<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[XX] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1998
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
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Commission file number 0-21396
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AFG Investment Trust A
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(Exact name of registrant as specified in its charter)
Delaware 04-3145953
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
88 Broad St., Sixth Floor, Boston, MA 02110
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 854-5800
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Securities registered pursuant to Section 12(b) of the Act NONE
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Title of each class Name of each exchange on which registered
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Securities registered pursuant to Section 12(g) of the Act:
549,218 Class A Trust Beneficiary Interests
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(Title of class)
826,072 Class B Trust Beneficiary Interests
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(Title of class)
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 XX No
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State the aggregate market value of the voting stock held by nonaffiliates
of the registrant. Not applicable. Securities are nonvoting for this purpose.
Refer to Item 12 for further information.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to security holders for
the year ended December 31, 1998 (Part I and II)
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AFG Investment Trust A
FORM 10-K
TABLE OF CONTENTS
Page
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PART I
Item 1. Business 3
Item 2. Properties 5
Item 3. Legal Proceedings 5
Item 4. Submission of Matters to a Vote of Security Holders 5
PART II
Item 5. Market for the Trust's Securities and Related Security
Holder Matters 6
Item 6. Selected Financial Data 7
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations 7
Item 8. Financial Statements and Supplementary Data 8
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure 8
PART III
Item 10. Directors and Executive Officers of the Trust 9
Item 11. Executive Compensation 11
Item 12. Security Ownership of Certain Beneficial Owners and Management 11
Item 13. Certain Relationships and Related Transactions 12
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K 15-16
2
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PART I
Item 1. Business.
(a) General Development of Business
AFG Investment Trust A (the "Trust") was organized as a Delaware business
trust in accordance with the Delaware Business Trust Act on February 26, 1992
for the purpose of acquiring and leasing to third parties a diversified
portfolio of capital equipment. Participants' capital initially consisted of
contributions of $1,000 from the Managing Trustee, AFG ASIT Corporation, $1,000
from the Special Beneficiary, Equis Financial Group Limited Partnership
(formerly known as American Finance Group), a Massachusetts limited partnership,
("EFG" or the "Advisor") and $100 from the Initial Beneficiary, AFG Assignor
Corporation, a wholly-owned affiliate of EFG. The Trust issued an aggregate of
549,218 Beneficiary Interests (hereinafter referred to as Class A Interests) at
a subscription price of $25.00 each ($13,730,450 in total) to 645 investors on
May 29, 1992. On July 18, 1997, the Trust issued 826,072 Class B Interests at
$5.00 each ($4,130,360 in total), of which (i) 822,863 interests are held by
Equis II Corporation, an affiliate of EFG, and (ii) 3,209 interests are held by
7 Class A investors. The Trust repurchased 65,402 Class A Interests on October
10, 1997 using proceeds from the issuance of Class B Interests. On April 28,
1998, the Trust repurchased 1,800 additional Class A Interests. Accordingly,
there are 482,016 Class A Interests currently outstanding.
The Trust has one Managing Trustee, AFG ASIT Corporation, a Massachusetts
corporation, and one Special Beneficiary, EFG. The Managing Trustee is
responsible for the general management and business affairs of the Trust. EFG
acts as Advisor to the Trust and provides services in connection with the
acquisition and remarketing of the Trust's assets. AFG ASIT Corporation is a
wholly-owned subsidiary of Equis II Corporation and an affiliate of EFG. Class A
Interests and Class B Interests basically have identical voting rights and,
therefore, Equis II Corporation has control over the Trust on all matters on
which the Beneficiaries may vote. The Managing Trustee and the Special
Beneficiary are not required to make any other capital contributions except as
may be required under the Second Amended and Restated Declaration of Trust, as
amended (the "Trust Agreement").
(b) Financial Information About Industry Segments
Historically, the Trust has been engaged in only one industry segment: the
business of acquiring capital equipment and leasing the equipment to
creditworthy lessees on a full-payout or operating lease basis. Full-payout
leases are those in which aggregate undiscounted, noncancellable rents equal or
exceed the Purchase Price of the leased equipment. Operating leases are those in
which the aggregate undiscounted, noncancellable rental payments are less than
the Purchase Price of the leased equipment. In connection with the Solicitation
Statement and consent of Beneficiaries (see Note 10 to the financial statements
included in Item 14, herein), the prior Trust Agreement was modified to permit
the Trust to invest in assets other than equipment. In the future, the Managing
Trustee anticipates that the Trust will make new investments that have the
potential to enhance the Trust's overall economic performance for the benefit of
all of the Beneficiaries. Industry segment data is not applicable.
(c) Narrative Description of Business
The Trust was organized to acquire a diversified portfolio of capital
equipment subject to various full-payout and operating leases and to lease the
equipment to third parties as income-producing investments. More specifically,
the Trust's primary investment objectives are to acquire and lease equipment
which will:
1. Generate monthly cash distributions;
2. Preserve and protect Trust capital; and
3. Maximize residual value for ultimate sale
The Trust has the additional objective of providing certain federal income
tax benefits.
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The Closing Date of the offering of Class A Beneficiary Interests was May
29, 1992. Significant operations commenced coincident with the Trust's initial
purchase of equipment and associated lease commitments on May 29, 1992. The
acquisition of the equipment and its associated leases is described in detail in
Note 3 to the financial statements included in Item 14, herein. Pursuant to the
Trust Agreement, the Trust is scheduled to be dissolved by December 31, 2003.
The Trust is a Nominal Defendant in a Class Action Lawsuit, the resolution of
which remains pending. See Note 12 to the accompanying financial statements.
The Trust has no employees; however, it entered into an Advisory Agreement
with EFG. EFG's role, among other things, is to (i) evaluate, select, negotiate,
and consummate the acquisition of equipment, (ii) manage the leasing,
re-leasing, financing, and refinancing of equipment, and (iii) arrange the
resale of equipment. The Advisor is compensated for such services as described
in the Trust Agreement, Item 13 herein, and in Note 5 to the financial
statements included in Item 14, herein.
The Trust's investment in equipment is, and will continue to be, subject
to various risks, including physical deterioration, technological obsolescence
and defaults by lessees. A principal business risk of owning and leasing
equipment is the possibility that aggregate lease revenues and equipment sale
proceeds will be insufficient to provide an acceptable rate of return on
invested capital after payment of all debt service costs and operating expenses.
In addition, the leasing industry is very competitive. The Trust is subject to
considerable competition when equipment is re-leased or sold at the expiration
of primary lease terms. The Trust must compete with lease programs offered
directly by manufacturers and other equipment leasing companies, including
business trusts and limited partnerships organized and managed similarly to the
Trust and including other EFG-sponsored partnerships and trusts, which may seek
to re-lease or sell equipment within their own portfolios to the same customers
as the Trust. Many competitors have greater financial resources and more
experience than the Trust, the Managing Trustee and the Advisor. In addition,
default by a lessee under a lease agreement may cause equipment to be returned
to the Trust at a time when the Managing Trustee or the Advisor is unable to
arrange the sale or re-lease of such equipment. This could result in the loss of
a portion of potential lease revenues and weaken the Trust's ability to repay
related indebtedness.
Revenue from major individual lessees which accounted for 10% or more of
lease revenue during the years ended December 31, 1998, 1997 and 1996 is
incorporated herein by reference to Note 2 to the financial statements in the
1998 Annual Report. Refer to Item 14(a)(3) for lease agreements filed with the
Securities and Exchange Commission.
The Trust Agreement originally provided for the reinvestment of Cash From
Sales or Refinancings in additional equipment until May 29, 1996, a period of
four years following Closing. In connection with the Solicitation Statement and
consent of Beneficiaries (see Note 10 to the financial statements included in
Item 14 herein), the Trust's reinvestment provisions were reinstated until
December 31, 2001 (see Note 5 to the financial statements included in Item 14
herein). In addition, the Trust is now permitted to invest in assets other than
equipment. Upon the expiration of each primary lease term, the Managing Trustee
will determine whether to sell or re-lease the Trust's equipment, depending on
the economic advantages of each alternative. Over time, the Trust will begin to
liquidate its portfolio of equipment.
EFG is a Massachusetts limited partnership formerly known as American
Finance Group ("AFG"). AFG was established in 1988 as a Massachusetts general
partnership and succeeded American Finance Group, Inc., a Massachusetts
corporation organized in 1980. EFG and its subsidiaries (collectively, the
"Company") are engaged in various aspects of the equipment leasing business,
including EFG's role as Equipment Manager or Advisor to the Trust and several
other direct-participation equipment leasing programs sponsored or co-sponsored
by EFG (the "Other Investment Programs"). The Company arranges to broker or
originate equipment leases, acts as remarketing agent and asset manager, and
provides leasing support services, such as billing, collecting, and asset
tracking.
The general partner of EFG, with a 1% controlling interest, is Equis
Corporation, a Massachusetts corporation owned and controlled entirely by Gary
D. Engle, its President, Chief Executive Officer and sole Director. Equis
Corporation also owns a controlling 1% general partner interest in EFG's 99%
limited partner, GDE Acquisition
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Limited Partnership ("GDE LP"). Equis Corporation and GDE LP were established in
December 1994 by Mr. Engle for the sole purpose of acquiring the business of
AFG.
In January 1996, the Company sold certain assets of AFG relating primarily
to the business of originating new leases, and the name "American Finance
Group," and its acronym, to a third party. AFG changed its name to Equis
Financial Group Limited Partnership after the sale was concluded. Pursuant to
terms of the sale agreements, EFG specifically reserved the rights to continue
using the name American Finance Group and its acronym in connection with the
Trust and the Other Investment Programs and to continue managing all assets
owned by the Trust and the Other Investment Programs.
(d) Financial Information About Foreign and Domestic Operations and Export
Sales
Not applicable.
Item 2. Properties.
Incorporated herein by reference to Note 3 to the financial statements in
the 1998 Annual Report.
Item 3. Legal Proceedings.
Incorporated herein by reference to Note 12 to the financial statements in
the 1998 Annual Report.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
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PART II
Item 5. Market for the Trust's Securities and Related Security Holder Matters.
(a) Market Information
There is no public market for the resale of the Interests and it is not
anticipated that a public market for resale of the Interests will develop.
(b) Approximate Number of Security Holders
At December 31, 1998, there were 563 record holders (555 Class A Interests
and 8 Class B Interests) in the Trust.
(c) Dividend History and Restrictions
Pursuant to Article VIII of the Trust Agreement, the amount of cash
distributions to be declared and paid to the Beneficiaries is determined on a
monthly basis. Each monthly distribution may vary in amount and the Managing
Trustee may, in its sole discretion, restrict or suspend distributions if it
believes such action to be in the best interests of the Trust. Each distribution
is made 90.75% to the Class A and Class B Beneficiaries, 8.25% to the Special
Beneficiary, and 1% to the Managing Trustee. Currently, there are no
restrictions that materially limit the Trust's ability to make distributions or
that the Trust believes are likely to materially limit future distributions. The
Trust expects to continue to make distributions on a monthly basis.
Distributable Cash From Operations and Distributable Cash From Sales or
Refinancings ("Distributions") must be distributed within 45 days after the
completion of each calendar month. Each Distribution is described in a statement
sent to the Beneficiaries.
Distributions, prior to Class B Payout (defined below), are allocated to
the Class A and Class B Beneficiaries as follows: first, 100% to the Class A
Beneficiaries up to $0.41 per Class A Interest; second, 100% to the Class B
Beneficiaries up to $0.164 per Class B Interest, reduced by the Class B
Distribution Reduction Factor (defined later herein); third, 100% to the Class A
Beneficiaries up to an additional $0.215 per Class A Interest; and fourth, until
Class B Payout has been attained, 80% to the Class B Beneficiaries and 20% to
the Class A Beneficiaries. After Class B Payout, all further distributions will
be made to the Class A Beneficiaries and the Class B Beneficiaries in amounts so
that each Class A Beneficiary receives, with respect to each Class A Interest,
an amount equal to 400%, divided by the difference between 100% and the Class B
Distribution Reduction Factor, of the amount so distributed with respect to each
Class B Interest. The Class B Distribution Reduction Factor means the percentage
determined as a fraction, the numerator of which is the aggregate amount of any
cash distributions paid to the Class B Beneficiaries as a return of their
original capital contributions (on a per Class B Subordinated Interest basis),
discounted at 8% per annum (commencing August 1, 1997, the first day of the
month following the Class B Closing) and the denominator of which is $5.00.
Distributions in 1998 and 1997 were as follows:
Managing Special
Total Trustee Beneficiary Beneficiaries
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Total 1998 distributions
Class A Interests $ 870,832 $ 8,708 $ 71,844 $ 790,280
Class B Interests 1,776,206 5,128 42,303 1,728,775
Total 1997 distributions
Class A Interests 1,750,493 9,421 77,726 1,663,346
Class B Interests 271,280 2,713 22,381 246,186
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Total $4,668,811 $ 25,970 $ 214,254 $4,428,587
========== ========== ========== ==========
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Distributions payable were $180,702 and $195,306 at December 31, 1998 and
1997, respectively.
"Distributable Cash From Operations" means the net cash provided by the
Trust's normal operations after general expenses and current liabilities of the
Trust are paid, reduced by any reserves for working capital and contingent
liabilities to be funded from such cash, to the extent deemed reasonable by the
Managing Trustee, and increased by any portion of such reserves deemed by the
Managing Trustee not to be required for Trust operations and reduced by all
accrued and unpaid Equipment Management Fees and, after Payout, further reduced
by all accrued and unpaid Subordinated Remarketing Fees. Distributable Cash From
Operations does not include any Distributable Cash From Sales or Refinancings.
"Distributable Cash From Sales or Refinancings" means Cash From Sales or
Refinancings as reduced by (i)(a) amounts reinvested in additional equipment in
accordance with Sections 4.2(b)(v) and 4.2(b)(vi) of the Trust Agreement, or (b)
the proceeds from the sale of an interest in a joint venture which are
reinvested in additional equipment, (ii) any accrued and unpaid Equipment
Management Fee and Acquisition Fees and Acquisition Expenses paid with respect
to additional equipment acquired through reinvestment of Cash From Sales or
Refinancings in accordance with Section 4.2(b)(v) of the Trust Agreement and
(iii) after Payout, any accrued and unpaid Subordinated Resale Fees.
"Cash From Sales or Refinancings" means cash received by the Trust from
sale or refinancing transactions, as reduced by (i)(a) all debts and liabilities
of the Trust required to be paid as a result of sale or refinancing
transactions, whether or not then due and payable (including any liabilities on
an item of equipment sold which are not assumed by the buyer and any remarketing
fees required to be paid to persons not affiliated with the Managing Trustee,
but not including any Subordinated Resale Fees whether or not then due and
payable) and (b) general expenses and current liabilities of the Trust and (c)
any reserves for working capital and contingent liabilities funded from such
cash to the extent deemed reasonable by the Managing Trustee and (ii) increased
by any portion of such reserves deemed by the Managing Trustee not to be
required for Trust operations. In the event the Trust accepts a note in
connection with any sale or refinancing transaction, all payments subsequently
received in cash by the Trust with respect to such note shall be included in
Cash From Sales or Refinancings, regardless of the treatment of such payments by
the Trust for tax or accounting purposes. If the Trust receives purchase money
obligations in payment for equipment sold, which are secured by liens on such
equipment, the amount of such obligations shall not be included in Cash From
Sales or Refinancings until the obligations are fully satisfied.
Class A Payout means the first time when the aggregate amount of all
distributions actually made to the Class A Beneficiaries equals $25 per Class A
Interest (minus all uninvested capital contributions returned to the Class A
Beneficiaries) plus a cumulative annual distribution of 10% compounded quarterly
and calculated beginning with the last day of the month of the Trust's initial
Class A Closing.
Class B Payout means the first time when the aggregate amount of all
distributions actually made to the Class B Beneficiaries equals $5 per Class B
Interest plus a cumulative annual return of 8% per annum compounded quarterly
with respect to capital contributions returned to them as a Class B Capital
Distribution and 10% per annum, compounded quarterly, with respect to the
balance of their capital contributions and calculated beginning August 1, 1997,
the first day of the month following the Class B Closing.
Item 6. Selected Financial Data.
Incorporated herein by reference to the section entitled "Selected
Financial Data" in the 1998 Annual Report.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Incorporated herein by reference to the section entitled "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in the
1998 Annual Report.
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Item 8. Financial Statements and Supplementary Data.
Incorporated herein by reference to the financial statements and
supplementary data included in the 1998 Annual Report.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
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PART III
Item 10. Directors and Executive Officers of the Trust.
(a-b) Identification of Directors and Executive Officers
The Trust has no Directors or Officers. As indicated in Item 1 of this
report, AFG ASIT Corporation is the Managing Trustee of the Trust. Under the
Trust Agreement, the Managing Trustee is solely responsible for the operation of
the Trust's properties and the Beneficiaries have no right to participate in the
control of such operations. The names, titles and ages of the Directors and
Executive Officers of the Managing Trustee as of March 15, 1999 are as follows:
DIRECTORS AND EXECUTIVE OFFICERS
OF THE MANAGING TRUSTEE (See Item 13)
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<TABLE>
<CAPTION>
Name Title Age Term
- ----------------------- -------------------------------------------- ------- ---------
<S> <C> <C> <C>
Geoffrey A. MacDonald Chairman and a member of the Until a
Executive Committee of EFG successor
and President and a Director is duly
of the Managing Trustee 50 elected
and
Gary D. Engle President and Chief Executive Officer qualified
and a member of the Executive
Committee of EFG and a Director
of the Managing Trustee 50
Gary M. Romano Executive Vice President and Chief
Operating Officer of EFG and
Clerk of the Managing Trustee 39
Michael J. Butterfield Senior Vice President, Finance and Treasurer
of EFG and Treasurer of the
Managing Trustee 39
James A. Coyne Executive Vice President of EFG, Capital
Markets and Senior Vice President of the
Managing Trustee 38
Sandra L. Simonsen Senior Vice President, Information Systems
of EFG 48
Gail D. Ofgant Senior Vice President, Lease Operations
of EFG 33
</TABLE>
(c) Identification of Certain Significant Persons
None.
(d) Family Relationship
No family relationship exists among any of the foregoing Directors or
Executive Officers.
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(e) Business Experience
Mr. MacDonald, age 50, is a co-founder, Chairman and a member of the
Executive Committee of EFG and President and a Director of the Managing Trustee.
Mr. MacDonald was also a co-founder, Director, and Senior Vice President of
EFG's predecessor corporation from 1980 to 1988. Mr. MacDonald is President of
American Finance Group Securities Corp. and a limited partner in Old North
Capital Limited Partnership ("ONC"). Prior to co-founding EFG's predecessors,
Mr. MacDonald held various executive and management positions in the leasing and
pharmaceutical industries. Mr. MacDonald holds a M.B.A. from Boston College and
a B.A. degree from the University of Massachusetts (Amherst).
Mr. Engle, age 50, is President and Chief Executive Officer of EFG and
sole shareholder and Director of its general partner, Equis Corporation and a
member of the Executive Committee of EFG and President of AFG Realty
Corporation. Mr. Engle joined EFG in 1990 as Executive Vice President and
acquired control of EFG and its subsidiaries in December 1994. Mr. Engle is Vice
President and a Director of certain of EFG's subsidiaries and affiliates, a
limited partner in ONC and controls the general partner of ONC. Mr. Engle is
also Chairman, Chief Executive Officer, and a member of the Board of Directors
of Semele Group, Inc. ("Semele"). From 1987 to 1990, Mr. Engle was a principal
and co-founder of Cobb Partners Development, Inc., a real estate and mortgage
banking company. From 1980 to 1987, Mr. Engle was Senior Vice President and
Chief Financial Officer of Arvida Disney Company, a large-scale community
development company owned by Walt Disney Company. Prior to 1980, Mr. Engle
served in various management consulting and institutional brokerage capacities.
Mr. Engle has a MBA from Harvard University and a BS degree from the University
of Massachusetts (Amherst).
Mr. Romano, age 39, became Executive Vice President and Chief Operating
Officer of EFG, and Secretary of Equis Corporation in 1996 and is Secretary or
Clerk of several of EFG's subsidiaries and affiliates. Mr. Romano joined EFG in
November 1989, became Vice President and Controller in April 1993 and Chief
Financial Officer in April 1995. Mr. Romano assumed his current position in
April 1996. Mr. Romano is also Vice President and Chief Financial Officer of
Semele. Prior to joining EFG, Mr. Romano was Assistant Controller for a
privately held real estate development and mortgage origination company that he
joined in 1987. Previously, Mr. Romano was an Audit Manager at Ernst & Whinney
(now Ernst & Young LLP), where he was employed from 1982 to 1986. Mr. Romano is
a Certified Public Accountant and holds a B.S. degree from Boston College.
Mr. Coyne, age 38, is Executive Vice President, Capital Markets of EFG and
President, Chief Operating Officer and a member of the Board of Directors of
Semele. Mr. Coyne joined EFG in 1989, remained until May 1993, and rejoined EFG
in November 1994. In September 1997, Mr. Coyne was appointed Executive Vice
President of EFG. Mr. Coyne is a limited partner in ONC. From May 1993 through
November 1994, he was employed by the Raymond Company, a private investment
firm, where he was responsible for financing corporate and real estate
acquisitions. From 1985 through 1989, Mr. Coyne was affiliated with a real
estate investment company and an equipment leasing company. Prior to 1985, he
was with the accounting firm of Ernst & Whinney (now Ernst & Young LLP). He has
a BS in Business Administration from John Carroll University, a Masters Degree
in Accounting from Case Western Reserve University and is a Certified Public
Accountant.
Mr. Butterfield, age 39, is Senior Vice President, Finance and Treasurer
of EFG and certain of its affiliates and is Treasurer of the Managing Trustee
and Semele. Mr. Butterfield joined EFG in June 1992, became Vice President,
Finance and Treasurer of EFG and certain of it's affiliates in April 1996 and in
July 1998, was promoted to Senior Vice President, Finance and Treasurer of EFG
and certain of its affiliates. Prior to joining EFG, Mr. Butterfield was an
Audit Manager with Ernst & Young LLP, which he joined in 1987. Mr. Butterfield
was employed in public accounting and industry positions in New Zealand and
London (UK) prior to coming to the United States in 1987. Mr. Butterfield
attained his Associate Chartered Accountant (A.C.A.) professional qualification
in New Zealand and has completed his CPA requirements in the United States. He
holds a Bachelor of Commerce degree from the University of Otago, Dunedin, New
Zealand.
Ms. Simonsen, age 48, joined EFG in February 1990 and was promoted to
Senior Vice President, Information Systems of EFG in April 1996. Prior to
joining EFG, Ms. Simonsen was Vice President, Information Systems with Investors
Mortgage Insurance Company, which she joined in 1973. Ms. Simonsen provided
systems consulting
10
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for a subsidiary of American International Group and authored a software program
published by IBM. Ms. Simonsen holds a BA degree from Wilson College.
Ms. Ofgant, age 33, is Senior Vice President, Lease Operations of EFG and
certain of its affiliates. Ms. Ofgant joined EFG in July 1989, was promoted to
Manager Lease Operations in April 1994, and became Vice President of Lease
Operations in April 1996. In July 1998, Ms. Ofgant was promoted to Senior Vice
President of Lease Operations. Prior to joining EFG, Ms. Ofgant was employed by
Security Pacific National Trust Company. Ms. Ofgant holds a BS degree in Finance
from Providence College.
(f) Involvement in Certain Legal Proceedings
None.
(g) Promoters and Control Persons
See Item 10 (a-b) above.
Item 11. Executive Compensation.
(a) Cash Compensation
Currently, the Trust has no employees. However, under the terms of the
Trust Agreement, the Trust is obligated to pay all costs of personnel employed
full or part-time by the Trust, including officers or employees of the Managing
Trustee or its Affiliates. There is no plan at the present time to make any
officers or employees of the Managing Trustee or its Affiliates employees of the
Trust. The Trust has not paid and does not propose to pay any options, warrants
or rights to the officers or employees of the Managing Trustee or its
Affiliates.
(b) Compensation Pursuant to Plans
None.
(c) Other Compensation
Although the Trust has no employees, as discussed in Item 11(a), pursuant
to section 10.4(c) of the Trust Agreement, the Trust incurs a monthly charge for
personnel costs of EFG for persons engaged in providing administrative services
to the Trust. A description of the remuneration paid by the Trust to the
Managing Trustee and its Affiliates for such services is included in Item 13 of
this report and in Note 5 to the financial statements included in Item 14
herein.
(d) Compensation of Directors
None.
(e) Termination of Employment and Change of Control Arrangement
There exists no remuneration plan or arrangement with the Managing Trustee
or its Affiliates which results or may result from their resignation, retirement
or any other termination.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
By virtue of its organization as a trust, the Trust has no outstanding
securities possessing traditional voting rights. However, as provided in Section
11.2(a) of the Trust Agreement (subject to Section 11.2(b)), a majority interest
of the Beneficiaries have voting rights with respect to:
1. Amendment of the Trust Agreement;
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2. Termination of the Trust;
3. Removal of the Managing Trustee; and
4. Approval or disapproval of the sale of all, or substantially all, of
the assets of the Trust (except in the orderly liquidation of the
Trust upon its termination and dissolution).
As of March 1, 1999, the following person or group owns beneficially more
than 5% of the Trust's outstanding Beneficiary interests:
Name and Amount Percent
Title Address of of Beneficial of
of Class Beneficial Owner Ownership Class
- ---------------------- -------------------- ----------------- -------
Interests Representing Equis II Corporation
Class B Beneficiary 88 Broad Street 822,863 Interests 99.61%
Boston, MA 02110
No person or group is known by the Managing Trustee to own beneficially
more than 5% of the Trust's 482,016 outstanding Class A Interests as of March 1,
1999.
Equis II Corporation is controlled by EFG's President and Chief Executive
Officer, Gary D. Engle (see Item 10 and Item 13 of this report).
The ownership and organization of EFG is described in Item 1 of this
report.
Item 13. Certain Relationships and Related Transactions.
The Managing Trustee of the Trust is AFG ASIT Corporation, an affiliate of
EFG.
(a) Transactions with Management and Others
All operating expenses incurred by the Trust are paid by EFG on behalf of
the Trust and EFG is reimbursed at its actual cost for such expenditures. Fees
and other costs incurred during the years ended December 31, 1998, 1997 and
1996, which were paid or accrued by the Trust to EFG or its Affiliates, are as
follows:
1998 1997 1996
------------ ------------ ------------
Equipment acquisition fees $ 151 $ -- $ 36,673
Equipment management fees 98,100 178,159 186,001
Offering costs -- 41,304 --
Administrative charges 68,280 68,806 40,533
Reimbursable operating expenses
due to third parties 255,562 222,494 97,206
------------ ------------ ------------
Total $ 422,093 $ 510,763 $ 360,413
============ ============ ============
EFG and its Affiliates were reimbursed for their out-of-pocket offering
costs incurred on behalf of the Trust in an amount equal to 1% of the gross
proceeds of the four trusts which sold Class B Interests, pursuant to the
Registration Statement on Form S-1. The amount of reimbursement made by the
Trust was prorated in proportion to the number of Beneficiary Interests sold in
the Trust.
As provided under the terms of the Trust Agreement, EFG is compensated for
its services to the Trust. Such services include all aspects of acquisition,
management and sale of equipment. For acquisition services, EFG was compensated
by an amount equal to .28% of Asset Base Price paid by the Trust for each asset
acquired for
12
<PAGE>
the Trust's initial asset portfolio. For acquisition services during the initial
reinvestment period, which expired on May 29, 1996, EFG was compensated by an
amount equal to 3% of Asset Base Price paid by the Trust. In connection with the
Solicitation Statement and consent of Beneficiaries (see Note 10 to the
financial statements included in Item 14, herein), the Trust's reinvestment
provisions were reinstated through December 31, 2001. In addition, the Trust is
now permitted to invest in assets other than equipment. Acquisition fees paid to
EFG in connection with such reinvestment assets are equal to 1% of Asset Base
Price paid by the Trust. For management services, EFG is compensated by an
amount equal to (i) 5% of gross operating lease rental revenue and 2% of gross
full payout lease rental revenue received by the Trust with respect assets
acquired on or prior to March 31, 1998. For management services earned in
connection with assets acquired on or after April 1, 1998, EFG is compensated by
an amount equal to 2% of gross lease rental revenue received by the Trust. Both
of these fees are subject to certain limitations defined in the Trust Agreement.
For non-equipment investments other than cash, the Managing Trustee receives an
annualized management fee of 1%. Compensation to EFG for services connected to
the remarketing of equipment is calculated as the lesser of (i) 3% of gross sale
proceeds or (ii) one-half of reasonable brokerage fees otherwise payable under
arm's length circumstances. Payment of the remarketing fee is subordinated to
Payout and is subject to certain limitations defined in the Trust Agreement.
Administrative charges represent amounts owed to the EFG, pursuant to
Section 10.4(c) of the Trust Agreement, for persons employed by EFG who are
engaged in providing administrative services to the Trust. Reimbursable
operating expenses due to third parties represent costs paid by EFG on behalf of
the Trust which are reimbursed to EFG at actual cost.
All equipment was purchased from EFG or directly from external vendors.
The Trust's Purchase Price is determined by the method described in Note 2 to
the Trust's financial statements included in Item 14, herein.
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 Trust. At
December 31, 1998, the Trust was owed $70,959 by EFG for such funds and the
interest thereon. These funds were remitted to the Trust in January 1999.
During 1997, the Trust and certain affiliated investment programs
sponsored by EFG exchanged their ownership interests in certain vessels for
aggregate consideration of $11,565,375. The Trust's share of such consideration
was $1,209,930, consisting of common stock in Semele valued at $314,541, a note
receivable from Semele of $462,353 and cash of $433,036. For further discussion,
see Note 4, "Investment Securities - Affiliate / Note Receivable - Affiliate to
the financial statements included in Item 14 herein and Item 10.
On July 18, 1997, the Trust issued 826,072 Class B Interests at $5.00 per
interest, thereby generating $4,130,360 in aggregate Class B capital
contributions. Class A Beneficiaries purchased 3,209 Class B Interests,
generating $16,045 of such aggregate capital contributions, and the Special
Beneficiary, EFG, purchased 822,863 of such Class B Interests, generating
$4,114,315 of such aggregate capital contributions. The Trust incurred offering
costs in the amount of $41,304 and professional service costs of $54,186 in
connection with this offering.
Subsequently, EFG transferred its Class B Interests to a special-purpose
company, Equis II Corporation, a Delaware corporation. EFG also transferred its
ownership of AFG ASIT Corporation, the Managing Trustee of the Trust, to Equis
II Corporation. As a result, Equis II Corporation has voting control of the
Trust through its ownership of the majority of the Trust's outstanding voting
interests, as well as its ownership of AFG ASIT Corporation. Equis II
Corporation is controlled by EFG's President and Chief Executive Officer, Gary
D. Engle. Accordingly, control of the Managing Trustee did not change as a
result of the foregoing transactions.
Old North Capital Limited Partnership ("ONC"), a Massachusetts limited
partnership formed in 1995 and an affiliate of EFG, owns 1,702 Class A Interests
or less than 1% of the total outstanding Class A Interests of the Trust. The
general partner of ONC is controlled by Gary D. Engle. In addition, the limited
partnership interests of ONC are owned by Semele. Gary D. Engle is Chairman and
CEO of Semele.
(b) Certain Business Relationships
13
<PAGE>
None.
(c) Indebtedness of Management to the Trust
None.
(d) Transactions with Promoters
See Item 13(a) above.
14
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) Documents filed as part of this report:
(1) Financial Statements:
Report of Independent Auditors...............................*
Statement of Financial Position
at December 31, 1998 and 1997................................*
Statement of Operations
for the years ended December 31, 1998, 1997 and 1996.........*
Statement of Changes in Participants' Capital
for the years ended December 31, 1998, 1997 and 1996.........*
Statement of Cash Flows
for the years ended December 31, 1998, 1997 and 1996.........*
Notes to the Financial Statements............................*
(2) Financial Statement Schedules:
None required.
(3) Exhibits:
Except as set forth below, all Exhibits to Form 10-K, as set
forth in Item 601 of Regulation S-K, are not applicable.
Exhibit
Number
-------
4 Second Amended and Restated Declaration of Trust.
13 The 1998 Annual Report to security holders, a copy of which is
furnished for the information of the Securities and Exchange
Commission. Such Report, except for those portions thereof
which are incorporated herein by reference, is not deemed
"filed" with the Commission.
23 Consent of Independent Auditors.
99(a) Lease agreement with Montgomery Ward & Company Inc. is filed
in the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1998 as Exhibit 99 (a) and is included
herein.
* Incorporated herein by reference to the appropriate portion of the 1998 Annual
Report to security holders for the year ended December 31, 1998 (see Part II).
15
<PAGE>
Exhibit
Number
-------
99(b) Lease agreement with Hebutt Grocery Company is filed in the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1998 as Exhibit 99 (b) and is included herein.
99(c) Lease agreement with Gearbulk Shipowning Ltd. (formerly
Kristian Gerhard Jebsen Skipsrederi A/S) was filed in the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1992 as Exhibit 28 (a) and is incorporated herein
by reference.
99(d) Lease agreement with Comair, Incorporated was filed in the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1992 as Exhibit 28 (c) and is incorporated herein
by reference.
(b) Reports on Form 8-K
None.
16
<PAGE>
SIGNATURES
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/ Geoffrey A. MacDonald By: /s/ Gary D. Engle
---------------------------------- -------------------------------------
Geoffrey A. MacDonald Gary D. Engle
Chairman and a member of the President and Chief Executive
Executive Committee of EFG and Officer and a member of the
President and a Director of the Executive Committee of EFG and a
Managing Trustee Director of the Managing
Trustee (Principal Executive Officer)
Date: March 31, 1999 Date: March 31, 1999
-------------------------------- -----------------------------------
By: /s/ Gary M. Romano By: /s/ Michael J. Butterfield
---------------------------------- -------------------------------------
Gary M. Romano Michael J. Butterfield
Executive Vice President and Chief Senior Vice President,
Operating Officer of EFG and Clerk Finance and Treasurer of EFG
of the Managing Trustee and Treasurer of the Managing Trustee
(Principal Financial Officer) (Principal Accounting Officer)
Date: March 31, 1999 Date: March 31, 1999
-------------------------------- -----------------------------------
17
<PAGE>
AFG INVESTMENT TRUST
AFG Investment Trust A
Annual Report to the Participants, December 31, 1998
<PAGE>
ADDITIONAL FINANCIAL INFORMATION
<PAGE>
AFG Investment Trust A
INDEX TO ANNUAL REPORT TO THE PARTICIPANTS
Page
----
SELECTED FINANCIAL DATA 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 3-8
FINANCIAL STATEMENTS:
Report of Independent Auditors 9
Statement of Financial Position
at December 31, 1998 and 1997 10
Statement of Operations
for the years ended December 31, 1998, 1997 and 1996 11
Statement of Changes in Participants' Capital
for the years ended December 31, 1998, 1997 and 1996 12
Statement of Cash Flows
for the years ended December 31, 1998, 1997 and 1996 13
Notes to the Financial Statements 14-27
ADDITIONAL FINANCIAL INFORMATION:
Schedule of Excess (Deficiency) of Total Cash
Generated to Cost of Equipment Disposed 28
Statement of Cash and Distributable Cash
From Operations, Sales and Refinancings 29
Schedule of Costs Reimbursed to the Managing Trustee
and its Affiliates as Required by Section 10.4 of the
Second Amended and Restated Declaration of Trust 30
<PAGE>
SELECTED FINANCIAL DATA
The following data should be read in conjunction with Management's
Discussion and Analysis of Financial Condition and Results of Operations and the
financial statements.
For each of the five years in the period ended December 31, 1998:
<TABLE>
<CAPTION>
Summary of
Operations 1998 1997 1996 1995 1994
- -------------------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Lease revenue $ 2,181,506 $ 4,453,680 $ 4,820,860 $ 5,276,233 $ 4,731,141
Net income (loss) $ (501,238) $ 411,988 $ 476,102 $ 488,063 $ 1,350,553
Per Beneficiary Interest:
Net income (loss)
Class A Interests $ -- $ 0.26 $ 0.79 $ 0.81 $ 2.23
Class B Interests $ (0.71) $ -- $ -- $ -- $ --
Cash distributions
Class A Interests $ 1.64 $ 3.11 $ 1.42 $ 2.00 $ 2.52
Class B Interests $ 2.09 $ 0.30 $ -- $ -- $ --
Financial Position
- -------------------------
Total assets $ 9,500,445 $14,058,563 $14,175,369 $16,603,124 $18,742,285
Total long-term obligations $ 861,300 $ 2,342,924 $ 4,249,311 $ 6,323,893 $ 7,543,509
Participants' capital $ 8,314,798 $11,362,142 $ 9,618,214 $ 9,999,981 $10,719,290
</TABLE>
2
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Year ended December 31, 1998 compared to the year ended
December 31, 1997 and the year ended December 31, 1997
compared to the year ended December 31, 1996
Certain statements in this annual report of AFG Investment Trust A (the
"Trust") 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 outcome of the Class Action Lawsuit
described in Note 12 to the accompanying financial statements, the collection
all rents due under the Trust's lease agreements and remarketing of the Trust's
equipment.
Year 2000 Issue
The Year 2000 Issue generally refers to the capacity of computer
programming logic to correctly identify the calendar year. Many companies
utilize computer programs or hardware with date sensitive software or embedded
chips that could interpret dates ending in "00" as the year 1900 rather than the
year 2000. In certain cases, such errors could result in system failures or
miscalculations that disrupt the operations of the affected businesses. The
Trust uses information systems provided by Equis Financial Group Limited
Partnership (formerly American Finance Group) ("EFG") and has no information
systems of its own. EFG has adopted a plan to address the Year 2000 Issue that
consists of four phases: assessment, remediation, testing, and implementation
and has elected to utilize principally internal resources to perform all phases.
EFG completed substantially all of its Year 2000 project by December 31, 1998 at
an aggregate cost of less than $50,000 and at a di minimus cost to the Trust.
Remaining items are expected to be minor and be completed by March 31, 1999. All
costs incurred in connection with EFG's Year 2000 project have been expensed as
incurred.
EFG's primary information software was coded by IBM at the point of
original design to use a four digit field to identify calendar year. All of the
Trust's lease billings, cash receipts and equipment remarketing processes are
performed using this proprietary software. In addition, EFG has gathered
information about the Year 2000 readiness of significant vendors and third party
servicers and continues to monitor developments in this area. All of EFG's
peripheral computer technologies, such as its network operating system and
third-party software applications, including payroll, depreciation processing,
and electronic banking, have been evaluated for potential programming changes
and have required only minor modifications to function properly with respect to
dates in the year 2000 and thereafter. EFG understands that each of its and the
Trust's significant vendors and third-party servicers are in the process, or
have completed the process, of making their systems Year 2000 compliant.
Substantially all parties queried have indicated that their systems would be
Year 2000 compliant by the end of 1998.
Presently, EFG is not aware of any outside customer with a Year 2000 Issue
that would have a material effect on the Trust's results of operations,
liquidity, or financial position. The Trust's equipment leases were structured
as triple net leases, meaning that the lessees are responsible for, among other
things, (i) maintaining and servicing all equipment during the lease term, (ii)
ensuring that all equipment functions properly and is returned in good
condition, normal wear and tear excepted, and (iii) insuring the assets against
casualty and other events of loss. Non-compliance with lease terms on the part
of a lessee, including failure to address Year 2000 Issues could result in lost
revenues and impairment of residual values of the Trust's equipment assets under
a worst-case scenario.
EFG believes that its Year 2000 compliance plan will be effective in
resolving all material Year 2000 risks in a timely manner and that the Year 2000
Issue will not pose significant operational problems with respect to its
computer systems or result in a system failure or disruption of its or the
Trust's business operations. However, EFG has no means of ensuring that all
customers, vendors and third-party servicers will conform ultimately to Year
2000 standards. The effect of this risk to the Trust is not determinable.
3
<PAGE>
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 EFG 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
fluctuate. Presently, the Trust is a Nominal Defendant in a Class Action
Lawsuit, the resolution of which remains pending. See Note 12 to the
accompanying financial statements. The Trust's operations commenced in 1992 and
pursuant to the Trust Agreement, the Trust is scheduled to be dissolved by
December 31, 2003.
Results of Operations
For the year ended December 31, 1998, the Trust recognized lease revenue
of $2,181,506 compared to $4,453,680 and $4,820,860 for the years ended December
31, 1997 and 1996, respectively. The decrease in lease revenue from 1997 to 1998
resulted partially from the exchange of the Trust's interest in a vessel, as
described in Note 4 to the accompanying financial statements. During 1997, the
Trust recognized lease revenue of $565,318 related to this vessel. Other
reductions in lease revenue from 1997 to 1998 occurred from lease term
expirations and the sale of equipment. The decrease in lease revenue from 1996
to 1997 resulted principally from lease term expirations and the sale of
equipment. The level of lease revenue to be recognized by the Trust in the
future may be impacted by the amendment to the Trust Agreement described in Note
10 to the accompanying financial statements; however, the extent of such impact
cannot be determined at this time.
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 EFG or an affiliated equipment leasing program sponsored by EFG.
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.
Interest income for the year ended December 31, 1998 was $328,579 compared
to $207,539 and $85,627 for the years ended December 31, 1997 and 1996,
respectively. Interest income is typically generated from temporary investment
of rental receipts and equipment sales proceeds in short-term instruments.
Interest income in 1998 included $46,235 earned on the note receivable from
Semele Group, Inc. ("Semele"). See Note 4 to the accompanying financial
statements. Interest income in 1997 and 1998 also included interest earned on
proceeds from the issuance of Class B Interests (see below). The amount of
future interest income is expected to fluctuate in relation to prevailing
interest rates, the collection of lease revenue, and the proceeds from equipment
sales.
During 1998, the Trust sold equipment having a net book value of $886,731
to existing lessees and third parties. These sales resulted in a net loss, for
financial statement purposes, of $256,890.
During 1997, the Trust sold equipment having a net book value of $306,946
to existing lessees and third parties. These sales resulted in a net gain, for
financial statement purposes, of $181,585. During 1997, the Trust also exchanged
its interest in a vessel with an original cost and net book value of $2,399,580
and $1,185,726, respectively (See Note 4 to the accompanying financial
statements). In connection with this transaction, the Trust realized proceeds of
$777,326, which resulted in a net loss, for financial statement purposes, of
$408,400. As this vessel was disposed of prior to the expiration of the related
lease term, the Trust also received a prepayment of the remaining contracted
rent due under the vessel's lease agreement.
In February 1996, the Trust concluded the sale of its interest in a Boeing
747-SP to the lessee, United Air Lines, Inc., ("United"). 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
4
<PAGE>
loss on sale of equipment on the accompanying Statement of Operations for the
year ended December 31, 1996. In addition to lease rents, the Trust received net
sale proceeds of $1,392,779. A portion of such sale proceeds was reinvested in
other equipment in March 1996 through the acquisition of an 8.86% ownership
interest in an aircraft (the "Reno Aircraft") at an aggregate cost to the Trust
of $1,239,741. To acquire its 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 year ended
December 31, 1996, the Trust sold other equipment having a net book value of
$31,554, to existing lessees and third parties. These sales resulted in a net
loss, for financial statement purposes, of $6,406.
The Trust received $71,850 in 1996 from a former lessee related to a
residual sharing agreement between the lessee and the Trust. In connection with
this agreement, the Trust was entitled to a portion of the sale proceeds
realized by the lessee upon its ultimate disposition of the vessel to a third
party. This amount is reflected as Other Income on the accompanying Statement of
Operations in 1996.
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 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 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 $2,052,750, $3,354,030 and
$3,628,279 for the years ended December 31, 1998, 1997 and 1996, respectively.
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.
Interest expense was $93,636 or 4.3 % of lease revenue in 1998, $198,927
or 4.5% of lease revenue in 1997 and $396,793 or 8.2% of lease revenue in 1996.
Interest expense in future years is expected to 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 indebtedness.
Management fees were 4.5%, 4% and 3.9% of lease revenue during the years
ended December 31, 1998, 1997 and 1996, respectively. 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.
Write-down of investment securities-affiliate was $186,105 for the year
ended December 31, 1998. The Managing Trustee determined that the decline in
market value of the Semele common stock was other-than-temporary at December
31, 1998. As a result, the Trust wrote down the cost of the Semele common
stock from $15 per share to $4.125 per share (the quoted price of Semele
stock on NASDAQ at December 31, 1998).
Operating expenses consist principally of administrative charges,
professional service costs, such as audit and legal fees, as well as printing,
distribution and remarketing expenses. Operating expenses were $323,842,
$291,300 and $137,739 for the years ended December 31, 1998, 1997 and 1996,
respectively. During 1998, the Trust incurred or accrued approximately $88,000
for certain legal expenses related to the Class Action Lawsuit described in Note
12 to the financial statements. Additionally, operating expenses increased from
1997 to 1998 due to professional service costs incurred in connection with the
Solicitation Statement described in Note 10 to the financial statements. The
increase in operating expenses from 1996 to 1997 was due primarily to costs
incurred in
5
<PAGE>
connection with the Solicitation and Registration Statements described in Note 8
to the accompanying financial statements.
Liquidity and Capital Resources and Discussion of Cash Flows
The Trust by its nature is a limited life entity. 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 $2,558,932, $3,849,225 and $4,295,178 for the years ended December
31, 1998, 1997 and 1996, respectively. Future renewal, re-lease and equipment
sale activities will cause a decline in the Trust's primary-term lease revenue
and corresponding sources of operating cash. Overall, expenses associated with
rental activities, such as management fees, and net cash flow from operating
activities will also decline as the Trust experiences a higher frequency of
remarketing events.
The Trust's equipment is leased by a number of creditworthy,
investment-grade companies and, to date, the Trust has not experienced any
material collection problems and has not considered it necessary to provide an
allowance for doubtful accounts. Notwithstanding a positive collection history,
there is no assurance that all future contracted rents will be collected or that
the credit quality of the Trust's lessees will be maintained. Collection risk
could increase in the future, particularly as the Trust remarkets its equipment
and enters re-lease agreements with different lessees. The Managing Trustee will
continue to evaluate and monitor the Trust's experience in collecting accounts
receivable to determine whether a future allowance for doubtful accounts may
become appropriate.
Cash expended for asset acquisitions and cash realized from asset disposal
transactions are reported under investing activities on the accompanying
Statement of Cash Flows. The Trust expended $15,246, and $1,441,796 to acquire
equipment during the years ended December 31, 1998 and 1996, respectively,
pursuant to the reinvestment provisions of the Trust Agreement (see Note 10).
Equipment acquired in 1996 was financed through a combination of leveraging and
sale proceeds available from the United Aircraft. There were no equipment
acquisitions during 1997. In 1998 and 1997, the Trust realized equipment sale
proceeds of $629,841 and $488,963, respectively. In 1996, the Trust received
sale proceeds of $1,417,927, including $1,392,779 of proceeds from the United
Aircraft. 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.
As a result of the vessel exchange (see Results of Operations), the Trust
became the beneficial owner of 209,694 shares of Semele common stock (valued at
$314,541 ($1.50 per share) at the time of the exchange transaction). The Trust
also received a beneficial interest in the Semele Note of $462,353 in connection
with the exchange.
In accordance with Financial Accounting Standards Board Statement No.
115, Accounting for Certain Investments in Debt and Equity Securities,
marketable equity securities classified as available-for-sale are required to
be carried at fair value. On June 30, 1998, Semele effected a 1-for-300
reverse stock split followed by a 30-for-1 forward stock split resulting in a
reduction of the number of shares of Semele common stock owned by the Trust
to 20,969 shares. During the year ended December 31, 1998, the Trust
decreased the carrying value of its investment in Semele common stock to
$4.125 per share (the quoted price of the Semele stock on NASDAQ at December
31, 1998) resulting in an unrealized loss in 1998 of $70,773. This loss was
reported as a component of comprehensive loss, included in participants'
capital. At December 31, 1998, the Managing Trustee determined that the
decline in market value of the Semele common stock was other-than-temporary.
As a result, the Trust wrote down the cost of the Semele stock to $4.125 per
share (the quoted price of the Semele stock on NASDAQ at December 31, 1998)
for a total realized loss of $186,105 in 1998.
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 in 1996 resulted from leveraging a portion of the Trust's
interest in the Reno Aircraft with a third-party lender (see above). 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
6
<PAGE>
used to repay the associated indebtedness. In future years, 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.
Notwithstanding the foregoing, the Trust has a balloon payment obligation of
$282,421 at the expiration of the primary lease term related to its interest in
the Reno Aircraft.
For financial reporting purposes, the Managing Trustee and the Special
Beneficiary each has accumulated a capital deficit at December 31, 1998. This is
the result of aggregate cash distributions to these Participants being in excess
of their aggregate capital contributions ($1,000 each) and their respective
allocations of financial statement net income or loss. Ultimately, the existence
of a capital deficit for the Managing Trustee or the Special Beneficiary for
financial reporting purposes is not indicative of any further capital
obligations to the Trust by either the Managing Trustee or the Special
Beneficiary. However, for income tax purposes, the Trust Agreement requires that
income be allocated first to those Participants having negative tax capital
account balances so as to eliminate any such balances. In accordance with the
Trust Agreement, upon the dissolution of the Trust, the Managing Trustee will be
required to contribute to the Trust an amount equal to any negative balance
which may exist in the Managing Trustee's tax capital account. At December 31,
1998, the Managing Trustee had a positive tax capital account balance. No such
requirement exists with respect to the Special Beneficiary.
At December 31, 1998, the Trust was due aggregate future minimum lease
payments of $1,484,028 from contractual lease agreements (see Note 2 to the
financial statements), a portion of which will be used to amortize the principal
balance of notes payable of $861,300 (see Note 6 to the financial statements).
Additional cash inflows will be realized from future remarketing activities,
such as lease renewals and equipment sales, the timing and extent of which
cannot be predicted with certainty. This is because the timing and extent of
equipment sales is often dependent upon the needs and interests of the existing
lessees. Some lessees may choose to renew their lease contracts, while others
may elect to return the equipment. In the latter instances, the equipment could
be re-leased to another lessee or sold to a third party. Accordingly, as the
Trust matures and a greater level of its equipment assets becomes available for
remarketing, the cash flows of the Trust will become less predictable. In
addition, the Trust will have cash needs to satisfy interest on indebtedness and
to pay management fees and operating expenses. Ultimately, the Trust is expected
to meet its future disbursement obligations and to distribute any excess of cash
inflows over cash outflows to the Participants in accordance with the Trust
Agreement. However, several factors, including month-to-month lease extensions,
lessee defaults, equipment casualty events, and early lease terminations could
alter the Trust's anticipated cash flows as described herein and in the
accompanying financial statements and result in fluctuations to the Trust's
periodic cash distribution payments.
On July 18, 1997, the Trust issued 826,072 Class B Interests at $5.00 per
interest, thereby generating $4,130,360 in aggregate Class B capital
contributions. Class A Beneficiaries purchased 3,209 Class B Interests,
generating $16,045 of such aggregate capital contributions, and the Special
Beneficiary, EFG, purchased 822,863 Class B Interests, generating $4,114,315 of
such aggregate capital contributions. The Trust incurred offering costs in the
amount of $41,304 and professional service costs of $54,186 in connection with
this offering. Subsequently, EFG transferred its Class B Interests to a
special-purpose company, Equis II Corporation, a Delaware corporation. EFG also
transferred its ownership of AFG ASIT Corporation, the Managing Trustee of the
Trust, to Equis II Corporation. As a result, Equis II Corporation has voting
control of the Trust through its ownership of the majority of all of the Trust's
outstanding voting interests, as well as its ownership of AFG ASIT Corporation.
Equis II Corporation is controlled by EFG's President and Chief Executive
Officer, Gary D. Engle. Accordingly, control of the Managing Trustee did not
change as a result of the foregoing transactions (see also Note 8 to the
accompanying financial statements).
As described in the Prospectus for the offering of the Class B Interests,
the Managing Trustee used a portion of the net cash proceeds realized from the
offering of the Class B Interests to pay a one-time special cash distribution to
the Class A Beneficiaries of the Trust. The Managing Trustee declared and paid
this special cash distribution of approximately $1.47 per Class A Interest,
aggregating $808,363, to Class A Beneficiaries on August 15, 1997.
On August 7, 1997, the Trust commenced an offer to purchase up to 45% of
the outstanding Class A Beneficiary Interests of the Trust. On October 10, 1997,
the Trust used $620,011 of the net proceeds realized from issuance of the Class
B Interests to purchase 65,402 of the Class A Interests tendered as a result of
the offer. On July 6, 1998, the Trust used $1,263,443 of such proceeds to pay a
capital distribution to the Class B Beneficiaries. The remaining net proceeds
from the Class B offering of $1,343,053 will be used according to terms
7
<PAGE>
negotiated in connection with settling the Class Action Lawsuit described in
Note 12 (see also Notes 9, 10 and 11 to the accompanying financial statements).
On April 28, 1998, the Trust purchased 1,800 additional Class A Interests at a
cost of $14,400.
Cash distributions paid to the Participants 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 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 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 Trust's equipment portfolio.
It is the intention of the Managing Trustee to maintain a cash
distribution level that is consistent with the operating cash flows of the Trust
and to optimize the long-term value of the Trust. A distribution level that is
higher than the Trust's operating cash flows could compromise the Trust's
working capital position, as well as its ability to refurbish or upgrade
equipment in response to lessee requirements or other market circumstances.
Accordingly, in order to better align monthly cash distributions with the
Trust's operating cash flows, the Managing Trustee reduced the level of monthly
cash distributions from an annualized rate of $2.52 per Class A Interest (the
rate established and paid from the Trust's inception through September 1995) to
an annualized rate of $1.26 per Class A Interest commencing in October 1995. In
October 1996, the Managing Trustee increased the annualized distribution rate to
$1.64 per Class A Interest and has sustained this distribution rate throughout
1997 and 1998. For the Class B Beneficiaries, the Managing Trustee established
and paid, from the Trust, an annualized distribution of $0.66 per Class B
Interest commencing July 18, 1997. Future distributions with respect to Class B
Interests will be subordinate to certain distributions with respect to Class A
Interests.
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 year ended December 31, 1998, the
Trust declared total cash distributions of $2,647,038. Of the total
distributions, the Beneficiaries were allocated $2,519,055 ($790,280 for Class A
Beneficiaries and $1,728,775 for Class B Beneficiaries); the Special Beneficiary
was allocated $114,147, and the Managing Trustee was allocated $13,836.
The nature of the Trust's operations and principal cash flows gradually
will shift from rental receipts to equipment sale proceeds as the Trust matures
and change as a result of new investments not consisting of equipment
acquisitions. As this occurs, the Trust's cash flows resulting from equipment
investments may become more volatile in that certain of the Trust's equipment
leases will be renewed and certain of its assets will be sold. In some cases,
the Trust may be required to expend funds to refurbish or otherwise improve the
equipment being remarketed in order to make it more desirable to a potential
lessee or purchaser. The Trust's Advisor, EFG, and the Managing Trustee will
attempt to monitor and manage these events in order to maximize the residual
value of the Trust's equipment and will consider these factors, in addition to
new investment activities and the collection of contractual rents, the
retirement of scheduled indebtedness, and the Trust's future working capital
requirements, in establishing future cash distribution rates.
8
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Participants of AFG Investment Trust A:
We have audited the accompanying statements of financial position of AFG
Investment Trust A as of December 31, 1998 and 1997, and the related statements
of operations, changes in participants' capital, and cash flows for each of the
three years in the period ended December 31, 1998. These financial statements
are the responsibility of the Trust's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of AFG Investment Trust A at
December 31, 1998 and 1997, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1998, in conformity
with generally accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on the
basic financial statements taken as a whole. The Additional Financial
Information identified in the Index to Annual Report to the Participants is
presented for purposes of additional analysis and is not a required part of the
basic financial statements. Such information has been subjected to the auditing
procedures applied in our audits of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
ERNST & YOUNG LLP
Boston, Massachusetts
March 26, 1999
9
<PAGE>
AFG Investment Trust A
STATEMENT OF FINANCIAL POSITION
December 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 3,456,154 $ 3,176,850
Restricted cash 1,343,053 2,606,496
Rents receivable 188,331 533,052
Accounts receivable - affiliate 70,959 305,209
Note receivable - affiliate 462,353 462,353
Investment securities - affiliate 86,497 157,270
Equipment at cost, net of accumulated depreciation
of $10,824,318 and $11,445,495 at December 31, 1998
and 1997, respectively 3,893,098 6,817,333
------------ ------------
Total assets $ 9,500,445 $ 14,058,563
============ ============
LIABILITIES AND PARTICIPANTS' CAPITAL
Notes payable $ 861,300 $ 2,342,924
Accrued interest 2,933 31,244
Accrued liabilities 118,500 11,550
Accrued liabilities - affiliate 11,947 35,621
Deferred rental income 10,265 79,776
Cash distributions payable to participants 180,702 195,306
------------ ------------
Total liabilities 1,185,647 2,696,421
------------ ------------
Participants' capital (deficit):
Managing Trustee (16,788) (12,052)
Special Beneficiary (129,812) (92,015)
Class A Beneficiary Interests (482,016 and 483,816 Interests
at December 31, 1998 and 1997, respectively,
initial purchase price of $25 each) 7,567,249 8,357,529
Class B Beneficiary Interests (826,072 Interests
initial purchase price of $5 each) 1,528,560 3,728,691
Treasury Interests (67,202 and 65,402 Class A Interests
at December 31, 1998 and 1997, respectively, at Cost) (634,411) (620,011)
------------ ------------
Total participants' capital 8,314,798 11,362,142
------------ ------------
Total liabilities and participants' capital $ 9,500,445 $ 14,058,563
============ ============
</TABLE>
The accompanying notes are an integral part of
these financial statements
10
<PAGE>
AFG Investment Trust A
STATEMENT OF OPERATIONS
for the years ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Income:
Lease revenue $ 2,181,506 $ 4,453,680 $ 4,820,860
Interest income 282,344 207,539 85,627
Interest income - affiliate 46,235 -- --
Other income -- -- 71,850
Loss on exchange of equipment -- (408,400) --
Gain (loss) on sale of equipment (256,890) 181,585 (153,423)
----------- ----------- -----------
Total income 2,253,195 4,434,404 4,824,914
----------- ----------- -----------
Expenses:
Depreciation and amortization 2,052,750 3,354,030 3,628,279
Interest expense 93,636 198,927 396,793
Equipment management fees - affiliate 98,100 178,159 186,001
Write-down of investment
securities-affiliate 186,105 -- --
Operating expenses - affiliate 323,842 291,300 137,739
----------- ----------- -----------
Total expenses 2,754,433 4,022,416 4,348,812
----------- ----------- -----------
Net income (loss) $ (501,238) $ 411,988 $ 476,102
=========== =========== ===========
Net income (loss)
per Class A Beneficiary Interest $ -- $ 0.26 $ 0.79
=========== =========== ===========
per Class B Beneficiary Interest $ (0.71) $ -- $ --
=========== =========== ===========
Cash distributions declared
per Class A Beneficiary Interest $ 1.64 $ 3.11 $ 1.42
=========== =========== ===========
per Class B Beneficiary Interest $ 2.09 $ 0.30 $ --
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of
these financial statements
11
<PAGE>
AFG Investment Trust A
STATEMENT OF CHANGES IN PARTICIPANTS' CAPITAL
for the years ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
Managing Special Class A Beneficiaries
Trustee Beneficiary ----------------------------
Amount Amount Interests Amount
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Balance at December 31, 1995 $ (23,330) $ (199,729) 549,218 $ 10,223,040
Net income - 1996 4,761 39,278 -- 432,063
------------ ------------ ------------ ------------
Comprehensive income 4,761 39,278 -- 432,063
------------ ------------ ------------ ------------
Cash distributions declared (8,579) (70,774) -- (778,516)
------------ ------------ ------------ ------------
Balance at December 31, 1996 (27,148) (231,225) 549,218 9,876,587
Class B capital contribution -- -- -- --
Less: Offering costs -- -- -- --
Net income - 1997 28,383 239,317 -- 144,288
Unrealized loss on investment securities
- affiliate (1,153) -- -- --
------------ ------------ ------------ ------------
Comprehensive income (loss) 27,230 239,317 -- 144,288
------------ ------------ ------------ ------------
Cash distributions declared (12,134) (100,107) -- (1,663,346)
Acquisition of treasury interests, at cost -- -- (65,402) --
------------ ------------ ------------ ------------
Balance at December 31, 1997 (12,052) (92,015) 483,816 8,357,529
Net income (loss) - 1998 7,947 76,350 -- --
Unrealized loss on investment securities
- affiliate (708) -- -- --
Less: reclassification adjustment for
write-down of investment securities
- affiliate 1,861 -- -- --
------------ ------------ ------------ ------------
Comprehensive income (loss) 9,100 76,350 -- --
------------ ------------ ------------ ------------
Cash distributions declared (13,836) (114,147) -- (790,280)
Acquisition of treasury interests, at cost -- -- (1,800) --
------------ ------------ ------------ ------------
Balance at December 31, 1998 $ (16,788) $ (129,812) 482,016 $ 7,567,249
============ ============ ============ ============
<CAPTION>
Class B Beneficiaries
--------------------------- Treasury
Interests Amount Interests Total
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Balance at December 31, 1995 -- $ -- $ -- $ 9,999,981
Net income - 1996 -- -- -- 476,102
------------ ------------ ------------ ------------
Comprehensive income -- -- -- 476,102
------------ ------------ ------------ ------------
Cash distributions declared -- -- -- (857,869)
------------ ------------ ------------ ------------
Balance at December 31, 1996 -- -- -- 9,618,214
Class B capital contribution 826,072 4,130,360 -- 4,130,360
Less: Offering costs -- (41,304) -- (41,304)
Net income - 1997 -- -- -- 411,988
Unrealized loss on investment securities
- affiliate -- (114,179) -- (115,332)
------------ ------------ ------------ ------------
Comprehensive income (loss) -- (114,179) -- 296,656
------------ ------------ ------------ ------------
Cash distributions declared -- (246,186) -- (2,021,773)
Acquisition of treasury interests, at cost -- -- (620,011) (620,011)
------------ ------------ ------------ ------------
Balance at December 31, 1997 826,072 3,728,691 (620,011) 11,362,142
Net income (loss) - 1998 -- (585,535) -- (501,238)
Unrealized loss on investment securities
- affiliate -- (70,065) -- (70,773)
Less: reclassification adjustment for
write-down of investment securities
- affiliate -- 184,244 -- 186,105
------------ ------------ ------------ ------------
Comprehensive income (loss) -- (471,356) -- (385,906)
------------ ------------ ------------ ------------
Cash distributions declared -- (1,728,775) -- (2,647,038)
Acquisition of treasury interests, at cost -- -- (14,400) (14,400)
------------ ------------ ------------ ------------
Balance at December 31, 1998 826,072 $ 1,528,560 $ (634,411) $ 8,314,798
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of
these financial statements
12
<PAGE>
AFG Investment Trust A
STATEMENT OF CASH FLOWS
for the years ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from (used in) operating activities:
Net income (loss) $ (501,238) $ 411,988 $ 476,102
Adjustments to reconcile net income (loss)
to net cash from operating activities:
Depreciation and amortization 2,052,750 3,354,030 3,628,279
Loss on exchange of equipment -- 408,400 --
(Gain) loss on sale of equipment 256,890 (181,585) 153,423
Write-down of investment
securities - affiliate 186,105 -- --
Changes in assets and liabilities:
Decrease (increase) in:
Rents receivable 344,721 90,185 19,443
Accounts receivable - affiliate 234,250 (249,360) 27,465
Increase (decrease) in:
Accrued interest (28,311) (31,116) (21,066)
Accrued liabilities 106,950 (11,700) (885)
Accrued liabilities - affiliate (23,674) (2,672) 33,549
Deferred rental income (69,511) 61,055 (21,132)
----------- ----------- -----------
Net cash from operating activities 2,558,932 3,849,225 4,295,178
----------- ----------- -----------
Cash flows from (used in) investing activities:
Dividend received -- 41,939 --
Purchase of equipment (15,246) -- (1,441,796)
Proceeds from equipment sales 629,841 488,963 1,417,927
----------- ----------- -----------
Net cash from (used in) investing activities 614,595 530,902 (23,869)
----------- ----------- -----------
Cash flows from (used in) financing activities:
Proceeds from Class B capital contributions -- 4,130,360 --
Payment of offering costs -- (41,304) --
Purchase of treasury interests (14,400) (620,011) --
Restricted cash 1,263,443 (2,606,496) --
Proceeds from notes payable -- -- 997,888
Principal payments - notes payable (1,481,624) (1,906,387) (3,072,470)
Distributions paid (2,661,642) (1,991,687) (819,741)
----------- ----------- -----------
Net cash used in financing activities (2,894,223) (3,035,525) (2,894,323)
----------- ----------- -----------
Net increase in cash and cash equivalents 279,304 1,344,602 1,376,986
Cash and cash equivalents at beginning of year 3,176,850 1,832,248 455,262
----------- ----------- -----------
Cash and cash equivalents at end of year $ 3,456,154 $ 3,176,850 $ 1,832,248
=========== =========== ===========
Supplemental disclosure of cash flow information:
Cash paid during the year for interest $ 121,947 $ 230,043 $ 417,859
=========== =========== ===========
</TABLE>
Supplemental disclosure of non-cash activity:
See Note 4 to the financial statements.
The accompanying notes are an integral part of
these financial statements
13
<PAGE>
AFG Investment Trust A
Notes to the Financial Statements
December 31, 1998
NOTE 1 - ORGANIZATION AND TRUST MATTERS
AFG Investment Trust A (the "Trust") was organized as a Delaware business
trust in accordance with the Delaware Business Trust Act on February 26, 1992
for the purpose of acquiring and leasing to third parties a diversified
portfolio of capital equipment. Participants' capital initially consisted of
contributions of $1,000 from the Managing Trustee, AFG ASIT Corporation, $1,000
from the Special Beneficiary, Equis Financial Group Limited Partnership
(formerly known as American Finance Group), a Massachusetts limited partnership,
("EFG" or the "Advisor") and $100 from the Initial Beneficiary, AFG Assignor
Corporation, a wholly-owned affiliate of EFG. The Trust issued an aggregate of
549,218 Beneficiary Interests (hereinafter referred to as Class A Interests) at
a subscription price of $25.00 each ($13,730,450 in total) to 645 investors on
May 29, 1992. On July 18, 1997, the Trust issued 826,072 Class B Interests at
$5.00 each ($4,130,360 in total), of which (i) 822,863 interests are held by
Equis II Corporation, an affiliate of EFG, and (ii) 3,209 interests are held by
7 Class A investors. The Trust repurchased 65,402 Class A Interests on October
10, 1997 using proceeds from the issuance of Class B Interests. On April 28,
1998, the Trust repurchased 1,800 additional Class A Interests. Accordingly,
there are 482,016 Class A Interests currently outstanding.
The Trust has one Managing Trustee, AFG ASIT Corporation, a Massachusetts
corporation, and one Special Beneficiary, EFG. The Managing Trustee is
responsible for the general management and business affairs of the Trust. EFG
acts as Advisor to the Trust and provides services in connection with the
acquisition and remarketing of the Trust's assets. AFG ASIT Corporation is a
wholly owned subsidiary of Equis II Corporation and an affiliate of EFG. Class A
Interests and Class B Interests basically have identical voting rights and,
therefore, Equis II Corporation has control over the Trust on all matters on
which the Beneficiaries may vote. The Managing Trustee and the Special
Beneficiary are not required to make any other capital contributions except as
may be required under the Second Amended and Restated Declaration of Trust, as
amended (the "Trust Agreement").
Significant operations commenced May 29, 1992 when the Trust made its
initial equipment purchase. Pursuant to the Trust Agreement, each distribution
of Distributable Cash From Operations and Distributable Cash From Sales or
Refinancings of the Trust is made 90.75% to the Beneficiaries, 8.25% to the
Special Beneficiary and 1% to the Managing Trustee.
Under the terms of the Advisory Agreement between the Trust and EFG,
management services are provided by EFG to the Trust at fees, which the Managing
Trustee believes to be competitive for similar services. (Also see Note 5.)
EFG is a Massachusetts limited partnership formerly known as American
Finance Group ("AFG"). AFG was established in 1988 as a Massachusetts general
partnership and succeeded American Finance Group, Inc., a Massachusetts
corporation organized in 1980. EFG and its subsidiaries (collectively, the
"Company") are engaged in various aspects of the equipment leasing business,
including EFG's role as Equipment Manager or Advisor to the Trust and several
other direct-participation equipment leasing programs sponsored or co-sponsored
by EFG (the "Other Investment Programs"). The Company arranges to broker or
originate equipment leases, acts as remarketing agent and asset manager, and
provides leasing support services, such as billing, collecting, and asset
tracking.
The general partner of EFG, with a 1% controlling interest, is Equis
Corporation, a Massachusetts corporation owned and controlled entirely by Gary
D. Engle, its President, Chief Executive Officer and sole Director. Equis
Corporation also owns a controlling 1% general partner interest in EFG's 99%
limited partner, GDE Acquisition Limited Partnership ("GDE LP"). Equis
Corporation and GDE LP were established in December 1994 by Mr. Engle for the
sole purpose of acquiring the business of AFG.
14
<PAGE>
AFG Investment Trust A
Notes to the Financial Statements
(Continued)
In January 1996, the Company sold certain assets of AFG relating primarily
to the business of originating new leases, and the name "American Finance
Group", and its acronym, to a third party. AFG changed its name to Equis
Financial Group Limited Partnership after the sale was concluded. Pursuant to
terms of the sale agreements, EFG specifically reserved the rights to continue
using the name American Finance Group and its acronym in connection with the
Trust and the Other Investment Programs and to continue managing all assets
owned by the Trust and the Other Investment Programs.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
As of January 1, 1998, the Trust adopted Statement 130, Reporting
Comprehensive Income. Statement 130 establishes new rules for the reporting and
the display of comprehensive income and its components; however, the adoption of
this statement had no impact on the Trust's net income or participants' capital.
Statement 130 requires unrealized gains or losses on the Trust's
available-for-sale securities, which prior to adoption were reported separately
in participants' capital, to be included in comprehensive income (loss). At
December 31, 1997, the cumulative amount of other comprehensive losses was
$115,332.
Statement of Cash Flows and Restricted Cash
The Trust considers liquid investment instruments purchased with a
maturity of three months or less to be cash equivalents. From time to time, the
Trust invests excess cash with large institutional banks in federal agency
discount notes and reverse repurchase agreements with overnight maturities.
Under the terms of the agreements, title to the underlying securities passes to
the Trust. The securities underlying the agreements are book entry securities.
At December 31, 1998, the Trust had $4,689,000 invested in federal agency
discount notes and reverse repurchase agreements secured by U.S. Treasury Bills
or interests in U.S. Government securities. Such cash includes $1,343,053 which
is classified as Restricted Cash and represents the net proceeds realized from
the offering of the Class B Interests less ( i ) the portion thereof used to pay
a special distribution to the Class A Beneficiaries and to redeem Class A
Interests (see Notes 8 and 9) and ( ii ) the portion used to pay a capital
distribution to the Class B Beneficiaries (see Note 11). The remainder is
expected to be used according to terms negotiated in conjunction with settling
the Class Action Lawsuit described in Note 12.
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. In certain instances, the Trust
may enter primary-term, renewal or re-lease agreements which expire beyond the
Trust's anticipated dissolution date. This circumstance is not expected to
prevent the orderly wind-up of the Trust's business activities as the Managing
Trustee and the Advisor would seek to sell the then-remaining equipment assets
either to the lessee or to a third party, taking into consideration the amount
of future non-cancelable rental payments associated with the attendant lease
agreements. Future minimum rents of $1,484,028 are due as follows:
For the year ending December 31, 1999 $ 623,520
2000 497,582
2001 182,138
2002 179,149
2003 1,639
-------------
Total $ 1,484,028
=============
15
<PAGE>
AFG Investment Trust A
Notes to the Financial Statements
(Continued)
Revenue from major individual lessees which accounted for 10% or more of
lease revenue during the years ended December 31, 1998, 1997 and 1996 is as
follows:
1998 1997 1996
-------- -------- --------
Comair, Incorporated $449,625 $645,627 $645,627
Montgomery Ward & Company Inc. $384,305 $ -- $ --
Hebutt Grocery Company $270,831 $ -- $ --
Gearbulk Shipowning Ltd (formerly Kristian
Gerhard Jebsen Skipsrederi A/S) $ -- $565,318 $530,881
Use of Estimates
The preparation of the financial statements in conformity with generally
accepted accounting principles requires the use of estimates and assumptions
that affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.
Equipment on Lease
All equipment was acquired from EFG, one of its Affiliates or from
third-party sellers. Equipment Cost means the actual cost paid by the Trust to
acquire the equipment, including acquisition fees. Where equipment was acquired
from EFG or an Affiliate, Equipment Cost reflects the actual price paid for the
equipment by EFG or the Affiliate plus all actual costs incurred by EFG or the
Affiliate while carrying the equipment, including all liens and encumbrances,
less the amount of all primary term rents earned by EFG or the Affiliate prior
to selling the equipment. Where the seller of the equipment was a third party,
Equipment Cost reflects the seller's invoice price.
Depreciation and Amortization
The Trust's depreciation policy is intended to allocate the cost of
equipment over the period during which it produces economic benefit. The
principal period of economic benefit is considered to correspond to each asset's
primary lease term, which term generally represents the period of greatest
revenue potential for each asset. Accordingly, 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.
Periodically, the Managing Trustee evaluates the net carrying value of equipment
to determine whether it exceeds estimated net realizable value. For purposes of
this comparison, "net carrying value" represents, at a given date, the net book
value (equipment cost less accumulated depreciation for financial reporting
purposes) of the Trust's equipment and "net realizable value" represents, at the
same date, the aggregate undiscounted cash flows resulting from future
contracted lease payments plus the estimated residual value of the Trust's
equipment. The Managing Trustee evaluates significant equipment assets, such as
aircraft and vessels, individually. All other assets are evaluated collectively
by equipment type unless the Managing Trustee learns of specific circumstances,
such as a lessee default, technological obsolescence, or other market
developments, which could affect the net realizable value of particular assets.
Adjustments to reduce the net carrying value of equipment are recorded in those
instances where estimated net realizable value is considered to be less than net
carrying value. To the extent that such adjustments were recorded, they are
reflected separately on the accompanying Statement of Operations as Write-Down
of Equipment.
16
<PAGE>
AFG Investment Trust A
Notes to the Financial Statements
(Continued)
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.
Organization costs were amortized using the straight-line method over a
period of five years.
INVESTMENT SECURITIES -- AFFILIATE
The Trust's investment in Semele Group, Inc. is considered to be
available-for-sale and as such is carried at fair value with unrealized gains
and losses reported as a separate component of Participant's Capital.
Other-than-temporary declines in market value are recorded as write-down of
investment in the Statement of Operations (see Note 4).
Accrued Liabilities - Affiliate
Unpaid fees and operating expenses paid by EFG on behalf of the Trust and
accrued but unpaid administrative charges and management fees are reported as
Accrued Liabilities - Affiliate (see Note 5).
Allocation of Net Income or Loss
Net income is allocated quarterly first, to eliminate any Participant's
negative capital account balance and second, 1% to the Managing Trustee, 8.25%
to the Special Beneficiary and 90.75% collectively to the Class A and Class B
Beneficiaries. The latter is allocated proportionately between the Class A and
Class B Beneficiaries based upon the ratio of cash distributions declared and
allocated to the Class A and Class B Beneficiaries during the period. Net losses
are allocated quarterly first, to eliminate any positive capital account balance
of the Managing Trustee, the Special Beneficiary and the Class B Beneficiaries;
second, to eliminate any positive capital account balances of the Class A
Beneficiaries; and third, any remainder to the Managing Trustee. Prior to
adoption of the current Trust Agreement on July 15, 1997 (see Note 8), the Trust
allocated net income or loss to the Participants for financial reporting
purposes according to their respective beneficial interests in the Trust (1% to
the Managing Trustee, 8.25% to the Special Beneficiary, and 90.75% to the Class
A Beneficiaries).
The allocation of net income or loss pursuant to the Trust Agreement
differs from the foregoing and is based upon government rules and regulations
for federal income tax reporting purposes and assumes, for each income tax
reporting period, the liquidation of all of the Trust's assets and the
subsequent distribution of all available cash to the Participants. For income
tax purposes, the Trust adjusts its allocations of income and loss to the
Participants so as to cause their tax capital account balances at the end of the
reporting period to be equal to the amount that would be distributed to them at
such date in the event of a liquidation and dissolution of the Trust. This
methodology does not consider the costs attendant to liquidation or whether the
Trust intends to have future business operations. If the Trust made similar
assumptions and allocations for financial reporting purposes and the Trust was
liquidated at December 31, 1998 for an amount equal to its net carrying value
for financial reporting purposes, the capital accounts of the Managing Trustee,
Special Beneficiary, Class A Beneficiaries, and Class B Beneficiaries would have
reflected ending balances of $98,470, $803,688, $4,165,589, and $3,247,051,
respectively. See Note 7 for additional information concerning the allocation of
net income or loss for income tax reporting purposes.
Net Income and Cash Distributions Per Beneficiary Interest
Net income and cash distributions per Class A Interest in 1998 are based
on 483,816 Class A Interests outstanding during the period January 1, 1998
through April 27, 1998 and 482,016 Class A Interests outstanding during the
period April 28, 1998 through December 31, 1998. Net income and cash
distributions per Class A Interest in 1997 are based on 549,218 Class A
Interests outstanding during the period January 1, 1997 through October 9, 1997
and 483,816 Class A Interests outstanding during the period October 10, 1997
through December 31, 1997. Net income and cash distributions per Beneficiary
Interest are based on 549,218 Class A Interests outstanding during the year
ended December 31, 1996. Net income and cash distributions per Class B Interest
are based on 826,072 Class B Interests outstanding during the year ended
December 31, 1998 and the period July 18, 1997 through December 31, 1997. For
each of the aforementioned periods, net income and cash distributions per
Beneficiary Interest are computed after allocation of the Managing Trustee's and
Special Beneficiary's shares of net income and cash distributions.
17
<PAGE>
AFG Investment Trust A
Notes to the Financial Statements
(Continued)
Provision for Income Taxes
No provision or benefit from income taxes is included in the accompanying
financial statements. The Participants are responsible for reporting their
proportionate shares of the Trust's taxable income or loss and other tax
attributes on their tax returns.
NOTE 3 - EQUIPMENT
The following is a summary of equipment owned by the Trust at December 31,
1998. Remaining Lease Term (Months), as used below, represents the number of
months remaining from December 31, 1998 under contracted lease terms and is
presented as a range when more than one lease agreement is contained in the
stated equipment category. A Remaining Lease Term equal to zero reflects
equipment either held for sale or re-lease or being leased on a month-to-month
basis. In the opinion of EFG, the acquisition cost of the equipment did not
exceed its fair market value.
<TABLE>
<CAPTION>
Remaining
Lease Term Equipment
Equipment Type (Months) at Cost Location
- ------------------------------------- ---------------- ----------------- ---------------------------------
<S> <C> <C> <C>
Aircraft 0-48 $ 6,814,840 NV/OH/WA
Materials handling 0-33 2,425,123 AR/CA/IA/IL/MI/NC/NY/OH/PA/SC/
TX/WV
Communications 24 1,802,423 AL/AR/AZ/CA/CO/FL/GA/IA/ID/IL/IN/
KS/KY/LA/MD/MI/MN/MO/MT/NC/
ND/NE/NH/NM/NV/NY/OH/OK/OR/
PA/SC/TN/TX/VA/VT/WA/WI/WV/
WY
Retail store fixtures 0-10 1,260,881 OK/TX
Construction and mining 0-48 887,040 IL/MI/PA
Computers and peripherals 0 505,212 AZ/KY/NY/OH/PA/VAWI
Research and test 0 459,282 MI
Manufacturing 0 442,590 NJ
Energy systems 0 108,975 IL
Photocopying 10 11,050 IL
-----------------
Total equipment cost 14,717,416
Accumulated depreciation (10,824,318)
-----------------
Equipment, net of accumulated depreciation $ 3,893,098
=================
</TABLE>
In certain cases, the cost of the Trust's equipment represents a
proportionate ownership interest. The remaining interests are owned by EFG or an
affiliated equipment leasing program sponsored by EFG. 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. 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. At December 31, 1998, the Trust's equipment portfolio included
equipment having a proportionate original cost of $5,301,429, representing
approximately 36% of total equipment cost.
18
<PAGE>
AFG Investment Trust A
Notes to the Financial Statements
(Continued)
Certain of the equipment and related lease payment streams were used to
secure term loans with third-party lenders. The preceding summary of equipment
includes leveraged equipment having an original cost of approximately $4,197,000
and a net book value of approximately $1,272,000 at December 31, 1998 (see Note
6).
Generally, the costs associated with maintaining, insuring and operating
the Trust's equipment are incurred by the respective lessees pursuant to terms
specified in their individual lease agreements with the Trust.
As equipment is sold to third parties, or otherwise disposed of, the Trust
will recognize a gain or loss equal to the difference between the net book value
of the equipment at the time of sale or disposition and the proceeds realized
upon sale or disposition. The ultimate realization of estimated residual value
in the equipment will be dependent upon, among other things, EFG's ability to
maximize proceeds from selling or re-leasing the equipment upon the expiration
of the primary lease terms. At December 31, 1998, the cost and net book value of
equipment held for sale or re-lease was approximately $6,288,000 and $2,147,000,
respectively. This equipment includes the Trust's proportionate interest in a
McDonnell Douglas MD-82 aircraft formerly leased to Alaska Airlines, Inc. with a
cost and net book value of $1,153,983 and $706,535, respectively (See Note 13 -
Subsequent Event), and a SAAB SF340A aircraft formerly leased to Comair, Inc.
with a cost and net book value of $4,421,116 and $1,415,736, respectively. The
Managing Trustee is actively seeking the sale of the SAAB SF340A aircraft and
the sale or re-lease of all other equipment not on lease. In addition, the
summary above includes equipment being leased on a month-to-month basis.
NOTE 4 - INVESTMENT SECURITIES - AFFILIATE / NOTE RECEIVABLE - AFFILIATE
On April 30, 1997, the vessel partnerships, in which the Trust and certain
affiliated investment programs are limited partners and through which the Trust
and the affiliated investment programs shared economic interests in three cargo
vessels (the "Vessels") leased by Gearbulk Shipowning Ltd (formerly Kristian
Gerhard Jebsen Skipsrederi A/S) (the "Lessee"), exchanged their ownership
interests in the Vessels for aggregate consideration of $11,565,375, consisting
of 1,987,000 newly issued shares (at $1.50 per share) of common stock in Semele
Group, Inc. (formerly Banyan Strategic Land Fund II) ("Semele"), a purchase
money note of $8,219,500 (the "Note") and cash of $365,375. Semele is a Delaware
corporation organized on April 14, 1987 and has its common stock listed on
NASDAQ (NASDAQ SmallCap Market effective January 5, 1999). At the date of the
exchange transaction, the common stock of Semele had a net book value of
approximately $1.50 per share and closing market value of $1.00 per share.
Semele has one principal real estate asset consisting of an undeveloped 274-acre
parcel of land near Malibu, California ("Rancho Malibu").
The exchange was organized through an intermediary company (Equis Exchange
LLC, 99% owned by Semele and 1% owned by EFG), which was established for the
sole purpose of facilitating the exchange. There were no fees paid to EFG by
Equis Exchange LLC or Semele or by any other party that otherwise would not have
been paid to EFG had the Trust sold its beneficial interest in the Vessels
directly to the Lessee. The Lessee prepaid all of its remaining contracted
rental obligations and purchased the Vessels in two closings occurring on May 6,
1997 and May 12, 1997. The Note was repaid with $3,800,000 of cash and delivery
of a $4,419,500 note from Semele (the "Semele Note").
As a result of the exchange transaction and its original 33% beneficial
ownership interest in Hato Arrow, one of the three Vessels, the Trust received
$433,036 in cash, became the beneficial owner of 209,694 shares of Semele common
stock (valued at $314,541 ($1.50 per share) at the time of the exchange
transaction) and received a beneficial interest in the Semele Note of $462,353.
At June 30, 1998, Semele performed both a reverse stock split and a forward
stock split resulting in a change of the Trust's beneficial ownership in its
stock to 20,969 shares. The Semele Note bears an annual interest rate of 10% and
will be amortized over three years with mandatory principal reductions, if and
to the extent that net proceeds are received by Semele from the sale or
refinancing of Rancho Malibu. The Trust recognized interest income of $46,235
related to the Semele Note during the year
19
<PAGE>
AFG Investment Trust A
Notes to the Financial Statements
(Continued)
ended December 31, 1998. The Trust's interest in the Hato Arrow had an original
cost and net book value of $2,399,580 and $1,185,726, respectively. The proceeds
realized by the Trust of $777,326 resulted in a net loss, for financial
statement purposes, of $408,400. In addition, as this vessel was disposed of
prior to the expiration of the related lease term, the Trust received a
prepayment of the remaining contracted rent due under the vessel's lease
agreement of $432,604.
Pursuant to terms of the exchange, cash equal to the amount of the Semele
Note was placed in a segregated escrow account for the benefit of Semele pending
the outcome of certain shareholder proposals. Specifically, as part of the
exchange, Semele agreed to seek consent ("Consent") from its shareholders to:
(1) amend its certificate of incorporation and by-laws; (2) make additional
amendments to restrict the acquisition of its common stock in a way to protect
Semele's net operating loss carry-forwards, and (3) engage EFG to provide
administrative services to Semele, which services EFG will provide at cost. On
October 21, 1997, such Consent was obtained from Semele's shareholders. The
Consent also allowed for (i) the election of a new Board of Directors nominated
by EFG for terms of up to three years and an increase in the size of the Board
to as many as nine members, provided a majority of the Board shall consist of
members independent of Semele, EFG or any affiliate; and (ii) an amendment
extending Semele's life to perpetual and changing its name from Banyan Strategic
Land Fund II. Contemporaneously with the Consent being obtained, Semele declared
a $0.20 per share dividend to be paid on all shares, including those
beneficially owned by the Trust. A dividend of $41,939 was paid to the Trust on
November 17, 1997. This dividend represented a return of equity to the Trust,
which proportionately reduced the Trust's investment in Semele. Subsequent to
the exchange transaction, Gary D. Engle, President and Chief Executive Officer
of EFG, was elected to the Board of Directors and appointed Chief Executive
Officer of Semele and James A. Coyne, Executive Vice President of EFG was
appointed Semele's President and Chief Operating Officer, and elected to the
Board of Directors.
In accordance with Financial Accounting Standards Board Statement No.
115, Accounting for Certain Investments in Debt and Equity Securities,
marketable equity securities classified as available-for-sale are required to
be carried at fair value. On June 30, 1998, Semele effected a 1-for-300
reverse stock split followed by a 30-for-1 forward stock split resulting in a
reduction of the number of shares of Semele common stock owned by the Trust
to 20,969 shares. During the year ended December 31, 1998, the Trust
decreased the carrying value of its investment in Semele common stock to
$4.125 per share (the quoted price of the Semele stock on NASDAQ at December
31, 1998) resulting in an unrealized loss in 1998 of $70,773. This loss was
reported as a component of comprehensive loss, included in participants'
capital. The split-adjusted market price of Semele's stock was $7.50 per
share at December 31, 1997. At December 31, 1998, the Managing Trustee
determined that the decline in market value of the Semele common stock was
other-than-temporary. As a result, the Trust wrote down the cost of the
Semele stock to $4.125 per share (the quoted price of the Semele stock on
NASDAQ at December 31, 1998) for a total realized loss of $186,105 in 1998.
NOTE 5 - RELATED PARTY TRANSACTIONS
All operating expenses incurred by the Trust are paid by EFG on behalf of
the Trust and EFG is reimbursed at its actual cost for such expenditures. Fees
and other costs incurred during the years ended December 31, 1998, 1997 and 1996
which were paid or accrued by the Trust to EFG or its Affiliates, are as
follows:
1998 1997 1996
-------- -------- --------
Equipment acquisition fees $ 151 $ -- $ 36,673
Equipment management fees 98,100 178,159 186,001
Offering costs -- 41,304 --
Administrative charges 68,280 68,806 40,533
Reimbursable operating expenses
due to third parties 255,562 222,494 97,206
-------- -------- --------
Total $422,093 $510,763 $360,413
======== ======== ========
20
<PAGE>
AFG Investment Trust A
Notes to the Financial Statements
(Continued)
EFG and its Affiliates were reimbursed for their out-of-pocket offering
costs incurred on behalf of the Trust in an amount equal to 1% of the gross
proceeds of the four trusts which sold Class B Interests, pursuant to the
Registration Statement on Form S-1. The amount of reimbursement made by the
Trust was prorated in proportion to the number of Beneficiary Interests sold in
the Trust.
As provided under the terms of the Trust Agreement, EFG is compensated for
its services to the Trust. Such services include all aspects of acquisition,
management and sale of equipment. For acquisition services, EFG was compensated
by an amount equal to .28% of Asset Base Price paid by the Trust for each asset
acquired for the Trust's initial asset portfolio. For acquisition services
during the initial reinvestment period, which expired on May 29, 1996, EFG was
compensated by an amount equal to 3% of Asset Base Price paid by the Trust. In
connection with the Solicitation Statement and consent of Beneficiaries (See
Note 10), the Trust's reinvestment provisions were reinstated through December
31, 2001. In addition, the Trust is now permitted to invest in assets other than
equipment. Acquisition fees paid to EFG in connection with such reinvestment
assets are equal to 1% of Asset Base Price paid by the Trust. For management
services, EFG is compensated by an amount equal to (i) 5% of gross operating
lease rental revenue and 2% of gross full payout lease rental revenue received
by the Trust with respect assets acquired on or prior to March 31, 1998. For
management services earned in connection with assets acquired on or after April
1, 1998, EFG is compensated by an amount equal to 2% of gross lease rental
revenue received by the Trust. Both of these fees are subject to certain
limitations defined in the Trust Agreement. For non-equipment investments other
than cash, the Managing Trustee receives an annualized management fee of 1%.
Compensation to EFG for services connected to the remarketing of equipment is
calculated as the lesser of (i) 3% of gross sale proceeds or (ii) one-half of
reasonable brokerage fees otherwise payable under arm's length circumstances.
Payment of the remarketing fee is subordinated to Payout and is subject to
certain limitations defined in the Trust Agreement.
Administrative charges represent amounts owed to EFG, pursuant to Section
10.4(c) the Trust Agreement, for persons employed by EFG who are engaged in
providing administrative services to the Trust. Reimbursable operating expenses
due to third parties represent costs paid by EFG on behalf of the Trust which
are reimbursed to EFG at actual cost.
All equipment was purchased from EFG, one of its Affiliates or from
third-party sellers. The Trust's Purchase Price is determined by the method
described in Note 2, Equipment on Lease.
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 Trust. At
December 31, 1998, the Trust was owed $70,959 by EFG for such funds and the
interest thereon. These funds were remitted to the Trust in January 1999.
Old North Capital Limited Partnership ("ONC"), a Massachusetts limited
partnership formed in 1995 and an affiliate of EFG, owns 1,702 Class A Interests
or less than 1% of the total outstanding Class A Interests of the Trust. The
general partner of ONC is controlled by Gary D. Engle. In addition, the limited
partnership interests of ONC are owned by Semele. Gary D. Engle is Chairman and
CEO of Semele.
Refer to Note 8 regarding the purchase of Class B Interests by an
affiliate, Equis II Corporation and the change in ownership of the Managing
Trustee.
NOTE 6 - NOTES PAYABLE
Notes payable at December 31, 1998 consisted of installment notes of
$861,300 payable to banks and institutional lenders. The notes bear interest
rates ranging between 5.7% and 8%, except for one note which
21
<PAGE>
AFG Investment Trust A
Notes to the Financial Statements
(Continued)
bears a fluctuating interest rate based on LIBOR (5.54% at December 31, 1998)
plus a margin. 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 of $282,421 at the
expiration of the primary lease term related to its interest in an aircraft
leased to Reno Air, Inc. The carrying amount of notes payable approximates fair
value at December 31, 1998.
The annual maturities of the notes payable are as follows:
For the year ended December 31, 1999 $ 210,654
2000 118,459
2001 128,106
2002 121,660
2003 282,421
-------------
Total $ 861,300
=============
NOTE 7 - INCOME TAXES
The Trust is not a taxable entity for federal income tax purposes.
Accordingly, no provision for income taxes has been recorded in the accounts of
the Trust.
For financial statement purposes, the Trust allocates net income quarterly
first, to eliminate any Participant's negative capital account balance and
second, 1% to the Managing Trustee, 8.25% to the Special Beneficiary and 90.75%
collectively to the Class A and Class B Beneficiaries. The latter is allocated
proportionately between the Class A and Class B Beneficiaries based upon the
ratio of cash distributions declared and allocated to the Class A and Class B
Beneficiaries during the period. Net losses are allocated quarterly first, to
eliminate any positive capital account balance of the Managing Trustee, the
Special Beneficiary and the Class B Beneficiaries; second, to eliminate any
positive capital account balances of the Class A Beneficiaries; and third, any
remainder to the Managing Trustee. This convention differs from the income or
loss allocation requirements for income tax and Dissolution Event purposes as
delineated in the Trust Agreement. For income tax purposes, the Trust allocates
net income or net loss in accordance with the provisions of such agreement.
Pursuant to the Trust Agreement, upon dissolution of the Trust, the Managing
Trustee will be required to contribute to the Trust an amount equal to any
negative balance which may exist in the Managing Trustee's tax capital account.
At December 31, 1998, the Managing Trustee had a positive tax capital account
balance.
The following is a reconciliation between net income (loss) reported for
financial statement and federal income tax reporting purposes for the years
ended December 31, 1998, 1997 and 1996:
<TABLE>
<CAPTION>
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Net income (loss) $ (501,238) $ 411,988 $ 476,102
Financial statement depreciation in
excess of tax depreciation 1,076,559 1,011,315 68,453
Tax gain in excess of book gain (loss) 351,721 (427,701) 446,154
Deferred rental income (69,511) 61,055 (21,132)
Other 195,325 (19,533) 15,399
----------- ----------- -----------
Net income for federal income tax
reporting purposes $ 1,052,856 $ 1,037,124 $ 984,976
=========== =========== ===========
</TABLE>
22
<PAGE>
AFG Investment Trust A
Notes to the Financial Statements
(Continued)
The following is a reconciliation between participants' capital reported
for financial statement and federal income tax reporting purposes for the years
ended December 31, 1998 and 1997:
<TABLE>
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
Participants' capital $ 8,314,798 $ 11,362,142
Unrealized loss on investment securities -- 115,332
Add back selling commissions and organization
and offering costs 1,340,697 1,340,697
Add deferred step-up of capital basis 11,065 --
Financial statement distributions in excess of
tax distributions 72,107 --
Cumulative difference between federal income tax
and financial statement income (loss) (2,719,422) (4,158,184)
------------ ------------
Participants' capital for federal income tax reporting purposes $ 7,019,245 $ 8,659,987
============ ============
</TABLE>
Financial statement distributions in excess of tax distributions and
cumulative difference between federal income tax and financial statement income
(loss) represent timing differences.
NOTE 8 - ISSUANCE OF CLASS B INTERESTS
On October 26, 1996, the Trust filed a Solicitation Statement with the
United States Securities and Exchange Commission (the "SEC") which subsequently
was sent to the Beneficiaries pursuant to Regulation 14A of Section 14 of the
Securities Exchange Act. The Solicitation Statement sought the consent of the
Beneficiaries to a proposed amendment (the "Amendment") to the Amended and
Restated Declaration of Trust (the "Amended Trust Agreement") which would (i)
amend the provisions of the Amended Trust Agreement governing the redemption of
Beneficiary Interests to permit the Trust to offer to redeem outstanding
Beneficiary Interests at such times, in such amounts, in such manner and at such
prices as the Managing Trustee might determine from time to time, in accordance
with applicable law; and (ii) add a provision to the Amended Trust Agreement
that would permit the Trust to issue, at the discretion of the Managing Trustee
and without further consent or approval of the Beneficiaries, an additional
class of security with such designations, preferences and relative,
participating, optional or other special rights, powers and duties as the
Managing Trustee might affix. The funds obtained through the issuance of such a
security were intended to be used by the Trust to (a) expand redemption
opportunities for Beneficiaries without using Trust funds which might otherwise
be available for cash distributions; and (b) make a special one-time cash
distribution to the Class A Beneficiaries.
Pursuant to the Amended Trust Agreement, the adoption of the Amendment
required the consent of the Beneficiaries holding more than 50% in the aggregate
of the Class A Interests held by all Class A Beneficiaries. A majority of Class
A Interests, representing 286,868 Interests or 52.2% of all Class A Interests,
voted in favor of the Amendment; 49,019 Interests or 8.9% of all Class A
Interests voted against the Amendment; and 16,104 Interests or 2.9% of all Class
A Interests abstained. Approximately 64% of all Class A Interests participated
in the vote. Accordingly, the Amendment was adopted.
23
<PAGE>
AFG Investment Trust A
Notes to the Financial Statements
(Continued)
On February 12, 1997, the Trust filed a Registration Statement on Form S-1
with the SEC, which became effective June 10, 1997. The Registration Statement
covered the issuance and sale of a new class of beneficiary interests in the
Trust (the "Class B Interests"). The characteristics of the Class B Interests,
associated risk factors and other matters of importance to the Beneficiaries and
purchasers of the Class B Interests were set forth in a Prospectus sent to the
Beneficiaries. On July 17, 1997, the offering closed and on July 18, 1997 the
Trust issued 826,072 Class B Interests at $5.00 per interest, thereby generating
$4,130,360 in aggregate Class B capital contributions. Class A Beneficiaries
purchased 3,209 Class B Interests, generating $16,045 of such aggregate capital
contributions, and the Special Beneficiary, EFG, purchased 822,863 Class B
Interests, generating $4,114,315 of such aggregate capital contributions. The
Trust incurred offering costs in the amount of $41,304 and professional service
costs of $54,186 in connection with this offering.
Subsequently, EFG transferred its Class B Interests to a special-purpose
company, Equis II Corporation, a Delaware corporation. EFG also transferred its
ownership of AFG ASIT Corporation, the Managing Trustee of the Trust, to Equis
II Corporation. As a result, Equis II Corporation has voting control of the
Trust through its ownership of the majority of all of the Trust's outstanding
voting interests, as well as its ownership of AFG ASIT Corporation. Equis II
Corporation is controlled by EFG's President and Chief Executive Officer, Gary
D. Engle. Accordingly, control of the Managing Trustee did not change as a
result of the foregoing transactions.
As described in the Prospectus for the offering of the Class B Interests,
the Managing Trustee used a portion of the net cash proceeds realized from the
offering of the Class B Interests to pay a one-time special cash distribution of
approximately $1.47 per Class A Interest to the Class A Beneficiaries of the
Trust. The Managing Trustee declared and paid this special cash distribution,
aggregating $808,363, to Class A Beneficiaries on August 15, 1997. See Note 9
regarding the redemption of Class A Interests.
NOTE 9 - REDEMPTION OF CLASS A INTERESTS
On August 7, 1997, the Trust commenced an offer to purchase up to 45% of
the outstanding Class A Beneficiary Interests of the Trust by filing a Form
13E-4, Issuer Tender Offer Statement, with the SEC and distributing to the Class
A Beneficiaries information concerning the offer. On October 10, 1997, the Trust
used $620,011 of the net proceeds realized from the issuance of the Class B
Interests to purchase 65,402 of the Class A Interests tendered as a result of
the offer. On April 28, 1998, the Trust purchased 1,800 additional Class A
Interests at a cost of $14,400.
NOTE 10 - SOLICITATION STATEMENT
On May 5, 1998, the Trust filed a definitive Solicitation Statement with
the United States Securities and Exchange Commission in connection with the
solicitation by the Trust of the consent of the Beneficiaries to a proposed
amendment (the "Amendment") to the Second Amended and Restated Declaration of
Trust (the "Trust Agreement"). The Solicitation Statement and Consent of
Beneficiary were mailed to all of the Beneficiaries of the Trust on May 6, 1998.
The Beneficiaries were requested to use the Consent of Beneficiary to vote on
seven proposals and return their votes on or before June 5, 1998. Equis II
Corporation, which has voting control of the Trust, agreed to vote all of its
Class B Interests in the same manner in which the majority of the Class A
Interests were actually voted. Accordingly, the Amendment would be adopted or
rejected based upon the voting results of the majority of Class A Interests that
were actually voted (including 1,702 Class A Interests owned by affiliates of
EFG), regardless of how few Class A Interests were actually voted.
The results of the voting reflected that a majority of Class A Interests
voted in favor of each of the proposals. Therefore, the Trust Agreement was
amended to (i) broaden the Trust's stated investment policies and objectives and
permit the Trust to invest in assets other than leased equipment; (ii) modify
the Trust's financing provisions to
24
<PAGE>
AFG Investment Trust A
Notes to the Financial Statements
(Continued)
eliminate any cap on the amount of aggregate Trust indebtedness and permit the
Trust to use cross-collateralized and other recourse debt structures; (iii)
extend the Trust's reinvestment period, which originally expired on May 29,
1996, until December 31, 2001 and (iv) reduce acquisition fees paid to EFG in
connection with reinvestment assets acquired after the Amendment date from a
maximum of 3% to 1% and management fees earned in connection with such assets
from a maximum of 5% to 2%.
In addition, subject to attaining a settlement in the Class Action Lawsuit
described in Note 12 herein, the Trust Agreement will be modified in the
following principal respects: (i) the Trust will pay a Special Cash Distribution
to the Class A Beneficiaries of record as of September 1, 1997, or to their
successors or assigns, totaling $413,247 (or approximately $0.75 per Class A
Beneficiary Interest) using a portion of the Class B capital contributions that
otherwise would be distributed as a Class B Capital Distribution to Equis II
Corporation, the parent company of the Managing Trustee and an affiliate of EFG;
(ii) Equis II Corporation will be required to reduce its prospective Class B
Capital Distributions by $929,806 and treat such amount as a long-term equity
investment in the Trust and (iii) certain voting restrictions will be placed
upon the Class B Interests owned by Equis II Corporation.
NOTE 11 - CLASS B CAPITAL DISTRIBUTION
The Managing Trustee and certain of its affiliates were named as
defendants in the Class Action Lawsuit discussed in Note 12 herein. In
connection with this litigation and subject to a settlement being effected, the
Managing Trustee has agreed to adopt certain modifications to the Trust
Agreement as described in the Solicitation Statement referred to in Note 10
herein. One aspect of the proposed settlement would result in using of a portion
of Equis II Corporation's Class B Capital Contribution to the Trust to (i) pay a
second special cash distribution to Class A Beneficiaries totaling $413,247,
approximately $.75 per Class A Beneficiary Interest, and (ii) invest $929,806 in
the Trust's long-term business activities. The remainder of the Class B Capital
Contributions (not otherwise used to repurchase Class A Interests or to pay for
offering and related costs associated with the Class B Interests or to pay the
first special cash distribution), $1,263,443 in total, was returned to Equis II
Corporation ($1,253,318) and the other third-party Class B capital contributors
($10,125) on July 6, 1998.
NOTE 12 - LEGAL PROCEEDINGS
On or about January 15, 1998, certain plaintiffs (the "Plaintiffs") filed
a class and derivative action, captioned Leonard Rosenblum, et al. v. Equis
Financial Group Limited Partnership, et al., in the United States District Court
for the Southern District of Florida (the "Court") on behalf of a proposed class
of investors in 28 equipment leasing programs sponsored by EFG, including the
Trust (collectively, the "Nominal Defendants"), against EFG and a number of its
affiliates, including the Managing Trustee, as defendants (collectively, the
"Defendants"). Certain of the Plaintiffs, on or about June 24, 1997, had filed
an earlier derivative action, captioned Leonard Rosenblum, et al. v. Equis
Financial Group Limited Partnership, et al., in the Superior Court of the
Commonwealth of Massachusetts on behalf of the Nominal Defendants against the
Defendants. Both actions are referred to herein collectively as the "Class
Action Lawsuit."
The Plaintiffs have asserted, among other things, claims against the
Defendants on behalf of the Nominal Defendants for violations of the Securities
Exchange Act of 1934, common law fraud, breach of contract, breach of fiduciary
duty, and violations of the partnership or trust agreements that govern each of
the Nominal Defendants. The Defendants have denied, and continue to deny, that
any of them have committed or threatened to commit any violations of law or
breached any fiduciary duties to the Plaintiffs or the Nominal Defendants.
On July 16, 1998, counsel for the Defendants and the Plaintiffs executed a
Stipulation of Settlement setting forth terms pursuant to which a settlement of
the Class Action Lawsuit is intended to be achieved and which, among other
things, is expected to reduce the burdens and expenses attendant to continuing
litigation. The
25
<PAGE>
AFG Investment Trust A
Notes to the Financial Statements
(Continued)
Stipulation of Settlement was based upon and superseded a Memorandum of
Understanding between the parties dated March 9, 1998 which outlined the terms
of a possible settlement. The Stipulation of Settlement was filed with the Court
on July 23, 1998 and was preliminarily approved by the Court on August 20, 1998
when the Court issued its "Order Preliminarily Approving Settlement,
Conditionally Certifying Settlement Class and Providing for Notice of, and
Hearing on, the Proposed Settlement" (the "August 20 Order"). Prior to issuing a
final order, the Court will hold a fairness hearing that will be open to all
interested parties and permit any party to object to the settlement. The
investors of the Trust and all other plaintiff class members in the Class Action
Lawsuit will receive a Notice of Settlement and other information pertinent to
the settlement of their claims in advance of the fairness hearing. Since first
executing the Stipulation of Settlement, the Court has scheduled two fairness
hearings, the first on December 11, 1998 and the second on March 19, 1999, each
of which was postponed because of delays in finalizing certain information
materials that are subject to regulatory review prior to being distributed to
investors, but none of which involved the Trust's settlement.
On March 15, 1999, counsel for the Plaintiffs and the Defendants entered
into an amended stipulation of settlement (the "Amended Stipulation") which was
filed with the Court on March 15, 1999. The Amended Stipulation was
preliminarily approved by the Court by its "Modified Order Preliminarily
Approving Settlement, Conditionally Certifying Settlement Class and Providing
For Notice of, and Hearing On, the Proposed Settlement" dated March 22, 1999
(the "March 22 Order"). The Amended Stipulation, among other things, divides the
Class Action Lawsuit into two separate sub-classes that can be settled
individually. This revision is expected to expedite the settlement of the
Trust's claims by the middle of 1999. The second sub-class, which does not
include the Trust, is expected to remain pending for a longer period.
Assuming the proposed settlement is effected according to present terms,
the Trust's share of legal fees and expenses related to the Class Action Lawsuit
is estimated to be approximately $88,000, all of which was accrued and expensed
by the Trust in 1998. There can be no assurance that settlement of either
sub-class of the Class Action Lawsuit will receive final Court approval and be
effected. However, the Managing Trustee and its affiliates, in consultation with
counsel, concur that there is a reasonable basis to believe that final
settlements of each sub-class will be achieved. In the absence of final
settlements approved by the Court, the Defendants intend to defend vigorously
against the claims asserted in the Class Action Lawsuit. Neither the Managing
Trustee nor its affiliates can predict with any degree of certainty the cost of
continuing litigation to the Trust or the ultimate outcome.
In addition to the foregoing, the Trust is a party to other lawsuits that
have arisen out of the conduct of its business, principally involving disputes
or disagreements with lessees over lease terms and conditions. The following
action had not been finally adjudicated at December 31, 1998:
Action involving National Steel Corporation
EFG, on behalf of the Trust and certain affiliated investment programs
(collectively, the "Plaintiffs"), filed an action in the Commonwealth of
Massachusetts Superior Court, Department of the Trial Court in and for the
County of Suffolk on July 27, 1995, for damages and declaratory relief against a
lessee of the Trust, National Steel Corporation ("National Steel"). The
Complaint seeks reimbursement from National Steel of certain sales and/or use
taxes paid to the State of Illinois in connection with equipment leased by
National Steel from the Plaintiffs and other remedies provided under the Master
Lease Agreement ("MLA"). On August 30, 1995, National Steel filed a Notice of
Removal, which removed the case to United States District Court, District of
Massachusetts. On September 7, 1995, National Steel filed its Answer to the
Plaintiff's Complaint along with Affirmative Defenses and Counterclaims and
sought declaratory relief, alleging breach of contract, implied covenant of good
faith and fair dealing, and specific performance. The Plaintiffs filed an Answer
to National Steel's Counterclaims on September 29, 1995. The parties discussed
settlement with respect to this matter for some time; however, the negotiations
were unsuccessful. The Plaintiffs filed an Amended and Supplemental Complaint
alleging further default under the MLA and filed a motion for Summary Judgment
on all claims and Counterclaims. The Court held a hearing on the Plaintiff's
motion in December 1997 and later entered a decision dismissing certain of
National
26
<PAGE>
AFG Investment Trust A
Notes to the Financial Statements
(Continued)
Steel's Counterclaims, finding in favor of the Plaintiffs on certain issues and
in favor of National Steel on other issues. In March 1999, the Plaintiffs
obtained payment for certain of the disputed items and have resumed settlement
discussions to resolve remaining issues. The Managing Trustee does not believe
that the resolution of the remaining claims will have a material adverse effect
on the Trust's financial position or results of operations.
NOTE 13 - SUBSEQUENT EVENT
In January 1999, the Trust sold its 6.74% interest in a McDonnell Douglas
MD-82 aircraft formerly leased to Alaska Airlines, Inc. The Trust received sale
proceeds of $786,406. At December 31, 1998, the net carrying value of this
aircraft to the Trust was $706,535.
27
<PAGE>
AFG Investment Trust A
SCHEDULE OF EXCESS (DEFICIENCY) OF TOTAL CASH GENERATED TO COST
OF EQUIPMENT DISPOSED
for the years ended December 31, 1998, 1997 and 1996
The Trust classifies all rents from leasing equipment as lease revenue.
Upon expiration of the primary lease terms, equipment may be sold, rented on a
month-to-month basis or re-leased for a defined period under a new or extended
lease agreement. The proceeds generated from selling or re-leasing the
equipment, in addition to any month-to-month revenues, represent the total
residual value realized for each item of equipment. Therefore, the financial
statement gain or loss, which reflects the difference between the net book value
of the equipment at the time of sale or disposition and the proceeds realized
upon sale or disposition may not reflect the aggregate residual proceeds
realized by the Trust for such equipment.
The following is a summary of cash excess associated with equipment
dispositions occurring in the years ended December 31, 1998, 1997 and 1996.
1998 1997 1996
---------- ---------- ----------
Rents earned prior to disposal of
equipment, net of interest charges $3,710,491 $2,490,150 $ 925,719
Sale proceeds, including assumption of
debt and interest, realized upon
disposition of equipment 629,841 488,963 1,417,927
---------- ---------- ----------
Total cash generated from rents
and equipment sale proceeds 4,340,332 2,979,113 2,343,646
Original acquisition cost of equipment
disposed 3,560,658 2,282,111 2,228,056
---------- ---------- ----------
Excess of total cash generated to cost
of equipment disposed $ 779,674 $ 697,002 $ 115,590
========== ========== ==========
28
<PAGE>
AFG Investment Trust A
STATEMENT OF CASH AND DISTRIBUTABLE CASH FROM OPERATIONS,
SALES AND REFINANCINGS
for the year ended December 31, 1998
<TABLE>
<CAPTION>
Sales and
Operations Refinancings Total
----------- ----------- -----------
<S> <C> <C> <C>
Net loss $ (244,348) $ (256,890) $ (501,238)
Add:
Depreciation 2,052,750 -- 2,052,750
Management fees 98,100 -- 98,100
Write-down of investment
securities - affiliate 186,105 -- 186,105
Book value of disposed equipment -- 886,731 886,731
Less:
Principal reduction of notes payable (1,481,624) -- (1,481,624)
----------- ----------- -----------
Cash from operations, sales and
refinancings 610,983 629,841 1,240,824
Less:
Management fees (98,100) -- (98,100)
----------- ----------- -----------
Distributable cash from operations,
sales and refinancings 512,883 629,841 1,142,724
Other sources and uses of cash:
Cash at beginning of year 1,474,992 1,701,858 3,176,850
Restricted cash 1,263,443 -- 1,263,443
Purchase of Treasury Interests (14,400) -- (14,400)
Purchase of equipment (15,246) -- (15,246)
Net change in receivables and
accruals 564,425 -- 564,425
Less:
Cash distributions paid (2,661,642) -- (2,661,642)
----------- ----------- -----------
Cash at end of year $ 1,124,455 $ 2,331,699 $ 3,456,154
=========== =========== ===========
</TABLE>
29
<PAGE>
AFG Investment Trust A
SCHEDULE OF COSTS REIMBURSED TO THE
MANAGING TRUSTEE AND ITS AFFILIATES AS
REQUIRED BY SECTION 10.4 OF THE SECOND AMENDED AND
RESTATED DECLARATION OF TRUST
December 31, 1998
For the year ended December 31, 1998, the Trust reimbursed the Managing
Trustee and its Affiliates for the following costs:
Operating expenses $ 233,287
30
<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report (Form
10-K) of AFG Investment Trust A of our report dated March 26, 1999, included in
the 1998 Annual Report to the Participants of AFG Investment Trust A.
ERNST & YOUNG LLP
Boston, Massachusetts
March 26, 1999
17
<PAGE>
EQUIPMENT SCHEDULE 1A dated as of December 22, 1993 (the "Equipment
Schedule") is hereby renewed as
RENEWAL EQUIPMENT SCHEDULE NO. 1ARN1 (the "Renewal Equipment
Schedule") DATED AS OF JANUARY 1, 1999
TO EQUIPMENT LEASE AGREEMENT NO. (the "Equipment Lease")
DATED AS OF DECEMBER 22, 1993
LESSOR LESSEE
Investors Asset Holding Corporation, Montgomery Ward & Co., Inc.
not in its individual capacity but solely as One Montgomery Ward Plaza
Trustee of the AFG/M-Ward 1994-1 Trust Chicago, IL 60671
c/o Equis Financial Group Limited Partnership
88 Broad Street
Boston, MA 02110
1. LEASE TERM. PAYMENT DATES.
This Renewal Equipment Schedule, between Lessor and Lessee incorporates by
reference the terms and conditions of the Equipment Lease. Lessor hereby leases
to Lessee and Lessee hereby leases from Lessor those items of Equipment
described on the attached Schedule B, for the Renewal Lease Term and at the
Renewal Term Basic Rent payable on the Payment Dates hereinafter set forth on
the attached Schedule A, on the terms and conditions set forth in the Equipment
Lease.
2. BASIC RENT. TAX INDEMNIFICATION. CASUALTY VALUE.
Renewal Term Basic Rent is computed by multiplying the Total Equipment Cost by
the Renewal Lease Rate set forth on the attached Schedule A.
The Casualty Value for the Equipment during the Renewal Lease Term or any
extension thereof shall be thirty five percent of the original equipment cost
for each item of Equipment.
3. FIXED PRICE PURCHASE.
Upon the expiration of the Renewal Lease Term, and provided that no Event of
Default has occurred and is continuing, upon 60 days prior written notice to
Lessor, Lessee has the option to purchase all, but not less than all, of the
Equipment subject to this Lease, in immediately available funds of $18,450.00,
plus all applicable taxes. If Lessee fails to
<PAGE>
RENEWAL EQUIPMENT SCHEDULE NO. 1ARN1
PAGE TWO
provide 60 days prior written notice, the Renewal Lease Term may, at Lessor's
option be extended until 60 days from the date Lessor receives written notice of
Lessee's decision to purchase the Equipment. Upon receipt of the Purchase Price
from Lessee, Lessor shall deliver to Lessee a Bill of Sale transferring good and
marketable title to the Equipment, free and clear of all liens and encumbrances
placed thereon by Lessor or anyone claiming by through or under Lessor and not
resulting from any default, act or omission of Lessee. Except as set forth in
the preceding sentence, the sale of the Equipment shall be made "as-is" and
"where-is" without recourse or warranty of any kind.
4. SPECIAL CONDITIONS.
In furtherance, and not in limitation of, the use, maintenance and return
conditions for the Equipment set forth in the Equipment Lease, Lessee hereby
agrees to return the Equipment to Lessor in accordance with all of the terms and
conditions of the Equipment Lease and in compliance with the following
conditions:
a. Notwithstanding anything to the contrary in the Equipment Schedule,
all of the terms of the Equipment Schedule shall apply to this
Renewal Equipment Schedule.
5. ENTIRE AGREEMENT. MODIFICATION AND WAIVERS. EXECUTION IN COUNTERPARTS.
This Renewal Equipment Schedule, the Equipment Lease and the Equipment Schedule
constitute the entire agreement between Lessee and Lessor with respect to the
leasing of the Equipment. Lessee hereby represents, warrants and certifies that
the representations and warranties of Lessee set forth in the Equipment Lease
are true and correct as of the date hereof. Capitalized terms not defined herein
shall have the meanings assigned to them in the Equipment Lease. To the extent
any of the terms and conditions set forth in this Renewal Equipment Schedule
conflict with or are inconsistent with the Equipment Lease or the Equipment
Schedule, this Renewal Equipment Schedule shall govern and control. No
amendment, modification or waiver of
<PAGE>
RENEWAL EQUIPMENT SCHEDULE NO. 1ARN1
PAGE THREE
this Renewal Equipment Schedule, the Equipment Lease or the Equipment Schedule
will be effective unless evidenced in writing signed by the party to be charged.
This Renewal Equipment Schedule may be executed in counterparts, all of which
together shall constitute one and the same instrument.
The undersigned, being the duly authorized representative of the Lessee, hereby
certifies that the items of Equipment described on the attached Schedule B have
been duly delivered to the Lessee in good order and duly inspected and accepted
by the Lessee as conforming in all respects with the requirements and provisions
of the Equipment Lease, as of the Renewal Term Commencement Date stated on the
attached Schedule A.
Lessor Lessee
Investors Asset Holding Corporation, Montgomery Ward & Co., Inc.
Not in its individual capacity but solely
as Trustee of the AFG/M-Ward 1994-1 Trust
By: /s/ Gail D. Ofgant By: /s/ Douglas V. Gathany
-------------------------- -----------------------------
DOUGLAS V. GATHANY
Title: Sr. Vice President Title: VICE PRESIDENT-TREASURER
----------------------- --------------------------
COUNTERPART NO. 1 OF 2 SERIALLY NUMBERED MANUALLY EXECUTED COUNTERPARTS. TO THE
EXTENT IF ANY THAT THIS DOCUMENT CONSTITUTES CHATTEL PAPER UNDER THE UNIFORM
COMMERCIAL CODE, NO SECURITY INTEREST MAY BE CREATED THROUGH THE TRANSFER AND
POSSESSION OF ANY COUNTERPART OTHER THAN COUNTERPART NO. 1
<PAGE>
LLR40D-01 EQUIS FINANCIAL GROUP 12/31/98 9:21:52 PAGE 1
Schedule A -- Rental Schedule Economics
LESSEE: MONTGOMERY WARD & CO., INC.
LESSOR: EQUIS FINANCIAL GROUP
RENTAL SCHEDULE: 1ARN1
LEASE TERM (months): 24
PRIMARY START DATE: 1/01/1999
LEASE EXPIRATION DATE: 12/31/2000
PAYMENT FREQUENCY: MONTHLY
ADVANCE/ARREARS: ADVANCE
LEASE RATE: .011335246
PER DIEM LEASE RATE: .000377842
PERIODIC RENT: $16,725.00
NUMBER OF PAYMENTS: 24
TOTAL INTERIM RENT: $.00
PAYMENT COMMENCEMENT DATE: 1/01/1999
TOTAL EQUIPMENT COST: $1,475,486.23
DOCUMENTATION FEE: -0-
-------------
DVG LESSEE INITIALS
- -----
GDO LESSOR INITIALS
- -----
<PAGE>
Schedule B Equipment Description
Renewal Equipment Schedule No. 1ARN1
<TABLE>
<CAPTION>
LOCATION SITE/CITY STATE ZIP LOC# INV# DATE UNIT COST
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 Milestone Payment #1 844 North Larrabee Chicago IL 60671 970 P00079 01/25/93 $237,913.00
- ------------------------------------------------------------------------------------------------------------------------------------
2 Milestone Payment #2 844 North Larrabee Chicago IL 60671 970 PE12164 08/10/93 $356,869.50
- ------------------------------------------------------------------------------------------------------------------------------------
3 **Milestone Payment #3 844 North Larrabee Chicago IL 60671 970 PE13381 10/28/93 $356,869.50
- ------------------------------------------------------------------------------------------------------------------------------------
4 **Milestone Payment #4 844 North Larrabee Chicago IL 60671 970 PE13879 12/08/93 $118,956.50
- ------------------------------------------------------------------------------------------------------------------------------------
5 **Milestone Payment #5 844 North Larrabee Chicago IL 60671 970 PE13879 12/08/93 $118,956.50
- ------------------------------------------------------------------------------------------------------------------------------------
1 General Data Comm 844 North Larrabee Chicago IL 60671 A2-1313 312281 03/26/93 $56,638.00
- ------------------------------------------------------------------------------------------------------------------------------------
2 General Data Comm 844 North Larrabee Chicago IL 60671 A2-1313 312879 03/31/93 $161.08
- ------------------------------------------------------------------------------------------------------------------------------------
3 General Data Comm 844 North Larrabee Chicago IL 60671 A2-1313 313230 04/02/93 $5,471.25
- ------------------------------------------------------------------------------------------------------------------------------------
4 General Data Comm 844 North Larrabee Chicago IL 60671 A2-1313 233790 04/22/93 $760.00
- ------------------------------------------------------------------------------------------------------------------------------------
5 General Data Comm 844 North Larrabee Chicago IL 60671 A2-1313 314415 04/26/93 $404.36
- ------------------------------------------------------------------------------------------------------------------------------------
6 General Data Comm 844 North Larrabee Chicago IL 60671 A2-1313 235441 05/27/93 $3,240.00
- ------------------------------------------------------------------------------------------------------------------------------------
7 General Data Comm 144 North Larrabee Chicago IL 60671 A2-1313 239791 09/10/93 $340.00
- ------------------------------------------------------------------------------------------------------------------------------------
8 General Data Comm Hughes Nework Systems Bldg. A Germantown MD 20876 A2-1313 313666 04/13/93 $1,128.19
- ------------------------------------------------------------------------------------------------------------------------------------
9 General Data Comm Hughes Nework Systems Bldg. A Germantown MD 20876 A2-1313 312279 03/26/93 $45,491.00
- ------------------------------------------------------------------------------------------------------------------------------------
10 General Data Comm 11717 Exploration Lane Germantown MD 20876 A2-1313 235434 05/27/93 $2,835.00
- ------------------------------------------------------------------------------------------------------------------------------------
11 General Data Comm Hughes Nework Systems Bldg. A Germantown MD 20876 A2-1313 314416 04/26/93 $203.06
- ------------------------------------------------------------------------------------------------------------------------------------
12 General Data Comm 711 Edgewood Drive Wooddale IL 60191 A2-1313 312280 03/26/93 $40,833.00
- ------------------------------------------------------------------------------------------------------------------------------------
13 General Data Comm 711 Edgewood Drive Wooddale IL 60191 A2-1313 313232 04/26/93 $2,024.25
- ------------------------------------------------------------------------------------------------------------------------------------
14 General Data Comm 711 Edgewood Drive Wooddale IL 60191 A2-1313 313477 04/07/93 $9.50
- ------------------------------------------------------------------------------------------------------------------------------------
15 General Data Comm 711 Edgewood Drive Wooddale IL 60191 A2-1313 315247 05/06/93 $239.99
- ------------------------------------------------------------------------------------------------------------------------------------
16 Bytex 844 North Larrabee Chicago IL 60671 A2-1313 121863 03/23/93 $96,845.00
- ------------------------------------------------------------------------------------------------------------------------------------
17 Bytex 844 North Larrabee Chicago IL 60671 A2-1313 121874 03/26/93 $3,575.00
- ------------------------------------------------------------------------------------------------------------------------------------
18 Cables for Computers 844 North Larrabee Chicago IL 60671 A2-1313 000008 04/30/93 $87.76
- ------------------------------------------------------------------------------------------------------------------------------------
19 Cable Comm Tech 844 North Larrabee Chicago IL 60671 A2-1313 25832 04/12/93 $352.00
- ------------------------------------------------------------------------------------------------------------------------------------
20 Cable Comm Tech 844 North Larrabee Chicago IL 60671 A2-1313 25878 04/14/93 $1,373.60
- ------------------------------------------------------------------------------------------------------------------------------------
21 Cable Comm Tech 844 North Larrabee Chicago IL 60671 A2-1313 25891 04/14/93 $131.79
- ------------------------------------------------------------------------------------------------------------------------------------
22 Cable Comm Tech 844 North Larrabee Chicago IL 60671 A2-1313 26107 04/29/93 $71.11
- ------------------------------------------------------------------------------------------------------------------------------------
23 Cable Comm Tech Hughes Nework Systems Bldg. A Germantown MD 20876 A2-1313 25841 04/12/93 $308.57
- ------------------------------------------------------------------------------------------------------------------------------------
24 Illinois Switchboard 844 North Larrabee Chicago IL 60671 A2-1313 37315 09/08/93 $1,095.00
- ------------------------------------------------------------------------------------------------------------------------------------
25 **General Data Comm 844 North Larrabee Chicago IL 60671 A2-1313 329061 10/28/93 $302.72
- ------------------------------------------------------------------------------------------------------------------------------------
26 **Hughes Network 844 North Larrabee Chicago IL 60671 A2-1313 PE13749 11/24/93 $22,000.00
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL: $1,475,486.23
</TABLE>
<PAGE>
EQUIPMENT SCHEDULE 1B dated as of December 22, 1993 (the "Equipment
Schedule") is hereby renewed as
RENEWAL EQUIPMENT SCHEDULE NO. 1BRN1 (the "Renewal Equipment
Schedule") DATED AS OF JANUARY 1, 1999
TO EQUIPMENT LEASE AGREEMENT NO. (the "Equipment Lease")
DATED AS OF DECEMBER 22, 1993
LESSOR LESSEE
Investors Asset Holding Corporation, Montgomery Ward & Co., Inc.
not in its individual capacity but solely as One Montgomery Ward Plaza
Trustee of the AFG/M-Ward 1994-1 Trust Chicago, IL 60671
c/o Equis Financial Group Limited Partnership
88 Broad Street
Boston, MA 02110
1. LEASE TERM. PAYMENT DATES.
This Renewal Equipment Schedule, between Lessor and Lessee incorporates by
reference the terms and conditions of the Equipment Lease. Lessor hereby leases
to Lessee and Lessee hereby leases from Lessor those items of Equipment
described on the attached Schedule B, for the Renewal Lease Term and at the
Renewal Term Basic Rent payable on the Payment Dates hereinafter set forth on
the attached Schedule A, on the terms and conditions set forth in the Equipment
Lease.
2. BASIC RENT. TAX INDEMNIFICATION. CASUALTY VALUE.
Renewal Term Basic Rent is computed by multiplying the Total Equipment Cost by
the Renewal Lease Rate set forth on the attached Schedule A.
The Casualty Value for the Equipment during the Renewal Lease Term or any
extension thereof shall be thirty five percent of the original equipment cost
for each item of Equipment.
3. FIXED PRICE PURCHASE.
Upon the expiration of the Renewal Lease Term, and provided that no Event of
Default has occurred and is continuing, upon 60 days prior written notice to
Lessor, Lessee has the option to purchase all, but not less than all, of the
Equipment subject to this Lease, in immediately available funds of $37,800.00,
plus all applicable taxes. If Lessee fails to
<PAGE>
RENEWAL EQUIPMENT SCHEDULE NO. 1BRN1
PAGE TWO
provide 60 days prior written notice, the Renewal Lease Term may, at Lessor's
option be extended until 60 days from the date Lessor receives written notice of
Lessee's decision to purchase the Equipment. Upon receipt of the Purchase Price
from Lessee, Lessor shall deliver to Lessee a Bill of Sale transferring good and
marketable title to the Equipment, free and clear of all liens and encumbrances
placed thereon by Lessor or anyone claiming by through or under Lessor and not
resulting from any default, act or omission of Lessee. Except as set forth in
the preceding sentence, the sale of the Equipment shall be made "as-is" and
"where-is" without recourse or warranty of any kind.
4. SPECIAL CONDITIONS.
In furtherance, and not in limitation of, the use, maintenance and return
conditions for the Equipment set forth in the Equipment Lease, Lessee hereby
agrees to return the Equipment to Lessor in accordance with all of the terms and
conditions of the Equipment Lease and in compliance with the following
conditions:
a. Notwithstanding anything to the contrary in the Equipment Schedule,
all of the terms of the Equipment Schedule shall apply to this
Renewal Equipment Schedule.
5. ENTIRE AGREEMENT. MODIFICATION AND WAIVERS. EXECUTION IN COUNTERPARTS.
This Renewal Equipment Schedule, the Equipment Lease and the Equipment Schedule
constitute the entire agreement between Lessee and Lessor with respect to the
leasing of the Equipment. Lessee hereby represents, warrants and certifies that
the representations and warranties of Lessee set forth in the Equipment Lease
are true and correct as of the date hereof. Capitalized terms not defined herein
shall have the meanings assigned to them in the Equipment Lease. To the extent
any of the terms and conditions set forth in this Renewal Equipment Schedule
conflict with or are inconsistent with the Equipment Lease or the Equipment
Schedule, this Renewal Equipment Schedule shall govern and control. No
amendment, modification or waiver of
<PAGE>
RENEWAL EQUIPMENT SCHEDULE NO. 1BRN1
PAGE THREE
this Renewal Equipment Schedule, the Equipment Lease or the Equipment Schedule
will be effective unless evidenced in writing signed by the party to be charged.
This Renewal Equipment Schedule may be executed in counterparts, all of which
together shall constitute one and the same instrument.
The undersigned, being the duly authorized representative of the Lessee, hereby
certifies that the items of Equipment described on the attached Schedule B have
been duly delivered to the Lessee in good order and duly inspected and accepted
by the Lessee as conforming in all respects with the requirements and provisions
of the Equipment Lease, as of the Renewal Term Commencement Date stated on the
attached Schedule A.
Lessor Lessee
Investors Asset Holding Corporation, Montgomery Ward & Co., Inc.
Not in its individual capacity but solely
as Trustee of the AFG/M-Ward 1994-1 Trust
By: /s/ Gail D. Ofgant By: /s/ Douglas V. Gathany
-------------------------- -----------------------------
DOUGLAS V. GATHANY
Title: Sr. Vice President Title: VICE PRESIDENT-TREASURER
----------------------- --------------------------
COUNTERPART NO. 1 OF 2 SERIALLY NUMBERED MANUALLY EXECUTED COUNTERPARTS. TO THE
EXTENT IF ANY THAT THIS DOCUMENT CONSTITUTES CHATTEL PAPER UNDER THE UNIFORM
COMMERCIAL CODE, NO SECURITY INTEREST MAY BE CREATED THROUGH THE TRANSFER AND
POSSESSION OF ANY COUNTERPART OTHER THAN COUNTERPART NO. 1
<PAGE>
LLR40D-01 EQUIS FINANCIAL GROUP 12/31/98 9:52:33 PAGE 1
Schedule A - Rental Schedule Economics
LESSEE: MONTGOMERY WARD & CO., INC.
LESSOR: EQUIS FINANCIAL GROUP
RENTAL SCHEDULE: 1BRN1
LEASE TERM (months): 24
PRIMARY START DATE: 1/01/1999
LEASE EXPIRATION DATE: 12/31/2000
PAYMENT FREQUENCY: MONTHLY
ADVANCE /ARREARS: ADVANCE
LEASE RATE: .01130335
PER DIEM LEASE RATE: .000376778
PERIODIC RENT: $34,175.00
NUMBER OF PAYMENTS: 24
TOTAL INTERIM RENT: $.00
PAYMENT COMMENCEMENT DATE: 1/01/1999
TOTAL EQUIPMENT COST: $3,023,440.00
DOCUMENTATION FEE: $0
-------------
DVG LESSEE INITIALS
- -----
GDO LESSOR INITIALS
- -----
<PAGE>
Schedule B Equipment Description
Renewal Equipment Schedule No. 1BRN1
<TABLE>
<CAPTION>
INVOICE INVOICE
DESCRIPTION SITE CITY STATE OC. # INV. # DATE AMOUNT
----------- ---- ---- ----- ----- ------ ---- ------
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 PES EQUIPMENT MWD01001 EVERGREEN PARK IL 1001 PE12615 09/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
2 PES EQUIPMENT MWD01002 MOUNT PROSPECT IL 1002 PE13297 10/20/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
3 PES EQUIPMENT MWD01012 ENGLEWOOD CO 1012 PE12362 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
4 PES EQUIPMENT MWD01013 INDIANAPOLIS IN 1013 PE12363 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
5 PES EQUIPMENT MWD01014 MUNSTER IN 1014 PE12364 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
6 PES EQUIPMENT MWD01019 INDIANAPOLIS IN 1019 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
7 PES EQUIPMENT MWD01040 BECKLEY WV 1040 PE11956 07/19/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
8 PES EQUIPMENT MWD01042 JOHNSON CITY NY 1042 PE12365 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
9 PES EQUIPMENT MWD01047 BUTLER PA 1047 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
10 PES EQUIPMENT MWD01049 CARLISLE PA 1049 PE13716 11/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
11 PES EQUIPMENT MWD01050 CHARLEROI PA 1050 PE12814 09/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
12 PES EQUIPMENT MWD01065 DU BOIS PA 1065 PE12366 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
13 PES EQUIPMENT MWD01071 FALLS CHURCH VA 1071 PE13717 11/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
14 PES EQUIPMENT MWD01072 IRVING TX 1072 PE11954 07/19/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
15 PES EQUIPMENT MWD01073 GAITHERSBURG MD 1073 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
16 PES EQUIPMENT MWD01075 GLEN BURNIE MD 1075 PE12809 09/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
17 PES EQUIPMENT MWD01079 HAGERSTOWN MD 1079 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
18 PES EQUIPMENT MWD01083 HUNTSVILLE AL 1083 PE12233 08/16/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
19 PES EQUIPMENT MWD01084 INDIANA PA 1084 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
20 PES EQUIPMENT MWD01090 KINGSPORT TN 1090 PE13296 10/20/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
21 PES EQUIPMENT MWD01092 KINGSTON NY 1092 PE13267 10/19/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
22 PES EQUIPMENT MWD01097 HYATTSVILLE MD 1097 PE11966 07/19/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
23 PES EQUIPMENT MWD01101 MELBOURNE FL 1101 PE12816 09/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
24 PES EQUIPMENT MWD01102 WALDOF MD 1102 PE11967 07/19/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
25 PES EQUIPMENT MWD01104 LOCKPORT NY 1104 PE13718 11/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
26 PES EQUIPMENT MWD01108 MEADVILLE PA 1108 PE12817 09/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
27 PES EQUIPMENT MWD01113 MORGANTOWN WV 1113 PE13299 10/20/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
28 PES EQUIPMENT MWD01114 NASHUA NH 1114 PE11971 07/19/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
29 PES EQUIPMENT MWD01117 LOWER BURREL PA 1117 PE12367 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
30 PES EQUIPMENT MWD01120 OCALA FL 1120 PE12810 09/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
31 PES EQUIPMENT MWD01124 PARKERSBURG WV 1124 PE11959 07/19/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
32 PES EQUIPMENT MWD01125 PLATTSBURG NY 1125 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
33 PES EQUIPMENT MWD01136 ROCKY MOUNT NC 1136 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
34 PES EQUIPMENT MWD01138 ROME NY 1138 PE13286 10/19/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
35 PES EQUIPMENT MWD01139 RUTLAND VT 1139 PE11972 07/19/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
36 PES EQUIPMENT MWD01151 SUNBURY PA 1151 PE13719 11/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
37 PES EQUIPMENT MWD01153 TOWSON MD 1153 PE13720 11/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
</TABLE>
PAGE 1
<PAGE>
<TABLE>
<CAPTION>
INVOICE INVOICE
DESCRIPTION SITE CITY STATE OC. # INV. # DATE AMOUNT
----------- ---- ---- ----- ----- ------ ---- ------
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
38 PES EQUIPMENT MWD01163 WHEATON MD 1163 PO0079 01/25/93
- -----------------------------------------------------------------------------------------------------------
39 PES EQUIPMENT MWD01165 WINCHESTER VA 1165 PO0079 01/25/93
- -----------------------------------------------------------------------------------------------------------
40 PES EQUIPMENT MWD01167 SALISBURY MD 1167 PE13300 10/20/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
41 PES EQUIPMENT MWD01169 HARRISBURG PA 1169 PE13301 10/20/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
42 PES EQUIPMENT MWD01178 EL PASO TX 1178 PE12368 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
43 PES EQUIPMENT MWD01182 ORLANDO FL 1182 PO0079 01/25/93
- -----------------------------------------------------------------------------------------------------------
44 PES EQUIPMENT MWD01188 BISMARK ND 1188 PE13721 11/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
45 PES EQUIPMENT MWD01190 BLOOMINGTON MN 1190 PE12816 09/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
46 PES EQUIPMENT MWD01191 BRAINERD MN 1191 PE12819 09/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
47 PES EQUIPMENT MWD01205 CUYAHOGA FALLS OH 1205 PE11961 07/19/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
48 PES EQUIPMENT MWD01206 DEARBORN MI 1208 PE13302 10/20/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
49 PES EQUIPMENT MWD01235 GRAND RAPIDS MI 1235 PE12620 09/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
50 PES EQUIPMENT MWD01236 GREEN BAY WI 1236 PE12369 06/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
51 PES EQUIPMENT MWD01255 SKOKIE IL 1255 PE13303 10/20/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
52 PES EQUIPMENT MWD01257 CASTLETON IN 1257 PO0079 01/25/93
- -----------------------------------------------------------------------------------------------------------
53 PES EQUIPMENT MWD01259 NORMAL IL 1259 PE12370 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
54 PES EQUIPMENT MWD01261 TUCSON AZ 1261 PO0079 01/25/93
- -----------------------------------------------------------------------------------------------------------
55 PES EQUIPMENT MWD01262 LEXINGTON KY 1262 PO0079 01/25/93
- -----------------------------------------------------------------------------------------------------------
56 PES EQUIPMENT MWD01265 LIVONIA MI 1265 PE11952 07/19/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
57 PES EQUIPMENT MWD01266 FORT SMITH AR 1266 PE13304 10/20/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
58 PES EQUIPMENT MWD01267 CORPUS CHRISTI TX 1267 PO0079 01/25/93
- -----------------------------------------------------------------------------------------------------------
59 PES EQUIPMENT MWD01270 SCHAUMBERG IL 1270 PE12371 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
60 PES EQUIPMENT MWD01272 MANSFIELD OH 1272 PE11960 07/19/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
61 PES EQUIPMENT MWD01302 PEORIA IL 1302 PE13305 10/20/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
62 PES EQUIPMENT MWD01306 PONTIAC MI 1306 PE12372 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
63 PES EQUIPMENT MWD01318 ROBBINSDALE MN 1318 PE12622 09/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
64 PES EQUIPMENT MWD01319 ROCHESTER NY 1319 PE12823 09/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
65 PES EQUIPMENT MWD01338 SOUTHGATE MI 1338 PE13722 11/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
66 PES EQUIPMENT MWD01341 BALTIMORE MD 1341 PE12373 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
67 PES EQUIPMENT MWD01355 WARREN MI 1355 PE13306 10/20/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
68 PES EQUIPMENT MWD01371 ABILENE TX 1371 PO0079 01/25/93
- -----------------------------------------------------------------------------------------------------------
69 PES EQUIPMENT MWD01376 AMARILLO TX 1376 PE12824 09/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
70 PES EQUIPMENT MWD01377 VICTORVILLE CA 1377 PE13307 10/20/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
71 PES EQUIPMENT MWD01379 ARDMORE OK 1379 PE11980 07/19/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
72 PES EQUIPMENT MWD01380 SALINAS CA 1380 PE12374 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
73 PES EQUIPMENT MWD01381 RANCHO CUCAMONGA CA 1381 PE12375 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
74 PES EQUIPMENT MWD01382 AUSTIN TX 1382 PE12376 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
</TABLE>
PAGE 2
<PAGE>
<TABLE>
<CAPTION>
INVOICE INVOICE
DESCRIPTION SITE CITY STATE OC. # INV. # DATE AMOUNT
----------- ---- ---- ----- ----- ------ ---- ------
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
75 PES EQUIPMENT MWD01384 BARTLESVILLE OK 1384 PE11961 07/19/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
76 PES EQUIPMENT MWD01385 BATON ROUGE LA 1385 PE13723 11/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
77 PES EQUIPMENT MWD01386 CHESAPEAKE VA 1386 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
78 PES EQUIPMENT MWD01390 BLYTHEVILLE AR 1390 PE12377 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
79 PES EQUIPMENT MWD01391 SCRANTON PA 1391 PE12378 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
80 PES EQUIPMENT MWD01392 BOULDER CO 1392 PE13306 10/20/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
81 PES EQUIPMENT MWD01393 SAVANNAH GA 1393 PE12379 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
82 PES EQUIPMENT MWD01396 BRYAN TX 1396 PE12825 09/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
83 PES EQUIPMENT MWD01397 BURLINGTON IA 1397 PE12380 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
84 PES EQUIPMENT MWD01398 STERLING HEIGHTS MI 1398 PE13724 11/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
85 PES EQUIPMENT MWD01400 CEDAR RAPIDS IA 1400 PE12361 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
86 PES EQUIPMENT MWD01403 WESTMINISTER MD 1403 PE11945 07/19/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
87 PES EQUIPMENT MWD01404 CHEYENNE WY 1404 PE11969 07/19/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
88 PES EQUIPMENT MWD01406 TOPEKA KS 1406 PE13725 11/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
89 PES EQUIPMENT MWD01410 COLORADO SPRINGS CO 1410 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
90 PES EQUIPMENT MWD01416 DALLAS TX 1416 PE11950 07/19/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
91 PES EQUIPMENT MWD01420 NAPERVILE IL 1420 PE12611 09/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
92 PES EQUIPMENT MWD01425 DENVER CO 1425 PE12382 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
93 PES EQUIPMENT MWD01426 ORANGE PARK FL 1426 PE12383 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
94 PES EQUIPMENT MWD01428 JACKSONVILLE FL 1428 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
95 PES EQUIPMENT MWD01429 DES MOINES IA 1429 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
96 PES EQUIPMENT MWD01430 MESA AZ 1430 PE12364 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
97 PES EQUIPMENT MWD01436 BRADENTON FL 1436 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
98 PES EQUIPMENT MWD01437 LAKELAND FL 1437 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
99 PES EQUIPMENT MWD01438 FORT MEYERS FL 1438 PE12626 09/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
100 PES EQUIPMENT MWD01439 POUGHKEEPSIE NY 1439 PE12385 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
101 PES EQUIPMENT MWD01441 ST. PETERSBURG FL 1441 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
102 PES EQUIPMENT MWD01442 FORT COLLINS CO 1442 PE12827 09/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
103 PES EQUIPMENT MWD01444 FT. WORTH TX 1444 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
104 PES EQUIPMENT MWD01447 FLINT MI 1447 PE12386 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
105 PES EQUIPMENT MWD01457 GREELEY CO 1457 PE13309 10/20/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
106 PES EQUIPMENT MWD01464 HOUSTON TX 1464 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
107 PES EQUIPMENT MWD01466 HOUSTON TX 1466 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
108 PES EQUIPMENT MWD01470 LYNCHBURG VA 1470 PE13310 10/20/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
109 PES EQUIPMENT MWD01471 ROANOKE VA 1471 PE11957 07/19/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
110 PES EQUIPMENT MWD01473 BAKERSFIELD CA 1473 PE12387 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
111 PES EQUIPMENT MWD01475 CANOGA PARK CA 1475 PE12388 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
</TABLE>
PAGE 3
<PAGE>
<TABLE>
<CAPTION>
INVOICE INVOICE
DESCRIPTION SITE CITY STATE OC. # INV. # DATE AMOUNT
----------- ---- ---- ----- ----- ------ ---- ------
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
112 PES EQUIPMENT MWD01478 COEUR D'ALENE ID 1478 PE12389 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
113 PES EQUIPMENT MWD01481 EUGENE OR 1481 PE12390 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
114 PES EQUIPMENT MWD01483 EUREKA CA 1483 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
115 PES EQUIPMENT MWD01486 GREAT FALLS MT 1486 PE13726 11/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
116 PES EQUIPMENT MWD01492 LA MESA CA 1492 PE13727 11/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
117 PES EQUIPMENT MWD01494 LONGVIEW WA 1494 PE13311 10/20/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
118 PES EQUIPMENT MWD01501 MEDFORD OR 1501 PE11976 07/19/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
119 PES EQUIPMENT MWD01508 OROVILLE CA 1508 PE12391 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
120 PES EQUIPMENT MWD01509 PANORAMA CITY CA 1509 PE12392 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
121 PES EQUIPMENT MWD01510 WESTMINISTER CO 1510 PE12626 09/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
122 PES EQUIPMENT MWD01511 PHOENIX AZ 1511 PE12629 09/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
123 PES EQUIPMENT MWD01513 PHOENIX AZ 1513 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
124 PES EQUIPMENT MWD01517 PORTERVILLE CA 1517 PE11948 07/19/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
125 PES EQUIPMENT MWD01520 GLENDALE AZ 1520 PE12830 09/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
126 PES EQUIPMENT MWD01522 REDDING CA 1522 PE11965 07/19/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
127 PES EQUIPMENT MWD01523 PHOENIX AZ 1523 PE13312 10/20/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
128 PES EQUIPMENT MWD01524 RENO NV 1524 PE11949 07/19/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
129 PES EQUIPMENT MWD01525 RICHMOND CA 1525 PE12393 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
130 PES EQUIPMENT MWD01529 SALEM OR 1529 PE12394 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
131 PES EQUIPMENT MWD01530 PHOENIX AZ 1530 PE12806 09/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
132 PES EQUIPMENT MWD01532 SAN DIEGO CA 1532 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
133 PES EQUIPMENT MWD01533 SAN JOSE CA 1533 PE12395 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
134 PES EQUIPMENT MWD01535 SANTA ANA CA 1535 PE12396 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
135 PES EQUIPMENT MWD01540 STOCKTON CA 1540 PE12397 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
136 PES EQUIPMENT MWD01541 TUCSON AZ 1541 PE13313 10/20/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
137 PES EQUIPMENT MWD01542 VISALIA CA 1542 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
138 PES EQUIPMENT MWD01548 HARPER WOODS MI 1548 PE12831 09/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
139 PES EQUIPMENT MWD01554 FULLERTON CA 1554 PE12398 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
140 PES EQUIPMENT MWD01555 LAS VEGAS NV 1555 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
141 PES EQUIPMENT MWD01557 NAPA CA 1557 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
142 PES EQUIPMENT MWD01566 MINNEAPLOIS MN 1566 PE12399 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
143 PES EQUIPMENT MWD01567 CHICAGO RIDGE IL 1567 PE11965 07/19/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
144 PES EQUIPMENT MWD01579 VENTURA CA 1579 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
145 PES EQUIPMENT MWD01586 JUNCTION CITY KS 1586 PE13314 10/20/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
146 PES EQUIPMENT MWD01591 KANSAS CITY MO 1591 PE13728 11/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
147 PES EQUIPMENT MWD01592 KANSAS CITY MO 1592 PE12400 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
148 PES EQUIPMENT MWD01600 LAFAYETTE LA 1600 PE13315 10/20/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
</TABLE>
PAGE 4
<PAGE>
<TABLE>
<CAPTION>
INVOICE INVOICE
DESCRIPTION SITE CITY STATE OC. # INV. # DATE AMOUNT
----------- ---- ---- ----- ----- ------ ---- ------
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
149 PES EQUIPMENT MWD01602 WATERTOWN NY 1602 PE12832 09/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
150 PES EQUIPMENT MWD01605 LAWTON OK 1605 PE12401 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
151 PES EQUIPMENT MWD01618 MESQUITE TX 1618 PE11955 07/19/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
152 PES EQUIPMENT MWD01621 MONROE LA 1621 PE13729 11/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
153 PES EQUIPMENT MWD01635 OMAHA NE 1635 PE12402 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
154 PES EQUIPMENT MWD01640 PORT CHARLOTTE FL 1640 PE12833 09/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
155 PES EQUIPMENT MWD01647 PUEBLO CO 1647 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
156 PES EQUIPMENT MWD01651 SAINT JOSEPH MO 1651 PE13289 10/19/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
157 PES EQUIPMENT MWD01654 SAN ANTONIO TX 1654 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
158 PES EQUIPMENT MWD01655 SAN ANTONIO TX 1655 PE13316 10/20/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
159 PES EQUIPMENT MWD01666 TEXARKANA TX 1666 PE11975 07/19/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
160 PES EQUIPMENT MWD01670 TYLER TX 1670 PE11979 07/19/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
161 PES EQUIPMENT MWD01672 WACO TX 1672 PE12403 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
162 PES EQUIPMENT MWD01715 ALTAMONTE SPRINGS FL 1715 PE11942 07/19/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
163 PES EQUIPMENT MWD01716 ORLANDO FL 1716 PE12404 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
164 PES EQUIPMENT MWD01720 CLARKSVILLE TN 1720 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
165 PES EQUIPMENT MWD01736 YAKIMA WA 1736 PE11975 07/19/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
166 PES EQUIPMENT MWD01748 DENVER CO 1748 PE13291 10/19/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
167 PES EQUIPMENT MWD01755 PLANO TX 1755 PE13317 10/20/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
168 PES EQUIPMENT MWD01765 FREMONT CA 1765 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
169 PES EQUIPMENT MWD01794 GREENSBURG PA 1794 PE12405 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
170 PES EQUIPMENT MWD01797 GRANTS PASS OR 1797 PE11977 07/19/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
171 PES EQUIPMENT MWD01810 LANSING IL 1810 PE12406 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
172 PES EQUIPMENT MWD01822 JEFFERSON CITY MO 1822 PE12834 09/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
173 PES EQUIPMENT MWD01886 TEMPLE HILLS MD 1886 PE11968 07/19/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
174 PES EQUIPMENT MWD01887 COVINA CA 1887 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
175 PES EQUIPMENT MWD01888 MARYSVILLE CA 1888 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
176 PES EQUIPMENT MWD01947 DALLAS TX 1947 PE12407 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
177 PES EQUIPMENT MWD01953 YORK PA 1953 PE13318 10/20/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
178 PES EQUIPMENT MWD01959 HUNTINGTON BEACH CA 1959 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
179 PES EQUIPMENT MWD01961 LITTLE ROCK AZ 1961 PE12406 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
180 PES EQUIPMENT MWD01962 SPRINGFIELD MO 1962 PE12409 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
181 PES EQUIPMENT MWD01965 ROSEMEAD TX 1965 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
182 PES EQUIPMENT MWD02006 PASADENA MI 2006 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
183 PES EQUIPMENT MWD02018 SOUTHFIELD MI 2018 PE12835 09/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
184 PES EQUIPMENT MWD02024 ESCONDIDO CA 2024 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
185 PES EQUIPMENT MWD02027 LOMBARD IL 2027 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
</TABLE>
PAGE 5
<PAGE>
<TABLE>
<CAPTION>
INVOICE INVOICE
DESCRIPTION SITE CITY STATE OC. # INV. # DATE AMOUNT
----------- ---- ---- ----- ----- ------ ---- ------
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
186 PES EQUIPMENT MWD02045 NORWALK CA 2045 PO0079 01/25/93
- -----------------------------------------------------------------------------------------------------------
187 PES EQUIPMENT MWD02070 CANTON OH 2070 PE11962 07/19/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
188 PES EQUIPMENT MWD02071 DALY CITY CA 2071 PO0079 01/25/93
- -----------------------------------------------------------------------------------------------------------
189 PES EQUIPMENT MWD02072 LANSING MI 2072 PE12812 09/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
190 PES EQUIPMENT MWD02083 LAUREL MD 2083 PE11946 07/19/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
191 PES EQUIPMENT MWD02101 SACRAMENTO CA 2101 PE12236 08/16/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
192 PES EQUIPMENT MWD02109 CRYSTAL LAKE IL 2109 PE12636 09/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
193 PES EQUIPMENT MWD02115 SCHENCTADY NY 2115 PO0079 01/25/93
- -----------------------------------------------------------------------------------------------------------
194 PES EQUIPMENT MWD02129 PHARR TX 2129 PE12410 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
195 PES EQUIPMENT MWD02136 JOPLIN MO 2136 PE12411 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
196 PES EQUIPMENT MWD02137 KANSAS CITY MO 2137 PE12412 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
197 PES EQUIPMENT MWD02139 SANTA FE NM 2139 PE13319 10/20/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
198 PES EQUIPMENT MWD02142 MANASSAS VA 2142 PE11963 07/19/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
199 PES EQUIPMENT MWD02145 GRAND RAPIDS MI 2145 PE12637 09/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
200 PES EQUIPMENT MWD02147 NORFOLK VA 2147 PE12413 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
201 PES EQUIPMENT MWD02148 PENSACOLA FL 2148 PE12607 09/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
202 PES EQUIPMENT MWD02153 UNIONTOWN PA 2153 PE12414 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
203 PES EQUIPMENT MWD02155 PORTLAND OR 2155 PE12415 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
204 PES EQUIPMENT MWD02158 LOS ANGELES CA 2158 PO0079 01/25/93
- -----------------------------------------------------------------------------------------------------------
205 PES EQUIPMENT MWD02161 PERU IL 2161 PO0079 01/25/93
- -----------------------------------------------------------------------------------------------------------
206 PES EQUIPMENT MWD02162 KALAMAZOO MI 2162 PE12613 09/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
207 PES EQUIPMENT MWD02164 LAS CRUCES NM 2164 PE12416 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
208 PES EQUIPMENT MWD02168 ALEXANDRIA LA 2168 PE12417 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
209 PES EQUIPMENT MWD02170 ARLINGTON TX 2170 PO0079 01/25/93
- -----------------------------------------------------------------------------------------------------------
210 PES EQUIPMENT MWD02194 BEAUMONT TX 2194 PE12838 09/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
211 PES EQUIPMENT MWD02195 TORRANCE CA 2195 PO0079 01/25/93
- -----------------------------------------------------------------------------------------------------------
212 PES EQUIPMENT MWD02196 AURORA CO 2196 PO0079 01/25/93
- -----------------------------------------------------------------------------------------------------------
213 PES EQUIPMENT MWD02202 SAINT CHARLES IL 2202 PE12419 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
214 PES EQUIPMENT MWD02203 JACKSON MI 2203 PE11953 07/19/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
215 PES EQUIPMENT MWD02211 BEL AIR MD 2211 PE12420 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
216 PES EQUIPMENT MWD02212 FREDERICK MD 2212 PE11947 07/19/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
217 PES EQUIPMENT MWD02213 TALLAHASSEE FL 2213 PE13320 10/20/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
218 PES EQUIPMENT MWD02215 FRESNO CA 2215 PO0079 01/25/93
- -----------------------------------------------------------------------------------------------------------
219 PES EQUIPMENT MWD02219 SAN LEANDRO CA 2219 PE12421 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
220 PES EQUIPMENT MWD02220 SAN BERNARDINO CA 2220 PE12422 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
221 PES EQUIPMENT MWD02221 LOS ANGELES CA 2221 PO0079 01/25/93
- -----------------------------------------------------------------------------------------------------------
222 PES EQUIPMENT MWD02233 SPRINGFIELD VA 2233 PE13321 10/20/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
</TABLE>
PAGE 6
<PAGE>
<TABLE>
<CAPTION>
INVOICE INVOICE
DESCRIPTION SITE CITY STATE OC. # INV. # DATE AMOUNT
----------- ---- ---- ----- ----- ------ ---- ------
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
223 PES EQUIPMENT MWD02235 MONTCLAIR CA 2235 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
224 PES EQUIPMENT MWD02237 PORTLAND OR 2237 PE13730 11/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
225 PES EQUIPMENT MWD02238 CITRUS HEIGHTS CA 2238 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
226 PES EQUIPMENT MWD02239 LAKE CHARLES LA 2239 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
227 PES EQUIPMENT MWD02245 LAKE CHARLES LA 2245 PE13322 10/20/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
228 PES EQUIPMENT MWD02246 DENTON TX 2246 PE13323 10/20/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
229 PES EQUIPMENT MWD02248 ROSEDALE MD 2248 PE12423 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
230 PES EQUIPMENT MWD02251 LAS VEGAS NV 2251 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
231 PES EQUIPMENT MWD02253 TOLEDO OH 2253 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
232 PES EQUIPMENT MWD02254 HOUSTON TX 2254 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
233 PES EQUIPMENT MWD02257 BLAINE MN 2257 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
234 PES EQUIPMENT MWD02259 ODESSA TX 2259 PE13324 10/20/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
235 PES EQUIPMENT MWD02269 NEWINGTON NH 2269 PE11943 07/19/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
236 PES EQUIPMENT MWD02278 SOUTH BEND IN 2278 PE12424 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
237 PES EQUIPMENT MWD02286 MATTESON IL 2286 PE12839 09/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
238 PES EQUIPMENT MWD02289 EL PASO TX 2289 PE12425 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
239 PES EQUIPMENT MWD02290 BROWNSVILLE TX 2290 PE12426 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
240 PES EQUIPMENT MWD02292 OKLAHOMA CITY OK 2292 PE12427 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
241 PES EQUIPMENT MWD02296 DULUTH MN 2296 PE12428 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
242 PES EQUIPMENT MWD02306 LAKEWOOD CA 2306 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
243 PES EQUIPMENT MWD02313 UTICA NY 2313 PE13285 10/19/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
244 PES EQUIPMENT MWD02327 JOLIET IL 2327 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
245 PES EQUIPMENT MWD02336 SAN ANTONIO TX 2336 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
246 PES EQUIPMENT MWD02337 SHREVEPORT LA 2337 PE12840 09/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
247 PES EQUIPMENT MWD02368 GREENSBORO NC 2368 PE13325 10/20/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
248 PES EQUIPMENT MWD02369 OVERLAND PARK KS 2369 PE13268 10/19/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
249 PES EQUIPMENT MWD02374 CHARLESTON SC 2374 PE12429 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
250 PES EQUIPMENT MWD02376 HAWTHORNE CA 2376 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
251 PES EQUIPMENT MWD02383 PINELLAS PARK FL 2383 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
252 PES EQUIPMENT MWD02387 NORTH RIVERSIDE IL 2387 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
253 PES EQUIPMENT MWD02388 SPRINGFIELD IL 2388 PE12430 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
254 PES EQUIPMENT MWD02393 COLUMBUS GA 2393 PE12234 08/16/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
255 PES EQUIPMENT MWD02401 SACRAMENTO CA 2401 PE12235 08/16/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
256 PES EQUIPMENT MWD02402 TAMPA FL 2402 PE12841 09/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
257 PES EQUIPMENT MWD02405 SARATOGA SPRINGS NY 2405 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
258 PES EQUIPMENT MWD02406 VIRGINIA BEACH VA 2406 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
259 PES EQUIPMENT MWD02411 BILLINGS MT 2411 PE13326 10/20/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
</TABLE>
PAGE 7
<PAGE>
<TABLE>
<CAPTION>
INVOICE INVOICE
DESCRIPTION SITE CITY STATE OC. # INV. # DATE AMOUNT
----------- ---- ---- ----- ----- ------ ---- ------
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
260 PES EQUIPMENT MWD02412 KANSAS CITY MO 2412 PE12431 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
261 PES EQUIPMENT MWD02425 BEAVERTON OR 2425 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
262 PES EQUIPMENT MWD02426 RIVERSIDE CA 2426 PE12432 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
263 PES EQUIPMENT MWD02429 ITAHCA NY 2429 PE13290 10/19/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
264 PES EQUIPMENT MWD02438 NEWPORT NEWS VA 2438 PE11983 07/19/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
265 PES EQUIPMENT MWD02443 RICHARDSON TX 2443 PE11951 07/19/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
266 PES EQUIPMENT MWD02445 SAN JOSE CA 2445 PE12433 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
267 PES EQUIPMENT MWD02446 FT. WORTH TX 2446 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
268 PES EQUIPMENT MWD02484 BEDFORD NH 2484 PE11944 07/19/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
269 PES EQUIPMENT MWD02486 AUGUSTA GA 2486 PE12434 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
270 PES EQUIPMENT MWD02489 HOUSTON TX 2489 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
271 PES EQUIPMENT MWD02493 HOUSTON TX 2493 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
272 PES EQUIPMENT MWD02495 LAREDO TX 2495 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
273 PES EQUIPMENT MWD02509 HURST TX 2509 PE13327 10/20/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
274 PES EQUIPMENT MWD02510 MISSION VIEJO CA 2510 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
275 PES EQUIPMENT MWD02526 SUNNYVALE CA 2526 PE12435 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
276 PES EQUIPMENT MWD02530 MERRILLVILLE IN 2530 PE12436 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
277 PES EQUIPMENT MWD02531 SAINT LOUIS PARK MN 2531 PE12842 09/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
278 PES EQUIPMENT MWD02559 WICHITA KS 2559 PE13326 10/20/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
279 PES EQUIPMENT MWD02560 MIDWEST CITY OK 2560 PE13329 10/20/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
280 PES EQUIPMENT MWD02561 DES MOINES IA 2561 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
281 PES EQUIPMENT MWD02569 TAMPA BAY FL 2569 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
282 PES EQUIPMENT MWD02572 MESA AZ 2572 PE12643 09/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
283 PES EQUIPMENT MWD02573 PICO RIVERA CA 2573 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
284 PES EQUIPMENT MWD02576 AUSTIN TX 2576 PE12437 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
285 PES EQUIPMENT MWD02580 PORT RICHEY FL 2580 PE13330 11/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
286 PES EQUIPMENT MWD02601 CHICAGO IL 2601 PE11974 07/19/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
287 PES EQUIPMENT MWD02604 ROSEVILLE MN 2604 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
288 PES EQUIPMENT MWD02611 BAYTOWN TX 2611 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
289 PES EQUIPMENT MWD02612 SPOKANE WA 2612 PE12438 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
290 PES EQUIPMENT MWD02629 ALBANY NY 2629 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
291 PES EQUIPMENT MWD02631 ORLAND PARK IL 2631 PE12644 09/22/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
292 PES EQUIPMENT MWD02632 PORTLAND OR 2632 PE11973 07/19/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
293 PES EQUIPMENT MWD02635 HOUSTON TX 2635 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
294 PES EQUIPMENT MWD02707 FREDERICKSBURG VA 2707 PE11964 07/19/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
295 PES EQUIPMENT MWD02710 HAMPTON VA 2710 PE11962 07/19/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
296 PES EQUIPMENT MWD02711 BLOOMINGDALE IL 2711 PE12237 08/16/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
</TABLE>
PAGE 8
<PAGE>
<TABLE>
<CAPTION>
INVOICE INVOICE
DESCRIPTION SITE CITY STATE OC. # INV. # DATE AMOUNT
----------- ---- ---- ----- ----- ------ ---- ------
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
297 PES EQUIPMENT MWD02713 TOLEDO OH 2713 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
298 PES EQUIPMENT MWD02722 LONG BEACH CA 2722 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
299 PES EQUIPMENT MWD02744 LITTLETON CO 2744 PE11970 07/19/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
300 PES EQUIPMENT MWD02750 SAN MATEO CA 2750 P00079 01/25/93
- -----------------------------------------------------------------------------------------------------------
301 PES EQUIPMENT MWD02753 NATIONAL CITY CA 2753 PE12439 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
302 PES EQUIPMENT MWD02755 CHARLESTON WV 2755 PE11958 07/19/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
303 PES EQUIPMENT MWD02757 SAN ANTONIO TX 2757 PE13331 10/20/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
304 PES EQUIPMENT MWD02816 TEMPLE TX 2816 PE12440 08/23/93 9,850.00
- -----------------------------------------------------------------------------------------------------------
TOTAL LOCATIONS 220 2,167,000.00
MILESTONE LOCATIONS Exhibit A 84 P00079 01/25/93 827,000.00
Installation Exhibit B 29,040.00
Total: $3,023,440.00
</TABLE>
PAGE 9
<PAGE>
EXHIBIT B To
Schedule B to Renewal Equipment Schedule No. 1BRN1
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
INVOICE INVOICE
DESCRIPTION SITE CITY STATE LOC. # INV. # DATE AMOUNT
----------- ---- ---- ----- ------ ------ ---- ------
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 REC/DEC + INSTALLATION MWDOOOHQ CHICAGO IL 00HQ PE12741 09/20/93 $2,420.00
- ----------------------------------------------------------------------------------------------------
2 REC/DEC + INSTALLATION MWD02629 ALBANY NY 2629 PE12741 09/20/93 $2,420.00
- ----------------------------------------------------------------------------------------------------
3 REC/DEC + INSTALLATION MWD02027 CHICAGO IL 2027 PE12741 09/20/93 $2,420.00
- ----------------------------------------------------------------------------------------------------
4 REC/DEC + INSTALLATION MWDO1265 LIVONIA MI 1265 PE12741 09/20/93 $2,420.00
- ----------------------------------------------------------------------------------------------------
5 REC/DEC + INSTALLATION MWD02565 TAMPA FL 2565 PE12741 09/20/93 $2,420.00
- ----------------------------------------------------------------------------------------------------
6 REC/DEC + INSTALLATION MWDO1163 WHEATON MD 1163 PE12741 09/20/93 $2,420.00
- ----------------------------------------------------------------------------------------------------
7 REC/DEC + INSTALLATION MWDO2196 AURORA CO 2196 PE12741 09/20/93 $2,420.00
- ----------------------------------------------------------------------------------------------------
8 REC/DEC + INSTALLATION MWD02235 MONTCLAIR CA 2235 PE12741 09/20/93 $2,420.00
- ----------------------------------------------------------------------------------------------------
9 REC/DEC + INSTALLATION MWDO1785 FREMONT CA 1785 PE12741 09/20/93 $2,420.00
- ----------------------------------------------------------------------------------------------------
10 REC/DEC + INSTALLATION MWD02336 SAN ANTONIO TX 2336 PE12741 09/20/93 $2,420.00
- ----------------------------------------------------------------------------------------------------
11 REC/DEC + INSTALLATION MWD02257 BLAINE MN 2257 PE12741 09/20/93 $2,420.00
- ----------------------------------------------------------------------------------------------------
12 REC/DEC + INSTALLATION MWDO2170 ARLINGTON TX 2170 PE12741 09/20/93 $2,420.00
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
TOTAL: $29,040.00
- ----------------------------------------------------------------------------------------------------
</TABLE>
Page 10
<PAGE>
Exhibit A to
Schedule B to Renewal Equipment Schedule No. 1BRN1
Subsidiary of Hughes Aircraft Company
LM 20
Phone (301) 428-5500 TWX 710-828-0541 FAX (301) 428-1868/2830
- --------------------------------------------------------------------------------
NO. DATE
[ILLEGIBLE] 02/25/93 Billing Invoice
- --------------------------------------------------------------------------------
BILL TO: SHIPPED TO:
MONTGOMERY WARD & CO., INC. N/A
MONTGOMERY WARD PLAZA CR 392683
CHICAGO, ILLINOIS 60671 2/25/93
CHICAGO IL 60671
ATTN: ACCOUNTS PAYABLE
- --------------------------------------------------------------------------------
CUSTOMER ORDER NO. ACCOUNT NO. TERMS SHIPMENT NO.
CONTRACT DATED JANUARY 26, 1993 NET 30 PER CONTRACT
- --------------------------------------------------------------------------------
CLASS UNIT EXTENDED
ITEM DESCRIPTION CODE QTY PRICE PRICE
- --------------------------------------------------------------------------------
1 MILESTONE PAYMENT NO. 1 IN ACCORDANCE Y 1 237,913.00 237,913.00
WITH EXHIBIT C, SECTION 7.1 (20% OF
$1,189,565)
Tax not applied
2 MILESTONE PAYMENT IN ACCORDANCE WITH Y 1 827,400.00 827,400.00
EXHIBIT C, SECTION 7.2
Tax not applied 84 Earthstations
TOTAL AMOUNT DUE USD 1,065,313.00
Deposit on Satelites /s/ [ILLEGIBLE] /s/ [ILLEGIBLE]
TO [ILLEGIBLE]
LOCATION [ILLEGIBLE]
TRANSMIT NO. [ILLEGIBLE]
/s/ [ILLEGIBLE] PREPARED BY /s/ [ILLEGIBLE]
2/9/93 DATE PREPARED 8/15/93 Account
AUTHORIZED SIGNATURE OK'D Per
[ILLEGIBLE]
/s/ [ILLEGIBLE] /s/ [ILLEGIBLE]
- --------------------------------------------------------------------------------
Please submit payment to the address below
HUGHES NETWORK SYSTEMS, INC.
[ILLEGIBLE]
Baltimore, MD 21264
NOTE: If payment made by wire transfer, submit to:
Account of Hughes Network Systems, Inc.
First National Bank of Maryland
Baltimore, MD 21263
Acct. No. 401-5029-0
[ILLEGIBLE]
/s/ [ILLEGIBLE]
Philip K. O'Brien
Director of Contracts
- --------------------------------------------------------------------------------
Page 11
<PAGE>
EQUIPMENT SCHEDULE 1C dated as of December 22, 1993 (the "Equipment
Schedule") is hereby renewed as
RENEWAL EQUIPMENT SCHEDULE NO. 1CRN1 (the "Renewal Equipment
Schedule") DATED AS OF JANUARY 1, 1999
TO EQUIPMENT LEASE AGREEMENT NO. (the "Equipment Lease")
DATED AS OF DECEMBER 22, 1993
LESSOR LESSEE
Investors Asset Holding Corporation, Montgomery Ward & Co., Inc.
not in its individual capacity but solely as One Montgomery Ward Plaza
Trustee of the AFG/M-Ward 1994-1 Trust Chicago, IL 60671
c/o Equis Financial Group Limited Partnership
88 Broad Street
Boston, MA 02110
1. LEASE TERM. PAYMENT DATES.
This Renewal Equipment Schedule, between Lessor and Lessee incorporates by
reference the terms and conditions of the Equipment Lease. Lessor hereby leases
to Lessee and Lessee hereby leases from Lessor those items of Equipment
described on the attached Schedule B, for the Renewal Lease Term and at the
Renewal Term Basic Rent payable on the Payment Dates hereinafter set forth on
the attached Schedule A, on the terms and conditions set forth in the Equipment
Lease.
2. BASIC RENT. TAX INDEMNIFICATION. CASUALTY VALUE.
Renewal Term Basic Rent is computed by multiplying the Total Equipment Cost by
the Renewal Lease Rate set forth on the attached Schedule A.
The Casualty Value for the Equipment during the Renewal Lease Term or any
extension thereof shall be thirty five percent of the original equipment cost
for each item of Equipment.
3. FIXED PRICE PURCHASE.
Upon the expiration of the Renewal Lease Term, and provided that no Event of
Default has occurred and is continuing, upon 60 days prior written notice to
Lessor, Lessee has the option to purchase all, but not less than all, of the
Equipment subject to this Lease, in immediately available funds of $625.00, plus
all applicable taxes. If Lessee fails to
<PAGE>
RENEWAL EQUIPMENT SCHEDULE NO. 1CRN1
PAGE TWO
provide 60 days prior written notice, the Renewal Lease Term may, at Lessor's
option be extended until 60 days from the date Lessor receives written notice of
Lessee's decision to purchase the Equipment. Upon receipt of the Purchase Price
from Lessee, Lessor shall deliver to Lessee a Bill of Sale transferring good and
marketable title to the Equipment, free and clear of all liens and encumbrances
placed thereon by Lessor or anyone claiming by through or under Lessor and not
resulting from any default, act or omission of Lessee. Except as set forth in
the preceding sentence, the sale of the Equipment shall be made "as-is" and
"where-is" without recourse or warranty of any kind.
4. SPECIAL CONDITIONS.
In furtherance, and not in limitation of, the use, maintenance and return
conditions for the Equipment set forth in the Equipment Lease, Lessee hereby
agrees to return the Equipment to Lessor in accordance with all of the terms and
conditions of the Equipment Lease and in compliance with the following
conditions:
a. Notwithstanding anything to the contrary in the Equipment Schedule,
all of the terms of the Equipment Schedule shall apply to this
Renewal Equipment Schedule.
5. ENTIRE AGREEMENT. MODIFICATION AND WAIVERS. EXECUTION IN COUNTERPARTS.
This Renewal Equipment Schedule, the Equipment Lease and the Equipment Schedule
constitute the entire agreement between Lessee and Lessor with respect to the
leasing of the Equipment. Lessee hereby represents, warrants and certifies that
the representations and warranties of Lessee set forth in the Equipment Lease
are true and correct as of the date hereof. Capitalized terms not defined herein
shall have the meanings assigned to them in the Equipment Lease. To the extent
any of the terms and conditions set forth in this Renewal Equipment Schedule
conflict with or are inconsistent with the Equipment Lease or the Equipment
Schedule, this Renewal Equipment Schedule shall govern and control. No
amendment, modification or waiver of
<PAGE>
RENEWAL EQUIPMENT SCHEDULE NO. 1CRN1
PAGE THREE
this Renewal Equipment Schedule, the Equipment Lease or the Equipment Schedule
will be effective unless evidenced in writing signed by the party to be charged.
This Renewal Equipment Schedule may be executed in counterparts, all of which
together shall constitute one and the same instrument.
The undersigned, being the duly authorized representative of the Lessee, hereby
certifies that the items of Equipment described on the attached Schedule B have
been duly delivered to the Lessee in good order and duly inspected and accepted
by the Lessee as conforming in all respects with the requirements and provisions
of the Equipment Lease, as of the Renewal Term Commencement Date stated on the
attached Schedule A.
Lessor Lessee
Investors Asset Holding Corporation, Montgomery Ward & Co., Inc.
not in its individual capacity but solely
as Trustee of the AFG/M-Ward 1994-1 Trust
By: /s/ Gail D. Ofgant By: /s/ Douglas V. Gathany
-------------------------- -----------------------------
DOUGLAS V. GATHANY
Title: Sr. Vice President Title: VICE PRESIDENT-TREASURER
----------------------- --------------------------
COUNTERPART NO. 1 OF 2 SERIALLY NUMBERED MANUALLY EXECUTED COUNTERPARTS. TO THE
EXTENT IF ANY THAT THIS DOCUMENT CONSTITUTES CHATTEL PAPER UNDER THE UNIFORM
COMMERCIAL CODE, NO SECURITY INTEREST MAY BE CREATED THROUGH THE TRANSFER AND
POSSESSION OF ANY COUNTERPART OTHER THAN COUNTERPART NO. 1
<PAGE>
LLR40D-01 EQUIS FINANCIAL GROUP 12/31/98 9:58:54 PAGE 1
Schedule A - Rental Schedule Economics
LESSEE: MONTGOMERY WARD & CO., INC.
LESSOR: EQUIS FINANCIAL GROUP
RENTAL SCHEDULE: 1CRN1
LEASE TERM (months): 24
PRIMARY START DATE: 1/01/1999
LEASE EXPIRATION DATE: 12/31/2000
PAYMENT FREQUENCY: MONTHLY
ADVANCE/ARREARS: ADVANCE
LEASE RATE: .01177665
PER DIEM LEASE RATE: .00039255
PERIODIC RENT: $580.00
NUMBER OF PAYMENTS: 24
TOTAL INTERIM RENT: $.00
PAYMENT COMMENCEMENT DATE: 1/01/1999
TOTAL EQUIPMENT COST: $49,250.00
DOCUMENTATION FEE: $0
----------
DVG LESSEE INITIALS
- -----
GDO LESSOR INITIALS
- -----
<PAGE>
Schedule B Equipment Description
Renewal Equipment Schedule No. 1CRN1
<TABLE>
<CAPTION>
DESCRIPTION SITE LOCATION CITY STATE ZIP LOC. # INV. # DATE UNIT COST
- ----------- ---- -------- ---- ----- --- ------ ------ ---- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 PES EQUIPMENT MWD00001 619 West Chicago Avenue Chicago IL 60610 0001 PE12359 08/23/93 $9,850.00
2 PES EQUIPMENT MWD000HQ 844 North Larabee Street Chicago IL 60671 00HQ PE12360 08/23/93 $9,850.00
3 PES EQUIPMENT MWD00HQ2 844 North Larabee Street Chicago IL 60671 0HQ2 PE12361 08/23/93 $9,850.00
4 PES EQUIPMENT MWD01260 47th & Damen Chicago IL 60609 1260 PE12821 08/23/93 $9,850.00
5 PES EQUIPMENT MWD02843 2939 W. Addison Chicago IL 60618 2843 PE11984 08/23/93 $9,850.00
TOTAL: $49,250.00
</TABLE>
<PAGE>
EQUIPMENT SCHEDULE 1D dated as of December 22, 1993 and Amendment No. 1
dated as of March 7, 1994 (the "Equipment Schedule") is hereby renewed as
RENEWAL EQUIPMENT SCHEDULE NO. 1DRN1 (the "Renewal Equipment
Schedule") DATED AS OF JANUARY 1, 1999
TO EQUIPMENT LEASE AGREEMENT NO. (the "Equipment Lease")
DATED AS OF DECEMBER 22, 1993
LESSOR LESSEE
Investors Asset Holding Corporation, Montgomery Ward & Co., Inc.
not in its individual capacity but solely as One Montgomery Ward Plaza
Trustee of the AFG/M-Ward 1994-1 Trust Chicago, IL 60671
c/o Equis Financial Group Limited Partnership
88 Broad Street
Boston, MA 02110
1. LEASE TERM. PAYMENT DATES.
This Renewal Equipment Schedule, between Lessor and Lessee incorporates by
reference the terms and conditions of the Equipment Lease. Lessor hereby leases
to Lessee and Lessee hereby leases from Lessor those items of Equipment
described on the attached Schedule B, for the Renewal Lease Term and at the
Renewal Term Basic Rent payable on the Payment Dates hereinafter set forth on
the attached Schedule A, on the terms and conditions set forth in the Equipment
Lease.
2. BASIC RENT. TAX INDEMNIFICATION. CASUALTY VALUE.
Renewal Term Basic Rent is computed by multiplying the Total Equipment Cost by
the Renewal Lease Rate set forth on the attached Schedule A.
The Casualty Value for the Equipment during the Renewal Lease Term or any
extension thereof shall be thirty five percent of the original equipment cost
for each item of Equipment.
3. FIXED PRICE PURCHASE.
Upon the expiration of the Renewal Lease Term, and provided that no Event of
Default has occurred and is continuing, upon 60 days prior written notice to
Lessor, Lessee has the option to purchase all, but not less than all, of the
Equipment subject to this Lease, in immediately available funds of $1,225.00,
plus all applicable taxes. If Lessee fails to
<PAGE>
RENEWAL EQUIPMENT SCHEDULE NO. 1DRN1
PAGE TWO
provide 60 days prior written notice, the Renewal Lease Term may, at Lessor's
option be extended until 60 days from the date Lessor receives written notice of
Lessee's decision to purchase the Equipment. Upon receipt of the Purchase Price
from Lessee, Lessor shall deliver to Lessee a Bill of Sale transferring good and
marketable title to the Equipment, free and clear of all liens and encumbrances
placed thereon by Lessor or anyone claiming by through or under Lessor and not
resulting from any default, act or omission of Lessee. Except as set forth in
the preceding sentence, the sale of the Equipment shall be made "as-is" and
"where-is" without recourse or warranty of any kind.
4. SPECIAL CONDITIONS.
In furtherance, and not in limitation of, the use, maintenance and return
conditions for the Equipment set forth in the Equipment Lease, Lessee hereby
agrees to return the Equipment to Lessor in accordance with all of the terms and
conditions of the Equipment Lease and in compliance with the following
conditions:
a. Notwithstanding anything to the contrary in the Equipment Schedule,
all of the terms of the Equipment Schedule shall apply to this
Renewal Equipment Schedule.
5. ENTIRE AGREEMENT. MODIFICATION AND WAIVERS. EXECUTION IN COUNTERPARTS.
This Renewal Equipment Schedule, the Equipment Lease and the Equipment Schedule
constitute the entire agreement between Lessee and Lessor with respect to the
leasing of the Equipment. Lessee hereby represents, warrants and certifies that
the representations and warranties of Lessee set forth in the Equipment Lease
are true and correct as of the date hereof. Capitalized terms not defined herein
shall have the meanings assigned to them in the Equipment Lease. To the extent
any of the terms and conditions set forth in this Renewal Equipment Schedule
conflict with or are inconsistent with the Equipment Lease or the Equipment
Schedule, this Renewal Equipment Schedule shall govern and control. No
amendment, modification or waiver of
<PAGE>
RENEWAL EQUIPMENT SCHEDULE NO. 1DRN1
PAGE THREE
this Renewal Equipment Schedule, the Equipment Lease or the Equipment Schedule
will be effective unless evidenced in writing signed by the party to be charged.
This Renewal Equipment Schedule may be executed in counterparts, all of which
together shall constitute one and the same instrument.
The undersigned, being the duly authorized representative of the Lessee, hereby
certifies that the items of Equipment described on the attached Schedule B have
been duly delivered to the Lessee in good order and duly inspected and accepted
by the Lessee as conforming in all respects with the requirements and provisions
of the Equipment Lease, as of the Renewal Term Commencement Date stated on the
attached Schedule A.
Lessor Lessee
Investors Asset Holding Corporation, Montgomery Ward & Co., Inc.
not in its individual capacity but solely
as Trustee of the AFG/M-Ward 1994-1 Trust
By: /s/ Gail D. Ofgant By: /s/ Douglas V. Gathany
-------------------------- -----------------------------
DOUGLAS V. GATHANY
Title: Sr. Vice President Title: VICE PRESIDENT-TREASURER
----------------------- --------------------------
COUNTERPART NO. 1 OF 2 SERIALLY NUMBERED MANUALLY EXECUTED COUNTERPARTS. TO THE
EXTENT IF ANY THAT THIS DOCUMENT CONSTITUTES CHATTEL PAPER UNDER THE UNIFORM
COMMERCIAL CODE, NO SECURITY INTEREST MAY BE CREATED THROUGH THE TRANSFER AND
POSSESSION OF ANY COUNTERPART OTHER THAN COUNTERPART NO. 1
<PAGE>
LLR40D-01 EQUIS FINANCIAL GROUP 12/31/98 10:00:29 PAGE 1
Schedule A - Rental Schedule Economics
LESSEE: MONTGOMERY WARD & CO., INC.
LESSOR: EQUIS FINANCIAL GROUP
RENTAL SCHEDULE: 1DRN1
LEASE TERM (months): 24
PRIMARY START DATE: 1/01/1999
LEASE EXPIRATION DATE: 12/31/2000
PAYMENT FREQUENCY: MONTHLY
ADVANCE/ARREARS: ADVANCE
LEASE RATE: .011366692
PER DIEM LEASE RATE: .000378890
PERIODIC RENT: $1,115.00
NUMBER OF PAYMENTS: 24
TOTAL INTERIM RENT: $.00
PAYMENT COMMENCEMENT DATE: 1/01/1999
TOTAL EQUIPMENT COST: $98,093.62
DOCUMENTATION FEE: $0
----------
DVG LESSEE INITIALS
- -----
GDO LESSOR INITIALS
- -----
<PAGE>
Schedule B Equipment Description
Renewal Equipment Schedule No. 1DRN1
Unit
Manufacturing Serial No. Type Quantity Cost
- ------------- ---------- ---- -------- ----
Compression Video Conferencing 1 $86,325.00
Labs
AT&T ISPN System 1 $2,533.68
Sensormatic Video Conferencing 1 $9,234.94
Total: $98,093.62
<PAGE>
RENTAL SCHEDULE AND ACCEPTANCE CERTIFICATE NO. A-11 (the "Rental Schedule")
DATED AS OF APRIL 1, 1994
TO MASTER LEASE AGREEMENT NO. 9208TXG468 (the "Master Lease")
DATED AS OF SEPTEMBER 1, 1992
LESSOR LESSEE
AMERICAN FINANCE GROUP H.E. BUTT GROCERY COMPANY
EXCHANGE PLACE 646 SOUTH MAIN AVENUE
BOSTON, MA 02109 SAN ANTONIO, TX 78283
1. LEASE TERM. PAYMENT DATES.
This Rental Schedule, between Lessor and Lessee incorporates by reference
the terms and conditions of the Master Lease. Lessor hereby leases to Lessee and
Lessee hereby leases from Lessor those items of Equipment described on the
attached Schedule B, for the Lease Term and at the Basic Rent payable on the
Payment Dates hereinafter set forth on the attached Schedule A, on the terms and
conditions set forth in the Master Lease. The Lease Term is for the period from
and including the Acceptance Date of each item of Equipment set forth on the
attached Schedule B, to but not including the Primary Start Date, as hereinafter
defined ("Interim Term") and for a Primary Term commencing on the first day of
the calendar month following the last Acceptance Date for any item of Equipment
leased pursuant hereto ("Primary Start Date") and continuing to and including
the Lease Expiration Date set forth on the attached Schedule A. The Acceptance
Date for each item of Equipment shall be the date on which the item of Equipment
is accepted for lease by Lessee.
2. BASIC RENT.
Interim Term Basic Rent is computed by multiplying the Total Equipment
Cost by the Per Diem Lease Rate set forth on the attached Schedule A and
multiplying the product by the number of days in the Interim Term. Primary Term
Basic Rent is computed by multiplying the Total Equipment Cost by the Periodic
Lease Rate set forth on the attached Schedule A.
3. LESSEE'S OPTIONS UPON LEASE EXPIRATION.
Lessee has the option at the expiration of the Lease Term, exerciseable
with respect to all, but not less than all, items of Equipment leased pursuant
to Rental Schedules having the same Expiration Date, (i) to return the Equipment
to Lessor, (ii) to renew the Rental Schedule at fair rental value for a Renewal
Term the length of which shall be determined by agreement of Lessee and Lessor
or (iii) to purchase the equipment for cash at its then fair market value.
a. Lessee agrees to provide Lessor written notice of its decision to
return the Equipment, renew the Rental Schedule or purchase the
Equipment not less than ninety (90) days prior to the Lease
Expiration Date. If Lessee fails to give Lessor ninety (90) days
written notice, the Lease Term may, at Lessor's option, be extended
and continue until ninety (90) days from the date Lessor receives
written notice of Lessee's decision to return the Equipment, renew
the Rental Schedule or purchase the Equipment. Such (90) day
extension shall be at the original rate set forth on Schedule A.
<PAGE>
RENTAL SCHEDULE AND ACCEPTANCE CERTIFICATE NO. A-11
PAGE TWO
b. Fair market value and fair rental value shall mean an amount which
would be obtained in an arm's-length transaction between an informed
and willing buyer-user or lessee (other than a dealer) and an
informed and willing seller or lessor under no compulsion to sell or
lease provided, however, that in such determination: (i) the
Equipment shall be assumed to be in the condition in which it is
required to be maintained and returned under this Agreement and (ii)
costs of removal from current location shall not be a deduction from
such valuation. Fair market value, fair rental value and useful life
will be determined by agreement of Lessor and Lessee, or if the
parties cannot agree, by an independent equipment appraiser selected
by Lessor and reasonably acceptable to Lessee. The cost of the
appraisal will be shared equally by Lessor and Lessee.
c. Each item of equipment must be maintained in a manner that is
consistent with that which is recommended by the manufacturer. Upon
any termination or expiration of this Rental Schedule, Lessee will
promptly, at its own cost and expense provide Lessor with a
Maintenance Acceptance Qualification (MAQ) letter which will be
provided by a manufacturer's representative certifying that the
Equipment is eligible for maintenance. Lessee will return to Lessor
all operating manuals and cables required for the full functioning
of the Equipment. Any cost associated with transferring the software
license to a third party will be solely for the account of Lessee.
The Rental Schedule shall continue in full force and effect and Lessee shall
continue to pay Basic Rent through and including the date on which the Equipment
is returned by Lessee.
4. ACCEPTANCE CERTIFICATE
Lessee hereby represents, warrants and certifies (a) that the Equipment
described herein has been delivered to and inspected and found satisfactory by
Lessee and is accepted for lease by Lessee under this Rental Schedule and the
Master Lease as incorporated herein by reference, as of the Acceptance Date set
forth in Schedule A; (b) all items of Equipment are new and unused as of the
Acceptance Date, except as otherwise specified above; (c) the representations
and warranties of Lessee set forth in the Master Lease are true and correct as
of the date hereof; and (d) unless otherwise specified above, the Equipment is
not a fixture or accession to any real or personal property including any other
property owned by Lessor.
5. ENTIRE AGREEMENT. MODIFICATION AND WAIVERS. EXECUTION IN COUNTERPARTS.
This Rental Schedule and the Master Lease constitute the entire agreement
between Lessee and Lessor with respect to the leasing of the Equipment.
Capitalized terms not defined herein shall have the meanings assigned to them in
the Master Lease. To the extent any of the terms and
<PAGE>
RENTAL SCHEDULE AND ACCEPTANCE CERTIFICATE NO. A-11
PAGE THREE
conditions set forth in this Rental Schedule conflict with or are inconsistent
with the Master Lease, this Rental Schedule shall govern and control. No
amendment, modification or waiver of this Rental Schedule or the Master Lease
will be effective unless evidenced by a writing signed by the party to be
charged. This Rental Schedule may be executed in counterparts, all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF the parties hereto have caused this Rental Schedule and
Acceptance Certificate to be executed and delivered by their duly authorized
representatives as of the date first above written.
AMERICAN FINANCE GROUP H.E. BUTT GROCERY COMPANY
Lessor Lessee
By: /s/ [ILLEGIBLE] By: /s/ [ILLEGIBLE]
------------------------- -------------------------
Title: Vice President Title: VICE PRESIDENT M.I.S.
COUNTERPART NO. 2 OF 3 SERIALLY NUMBERED MANUALLY EXECUTED COUNTERPARTS. TO THE
EXTENT IF ANY THAT THIS DOCUMENT CONSTITUTES CHATTEL PAPER UNDER THE UNIFORM
COMMERCIAL CODE, NO SECURITY INTEREST MAY BE CREATED THROUGH THE TRANSFER AND
POSSESSION OF ANY COUNTERPART OTHER THAN COUNTERPART NO. 1
<PAGE>
LLR40D-01 AMERICAN FINANCE GROUP 4/06/94 16:36:22 PAGE 1
Schedule A -- Rental Schedule Economics
LESSEE: H E BUTT GROCERY COMPANY
LESSOR: AMERICAN FINANCE GROUP
RENTAL SCHEDULE: A-11
LEASE TERM (months): 36
PRIMARY START DATE: 4/01/1994
LEASE EXPIRATION DATE: 3/31/1997
PAYMENT FREQUENCY: MONTHLY
ADVANCE/ARREARS: ADVANCE
LEASE RATE: .026997000
PER DIEM LEASE RATE: .000899900
PERIODIC RENT: $12,984.31
NUMBER OF PAYMENTS: 36
TOTAL INTERIM RENT: $12,374.06
PAYMENT COMMENCEMENT DATE: 4/01/1994
TOTAL EQUIPMENT COST: $480,953.25
DOCUMENTATION FEE: 70.00
-----------
[ILLEGIBLE] LESSEE INITIALS
- -----------
[ILLEGIBLE] LESSOR INITIALS
- -----------
<PAGE>
LLR41D-01 AMERICAN FINANCE GROUP 4/06/94 11:10:28 PAGE 1
Schedule B Equipment Description
LESSEE: H E BUTT GROCERY COMPANY
RENTAL SCHEDULE AND ACCEPTANCE CERTIFICATE NUMBER: A-11
LESSOR: AMERICAN FINANCE GROUP
<TABLE>
<CAPTION>
Acceptance
Equipment Cost Serial Number Year Manufacturer Model Type Date
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
230.00 NBS (200) SINGLE KEY CAPS 2/27/1994
- ---------------
230.00 Total for Location 646 S MAIN AVE SAN ANTONIO TX 78283
74,580.00 ACR/APG/EPSON (44) KEYBOARD/DRAWER/PRIN 3/10/1994
3,592.00 ACR (8) PRINTER PRODUCT DISPL 3/10/1994
- ---------------
78,172.00 Total for Location 4801 SAN DARIO LAREDO TX 78041
38,985.00 ACR/APG/EPSON (23) KEYBOARD/DRAWER/PRIN 2/27/1994
2,245.00 ACR (5) PRINTER PRODUCT DISPL 2/27/1994
- ---------------
41,230.00 Total for Location 2310 SAUNDERS LAREDO TX 78040
17,780.00 ACR 2000 (35) KEYBOARD 2/27/1994
- ---------------
17,780.00 Total for Location 200 HANCOCK CTR AUSTIN TX 78751
1,158.00 EQUINOX (1) SERVER 2/28/1994
236.00 ACR (1) MICRO TRANSCEIVER 2/28/1994
1,790.00 ITHACA 51 (2) PRINTER 2/28/1994
- ---------------
3,184.00 Total for Location 4001 N LAMAR AUSTIN TX 78758
19,090.75 EPSON 930 (25) PRINTER 3/15/1994
120.00 ACR (20) KEYBOARD CABLE 3/15/1994
650.00 ACR (25) PRINTER/DRAWER CABLE 3/15/1994
- ---------------
19,860.75 Total for Location 11843 STARCREST SAN ANTONIO TX 78247
50,850.00 ACR/APG/EPSON (30) KEYBOARD/DRAWER/PRIN 2/14/1994
2,245.00 ACR (5) PRINTER PRODUCT DISPL 2/14/1994
- ---------------
53,095.00 Total for Location 2130 CULEBRA SAN ANTONIO TX 78228
57,630.00 ACR/APG/EPSON (34) KEYBOARD/DRAWER/PRIN 2/14/1994
4,490.00 ACR (10) PRINTER PRODUCT DISP 2/16/1994
189.00 ACR 2400 (3) MODEM 2/28/1994
1,158.00 EQUINOX (1) SERVER 2/28/1994
118.00 ACR (1) TRANSCEIVER 2/28/1994
- ---------------
63,585.00 Total for Location 400 W OLMOS SAN ANTONIO TX 78212
27,120.00 ACR/APG/EPSON (16) KEYBOARD/DRAWER/PRIN 3/10/1994
2,245.00 ACR (5) PRINTER DISPLAY 3/10/1994
</TABLE>
<PAGE>
LLR41D-01 AMERICAN FINANCE GROUP 4/06/94 11:10:28 PAGE 2
Schedule B Equipment Description
LESSEE: H E BUTT GROCERY COMPANY
RENTAL SCHEDULE AND ACCEPTANCE CERTIFICATE NUMBER: A-11
LESSOR: AMERICAN FINANCE GROUP
<TABLE>
<CAPTION>
Acceptance
Equipment Cost Serial Number Year Manufacturer Model Type Date
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ---------------
29,365.00 Total for Location 403 E MAIN ST ROBSTOWN TX 78380
13,560.00 ACR/APG/EPSON (8) KEYBOARD/DRAWER/PRINT 3/10/1994
- ---------------
13,560.00 Total for Location HIGHLAND LAKE CENTER KINGSLAND TX 78639
66,105.00 ACR/APG/EPSON (39) KEYBOARD/DRAWER/PRIN 3/10/1994
5,389.00 ACR (12) PRINTER PRODUCT DISP 3/10/1994
- ---------------
71,493.00 Total for Location 1345 BARROW ABILENE TX 79605
15,255.00 ACR/APG/EPSON (9) KEYBOARD/DRAWER/PRINT 3/10/1994
449.00 ACR (1) PRINTER PRODUCT DISPL 3/10/1994
- ---------------
15,704.00 Total for Location 400 S COLORADO LOCKHART TX 78644
25,425.00 ACR/APG/EPSON (15) KEYBOARD/DRAWER/PRIM 3/10/1994
898.00 ACR (2) PRINTER PRODUCT DISPL 3/10/1994
- ---------------
26,323.00 Total for Location 1103 MORGAN HARLINGEN TX 78550
158.50 NCR (1) DATACHECKER 2/17/1994
- ---------------
158.50 Total for Location 2601 VINNIA MCALLEN TX 78504
44,070.00 ACR/APG/EPSON (26) KEYBOARD/DRAWER/PRIN 3/14/1994
3,143.00 ACR (7) PRINTER PRODUCT DISPL 3/14/1994
- ---------------
47,213.00 Total for Location 641 E HOPKINS SAN MARCOS TX 78666
- ---------------
- ---------------
480,953.25 Total Equipment Cost
</TABLE>
<PAGE>
H.E. BUTT GROCERY COMPANY
EXHIBIT ONE
RENTAL SCHEDULE AND ACCEPTANCE CERTIFICATE NO A-11
(Stated as a Percentage of Equipment Cost)
AFTER
PRIMARY
TERM CASUALTY
PAYMENT NO. VALUE
- ----------- -----
Prior to 1 120.00
1 118.35
2 116.69
3 115.00
4 113.29
5 111.58
6 109.81
7 108.03
8 106.22
9 104.40
10 102.55
11 100.67
12 98.78
13 96.85
14 94.90
15 92.93
16 90.92
17 88.90
18 86.84
19 84.76
20 82.65
21 80.51
22 78.35
23 76.16
24 73.93
25 71.68
26 69.40
27 67.09
28 64.75
29 62.38
30 59.97
31 57.54
32 55.07
33 52.57
34 50.04
35 47.48
36 45.00
<PAGE>
RENTAL SCHEDULE AND ACCEPTANCE CERTIFICATE NO. A-12 (the "Rental Schedule")
DATED AS OF APRIL 1, 1994
TO MASTER LEASE AGREEMENT NO. 9208TXG468 (the "Master Lease")
DATED AS OF SEPTEMBER 1, 1992
LESSOR LESSEE
AMERICAN FINANCE GROUP H.E. BUTT GROCERY COMPANY
EXCHANGE PLACE 646 SOUTH MAIN AVENUE
BOSTON, MA 02109 SAN ANTONIO, TX 78283
1. LEASE TERM. PAYMENT DATES.
This Rental Schedule, between Lessor and Lessee incorporates by reference
the terms and conditions of the Master Lease. Lessor hereby leases to Lessee and
Lessee hereby leases from Lessor those items of Equipment described on the
attached Schedule B, for the Lease Term and at the Basic Rent payable on the
Payment Dates hereinafter set forth on the attached Schedule A, on the terms and
conditions set forth in the Master Lease. The Lease Term is for the period from
and including the Acceptance Date of each item of Equipment set forth on the
attached Schedule B, to but not including the Primary Start Date, as hereinafter
defined ("Interim Term") and for a Primary Term commencing on the first day of
the calendar month following the last Acceptance Date for any item of Equipment
leased pursuant hereto ("Primary Start Date") and continuing to and including
the Lease Expiration Date set forth on the attached Schedule A. The Acceptance
Date for each item of Equipment shall be the date on which the item of Equipment
is accepted for lease by Lessee.
2. BASIC RENT.
Interim Term Basic Rent is computed by multiplying the Total Equipment
Cost by the Per Diem Lease Rate set forth on the attached Schedule A and
multiplying the product by the number of days in the Interim Term. Primary Term
Basic Rent is computed by multiplying the Total Equipment Cost by the Periodic
Lease Rate set forth on the attached Schedule A.
3. LESSEE'S OPTIONS UPON LEASE EXPIRATION.
Lessee has the option at the expiration of the Lease Term, exerciseable
with respect to all, but not less than all, items of Equipment leased pursuant
to Rental Schedules having the same Expiration Date, (i) to return the Equipment
to Lessor, (ii) to renew the Rental Schedule at fair rental value for a Renewal
Term the length of which shall be determined by agreement of Lessee and Lessor
or (iii) to purchase the equipment for cash at its then fair market value.
a. Lessee agrees to provide Lessor written notice of its decision to
return the Equipment, renew the Rental Schedule or purchase the
Equipment not less than ninety (90) days prior to the Lease
Expiration Date. If Lessee fails to give Lessor ninety (90) days
written notice, the Lease Term may, at Lessor's option, be extended
and continue until ninety (90) days from the date Lessor receives
written notice of Lessee's decision to return the Equipment, renew
the Rental Schedule or purchase the Equipment. Such (90) day
extension shall be at the original rate set forth on Schedule A.
<PAGE>
RENTAL SCHEDULE AND ACCEPTANCE CERTIFICATE NO. A-12
PAGE TWO
b. Fair market value and fair rental value shall mean an amount which
would be obtained in an arm's-length transaction between an informed
and willing buyer-user or lessee (other than a dealer) and an
informed and willing seller or lessor under no compulsion to sell or
lease provided, however, that in such determination: (i) the
Equipment shall be assumed to be in the condition in which it is
required to be maintained and returned under this Agreement and (ii)
costs of removal from current location shall not be a deduction from
such valuation. Fair market value, fair rental value and useful life
will be determined by agreement of Lessor and Lessee, or if the
parties cannot agree, by an independent equipment appraiser selected
by Lessor and reasonably acceptable to Lessee. The cost of the
appraisal will be shared equally by Lessor and Lessee.
c. Each item of equipment must be maintained in a manner that is
consistent with that which is recommended by the manufacturer. Upon
any termination or expiration of this Rental Schedule, Lessee will
promptly, at its own cost and expense provide Lessor with a
Maintenance Acceptance Qualification (MAQ) letter which will be
provided by a manufacturer's representative certifying that the
Equipment is eligible for maintenance. Lessee will return to Lessor
all operating manuals and cables required for the full functioning
of the Equipment. Any cost associated with transferring the software
license to a third party will be solely for the account of Lessee.
The Rental Schedule shall continue in full force and effect and Lessee shall
continue to pay Basic Rent through and including the date on which the Equipment
is returned by Lessee.
4. ACCEPTANCE CERTIFICATE
Lessee hereby represents, warrants and certifies (a) that the Equipment
described herein has been delivered to and inspected and found satisfactory by
Lessee and is accepted for lease by Lessee under this Rental Schedule and the
Master Lease as incorporated herein by reference, as of the Acceptance Date set
forth in Schedule A; (b) all items of Equipment are new and unused as of the
Acceptance Date, except as otherwise specified above; (c) the representations
and warranties of Lessee set forth in the Master Lease are true and correct as
of the date hereof; and (d) unless otherwise specified above, the Equipment is
not a fixture or accession to any real or personal property including any other
property owned by Lessor.
5. ENTIRE AGREEMENT. MODIFICATION AND WAIVERS. EXECUTION IN COUNTERPARTS.
This Rental Schedule and the Master Lease constitute the entire agreement
between Lessee and Lessor with respect to the leasing of the Equipment.
Capitalized terms not defined herein shall have the meanings assigned to them in
the Master Lease. To the extent any of the terms and
<PAGE>
RENTAL SCHEDULE AND ACCEPTANCE CERTIFICATE NO. A-12
PAGE THREE
conditions set forth in this Rental Schedule conflict with or are inconsistent
with the Master Lease, this Rental Schedule shall govern and control. No
amendment, modification or waiver of this Rental Schedule or the Master Lease
will be effective unless evidenced by a writing signed by the party to be
charged. This Rental Schedule may be executed in counterparts, all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF the parties hereto have caused this Rental Schedule and
Acceptance Certificate to be executed and delivered by their duly authorized
representatives as of the date first above written.
AMERICAN FINANCE GROUP H.E. BUTT GROCERY COMPANY
Lessor Lessee
By: /s/ [ILLEGIBLE] By: /s/ [ILLEGIBLE]
------------------------- -------------------------
Title: Vice President Title: VICE PRESIDENT M.I.S.
COUNTERPART NO. 2 OF 3 SERIALLY NUMBERED MANUALLY EXECUTED COUNTERPARTS. TO THE
EXTENT IF ANY THAT THIS DOCUMENT CONSTITUTES CHATTEL PAPER UNDER THE UNIFORM
COMMERCIAL CODE, NO SECURITY INTEREST MAY BE CREATED THROUGH THE TRANSFER AND
POSSESSION OF ANY COUNTERPART OTHER THAN COUNTERPART NO. 1
<PAGE>
LLR40D-01 AMERICAN FINANCE GROUP 4/06/94 16:36:23 PAGE 1
Schedule A - Rental Schedule Economics
LESSEE: H E BUTT GROCERY COMPANY
LESSORS AMERICAN FINANCE GROUP
RENTAL SCHEDULE: A-12
LEASE TERM (months): 60
PRIMARY START DATE: 4/01/1994
LEASE EXPIRATION DATE: 3/31/1999
PAYMENT FREQUENCY: MONTHLY
ADVANCE/ARREARS: ADVANCE
LEASE RATE: .017823000
PER DIEM LEASE RATE: .000594100
PERIODIC RENT: $20,946.26
NUMBER OF PAYMENTS: 60
TOTAL INTERIM RENT: $26,109.56
PAYMENT COMMENCEMENT DATE: 4/01/1994
TOTAL EQUIPMENT COST: $1,175,233.70
DOCUMENTATION FEE: 70.00
-------------
[ILLEGIBLE] LESSEE INITIALS
- -----------
[ILLEGIBLE] LESSOR INITIALS
- -----------
<PAGE>
LLR41D-01 AMERICAN FINANCE GROUP 4/06/94 11:10:33 PAGE 1
Schedule B Equipment Description
LESSEE: H E BUTT GROCERY COMPANY
RENTAL SCHEDULE AND ACCEPTANCE CERTIFICATE NUMBER: A-12
LESSOR: AMERICAN FINANCE GROUP
<TABLE>
<CAPTION>
Acceptance
Equipment Cost Serial Number Year Manufacturer Model Type Date
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
79,288.00 DEC 425LP (44) COMPUTER 3/10/1994
5,600.00 SPECTRA PHYSICS (8) SPACE SCANNER 3/10/1994
1,400.00 SPECTRA PHYSICS SP400 (2) SCANNER 3/10/1994
6,900.00 CABLETRON (6) HUB 3/10/1994
21,122.00 DEC 450ST (2) COMPUTER 2/22/1994
750.00 OIC 525MB (1) TAPE DRIVE 2/22/1994
815.10 NCR (19) CABLE 3/07/1994
39,501.00 NCR (19) SCANNER/SCALE 3/07/1994
2,821.50 NCR (19) PACESETTER 3/07/1994
- ---------------
158,197.60 Total for Location 4801 SAN DARIO LAREDO TX 78041
21,122.00 DEC 450ST (2) COMPUTER 2/21/1994
750.00 OIC 525MB (1) TAPE DRIVE 2/21/1994
41,446.00 DEC 425LP (23) COMPUTER 2/27/1994
3,500.00 SPECTRA PHYSICS (5) SPACE SCANNER 2/27/1994
1,400.00 SPECTRA PHYSICS SP400 (2) SCANNER 2/27/1994
- ---------------
68,218.00 Total for Location 2310 SAUNDERS LAREDO TX 78040
217.00 24729771 NCR (1) REMOTE DISPLAY 8/02/1993
217.00 24729772 NCR (1) REMOTE DISPLAY 8/02/1993
217.00 24729773 NCR (1) REMOTE DISPLAY 8/02/1993
217.00 24729774 NCR (1) REMOTE DISPLAY 8/02/1993
217.00 24729775 NCR (1) REMOTE DISPLAY 8/02/1993
217.00 24729776 NCR (1) REMOTE DISPLAY 8/02/1993
217.00 24729777 NCR (1) REMOTE DISPLAY 8/02/1993
217.00 24729778 NCR (1) REMOTE DISPLAY 8/02/1993
217.00 24729779 NCR (1) REMOTE DISPLAY 8/02/1993
217.00 24729780 NCR (1) REMOTE DISPLAY 8/02/1993
217.00 24415138 NCR (1) REMOTE DISPLAY 8/02/1993
217.00 24415139 NCR (1) REMOTE DISPLAY 8/02/1993
217.00 24415132 NCR (1) REMOTE DISPLAY 8/02/1993
217.00 24415133 NCR (1) REMOTE DISPLAY 8/02/1993
217.00 24415134 NCR (1) REMOTE DISPLAY 8/02/1993
217.00 24415135 NCR (1) REMOTE DISPLAY 8/02/1993
217.00 24415136 NCR (1) REMOTE DISPLAY 8/02/1993
217.00 24760555 NCR (1) REMOTE DISPLAY 8/02/1993
217.00 24760556 NCR (1) REMOTE DISPLAY 8/02/1993
217.00 24760557 NCR (1) REMOTE DISPLAY 8/02/1993
- ---------------
4,340.00 Total for Location 3601 PECAN MCALLEN TX 78501
138.70 NCR (1) CABLE 1/19/1994
25,900.00 SPECTRA PHYSICS (37) SPACE SCANNER 3/15/1994
</TABLE>
<PAGE>
LLR41D-01 AMERICAN FINANCE GROUP 4/06/94 11:10:33 PAGE 2
Schedule B Equipment Description
LESSEE: H E BUTT GROCERY COMPANY
RENTAL SCHEDULE AND ACCEPTANCE CERTIFICATE NUMBER: A-12
LESSOR: AMERICAN FINANCE GROUP
<TABLE>
<CAPTION>
Acceptance
Equipment Cost Serial Number Year Manufacturer Model Type Date
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
14,000.00 SPECTRA PHYSICS SP400 (20) SCANNER 3/15/1994
- ---------------
40,038.70 Total for Location 11843 STARCREST SAN ANTONIO TX 78247
343.20 NCR (8) CABLE 11/24/1993
16,632.40 NCR (8) SCANNER/SCALE 11/24/1993
1,188.00 NCR (8) PACESETTER 11/24/1993
92.40 NCR (2) CABLE 11/24/1993
4,158.00 NCR (2) SCANNER/SCALE 11/24/1993
297.00 NCR (2) PACESETTER 11/24/1993
386.10 NCR (9) CABLE 11/24/1993
18,711.00 NCR (9) SCANNER/SCALE 11/24/1993
1,336.50 NCR (9) PACESETTER 11/24/1993
- ---------------
43,144.60 Total for Location 1100 LEOPARD CORPUS CHRISTI TX 78410
257.40 NCR (6) CABLE 1/19/1994
12,474.00 NCR (6) SCANNER/SCALE 1/19/1994
891.00 NCR (6) PACESETTER 1/19/1994
- ---------------
13,622.40 Total for Location 106 S SAN PATRICIO SINTON TX 78387
785.40 NCR (17) 9-PIN D SHELL 1/19/1994
35,343.00 NCR (17) SCANNER/SCALE 1/19/1994
2,524.50 NCR (17) PACESETTER 1/19/1994
4,200.00 SPECTRA PHYSICS (6) SPACE SCANNER 2/14/1994
1,400.00 SPECTRA PHYSICS SP400 (2) HAND SCANNER 2/14/1994
- ---------------
44,252.90 Total for Location 1533 AUSTIN HWY SAN ANTONIO TX 78218
429.00 NCR (10) CABLE 1/21/1994
20,790.00 NCR (10) SCANNER/SCALE 1/21/1994
1,485.00 NCR (10) PACESETTER 1/21/1994
3,500.00 SPECTRA PHYSICS (5) SPACE SCANNER 2/14/1994
- ---------------
26,204.00 Total for Location 301 N AUSTIN ROCKPORT TX 78382
27,027.00 NCR (13) SCANNER/SCALE 2/03/1994
1,930.50 NCR (13) PACESTTER 2/03/1994
1,716.00 NCR (13) DATACHECKER 2/03/1994
- ---------------
30,673.50 Total for Location 227 E MAIN UVALDE TX 78801
600.60 NCR (14) CABLE 2/04/1994
29,106.00 NCR (14) SCANNER/SCALE 2/04/1994
</TABLE>
<PAGE>
LLR41D-01 AMERICAN FINANCE GROUP 4/06/94 11:10:33 PAGE 3
Schedule B Equipment Description
LESSEE: H E BUTT GROCERY COMPANY
RENTAL SCHEDULE AND ACCEPTANCE CERTIFICATE NUMBER: A-12
LESSOR: AMERICAN FINANCE GROUP
<TABLE>
<CAPTION>
Acceptance
Equipment Cost Serial Number Year Manufacturer Model Type Date
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
2,079.00 NCR (14) PACESETTER 2/04/1994
21,122.00 DEC 450ST (2) COMPUTER 2/14/1994
750.00 OIC 525MB (1) TAPE DRIVE 2/14/1994
54,060.00 DEC 425LP (30) COMPUTER 2/14/1994
3,500.00 SPECTRA PHYSICS (5) SPACE SCANNER 2/14/1994
1,400.00 SPECTRA PHYSICS SP400 (2) HAND SCANNER 2/14/1994
21,122.00 DEC 450ST (2) COMPUTER 2/27/1994
750.00 OIC 525MB (1) TAPE DRIVE 2/27/1994
- ---------------
134,489.60 Total for Location 2130 CULEBRA SAN ANTONIO TX 78228
21,122.00 DEC 450ST (2) COMPUTER 2/16/1994
61,268.00 DEC 425LP (34) COMPUTER 2/16/1994
750.00 OIC 525MB (1) TAPE DRIVE 2/16/1994
7,000.00 SPECTRA PHYSICS (10) SPACE SCANNER 2/16/1994
4,900.00 SPECTRA PHYSICS SP400 (7) SCANNER 3/23/1994
- ---------------
95,040.00 Total for Location 400 W OLMOS SAN ANTONIO TX 78212
21,122.00 DEC 450ST (2) COMPUTER 3/10/1994
750.00 OIC 525MB (1) TAPE DRIVE 3/10/1994
28,832.00 DEC 425LP (16) COMPUTER 3/10/1994
2,100.00 SPECTRA PHYSICS (3) SPACE SCANNER 3/10/1994
1,400.00 SPECTRA PHYSICS SP400 (2) SCANNER 3/10/1994
3,450.00 CABLETRON (3) HUB 3/10/1994
- ---------------
57,654.00 Total for Location 403 E MAIN ST ROBSTOWN TX 78380
14,416.00 DEC 425LP (8) COMPUTER 3/10/1994
1,400.00 SPECTRA PHYSICS SP400 (2) SCANNER 3/10/1994
12,600.00 SPECTRA PHYSICS 960SL (6) SCANNER 3/10/1994
2,300.00 CABLETRON (2) HUB 3/10/1994
21,122.00 DEC 450ST (2) COMPUTER 2/22/1994
750.00 OIC 525MB (1) TAPE DRIVE 2/22/1994
- ---------------
52,588.00 Total for Location HIGHLAND LAKE CENTER KINGSLAND TX 78639
70,278.00 DEC 425LP (39) COMPUTER 3/10/1994
8,400.00 SPECTRA PHYSICS (12) SPACE SCANNER 3/10/1994
1,400.00 SPECTRA PHYSICS SP400 (2) SCANNER 3/10/1994
42,000.00 SPECTRA PHYSICS 960LS (25) SCANNER 3/10/1994
5,750.00 CABLETRON (5) HUB 3/10/1994
21,122.00 DEC 450ST (2) COMPUTER 2/21/1994
750.00 OIC 525MB (1) TAPE DRIVE 2/21/1994
- ---------------
149,700.00 Total for Location 1345 BARROW ABILENE TX 79605
</TABLE>
<PAGE>
LLR41D-01 AMERICAN FINANCE GROUP 4/06/94 11:10:33 PAGE 4
Schedule B Equipment Description
LESSEE: H E BUTT GROCERY COMPANY
RENTAL SCHEDULE AND ACCEPTANCE CERTIFICATE NUMBER: A-12
LESSOR: AMERICAN FINANCE GROUP
<TABLE>
<CAPTION>
Acceptance
Equipment Cost Serial Number Year Manufacturer Model Type Date
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
16,218.00 DEC 425LP (9) COMPUTER 3/10/1994
700.00 SPECTRA PHYSICS (1) SPACE SCANNER 3/10/1994
1,400.00 SPECTRA PHYSICS SP400 (2) SCANNER 3/10/1994
12,600.00 SPECTRA PHYSICS 960LS (6) SCANNER 3/10/1994
2,300.00 CABLETRON (2) HUB 3/10/1994
21,122.00 DEC 450ST (2) COMPUTER 2/21/1994
750.00 OIC 525MB (1) TAPE DRIVE 2/21/1994
- ---------------
55,090.00 Total for Location 400 S COLORADO LOCKHART TX 78644
27,030.00 DEC 425LP (15) COMPUTER 3/10/1994
1,400.00 SPECTRA PHYSICS (2) SPACE SCANNER 3/10/1994
1,400.00 SPECTRA PHYSICS SP400 (2) SCANNER 3/10/1994
23,100.00 SPECTRA PHYSICS 960LS (11) SCANNER 3/10/1994
2,300.00 CABLETRON (2) HUB 3/10/1994
21,122.00 DEC 450ST (2) COMPUTER 2/21/1994
750.00 OIC 525MB (1) TAPE DRIVE 2/21/1994
- ---------------
77,102.00 Total for Location 1103 MORGAN HARLINGEN TX 78550
46,852.00 DEC 425LP (26) COMPUTER 3/14/1994
2,100.00 SPECTRA PHYSICS (3) SPACE SCANNER 3/14/1994
1,400.00 SPECTRA PHYSICS SP400 (2) SCANNER 3/14/1994
33,600.00 SPECTRA PHYSICS 960LS (16) SCANNER 3/14/1994
4,600.00 CABLETRON (4) HUB 3/14/1994
- ---------------
88,552.00 Total for Location 641 E HOPKINS SAN MARCOS TX 78666
257.40 NCR (6) CABLE 3/07/1994
12,474.00 NCR (6) SCANNER/SCALE 3/07/1994
891.00 NCR (6) PACESETTER 3/07/1994
42.90 NCR (1) CABLE 3/07/1994
2,079.00 NCR (1) SCANNER/SCALE 3/07/1994
148.50 NCR (1) PACESETTER 3/07/1994
386.10 NCR (9) CABLE 3/07/1994
18,711.00 NCR (9) SCANNER/SCALE 3/07/1994
1,336.50 NCR (9) PACESETTER 3/07/1994
- ---------------
36,326.40 Total for Location 3910 MCCULLOUGH SAN ANTONIO TX 78212
- ---------------
- ---------------
1,175,233.70 Total Equipment Cost
</TABLE>
<PAGE>
H.E. BUTT GROCERY COMPANY
EXHIBIT ONE
RENTAL SCHEDULE AND ACCEPTANCE CERTIFICATE NO A-12
(Stated as a Percentage of Equipment Cost)
AFTER
PRIMARY
TERM CASUALTY
PAYMENT NO. VALUE
- ----------- -----
Prior to 1 120.00
1 119.25
2 118.48
3 117.70
4 116.91
5 116.11
6 115.30
7 114.48
8 113.64
9 112.79
10 111.94
11 111.06
12 110.18
13 109.29
14 108.38
15 107.46
16 106.53
17 105.58
18 104.62
19 103.65
20 102.66
21 101.66
22 100.65
23 99.62
24 98.58
25 97.52
26 96.45
27 95.37
28 94.26
29 93.15
30 92.02
31 90.87
32 89.71
33 88.53
34 87.33
35 86.12
<PAGE>
H.E. BUTT GROCERY COMPANY
EXHIBIT ONE
RENTAL SCHEDULE AND ACCEPTANCE CERTIFICATE NO A-12
(Stated as a Percentage of Equipment Cost)
AFTER
PRIMARY
TERM CASUALTY
PAYMENT NO. VALUE
- ----------- -----
36 84.89
37 83.65
38 82.39
39 81.11
40 79.81
41 78.49
42 77.16
43 75.81
44 74.44
45 73.05
46 71.65
47 70.22
48 68.77
49 67.31
50 65.82
51 64.32
52 62.79
53 61.25
54 59.68
55 58.09
56 56.48
57 54.85
58 53.19
59 51.51
60 50.00
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0000879494
<NAME> AFG INVESTMENT TRUST A
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 4,799,207
<SECURITIES> 86,497
<RECEIVABLES> 721,643
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,607,347
<PP&E> 14,717,416
<DEPRECIATION> 10,824,318
<TOTAL-ASSETS> 9,500,445
<CURRENT-LIABILITIES> 535,001
<BONDS> 650,646
0
0
<COMMON> 0
<OTHER-SE> 8,314,798
<TOTAL-LIABILITY-AND-EQUITY> 9,500,445
<SALES> 0
<TOTAL-REVENUES> 2,253,195
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,660,797
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 93,636
<INCOME-PRETAX> (501,238)
<INCOME-TAX> 0
<INCOME-CONTINUING> (501,238)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (501,238)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
