<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, 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 March 31, 1996 Commission File No. 0-21396
AFG Investment Trust A
- - ------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 04-3145953
- - ------------------------------------------ --------------
(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>
AFG Investment Trust A
FORM 10-Q
INDEX
Page
----
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Statement of Financial Position
at March 31, 1996 and December 31, 1995 3
Statement of Operations
for the three months ended March 31, 1996 and 1995 4
Statement of Cash Flows
for the three months ended March 31, 1996 and 1995 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>
AFG Investment Trust A
STATEMENT OF FINANCIAL POSITION
March 31, 1996 and December 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
------------ ------------
<S> <C> <C>
ASSETS
- - ------
Cash and cash equivalents $ 1,522,376 $ 455,262
Rents receivable 764,149 642,680
Accounts receivable - affiliate 112,473 83,314
Equipment at cost, net of accumulated
depreciation of $8,666,641 and
$8,310,244 at March 31, 1996
and December 31, 1995, respectively 14,354,845 15,420,535
Organization costs, net of accumulated
amortization of $3,917 and $3,667 at
March 31, 1996 and December 31, 1995,
respectively 1,083 1,333
----------- ----------
Total assets $16,754,926 $16,603,124
=========== ===========
LIABILITIES AND PARTICIPANTS' CAPITAL
- - -------------------------------------
Notes payable $ 6,611,748 $ 6,323,893
Accrued interest 106,548 83,426
Accrued liabilities 21,950 24,135
Accrued liabilities - affiliate 57,793 4,744
Deferred rental income 30,048 39,853
Cash distributions payable to 127,092 127,092
participants ----------- -----------
Total liabilities 6,955,179 6,603,143
----------- -----------
Participants' capital (deficit):
Managing Trustee (25,332) (23,330)
Special Beneficiary (216,249) (199,729)
Beneficiary Interests
(549,218 Interests; initial
purchase price of $25 each) 10,041,328 10,223,040
----------- -----------
Total participants' capital 9,799,747 9,999,981
----------- -----------
Total liabilities and
participants' capital $16,754,926 $16,603,124
=========== ===========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
3
<PAGE>
AFG Investment Trust A
STATEMENT OF OPERATIONS
for the three months ended March 31, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Income:
Lease revenue $1,254,648 $1,354,371
Interest income 6,336 4,056
Loss on sale of equipment (148,067) (8,498)
---------- ----------
Total income 1,112,917 1,349,929
---------- ----------
Expenses:
Depreciation and amortization 952,119 864,886
Interest expense 104,957 132,467
Equipment management fees -
affiliate 48,461 50,920
Operating expenses - affiliate 16,976 27,340
---------- ----------
Total expenses 1,122,513 1,075,613
---------- ----------
Net income (loss) $ (9,596) $ 274,316
========== ==========
Net income (loss)
per Beneficiary Interest $ (0.02) $ 0.45
========== ==========
Cash distributions declared
per Beneficiary Interest $ 0.32 $ 0.63
========== ==========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
4
<PAGE>
AFG Investment Trust A
STATEMENT OF CASH FLOWS
for the three months ended March 31, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Cash flows from (used in) operating
activities: $ (9,596) $ 274,316
Net income (loss)
Adjustments to reconcile net income
(loss) to
net cash from operating activities:
Depreciation and amortization 952,119 864,886
Loss on sale of equipment 148,067 8,498
Changes in assets and liabilities
Decrease (increase) in:
rents receivable (121,469) 42,557
accounts receivable - affiliate (29,159) (182,789)
Increase (decrease) in:
accrued interest 23,122 17,470
accrued liabilities (2,185) (5,500)
accrued liabilities - affiliate 53,049 (63,570)
deferred rental income (9,805) 1,456
----------- ----------
Net cash from operating activities 1,004,143 957,324
----------- ----------
Cash flows from (used in) investing
activities:
Purchase of equipment (1,441,796) --
Proceeds from equipment sales 1,407,550 7,550
----------- ----------
Net cash from (used in)
investing activities (34,246) 7,550
----------- ----------
Cash flows from (used in) financing
activities:
Proceeds from notes payable 997,888 1,454,669
Principal payments - notes payable (710,033) (874,415)
Distributions paid (190,638) (381,275)
----------- ----------
Net cash from financing activities 97,217 198,979
----------- ----------
Net increase in cash and cash equivalents 1,067,114 1,163,853
Cash and cash equivalents at beginning
of period 455,262 6,471
----------- ----------
Cash and cash equivalents at end of
period $ 1,522,376 $1,170,324
=========== ==========
Supplemental disclosure of cash flow
information:
Cash paid during the period for
interest $ 81,835 $ 114,997
=========== ==========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
5
<PAGE>
AFG Investment Trust A
Notes to the Financial Statements
March 31, 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 March 31, 1996 and December 31, 1995 and results of operations for
the three month periods ended March 31, 1996 and 1995 have been made and are
reflected.
NOTE 2 - CASH
- - -------------
At March 31, 1996, the Trust had $1,520,000 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 Trust 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
$9,805,820 are due as follows :
<TABLE>
<CAPTION>
<S> <C> <C>
For the year ending March 31, 1997 $4,488,906
1998 3,497,422
1999 1,053,254
2000 242,318
2001 208,771
Thereafter 315,149
-----------
Total $9,805,820
===========
</TABLE>
During March 1996, the Trust acquired an 8.86% proportionate ownership
interest in an MD-87 jet aircraft leased by Reno Air, Inc. (the "Reno
Aircraft")-See Note 4 herein. The Trust will receive approximately $143,000 of
rental revenue in the year ending March 31, 1997, $159,000 in each of the years
in the period ending March 31, 2002 and $120,000 in the year ending
March 31, 2003, pursuant to the Reno Aircraft lease agreement. Rents from the
Reno Aircraft, as provided for in the lease agreement, are adjusted monthly
for changes of the London Inter-Bank Offered Rate ("LIBOR"). Future rents from
the Reno Aircraft, included above, reflect the most recent LIBOR effected
rental payment .
6
<PAGE>
AFG Investment Trust A
Notes to the Financial Statements
(Continued)
NOTE 4 - EQUIPMENT
- - ------------------
The following is a summary of equipment owned by the Trust at March 31,
1996. In the opinion of American Finance Group ("AFG"), the acquisition cost of
the equipment did not exceed its fair market value.
<TABLE>
<CAPTION>
Lease Term Equipment
Equipment Type (Months) at Cost
- - --------------------------- ---------- -----------
<S> <C> <C>
Aircraft 60-72 $ 6,814,662
Materials handling 12-60 3,751,618
Retail store fixtures 36-60 2,992,236
Vessels 72 2,399,580
Computers and peripherals 9-62 2,264,354
Construction and mining 36-60 1,945,484
Communications 56 1,802,423
Research and test 60 459,282
Manufacturing 48 442,590
Energy systems 60 108,975
Photocopying 36 40,282
-----------
Total equipment cost 23,021,486
Accumulated depreciation (8,666,641)
-----------
Equipment, net of accumulated depreciation $14,354,845
===========
</TABLE>
On September 29, 1995, the Trust entered into an agreement with United Air
Lines, Inc. ("United") to transfer the Trust's proportionate ownership interest
in a Boeing 747-SP aircraft (the "United Aircraft"), to United for cash
consideration of $1,609,894, including unpaid rents through the date of sale,
which event concluded in February 1996. In March 1996, the Trust acquired an
8.86% ownership interest in the Reno Aircraft, pursuant to the reinvestment
provisions of the Trust's prospectus, at a cost of $1,239,741. To acquire the
interest in the Reno Aircraft, the Trust obtained leveraging of $997,888 from a
third-party lender and utilized cash proceeds of $241,853 from the sale of the
United Aircraft. The Managing Trustee intends to reinvest the remaining
proceeds from the sale of the United Aircraft in other equipment in 1996.
At March 31, 1996, the Trust's equipment portfolio included equipment
having a proportionate original cost of $8,519,757, representing approximately
37% of total equipment cost.
At March 31, 1996, the cost and net book value of equipment held for sale
or re-lease was approximately $58,000 and $22,000, respectively. The Managing
Trustee is actively seeking the sale or re-lease of all equipment not on lease.
Effective January 1, 1996, the Trust adopted Financial Accounting Standards
Board Statement No. 121, Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of, which requires impairment losses to be
recorded on long-lived assets used in operations when indicators of impairment
are present and the undiscounted cash flows estimated to be generated by those
assets are less than the assets'
7
<PAGE>
AFG Investment Trust A
Notes to the Financial Statements
(Continued)
carrying amount. Statement 121 also addresses the accounting for long-lived
assets that are expected to be disposed of. Adoption of this statement did not
have a material impact on the financial statements of the Trust.
NOTE 5 - RELATED PARTY TRANSACTIONS
- - -----------------------------------
All operating expenses incurred by the Trust are paid by AFG on behalf of
the Trust and AFG is reimbursed at its actual cost for such expenditures. Fees
and other costs incurred during the three month periods ended March 31, 1996 and
1995, which were paid or accrued by the Trust to AFG or its Affiliates, are as
follows:
<TABLE>
<CAPTION>
1996 1995
--------- --------
<S> <C> <C>
Equipment acquisition fees $ 36,109 --
Equipment management fees 48,461 $50,920
Administrative charges 5,250 3,000
Reimbursable operating expenses
due to third parties 11,726 24,340
-------- -------
Total $101,546 $78,260
======== =======
</TABLE>
All rents and proceeds from the sale of equipment are paid directly to
either AFG or to a lender. AFG temporarily deposits collected funds in a
separate interest-bearing escrow account prior to remittance to the Trust. At
March 31, 1996, the Trust was owed $112,473 by AFG for such funds and the
interest thereon. These funds were remitted to the Trust in April 1996.
NOTE 6 - NOTES PAYABLE
- - ----------------------
Notes payable at March 31, 1996 consisted of installment notes of
$6,611,748 payable to banks and institutional lenders. The notes bear interest
rates ranging between 5.7% and 9.17%, except for one note which bears a
fluctuating interest rate based on LIBOR plus a margin (7.63% at March 31,
1996). All of the installment notes are non-recourse and are collateralized by
the equipment and assignment of the related lease payments. Generally, the
installment notes will be fully amortized by noncancellable rents. However, the
Trust has a balloon payment obligation at the expiration of the primary lease
term related to the Reno Aircraft. The carrying amount of notes payable
approximates fair value at March 31, 1996.
The annual maturities of the notes payable are as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
For the year ending March 31, 1997 $3,299,445
1998 1,754,106
1999 812,717
2000 106,400
2001 116,278
Thereafter 522,802
----------
Total $6,611,748
==========
</TABLE>
8
<PAGE>
AFG Investment Trust A
Notes to the Financial Statements
(Continued)
NOTE 7 - SUBSEQUENT EVENT
- - -------------------------
Pursuant to its agreements with PLM International, Inc., referred to in Note 8
of the Trust's 1995 financial statements, American Finance Group agreed to
change its name and logo, except where they are used in connection with the
Trust and other affiliated investment programs. For all other purposes,
American Finance Group will operate as Equis Financial Group, effective April 2,
1996.
9
<PAGE>
AFG Investment Trust A
FORM 10-Q
PART I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results
- - --------------------------------------------------------------------------------
of Operations.
- - --------------
Three months ended March 31, 1996 compared to the three months ended March 31,
- - ------------------------------------------------------------------------------
1995:
- - -----
Overview
- - --------
As an equipment leasing trust, the Trust was organized to acquire a
diversified portfolio of capital equipment subject to lease agreements with
third parties. The Trust 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 Trust's
portfolio will progress through various stages. Initially, all equipment will
generate rental revenues under primary term lease agreements. During the life
of the Trust, 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 Trust'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 Trust will be dissolved. The Trust's operations commenced in 1992.
Results of Operations
- - ---------------------
For the three months ended March 31, 1996, the Trust recognized lease revenue
of $1,254,648 compared to $1,354,371 for the same period in 1995. The decrease
in lease revenue for the three months ended March 31, 1996 compared to the same
period in 1995 is due primarily to the Trust's sale of its interest in the
United Aircraft in February 1996, as discussed below. In the near-term, lease
revenue is expected to increase due to reinvestment of the proceeds from the
sale of the United Aircraft in other equipment. Over time, the level of lease
revenue will decline due to the expiration of the Trust's primary lease term
agreements. The Trust also earns interest income from temporary investments of
rental receipts and equipment sales proceeds in short-term instruments.
The Trust's equipment portfolio includes certain assets in which the Trust
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 Trust 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 Trust 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.
On February 5, 1996, the Trust concluded the sale of its interest in a Boeing
747-SP to the lessee, United Air Lines, Inc., as reported in Note 3 to the
Trust's 1995 Annual Report. The Trust recognized a net loss of $458,638 in
connection with this transaction, of which $311,621 was recognized as Write-Down
of Equipment in 1995. The remainder of $147,017 was recognized as a loss on sale
equipment on the accompanying financial statements for the quarter ended March
31, 1996. In addition to lease rents, the Trust received net sale proceeds of
$1,392,779 from United for the aircraft. The Trust plans to reinvest
substantially all of such proceeds in other equipment in 1996, a portion of
which was completed in March 1996 through the acquisition of an 8.86% ownership
interest in the Reno Aircraft at an aggregate cost of $1,239,741. To acquire the
interest in the Reno Aircraft, the Trust obtained long-term financing of
$997,888 from a third-party lender and utilized cash proceeds of $241,853 from
the sale of the United Aircraft. During the three months ended March 31, 1996,
the Trust sold other equipment having a net book value of $15,821 to existing
10
<PAGE>
AFG Investment Trust A
FORM 10-Q
PART I. FINANCIAL INFORMATION
lessees and third parties. These sales resulted in a net loss, for financial
statement purposes, of $1,050 compared to a net loss of $8,498 on equipment
having a net book value of $16,048 for the same period in 1995.
It cannot be determined whether future sales of equipment will result in a net
gain or a net loss to the Trust, 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 Trust 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 Trust 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 Trust achieved from leasing the equipment.
Depreciation and amortization expense was $952,119 for the three months ended
March 31, 1996, compared to $864,886 for the same period in 1995. For financial
reporting purposes, to the extent that an asset is held on primary lease term,
the Trust 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 Trust continues
to depreciate the remaining net book value of the asset on a straight-line basis
over the asset's remaining economic life. The increase in depreciation expense
for the three months ended March 31, 1996 compared to the same period in 1995,
reflects the acquisition of equipment subsequent to March 31, 1995.
Interest expense was $104,957 or 8.4% of lease revenue for the three month
period ended March 31, 1996, compared to $132,467 or 9.8% of lease revenue for
the same period in 1995. Interest expense in the near-term is expected to
increase due to anticipated leveraging to be obtained to finance the acquisition
of reinvestment equipment, discussed above. Thereafter, interest expense 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 3.9% of lease revenue for the three months ended March
31, 1996, compared to 3.8% of lease revenue for the same period in 1995.
Management fees are based on 5% of gross lease revenue generated by operating
leases and 2% of gross lease revenue generated by full payout leases.
Operating expenses consist principally of administrative charges, professional
service costs, such as audit and legal fees, as well as printing, distribution
and remarketing expenses. Collectively, operating expenses represented 1.4% of
lease revenue for the three months ended March 31, 1996, compared to 2% of lease
revenue for the same period 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 trust. Other fluctuations
typically occur in relation to the volume and timing of remarketing activities.
11
<PAGE>
AFG Investment Trust A
FORM 10-Q
PART I. FINANCIAL INFORMATION
Liquidity and Capital Resources and Discussion of Cash Flows
- - ------------------------------------------------------------
The Trust 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 Trust's principal operating activities derive from asset
rental transactions. Accordingly, the Trust'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 $1,004,143 and $957,324 for the three months ended March 31,
1996 and 1995, respectively. In the near-term, net cash inflows generated from
operating activities are expected to increase due to the receipt of additional
lease revenue from reinvestment equipment purchased during the three months
ended March 31, 1996 and additional reinvestment equipment to be purchased
during the remainder of 1996. Subsequently, future renewal, re-lease and
equipment sale activities will cause a gradual decline in the Trust's lease
revenue and corresponding sources of operating cash. Overall, expenses
associated with rental activities, such as management fees, and net cash flow
from operating activities will decline as the Trust experiences a higher
frequency of remarketing events.
Ultimately, the Trust 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 three month period ended March 31, 1996,
the Trust expended $1,441,796 to acquire equipment. This amount reflects the
acquisition of an ownership interest in a commercial jet aircraft at a cost of
$1,239,741, pursuant to the reinvestment provisions of the Trust's prospectus
and an original equipment acquisition of $202,055. During the three months
ended March 31, 1996, the Trust realized net cash proceeds of $1,407,550
compared to $7,550 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 Trust 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
$997,888 and $1,454,669 during three months ended March 31, 1996 and 1995,
respectively, resulted from leveraging a portion of the Trust'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 the
near-term, the amount of cash used to repay debt obligations will increase due
to leveraging obtained during the three months ended March 31, 1996 and
leveraging expected to be obtained to finance the acquisition of additional
reinvestment equipment. Subsequently, the amount of cash used to repay debt
obligations will decline as the principal balance of notes payable is reduced
through the collection and application of rents. However, the Trust has a
balloon payment obligation at the expiration of the primary lease term related
to the Reno Aircraft.
Cash distributions to the Managing Trustee, the Special Beneficiary and the
Beneficiaries are declared and generally paid within 45 days following the end
of each calendar month. The payment of such distributions is presented as a
component of financing activities. For the three months ended March 31, 1996,
the Trust declared
12
<PAGE>
AFG Investment Trust A
FORM 10-Q
PART I. FINANCIAL INFORMATION
total cash distributions of Distributable Cash From Operations and Distributable
Cash From Sales and Refinancings of $190,638. In accordance with the Amended and
Restated Declaration of Trust, the Beneficiaries were allocated 90.75% of these
distributions, or $173,004; the Special Beneficiary was allocated 8.25%, or
$15,728; and the Managing Trustee was allocated 1%, or $1,906.
Cash distributions paid to the Participants 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 Trust 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 Trust's equipment portfolio.
The future liquidity of the Trust will be influenced by the foregoing and will
be greatly dependent upon the collection of contractual rents and the outcome of
residual activities. The Managing Trustee anticipates that cash proceeds
resulting from these sources will satisfy the Trust'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 Trust's net cash from operating activities to diminish over time; and
equipment sale proceeds will vary in amount and period of realization.
Accordingly, fluctuations in the level of monthly cash distributions will occur
during the life of the Trust.
13
<PAGE>
AFG Investment Trust A
FORM 10-Q
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Response: None
Item 2. Changes in Securities
Response: None
Item 3. Defaults upon Senior Securities
Response: None
Item 4. Submission of Matters to a Vote of Security Holders
Response: None
Item 5. Other Information
Response: None
Item 6(a). Exhibits
Response: None
Item 6(b). Reports on Form 8-K
Response: None
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.
AFG Investment Trust A
By: AFG ASIT Corporation, a Massachusetts
corporation and the Managing Trustee of
the Registrant.
By: /s/ Michael J. Butterfield
-------------------------------------
Michael J. Butterfield
Treasurer AFG ASIT Corporation
(Duly Authorized Officer and
Principal Accounting Officer)
Date: May 15, 1996
-----------------------------------
By: /s/ Gary Romano
-------------------------------------
Gary M. Romano
Clerk of AFG ASIT Corporation
(Duly Authorized Officer and
Principal Financial Officer)
Date: May 15, 1996
-----------------------------------
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 1,522,376
<SECURITIES> 0
<RECEIVABLES> 876,622
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,398,998
<PP&E> 23,021,486
<DEPRECIATION> 8,666,641
<TOTAL-ASSETS> 16,754,926
<CURRENT-LIABILITIES> 343,431
<BONDS> 6,611,748
0
0
<COMMON> 0
<OTHER-SE> 9,799,747
<TOTAL-LIABILITY-AND-EQUITY> 16,754,926
<SALES> 1,254,648
<TOTAL-REVENUES> 1,112,917
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,017,556
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 104,957
<INCOME-PRETAX> (9,596)
<INCOME-TAX> 0
<INCOME-CONTINUING> (9,596)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9,596)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
