<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
------------------------------------------------
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, 1997 Commission File No. 0-19135
American Income Partners V-D Limited Partnership
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Massachusetts 04-3090151
- -------------------------------------- --------------------------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
88 Broad Street, Boston, MA 02110
- -------------------------------------- --------------------------------------
(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-D LIMITED PARTNERSHIP
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Statement of Financial Position at September 30, 1997 and December 31, 1996............................ 3
Statement of Operations for the three and nine months ended September 30, 1997 and 1996................ 4
Statement of Cash Flows for the nine months ended September 30, 1997 and 1996.......................... 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-D LIMITED PARTNERSHIP
STATEMENT OF FINANCIAL POSITION
September 30, 1997 and December 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------
<S> <C> <C>
ASSETS
Cash and cash equivalents........................................................... $ 2,541,383 $1,867,874
Rents receivable.................................................................... 69,731 15,859
Accounts receivable--affiliate...................................................... 84,045 101,298
Equipment at cost, net of accumulated depreciation of $3,161,800 and $4,761,138 at
September 30, 1997 and December 31, 1996, respectively............................ 644,314 1,566,382
------------- ------------
Total assets.................................................................... $ 3,339,473 $3,551,413
------------- ------------
------------- ------------
LIABILITIES AND PARTNERS' CAPITAL
Notes payable....................................................................... $ -- $ 307,479
Accrued interest.................................................................... -- 1,336
Accrued liabilities................................................................. 22,500 23,245
Accrued liabilities--affiliate...................................................... 8,326 20,837
Deferred rental income.............................................................. 14,400 194,980
Cash distributions payable to partners.............................................. 75,825 75,825
------------- ------------
Total liabilities............................................................... 121,051 623,702
------------- ------------
Partners' capital (deficit):
General Partner..................................................................... (371,132) (385,667)
Limited Partnership Interests (480,227 Units; initial purchase price of $25 each)... 3,589,554 3,313,378
------------- ------------
Total partners' capital......................................................... 3,218,422 2,927,711
------------- ------------
Total liabilities and partners' capital......................................... $ 3,339,473 $3,551,413
------------- ------------
------------- ------------
</TABLE>
The accompanying notes are in integral part
of these financial statements.
3
<PAGE>
AMERICAN INCOME PARTNERS V-D LIMITED PARTNERSHIP
STATEMENT OF OPERATIONS
for the three and nine months ended September 30, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
------------------------ ------------------------
1997 1996 1997 1996
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Income:
Lease revenue.............................................. $ 126,684 $ 762,891 $ 494,003 $ 1,577,362
Interest income............................................ 34,208 34,894 96,419 69,964
Gain on sale of equipment.................................. 112,440 474,581 308,090 530,328
---------- ------------ ---------- ------------
Total income............................................. 273,332 1,272,366 898,512 2,177,654
---------- ------------ ---------- ------------
Expenses:
Depreciation............................................... 65,825 142,954 215,726 619,178
Interest expense........................................... 4,407 7,643 18,835 7,643
Equipment management fees--affiliate....................... 5,634 37,171 22,747 80,561
Operating expenses--affiliate.............................. 55,242 26,707 123,018 65,370
---------- ------------ ---------- ------------
Total expenses........................................... 131,108 214,475 380,326 772,752
---------- ------------ ---------- ------------
Net income................................................... $ 142,224 $ 1,057,891 $ 518,186 $ 1,404,902
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
Net income per limited partnership unit...................... $ 0.28 $ 2.09 $ 1.03 $ 2.78
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
Cash distributions declared per limited partnership unit..... $ 0.15 $ 3.62 $ 0.45 $ 4.37
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
</TABLE>
The accompanying notes are in integral part
of these financial statements.
4
<PAGE>
AMERICAN INCOME PARTNERS V-D LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
for the nine months ended September 30, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Cash flows from (used in) operating activities:
Net income............................................................................ $ 518,186 $ 1,404,902
Adjustments to reconcile net income to net cash from operating activities:
Depreciation...................................................................... 215,726 619,178
Gain on sale of equipment......................................................... (308,090) (530,328)
Changes in assets and liabilities
Decrease (increase) in:
rents receivable.................................................................. (53,872) (12,521)
accounts receivable--affiliate.................................................... 17,253 61,301
Increase (decrease) in:
accrued interest.................................................................. (1,336) 5,614
accrued liabilities............................................................... (745) (1,250)
accrued liabilities--affiliate.................................................... (12,511) (6,629)
deferred rental income............................................................ 13,512 (2,110)
------------ ------------
Net cash from operating activities.............................................. 388,123 1,538,157
------------ ------------
Cash flows from investing activities:
Proceeds from equipment sales....................................................... 820,340 1,327,381
------------ ------------
Net cash from investing activities.............................................. 820,340 1,327,381
------------ ------------
Cash flows used in financing activities:
Principal payments--notes payable................................................... (307,479) (86,802)
Distributions paid.................................................................. (227,475) (631,877)
------------ ------------
Net cash used in financing activities........................................... (534,954) (718,679)
------------ ------------
Net increase in cash and cash equivalents............................................. 673,509 2,146,859
Cash and cash equivalents at beginning of period...................................... 1,867,874 1,108,982
------------ ------------
Cash and cash equivalents at end of period............................................ $ 2,541,383 $ 3,255,841
------------ ------------
------------ ------------
Supplemental disclosure of cash flow information:
Cash paid during the period for interest............................................ $ 20,171 $ 2,029
------------ ------------
------------ ------------
</TABLE>
Supplemental disclosure of non-cash activity:
The Partnership received $194,092 from a lessee prior to 1997, representing
an equipment purchase option.These funds were classified as deferred rental
income on the Statement of Financial Position at December 31, 1996.During
the nine months ended September 30, 1997, the Partnership sold the equipment
and such funds were recognized as sales proceeds.See also Note 4 to the
financial statements for 1996 non-cash activities.
The accompanying notes are in integral part
of these financial statements.
5
<PAGE>
AMERICAN PARTNERS V-D LIMITED PARTNERSHIP
Notes to the Financial Statements
September 30, 1997
(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 1996 Annual Report. Except as disclosed herein, there
has been no material change to the information presented in the footnotes to the
1996 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, 1997 and December 31, 1996 and results of operations
for the three and nine month periods ended September 30, 1997 and 1996 have been
made and are reflected.
NOTE 2--CASH
At September 30, 1997, the Partnership had $2,435,000 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 or quarterly 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 $414,873 are due as
follows:
For the year ending September 30, 1998 $ 162,359
1999 100,478
2000 84,778
2001 67,258
---------
Total $ 414,873
---------
---------
NOTE 4--EQUIPMENT
The following is a summary of equipment owned by the Partnership at
September 30, 1997. In the opinion of Equis Financial Group Limited Partnership
("EFG"), the acquisition cost of the equipment did not exceed its fair market
value.
6
<PAGE>
AMERICAN PARTNERS V-D LIMITED PARTNERSHIP
Notes to the Financial Statements
(Continued)
<TABLE>
<CAPTION>
REMAINING
LEASE TERM EQUIPMENT
EQUIPMENT TYPE (MONTHS) AT COST
- -------------------------------------------------------------------------------------- ------------- -------------
<S> <C> <C>
Aircraft.............................................................................. 0 $ 1,160,990
Materials handling.................................................................... 0-3 1,058,340
Trailers and intermodal containers.................................................... 45-46 357,884
Tractors and heavy duty trucks........................................................ 0-17 301,746
Manufacturing......................................................................... 0-17 268,764
Communications........................................................................ 0-5 229,633
Construction and mining............................................................... 0-16 151,097
Computers and peripherals............................................................. 0 107,488
Research and test..................................................................... 7 105,805
Motor vehicles........................................................................ 17 64,367
-------------
Total equipment cost........................................................................... 3,806,114
Accumulated depreciation....................................................................... (3,161,800)
-------------
Equipment, net of accumulated depreciation..................................................... $ 644,314
-------------
-------------
</TABLE>
During July 1996, the Partnership transferred its ownership interest in
certain trailers, previously leased to The Atchison Topeka and Santa Fe
Railroad, to a third party for cash consideration of $60,170. The trailers had a
net book value of $22,808 at the time of the transfer, which resulted in a net
gain of $37,362. In September 1996, the Partnership replaced these trailers with
comparable trailers and leased such to a new lessee. The transaction was
accounted for as a like-kind exchange for income tax reporting purposes. The
cost of the new trailers, $357,884, was reduced by $36,574, representing the
proportionate amount of gain deferred on the original trailers. The Partnership
funded this transaction with $58,901 of cash consideration and long-term
financing of $335,557. The unused cash consideration of $1,269 was recognized as
proceeds from equipment sales. The associated deferred gain of $788 was
recognized as Gain on Sale of Equipment on the Statement of Operations for the
three months ended September 30, 1996.
At September 30, 1997, the Partnership's equipment portfolio included
equipment having a proportionate original cost of $1,332,708, representing
approximately 35% of total equipment cost.
The summary above includes equipment held for sale or re-lease which had
been fully depreciated with an original cost of approximately $36,000 at
September 30, 1997. In addition, the summary above also includes equipment being
leased on a month-to-month basis.
NOTE 5--RELATED PARTY TRANSACTIONS
All operating expenses incurred by the Partnership are paid by EFG on behalf
of the Partnership and EFG is reimbursed at its actual cost for such
expenditures. Fees and other costs incurred during each of the nine month
periods ended September 30, 1997 and 1996, which were paid or accrued by the
Partnership to EFG or its Affiliates, are as follows:
7
<PAGE>
AMERICAN PARTNERS V-D LIMITED PARTNERSHIP
Notes to the Financial Statements
(Continued)
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Equipment management fees............................................. $ 22,747 $ 80,561
Administrative charges................................................ 42,862 15,408
Reimbursable operating expenses due to third parties.................. 80,156 49,962
---------- ----------
Total............................................................. $ 145,765 $ 145,931
---------- ----------
---------- ----------
</TABLE>
All rents and proceeds from the sale of equipment are paid directly to
either EFG or to a lender. EFG temporarily deposits collected funds in a
separate interest-bearing escrow account prior to remittance to the Partnership.
At September 30, 1997, the Partnership was owed $84,045 by EFG for such funds
and the interest thereon. These funds were remitted to the Partnership in
October 1997.
NOTE 6--LEGAL PROCEEDINGS
On June 24, 1997, four plaintiffs (the "Plaintiffs") owning limited partner
units or beneficiary interests in eight investment programs sponsored by EFG
filed a lawsuit, as a derivative action, on behalf of the Partnership and 27
other investment programs (collectively, the "Nominal Defendants") in the
Superior Court of the Commonwealth of Massachusetts for the County of Suffolk
against EFG and certain of EFG's affiliates, including the General Partner of
the Partnership and four other wholly-owned subsidiaries of EFG which are
general partner or managing trustee of one or more of the investment programs,
(collectively, the "Managing Defendants"), and certain other entities and
individuals that have control of the Managing Defendants and the Nominal
Defendants (the "Controlling Defendants"). The Plaintiffs assert claims of
breach of fiduciary duty, breach of contract, unjust enrichment, and equitable
relief and seek various remedies, including compensatory and punitive damages to
be determined at trial.
The General Partner and EFG are in the early stages of evaluating the nature
and extent of the claims asserted in this lawsuit and cannot predict its outcome
with any degree of certainty. However, based upon all of the facts presently
being considered by management, the General Partner and EFG do not believe that
any likely outcome will have a material adverse effect on the Partnership. The
General Partner, EFG and their affiliates intend to vigorously defend against
the lawsuit.
8
<PAGE>
AMERICAN INCOME PARTNERS V-D LIMITED PARTNERSHIP
FORM 10-Q
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Certain statements in this quarterly report that are not historical fact
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 and are subject to a variety of risks
and uncertainties. There are a number of important factors that could cause
actual results to differ materially from those expressed in any forward-looking
statements made herein. These factors include, but are not limited to, the
ability of EFG to collect all rents due under the attendant lease agreements and
successfully remarket the Partnership's equipment upon the expiration of such
leases.
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO THE THREE AND NINE
MONTHS ENDED SEPTEMBER 30, 1996:
OVERVIEW
The Partnership was organized in 1990 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. Accordingly, the
General Partner is pursuing the remarketing of all of the Partnership's
remaining equipment. Currently, the General Partner anticipates that it will
wind-up the operations of the Partnership and make a liquidating distribution to
the Partners, net of any cash reserves which the General Partner may consider
appropriate, possibly by December 31, 1998.
RESULTS OF OPERATIONS
For the three and nine months ended September 30, 1997, the Partnership
recognized lease revenue of $126,684 and $494,003, respectively, compared to
$762,891 and $1,577,362 for the same periods in 1996. The decrease in lease
revenue from 1996 to 1997 was expected and resulted principally from renewal
lease term expirations and the sale of equipment. Lease revenue during the three
and nine months ended September 30, 1996 included the receipt of $516,712 of
lease termination rents received in connection with the sale of the
Partnership's interest in two Boeing 727-251 Advanced aircraft in July 1996 (see
discussion below). 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 an affiliated equipment leasing program
sponsored by EFG. 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 September 30, 1997, the Partnership sold
equipment that had been fully depreciated to existing lessees and third
parties resulting in a net gain, for financial statement purposes, of
$112,440. For the nine months ended September 30, 1997, the Partnership sold
equipment having a net book value of $706,342, to existing lessees and third
parties. These sales resulted in a net gain, for financial statement purposes,
of $308,090.
9
<PAGE>
AMERICAN INCOME PARTNERS V-D LIMITED PARTNERSHIP
FORM 10-Q
PART I. FINANCIAL INFORMATION
For the three and nine months ended September 30, 1996, the Partnership sold
equipment having a net book value of $759,192 and $796,572, respectively, to
existing lessees and third parties. These sales resulted in net gains for
financial statement purposes of $475,756 and $529,540, respectively. These
equipment sales included the sale of the Partnership's interest in two Boeing
727-251 Advanced aircraft with an original cost and net book value of $4,536,732
and $740,021, respectively, sold to the existing lessee in July 1996. In
connection with this aircraft sale, the Partnership realized sale proceeds of
$1,195,994, which resulted in a net gain, for financial statement purposes, of
$455,973. This equipment was sold prior to the expiration of the related lease
term, resulting in the receipt by the Partnership of lease termination rents,
described above.
During July 1996, the Partnership transferred its ownership interest in
certain trailers to a third party for cash consideration of $60,170. The
trailers had a net book value of $22,808 at the time of the transfer, resulting
in a net gain of $37,362. In September 1996, the Partnership replaced these
trailers with comparable trailers and leased such to a new lessee. The
transaction was accounted for as a like-kind exchange for income tax reporting
purposes. The cost of the new trailers, $357,884, was reduced by $36,574,
representing the proportionate amount of gain deferred on the original trailers.
The Partnership funded this transaction with $58,901 of cash consideration and
long-term financing of $335,557. The unused cash consideration of $1,269 was
recognized as proceeds from equipment sales. The associated deferred gain of
$788 was recognized as Gain on Sale of Equipment on the Statement of Operations
for the three months ended September 30, 1996.
It cannot be determined whether future sales of equipment will result in a
net gain or a net loss to the Partnership, as such transactions will be
dependent upon the condition and type of equipment being sold and its
marketability at the time of sale. In addition, the amount of gain or loss
reported for financial statement purposes is partly a function of the amount of
accumulated depreciation associated with the equipment being sold.
The ultimate realization of residual value for any type of equipment is
dependent upon many factors, including EFG'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. EFG 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 was $65,825 and $215,726 for the three and nine months
ended September 30, 1997, respectively, compared to $142,954 and $619,178 for
the same periods in 1996. 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 $4,407 and $18,835 or 3.5% and 3.8% of lease revenue
for the three and nine months ended September 30, 1997, respectively. Interest
expense was $7,643 during each of the three and nine months ended September
30, 1996 (1% and less than 1% of lease revenue for the respective periods).
Interest expense
10
<PAGE>
AMERICAN INCOME PARTNERS V-D LIMITED PARTNERSHIP
FORM 10-Q
PART I. FINANCIAL INFORMATION
in both 1997 and 1996 related to financing obtained from a third-party lender in
connection with the like-kind exchange transaction which occurred during the
three months ended September 30, 1996, described above. The Partnership's notes
payable were fully amortized during the three months ended September 30, 1997.
Management fees were 4.4% and 4.6% of lease revenue for the three and nine
months ended September 30, 1997, respectively, compared to 4.9% and 5.1% of
lease revenue for the same periods in 1996. Management fees during the nine
months ended September 30, 1996 included $4,617, 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. Operating expenses were $55,242 and $123,018 for the three and nine
months ended September 30, 1997, respectively, compared to $26,707 and $65,370
for the same periods in 1996. The increase in operating expenses from 1996 to
1997 resulted primarily from increases in administrative charges and
professional fees. The amount of future operating expenses cannot be predicted
with certainty; however, such expenses are usually higher during the acquisition
and liquidation phases of a partnership. Other fluctuations typically occur in
relation to the volume and timing of remarketing activities.
LIQUIDITY AND CAPITAL RESOURCES AND DISCUSSION OF CASH FLOWS
The Partnership by its nature is a limited life entity which was established
for specific purposes described in the preceding "Overview". As an equipment
leasing program, the Partnership's principal operating activities derive from
asset rental transactions. Accordingly, the Partnership's principal source of
cash from operations is generally 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 $388,123 and $1,538,157 for the nine
months ended September 30, 1997 and 1996, respectively. Net cash from operating
activities in 1996 included lease termination rents of $516,712 received in
connection with the aircraft sale discussed above. Future renewal, re-lease and
equipment sale activities will cause a 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 realized from asset disposal transactions is reported under investing
activities on the accompanying Statement of Cash Flows. During the nine months
ended September 30, 1997, the Partnership realized $820,340 in equipment sale
proceeds compared to $1,327,381 for the same period in 1996. In addition, the
Partnership received $194,092 from a lessee prior to 1997, representing an
equipment purchase option. These funds were classified as deferred rental
income on the Statement of Financial Position at December 31, 1996. During the
nine months ended September 30, 1997, the Partnership sold the equipment and
such funds were recognized as equipment sales proceeds. Future inflows of cash
from asset disposals will vary in timing and amount and will be
11
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AMERICAN INCOME PARTNERS V-D LIMITED PARTNERSHIP
FORM 10-Q
PART I. FINANCIAL INFORMATION
influenced by many factors including, but not limited to, the frequency and
timing of lease expirations, the type of equipment being sold, its condition and
age, and future market conditions.
The Partnership obtained long-term financing in connection with certain
equipment leases. The repayments of principal related to such indebtedness are
reported as a component of financing activities. The Partnership's notes payable
were fully amortized during the three months ended September 30, 1997 utilizing
rent receipts and available cash.
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 nine months ended September 30, 1997, the
Partnership declared total cash distributions of Distributable Cash From
Operations and Distributable Cash From Sales and Refinancings of $227,475. In
accordance with the Amended and Restated Agreement and Certificate of Limited
Partnership, the Recognized Owners were allocated 95% of these distributions, or
$216,101, and the General Partner was allocated 5%, or $11,374. The third
quarter 1997 cash distribution was paid on October 14, 1997.
Cash distributions paid to the Recognized Owners consist of both a return of
and a return on 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 EFG to manage and remarket the assets, and many other events and
circumstances, could enhance or detract from individual asset yields and the
collective performance of the Partnership's equipment portfolio.
The future liquidity of the Partnership will be influenced by the foregoing
and will be greatly dependent upon the collection of contractual rents and the
outcome of residual activities. The General Partner anticipates that cash
proceeds resulting from these sources will satisfy the Partnership's future
expense obligations. However, the amount of cash available for distribution in
future periods will fluctuate. Equipment lease expirations and asset disposals
will cause the Partnership's net cash from operating activities to diminish over
time; and equipment sale proceeds will vary in amount and period of realization.
In addition, the Partnership may be required to incur asset refurbishment or
upgrade costs in connection with future remarketing activities. Accordingly,
fluctuations in the level of future quarterly cash distributions are
anticipated.
12
<PAGE>
AMERICAN INCOME PARTNERS V-D LIMITED PARTNERSHIP
FORM 10-Q
PART II. OTHER INFORMATION
<TABLE>
<S> <C>
Item 1. Legal Proceedings
Response:
Refer to Note 6 to the financial statements herein.
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
</TABLE>
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-D 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 14, 1997
-----------------------------------------
By: /s/ Gary M. Romano
-----------------------------------------
Gary M. Romano
Clerk of AFG Leasing IV Incorporated
(Duly Authorized Officer and
Principal Financial Officer)
Date: November 14, 1997
-----------------------------------------
14
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