<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 MARCH 31, 2000
-------------------------------------------------
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 March 31, 2000 Commission File No. 33-35148-01
AMERICAN INCOME FUND I-A, a MASSACHUSETTS LIMITED PARTNERSHIP
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-3097216
- ----------------------------------- ------------------------
(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 FUND I-A,
a Massachusetts Limited Partnership
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Statement of Financial Position
at March 31, 2000 and December 31, 1999 3
Statement of Operations
for the three months ended March 31, 2000 and 1999 4
Statement of Cash Flows
for the three months ended March 31, 2000 and 1999 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 FUND I-A,
a Massachusetts Limited Partnership
STATEMENT OF FINANCIAL POSITION
March 31, 2000 and December 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
----------- -----------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 871,097 $ 2,593,713
Rents receivable 2,396 17,000
Accounts receivable 15,400 --
Accounts receivable - affiliate 7,887 9,270
Note receivable 1,650,000 --
Equipment at cost, net of accumulated depreciation
of $382,473 and $423,985 at March 31, 2000
and December 31, 1999, respectively -- --
----------- -----------
Total assets $ 2,546,780 $ 2,619,983
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Accrued liabilities $ 172,856 $ 204,068
Accrued liabilities - affiliate 3,343 5,465
Other liabilities 5,000 25,000
Cash distributions payable to partners -- 56,502
----------- -----------
Total liabilities 181,199 291,035
----------- -----------
Partners' capital (deficit):
General Partner (198,605) (200,437)
Limited Partnership Interests
(286,274 Units; initial purchase price of $25 each) 2,564,186 2,529,385
----------- -----------
Total partners' capital 2,365,581 2,328,948
----------- -----------
Total liabilities and partners' capital $ 2,546,780 $ 2,619,983
=========== ===========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
3
<PAGE>
AMERICAN INCOME FUND I-A,
a Massachusetts Limited Partnership
STATEMENT OF OPERATIONS
for the three months ended March 31, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
-------- --------
<S> <C> <C>
Income:
Lease revenue $ 16,779 $ 43,782
Interest income 45,071 27,880
Gain on sale of equipment 5,800 7,547
-------- --------
Total income 67,650 79,209
-------- --------
Expenses:
Depreciation -- 23,214
Equipment management fees - affiliate 839 2,189
Operating expenses - affiliate 30,178 57,641
-------- --------
Total expenses 31,017 83,044
-------- --------
Net income (loss) $ 36,633 $ (3,835)
======== ========
Net income (loss)
per limited partnership unit $ 0.12 $ (0.01)
======== ========
Cash distribution declared
per limited partnership unit $ -- $ 0.19
======== ========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
4
<PAGE>
AMERICAN INCOME FUND I-A,
a Massachusetts Limited Partnership
STATEMENT OF CASH FLOWS
for the three months ended March 31, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
----------- -----------
<S> <C> <C>
Cash flows from (used in) operating activities:
Net income (loss) $ 36,633 $ (3,835)
Adjustments to reconcile net income (loss) to
net cash from (used in) operating activities:
Depreciation -- 23,214
Gain on sale of equipment (5,800) (7,547)
Changes in assets and liabilities
Decrease (increase) in:
Rents receivable 14,604 1,133
Accounts receivable (15,400) --
Accounts receivable - affiliate 1,383 401,491
Increase (decrease) in:
Accrued liabilities (31,212) (34,200)
Accrued liabilities - affiliate (2,122) 7,460
Deferred rental income -- (3,925)
Other liabilities (20,000) 168,087
----------- -----------
Net cash from (used in) operating activities (21,914) 551,878
----------- -----------
Cash flows from (used in) investing activities:
Proceeds from equipment sales 5,800 7,547
Note receivable (1,650,000) --
----------- -----------
Net cash from (used in) investing activities (1,644,200) 7,547
----------- -----------
Cash flows used in financing activities:
Distributions paid (56,502) (56,502)
----------- -----------
Net cash used in financing activities (56,502) (56,502)
----------- -----------
Net increase (decrease) in cash and cash equivalents (1,722,616) 502,923
Cash and cash equivalents at beginning of period 2,593,713 1,969,323
----------- -----------
Cash and cash equivalents at end of period $ 871,097 $ 2,472,246
=========== ===========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
5
<PAGE>
AMERICAN INCOME FUND I-A,
a Massachusetts Limited Partnership
Notes to the Financial Statements
March 31, 2000
(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 1999 Annual Report. Except as disclosed herein, there
has been no material change to the information presented in the footnotes to the
1999 Annual Report.
In the opinion of management, all adjustments (consisting of normal and
recurring adjustments) considered necessary to present fairly the financial
position at March 31, 2000 and December 31, 1999 and results of operations for
the three month periods ended March 31, 2000 and 1999 have been made and are
reflected.
NOTE 2 - CASH
At March 31, 2000, American Income Fund I-A, a Massachusetts Limited
Partnership (the "Partnership") had $757,352 invested in federal agency discount
notes, repurchase agreements secured by U.S. Treasury Bills or interests in U.S.
Government securities, or other highly liquid overnight investments.
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. In certain instances, the
Partnership may enter renewal or re-lease agreements which expire beyond the
Partnership's anticipated dissolution date. This circumstance is not expected to
prevent the orderly wind-up of the Partnership's business activities as the
General Partner and Equis Financial Group Limited Partnership ("EFG") would seek
to sell the then-remaining equipment assets either to the lessee or to a third
party, taking into consideration the amount of future noncancellable rental
payments associated with the attendant lease agreements. See also Note 6 to the
financial statements presented in the Partnership's 1999 Annual Report regarding
the Class Action Lawsuit. Future minimum rents of $4,740 are due for the year
ending March 31, 2001.
NOTE 4 - EQUIPMENT
The following is a summary of equipment owned by the Partnership at
March 31, 2000. Remaining Lease Term (Months), as used below, represents the
number of months remaining from March 31, 2000 under contracted lease terms and
is presented as a range when more than one lease agreement is contained in the
stated equipment category. A Remaining Lease Term equal to zero reflects
equipment either held for sale or re-lease or being leased on a month-to-month
basis. In the opinion of EFG, the acquisition cost of the equipment did not
exceed its fair market value.
6
<PAGE>
AMERICAN INCOME FUND I-A,
a Massachusetts Limited Partnership
Notes to the Financial Statements
(Continued)
<TABLE>
<CAPTION>
Remaining
Lease Term Equipment
Equipment Type (Months) at Cost
- -------------------- ---------- ---------
<S> <C> <C>
Materials handling 0-6 382,473
Accumulated depreciation (382,473)
----------
Equipment, net of accumulated depreciation $ --
==========
</TABLE>
At March 31, 2000, all of the Partnership's equipment was subject to
contracted leases or being leased on a month-to-month basis.
NOTE 5 - NOTE RECEIVABLE
On March 8, 2000, the Partnership and 10 affiliated partnerships (the
"Exchange Partnerships") (see Note 6 to the financial statements presented in
the Partnership's 1999 Annual Report) collectively loaned $32 million to Echelon
Residential Holdings LLC, a newly-formed real estate development company that
will be owned by several investors, including James A. Coyne, Executive Vice
President of EFG. Mr. Coyne, in his individual capacity, is the only investor in
Echelon Residential Holdings LLC who is related to EFG.
The Partnership's participation in the loan is $1,650,000. Echelon
Residential Holdings LLC, through a subsidiary (Echelon Residential LLC), used
the loan proceeds to acquire various real estate assets from Echelon
International Corporation, a Florida based real estate company. The loan has a
term of 30 months maturing on September 7, 2002 and bears interest at the annual
rate of 14% for the first 24 months and 18% for the final six months of the
term. Interest accrues and compounds monthly but is not payable until maturity.
The Partnership accrued interest income of $15,400 related to this loan during
the three months ended March 31, 2000. In connection with the transaction,
Echelon Residential Holdings LLC has pledged a security interest in all of its
right, title and interest in and to its membership interests in Echelon
Residential LLC to the Exchange Partnerships as collateral.
NOTE 6 - 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 three month
periods ended March 31, 2000 and 1999, which were paid or accrued by the
Partnership to EFG or its Affiliates, are as follows:
7
<PAGE>
AMERICAN INCOME FUND I-A,
a Massachusetts Limited Partnership
Notes to the Financial Statements
(Continued)
<TABLE>
<CAPTION>
2000 1999
------- -------
<S> <C> <C>
Equipment management fees $ 839 $ 2,189
Administrative charges 10,831 14,373
Reimbursable operating expenses
due to third parties 19,347 43,268
------- -------
Total $31,017 $59,830
======= =======
</TABLE>
All rents and proceeds from the sale of equipment are paid directly to
EFG. EFG temporarily deposits collected funds in a separate interest-bearing
escrow account prior to remittance to the Partnership. At March 31, 2000, the
Partnership was owed $7,887 by EFG for such funds and the interest thereon.
These funds were remitted to the Partnership in April 2000.
NOTE 7 - LEGAL PROCEEDINGS
As described more fully in the Partnership's Annual Report on Form 10-K
for the year ended December 31, 1999, the Partnership is a Nominal Defendant in
a Class Action Lawsuit, the outcome of which could significantly alter the
nature of the Partnership's organization and its future business operations. In
addition, the Partnership's 1999 Annual Report describes certain other pending
litigation that has arisen out of the conduct of the Partnership's business,
principally involving disputes or disagreements with lessees over lease terms
and conditions.
8
<PAGE>
AMERICAN INCOME FUND I-A,
a Massachusetts 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 of American Income Fund
I-A, a Massachusetts Limited Partnership (the "Partnership") 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 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 outcome of the Class Action Lawsuit described in Note 6 to the
financial statements presented in the Partnership's 1999 Annual Report, the
remarketing of the Partnership's equipment, and the performance of the
Partnership's non-equipment assets.
THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THE THREE MONTHS ENDED MARCH 31,
1999:
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. Presently, the
Partnership is a Nominal Defendant in a Class Action Lawsuit, the outcome of
which could significantly alter the nature of the Partnership's organization and
its future business operations. See Note 6 to the financial statements presented
in the Partnership's 1999 Annual Report. Pursuant to the Amended and Restated
Agreement and Certificate of Limited Partnership (the "Restated Agreement, as
amended"), the Partnership is scheduled to be dissolved by December 31, 2001.
RESULTS OF OPERATIONS
For the three months ended March 31, 2000, the Partnership recognized
lease revenue of $16,779 compared to $43,782 for the same period in 1999. The
decrease in lease revenue between 1999 and 2000 resulted from lease term
expirations and the sale of equipment. In the future, lease revenue will
continue to decline due to lease term expirations and the sale of equipment.
The Partnership's equipment portfolio (until the second quarter of
1999) included certain assets in which the Partnership held a proportionate
ownership interest. In such cases, the remaining interests were owned by an
affiliated equipment leasing program sponsored by Equis Financial Group Limited
Partnership ("EFG"). Proportionate equipment ownership enabled the Partnership
to further diversify its equipment portfolio at inception by participating in
the ownership of selected assets, thereby reducing the general levels of risk
which could have resulted 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.
Interest income for the three months ended March 31, 2000 was $45,071
compared to $27,880 for the same period in 1999. Interest income is typically
generated from temporary investment of rental receipts and equipment sale
proceeds in short-term instruments. During the three months ending March 31,
2000, interest income included interest earned on a note receivable from Echelon
Residential Holdings LLC in the amount of $15,400 (see below). The amount of
future interest income is expected to fluctuate as a result of changing interest
rates and the amount of cash available for investment, among other factors.
During the three months ended March 31, 2000, the Partnership sold
fully-depreciated equipment to existing lessees and third parties. These sales
resulted in a net gain, for financial statement purposes, of $5,800 compared to
a net gain of $7,547 on fully-depreciated equipment for the same period in 1999.
The results of future sales of equipment will be dependent upon the condition
and type of equipment being sold and its marketability at the time of sale.
9
<PAGE>
AMERICAN INCOME FUND I-A,
a Massachusetts Limited Partnership
FORM 10-Q
PART I. FINANCIAL INFORMATION
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 for the three months ended March 31, 1999 was
$23,214. All of the Partnership's remaining assets became fully depreciated
during 1999. Management fees were approximately 5% of lease revenue for each of
the three months ended March 31, 2000 and 1999. 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 were $30,178 for the three months ended March 31,
2000 compared to $57,641 for the same period in 1999. In 1999, operating
expenses included approximately $9,000 related to the refurbishment of an
aircraft engine (see discussion below). Other operating expenses consist
principally of administrative charges, professional service costs, such as audit
and legal fees, as well as printing, distribution and other remarketing
expenses. In certain cases, equipment storage or repairs and maintenance costs
may be incurred in connection with equipment being remarketed.
LIQUIDITY AND CAPITAL RESOURCES AND DISCUSSION OF CASH FLOWS
The Partnership by its nature is a limited life entity. As an equipment
leasing program, the Partnership's principal operating activities derive from
asset rental transactions. Historically, the Partnership's principal source of
cash from operations was provided by the collection of periodic rents, however,
beginning in 1999, the principal source of such cash resulted from the receipt
of interest income. Cash inflows are used to pay management fees and operating
costs. Operating activities generated a net cash outflow of $21,914 and $4,809
(excluding the receipt of proceeds of $556,687 related to the deferred aircraft
sales, discussed below) during the three months ended March 31, 2000 and 1999,
respectively. The amount of future interest income is expected to fluctuate as a
result of changing interest rates and the level of cash available for
investment, among other factors. (See additional discussion below regarding the
loan made by the Partnership in March 2000). Future renewal, re-lease and
equipment sale activities will cause a decline in the Partnership's lease
revenues 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.
Cash realized from asset disposal transactions is reported under
investing activities on the accompanying Statement of Cash Flows. During the
three months ended March 31, 2000 and 1999, the Partnership realized equipment
sale proceeds of $5,800 and $7,547 respectively. 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.
10
<PAGE>
AMERICAN INCOME FUND I-A,
a Massachusetts Limited Partnership
FORM 10-Q
PART I. FINANCIAL INFORMATION
During the three months ended March 31, 1999, the Partnership received
$168,087, representing a portion of the sale proceeds from its interest in an
aircraft that was sold by the Partnership and certain affiliated investment
programs (collectively, the "Programs"). The remainder of the Partnership's sale
proceeds was received in the second quarter of 1999. The sale was treated as a
deferred sale due to certain contingencies that were not satisfied until the
second quarter of 1999. The proceeds received during the three months ended
March 31, 1999 were recorded as other liabilities prior to the recognition of
the sale. See the Partnership's 1999 Annual Report for further discussion.
In December 1998, the Partnership sold its interest in a second
aircraft for proceeds of $504,600, of which $388,600 was deposited into EFG's
customary escrow account and transferred to the Partnership in January 1999. Due
to certain associated contingencies, the Partnership deferred recognition of the
sale until the second quarter of 1999. In connection with this sale, the
Partnership accrued costs of approximately $9,000 during the three months ended
March 31, 2000 to refurbish an engine damaged while the aircraft was leased to
Transmeridian Airlines ("Transmeridian"). See Note 6 to the financial statements
presented in the Partnership's 1999 Annual Report regarding legal action
undertaken by the Programs related to Transmeridian and the damaged engine. See
the Partnership's 1999 Annual Report for further discussion of this deferred
sale.
At March 31, 2000, the Partnership was due aggregate future minimum
lease payments of $4,740 from contractual lease agreements (see Note 3 to the
financial statements). At the expiration of the individual lease terms
underlying the Partnership's future minimum lease payments, the Partnership will
sell the equipment or enter re-lease or renewal agreements when considered
advantageous by the General Partner and EFG. Such future remarketing activities
will result in the realization of additional cash inflows in the form of
equipment sale proceeds or rents from renewals and re-leases, the timing and
extent of which cannot be predicted with certainty. This is because the timing
and extent of remarketing events often is dependent upon the needs and interests
of the existing lessees. Some lessees may choose to renew their lease contracts,
while others may elect to return the equipment. In the latter instances, the
equipment could be re-leased to another lessee or sold to a third-party.
In connection with a preliminary settlement agreement for the Class
Action Lawsuit described in Note 6 to the financial statements presented in the
Partnership's 1999 Annual Report, the Partnership is permitted to invest in new
equipment or other business activities, subject to certain limitations. On March
8, 2000, the Partnership and 10 affiliated partnerships (the "Exchange
Partnerships") (see Note 6 to the financial statements presented in the
Partnership's 1999 Annual Report) collectively loaned $32 million to Echelon
Residential Holdings LLC, a newly-formed real estate development company that
will be owned by several investors, including James A. Coyne, Executive Vice
President of EFG. Mr. Coyne, in his individual capacity, is the only investor in
Echelon Residential Holdings LLC who is related to EFG.
The Partnership's participation in the loan is $1,650,000. Echelon
Residential Holdings LLC, through a subsidiary (Echelon Residential LLC), used
the loan proceeds to acquire various real estate assets from Echelon
International Corporation, a Florida based real estate company. The loan has a
term of 30 months maturing on September 7, 2002 and bears interest at the annual
rate of 14% for the first 24 months and 18% for the final six months of the
term. Interest accrues and compounds monthly but is not payable until maturity.
In connection with the transaction, Echelon Residential Holdings LLC has pledged
a security interest in all of its right, title and interest in and to its
membership interests in Echelon Residential LLC to the Exchange Partnerships as
collateral.
There are no formal restrictions under the Restated Agreement, as
amended, that materially limit the Partnership's ability to pay cash
distributions, except that the General Partner may suspend or limit cash
distributions to ensure that the Partnership maintains sufficient working
capital reserves to cover, among other things, operating costs and potential
expenditures, such as refurbishment costs to remarket equipment upon lease
11
<PAGE>
AMERICAN INCOME FUND I-A,
a Massachusetts Limited Partnership
FORM 10-Q
PART I. FINANCIAL INFORMATION
expiration. Liquidity is especially important as the Partnership matures and
sells equipment, because the remaining equipment base consists of fewer
revenue-producing assets that are available to cover prospective cash
disbursements. Insufficient liquidity could inhibit the Partnership's ability to
sustain its operations or maximize the realization of proceeds from remarketing
its remaining assets.
Cash distributions to the General and Limited Partners had been
declared and generally paid within fifteen days following the end of each
calendar quarter. The payment of such distributions is reported under financing
activities on the accompanying Statement of Cash Flows. No cash distributions
were declared for the quarter ended March 31, 2000 (see discussion below).
Cash distributions paid to the Limited Partners 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.
The Partnership's capital account balances for federal income tax and
for financial reporting purposes are different primarily due to differing
treatments of income and expense items for income tax purposes in comparison to
financial reporting purposes (generally referred to as permanent or timing
differences; see Note 5 to the financial statements presented in the
Partnership's 1999 Annual Report). For instance, selling commissions and
organization and offering costs pertaining to syndication of the Partnership's
limited partnership units are not deductible for federal income tax purposes,
but are recorded as a reduction of partners' capital for financial reporting
purposes. Therefore, such differences are permanent differences between capital
accounts for financial reporting and federal income tax purposes. Other
differences between the bases of capital accounts for federal income tax and
financial reporting purposes occur due to timing differences. Such items consist
of the cumulative difference between income or loss for tax purposes and
financial statement income or loss and the difference between distributions
(declared vs. paid) for income tax and financial reporting purposes. The
principal component of the cumulative difference between financial statement
income or loss and tax income or loss results from different depreciation
policies for book and tax purposes.
For financial reporting purposes, the General Partner has accumulated a
capital deficit at March 31, 2000. This is the result of aggregate cash
distributions to the General Partner being in excess of its capital contribution
of $1,000 and its allocation of financial statement net income or loss.
Ultimately, the existence of a capital deficit for the General Partner for
financial reporting purposes is not indicative of any further capital
obligations to the Partnership by the General Partner. The Restated Agreement,
as amended, requires that upon the dissolution of the Partnership, the General
Partner will be required to contribute to the Partnership an amount equal to any
negative balance which may exist in the General Partner's tax capital account.
At December 31, 1999, the General Partner had a positive tax capital account
balance.
The outcome of the Class Action Lawsuit described in Note 6 to the
financial statements presented in the Partnership's 1999 Annual Report will be
the principal factor in determining the future of the Partnership's operations.
The proposed settlement to that lawsuit, if effected, will materially change the
future organizational structure and business interests of the Partnership, as
well as its cash distribution policies. In addition, commencing with the first
quarter of 2000, the General Partner suspended the payment of quarterly cash
distributions pending final resolution of the Class Action Lawsuit. Accordingly,
future cash distributions are not expected to be paid until the Class Action
Lawsuit is adjudicated.
12
<PAGE>
AMERICAN INCOME FUND I-A,
a Massachusetts Limited Partnership
FORM 10-Q
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Response:
Refer to Note 7 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
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 FUND I-A, a Massachusetts Limited Partnership
By: AFG Leasing VI Incorporated, a Massachusetts
corporation and the General Partner of
the Registrant.
By: /S/ MICHAEL J. BUTTERFIELD
--------------------------------------------
Michael J. Butterfield
Treasurer of AFG Leasing VI Incorporated
(Duly Authorized Officer and
Principal Accounting Officer)
Date: MAY 15, 2000
--------------------------------------------
By: /S/ GARY M. ROMANO
--------------------------------------------
Gary M. Romano
Clerk of AFG Leasing VI Incorporated
(Duly Authorized Officer and
Principal Financial Officer)
Date: MAY 15, 2000
--------------------------------------------
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 871,097
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,546,780
<PP&E> 382,473
<DEPRECIATION> 382,473
<TOTAL-ASSETS> 2,546,780
<CURRENT-LIABILITIES> 181,199
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,365,581
<TOTAL-LIABILITY-AND-EQUITY> 2,546,780
<SALES> 0
<TOTAL-REVENUES> 67,650
<CGS> 0
<TOTAL-COSTS> 31,017
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 36,633
<INCOME-TAX> 0
<INCOME-CONTINUING> 36,633
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 36,633
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
