UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[ XX] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission file number 0-15621
American Income 5 Limited Partnership
(Exact name of registrant as specified in its charter)
Massachusetts 04-2917026
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
98 N. Washington St., Fifth Floor, Boston, MA 02114
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 854-5800
Securities registered pursuant to Section 12(b) of the Act NONE
Title of each class Name of each exchange on which registered
Securities registered pursuant to Section 12(g) of the Act:
71,295 Units Representing Limited Partnership Interest
(Title of class)
(Title of class)
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 XX No
State the aggregate market value of the voting stock held by
nonaffiliates of the registrant. Not applicable. Securities are nonvoting for
this purpose. Refer to Item 12 for further information.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to security holders for
the year ended December 31, 1995 (Part I and II)
-18-
AMERICAN INCOME 5 LIMITED PARTNERSHIP
FORM 10-K
TABLE OF CONTENTS
Page
PART I
Item 1. Business 3
Item 2. Properties 5
Item 3. Legal Proceedings 5
Item 4. Submission of Matters to a Vote of Security Holders 5
PART II
Item 5. Market for the Partnership's Securities and Related Security Holder Matters 6
Item 6. Selected Financial Data 7
Item 7. Management's Discussion and Analysis of Financial Condition and Results of
Operations 7
Item 8. Financial Statements and Supplementary Data 8
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure 8
PART III
Item 10. Directors and Executive Officers of the Partnership 9
Item 11. Executive Compensation 10
Item 12. Security Ownership of Certain Beneficial Owners and Management 11
Item 13. Certain Relationships and Related Transactions 11
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 14-16
PART I
Item 1. Business.
(a) General Development of Business
AMERICAN INCOME 5 LIMITED PARTNERSHIP (the "Partnership") was organized
as a limited partnership under the Massachusetts Uniform Limited Partnership Act
(the "Uniform Act") on April 15, 1986 for the purpose of acquiring and leasing
to third parties a diversified portfolio of capital equipment. Partners' capital
initially consisted of contributions of $1,000 each from the General Partner
(AFG Leasing Associates II) and the Initial Limited Partner (Daniel J.
Roggemann). The sole General Partner of the Partnership is wholly-owned by
American Finance Group ("AFG"), a Massachusetts partnership and its Affiliates.
On June 27, 1986, the Partnership issued 71,295 limited partnership units (the
"Units") to 1,491 Limited Partners, including four Units purchased by the
Initial Limited Partner. Initially, the General Partner had the following five
general partners: AFG Leasing Incorporated, a Massachusetts corporation,
Kestutis J. Makaitis, Daniel J. Roggemann, Martin F. Laughlin, and Geoffrey A.
MacDonald. Messrs. Makaitis, Roggemann and Laughlin subsequently elected to
withdraw as Individual General Partners. The General Partner is not required to
make any other capital contributions except as may be required under the Uniform
Act and Section 6.1(c) of the Amended and Restated Agreement and Certificate of
Limited Partnership (the "Restated Agreement, as amended"). In accordance with
the terms of the Restated Agreement, as amended, AFG purchased 1,783 Units
($445,750) of the Partnership, representing 2.5% of total capital contributions
received by the Partnership. In 1995, AFG tendered all of its Units to Atlantic
Acquisition Limited Partnership. (See Item 13 herein).
(b) Financial Information About Industry Segments
The Partnership is engaged in only one industry segment: the business of
acquiring capital equipment and leasing the equipment to creditworthy lessees on
a full-payout or operating lease basis. Full-payout leases are those in which
aggregate noncancellable rents equal or exceed the Purchase Price of the leased
equipment. Operating leases are those in which the aggregate noncancellable
rental payments are less than the Purchase Price of the leased equipment.
Industry segment data is not applicable.
(c) Narrative Description of Business
The Partnership was organized to acquire a diversified portfolio of
capital equipment subject to various full-payout and operating leases and to
lease the equipment to third parties as income-producing investments. More
specifically, the Partnership's primary investment objectives are to acquire and
lease equipment which will:
1. Generate quarterly cash distributions; and
2. Maintain substantial residual value for ultimate sale.
The Partnership has the additional objective of providing certain
federal income tax benefits.
The Closing date of the Offering of Units of the Partnership was June
27, 1986. The initial purchase of equipment and the associated lease commitments
occurred on June 30, 1986. The acquisition of the equipment and its associated
leases is described in detail in Note 3 to the financial statements included in
Item 14, herein. The Partnership is expected to terminate no later than December
31, 1997.
The Partnership has no employees; however, it entered into a Management
Agreement with AFG (the "Manager") coincident with the commencement of
operations. The Manager's role, among other things, is to: (i) evaluate, select,
negotiate, and consummate the acquisition of equipment, (ii) manage the leasing,
re-leasing, financing, and refinancing of equipment, and (iii) arrange the
resale of equipment. The Manager is compensated for such services as described
in the Restated Agreement, as amended, Item 13 herein, and in Note 4 to the
financial statements included in Item 14, herein.
The Partnership's investment in equipment is, and will continue to be,
subject to various risks, including physical deterioration, technological
obsolescence and defaults by lessees. A principal business risk of owning and
leasing equipment is the possibility that aggregate lease revenues and equipment
sale proceeds will be insufficient to provide an acceptable rate of return on
invested capital after payment of all debt service costs and operating expenses.
Consequently, the success of the Partnership is largely dependent upon the
ability of the General Partner and its Affiliates to forecast technological
advances, the ability of the lessees to fulfill their lease obligations and the
quality and marketability of the equipment at the time of sale.
In addition, the leasing industry is very competitive. Although all
funds available for acquisitions have been invested in equipment, subject to
noncancellable lease agreements, the Partnership will encounter considerable
competition as equipment is re-leased or sold at the expiration of primary lease
terms. The Partnership, which is now in the middle of its scheduled phase of
remarketing activities, will compete with lease programs offered directly by
manufacturers and other equipment leasing companies, including limited
partnerships, organized and managed similarly to the Partnership, and including
other AFG sponsored partnerships and trusts, which may seek to re-lease or sell
equipment within their own portfolios to the same customers as the Partnership.
Many competitors have greater financial resources and more experience than the
Partnership, the General Partner and the Manager.
Generally, the Partnership is prohibited from reinvesting the proceeds
generated by refinancing or selling equipment. Accordingly, the Partnership will
continue to liquidate its portfolio of equipment at the expiration of the
initial and renewal lease terms and to distribute the net liquidation proceeds.
As an alternative to sale, the Partnership may enter re-lease agreements when
considered advantageous by the General Partner and the Manager. In accordance
with the Partnership's stated investment objectives and policies, the General
Partner is considering winding-up the Partnership's operations, including the
liquidation of the entire portfolio.
Revenue from major individual lessees which accounted for 10% or more of
lease revenue during the years ended December 31, 1995, 1994 and 1993 is
incorporated herein by reference to Note 2 to the financial statements in the
1995 Annual Report. Refer to Item 14(a)(3) for lease agreements filed with the
Securities and Exchange Commission.
Default by a lessee under a lease may cause equipment to be returned to
the Partnership at a time when the General Partner or the Manager is unable to
arrange for the re-lease or sale of such equipment. This could result in the
loss of a material portion of anticipated revenues and significantly weaken the
Partnership's ability to repay related debt.
AFG is a successor to the business of American Finance Group, Inc., a
Massachusetts corporation engaged since its inception in 1980 in various aspects
of the equipment leasing business. In 1990, certain members of AFG's management,
principally Geoffrey A. MacDonald, Chief Executive Officer and co-founder of
AFG, established AFG Holdings (Massachusetts) Limited Partnership ("Holdings
Massachusetts") to acquire ownership and control of AFG. Holdings Massachusetts
effected this event by acquiring all of the equity interests of AFG's two
partners, AFG Holdings Illinois Limited Partnership ("Holdings Illinois") and
AFG Corporation. Holdings Massachusetts incurred significant indebtedness to
finance this acquisition, a significant portion of which was scheduled to mature
in 1995.
On December 16, 1994, the senior lender to Holdings Massachusetts (the
"Senior Lender") assumed control of its security interests in Holdings Illinois
and AFG Corporation and sold all such interests to GDE Acquisitions Limited
Partnership, a Massachusetts limited partnership owned and controlled entirely
by Gary D. Engle, President and member of the Executive Committee of AFG. As a
result of this transaction, GDE Acquisitions Limited Partnership acquired all of
the assets, rights and obligations of AFG from the Senior Lender and assumed
control of AFG. Geoffrey A. MacDonald remains as Chief Executive Officer of AFG
and member of its Executive Committee.
(d) Financial Information About Foreign and Domestic Operations and
Export Sales
Not applicable.
Item 2. Properties.
Incorporated herein by reference to Note 3 to the financial statements
in the 1995 Annual Report.
Item 3. Legal Proceedings.
There are no material pending legal proceedings to which the Partnership
is a party or which involve any of its equipment or leases.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
PART II
Item 5. Market for the Partnership's Securities and Related Security Holder
Matters.
(a) Market Information
There is no public market for the resale of the Units and it is not
anticipated that a public market for resale of the Units will develop.
(b) Approximate Number of Security Holders
At December 31, 1995, there were 1,287 recordholders of Units in the
Partnership.
(c) Dividend History and Restrictions
Pursuant to Article VI of the Restated Agreement, as amended, the
Partnership's Distributable Cash From Operations and Distributable Cash From
Sales or Refinancings are determined and distributed to the Partners quarterly.
Each quarter's distribution may vary in amount. Distributions may be made to the
General Partner prior to the end of the fiscal quarter; however, the amount of
such distribution reflects only amounts to which the General Partner is entitled
at the time such Distribution is made. Currently, there are no restrictions that
materially limit the Partnership's ability to distribute Distributable Cash From
Operations and Distributable Cash From Sales or Refinancings or that the
Partnership believes are likely to materially limit the future distribution of
Distributable Cash From Operations and Distributable Cash From Sales or
Refinancings. The Partnership expects to continue to distribute all
Distributable Cash From Operations and Distributable Cash From Sales or
Refinancings on a quarterly basis.
Distributions in 1995 and 1994 were as follows:
General Limited
Total Partner Partners
Total 1995 distributions $ 900,189 $ 9,002 $ 891,187
Total 1994 distributions 1,485,311 14,853 1,470,458
Total $ 2,385,500 $ 23,855 $ 2,361,645
Distributions payable at December 31, 1995 and 1994 were $180,038 and
$270,058, respectively.
"Distributable Cash From Operations" means the net cash provided by the
Partnership's normal operations after general expenses and current liabilities
of the Partnership are paid, reduced by any reserves for working capital and
contingent liabilities to be funded from such cash, to the extent deemed
reasonable by the General Partner, and increased by any portion of such reserves
deemed by the General Partner not to be required for Partnership operations and
reduced by all accrued and unpaid Equipment Management Fees and, after Payout,
further reduced by all accrued and unpaid Subordinated Remarketing Fees.
Distributable Cash From Operations does not include any Distributable
Cash From Sales or Refinancings.
"Distributable Cash From Sales or Refinancings" means Cash From Sales or
Refinancings as reduced by (i)(a) amounts realized from any loss or destruction
of equipment which the General Partner determines shall be reinvested in similar
equipment for the remainder of the original lease term of the lost or destroyed
equipment, or in isolated instances, in other equipment, if the General Partner
determines that investment of such proceeds will significantly improve the
diversity of the Partnership's equipment portfolio, and subject in either case
to satisfaction of all existing indebtedness secured by such equipment to the
extent deemed necessary or appropriate by the General Partner, and (b) the
proceeds from the sale of an interest in equipment pursuant to any agreement
governing a joint venture which the General Partner determines will be invested
in additional equipment or interests in equipment and which ultimately are so
reinvested and (ii) any accrued and unpaid Equipment Management Fees and, after
Payout, any accrued and unpaid Subordinated Remarketing Fees.
"Cash From Sales or Refinancings" means cash received by the Partnership
from sale or refinancing transactions, as reduced by (i)(a) all debts and
liabilities of the Partnership required to be paid as a result of sale or
refinancing transactions, whether or not then due and payable (including any
liabilities on an item of equipment sold which are not assumed by the buyer and
any remarketing fees required to be paid to persons not affiliated with the
General Partner, but not including any Subordinated Remarketing Fees whether or
not then due and payable) and (b) any reserves for working capital and
contingent liabilities funded from such cash to the extent deemed reasonable by
the General Partner and (ii) increased by any portion of such reserves deemed by
the General Partner not to be required for Partnership operations. In the event
the Partnership accepts a note in connection with any sale or refinancing
transaction, all payments subsequently received in cash by the Partnership with
respect to such note shall be included in Cash From Sales or Refinancings,
regardless of the treatment of such payments by the Partnership for tax or
accounting purposes. If the Partnership receives purchase money obligations in
payment for equipment sold, which are secured by liens on such equipment, the
amount of such obligations shall not be included in Cash From Sales or
Refinancings until the obligations are fully satisfied.
Each distribution of Distributable Cash From Operations and
Distributable Cash From Sales or Refinancings of the Partnership shall be made
99% to the Limited Partners and 1% to the General Partner before Payout and 85%
to the Limited Partners and 15% to the General Partner after Payout.
"Payout" is defined as the first time when the aggregate amount of all
distributions to the Limited Partners of Distributable Cash From Operations and
Distributable Cash From Sales or Refinancings equals the aggregate amount of the
Limited Partners' original capital contributions plus a cumulative annual return
of 10% (compounded daily and calculated beginning with the Partnership's Closing
Date) on their aggregate unreturned capital contributions. For purposes of this
definition, capital contributions shall be deemed to have been returned only to
the extent that distributions of cash to the Limited Partners exceed the amount
required to satisfy the cumulative annual return of 10% (compounded daily) on
the Limited Partners' aggregate unreturned capital contributions, such
calculation to be based on the aggregate unreturned capital contributions
outstanding on the first day of each fiscal quarter.
Distributable Cash From Operations and Distributable Cash From Sales or
Refinancings ("Distributions") are distributed within 60 days after the
completion of each quarter, beginning with the first full fiscal quarter
following the Partnership's Closing Date. Each Distribution is described in a
statement sent to the Limited Partners.
Item 6. Selected Financial Data.
Incorporated herein by reference to the section entitled "Selected
Financial Data" in the 1995 Annual Report.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Incorporated herein by reference to the section entitled "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in the
1995 Annual Report.
Item 8. Financial Statements and Supplementary Data.
Incorporated herein by reference to the financial statements and
supplementary data included in the 1995 Annual Report.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
PART III
Item 10. Directors and Executive Officers of the Partnership.
(a-b) Identification of Directors and Executive Officers
The Partnership has no Directors or Officers. As indicated in Item 1 of
this report, AFG Leasing Associates II is the sole General Partner of the
Partnership. Under the Restated Agreement, as amended, the General Partner is
solely responsible for the operation of the Partnership's properties and the
Limited Partners have no right to participate in the control of such operations.
The names, titles and ages of the Directors and Executive Officers of the
corporate General Partner of the General Partner as of March 15, 1996 are as
follows:
DIRECTORS AND EXECUTIVE OFFICERS OF THE CORPORATE
GENERAL PARTNER OF THE GENERAL PARTNER (See Item 13)
Name Title Age Term
Geoffrey A. MacDonald Chief Executive Officer, Until a
Chairman, and a member of the successor
Executive Committee of AFG and is duly
President and a Director of elected
the corporate General Partner 47 and
qualified
Gary D. Engle President and Chief Operating
Officer and a member of the
Executive Committee of AFG 47
Gary M. Romano Vice President and Controller
of AFG and Clerk of the corporate
General Partner 36
James F. Livesey Vice President, Aircraft and Vessels 46
of AFG
Sandra L. Simonsen Vice President, Information Systems 45
of AFG
(c) Identification of Certain Significant Persons
None.
(d) Family Relationship
No family relationship exists among any of the foregoing Partners,
Directors or Executive Officers.
(e) Business Experience
Mr. MacDonald, age 47, is a co-founder, Chief Executive Officer, Chairman and a member of the Executive Committee
of AFG and President and a Director of the corporate General Partner. Mr. MacDonald served as a co-founder, Director and
Senior Vice President of AFG's predecessor corporation from 1980 to 1988. Mr. MacDonald is Vice President of American
Finance Group Securities Corp. and a limited partner in Atlantic Acquisition Limited Partnership ("AALP"). Prior to
co-founding AFG's predecessor, Mr. MacDonald held various executive and management positions in the leasing and
pharmaceutical industries. Mr. MacDonald holds an M.B.A. from Boston College and a B.A. degree from the University of
Massachusetts (Amherst).
Mr. Engle, age 47, is President, Chief Operating Officer, and a member of the Executive Committee of AFG and
President of AFG Realty Corporation. Mr. Engle is Vice President and a Director of certain of AFG's affiliates. On
December 16, 1994, Mr. Engle acquired control of AFG, the General Partner and each of AFG's subsidiaries. Mr. Engle
controls the general partner of AALP and is also a limited partner in AALP. From 1987 to 1990, Mr. Engle was a principal
and co-founder of Cobb Partners Development, Inc., a real estate and mortgage banking company. From 1980 to 1987, Mr.
Engle was Senior Vice President and Chief Financial Officer of Arvida Disney Company, a large scale community development
company owned by Walt Disney Company. Prior to 1980, Mr. Engle served in various management consulting and institutional
brokerage capacities. Mr. Engle has an M.B.A. from Harvard University and a B.S. degree from the University of
Massachusetts (Amherst).
Mr. Romano, age 36, is Vice President and Controller of AFG and certain of its affiliates and Clerk of the
corporate General Partner. Mr. Romano joined AFG in November 1989 and was appointed Vice President and Controller in
April 1993. Prior to joining AFG, Mr. Romano was Assistant Controller for a privately-held real estate company which he
joined in 1987. Mr. Romano held audit staff and manager positions at Ernst & Whinney from 1982 to 1986. Mr. Romano is a
C.P.A. and holds a B.S. degree from Boston College.
Mr. Livesey, age 46, is Vice President, Aircraft and Vessels, of AFG. Mr. Livesey joined AFG in October, 1989,
and was promoted to Vice President in January, 1992. Prior to joining AFG, Mr. Livesey held sales and marketing
positions with two privately-held equipment leasing firms. Mr. Livesey holds an M.B.A. from Boston College and B.A.
degree from Stonehill College.
Ms. Simonsen, age 45, joined AFG in February 1990 and was promoted to Vice President, Information Systems in April
1992. Prior to joining AFG, Ms. Simonsen was Vice President, Information Systems with Investors Mortgage Insurance
Company which she joined in 1973. Ms. Simonsen provided systems consulting for a subsidiary of American International
Group and authored a software program published by IBM. Ms. Simonsen holds a B.A. degree from Wilson College.
(f) Involvement in Certain Legal Proceedings
None.
(g) Promoters and Control Persons
See Item 10 (a-b) above.
Item 11. Executive Compensation.
(a) Cash Compensation
Currently, the Partnership has no employees. However, under the terms of
the Restated Agreement, as amended, the Partnership is obligated to pay all
costs of personnel employed full or part-time by the Partnership, including
officers or employees of the General Partner or its Affiliates. There is no plan
at the present time to make any partners or employees of the General Partner or
its Affiliates employees of the Partnership. The Partnership has not paid and
does not propose to pay any options, warrants or rights to the officers or
employees of the General Partner or its Affiliates.
(b) Compensation Pursuant to Plans
None.
(c) Other Compensation
Although the Partnership has no employees, as discussed in Item 11(a),
pursuant to section 9.4 of the Restated Agreement, as amended, the Partnership
incurs a monthly charge for personnel costs of the Manager for persons engaged
in providing administrative services to the Partnership. A description of the
remuneration paid by the Partnership to the Manager for such services is
included in Item 13, herein and in Note 4 to the financial statements included
in Item 14, herein.
(d) Compensation of Directors
None.
(e) Termination of Employment and Change of Control Arrangement
There exists no remuneration plan or arrangement with any partners of
the General Partner or its Affiliates which results or may result from their
resignation, retirement or any other termination.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
By virtue of its organization as a limited partnership, the Partnership
has outstanding no securities possessing traditional voting rights. However, as
provided in Section 11.2(a) of the Restated Agreement, as amended (subject to
Sections 11.2(b) and 11.3), a majority interest of the Limited Partners has
voting rights with respect to:
1. Amendment of the Restated Agreement;
2. Termination of the Partnership;
3. Removal of the General Partner; and
4. Approval or disapproval of the sale of all, or substantially all,
of the assets of the Partnership (except in the orderly
liquidation of the Partnership upon its termination and
dissolution).
As of March 1, 1996, the following person or group owns beneficially more than 5% of the Partnership's 71,295
outstanding Units:
Name and Amount Percent
Title Address of of Beneficial of
of Class Beneficial Owner Ownership Class
Units Representing Atlantic Acquisition Limited Partnership
Limited Partnership 98 North Washington Street 10,391 Units 14.57%
Interests Boston, MA 02114
Messrs. Engle and MacDonald have ownership interests in AALP. See Item 10 of this report.
The ownership and organization of AFG is described in Item 1 of this
report.
Item 13. Certain Relationships and Related Transactions.
The General Partner of the Partnership is AFG Leasing Associates II, an
Affiliate of AFG.
(a) Transactions with Management and Others
All operating expenses incurred by the Partnership are paid by AFG on
behalf of the Partnership and AFG is reimbursed at its actual cost for such
expenditures. Fees and other costs incurred during each of the three years in
the period ended December 31, 1995, which were paid or accrued by the
Partnership to AFG or its Affiliates, are as follows:
1995 1994 1993
Equipment management fees $ 67,246 $ 81,024 $ 83,368
Administrative charges 16,128 12,000 14,955
Reimbursable operating expenses
due to third parties 62,211 49,526 59,688
Total $ 145,585 $ 142,550 $ 158,011
As provided under the terms of the Management Agreement, AFG is
compensated for its services to the Partnership. Such services include all
aspects of acquisition, management and sale of equipment. For acquisition
services, AFG is compensated by an amount equal to 4.75% of Equipment Base Price
paid by the Partnership. For management services, AFG is compensated by an
amount equal to the lesser of (i) 5% of gross lease rental revenue earned by the
Partnership or (ii) fees which the General Partner reasonably believes to be
competitive for similar services for similar equipment. Both of these fees are
subject to certain limitations defined in the Management Agreement. Compensation
to AFG for services connected to the sale of equipment is calculated as the
lesser of (i) 3% of gross sale proceeds or (ii) one-half of reasonable brokerage
fees otherwise payable under arm's length circumstances. Payment of the
remarketing fee is subordinated to Payout and is subject to certain limitations
defined in the Management Agreement.
Administrative charges represent amounts owed to AFG, pursuant to
Section 9.4 of the Restated Agreement, as amended, for persons employed by AFG
who are engaged in providing administrative services to the Partnership.
Reimbursable operating expenses due to third parties represent costs paid by AFG
on behalf of the Partnership which are reimbursed to AFG.
All equipment was purchased from AFG, one of AFG's affiliates, including
other equipment leasing programs sponsored by AFG, or from third party sellers.
The Partnership's Purchase Price was determined by the method described in Note
2 to the financial statements included in Item 14, herein.
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 Partnership.
At December 31, 1995, the Partnership was owed $200,698 by AFG for such funds
and the interest thereon. These funds were remitted to the Partnership in
January 1996.
On August 18, 1995, Atlantic Acquisition Limited Partnership ("AALP"), a
newly formed Massachusetts limited partnership owned and controlled by certain
principals of AFG, commenced a voluntary cash Tender Offer (the "Offer") for up
to approximately 45% of the outstanding units of limited partner interest in
this Partnership and 20 affiliated partnerships sponsored and managed by AFG.
The Offer was subsequently amended and supplemented in order to provide
additional disclosure to unitholders; increase the offer price; reduce the
number of units sought to approximately 35% of the outstanding units; and extend
the expiration date of the Offer to October 20, 1995. Following commencement of
the Offer, certain legal actions were initiated by interested persons against
AALP, each of the general partners (4 in total) of the 21 affected programs, and
various other affiliates and related parties. One action, a class action brought
in the United States District Court for the District of Massachusetts (the
"Court") on behalf of the unitholders (limited partners), sought to enjoin the
Offer and obtain unspecified monetary damages. A settlement of this litigation
was approved by the Court on November 15, 1995. A second class action, brought
in the Superior Court of the Commonwealth of Massachusetts (the "Superior
Court") seeking to enjoin the Offer, obtain unspecified monetary damages, and
intervene in the first class action, was dismissed by the Superior Court. The
Plaintiffs have filed an appeal in this matter. The limited partners of the
Partnership tendered approximately 10,391 units or 14.57% of the total
outstanding units of the Partnership to AALP. The operations of the Partnership
are not expected to be adversely affected by these proceedings or settlements.
(b) Certain Business Relationships
None.
(c) Indebtedness of Management to the Partnership
None.
(d) Transactions with Promoters
See Item 13(a) above.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) Documents filed as part of this report:
(1) Financial Statements:............................................................................*
Report of Independent Auditors...................................................................*
Statement of Financial Position
at December 31, 1995 and 1994....................................................................*
Statement of Operations
for the years ended December 31, 1995, 1994 and 1993.............................................*
Statement of Changes in Partners' Capital
for the years ended December 31, 1995, 1994 and 1993.............................................*
Statement of Cash Flows
for the years ended December 31, 1995, 1994 and 1993.............................................*
Notes to the Financial Statements................................................................*
(2) Financial Statement Schedules:
None required.
(3) Exhibits:
Except as set forth below, all Exhibits to Form 10-K,
as set forth in Item 601 of Regulation S-K, are not
applicable.
Exhibit
Number
4 Amended and Restated Agreement and Certificate of Limited Partnership included as Exhibit A to
the Prospectus which is included in Registration Statement on Form S-1 (No. 33-1190).
13 The 1995 Annual Report to security holders, a copy of
which is furnished for the information of the
Securities and Exchange Commission. Such Report, except
for those portions thereof which are incorporated
herein by reference, is not deemed "filed" with the
Commission.
23 Consent of Independent Auditors.
99 (a) Lease agreement with United Technologies
Corporation, was filed in the Registrant's Annual
Report on Form 10-K for the year ended December 31,
1989 as Exhibit 28 (a) and is incorporated herein by
reference.
* Incorporated herein by reference to the appropriate portion of the 1995 Annual Report to security holders for the year
ended December 31, 1995. (See Part II)
Exhibit
Number
99 (b) Lease agreement with Northwest Airlines, Inc., was
filed in the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1989 as Exhibit 28 (b)
and is incorporated herein by reference.
99 (c) Lease agreement with Comair Inc., was filed in the
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1995 and is included herein.
(b) Reports on Form 8-K
None.
Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report (Form
10-K) of American Income 5 Limited Partnership of our report dated March 12,
1996, included in the 1995 Annual Report to the Partners of American Income 5
Limited Partnership.
ERNST & YOUNG LLP
Boston, Massachusetts
March 12,1996
-17-
SIGNATURES
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 5 LIMITED PARTNERSHIP
By: AFG Leasing Associates II,
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/ Geoffrey A. MacDonald By: /s/ Gary D. Engle
Geoffrey A. MacDonald Gary D. Engle
Chief Executive Officer, President and Chief Operating
Chairman, and a member of the Officer and member of the
Executive Committee of AFG and Executive Committee of AFG
President and a Director of the (Principal Financial Officer)
corporate General Partner
(Principal Executive Officer)
Date: March 29, 1996 Date: March 29, 1996
By: /s/ Gary M. Romano
Gary M. Romano
Vice President and Controller
of AFG and Clerk of the corporate General
Partner
(Principal Accounting Officer)
Date: March 29, 1996