280,000, respectively, at
June 30, 1996. This equipment includes the Partnership's proportionate
interest in a Boeing 727-251 Advanced aircraft (the "Aircraft"), formerly
leased to Northwest Airlines, Inc., having a cost and net book value of
$2,175,454 and $200,911, respectively, at June 30, 1996. This aircraft was
returned upon expiration of its lease term on November 30, 1995 and is
currently undergoing heavy maintenance expected to cost the Partnership
approximately $134,000, all of which was accrued during the three months
ended March 31, 1996. The Partnership entered into a new 28-month lease
agreement with Transmeridian Airlines to re-lease the Aircraft at a base rent
to the Partnership of $16,016 per month, effective upon completion of the
heavy maintenance. In addition, at June 30, 1996 the Partnership's portfolio
included a proportionate interest in two Boeing 727-251 Advanced aircraft
which were sold in July 1996 (See Note 7).
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 each of the six month
periods ended June 30, 1996 and 1995, which were paid or accrued by the
Partnership to AFG or its Affiliates, are as follows:
7
<PAGE>
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Equipment management fees $ 95,393 $100,627
Administrative charges 10,500 10,500
Reimbursable operating expenses
due to third parties 269,171 60,470
-------- --------
Total $375,064 $171,597
======== ========
</TABLE>
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 June 30, 1996, the Partnership was owed $269,615 by AFG for
such funds and the interest thereon. These funds were remitted to the
Partnership in July 1996.
NOTE 6 - NOTES PAYABLE
----------------------
Notes payable at June 30, 1996 consisted of installment notes of $1,845,743
payable to banks and institutional lenders. All of the installment notes are
non-recourse, two notes which bear fluctuating interest rates based on the
London Inter-Bank Offered Rate plus a margin (7.01% at June 30, 1996), one
note with a fluctuating interest rate tied to United States Treasury Bill
yields plus a margin (6.45% at June 30, 1996), and one note with an interest
rate of 10%. The installment notes are collateralized by the equipment and
assignment of the related lease payments and will be fully amortized by
noncancellable rents. The carrying amount of notes payable approximates fair
value at June 30, 1996.
The annual maturities of the installment notes payable are as follows:
<TABLE>
<CAPTION>
<S> <C>
For the year ending June 30, 1997 $ 773,263
1998 665,131
1999 407,349
----------
Total $1,845,743
==========
</TABLE>
NOTE 7 - SUBSEQUENT EVENT
-------------------------
During July 1996, the Partnership sold its interest in two Boeing 727-251
Advanced aircraft to the lessee, Northwest Airlines, Inc. The Partnership
received lease termination rents of $846,649 and sale proceeds of $1,959,671.
At June 30, 1996 the net carrying value of these aircraft to the Partnership
was $1,188,592.
8
<PAGE>
AMERICAN INCOME PARTNERS V-A 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 six months ended June 30, 1996 compared to the three and six months
-----------------------------------------------------------------------------
ended June 30, 1995:
--------------------
Overview
--------
As an equipment leasing partnership, the Partnership was organized to
acquire a diversified portfolio of capital equipment subject to lease
agreements with third parties. 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
1989.
Results of Operations
---------------------
For the three and six months ended June 30, 1996, the Partnership
recognized lease revenue of $917,320 and $1,841,805, respectively, compared
to $1,069,419 and $2,097,520 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 months ended June 30, 1996, the Partnership sold equipment
having a net book value of $36,107 to existing lessees and third parties.
These sales resulted in a net gain, for financial statement purposes, of
$71,952 compared to a net gain of $130,390 on equipment having a net book
value of $91,186 for the same period in 1995.
For the six months ended June 30, 1996, the Partnership sold equipment
having a net book value of $65,132 to existing lessees and third parties.
These sales resulted in a net gain, for financial statement purposes, of
$190,927 compared to a net gain of $347,656 on equipment having a net book
value of $182,322 for the same period in 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
9
<PAGE>
AMERICAN INCOME PARTNERS V-A LIMITED PARTNERSHIP
FORM 10-Q
PART I. FINANCIAL INFORMATION
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 revenue generated from that asset,
together with its residual value. The latter consists of cash proceeds
realized upon the asset's sale in addition to all other cash receipts
obtained from renting the asset on a re-lease, renewal or month-to-month
basis. The Partnership classifies such residual rental payments as lease
revenue. Consequently, the amount of gain or loss reported in the financial
statements is not necessarily indicative of the total residual value the
Partnership achieved from leasing the equipment.
Depreciation expense for the three and six months ended June 30, 1996 was
$520,837 and $1,050,742, respectively, compared to $819,380 and $1,679,455
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 $34,526 and $64,340, or 3.8% and 3.5% of lease revenue
for the three and six months ended June 30, 1996, respectively, compared to
$136,441 and $208,762, or 12.8% and 10% of lease revenue for the same periods
in 1995. Interest expense in future periods will continue to 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 4.8% and 5.2% of lease revenue during the three and
six months ended June 30, 1996, respectively, compared to 4.6% and 4.8% of
lease revenue during the same periods in 1995. Management fees during the
six months ended June 30, 1996 include $6,065, resulting from an underaccrual
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.
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
7.9% and 15.2% of lease revenue for the three and six months ended June 30,
1996, respectively, compared to 2.5% and 3.4% of lease revenue for the same
periods in 1995. The increase in operating expenses from 1995 to 1996 was
due primarily to heavy maintenance and airframe overhaul costs incurred or
accrued in connection with certain of the Partnership's Boeing 727 aircraft.
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.
10
<PAGE>
AMERICAN INCOME PARTNERS V-A LIMITED PARTNERSHIP
FORM 10-Q
PART I. FINANCIAL INFORMATION
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
$1,307,846 and $2,008,943 for the six months ended June 30, 1996 and 1995,
respectively. Future renewal, re-lease and equipment sale activities will
continue to cause a gradual decline in the Partnership's lease revenue and
corresponding sources of operating cash. Overall, expenses associated with
rental activities, such as management fees, and net cash flow from operating
activities will also continue to 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 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 months ended June 30,
1996, the Partnership expended $245,280 to replace certain aircraft engines
to facilitate the re-lease of this aircraft to Transmeridian Airlines. There
were no equipment acquisitions during the same period in 1995. During the six
months ended June 30, 1996, the Partnership realized $256,059 in equipment
sale proceeds compared to $529,978 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.
On November 30, 1995, upon the expiration of its lease term, Northwest
Airlines, Inc., returned a Boeing 727-251 Advanced aircraft (the "Aircraft")
in which the Partnership has a 22.4% ownership interest with a cost and net
book value to the Partnership of $2,175,454 and $200,911, respectively, at
June 30, 1996. The Aircraft is currently undergoing heavy maintenance
expected to cost the Partnership approximately $134,000, all of which was
accrued during the three months ended March 31, 1996. The Partnership entered
into a new 28-month lease agreement with Transmeridian Airlines to re-lease
the Aircraft at a base rent to the Partnership of $16,016 per month,
effective upon completion of the heavy maintenance.
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. 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 continue to decline as the principal balance of notes
payable is reduced through the collection and application of rents.
11
<PAGE>
AMERICAN INCOME PARTNERS V-A LIMITED PARTNERSHIP
FORM 10-Q
PART I. FINANCIAL INFORMATION
Cash distributions to the General Partner and Recognized Owners are
declared and generally paid within fifteen days following the end of each
calendar quarter. The payment of such distributions is presented as a
component of financing activities. For the six months ended June 30, 1996,
the Partnership declared total cash distributions of Distributable Cash From
Operations and Distributable Cash From Sales and Refinancings of $1,089,996.
In accordance with the Amended and Restated Agreement and Certificate of
Limited Partnership, the Recognized Owners were allocated 95% of these
distributions, or $1,035,496, and the General Partner was allocated 5%, or
$54,500. The second quarter 1996 cash distribution was paid on July 15,
1996.
Cash distributions paid to the Recognized Owners 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.
Further, the Partnership's future cash distributions will be adversely
affected by the bankruptcy of Midway Airlines, Inc., as the Partnership will
be unable to realize any future residual value for these aircraft.
Notwithstanding such adverse impact, the overall investment results to be
achieved by the Partnership will be dependent upon the collective performance
results of all of the Partnership's equipment leases.
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. In July 1996, the Partnership
will collect cash of $2,806,320, consisting of lease termination rents equal
to $846,649 and sale proceeds equal to $1,959,671, from the sale of its
interests in two Boeing 727-Advanced jet aircraft to the lessee, Northwest.
The amount of cash available for distribution to the Partners in future
periods will be affected by this and other remarketing activities, which,
depending upon timing, the amounts realized and other considerations, such as
market conditions and any cash reserves retained by the Partnership, may
cause the level of future quarterly cash distributions to fluctuate. Further,
equipment lease expirations and asset disposals will cause the Partnership's
net cash from operating activities to diminish over time. In addition, the
Partnership may be required to incur asset refurbishment or upgrade costs in
connection with future remarketing activities. Notwithstanding such
circumstances, the General Partner anticipates that cash proceeds resulting
from the Partnership's rental and remarketing activities will satisfy the
Partnership's future expense obligations.
12
<PAGE>
AMERICAN INCOME PARTNERS V-A 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
13
<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 PARTNERS V-A 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: August 14, 1996
---------------
By: /s/ Gary M. Romano
-------------------
Gary M. Romano
Clerk of AFG Leasing IV Incorporated
(Duly Authorized Officer and
Principal Financial Officer)
Date: August 14, 1996
---------------
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
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