<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. 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
<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 6-9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10-13
PART II. OTHER INFORMATION:
Items 1 - 6 14
</TABLE>
2
<PAGE>
AFG Investment Trust D
STATEMENT OF FINANCIAL POSITION
June 30, 1996 and December 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1995 1996
--------- -------------
<S> <C> <C>
ASSETS
- ------
Cash and cash equivalents $ 2,643,469 $ 669,998
Rents receivable 2,850,100 2,854,161
Accounts receivable - affiliate 379,792 109,551
Equipment at cost, net of accumulated
depreciation of $22,906,346 and
$15,958,176 at June 30, 1996 and
and December 31, 1995, respectively 77,681,929 83,883,410
Organization costs, net of accumulated
amortization of $2,750 and $2,250 at
June 30, 1996 and December 31, 1995,
respectively 2,250 2,750
----------- -----------
Total assets $83,557,540 $87,519,870
=========== ===========
LIABILITIES AND PARTICIPANTS' CAPITAL
- -------------------------------------
Notes payable $38,778,858 $42,655,805
Accrued interest 750,924 677,345
Accrued liabilities 36,353 43,851
Accrued liabilities - affiliate 82,622 97,588
Deferred rental income 183,219 358,760
Cash distributions payable to
participants 241,702 241,702
----------- -----------
Total liabilities 40,073,678 44,075,051
----------- -----------
Participants' capital (deficit):
Managing Trustee (36,874) (37,265)
Special Beneficiary (311,464) (314,685)
Beneficiary Interests (2,089,030
Interests; initial purchase
price of $25 each) 43,832,200 43,796,769
----------- -----------
Total participants' capital 43,483,862 43,444,819
----------- -----------
Total liabilities and participants'
capital $83,557,540 $87,519,870
=========== ===========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
3
<PAGE>
AFG Investment Trust D
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 $5,528,992 $4,999,976 $11,129,692 $7,915,121
Interest income 33,028 99,928 46,849 277,106
Gain (loss) on sale of equipment (1,442) 7,187 (92,007) 7,187
---------- ---------- ----------- ----------
Total income 5,560,578 5,107,091 11,084,534 8,199,414
---------- ---------- ----------- ----------
Expenses:
Depreciation and amortization 3,539,297 2,964,805 7,081,212 5,069,530
Interest expense 870,658 1,067,776 1,763,330 1,427,110
Interest expense - affiliate -- 1,707 -- 1,707
Equipment management fees
- affiliate 243,544 221,162 490,472 338,951
Operating expenses - affiliate 96,648 104,817 260,243 160,105
---------- ---------- ----------- ----------
Total expenses 4,750,147 4,360,267 9,595,257 6,997,403
---------- ---------- ----------- ----------
Net income $ 810,431 $ 746,824 $ 1,489,277 $1,202,011
========== ========== =========== ==========
Net income
per Beneficiary Interest $ 0.35 $ 0.32 $ 0.65 $ 0.53
========== ========== =========== ==========
Cash distributions declared
per Beneficiary Interest $ 0.31 $ 0.63 $ 0.63 $ 1.27
========== ========== =========== ==========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
4
<PAGE>
AFG Investment Trust D
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 $ 1,489,277 $ 1,202,011
Adjustments to reconcile net income to
net cash from operating activities:
Depreciation and amortization 7,081,212 5,069,530
(Gain) loss on sale of equipment 92,007 (7,187)
Changes in assets and liabilities
Decrease (increase) in:
rents receivable 4,061 (1,771,914)
accounts receivable - affiliate (270,241) (9,017)
Increase (decrease) in:
accrued interest 73,579 498,141
accrued liabilities (7,498) (23,284)
accrued liabilities - affiliate (14,966) 101,397
deferred rental income (175,541) 233,089
----------- ------------
Net cash from operating activities 8,271,890 5,292,766
----------- ------------
Cash flows from (used in) investing
activities:
Purchase of equipment (1,239,741) (33,898,651)
Proceeds from equipment sales 268,503 61,512
----------- ------------
Net cash used in investing activities (971,238) (33,837,139)
----------- ------------
Cash flows from (used in) financing
activities:
Proceeds from capital contributions -- 5,882,925
Payment of selling commissions -- (411,805)
Payment of organization and offering
costs -- (147,073)
Proceeds from notes payable 2,465,737 22,761,320
Proceeds from notes payable -
affiliate -- 30,801
Principal payments - notes payable (6,342,684) (3,164,018)
Principal payments - notes payable -
affiliate -- (30,801)
Distributions paid (1,450,234) (2,812,989)
----------- ------------
Net cash from (used in) financing
activities (5,327,181) 22,108,360
----------- ------------
Net increase (decrease) in cash and
cash equivalents 1,973,471 (6,436,013)
Cash and cash equivalents at beginning
of period 669,998 9,798,360
----------- ------------
Cash and cash equivalents at end of
period $ 2,643,469 $ 3,362,347
=========== ============
Supplemental disclosure of cash flow
information:
Cash paid during the period for
interest $ 1,689,751 $ 927,263
=========== ============
</TABLE>
The accompanying notes are an integral part
of these financial statements.
5
<PAGE>
AFG Investment Trust D
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 - 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 each of the three and six
months ended June 30, 1996 and the three months ended June 30, 1995. Net income
and cash distributions per Beneficiary Interest for the six months ended
June 30, 1995 are based on 2,057,565 Beneficiary Interests which was calculated
using the weighted average number of Beneficiary Interests outstanding during
the period 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 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
6
<PAGE>
AFG Investment Trust D
Notes to the Financial Statements
(Continued)
are noncancellable. Rents received prior to their due dates are deferred. Future
minimum rents of $66,568,447 are due as follows:
<TABLE>
<S> <C>
For the year ending June 30, 1997 $20,937,206
1998 17,729,235
1999 13,129,083
2000 8,479,179
2001 3,285,760
Thereafter 3,007,984
-----------
Total $66,568,447
===========
</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 $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.
NOTE 5 - 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>
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 6,120,235
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 100,588,275
Accumulated depreciation (22,906,346)
------------
Equipment, net of accumulated depreciation $ 77,681,929
============
</TABLE>
7
<PAGE>
AFG Investment Trust D
Notes to the Financial Statements
(Continued)
At June 30, 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 $18,000 and $13,000,
respectively. The Managing Trustee is actively seeking the sale or re-lease of
all equipment not on lease.
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 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>
Reimbursements for selling commissions $ -- $ 411,805
Reimbursements for organization
and offering costs -- 147,073
Equipment acquisition fees 36,109 94,073
Equipment management fees 490,472 338,951
Administrative charges 10,500 10,500
Reimbursable operating expenses
due to third parties 249,743 149,605
Interest on notes payable - affiliate -- 1,707
-------- ----------
Total $786,824 $1,153,714
======== ==========
</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
June 30, 1996, the Trust was owed $379,792 by AFG for such funds and the
interest thereon. These funds were remitted to the Trust in July 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.
NOTE 7 - NOTES PAYABLE
- ----------------------
Notes payable at June 30, 1996 consisted of installment notes of $38,778,858
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 (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. The installment notes will be fully
amortized by noncancellable rents. The carrying value of notes payable
approximates fair value at June 30, 1996.
8
<PAGE>
AFG Investment Trust D
Notes to the Financial Statements
(Continued)
The annual maturities of the notes payable are as follows:
<TABLE>
<S> <C>
For the year ending June 30, 1997 $13,149,129
1998 10,239,161
1999 6,421,443
2000 4,698,387
2001 1,800,067
Thereafter 2,470,671
-----------
Total $38,778,858
===========
</TABLE>
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 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 1993.
Results of Operations
- ---------------------
For the three and six months ended June 30, 1996, the Trust recognized lease
revenue of $5,528,992 and $11,129,692, respectively, compared to $4,999,976 and
$7,915,121 for the same periods in 1995. The increase in lease revenue from 1995
to 1996 was attributable principally to the acquisition of additional equipment
subsequent to June 30, 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 six months ended June 30,1996 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 and six months ended June 30, 1996 was $33,028
and $46,849, respectively, compared to $99,928 and $277,106 for the same periods
in 1995. Interest income is generated from temporary investment of rental
receipts and unexpended capital contributions in short-term money market
instruments. Interest income was higher in 1995 than 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.
During the three and six months ended June 30, 1996, the Trust sold equipment
having a net book value of $3,000 and $360,510, respectively, to existing
lessees and third parties. These sales resulted in net losses, for financial
statement purposes, of $1,442 and $92,007, respectively.
10
<PAGE>
AFG Investment Trust D
FORM 10-Q
PART I. FINANCIAL INFORMATION
During the three and six months ended June 30, 1995, the Trust sold equipment
having a net book value of $54,325 to existing lessees and third parties. These
sales resulted in a net gain, for financial statement purposes, of $7,187.
It cannot be determined whether future sales of equipment will result in a net
gain or a net loss to the Trust, as such transactions will be dependent upon the
condition and type of equipment being sold and its marketability at the time of
sale. In addition, the amount of gain or loss reported for financial statement
purposes is partly a function of the amount of accumulated depreciation
associated with the equipment being sold.
The ultimate realization of residual value for any type of equipment is
dependent upon many factors, including AFG's ability to sell and re-lease
equipment. Changing market conditions, industry trends, technological advances,
and many other events can converge to enhance or detract from asset values at
any given time. AFG attempts to monitor these changes in order to identify
opportunities which may be advantageous to the Trust and which will maximize
total cash returns for each asset.
The total economic value realized upon final disposition of each asset is
comprised of all primary lease term revenue generated from that asset, together
with its residual value. The latter consists of cash proceeds realized upon the
asset's sale in addition to all other cash receipts obtained from renting the
asset on a re-lease, renewal or month-to-month basis. The Trust classifies such
residual rental payments as lease revenue. Consequently, the amount of gain or
loss reported in the financial statements is not necessarily indicative of the
total residual value the Trust achieved from leasing the equipment.
Depreciation and amortization expense for the three and six months ended June
30, 1996 was $3,539,297 and $7,081,212, respectively, compared to $2,964,805 and
$5,069,530 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 reflects
the acquisition of equipment subsequent to June 30, 1995.
Interest expense was $870,658 and $1,763,330 or 15.8% of lease revenue for
each of the three and six months ended June 30, 1996, respectively, compared to
$1,069,483 and $1,428,817 or 21.4% and 18.1% of lease revenue for the same
periods in 1995. The overall increase in interest expense from 1995 to 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 six
months ended June 30, 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 each of the three and six
months ended June 30, 1996 compared to 4.4% and 4.3% of lease revenue for the
same periods in 1995. Management fees are based on 5% of gross lease revenue
generated by operating leases and 2% of gross lease revenue generated by full
payout leases.
Operating expenses consist principally of administrative charges, professional
service costs, such as audit and legal fees, as well as printing, distribution
and remarketing expenses. Collectively, operating expenses represented 1.8% and
2.3% of lease revenue for the three and six months ended June 30, 1996,
11
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AFG Investment Trust D
FORM 10-Q
PART I. FINANCIAL INFORMATION
respectively, compared to 2.1% and 2% of lease revenue for the same periods 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.
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 $8,271,890 and $5,292,766 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 be consistent with the six months ended
June 30, 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 $33,898,651 to
acquire equipment during the six months ended June 30, 1996 and 1995,
respectively. The equipment acquired during the six months ended June 30, 1996
was acquired pursuant to the reinvestment provision of the Trust's prospectus.
This equipment was financed through a combination of leveraging and the
reinvestment of sale proceeds. During the six months ended June 30, 1996, the
Trust realized $268,503 in equipment sale proceeds, compared to $61,512 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
$2,465,737 and $22,761,320 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 to the
Trust until third-party financing was finalized. The Trust received $30,801 of
such financing during the six months ended June 30, 1995. There was no
financing provided by AFG during the same period in 1996.
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 six months ended June 30, 1996 and
12
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AFG Investment Trust D
FORM 10-Q
PART I. FINANCIAL INFORMATION
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 six months ended June 30, 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.
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 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 $1,450,234. In accordance
with the Amended and Restated Declaration of Trust, the Beneficiaries were
allocated 90.75% of these distributions, or $1,316,088; the Special Beneficiary
was allocated 8.25%, or $119,644; and the Managing Trustee was allocated 1%, or
$14,502.
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: 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
---------------------------------------------
15
<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> 2,643,469
<SECURITIES> 0
<RECEIVABLES> 3,229,892
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,875,611
<PP&E> 106,588,275
<DEPRECIATION> 22,906,346
<TOTAL-ASSETS> 83,557,540
<CURRENT-LIABILITIES> 1,294,820
<BONDS> 38,778,858
0
0
<COMMON> 0
<OTHER-SE> 43,483,862
<TOTAL-LIABILITY-AND-EQUITY> 83,557,540
<SALES> 0
<TOTAL-REVENUES> 11,084,534
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 9,595,257
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,763,330
<INCOME-PRETAX> 1,489,277
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,489,277
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,489,277
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
