<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
-------------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________________ to _________________________
------------------
For Quarter Ended March 31, 1996 Commission File No. 0-21444
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 not been
subject to such filing requirements for the past 90 days.
Yes No
----- -----
<PAGE>
AFG Investment Trust C
FORM 10-Q
INDEX
Page
----
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Statement of Financial Position
at March 31, 1996 and December 31, 1995 3
Statement of Operations
for the three months ended March 31, 1996 and 1995 4
Statement of Cash Flows
for the three months ended March 31, 1996 and 1995 5
Notes to the Financial Statements 6-9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10-13
PART II. OTHER INFORMATION:
Items 1 - 6 14
2
<PAGE>
AFG Investment Trust C
STATEMENT OF FINANCIAL POSITION
March 31, 1996 and December 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
------------- -------------
<S> <C> <C>
ASSETS
- - ------
Cash and cash equivalents $ 4,018,644 $ 279,116
Rents receivable 2,446,614 2,949,192
Accounts receivable - affiliate 377,644 101,258
Equipment at cost, net of accumulated
depreciation of $35,526,099 and
$33,214,195 at March 31, 1996
and December 31, 1995, respectively 57,869,952 65,137,539
Organization costs, net of accumulated
amortization of $3,333 and $3,083 at
March 31, 1996 and December 31, 1995,
respectively 1,667 1,917
----------- -----------
Total assets $64,714,521 $68,469,022
=========== ===========
LIABILITIES AND PARTICIPANTS' CAPITAL
- - -------------------------------------
Notes payable $26,193,534 $29,517,713
Accrued interest 293,041 354,297
Accrued liabilities 19,750 20,000
Accrued liabilities - affiliate 74,213 --
Deferred rental income 245,027 305,117
Cash distributions payable to participants 232,679 232,679
----------- -----------
Total liabilities 27,058,244 30,429,806
----------- -----------
Participants' capital (deficit):
Managing Trustee (77,498) (73,669)
Special Beneficiary (646,618) (615,026)
Beneficiary Interests (2,011,014
Interests; initial purchase price of
$25 each) 38,380,393 38,727,911
----------- -----------
Total participants' capital 37,656,277 38,039,216
----------- -----------
Total liabilities and $64,714,521 $68,469,022
participants' capital =========== ===========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
3
<PAGE>
AFG Investment Trust C
STATEMENT OF OPERATIONS
for the three months ended March 31, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
------------ -----------
<S> <C> <C>
Income:
Lease revenue $5,465,302 $5,304,822
Interest income 8,693 9,428
Loss on sale of equipment (442,120) --
---------- ----------
Total income 5,031,875 5,314,250
---------- ----------
Expenses:
Depreciation and amortization 3,999,259 3,458,271
Interest expense 465,462 583,063
Interest expense - affiliate -- 649
Equipment management fees -
affiliate 217,598 200,408
Operating expenses - affiliate 34,457 60,793
---------- ----------
Total expenses 4,716,776 4,303,184
---------- ----------
Net income $ 315,099 $1,011,066
========== ==========
Net income
per Beneficiary Interest $ 0.14 $ 0.46
========== ==========
Cash distributions declared
per Beneficiary Interest $ 0.32 $ 0.63
========== ==========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
4
<PAGE>
AFG Investment Trust C
STATEMENT OF CASH FLOWS
for the three months ended March 31, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Cash flows from (used in) operating
activities: $ 315,099 $ 1,011,066
Net income
Adjustments to reconcile net income to
net cash from operating activities:
Depreciation and amortization 3,999,259 3,458,271
Loss on sale of equipment 442,120 --
Changes in assets and liabilities
Decrease (increase) in:
rents receivable 502,578 (144,603)
accounts receivable - affiliate (276,386) 62,264
Increase (decrease) in:
accrued interest (61,256) 45,882
accrued liabilities (250) (5,500)
accrued liabilities - affiliate 74,213 (129,505)
deferred rental income (60,090) 209,737
----------- -----------
Net cash from operating
activities 4,935,287 4,507,612
----------- -----------
Cash flows from (used in) investing
activities:
Purchase of equipment (1,239,741) --
Proceeds from equipment sales 4,066,199 --
----------- -----------
Net cash from investing
activities 2,826,458 --
----------- -----------
Cash flows from (used in) financing
activities:
Proceeds from notes payable 997,888 2,134,199
Principal payments - notes payable (4,322,067) (3,325,239)
Distributions paid (698,038) (1,396,076)
----------- -----------
Net cash used in financing
activities (4,022,217) (2,587,116)
----------- -----------
Net increase in cash and cash
equivalents 3,739,528 1,920,496
Cash and cash equivalents at beginning
of period 279,116 214,260
----------- -----------
Cash and cash equivalents at end of
period $ 4,018,644 $ 2,134,756
=========== ===========
Supplemental disclosure of cash flow
information:
Cash paid during the period for
interest $ 526,718 $ 537,830
=========== ===========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
5
<PAGE>
AFG Investment Trust C
Notes to the Financial Statements
March 31, 1996
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
- - ------------------------------
The financial statements presented herein are prepared in conformity with
generally accepted accounting principles and the instructions for preparing Form
10-Q under Rule 10-01 of Regulation S-X of the Securities and Exchange
Commission and are unaudited. As such, these financial statements do not
include all information and footnote disclosures required under generally
accepted accounting principles for complete financial statements and,
accordingly, the accompanying financial statements should be read in conjunction
with the footnotes presented in the 1995 Annual Report. Except as disclosed
herein, there has been no material change to the information presented in the
footnotes to the 1995 Annual Report.
In the opinion of management, all adjustments (consisting of normal and
recurring adjustments) considered necessary to present fairly the financial
position at March 31, 1996 and December 31, 1995 and results of operations for
the three month periods ended March 31, 1996 and 1995 have been made and are
reflected.
NOTE 2 - CASH
- - -------------
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
$44,785,558 are due as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
For the year ending March 31, 1997 $18,406,094
1998 15,076,367
1999 7,262,419
2000 3,315,671
2001 445,917
Thereafter 279,090
------------
Total $44,785,558
============
</TABLE>
During March 1996, the Trust acquired an 8.86% proportionate ownership
interest in an MD-87 jet aircraft leased by Reno Air, Inc. (the "Reno Aircraft")
- - - See Note 4 herein. The Trust will receive approximately $143,000 of rental
revenue in the year ending March 31, 1997, $159,000 in each of the years in the
period ending March 31, 2002 and $120,000 in the year ending March 31, 2003.
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 March 31, 1996.
In the opinion of American Finance Group ("AFG"), the acquisition cost of the
equipment did not exceed its fair market value.
<TABLE>
<CAPTION>
Lease Term Equipment
Equipment Type (Months) at Cost
- - --------------------------- -------------- ------------
<S> <C> <C>
Aircraft 48-81 $ 16,504,999
Computers & peripherals 12-72 15,397,701
Vessels 72-73 13,014,544
Retail store fixtures 36-60 11,233,766
Locomotives 36-84 9,438,818
Materials handling 12-84 7,597,766
Construction & mining 36-72 7,584,573
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 27-60 805,587
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 93,396,051
Accumulated depreciation (35,526,099)
------------
Equipment, net of accumulated depreciation $ 57,869,952
============
</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 March 31, 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 March 31, 1996, the cost and net book value of equipment held for sale or
re-lease was approximately $112,500 and $51,900, respectively. The Managing
Trustee is actively seeking the sale or re-lease of all equipment not on lease.
Effective January 1, 1996, the Trust adopted Financial Accounting Standards
Board Statement No. 121, Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of, which requires
7
<PAGE>
AFG Investment Trust C
Notes to the Financial Statements
(Continued)
impairment losses to be recorded on long-lived assets used in operations when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets are less than the assets' carrying amount.
Statement 121 also addresses the accounting for long-lived assets that are
expected to be disposed of. Adoption of this statement did not have a material
impact on the financial statements of the Trust.
NOTE 5 - RELATED PARTY TRANSACTIONS
- - -----------------------------------
All operating expenses incurred by the Trust are paid by AFG on behalf of the
Trust and AFG is reimbursed at its actual cost for such expenditures. Fees and
other costs incurred during each of the three month periods ended March 31, 1996
and 1995, which were paid or accrued by the Trust to AFG or its Affiliates, are
as follows:
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Equipment acquisition fees $ 36,109 $ --
Equipment management fees 217,598 200,408
Administrative charges 5,250 3,000
Reimbursable operating expenses
due to third parties 29,207 57,793
Interest on notes payable - affiliate -- 649
-------- --------
Total $288,164 $261,850
======== ========
</TABLE>
All rents and proceeds from the sale of equipment are paid directly to either
AFG or to a lender. AFG temporarily deposits collected funds in a separate
interest-bearing escrow account prior to remittance to the Trust. At March 31,
1996, the Trust was owed $377,644 by AFG for such funds, and the interest
thereon. These funds were remitted to the Trust in April 1996.
NOTE 6 - NOTES PAYABLE
- - ----------------------
Notes payable at March 31, 1996 consisted of installment notes of $26,193,534
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 (7.63% at March 31, 1996). All of
the installment notes are non-recourse and are collateralized by the equipment
and assignment of the related lease payments. Generally, the installment notes
will be fully amortized by noncancellable rents. However, the Trust has 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
March 31, 1996.
The annual maturities of the notes payable are as follows:
<TABLE>
<S> <C> <C>
For the year ending March 31, 1997 $12,311,042
1998 8,924,890
1999 3,650,057
2000 668,465
2001 116,278
Thereafter 522,802
------------
Total $26,193,534
============
</TABLE>
8
<PAGE>
AFG Investment Trust C
Notes to the Financial Statements
(Continued)
NOTE 7 - SUBSEQUENT EVENT
- - -------------------------
Pursuant to its agreements with PLM International, Inc., referred to in Note 8
of the Trust's 1995 financial statements, American Finance Group agreed to
change its name and logo, except where they are used in connection with the
Trust and other affiliated investment programs. For all other purposes,
American Finance Group will operate as Equis Financial Group, effective April 2,
1996.
9
<PAGE>
AFG Investment Trust C
FORM 10-Q
PART 1. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results
- - --------------------------------------------------------------------------------
of Operations.
- - --------------
Three months ended March 31, 1996 compared to the three months ended March 31,
- - ------------------------------------------------------------------------------
1995:
- - -----
Overview
- - --------
As an equipment leasing trust, the Trust was organized to acquire a
diversified portfolio of capital equipment subject to lease agreements with
third parties. The Trust was designed to progress through three principal
phases: acquisitions, operations, and liquidation. During the operations
phase, a period of approximately six years, all equipment in the Trust's
portfolio will progress through various stages. Initially, all equipment will
generate rental revenues under primary term lease agreements. During the life
of the Trust, these agreements will expire on an intermittent basis and
equipment held pursuant to the related leases will be renewed, re-leased or
sold, depending on prevailing market conditions and the assessment of such
conditions by AFG to obtain the most advantageous economic benefit. Over time,
a greater portion of the Trust's original equipment portfolio will become
available for remarketing and cash generated from operations and from sales or
refinancings will begin to fluctuate. Ultimately, all equipment will be sold
and the Trust will be dissolved. The Trust's operations commenced in 1992.
Results of Operations
- - ---------------------
For the three months ended March 31, 1996, the Trust recognized lease revenue
of $5,465,302, compared to $5,304,822 for the same period in 1995. The increase
in lease revenue from 1995 to 1996 was attributable principally to the
acquisition of additional equipment during 1995, including the effects of
reinvestment. 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 quarter ended
March 31, 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
10
<PAGE>
AFG Investment Trust C
FORM 10-Q
PART 1. FINANCIAL INFORMATION
months ended March 31, 1996, the Trust sold other equipment having a net book
value of $27,135 to existing lessees and third parties. These sales resulted in
a net loss, for financial statement purposes, of $9,715. There were no equipment
sales during the same period in 1995.
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 months ended March 31,
1996 was $3,999,259, compared to $3,458,271 for the same period in 1995. For
financial reporting purposes, to the extent that an asset is held on primary
lease term, the Trust depreciates the difference between (i) the cost of the
asset and (ii) the estimated residual value of the asset on a straight-line
basis over such term. For purposes of this policy, estimated residual values
represent estimates of equipment values at the date of primary lease expiration.
To the extent that an asset is held beyond its primary lease term, the Trust
continues to depreciate the remaining net book value of the asset on a straight-
line basis over the asset's remaining economic life. The increase in
depreciation expense for the three months ended March 31, 1996 compared to the
same period in 1995, reflects the acquisition of equipment during 1995 and 1996.
Interest expense was $465,462, or 9.3% of lease revenue for the three months
ended March 31, 1996, compared to $583,712, or 11% of lease revenue for the
same period in 1995. Interest expense in the near-term is expected to increase
due to anticipated leveraging to be obtained to finance the acquisition of
reinvestment equipment discussed above. Thereafter, interest expense will
decline in amount and as a percentage of lease revenue as the principal balance
of notes payable is reduced through the application of rent receipts to
outstanding debt.
Management fees were 4% and 3.8% of lease revenue for the three months ended
March 31, 1996 and 1995, 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.
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% of lease revenue for the three months ended March 31, 1996
compared to 1.2% of lease revenue for the same period in 1995. The amount of
future operating expenses cannot be predicted with certainty; however, such
expenses are usually higher during the acquisition and liquidation phases of a
trust. Other fluctuations typically occur in relation to the volume and timing
of remarketing activities.
11
<PAGE>
AFG Investment Trust C
FORM 10-Q
PART 1. FINANCIAL INFORMATION
Liquidity and Capital Resources and Discussion of Cash Flows
- - ------------------------------------------------------------
The Trust by its nature is a limited life entity which was established for
specific purposes described in the preceding "Overview". As an equipment
leasing program, the Trust's principal operating activities derive from asset
rental transactions. Accordingly, the Trust's principal source of cash from
operations is provided by the collection of periodic rents. These cash inflows
are used to satisfy debt service obligations associated with leveraged leases,
and to pay management fees and operating costs. Operating activities generated
net cash inflows of $4,935,287 and $4,507,612 for the three months ended March
31, 1996 and 1995, respectively. In the near-term, net cash inflows generated
from operating activities are expected to increase due to 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 three months ended March 31, 1996, the
Trust realized net cash proceeds of $4,066,199 from equipment sales and acquired
an ownership interest in a commercial jet aircraft at a cost of $1,239,741,
pursuant to the reinvestment provisions of the Trust's prospectus. There were
no equipment sales or equipment acquisitions during 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 $2,134,199 during the three months ended March 31, 1996 and 1995,
respectively, resulted from leveraging a portion of the Trust's equipment
portfolio with third-party lenders. Each note payable is recourse only to the
specific equipment financed and to the minimum rental payments contracted to be
received during the debt amortization period (which period generally coincides
with the lease rental term). As rental payments are collected, a portion or all
of the rental payment is used to repay the associated indebtedness. The amount
of cash used to repay debt in the three months ended March 31, 1996 increased
compared to the same period in 1995, as a result of leveraging obtained in 1996
and 1995. The amount of cash used to repay debt obligations in future periods
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 three months ended March 31, 1996,
the Trust declared total cash distributions of Distributable Cash From
Operations and Distributable Cash From Sales and Refinancings of $698,038. In
accordance with the Amended and Restated Declaration of Trust, the Beneficiaries
were allocated 90.75% of these distributions, or $633,470, the Special
Beneficiary was allocated 8.25%, or $57,588, and the Managing Trustee was
allocated 1%, or $6,980.
12
<PAGE>
AFG Investment Trust C
FORM 10-Q
PART 1. FINANCIAL INFORMATION
Cash distributions paid to the Participants consist of both a return of and a
return on capital. To the extent that cash distributions consist of Cash From
Sales or Refinancings, substantially all of such cash distributions should be
viewed as a return of capital. Cash distributions do not represent and are not
indicative of yield on investment. Actual yield on investment cannot be
determined with any certainty until conclusion of the Trust and will be
dependent upon the collection of all future contracted rents, the generation of
renewal and/or re-lease rents, and the residual value realized for each asset at
its disposal date. Future market conditions, technological changes, the ability
of AFG to manage and remarket the assets, and many other events and
circumstances, could enhance or detract from individual asset yields and the
collective performance of the Trust's equipment portfolio.
The future liquidity of the Trust will be influenced by the foregoing and will
be greatly dependent upon the collection of contractual rents and the outcome of
residual activities. The Managing Trustee anticipates that cash proceeds
resulting from these sources will satisfy the Trust's future expense
obligations. However, the amount of cash available for distribution in future
periods will fluctuate. Equipment lease expirations and asset disposals will
cause the Trust's net cash from operating activities to diminish over time; and
equipment sale proceeds will vary in amount and period of realization.
Accordingly, fluctuations in the level of monthly cash distributions will occur
during the life of the Trust.
13
<PAGE>
AFG Investment Trust 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
14
<PAGE>
SIGNATURE PAGE
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below on behalf of the registrant and in the capacity and
on the date indicated.
AFG Investment Trust C
By: AFG ASIT Corporation, a Massachusetts
corporation and the Managing Trustee of
the Registrant.
By: /s/ Michael J. Butterfield
--------------------------------------
Michael J. Butterfield
Treasurer AFG ASIT Corporation
(Duly Authorized Officer and
Principal Accounting Officer)
Date: May 15, 1996
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By: /s/ Gary Romano
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Gary M. Romano
Clerk of AFG ASIT Corporation
(Duly Authorized Officer and
Principal Financial Officer)
Date: May 15, 1996
--------------------------------------
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 4,018,644
<SECURITIES> 0
<RECEIVABLES> 2,824,258
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,844,569
<PP&E> 93,396,051
<DEPRECIATION> 35,526,099
<TOTAL-ASSETS> 64,714,521
<CURRENT-LIABILITIES> 864,710
<BONDS> 26,193,534
0
0
<COMMON> 0
<OTHER-SE> 37,656,277
<TOTAL-LIABILITY-AND-EQUITY> 64,714,521
<SALES> 5,465,302
<TOTAL-REVENUES> 5,031,875
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,251,314
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 465,462
<INCOME-PRETAX> 315,099
<INCOME-TAX> 0
<INCOME-CONTINUING> 315,099
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 315,099
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
