<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. 33-42946
AFG Investment Trust D
- - --------------------------------------------------------------------------------
(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
--- ---
<PAGE>
AFG Investment Trust D
FORM 10-Q
INDEX
Page
----
PART I. FINANCIAL INFORMATION:
<TABLE>
<CAPTION>
Item 1. Financial Statements
<S> <C>
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
</TABLE>
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 D
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 $ 886,652 $ 669,998
Rents receivable 2,456,515 2,854,161
Accounts receivable - affiliate 762,502 109,551
Equipment at cost, net of accumulated
depreciation of $19,367,787 and
$15,958,176 at March 31, 1996
and December 31, 1995, respectively 81,223,976 83,883,410
Organization costs, net of accumulated
amortization of $2,500 and $2,250
at March 31, 1996 and December 31,
1995, respectively 2,500 2,750
----------- -----------
Total assets $85,332,145 $87,519,870
=========== ===========
LIABILITIES AND PARTICIPANTS' CAPITAL
- - ----------------------------------------
Notes payable $40,649,408 $42,655,805
Accrued interest 644,217 677,345
Accrued liabilities 47,487 43,851
Accrued liabilities - affiliate 174,068 97,588
Deferred rental income 176,715 358,760
Cash distributions payable to
participants 241,702 241,702
----------- -----------
Total liabilities 41,933,597 44,075,051
----------- -----------
Participants' capital (deficit):
Managing Trustee (37,728) (37,265)
Special Beneficiary (318,502) (314,685)
Beneficiary Interests
(2,089,030 Interests;
initial purchase price of $25 each) 43,754,778 43,796,769
----------- -----------
Total participants' capital 43,398,548 43,444,819
----------- -----------
Total liabilities and $85,332,145 $87,519,870
participants' capital =========== ===========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
3
<PAGE>
AFG Investment Trust D
STATEMENT OF OPERATIONS
for the three months ended March 31, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
------------ -----------
<S> <C> <C>
Income:
Lease revenue $5,600,700 $2,915,145
Interest income 13,821 177,178
Loss on sale of equipment (90,565) --
---------- ----------
Total income 5,523,956 3,092,323
---------- ----------
Expenses:
Depreciation and amortization 3,541,915 2,104,725
Interest expense 892,672 359,334
Equipment management fees -
affiliate 246,928 117,789
Operating expenses - affiliate 163,595 55,288
---------- ----------
Total expenses 4,845,110 2,637,136
---------- ----------
Net income $ 678,846 $ 455,187
========== ==========
Net income
per Beneficiary Interest $ 0.29 $ 0.20
========== ==========
Cash distributions declared
per Beneficiary Interest $ 0.31 $ 0.64
========== ==========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
4
<PAGE>
AFG Investment Trust D
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: $ 678,846 $ 455,187
Net income
Adjustments to reconcile net income to
net cash from operating activities:
3,541,915 2,104,725
Depreciation and amortization
Loss on sale of equipment 90,565 --
Changes in assets and liabilities
Decrease (increase) in:
rents receivable 397,646 51,381
accounts receivable - affiliate (652,951) (15,425)
Increase (decrease) in:
accrued interest (33,128) (168,527)
accrued liabilities 3,636 (5,500)
accrued liabilities - affiliate 76,480 41,335
deferred rental income (182,045) 194,702
----------- ------------
Net cash from operating
activities 3,920,964 2,657,878
----------- ------------
Cash flows from (used in) investing
activities: (1,239,741) (15,359,451)
Purchase of equipment
Proceeds from equipment sales 266,945 --
----------- ------------
Net cash used in investing
activities (972,796) (15,359,451)
----------- ------------
Cash flows from (used in) financing
activities: -- 5,882,925
Proceeds from capital contributions
Payment of selling commissions -- (411,805)
Payment of organization and
offering costs -- (147,073)
Proceeds from notes payable 997,888 17,483,259
Principal payments - notes
payable (3,004,285) (1,472,557)
Distributions paid (725,117) (1,362,753)
----------- ------------
Net cash from (used in) (2,731,514) 19,971,996
financing activities ----------- ------------
Net increase in cash and cash 216,654 7,270,423
equivalents
Cash and cash equivalents at beginning 669,998 9,798,360
of period ----------- ------------
Cash and cash equivalents at end of $ 886,652 $ 17,068,783
period =========== ============
Supplemental disclosure of cash flow
information:
Cash paid during the period for
interest $ 925,800 $ 527,861
=========== ============
</TABLE>
5
<PAGE>
AFG Investment Trust D
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 - ORGANIZATION AND TRUST MATTERS
- - ---------------------------------------
The Trust issued 204,355 Beneficiary Interests to 260 investors for an
aggregate purchase price of $5,108,875 on October 26, 1993, its first Interim
Close. Sixteen subsequent Interim Closes in 1993, 1994 and 1995 resulted in the
issuance by the Trust of an additional 1,884,675 Beneficiary Interests to 2,375
investors for an aggregate purchase price of $47,116,875. The Trust's Final
Closing occurred on February 6, 1995. No additional Beneficiary Interests will
be issued. In total, the Trust has issued 2,089,030 Beneficiary Interests
representing a total purchase price of $52,225,750 to 2,635 investors.
Net Income and Cash Distributions Per Beneficiary Interest
- - ----------------------------------------------------------
Net income and cash distributions per Beneficiary Interest are based on
2,089,030 Beneficiary Interests outstanding during the three month period ended
March 31, 1996 and the weighted average number of Beneficiary Interests
outstanding during the three month period ended March 31, 1995, after allocation
of the Managing Trustee's and Special Beneficiary's shares of net income and
cash distributions. The weighted average number of Beneficiary Interests
outstanding during the three month period ended March 31, 1995 was 2,025,750.
The weighted average number of Beneficiary Interests was calculated based on the
total number of Beneficiary Interests outstanding and the number of days each
Beneficiary Interest was outstanding during the period.
NOTE 3 - 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 4 - 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
$71,304,549 are due as follows:
6
<PAGE>
AFG Investment Trust D
Notes to the Financial Statements
(Continued)
<TABLE>
<CAPTION>
<S> <C>
For the year ending March 31, 1997 $21,646,710
1998 18,773,592
1999 14,260,904
2000 9,541,526
2001 3,432,087
Thereafter 3,649,730
-----------
Total $71,304,549
===========
</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")
pursuant to the reinvestment provisions of the Trust's prospectus. The Trust
will receive approximately $143,000 of rental revenue in the year ending March
31, 1997, $160,000 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.
NOTE 5 - 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>
Vessels 73-90 $ 23,171,463
Aircraft 48-81 22,779,945
Railroad 36-72 17,205,933
Computers & peripherals 17-60 7,780,151
Construction & mining 48-84 6,205,962
Materials handling 36-84 6,123,723
Retail store fixtures 36-60 4,930,049
Manufacturing 48-60 3,849,128
Miscellaneous 48-60 3,564,568
Communications 30-36 1,834,800
Tractors & heavy duty trucks 12-48 1,292,948
Trailers/intermodal containers 36-60 812,037
Research & test 36-60 664,901
Furniture & fixtures 48 271,945
Photocopying 36 65,711
Motor vehicles 60 38,499
------------
Total equipment cost 100,591,763
Accumulated depreciation (19,367,787)
------------
Equipment, net of accumulated depreciation $ 81,223,976
============
</TABLE>
7
<PAGE>
AFG Investment Trust D
Notes to the Financial Statements
(Continued)
At March 31, 1996, the Trust's equipment portfolio included equipment having a
proportionate original cost of $24,664,362, representing approximately 25% of
total equipment cost.
The summary above includes equipment held for sale or re-lease which had an
original cost and net book value of approximately $37,000 and $27,000,
respectively. The Managing Trustee is actively seeking the sale or re-lease of
all equipment not on lease.
Effective January 1, 1996, the Trust adopted Financial Accounting Standards
Board Statement No. 121, Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of, which requires impairment losses to be
recorded on long-lived assets used in operations when indicators of impairment
are present and the undiscounted cash flows estimated to be generated by those
assets are less than the assets' 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 6 - RELATED PARTY TRANSACTIONS
- - -----------------------------------
All operating expenses incurred by the Trust are paid by AFG on behalf of the
Trust and AFG is reimbursed at its actual cost for such expenditures. Fees and
other costs incurred during the three month periods ended March 31, 1996 and
1995, which were paid or accrued by the Trust to AFG or its Affiliates, are as
follows:
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Reimbursements for selling commissions $ -- $411,805
Reimbursements for organization
and offering costs -- 147,073
Equipment acquisition fees 36,109 42,504
Equipment management fees 246,928 117,789
Administrative charges 5,250 3,000
Reimbursable operating expenses
due to third parties 158,345 52,288
-------- --------
Total $446,632 $774,459
======== ========
</TABLE>
All rents and the 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 $762,502 by AFG for such funds and the
interest thereon. These funds were remitted to the Trust in April 1996.
American Finance Group Securities Corp., an affiliate of AFG, was paid the
entire amount of selling commissions incurred at each of the Closings of the
Trust. Commissions of $411,805, relating to the Closings during 1995, were then
paid to the Soliciting Dealers responsible for the sales. No Soliciting Dealer
commissions were earned by American Finance Group Securities Corp. for Interests
sold to an unrelated party.
8
<PAGE>
AFG Investment Trust D
Notes to the Financial Statements
(Continued)
NOTE 7 - NOTES PAYABLE
- - ----------------------
Notes payable at March 31, 1996 consisted of installment notes of $40,649,408
payable to banks and institutional lenders. The notes bear interest rates
ranging between 5.1% and 13.75%, 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. The installment notes will be fully
amortized by noncancellable rents. The carrying value of notes payable
approximates fair value at March 31, 1996.
The annual maturities of the notes payable are as follows:
<TABLE>
<CAPTION>
<S> <C>
For the year ending March 31, 1997 $13,940,710
1998 10,672,096
1999 6,827,405
2000 4,703,131
2001 1,609,541
Thereafter 2,896,525
-----------
Total $40,649,408
===========
</TABLE>
NOTE 8 - 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 D
FORM 10-Q
PART I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results
- - --------------------------------------------------------------------------------
of Operations.
- - -------------
Three months ended March 31, 1996 compared to the three months ended March 31,
- - ------------------------------------------------------------------------------
1995:
- - -----
Overview
- - --------
As an equipment leasing trust, the Trust was organized to acquire a
diversified portfolio of capital equipment subject to lease agreements with
third parties. The Trust was designed to progress through three principal
phases: acquisitions, operations, and liquidation. During the operations phase,
a period of approximately six years, all equipment in the Trust's portfolio will
progress through various stages. Initially, all equipment will generate rental
revenues under primary term lease agreements. During the life of the Trust,
these agreements will expire on an intermittent basis and equipment held
pursuant to the related leases will be renewed, re-leased or sold, depending on
prevailing market conditions and the assessment of such conditions by AFG to
obtain the most advantageous economic benefit. Over time, a greater portion of
the Trust's original equipment portfolio will become available for remarketing
and cash generated from operations and from sales or refinancings will begin to
fluctuate. Ultimately, all equipment will be sold and the Trust will be
dissolved. The Trust's operations commenced in 1993.
Results of Operations
- - ---------------------
For the three months ended March 31, 1996, the Trust recognized lease revenue
of $5,600,700 compared to $2,915,145 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 the near-term, the Trust's aggregate
rental revenues are expected to be consistent with the three months ended March
31,1996 due to reinvestment activities.
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.
Interest income for the three months ended March 31, 1996 was $13,821,
compared to $177,178 for the same period in 1995. Interest income was generated
from temporary investment of available cash in short-term money market
instruments. Interest income was higher in the three months ended March 31, 1995
than in the same period in 1996 due to the temporary investment of cash prior to
the acquisition of equipment. The amount of future interest income is expected
to fluctuate in relation to prevailing interest rates and the collection of
lease revenue and equipment sales proceeds.
For the three months ended March 31, 1996, the Trust sold equipment having a
net book value of $357,510 to existing lessees and third parties. These sales
resulted in a net loss, for financial statement purposes, of $90,565. There were
no equipment sales during the three months ended March 31, 1995.
It cannot be determined whether future sales of equipment will result in a net
gain or a net loss to the Trust, as such transactions will be dependent upon the
condition and type of equipment being sold and its marketability at the time of
sale. In addition, the amount of gain or loss reported for financial statement
purposes is partly a function of the amount of accumulated depreciation
associated with the equipment being sold.
10
<PAGE>
AFG Investment Trust D
FORM 10-Q
PART I. FINANCIAL INFORMATION
The ultimate realization of residual value for any type of equipment is
dependent upon many factors, including AFG's ability to sell and re-lease
equipment. Changing market conditions, industry trends, technological advances,
and many other events can converge to enhance or detract from asset values at
any given time. AFG attempts to monitor these changes in order to identify
opportunities which may be advantageous to the Trust and which will maximize
total cash returns for each asset.
The total economic value realized upon final disposition of each asset is
comprised of all primary lease term revenue generated from that asset, together
with its residual value. The latter consists of cash proceeds realized upon the
asset's sale in addition to all other cash receipts obtained from renting the
asset on a re-lease, renewal or month-to-month basis. The Trust classifies such
residual rental payments as lease revenue. Consequently, the amount of gain or
loss reported in the financial statements is not necessarily indicative of the
total residual value the Trust achieved from leasing the equipment.
Depreciation and amortization expense for the three months ended March 31, 1996
was $3,541,915 compared to $2,104,725 for the same period in 1995. For financial
reporting purposes, to the extent that an asset is held on primary lease term,
the Trust depreciates the difference between (i) the cost of the asset and (ii)
the estimated residual value of the asset on a straight-line basis over such
term. For purposes of this policy, estimated residual values represent estimates
of equipment values at the date of primary lease expiration. To the extent that
an asset is held beyond its primary lease term, the Trust continues to
depreciate the remaining net book value of the asset on a straight-line basis
over the asset's remaining economic life. The increase in depreciation expense
for the three months ended March 31, 1996 compared to the same period in 1995
reflects the acquisition of equipment subsequent to March 31, 1995.
Interest expense was $892,672 or 15.9% of lease revenue for the three months
ended March 31, 1996, compared to $359,334 or 12.3% of lease revenue for the
same period in 1995. The increase in interest expense in the three months ended
March 31, 1996 was due to additional leveraging obtained in 1995 and 1996.
Interest expense in the near-term is expected to increase due to leveraging
obtained during the three months ended March 31, 1996 and additional leveraging
expected to be obtained during the remainder of 1996. 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 4.4% of lease revenue for the three months ended March 31,
1996 compared to 4% of lease revenue for the same period in 1995. Management
fees are based on 5% of gross lease revenue generated by operating leases and 2%
of gross lease revenue generated by full payout leases.
Operating expenses consist principally of administrative charges, professional
service costs, such as audit and legal fees, as well as printing, distribution
and remarketing expenses. Collectively, operating expenses represented 2.9% of
lease revenue for the three months ended March 31, 1996, compared to 1.9% of
lease revenue for the same period in 1995. The increase in operating expenses
from 1995 to 1996 was due primarily to remarketing fees incurred relating to the
sale of certain equipment. 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.
11
<PAGE>
AFG Investment Trust D
FORM 10-Q
PART I. FINANCIAL INFORMATION
Liquidity and Capital Resources and Discussion of Cash Flows
- - ------------------------------------------------------------
The Trust by its nature is a limited life entity which was established for
specific purposes described in the preceding "Overview". As an equipment leasing
program, the Trust's principal operating activities derive from asset rental
transactions. Accordingly, the Trust's principal source of cash from operations
is provided by the collection of periodic rents. These cash inflows are used to
satisfy debt service obligations associated with leveraged leases, and to pay
management fees and operating costs. Operating activities generated net cash
inflows of $3,920,964 and $2,657,878 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 be consistent with the three months ended
March 31, 1996. Thereafter, renewal, re-lease and equipment sale activities will
cause a gradual decline in the Trust's lease revenue and corresponding sources
of operating cash. Overall, expenses associated with rental activities, such as
management fees, and net cash flow from operating activities will decline as the
Trust experiences a higher frequency of remarketing events.
Ultimately, the Trust will dispose of all assets under lease. This will occur
principally through sale transactions whereby each asset will be sold to the
existing lessee or to a third party. Generally, this will occur upon expiration
of each asset's primary or renewal/re-lease term. In certain instances, casualty
or early termination events may result in the disposal of an asset. Such
circumstances are infrequent and usually result in the collection of stipulated
cash settlements pursuant to terms and conditions contained in the underlying
lease agreements.
Cash expended for asset acquisitions and cash realized from asset disposal
transactions are reported under investing activities on the accompanying
Statement of Cash Flows. The Trust expended $1,239,741 and $15,359,451 to
acquire equipment during the three months ended March 31, 1996 and 1995,
respectively. The equipment acquired during the three months ended March 31,
1996 was acquired pursuant to the reinvestment provisions of the Trust's
prospectus. This equipment was financed through a combination of leveraging and
the reinvestment of sale proceeds. During the three months ended March 31, 1996,
the Trust realized $266,945 in equipment sale proceeds. There were no equipment
sales 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 $17,483,259 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. In the near-term, the amount of
cash used to repay debt obligations will continue to increase as a result of
leveraging obtained during the three months ended March 31, 1996 and additional
leveraging expected to be obtained during the remainder of 1996. Subsequently,
the amount of cash used to repay debt obligations will decline as the principal
balance of notes payable is reduced through the collection and application of
rents.
During the three months ended March 31, 1995, financing activities also
included cash inflows from capital contributions from the Beneficiaries (net of
selling commissions and organization and offering costs) of $5,324,047.
Substantially all of these funds were used to purchase equipment. The Trust's
Final Closing of capital contributions occurred on February 6, 1995.
12
<PAGE>
AFG Investment Trust D
FORM 10-Q
PART I. FINANCIAL INFORMATION
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 calendar month. The payment of such distributions is presented as a
component of financing activities. For the three months ended March 31, 1996,
the Trust declared total cash distributions of Distributable Cash From
Operations of $725,117. In accordance with the Amended and Restated Declaration
of Trust, the Beneficiaries were allocated 90.75% of these distributions, or
$658,044; the Special Beneficiary was allocated 8.25%, or $59,822; and the
Managing Trustee was allocated 1%, or $7,251.
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 D
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 D
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: May 13, 1996
-------------------------
By: /s/ Gary Romano
---------------------------
Gary M. Romano
Clerk of AFG ASIT Corporation
(Duly Authorized Officer and
Principal Financial Officer)
Date: May 13, 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> 886,652
<SECURITIES> 0
<RECEIVABLES> 3,219,017
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,108,169
<PP&E> 100,591,763
<DEPRECIATION> 19,367,787
<TOTAL-ASSETS> 85,332,145
<CURRENT-LIABILITIES> 1,284,189
<BONDS> 40,649,408
0
0
<COMMON> 0
<OTHER-SE> 43,398,548
<TOTAL-LIABILITY-AND-EQUITY> 85,332,145
<SALES> 5,600,700
<TOTAL-REVENUES> 5,523,956
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,949,438
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 892,672
<INCOME-PRETAX> 678,846
<INCOME-TAX> 0
<INCOME-CONTINUING> 678,846
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 678,846
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
