UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[XX] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 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 June 30, 1997 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.)
88 Broad Street, Boston, MA 02110
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 854-5800
98 North Washington Street, Boston, MA 02114
- --------------------------------------------------------------------------------
(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 June 30, 1997 and December 31, 1996 3
Statement of Operations
for the three and six months ended June 30, 1997 and 1996 4
Statement of Cash Flows
for the six months ended June 30, 1997 and 1996 5
Notes to the Financial Statements 6-9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10-13
PART II. OTHER INFORMATION:
Items 1 - 6 14
2
<PAGE>
AMERICAN INCOME FUND I-B,
a Massachusetts Limited Partnership
STATEMENT OF FINANCIAL POSITION
June 30, 1997 and December 31, 1996
(Unaudited)
June 30, December 31,
1997 1996
----------- -----------
ASSETS
Cash and cash equivalents $ 1,704,963 $ 1,938,967
Rents receivable 50,732 1,509
Accounts receivable - affiliate 18,653 38,647
Equipment at cost, net of accumulated depreciation
of $3,488,975 and $3,460,675 at June 30, 1997
and December 31, 1996, respectively 1,443,943 1,597,440
----------- -----------
Total assets $ 3,218,291 $ 3,576,563
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Notes payable $ 495,758 $ 726,096
Accrued interest 9,171 3,883
Accrued liabilities 15,000 22,750
Accrued liabilities - affiliate 12,318 20,448
Deferred rental income 5,898 26,165
Cash distributions payable to partners 75,451 75,451
----------- -----------
Total liabilities 613,596 874,793
----------- -----------
Partners' capital (deficit):
General Partner (187,136) (182,282)
Limited Partnership Interests
(286,711 Units; initial purchase price of $25 each) 2,791,831 2,884,052
----------- -----------
Total partners' capital 2,604,695 2,701,770
----------- -----------
Total liabilities and partners' capital $ 3,218,291 $ 3,576,563
=========== ===========
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 six months ended June 30, 1997 and 1996
(Unaudited)
Three Months Six Months
Ended June 30, Ended June 30,
1997 1996 1997 1996
-------- -------- -------- --------
Income:
Lease revenue $143,950 $164,111 $296,285 $378,270
Interest income 20,068 21,148 41,367 36,960
Gain on sale of equipment 6,097 480,390 35,379 491,640
-------- -------- -------- --------
Total income 170,115 665,649 373,031 906,870
-------- -------- -------- --------
Expenses:
Depreciation and amortization 104,847 147,889 220,890 396,995
Interest expense 12,725 13,673 29,210 36,000
Equipment management fees
- affiliate 6,132 8,157 12,765 17,575
Operating expenses - affiliate 38,811 14,635 56,339 27,088
-------- -------- -------- --------
Total expenses 162,515 184,354 319,204 477,658
-------- -------- -------- --------
Net income $ 7,600 $481,295 $ 53,827 $429,212
======== ======== ======== ========
Net income
per limited partnership unit $ 0.03 $ 1.59 $ 0.18 $ 1.42
======== ======== ======== ========
Cash distributions declared
per limited partnership unit $ 0.25 $ 0.38 $ 0.50 $ 0.75
======== ======== ======== ========
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 six months ended June 30, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Cash flows from (used in) operating activities:
Net income $ 53,827 $ 429,212
Adjustments to reconcile net income to
net cash from operating activities:
Depreciation and amortization 220,890 396,995
Gain on sale of equipment (35,379) (491,640)
Changes in assets and liabilities
Decrease (increase) in:
rents receivable (49,223) 258,118
accounts receivable - affiliate 19,994 501,620
Increase (decrease) in:
accrued interest 5,288 (22,005)
accrued liabilities (7,750) (2,942)
accrued liabilities - affiliate (8,130) (1,029)
deferred rental income (20,267) 20,866
----------- -----------
Net cash from operating activities 179,250 1,089,195
----------- -----------
Cash flows from (used in) investing activities:
Purchase of equipment (75,957) --
Proceeds from equipment sales 43,943 558,448
----------- -----------
Net cash from (used in) investing activities (32,014) 558,448
----------- -----------
Cash flows used in financing activities:
Principal payments - notes payable (230,338) (476,757)
Distributions paid (150,902) (226,352)
----------- -----------
Net cash used in financing activities (381,240) (703,109)
----------- -----------
Net increase (decrease) in cash and cash equivalents (234,004) 944,534
Cash and cash equivalents at beginning of period 1,938,967 839,087
----------- -----------
Cash and cash equivalents at end of period $ 1,704,963 $ 1,783,621
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 23,922 $ 58,005
=========== ===========
</TABLE>
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
June 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 June 30, 1997 and December 31, 1996 and results of operations for
the three and six month periods ended June 30, 1997 and 1996, have been made and
are reflected.
NOTE 2 - CASH
At June 30, 1997, the Partnership had $1,600,000 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 $876,630
are due as follows:
For the year ending June 30, 1998 $ 386,192
1999 185,182
2000 153,074
2001 112,906
2002 28,634
Thereafter 10,642
---------
Total $ 876,630
=========
NOTE 4 - EQUIPMENT
The following is a summary of equipment owned by the Partnership at June
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 INCOME FUND I-B,
a Massachusetts Limited Partnership
Notes to the Financial Statements
(Continued)
Lease Term Equipment
Equipment Type (Months) at Cost
- -------------------------------- ----------- -------------
Aircraft 38 $ 2,641,262
Materials handling 4-60 688,078
Trailers/intermodal containers 60-84 620,259
Research & test 24-60 508,837
Construction & mining 24-60 371,529
Communications 22-52 102,953
-----------
Total equipment cost 4,932,918
Accumulated depreciation (3,488,975)
-----------
Equipment, net of accumulated depreciation $ 1,443,943
===========
At June 30, 1997, the Partnership's equipment portfolio included equipment
having a proportionate original cost of $2,792,790, representing approximately
57% of total equipment cost.
The summary above includes fully depreciated equipment held for re-lease or
sale with a cost of approximately $332,000 at June 30, 1997. The General Partner
is actively seeking the sale or re-lease of all equipment not on lease.
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 the six month periods ended
June 30, 1997 and 1996 which were paid or accrued by the Partnership to EFG or
its Affiliates, are as follows:
1997 1996
------- -------
Equipment management fees $12,765 $17,575
Administrative charges 25,080 7,086
Reimbursable operating expenses
due to third parties 31,259 20,002
------- -------
Total $69,104 $44,663
======= =======
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 June 30, 1997, the Partnership was owed $18,653 by EFG for such funds and the
interest thereon. These funds were remitted to the Partnership in July 1997.
7
<PAGE>
AMERICAN INCOME FUND I-B,
a Massachusetts Limited Partnership
Notes to the Financial Statements
(Continued)
NOTE 6 - NOTES PAYABLE
Notes payable at June 30, 1997 consisted of installment notes of $495,758
payable to banks and institutional lenders. All of the installment notes are
non-recourse, with interest rates ranging between 9.75% 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 June 30, 1997.
The annual maturities of the installment notes payable are as follows:
For the year ending June 30, 1998 $ 253,300
1999 70,944
2000 78,235
2001 85,989
2002 7,290
----------
Total $ 495,758
==========
NOTE 7 - LEGAL PROCEEDINGS
On July 27, 1995, EFG, on behalf of the Partnership and other
EFG-sponsored investment programs, filed an action in the Commonwealth of
Massachusetts Superior Court Department of the Trial Court in and for the County
of Suffolk, for damages and declaratory relief against a lessee of the
Partnership, National Steel Corporation ("National Steel"), under a certain
Master Lease Agreement ("MLA") for the lease of certain equipment. EFG is
seeking the reimbursement by National Steel of certain sales and/or use taxes
paid to the State of Illinois and other remedies provided by the MLA. On August
30, 1995, National Steel filed a Notice of Removal which removed the case to the
United States District Court, District of Massachusetts. On September 7, 1995,
National Steel filed its Answer to EFG's Complaint along with Affirmative
Defenses and Counterclaims, seeking declaratory relief and alleging breach of
contract, implied covenant of good faith and fair dealing and specific
performance. EFG filed its Answer to these counterclaims on September 29, 1995.
Though the parties have been discussing settlement with respect to this matter
for some time, to date, the negotiations have been unsuccessful. Notwithstanding
these discussions, EFG recently filed an Amended and Supplemental Complaint
alleging a further default by National Steel under the MLA and EFG recently
filed a Summary Judgment on all claims and counterclaims. The matter remains
pending before the Court. The Partnership has not experienced any material
losses as a result of this action.
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.
8
<PAGE>
AMERICAN INCOME FUND I-B,
a Massachusetts Limited Partnership
Notes to the Financial Statements
(Continued)
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.
9
<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.
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 six months ended June 30, 1997 compared to the three and six months
ended June 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. The value of the
Partnership's equipment portfolio decreases over time due to depreciation
resulting from age and usage of the equipment, as well as technological changes
and other market factors. In addition, the Partnership does not replace
equipment as it is sold; therefore, its aggregate investment value in equipment
declines from asset disposals occurring in the normal course of business. As a
result of the Partnership's age and a declining equipment portfolio, the General
Partner is evaluating a variety of transactions that will reduce the
Partnership's prospective costs to operate as a publicly registered limited
partnership and, therefore, enhance overall cash distributions to the limited
partners. Such a transaction may involve the sale of the Partnership's remaining
equipment or a transaction that would allow for the consolidation of the
Partnership's expenses with other similarly-organized equipment leasing
programs. In order to increase the marketability of the Partnership's remaining
equipment, the General Partner expects to use the Partnership's available cash
and future cash flow to retire indebtedness. This will negatively effect
short-term cash distributions.
Results of Operations
For the three and six months ended June 30, 1997, the Partnership
recognized lease revenue of $143,950 and $296,285, respectively, compared to
$164,111 and $378,270 for the same periods in 1996. The decrease in lease
revenue from 1996 to 1997 was expected and resulted principally from 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 EFG or 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.
During the three and six months ended June 30, 1997, the Partnership sold
equipment having a net book value of $4,402 and $8,564 to existing lessees and
third parties. These sales resulted in net gains, for financial statement
purposes, of $6,097 and $35,379, respectively.
10
<PAGE>
AMERICAN INCOME FUND I-B,
a Massachusetts Limited Partnership
FORM 10-Q
PART I. FINANCIAL INFORMATION
During the three and six months ended June 30, 1996, the Partnership sold
equipment having a net book value of $66,808 to existing lessees and third
parties. These sales resulted in net gains, for financial statement purposes, of
$480,390 and $491,640, respectively.
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 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 six months ended
June 30, 1997 was $104,847 and $220,890, respectively, compared to $147,889 and
$396,995 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 $12,725 and $29,210 or 8.8% and 9.9% of lease revenue
for the three and six months ended June 30, 1997, respectively, compared to
$13,673 and $36,000 or 8.3% and 9.5% of lease revenue for the same periods in
1996. 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. In addition, the
General Partner expects to use a portion of the Partnership's available cash and
future cash flow to retire indebtedness (see Overview).
Management fees were approximately 4.3% of lease revenue for each of the
three and six months ended June 30, 1997, compared to 5% and 4.6% of lease
revenue for the same periods in 1996. 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. The increase in operating expenses from 1996 to 1997 was due
primarily to an increase in administrative charges. The amount of
11
<PAGE>
AMERICAN INCOME FUND I-B,
a Massachusetts Limited Partnership
FORM 10-Q
PART I. FINANCIAL INFORMATION
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 $179,250 and $1,089,195 for the six
months ended June 30, 1997 and 1996, respectively. 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 decline as the Partnership experiences a
higher frequency of remarketing events.
Ultimately, the Partnership will dispose of all assets under lease. This
will occur principally through sale transactions whereby each asset will be sold
to the existing lessee or to a third-party. Generally, this will occur upon
expiration of each asset's primary or renewal/re-lease term. In certain
instances, casualty or early termination events may result in the disposal of an
asset. Such circumstances are infrequent and usually result in the collection of
stipulated cash settlements pursuant to terms and conditions contained in the
underlying lease agreements.
Cash expended for equipment acquisitions and cash realized from asset
disposal transactions are reported under investing activities on the
accompanying Statement of Cash Flows. During the six months ended June 30, 1997,
the Partnership expended $75,957 to upgrade certain research and test equipment.
There were no equipment acquisitions during the same period in 1996. For the six
months ended June 30, 1997, the Partnership realized $43,943 in equipment sale
proceeds compared to $558,448 for the same period in 1996. 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 repayments of principal related to such indebtedness are
reported as a component of financing activities. Each note payable is recourse
only to the specific equipment financed and to the minimum rental payments
contracted to be received during the debt amortization period (which period
generally coincides with the lease rental term). As rental payments are
collected, a portion or all of the rental payment is used to repay the
associated indebtedness. In future periods, the amount of cash used to repay
debt obligations is scheduled to decline as the principal balance of notes
payable is reduced through the collection and application of rents. However, the
amount of cash used to repay debt obligations may fluctuate due to the use of
the Partnership's available cash and future cash flow to retire indebtedness
(see Overview).
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 six months ended June 30, 1997, the Partnership declared
total cash distributions of Distributable Cash From Operations and Distributable
Cash From Sales and Refinancings of $150,902. In
12
<PAGE>
AMERICAN INCOME FUND I-B,
a Massachusetts Limited Partnership
FORM 10-Q
PART I. FINANCIAL INFORMATION
accordance with the Amended and Restated Agreement and Certificate of Limited
Partnership, the Limited Partners were allocated 95% of these distributions, or
$143,357 and the General Partner was allocated 5%, or $7,545. The second quarter
1997 cash distribution was paid on July 14, 1997.
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. 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 quarterly cash distributions will occur during the
life of the Partnership.
13
<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.
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
14
<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: August 14, 1997
By: /s/ Gary M. Romano
--------------------------------------------
Gary M. Romano
Clerk of AFG Leasing VI Incorporated
(Duly Authorized Officer and
Principal Financial Officer)
Date: August 14, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 1,704,963
<SECURITIES> 0
<RECEIVABLES> 69,385
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,774,348
<PP&E> 4,932,918
<DEPRECIATION> 3,488,975
<TOTAL-ASSETS> 3,218,291
<CURRENT-LIABILITIES> 117,838
<BONDS> 495,758
0
0
<COMMON> 0
<OTHER-SE> 2,604,695
<TOTAL-LIABILITY-AND-EQUITY> 3,218,291
<SALES> 0
<TOTAL-REVENUES> 373,031
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 289,994
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 29,210
<INCOME-PRETAX> 53,827
<INCOME-TAX> 0
<INCOME-CONTINUING> 53,827
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 53,827
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
