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 March 31, 1995
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, 1995 Commission File No. 0-14414
American Income 3 Limited Partnership
(Exact name of registrant as specified in its charter)
Massachusetts 04-2809323
(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
Exchange Place, 14th Floor, Boston, MA 02109
(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______
[CAPTION]
AMERICAN INCOME 3 LIMITED PARTNERSHIP
FORM 10-Q
INDEX
Page
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Statement of Net Assets in Liquidation
at March 31, 1995 and December 31, 1994 3
Statement of Changes in Net Assets in Liquidation
for the three months ended March 31, 1995 4
Statement of Operations
for the three months ended March 31, 1994 5
Statement of Cash Flows
for the three months ended March 31, 1994 6
Notes to the Financial Statements 7-8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-10
PART II. OTHER INFORMATION:
Items 1 - 6 11
[CAPTION]
AMERICAN INCOME 3 LIMITED PARTNERSHIP
STATEMENT OF NET ASSETS IN LIQUIDATION
March 31, 1995 and December 31, 1994
(Unaudited)
March 31, December 31,
1995 1994
ASSETS
Cash and cash equivalents $ 399,695 $ 604,724
Accounts receivable - affiliate -- 5,618
Total assets $ 399,695 $ 610,342
LIABILITIES
Accrued liabilities $ 7,000 $ 3,000
Accrued liabilities - affiliate 6,164 5,271
Cash distributions payable to partners 204,255 204,255
Total liabilities 217,419 212,526
NET ASSETS $ 182,276 $ 397,816
[CAPTION]
AMERICAN INCOME 3 LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION
for the three months ended March 31, 1995
(Unaudited)
Interest income $ 5,549
Cash distribution (204,255)
Operating expenses - affiliate (16,834)
Net decrease in net assets in
liquidation during the period (215,540)
Net assets in liquidation at
the beginning of the period 397,816
Net assets in liquidation at
the end of the period $ 182,276
Cash distribution declared per
limited partnership unit $ 2.50
[CAPTION]
AMERICAN INCOME 3 LIMITED PARTNERSHIP
STATEMENT OF OPERATIONS
for the three months ended March 31, 1994
(Unaudited)
Income:
Lease revenue $ 111,726
Interest income 298
Gain on sale of equipment 2,300
Total income 114,324
Expenses:
Depreciation 178,924
Equipment management fees - affiliate 5,586
Operating expenses - affiliate 21,329
Total expenses 205,839
Net loss $ (91,515)
Net loss
per limited partnership unit $ (1.12)
Cash distribution declared
per limited partnership unit $ 10.00
[CAPTION]
AMERICAN INCOME 3 LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
for the three months ended March 31, 1994
(Unaudited)
Cash flows from (used in) operating activities:
Net loss $ (91,515)
Adjustments to reconcile net loss to net
cash from operating activities:
Depreciation 178,924
Gain on sale of equipment (2,300)
Changes in assets and liabilities
Decrease in:
rents receivable 5,833
accounts receivable - affiliate 2,537
Increase (decrease) in:
accrued liabilities 3,631
accrued liabilities - affiliate 123,391
deferred rental income (30,322)
Net cash from operating activities 190,179
Cash flows from investing activities:
Proceeds from equipment sales 2,300
Net cash from investing activities 2,300
Cash flows used in financing activities:
Distributions paid (255,319)
Net cash used in financing activities (255,319)
Net decrease in cash and cash equivalents (62,840)
Cash and cash equivalents at beginning of period 106,303
Cash and cash equivalents at end of period $ 43,463
AMERICAN INCOME 3 LIMITED PARTNERSHIP
Notes to the Financial Statements
March 31, 1995
(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 1994 Annual Report. Except as disclosed
herein, there has been no material change to the information presented in the
footnotes to the 1994 Annual Report.
Beginning July 1, 1994, the General Partner initiated the liquidation of
the Partnership in accordance with the Amended and Restated Agreement and
Certificate of Limited Partnership (the "Restated Agreement, as amended").
Accordingly, the financial statements herein for the three months ended March
31, 1995 have been prepared on a liquidation basis of accounting.
In the opinion of management, all adjustments (consisting of normal and
recurring adjustments) considered necessary to present fairly the Partnership's
net assets in liquidation at March 31, 1995 and December 31, 1994, its changes
in net assets in liquidation for the three months ended March 31, 1995 and its
results of operations and cash flows for the three months ended March 31, 1994
have been made and are reflected.
NOTE 2 - CASH
At March 31, 1995, the Partnership had $395,000 invested in reverse
repurchase agreements secured by U.S. Treasury Bills or interests in U.S.
Government securities.
NOTE 3 - REVENUE RECOGNITION
All of the Partnership's primary and renewal leases had expired and all of
the associated equipment was sold as of December 31, 1994. No future rents are
due.
NOTE 4 - RELATED PARTY TRANSACTIONS
All operating expenses incurred by the Partnership are paid by American
Finance Group ("AFG") on behalf of the Partnership and AFG is reimbursed at its
actual cost for such expenditures. Fees and other costs incurred during the
three months ended March 31, 1995 and 1994, which were paid or accrued by the
Partnership to AFG or its Affiliates, are as follows:
1995 1994
Equipment management fees -- $ 5,586
Reimbursable operating expenses
due to third parties $ 13,834 18,329
Administrative charges 3,000 3,000
Total $ 16,834 $ 26,915
All rents and proceeds from the sale of equipment were paid directly to
either AFG or to a lender. AFG temporarily deposited collected funds in a
separate interest bearing escrow account prior to remittance to the Partnership.
The Partnership was owed no such funds at March 31, 1995.
AMERICAN INCOME 3 LIMITED PARTNERSHIP
FORM 10-Q
PART I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Overview
On July 1, 1994, the General Partner initiated the liquidation of the
Partnership. The Partnership was organized in 1986 to acquire and lease a
diversified portfolio of capital equipment to third-party lessees and to
distribute the net proceeds from operating and remarketing activities, after
satisfaction of all expenses and debt service obligations, to the Partners. The
Partnership was capitalized with $20,221,250 of equity from the Limited Partners
and $50,000 of equity from the General Partner and acquired $34,595,921 of
equipment, subject to related indebtedness. All of the Partnership's equipment
has been sold. Dissolution of the Partnership is expected in 1995.
Results of Operations
The Statement of Changes in Net Assets in Liquidation is presented for the
three months ended March 31, 1995 and reflects the liquidation of assets during
the period. As a result, a comparison between current and prior year reporting
periods is not meaningful.
For the period ended March 31, 1995, the Partnership recognized $5,549 of
interest income generated from the temporary investment of excess cash.
Operating expenses consisted principally of administrative charges, professional
service costs, such as audit and legal fees, as well as printing and
distribution expenses. These charges amounted to $16,834 during the period
ended March 31, 1995. The Partnership will continue to to incur distribution,
accounting and administrative costs until the Partnership is dissolved.
Liquidity and Capital Resources
The Partnership will have limited cash activities for the remainder of its
existence. Prior to its dissolution, cash transactions are expected to result
from the receipt of interest income on short-term investments, the payment of
operating expenses, discussed above, and the payment of distributions to
the Partners. At March 31, 1995, the Partnership had $399,695 of cash,
substantially all of which was invested in interest-bearing investments. See
Note 2 to the financial statements herein.
For the three months ended March 31, 1995, the Partnership declared total
distributions of $204,255. In accordance with the Restated Agreement, as
amended, the Limited Partners were allocated 99% of these distributions, or
$202,212 and the General Partner was allocated 1%, or $2,043. The first quarter
1995 cash distribution was paid on April 14, 1995. Since inception, the
Partnership has distributed $21,002,832 to the Limited Partners and $212,150 to
the General Partner.
Cash distributions paid to the Limited Partners 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 will be
determined coincident with the final cash distribution payment to the Partners.
AMERICAN INCOME 3 LIMITED PARTNERSHIP
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
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.
AMERICAN INCOME 3 LIMITED PARTNERSHIP
By: AFG Leasing Associates, a Massachusetts
general partnership and the General Partner of
the Registrant.
By: AFG Leasing Incorporated, a Massachusetts
corporation and general partner in such general
partnership.
By: /s/ Gary M. Romano
Gary M. Romano
Vice President and Controller
(Duly Authorized Officer and
Principal Accounting Officer)
Date: May 18, 1995