<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[XX] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
-------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
---------------------- ---------------------
_______________________
For Quarter Ended June 30, 1996 Commission File No. 0-21444
AFG Investment Trust C
- -----------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 04-3157232
- ------------ ----------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
98 North Washington Street, Boston, MA 02114
- ---------------------------------------- -------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 854-5800
------------------
- ------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes No
--- ---
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AFG Investment Trust C
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Statement of Financial Position
at June 30, 1996 and December 31, 1995 3
Statement of Operations for the three and
six months ended June 30, 1996 and 1995 4
Statement of Cash Flows for the six months
ended June 30, 1996 and 1995 5
Notes to the Financial Statements 6-8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-12
PART II. OTHER INFORMATION:
Items 1 - 6 13
</TABLE>
2
<PAGE>
AFG Investment Trust C
STATEMENT OF FINANCIAL POSITION
June 30, 1996 and December 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
------------ ------------
<S> <C> <C>
ASSETS
- ------
Cash and cash equivalents $ 4,594,788 $ 279,116
Rents receivable 2,152,567 2,949,192
Accounts receivable - affiliate 552,175 101,258
Equipment at cost, net of accumulated
depreciation of $39,103,371 and
$33,214,195 at June 30, 1996
and December 31, 1995, respectively 53,840,747 65,137,539
Organization costs, net of accumulated
amortization of $3,583 and $3,083 at
June 30, 1996 and December 31, 1995,
respectively 1,417 1,917
----------- -----------
Total assets $61,141,694 $68,469,022
=========== ===========
LIABILITIES AND PARTICIPANTS' CAPITAL
- -------------------------------------
Notes payable $22,727,467 $29,517,713
Accrued interest 299,346 354,297
Accrued liabilities 12,500 20,000
Accrued liabilities - affiliate 54,503 --
Deferred rental income 290,485 305,117
Cash distributions payable to
participants 232,679 232,679
----------- -----------
Total liabilities 23,616,980 30,429,806
----------- -----------
Participants' capital (deficit):
Managing Trustee (78,814) (73,669)
Special Beneficiary (657,472) (615,026)
Beneficiary Interests (2,011,014
Interests; initial purchase
price of $25 each) 38,261,000 38,727,911
----------- -----------
Total participants' capital 37,524,714 38,039,216
----------- -----------
Total liabilities and participants'
capital $61,141,694 $68,469,022
=========== ===========
</TABLE>
The accompanying notes are an integral
part of these financial statements.
3
<PAGE>
AFG Investment Trust C
STATEMENT OF OPERATIONS
for the three and six months ended June 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
1996 1995 1996 1995
--------------- --------------- ------------- -------------
<S> <C> <C> <C> <C>
Income:
Lease revenue $5,149,521 $5,422,352 $10,614,823 $10,727,174
Interest income 88,422 28,833 97,115 38,261
Loss on sale of equipment (89,278) (207,989) (531,398) (207,989)
---------- ---------- ----------- -----------
Total income 5,148,665 5,243,196 10,180,540 10,557,446
---------- ---------- ----------- -----------
Expenses:
Depreciation and amortization 3,879,128 3,572,408 7,878,387 7,030,679
Interest expense 420,073 579,906 885,535 1,162,969
Interest expense - affiliate -- 1,790 -- 2,439
Equipment management fees
- affiliate 203,102 204,503 420,700 404,911
Operating expenses - affiliate 79,888 61,640 114,345 122,433
---------- ---------- ----------- -----------
Total expenses 4,582,191 4,420,247 9,298,967 8,723,431
---------- ---------- ----------- -----------
Net income $ 566,474 $ 822,949 $ 881,573 $ 1,834,015
========== ========== =========== ===========
Net income
per Beneficiary Interest $ 0.26 $0.37 $ 0.40 $ 0.83
========== ========== =========== ===========
Cash distributions declared
per Beneficiary Interest $ 0.31 $0.63 $ 0.63 $ 1.26
========== ========== =========== ===========
</TABLE>
The accompanying notes are an integral
part of these financial statements.
4
<PAGE>
AFG Investment Trust C
STATEMENT OF CASH FLOWS
for the six months ended June 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Cash flows from (used in) operating
activities:
Net income $ 881,573 $ 1,834,015
Adjustments to reconcile net income to
net cash from operating activities:
Depreciation and amortization 7,878,387 7,030,679
Loss on sale of equipment 531,398 207,989
Changes in assets and liabilities
Decrease (increase) in:
rents receivable 796,625 42,757
accounts receivable - affiliate (450,917) 71,525
Increase (decrease) in:
accrued interest (54,951) (19,213)
accrued liabilities (7,500) (500)
accrued liabilities - affiliate 54,503 407,213
deferred rental income (14,632) 10,107
----------- -----------
Net cash from operating activities 9,614,486 9,584,572
----------- -----------
Cash flows from (used in) investing
activities:
Purchase of equipment (1,239,741) (5,892,015)
Proceeds from equipment sales 4,127,248 4,102,763
----------- -----------
Net cash from (used in) investing
activities 2,887,507 (1,789,252)
----------- -----------
Cash flows from (used in) financing
activities:
Proceeds from notes payable 997,888 3,622,137
Proceeds from notes payable -
affiliate -- 6,636,800
Principal payments - notes payable (7,788,134) (7,272,769)
Principal payments - notes payable -
affiliate -- (6,612,392)
Distributions paid (1,396,075) (2,792,152)
----------- -----------
Net cash used in financing activities (8,186,321) (6,418,376)
----------- -----------
Net increase in cash and cash
equivalents 4,315,672 1,376,944
Cash and cash equivalents at beginning
of period 279,116 214,260
----------- -----------
Cash and cash equivalents at end
of period $ 4,594,788 $ 1,591,204
=========== ===========
Supplemental disclosure of cash
flow information:
Cash paid during the period for
interest $ 940,486 $ 1,184,621
=========== ===========
</TABLE>
Supplemental schedule of non-cash investing and financing activities:
During 1995, the Trust sold equipment to a lessee which assumed debt and
interest of $308,476 and $1,988, respectively.
The accompanying notes are an integral
part of these financial statements
5
<PAGE>
AFG Investment Trust C
Notes to the Financial Statements
June 30, 1996
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
- ------------------------------
The financial statements presented herein are prepared in conformity with
generally accepted accounting principles and the instructions for preparing Form
10-Q under Rule 10-01 of Regulation S-X of the Securities and Exchange
Commission and are unaudited. As such, these financial statements do not
include all information and footnote disclosures required under generally
accepted accounting principles for complete financial statements and,
accordingly, the accompanying financial statements should be read in conjunction
with the footnotes presented in the 1995 Annual Report. Except as disclosed
herein, there has been no material change to the information presented in the
footnotes to the 1995 Annual Report.
In the opinion of management, all adjustments (consisting of normal and
recurring adjustments) considered necessary to present fairly the financial
position at June 30, 1996 and December 31, 1995 and results of operations for
the three and six month periods ended June 30, 1996 and 1995 have been made and
are reflected.
NOTE 2 - CASH
- -------------
The Trust invests excess cash with large institutional banks in reverse
repurchase agreements with overnight maturities. The reverse repurchase
agreements are secured by U.S. Treasury Bills or interests in U.S. Government
securities.
NOTE 3 - REVENUE RECOGNITION
- ----------------------------
Rents are payable to the Trust monthly, quarterly or semi-annually and no
significant amounts are calculated on factors other than the passage of time.
The leases are accounted for as operating leases and are noncancellable. Rents
received prior to their due dates are deferred. Future minimum rents of
$39,684,484 are due as follows:
<TABLE>
<S> <C>
For the year ending June 30, 1997 $17,195,439
1998 13,089,890
1999 6,421,493
2000 2,311,300
2001 430,760
Thereafter 235,602
-----------
Total $39,684,484
===========
</TABLE>
During March 1996, the Trust acquired an 8.86% proportionate ownership
interest in an MD-87 jet aircraft leased by Reno Air, Inc. (the "Reno Aircraft")
- - See Note 4 herein. The Trust will receive approximately $157,000 of rental
revenue in each of the years in the period ending June 30, 2002 and $79,000 in
the year ending June 30, 2003. Rents from the Reno Aircraft, as provided for in
the lease agreement, are adjusted monthly for changes of the London Inter-Bank
Offered Rate ("LIBOR"). Future rents from the Reno Aircraft included above
reflect the most recent LIBOR effected rental payment.
6
<PAGE>
AFG Investment Trust C
Notes to the Financial Statements
(Continued)
NOTE 4 - EQUIPMENT
- ------------------
The following is a summary of equipment owned by the Trust at June 30, 1996.
In the opinion of American Finance Group ("AFG"), the acquisition cost of the
equipment did not exceed its fair market value.
<TABLE>
<CAPTION>
Lease Term Equipment
Equipment Type (Months) at Cost
- -------------- ---------- ---------
<S> <C> <C>
Aircraft 48-81 $ 16,504,999
Computers & peripherals 12-72 15,066,078
Vessels 72-73 13,014,544
Retail store fixtures 36-60 11,233,766
Locomotives 36-84 9,438,818
Construction & mining 36-72 7,584,573
Materials handling 12-84 7,568,936
Manufacturing 60-72 3,815,155
Commercial printing 66 3,542,761
Communications 30-40 2,004,394
Research & test 36-60 1,667,223
Tractors and heavy duty trucks 18-60 714,107
Trailers/intermodal containers 51-60 342,029
Furniture & fixtures 60 239,785
Photocopying 36-60 140,373
Energy systems 36 63,900
Medical 36 2,206
----- ------------
Miscellaneous 36 471
------------
Total equipment cost 92,944,118
Accumulated depreciation (39,103,371)
------------
Equipment, net of accumulated depreciation $ 53,840,747
============
</TABLE>
On September 29, 1995, the Trust entered into an agreement with United Air
Lines, Inc. ("United") to sell the Trust's proportionate ownership interest in a
Boeing 747-SP aircraft (the "United Aircraft"), to United for cash consideration
of $4,679,924 including unpaid rents through the date of sale, which event
concluded in February 1996. In March 1996, the Trust acquired an 8.86%
ownership interest in the Reno Aircraft, pursuant to the reinvestment provisions
of the Trust's prospectus, at a cost of $1,239,741. To acquire the interest in
the Reno Aircraft, the Trust obtained leveraging of $997,888 from a third-party
lender and utilized cash proceeds of $241,853 from the sale of the United
Aircraft. The Managing Trustee intends to reinvest the remaining proceeds from
the sale of the United Aircraft in other equipment in 1996.
At June 30, 1996, the Trust's equipment portfolio included equipment having a
proportionate original cost of $41,603,638, representing approximately 45% of
total equipment cost.
At June 30, 1996, the cost and net book value of equipment held for sale or
re-lease was approximately $552,000 and $249,000, respectively. The Managing
Trustee is actively seeking the sale or re-lease of all equipment not on lease.
7
<PAGE>
NOTE 5 - RELATED PARTY TRANSACTIONS
- -----------------------------------
All operating expenses incurred by the Trust are paid by AFG on behalf of the
Trust and AFG is reimbursed at its actual cost for such expenditures. Fees and
other costs incurred during each of the six month periods ended June 30, 1996
and 1995, which were paid or accrued by the Trust to AFG or its Affiliates, are
as follows:
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Equipment acquisition fees $ 36,109 $132,823
Equipment management fees 420,700 404,911
Administrative charges 10,500 10,500
Reimbursable operating expenses
due to third parties 103,845 111,933
Interest on notes payable - affiliate -- 2,439
-------- --------
Total $571,154 $662,606
======== ========
</TABLE>
All rents and proceeds from the sale of equipment are paid directly to either
AFG or to a lender. AFG temporarily deposits collected funds in a separate
interest-bearing escrow account prior to remittance to the Trust. At June 30,
1996, the Trust was owed $552,175 by AFG for such funds, and the interest
thereon. These funds were remitted to the Trust in July 1996.
NOTE 6 - NOTES PAYABLE
- ----------------------
Notes payable at June 30, 1996 consisted of installment notes of $22,727,467
payable to banks and institutional lenders. The notes bear interest rates
ranging between 5.1% and 11.75%, except for one note which bears a fluctuating
interest rate based on LIBOR plus a margin (5.5% at June 30, 1996). All of the
installment notes are non-recourse and are collateralized by the equipment and
assignment of the related lease payments. Generally, the installment notes will
be fully amortized by noncancellable rents. However, the Trust has balloon
payment obligations at the expiration of the primary lease term related to the
Reno Aircraft. The carrying amount of notes payable approximates fair value at
June 30, 1996.
The annual maturities of the notes payable are as follows:
<TABLE>
<S> <C>
For the year ending June 30, 1997 $11,625,979
1998 7,477,099
1999 2,674,743
2000 338,600
2001 118,875
Thereafter 492,171
-----------
Total $22,727,467
===========
</TABLE>
8
<PAGE>
AFG Investment Trust C
FORM 10-Q
PART I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results
- --------------------------------------------------------------------------------
of Operations.
- --------------
Three and six months ended June 30, 1996 compared to the three and six months
- -----------------------------------------------------------------------------
ended June 30, 1995:
- --------------------
Overview
- --------
As an equipment leasing trust, the Trust was organized to acquire a
diversified portfolio of capital equipment subject to lease agreements with
third parties. The Trust was designed to progress through three principal
phases: acquisitions, operations, and liquidation. During the operations
phase, a period of approximately six years, all equipment in the Trust's
portfolio will progress through various stages. Initially, all equipment will
generate rental revenues under primary term lease agreements. During the life
of the Trust, these agreements will expire on an intermittent basis and
equipment held pursuant to the related leases will be renewed, re-leased or
sold, depending on prevailing market conditions and the assessment of such
conditions by AFG to obtain the most advantageous economic benefit. Over time,
a greater portion of the Trust's original equipment portfolio will become
available for remarketing and cash generated from operations and from sales or
refinancings will begin to fluctuate. Ultimately, all equipment will be sold
and the Trust will be dissolved. The Trust's operations commenced in 1992.
Results of Operations
- ---------------------
For the three and six months ended June 30, 1996, the Trust recognized lease
revenue of $5,149,521 and $10,614,823, respectively, compared to $5,422,352 and
$10,727,174 for the same periods in 1995. The decrease in lease revenue from
1995 to 1996 is due primarily to the Trust's sale of its interest in the United
Aircraft in February 1996, as discussed below. The Trust's original equipment
acquisition and leveraging processes were completed in 1995. Future remarketing
activities will cause rental revenues to decline. However, in 1996, the Trust's
aggregate rental revenues are expected to be consistent with 1995 due to the
recognition of a full year's revenue related to equipment acquired during 1995
and reinvestment, in 1996, of the cash proceeds realized from the Trust's sale
of its proportionate interest in an aircraft (see below). The Trust also earns
interest income from temporary investments of rental receipts and equipment
sales proceeds in short-term instruments.
The Trust's equipment portfolio includes certain assets in which the Trust
holds a proportionate ownership interest. In such cases, the remaining
interests are owned by AFG or an affiliated equipment leasing program sponsored
by AFG. Proportionate equipment ownership enables the Trust to further
diversify its equipment portfolio by participating in the ownership of selected
assets, thereby reducing the general levels of risk which could result from a
concentration in any single equipment type, industry or lessee. The Trust and
each affiliate individually report, in proportion to their respective ownership
interests, their respective shares of assets, liabilities, revenues, and
expenses associated with the equipment.
On February 5, 1996, the Trust concluded the sale of its interest in a Boeing
747-SP to the lessee, United Air Lines, Inc., as reported in Note 3 to the
Trust's 1995 Annual Report. The Trust recognized a net loss of $1,313,122 in
connection with this transaction, of which $880,717 was recognized as Write-
Down of Equipment in 1995. The remainder of $432,405 was recognized as a loss
on sale of equipment on the accompanying financial statements for the six months
ended June 30, 1996. In addition to lease rents, the Trust received net sale
proceeds of $4,048,779 from United for the aircraft. The Trust plans to
reinvest substantially all of such proceeds in other equipment in 1996, a
portion of which was completed in March 1996 through the acquisition of an 8.86%
ownership interest in the Reno Aircraft at an aggregate cost of $1,239,741. To
acquire the interest in the Reno Aircraft, the Trust obtained long-term
financing of $997,888 from a third-party lender and utilized cash proceeds of
$241,853 from the sale of the United Aircraft. During the three and six months
ended June 30, 1996, the Trust sold other equipment having a net book value of
9
<PAGE>
$150,327 and $177,462, respectively, to existing lessees and third parties.
These sales resulted in net losses, for financial statement purposes, of $89,278
and $98,993, respectively.
During the three and six months ended June 30, 1995, the Trust sold equipment
having a net book value of $4,621,216 to an existing lessee and a third party.
These sales resulted in a net loss, for financial statement purposes, of
$207,989. The equipment sales included the Trust's interest in a vessel with an
original cost and net book value of $6,199,161 and $4,612,874, respectively,
which the Trust sold to an existing lessee in June 1995. In connection with
this sale, the Trust realized sale proceeds of $4,091,193 and the purchaser
assumed related debt and interest of $308,476 and $1,988, respectively, which
resulted in a net loss, for financial statement purposes, of $211,217. This
equipment was sold prior to the expiration of the related lease term.
It cannot be determined whether future sales of equipment will result in a net
gain or net loss to the Trust, as such transactions will be dependent upon the
condition and type of equipment being sold and its marketability at the time of
sale. In addition, the amount of gain or loss reported for financial statement
purposes is partly a function of the amount of accumulated depreciation
associated with the equipment being sold.
The ultimate realization of residual value for any type of equipment is
dependent upon many factors, including AFG's ability to sell and re-lease
equipment. Changing market conditions, industry trends, technological advances
and many other events can converge to enhance or detract from asset values at
any given time. AFG attempts to monitor these changes in order to identify
opportunities which may be advantageous to the Trust and to 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 which may be 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 for the three and six months ended June
30, 1996 was $3,879,128 and $7,878,387, respectively, compared to $3,572,408 and
$7,030,679 for the same periods in 1995. For financial reporting purposes, to
the extent that an asset is held on primary lease term, the Trust depreciates
the difference between (i) the cost of the asset and (ii) the estimated residual
value of the asset on a straight-line basis over such term. For purposes of
this policy, estimated residual values represent estimates of equipment values
at the date of primary lease expiration. To the extent that an asset is held
beyond its primary lease term, the Trust continues to depreciate the remaining
net book value of the asset on a straight-line basis over the asset's remaining
economic life. The increase in depreciation expense from 1995 to 1996 was due
to the acquisition of equipment subsequent to June 30, 1995.
Interest expense was $420,073 and $885,535, or 8.2% and 8.3% of lease revenue
for the three and six months ended June 30, 1996, respectively, compared to
$581,696 and $1,165,408, or 10.7% and 10.9% of lease revenue for the same
periods in 1995. Interest expense in the near-term is expected to increase due
to anticipated leveraging to be obtained to finance the acquisition of
reinvestment equipment discussed above. Thereafter, interest expense will
decline in amount and as a percentage of lease revenue as the principal balance
of notes payable is reduced through the application of rent receipts to
outstanding debt.
Management fees were 3.9% and 4% of lease revenue for the three and six months
ended June 30, 1996, respectively, compared to 3.8% of lease revenue for each of
the same periods in 1995. Management fees
10
<PAGE>
are based on 5% of gross lease revenue generated by operating leases and 2% of
gross lease revenue generated by full payout leases.
Operating expenses consist principally of administrative charges, professional
service costs, such as audit, insurance and legal fees, as well as printing,
distribution and remarketing expenses. Collectively, operating expenses
represented 1.6% and 1.1% of lease revenue for the three and six months ended
June 30, 1996, respectively, compared to 1.1% of lease revenue for each of the
same periods in 1995. The amount of future operating expenses cannot be
predicted with certainty; however, such expenses are usually higher during the
acquisition and liquidation phases of a trust. Other fluctuations typically
occur in relation to the volume and timing of remarketing activities.
Liquidity and Capital Resources and Discussion of Cash Flows
- ------------------------------------------------------------
The Trust by its nature is a limited life entity which was established for
specific purposes described in the preceding "Overview". As an equipment
leasing program, the Trust's principal operating activities derive from asset
rental transactions. Accordingly, the Trust's principal source of cash from
operations is provided by the collection of periodic rents. These cash inflows
are used to satisfy debt service obligations associated with leveraged leases,
and to pay management fees and operating costs. Operating activities generated
net cash inflows of $9,614,486 and $9,584,572 for the six months ended June 30,
1996 and 1995, respectively. In the near-term, net cash inflows generated from
operating activities are expected to increase due to additional reinvestment of
the cash proceeds from the United transaction previously discussed. Thereafter,
renewal, re-lease and equipment sale activities will cause the Trust's lease
revenue and corresponding sources of operating cash to decline. Overall,
expenses associated with rental activities, such as management fees, and net
cash flow from operating activities will decline as the Trust experiences a
higher frequency of remarketing events.
Ultimately, the Trust will dispose of all assets under lease. This will occur
principally through sale transactions whereby each asset will be sold to the
existing lessee or to a third party. Generally, this will occur upon expiration
of each asset's primary or renewal/re-lease term. In certain instances,
casualty or early termination events may result in the disposal of an asset.
Such circumstances are infrequent and usually result in the collection of
stipulated cash settlements pursuant to terms and conditions contained in the
underlying lease agreements.
Cash expended for equipment acquisitions and cash realized from asset disposal
transactions are reported under investing activities on the accompanying
Statement of Cash Flows. During the six month periods ended June 30, 1996 and
1995, the Trust expended $1,239,741 and $5,892,015, respectively, to acquire
equipment, including reinvestment equipment discussed above. During the six
months ended June 30, 1996, the Trust realized $4,127,248 in equipment sale
proceeds compared to $4,102,763 for the same period in 1995. Future inflows of
cash from asset disposals will vary in timing and amount and will be influenced
by many factors including, but not limited to, the frequency and timing of lease
expirations, the type of equipment being sold, its condition and age, and future
market conditions.
The Trust obtained long-term financing in connection with certain equipment
leases. The origination of such indebtedness and the subsequent repayments of
principal are reported as components of financing activities. Cash inflows of
$997,888 and $3,622,137 during the six months ended June 30, 1996 and 1995,
respectively, resulted from leveraging a portion of the Trust's equipment
portfolio with third-party lenders. AFG also provided interim financing of
$6,636,800 to the Trust during the six months ended June 30, 1995. No interim
financing was provided during the same period in 1996.
11
<PAGE>
Each note payable is recourse only to the specific equipment financed and to
the minimum rental payments contracted to be received during the debt
amortization period (which period generally coincides with the lease rental
term). As rental payments are collected, a portion or all of the rental payment
is used to repay the associated indebtedness. The amount of cash used to repay
debt in 1996 increased as a result of leveraging obtained in 1996 and 1995. The
amount of cash used to repay debt obligations in the near-term will increase as
a result of new financings. Over time, the principal balance of notes payable
will be reduced through the collection and application of rents.
Cash distributions to the Managing Trustee, the Special Beneficiary, and the
Beneficiaries are declared and generally paid within fifteen days following the
end of each month. The payment of such distributions is presented as a
component of financing activities. For the six months ended June 30, 1996, the
Trust declared total cash distributions of Distributable Cash From Operations
and Distributable Cash From Sales and Refinancings of $1,396,075. In accordance
with the Amended and Restated Declaration of Trust, the Beneficiaries were
allocated 90.75% of these distributions, or $1,266,938, the Special Beneficiary
was allocated 8.25%, or $115,176, and the Managing Trustee was allocated 1%, or
$13,961.
Cash distributions paid to the Participants consist of both a return of and a
return on capital. To the extent that cash distributions consist of Cash From
Sales or Refinancings, substantially all of such cash distributions should be
viewed as a return of capital. Cash distributions do not represent and are not
indicative of yield on investment. Actual yield on investment cannot be
determined with any certainty until conclusion of the Trust and will be
dependent upon the collection of all future contracted rents, the generation of
renewal and/or re-lease rents, and the residual value realized for each asset at
its disposal date. Future market conditions, technological changes, the ability
of AFG to manage and remarket the assets, and many other events and
circumstances, could enhance or detract from individual asset yields and the
collective performance of the Trust's equipment portfolio.
The future liquidity of the Trust will be influenced by the foregoing and will
be greatly dependent upon the collection of contractual rents and the outcome
of residual activities. The Managing Trustee anticipates that cash proceeds
resulting from these sources will satisfy the Trust's future expense
obligations. However, the amount of cash available for distribution in future
periods will fluctuate. Equipment lease expirations and asset disposals will
cause the Trust's net cash from operating activities to diminish over time; and
equipment sale proceeds will vary in amount and period of realization.
Accordingly, fluctuations in the level of monthly cash distributions will occur
during the life of the Trust.
12
<PAGE>
AFG Investment Trust C
FORM 10-Q
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Response: None
Item 2. Changes in Securities
Response: None
Item 3. Defaults upon Senior Securities
Response: None
Item 4. Submission of Matters to a Vote of Security Holders
Response: None
Item 5. Other Information
Response: None
Item 6(a). Exhibits
Response: None
Item 6(b). Reports on Form 8-K
Response: None
13
<PAGE>
SIGNATURE PAGE
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below on behalf of the registrant and in the capacity and
on the date indicated.
AFG Investment Trust C
By: AFG ASIT Corporation, a Massachusetts
corporation and the Managing Trustee of
the Registrant.
By: /s/ Michael J. Butterfield
_________________________________________
Michael J. Butterfield
Treasurer of AFG ASIT Corporation
(Duly Authorized Officer and
Principal Accounting Officer)
Date: August 14, 1996
_________________________________________
By: /s/ Gary M. Romano
_________________________________________
Gary M. Romano
Clerk of AFG ASIT Corporation
(Duly Authorized Officer and
Principal Financial Officer)
Date: August 14, 1996
_________________________________________
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 4,594,788
<SECURITIES> 0
<RECEIVABLES> 2,704,742
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 7,300,947
<PP&E> 92,945,118
<DEPRECIATION> 39,103,371
<TOTAL-ASSETS> 61,141,694
<CURRENT-LIABILITIES> 889,513
<BONDS> 22,727,467
0
0
<COMMON> 0
<OTHER-SE> 37,524,714
<TOTAL-LIABILITY-AND-EQUITY> 61,141,694
<SALES> 0
<TOTAL-REVENUES> 10,614,823
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 9,298,967
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 885,535
<INCOME-PRETAX> 881,573
<INCOME-TAX> 0
<INCOME-CONTINUING> 881,573
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 881,573
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
