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 [FEE REQUIRED]
For quarterly period ended September 30, 1994
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
For Quarter Ended September 30, 1994 Commission File No. 0-16511
American Income Partners III-A Limited Partnership
(Exact name of registrant as specified in its charter)
Massachusetts 04-2962676
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
Exchange Place, 14th Floor, Boston, MA 02109
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 542-1200
____________________________________________________________________________
(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 PARTNERS III-A LIMITED PARTNERSHIP
FORM 10-Q
INDEX
PART I. FINANCIAL INFORMATION: Page
Item 1. Financial Statements
Statement of Financial Position
at September 30, 1994 and December 31, 1993 3
Statement of Operations
for the three and nine months ended September 30, 1994 and 1993 4
Statement of Cash Flows
for the nine months ended September 30, 1994 and 1993 5
Notes to the Financial Statements 6-10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 11-15
PART II. OTHER INFORMATION:
Items 1 - 6 16
[CAPTION]
AMERICAN INCOME PARTNERS III-A LIMITED PARTNERSHIP
STATEMENT OF FINANCIAL POSITION
September 30, 1994 and December 31, 1993
(Unaudited)
September 30, December 31,
1994 1993
ASSETS
Cash and cash equivalents $ 1,021,327 $ 1,486,204
Rents receivable, net of allowance for
doubtful accounts of $140,000 and
$185,000 at September 30, 1994 and
December 31, 1993, respectively 170,732 238,646
Accounts receivable - affiliate 113,096 105,083
Equipment at cost, net of accumulated
depreciation of $9,747,311 and
$11,062,913 at September 30, 1994 and
December 31, 1993, respectively 4,769,372 5,638,454
Total assets $ 6,074,527 $ 7,468,387
LIABILITIES AND PARTNERS' CAPITAL
Notes payable $ 257,641 $ 560,198
Accrued interest 4,962 23,541
Accrued liabilities 18,125 64,000
Accrued liabilities - affiliate 10,469 12,662
Deferred rental income 68,277 55,564
Cash distributions payable to partners 509,603 509,603
Total liabilities 869,077 1,225,568
Partners' capital (deficit):
General Partners (169,690) (159,316)
Limited Partnership Interests
(1,009,014 Units; initial
purchase price of $25 each) 5,375,140 6,402,135
Total partners' capital 5,205,450 6,242,819
Total liabilities and partners' capital $ 6,074,527 $ 7,468,387
[CAPTION]
AMERICAN INCOME PARTNERS III-A LIMITED PARTNERSHIP
STATEMENT OF OPERATIONS
for the three and nine months ended September 30, 1994 and 1993
(Unaudited)
Three Months Nine Months
Ended September 30, Ended September 30,
1994 1993 1994 1993
Income:
Lease revenue $ 331,454 $ 449,146 $ 1,321,124 $ 1,592,880
Interest income 12,269 6,130 34,027 20,197
Gain on sale
of equipment 10,344 252,785 133,898 640,274
Total income 354,067 708,061 1,489,049 2,253,351
Expenses:
Depreciation 209,735 549,895 803,816 1,787,882
Interest expense 1,743 11,762 9,387 44,388
Equipment management
fees - affiliate 16,572 22,457 66,056 79,644
Operating expenses
- affiliate 72,696 20,913 118,350 70,991
Total expenses 300,746 605,027 997,609 1,982,905
Net income $ 53,321 $ 103,034 $ 491,440 $ 270,446
Net income per limited
partnership unit $ 0.05 $ 0.10 $ 0.48 $ 0.27
Cash distributions
declared per limited
partnership unit $ 0.50 $ 0.50 $ 1.50 $ 1.50
[CAPTION]
AMERICAN INCOME PARTNERS III-A LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
for the nine months ended September 30, 1994 and 1993
(Unaudited)
1994 1993
Cash flows from (used in) operating activities:
Net income $ 491,440 $ 270,446
Adjustments to reconcile net income to net
cash from operating activities:
Depreciation 803,816 1,787,882
Gain on sale of equipment (133,898) (640,274)
Decrease in allowance for doubtful accounts (45,000) --
Changes in assets and liabilities
Decrease (increase) in:
rents receivable 112,914 145,773
accounts receivable - affiliate (8,013) 501,378
Increase (decrease) in:
accrued interest (18,579) (12,989)
accrued liabilities (45,875) (11,318)
accrued liabilities - affiliate (2,193) 1,624
deferred rental income 12,713 19,603
Net cash from operating activities 1,167,325 2,062,125
Cash flows from (used in) investing activities:
Purchase of equipment (16,420) --
Proceeds from equipment sales 215,584 687,906
Net cash from investing activities 199,164 687,906
Cash flows from (used in) financing activities:
Proceeds from notes payable -- 182,044
Principal payments - notes payable (302,557) (725,044)
Distributions paid (1,528,809) (1,401,408)
Net cash used in financing activities (1,831,366) (1,944,408)
Net increase (decrease) in cash and cash equivalents (464,877) 805,623
Cash and cash equivalents at beginning of period 1,486,204 560,432
Cash and cash equivalents at end of period $ 1,021,327 $ 1,366,055
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 27,966 $ 57,377
[CAPTION]
AMERICAN INCOME PARTNERS III-A LIMITED PARTNERSHIP
Notes to the Financial Statements
September 30, 1994
(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 principals for complete financial statements and,
accordingly, the accompanying financial statements should be read in
conjunction with the footnotes presented in the 1993 Annual Report. Except
as disclosed herein, there has been no material change to the information
presented in the footnotes to the 1993 Annual Report.
In the opinion of management, all adjustments (consisting of normal and
recurring adjustments) considered necessary to present fairly the financial
position at September 30, 1994 and December 31, 1993 and results of operations
for the three and nine month periods ended September 30, 1994 and 1993 have
been made and are reflected.
NOTE 2 - CASH
The Partnership invests excess cash with large institutional banks in
reverse repurchase agreements with overnight securities. The reverse
repurchase agreements are secured by U.S. Treasury Bills or interests in U.S.
Government securities.
NOTE 3 - REVENUE RECOGNITION
Rents are payable to the Partnership 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
$1,466,461 are due as follows:
For the year ending September 30, 1995 $ 708,064
1996 484,903
1997 267,694
1998 2,900
1999 2,900
Total $ 1,466,461
The Managing General Partner lowered the aggregate amount reserved against
potentially uncollectable rents to $140,000 during the nine months ended
September 30, 1994. This caused an increase in lease revenue of $45,000 or
$0.04 per limited partnership unit. It cannot be determined whether the
Partnership will recover any past due rents in the future; however, the
Managing General Partner will pursue the collection of all such items.
During 1994, the Partnership and other affiliated partnerships, executed a
renewal lease agreement in connection with an MD-82 aircraft leased by
Northwest Airlines, Inc. ("Northwest"). Pursuant to the agreement, Northwest
will continue to lease the aircraft until July 31, 1997. The Partnership,
which owns a 14% interest in this aircraft, will receive an aggregate of
$861,460 in lease revenue during the thirty-eight month renewal period. Such
rents are included in the future minimum rents above.
NOTE 4 - EQUIPMENT
At September 30, 1994, the Partnership owned equipment with an original
cost of $14,516,683 as summarized below. In the opinion of American Finance
Group ("AFG"), the carrying value of the equipment does not exceed its fair
market value. The equipment is summarized as follows:
Lease Term Equipment
Equipment Type (Months) at Cost
Aircraft 12-60 $ 7,649,166
Retail store fixtures 1-72 1,431,673
Trailers/intermodal containers 60-84 1,172,384
Motor vehicles 12-72 1,091,401
Communications 36-84 816,309
Medical 10-60 733,242
Research and test 17-84 726,964
Locomotives 57-60 378,818
Tractors and heavy duty trucks 1-72 274,972
Materials handling 1-84 167,419
Computers and peripherals 1-60 60,852
Manufacturing 60-72 12,291
Photocopying 1-36 1,192
Total equipment cost 14,516,683
Accumulated depreciation (9,747,311)
Equipment, net of accumulated depreciation $ 4,769,372
The summary above includes equipment held for sale or re-lease which was
fully depreciated and had an original cost of approximately $268,000 at
September 30, 1994.
NOTE 5 - RELATED PARTY TRANSACTIONS
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 nine month
periods ended September 30, 1994 and 1993, which were paid or accrued by the
Partnership to AFG or its Affiliates, are as follows:
1994 1993
Equipment management fees $ 66,056 $ 79,644
Administrative charges 9,000 11,955
Reimbursable operating expenses
due to third parties 109,350 59,036
Total $ 184,406 $ 150,635
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 September 30, 1994, the Partnership was owed $113,096 by AFG
for such funds and the interest thereon. These funds were remitted to the
Partnership in October 1994.
NOTE 6 - NOTES PAYABLE
Notes payable at September 30, 1994 consisted of installment notes of
$257,641 payable to banks and institutional lenders. All of the installment
notes are non-recourse, with interest rates ranging between 6.25% and 9.62%
and are collateralized by the equipment and assignment of the related lease
payments. The installment notes will be fully amortized by noncancellable
rents.
The annual maturities of the installment notes payable are as follows:
For the year ending September 30, 1995 $ 242,032
1996 15,609
Total $ 257,641
NOTE 7 - LEGAL PROCEEDINGS
In 1991, a lessee of the Partnership, Healthcare Financial Services, Inc.
and Healthcare International, Inc., the guarantor of certain lease obligations
of Healthcare Financial Services, Inc., (collectively, the "Debtors") filed for
bankruptcy protection under Chapter 11 of the Bankruptcy Code. The Partnership
and other AFG-sponsored programs filed a proof of claim in this case. The
Debtors settled this claim with respect to the Partnership and purchased all of
the remaining equipment in 1994 which resulted in a net gain of approximately
$6,000 for financial statement purposes. The Chapter 11 proceeding of the
Debtors was dismissed on July 21, 1994. This bankruptcy did not have a
material adverse effect on the financial position of the Partnership.
In 1991 and 1992, respectively, Linda Vista Community Hospital and Florida
Hospital Corporation (collectively, the "Debtors"), lessees of the Partnership,
filed for protection under Chapters 7 and 11, respectively, of the Bankruptcy
Code. The Partnership and other AFG-sponsored programs, filed proofs of claim
in each case. Pursuant to a Release Agreement, the Debtors settled all
outstanding claims on February 28, 1994 by acquiring all affected equipment
owned by the Partnership for $20,007. This resulted in a net gain of $20,007,
for financial statement purposes, which was recorded in March 1994. These
bankruptcies did not have a material adverse effect on the financial position
of the Partnership.
In July 1993, Fred Meyer, Inc. (the "plaintiff"), in anticipation of a
declaration of lease default by AFG, filed a complaint against AFG (the
"defendant") in the Circuit Court of the State of Oregon as a result of a
dispute which arose between the plaintiff and the defendant concerning holdover
rents due to the Partnership with respect to certain equipment and the fair
market value of such equipment leased by the Partnership to the plaintiff. AFG
filed an answer to the plaintiff's complaint and asserted a counterclaim
seeking monetary damages. A Settlement Agreement, including dismissal of
this case, was executed on June 22, 1994 and resulted in the plaintiff's
payment of $161,822 to the Partnership for rent and residual proceeds. The
equipment dispositions resulted in a net gain of $37,167, for financial
statement purposes, which the Partnership recorded in June 1994. This
settlement did not have a material adverse effect on the financial position
of the Partnership.
In 1993, Healthcare Enterprises of North Texas Ltd. (d.b.a. "Wylie
Hospital"), a lessee of the Partnership, filed for protection under Chapter 11
of the Bankruptcy Code in the Eastern District of Texas. The Chapter 11
proceeding remains pending. AFG, on behalf of the Partnership and other
AFG-sponsored programs, filed a proof of claim in this matter. At
September 30, 1994, equipment leased to this lessee had a cost of $36,517,
which was fully depreciated for financial reporting purposes. Pursuant to
an order of the U.S. District Bankruptcy Court, Wylie Hospital must pay
$11,000 to the Partnership for settlement of this matter, which funds had not
been received at November 11, 1994. American Healthcare Management, the
Guarantor of this lessee's obligations, will pay $8,000 to the Partnership in
the event that Wylie Hospital defaults on its payment obligation. This
bankruptcy is not expected to have a material adverse effect on the financial
position of the Partnership.
NOTE 8 - SUBSEQUENT EVENT
In connection with the indebtedness of AFG Holdings (Massachusetts) Limited
Partnership ("Holdings Massachusetts") to its senior lender (the "Senior
Lender"), referred to in Note 1 of the Partnership's 1993 Annual Report on Form
10-K, which was incurred by Holdings Massachusetts in 1990 to acquire AFG and
which is scheduled to mature on August 1, 1995, the management of AFG and the
Senior Lender have agreed to the following actions: (i) the Senior Lender will
foreclose on its security interests in AFG Holdings (Illinois) Limited
Partnership and other affiliated parties thereby causing a change in control of
AFG, and (ii) the Senior Lender will sell all of the interests it acquires in
foreclosure to GDE Acquisitions Limited Partnership, a Massachusetts limited
partnership entirely owned and controlled by Gary D. Engle, President and
Executive Committee Member of AFG. In effect, GDE Acquisitions Limited
Partnership will acquire all of the assets, rights and obligations of AFG from
the Senior Lender and assume control of AFG. Purchase and sale agreements to
effect this transfer were executed on October 17, 1994. The acquisition of AFG
by GDE Acquisitions Limited Partnership will occur only after the foreclosure
event by the Senior Lender has been concluded. In this regard, the Senior
Lender provided notice on October 21, 1994 to Holdings Massachusetts and
certain other affiliates of its intent to foreclose. The foreclosure event is
expected to occur on or after November 11, 1994. The sale of AFG to GDE
Acquisitions Limited Partnership is expected to occur on or before
December 31, 1994. Notwithstanding the foregoing, AFG's executive management
views the foreclosure and restructuring events favorably and looks forward to
their timely conclusion. AFG will continue to be managed by its current
executive group after the restructuring.
AMERICAN INCOME PARTNERS III-A LIMITED PARTNERSHIP
FORM 10-Q
PART I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Three and nine months ended September 30, 1994 compared to the three and nine
months ended September 30, 1993:
Overview
As an equipment leasing partnership, the Partnership was designed to
progress through four major phases: development, acquisition, operations, and
liquidation. During the operations phase, a period of approximately six years,
all equipment in the Partnership's portfolio will progress through various
stages. At first, all equipment will generate rental revenues under lease
agreements identified as primary term. As the Partnership ages, these primary
term lease agreements will expire on an intermittent basis. Equipment held
under expired leases may be renewed, re-leased or sold, depending on prevailing
market conditions and AFG's assessment of such conditions, to obtain the most
advantageous economic benefit. Over time, the frequency of primary lease term
expirations will increase and a greater portion of the Partnership's original
equipment portfolio will become available for remarketing. Cash generated from
operations and from sales or refinancings will begin to fluctuate as a result,
until all equipment is sold and the Partnership is liquidated. The
Partnership's operations commenced in 1987. Currently, the Partnership is in
the latter stages of its operations phase.
Results of Operations
For the three and nine months ended September 30, 1994, the Partnership
recognized lease revenue of $331,454 and $1,321,124, respectively, compared to
$449,146 and $1,592,880 for the same periods in 1993. The decrease in lease
revenue from 1993 to 1994 was expected and resulted principally from primary
lease term expirations and the sale of equipment. In addition, during May
1994, the Partnership re-leased an L1011-100 aircraft, in which it owns a
23.46% interest, to a third party. This re-lease will generate approximately
$141,000 in additional lease revenue through November 1994.
The Managing General Partner lowered the aggregate amount reserved against
potentially uncollectable rents to $140,000 during the nine months ended
September 30, 1994. This caused an increase in lease revenue of $45,000 or
$0.04 per limited partnership unit. It cannot be determined whether the
Partnership will recover any past due rents in the future; however, the
Managing General Partner will pursue the collection of all such items.
Interest income for the three and nine months ended September 30, 1994 was
$12,269 and $34,027, respectively, compared to $6,130 and $20,197 for the same
periods in 1993. Interest income is generated from temporary investment
of rental receipts and equipment sale proceeds in short-term instruments. The
increase in interest income from 1993 to 1994 is attributable to a greater
availability of cash used for investment prior to distribution to the
Partners. The amount of future interest income is expected to fluctuate in
relation to prevailing interest rates, collection of lease revenue, and the
proceeds from equipment sales.
For the three months ended September 30, 1994, the Partnership sold
equipment which had been fully depreciated to existing lessees or to third
parties. These sales resulted in a net gain, for financial statement purposes,
of $10,344 compared to a net gain of $252,785 on equipment having a net book
value of $22,693 for the same period in 1993.
For the nine months ended September 30, 1994, the Partnership sold
equipment having a net book value of $81,686 to existing lessees or to third
parties. These sales resulted in a net gain, for financial statement purposes,
of $133,898 compared to a net gain of $640,274 on equipment having a net book
value of $47,632 for the same period in 1993.
It cannot be determined whether future sales of equipment will result in a
net gain or a net loss to the Partnership, 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 Partnership 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 revenues 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 Partnership 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
Partnership achieved from leasing the equipment.
Depreciation expense for the three and nine months ended
September 30, 1994 was $209,735 and $803,816, respectively, compared to
$549,895 and $1,787,882 for the same periods in 1993. The Partnership
depreciates its equipment, on a straight-line basis, to an amount equal to
its estimated residual value at the end of its useful life. Typically,
useful life corresponds to the primary lease term period associated with each
asset. To the extent that equipment is held longer than its expected useful
life (beyond the primary lease term period), the Partnership continues to
depreciate the equipment on a straight-line basis over its remaining economic
life.
Interest expense was $1,743 and $9,387, or less than 1% of lease revenue
for the three and nine months ended September 30, 1994, respectively, compared
to $11,762 and $44,388 or 2.6% and 2.8% of lease revenue for the same periods
in 1993. Interest expense in future periods will continue to 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 5% of lease revenue in each of the periods ended
September 30, 1994 and 1993 and will not change as a percentage of lease
revenue in future periods.
Operating expenses consist principally of administrative charges,
professional service costs, such as audit and legal fees, as well as printing,
distribution and remarketing expenses. In certain cases, equipment storage or
repairs and maintenance costs may be incurred in connection with equipment
being remarketed. Collectively, operating expenses represented 21.9% and 9%
of lease revenue for the three and nine months ended September 30, 1994,
respectively, compared to 4.7% and 4.5% of lease revenue for the same periods
in 1993. The increase in operating expenses in 1994 is due primarily to
repair and maintenance costs incurred in connection with the re-lease of an
L1011-100 aircraft to a third party. 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 partnership. Other
fluctuations typically occur in relation to the volume and timing of
remarketing activities.
The relatively low inflation rates in 1994 and 1993 and the economic
recession may have caused some re-lease and sale proceeds to be lower than that
which may have been achieved in a stronger economic environment. In other
cases, the economic recession may have had an adverse effect on the ability of
certain lessees to fulfill all of their financial obligations under the leases.
These factors will result in the investors achieving a rate-of-return lower
than that anticipated at the Partnership's commencement date.
Discussion of Cash Flows
The statement of cash flows summarizes the cash inflows and outflows from
the Partnership's operating, investing and financing activities. The
Partnership's largest source of cash is that provided by operating activities.
The Partnership's operating activities generated net cash of $1,167,325 and
$2,062,125 for the nine months ended September 30, 1994 and 1993, respectively.
The Partnership reflects cash expended for equipment acquisitions and cash
provided from equipment sale proceeds under investing activities. In 1994, the
Partnership capitalized $16,420 in connection with the upgrade of an L1011-100
aircraft. During the nine months ended September 30, 1994, the Partnership
realized $215,584 in equipment sale proceeds compared to $687,906 for the same
period in 1993.
Financing activities reflect a net cash outflow of $1,831,366 and
$1,944,408 for the nine months ended September 30, 1994 and 1993,
respectively. For the period ended September 30, 1993, the Partnership
reflected cash inflows from leveraging a portion of the Partnership's
equipment portfolio with third-party lending institutions in the amount of
$182,044. During both periods, a significant cash outflow for the
Partnership resulted from the repayment of notes payable. All long-term
financing was provided by third-party lending institutions.
All of the Partnership's notes payable are secured by designated equipment
and the rental payments received in connection with that equipment. As rental
payments are collected, a portion or all of the rental payment is used to repay
the associated debt. All debt is structured such that it is fully amortized
over the lease term underlying the secured equipment. Principal payments on
long-term notes payable for the nine months ended September 30, 1994 and 1993
were $302,557 and $725,044 respectively.
A major outflow of cash is attributable to quarterly cash distributions
paid to the General Partners and Recognized Owners. Aggregate cash
distributions paid during the nine month periods ended September 30, 1994 and
1993 were $1,528,809 and $1,401,408, respectively.
Cash distributions to the 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.
Overall, cash and cash equivalents decreased by $464,877 and increased by
$805,623 during the nine month periods ended September 30, 1994 and 1993,
respectively.
Liquidity and Capital Resources
The Partnership's operations are expected to generate a positive cash flow
each year through the final disposition of equipment. However, the future
liquidity of the Partnership is greatly dependent upon the collection of
noncancellable rents and the residual values realized from remarketing the
Partnership's equipment. It is anticipated that cash proceeds resulting from
these sources will satisfy the Partnership's future expense obligations.
Lease revenues may drop significantly in the final stages of the
Partnership's operations phase due to equipment sales and lower rental revenues
generated from renewal and re-lease activities. Therefore, as the Partnership
begins its liquidation phase and the final stages of its remarketing
activities, it is expected that the level of quarterly cash distributions
will fluctuate.
During 1994, the Partnership and other affiliated partnerships, executed a
renewal lease agreement in connection with an MD-82 aircraft leased by
Northwest. Pursuant to the agreement, Northwest will continue to lease the
aircraft until July 31, 1997. The Partnership, which owns a 14% interest in
this aircraft, will receive an aggregate of $861,460 in lease revenue during
the thirty-eight month renewal period.
The legal proceedings referred to in Note 7 to the financial statements in
the 1993 Annual Report and Note 7 to the financial statements, herein, are not
expected to have a material adverse effect on the financial position of the
Partnership. However, the Partnership's future cash distributions will be
adversely affected by the 1990 bankruptcy of Affiliated Land Corporation
("Affiliated"). The bankruptcy of Affiliated will result in the Partnership's
loss of any future interest in the residual value of the equipment Affiliated
leased from the Partnership. Aggregate program performance will be dependent
upon many factors, including the outcome of all legal proceedings, the
collection of all future noncancellable rents, and the results of remarketing
the Partnership's remaining equipment.
For the nine months ended September 30, 1994, the Partnership declared
total cash distributions of Distributable Cash From Operations and
Distributable Cash From Sales and Refinancings of $1,528,809. In accordance
with the Amended and Restated Agreement and Certificate of Limited
Partnership, the Recognized Owners were allocated 99% of these distributions,
or $1,513,521 and the General Partners were allocated 1%, or $15,288. The
third quarter 1994 cash distribution occurred on October 14, 1994.
AMERICAN INCOME PARTNERS III-A LIMITED PARTNERSHIP
FORM 10-Q
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Response:
Refer to Note 7 to the financial statements, herein.
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 PARTNERS III-A LIMITED PARTNERSHIP
By: AFG Leasing Incorporated,
a Massachusetts corporation and
the Managing General Partner of
the Registrant.
By:
Gary M. Romano
Vice President and Controller
(Duly Authorized Officer and
Principal Accounting Officer)
Date:
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 PARTNERS III-A LIMITED PARTNERSHIP
By: AFG Leasing Incorporated,
a Massachusetts corporation and
the Managing General Partner of
the Registrant.
By:/s/ Gary M. Romano
Gary M. Romano
Vice President and Controller
(Duly Authorized Officer and
Principal Accounting Officer)
Date: November 10, 1994