<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, 1996
-----------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
---------------------- ---------------------
----------------------
For Quarter Ended September 30, 1996 Commission File No. 33-35148
American Income Fund I-B, a Massachusetts Limited Partnership
- ------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Massachusetts 04-3106525
- ------------------------------- -------------------
(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 FUND I-B,
a Massachusetts Limited Partnership
FORM 10-Q
INDEX
Page
----
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Statement of Financial Position
at September 30, 1996 and December 31, 1995 3
Statement of Operations
for the three and nine months ended September 30, 1996
and 1995 4
Statement of Cash Flows
for the nine months ended September 30, 1996 and 1995 5
Notes to the Financial Statements 6-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-12
PART II. OTHER INFORMATION:
Items 1 - 6 13
2
<PAGE>
AMERICAN INCOME FUND I-B,
a Massachusetts Limited Partnership
STATEMENT OF FINANCIAL POSITION
September 30, 1996 and December 31, 1995
(Unaudited)
SEPTEMBER 30, DECEMBER 31,
1996 1995
---------- ----------
ASSETS
Cash and cash equivalents $1,895,011 $ 839,087
Rents receivable 54,310 332,823
Accounts receivable - affiliate 50,806 587,704
Equipment at cost, net of accumulated depreciation
of $3,466,236 and $6,097,419 at September 30, 1996
and December 31, 1995, respectively 1,746,687 1,986,861
Organization costs, net of accumulated amortization
of $5,000 and $4,833 at September 30, 1996
and December 31, 1995, respectively -- 167
---------- ----------
Total assets $3,746,814 $3,746,642
---------- ----------
---------- ----------
LIABILITIES AND PARTNERS' CAPITAL
Notes payable $ 813,012 $1,022,276
Accrued interest 6,864 28,320
Accrued liabilities 18,750 68,610
Accrued liabilities - affiliate 5,062 7,090
Deferred rental income 21,236 --
Cash distributions payable to partners 113,176 113,176
---------- ----------
Total liabilities 978,100 1,239,472
---------- ----------
Partners' capital (deficit):
General Partner (178,934) (192,012)
Limited Partnership Interests
(286,711 Units; initial purchase price of $25 each) 2,947,648 2,699,182
---------- ----------
Total partners' capital 2,768,714 2,507,170
---------- ----------
Total liabilities and partners' capital $3,746,814 $3,746,642
---------- ----------
---------- ----------
The accompanying notes are an integral part
of these financial statements.
3
<PAGE>
AMERICAN INCOME FUND I-B,
a Massachusetts Limited Partnership
STATEMENT OF OPERATIONS
for the three and nine months ended September 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
1996 1995 1996 1995
-------- -------- ---------- ----------
<S> <C> <C> <C> <C>
Income:
Lease revenue $240,493 $393,614 $ 618,763 $1,220,049
Interest income 22,480 9,463 59,440 30,721
Gain (loss) on sale of equipment 69,011 -- 560,651 (12,906)
-------- -------- ---------- ----------
Total income 331,984 403,077 1,238,854 1,237,864
-------- -------- ---------- ----------
Expenses:
Depreciation and amortization 111,772 359,758 508,767 1,101,780
Interest expense 17,691 28,385 53,691 99,311
Equipment management fees
- affiliate 10,336 14,212 27,911 43,185
Operating expenses - affiliate 20,325 11,890 47,413 50,379
-------- -------- ---------- ----------
Total expenses 160,124 414,245 637,782 1,294,655
-------- -------- ---------- ----------
Net income (loss) $171,860 $(11,168) $ 601,072 $ (56,791)
-------- -------- ---------- ----------
-------- -------- ---------- ----------
Net income (loss)
per limited partnership unit $ 0.57 $ (0.04) $ 1.99 $ (0.19)
-------- -------- ---------- ----------
-------- -------- ---------- ----------
Cash distributions declared
per limited partnership unit $ 0.38 $ 0.38 $ 1.13 $ 1.88
-------- -------- ---------- ----------
-------- -------- ---------- ----------
</TABLE>
The accompanying notes are an integral part
of these financial statements.
4
<PAGE>
AMERICAN INCOME FUND I-B,
a Massachusetts Limited Partnership
STATEMENT OF CASH FLOWS
for the nine months ended September 30, 1996 and 1995
(Unaudited)
1996 1995
---------- ----------
Cash flows from (used in) operating activities:
Net income (loss) $ 601,072 $ (56,791)
Adjustments to reconcile net income (loss) to
net cash from operating activities:
Depreciation and amortization 508,767 1,101,780
(Gain) loss on sale of equipment (560,651) 12,906
Changes in assets and liabilities
Decrease in:
rents receivable 278,513 74,447
accounts receivable - affiliate 536,898 29,628
Increase (decrease) in:
accrued interest (21,456) (28,472)
accrued liabilities (49,860) 4,588
accrued liabilities - affiliate (2,028) (28,658)
deferred rental income 21,236 (4,398)
---------- ----------
Net cash from operating activities 1,312,491 1,105,030
---------- ----------
Cash flows from investing activities:
Proceeds from equipment sales 652,222 25,492
---------- ----------
Net cash from investing activities 652,222 25,492
---------- ----------
Cash flows from (used in) financing activities:
Proceeds from notes payable -- 737,116
Principal payments - notes payable (569,261) (703,232)
Distributions paid (339,528) (679,052)
---------- ----------
Net cash used in financing activities (908,789) (645,168)
---------- ----------
Net increase in cash and cash equivalents 1,055,924 485,354
Cash and cash equivalents at beginning of period 839,087 235,990
---------- ----------
Cash and cash equivalents at end of period $1,895,011 $ 721,344
---------- ----------
---------- ----------
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 75,147 $ 127,783
---------- ----------
---------- ----------
Supplemental disclosure of non-cash investing and financing activities:
See Note 4 to the Financial Statements
The accompanying notes are an integral part
of these financial statements.
5
<PAGE>
AMERICAN INCOME FUND I-B,
a Massachusetts Limited Partnership
Notes to the Financial Statements
September 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 September 30, 1996 and December 31, 1995 and results of
operations for the three and nine month periods ended September 30, 1996 and
1995, have been made and are reflected.
NOTE 2 - CASH
At September 30, 1996, the Partnership had $1,715,000 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 $1,158,529 are due as follows:
For the year ending September 30, 1997 $525,195
1998 264,916
1999 138,906
2000 112,906
2001 90,001
Thereafter 26,605
----------
Total $1,158,529
----------
----------
6
<PAGE>
AMERICAN INCOME FUND I-B
a Massachusetts Limited Partnership
Notes to the Financial Statements
(Continued)
NOTE 4 - EQUIPMENT
The following is a summary of equipment owned by the Partnership at
September 30, 1996. In the opinion of American Finance Group ("AFG"), the
acquisition cost of the equipment did not exceed its fair market value.
Lease Term Equipment
Equipment Type (Months) at Cost
- ------------------------------ ---------- -----------
Aircraft 38 $ 2,641,262
Materials handling 4-60 916,362
Trailers/intermodal containers 60-84 620,262
Research & test 24-60 532,779
Construction & mining 48-60 371,529
Communications 22-52 102,953
Motor vehicles 60 27,776
-----------
Total equipment cost 5,212,923
Accumulated depreciation (3,466,236)
-----------
Equipment, net of accumulated depreciation $ 1,746,687
-----------
-----------
At September 30, 1996, the Partnership's equipment portfolio included
equipment having a proportionate original cost of $2,792,790, representing
approximately 54% of total equipment cost.
The summary above includes equipment held for re-lease or sale with a
cost and net book value of approximately $332,000 and $19,000, respectively,
at September 30, 1996. The General Partner is actively seeking the sale or
re-lease of all equipment not on lease.
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 $85,957. The trailers
had a net book value of $32,494 at the time of transfer, resulting in a net
gain of $53,463. 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, $385,063, was reduced by $41,241, representing
the proportionate amount of gain deferred on the original trailers. The
Partnership funded this transaction with $66,307 of cash consideration and
long-term financing of $359,997. The unused consideration of $19,650 was
recognized as proceeds from equipment sales. The associated deferred gain of
$12,222 was recognized as Gain on Sale of Equipment on the Statement of
Operations for the three months ended September 30, 1996.
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 the nine month periods
ended September 30, 1996 and 1995 which were paid or accrued by the
Partnership to AFG or its Affiliates, are as follows:
7
<PAGE>
AMERICAN INCOME FUND I-B
a Massachusetts Limited Partnership
Notes to the Financial Statements
(Continued)
1996 1995
------- -------
Equipment management fees $27,911 $43,185
Administrative charges 10,629 10,629
Reimbursable operating expenses
due to third parties 36,784 39,750
------- -------
Total $75,324 $93,564
------- -------
------- -------
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 September 30, 1996, the Partnership was owed $50,806 by AFG
for such funds and the interest thereon. These funds were remitted to the
Partnership in October 1996.
NOTE 6 - NOTES PAYABLE
Notes payable at September 30, 1996 consisted of installment notes of
$813,012 payable to banks and institutional lenders. All of the installment
notes are non-recourse, with interest rates ranging between 7.04% and 10.12%
and are collateralized by the equipment and assignment of the related lease
payments. The installment notes will be fully amortized by noncancellable
rents. The carrying value of notes payable approximates fair value at
September 30, 1996.
The annual maturities of the installment notes payable are as follows:
For the year ending September 30, 1997 $337,490
1998 171,925
1999 88,990
2000 97,645
2001 91,565
Thereafter 25,397
--------
Total $813,012
--------
--------
NOTE 7 - LEGAL PROCEEDINGS
In July 1993, Fred Meyer, Inc. (the "Plaintiff"), in anticipation of a
declaration of lease default by AFG, filed a complaint against AFG (the
"Defendant") in the Circuit Court of the State of Oregon as a result of a
dispute which arose between the Plaintiff and the Defendant concerning
holdover rents due to the Partnership with respect to certain equipment and
the fair market value of such equipment leased by the Partnership to the
Plaintiff. The Defendant filed an answer to the Plaintiff's complaint and
asserted a counterclaim seeking monetary damages. A Settlement Agreement
executed on June 22, 1994, including dismissal of this case, requires the
Plaintiff to purchase all equipment it leases pursuant to unexpired rental
schedules upon the respective expiration dates of each schedule. During
1996, the Partnership sold all of the affected equipment having a cost of
$1,740,599 and recognized a net gain of $477,391 for financial statement
purposes. This settlement did not have an adverse effect on the financial
position of the Partnership.
8
<PAGE>
AMERICAN INCOME FUND I-B,
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.
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO THE THREE AND NINE
MONTHS ENDED SEPTEMBER 30, 1995:
OVERVIEW
As an equipment leasing partnership, the Partnership was organized to
acquire a diversified portfolio of capital equipment subject to lease
agreements. 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 1991.
RESULTS OF OPERATIONS
For the three and nine months ended September 30, 1996, the Partnership
recognized lease revenue of $240,493 and $618,763, respectively, compared to
$393,614 and $1,220,049 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 and nine months ended September 30, 1996, the Partnership
sold equipment having a net book value of $17,336 and $84,143, respectively,
to existing lessees and third parties. These sales resulted in net gains for
financial statement purposes of $56,789 and $548,429, respectively.
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 $85,957. The trailers
had a net book value of $32,494 at the time of transfer, resulting in a net
gain of $53,463 (See Note 4 to the financial statements). 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,
$385,063, was reduced by $41,241, representing the proportionate amount of
gain
9
<PAGE>
AMERICAN INCOME FUND I-B,
a Massachusetts Limited Partnership
FORM 10-Q
PART I. FINANCIAL INFORMATION
deferred on the original trailers. The Partnership funded this transaction
with $66,307 of cash consideration and long-term financing of $359,997. The
unused consideration of $19,650 was recognized as proceeds from equipment
sales. The associated deferred gain of $12,222 was recognized as Gain on
Sale of Equipment on the Statement of Operations for the three months ended
September 30, 1996.
During the nine months ended September 30, 1995, the Partnership
sold equipment having a net book value of $38,398 to existing lessees and
third parties. These sales resulted in a net loss, for financial statement
purposes, of $12,906. No sales occurred during the three months ended
September 30, 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 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 revenues 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 and amortization expense for the three and nine months
ended September 30, 1996 was $111,772 and $508,767, respectively, compared to
$359,758 and $1,101,780 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 $17,691 and $53,691 or 7.4% and 8.7% of lease
revenue for the three and nine months ended September 30, 1996, respectively,
compared to $28,385 and $99,311 or 7.2% and 8.1% of lease revenue for the
same periods in 1995. Interest expense increased as a percentage of lease
revenue from 1995 to 1996 due to leveragings obtained subsequent to September
30, 1995. Interest expense in future periods will 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 approximately 4.3% and 4.5% of lease revenue for
the three and nine months ended September 30, 1996, respectively, compared to
3.6% and 3.5% of lease revenue for the same periods 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.
10
<PAGE>
AMERICAN INCOME FUND I-B,
a Massachusetts Limited Partnership
FORM 10-Q
PART I. FINANCIAL INFORMATION
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
8.5% and 7.7% of lease revenue for the three and nine months ended September
30, 1996, respectively, compared to 3% and 4.1% of lease revenue for the same
periods in 1995. 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 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
$1,312,491 and $1,105,030 for the nine months ended September 30, 1996 and
1995, respectively. Future renewal, re-lease and equipment sale activities
will cause a gradual 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 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, 1996, the Partnership realized $652,222 in
equipment sale proceeds compared to $25,492 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.
The Partnership obtained long-term financing in connection with certain
equipment leases. The origination of such indebtedness and the subsequent
repayments of principal are reported as components of financing activities.
Cash inflows of $737,116 during the nine months ended September 30, 1995
resulted from leveraging a portion of the Partnership's equipment portfolio
with third-party lenders. 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 decline as the principal balance of notes payable is reduced
through the collection
11
<PAGE>
AMERICAN INCOME FUND I-B,
a Massachusetts Limited Partnership
FORM 10-Q
PART I. FINANCIAL INFORMATION
and application of rents. In September 1996, the Partnership obtained
additional long-term financing in connection with the like-kind exchange
transaction involving certain trailers (see Results of Operations).
Cash distributions to the General and Limited Partners 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, 1996, the
Partnership declared total cash distributions of Distributable Cash From
Operations and Distributable Cash From Sales and Refinancings of $339,528.
In accordance with the Amended and Restated Agreement and Certificate of
Limited Partnership, the Limited Partners were allocated 95% of these
distributions, or $322,552 and the General Partner was allocated 5%, or
$16,976. The third quarter 1996 cash distribution was paid on October 15,
1996.
Cash distributions paid to the Limited Partners consist of both a return
of and a return on capital. To the extent that cash distributions consist of
Cash From Sales or Refinancings, substantially all of such cash distributions
should be viewed as a return of capital. Cash distributions do not represent
and are not indicative of yield on investment. Actual yield on investment
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.
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
quarterly cash distributions will occur during the life of the Partnership.
12
<PAGE>
AMERICAN INCOME FUND I-B,
a Massachusetts Limited Partnership
FORM 10-Q
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Response:
Refer to Note 7 herein and to Note 7
in the 1995 Annual Report.
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-B, 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: November 14, 1996
---------------------------------
By: /s/ Gary M. Romano
---------------------------------
Gary M. Romano
Clerk of AFG Leasing VI Incorporated
(Duly Authorized Officer and
Principal Financial Officer)
Date: November 14, 1996
---------------------------------
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,895,011
<SECURITIES> 0
<RECEIVABLES> 105,116
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,000,127
<PP&E> 5,212,923
<DEPRECIATION> 3,466,236
<TOTAL-ASSETS> 3,746,814
<CURRENT-LIABILITIES> 165,088
<BONDS> 813,012
0
0
<COMMON> 0
<OTHER-SE> 2,768,714
<TOTAL-LIABILITY-AND-EQUITY> 3,746,814
<SALES> 618,763
<TOTAL-REVENUES> 1,238,854
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 584,091
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 53,691
<INCOME-PRETAX> 601,072
<INCOME-TAX> 0
<INCOME-CONTINUING> 601,072
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 601,072
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
