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, 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
Commission file number 0-16512
American Income Partners III-B Limited Partnership
(Exact name of registrant as specified in its charter)
Massachusetts 04-2968859
(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
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:
1,127,330 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, 1994 (Part I and II)
AMERICAN INCOME PARTNERS III-B 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 8
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
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 11
Item 12. Security Ownership of Certain Beneficial Owners
and Management 12
Item 13. Certain Relationships and Related Transactions 12
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 PARTNERS III-B LIMITED PARTNERSHIP (the "Partnership") was
organized as a limited partnership under the Massachusetts Uniform Limited
Partnership Act (the "Uniform Act") on June 29, 1987 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
from the Managing General Partner (AFG Leasing Incorporated) and $100 from the
Initial Limited Partner (AFG Assignor Corporation). On September 29, 1987, the
Partnership issued 1,127,330 units, representing assignments of limited
partnership interests (the "Units") to 2,125 investors. Unitholders and Limited
Partners (other than the Initial Limited Partner) are collectively referred to
as Recognized Owners. Subsequent to the Partnership's Closing on
September 29, 1987, the Partnership had five General Partners: AFG Leasing
Incorporated, a Massachusetts corporation, Kestutis J. Makaitis, Daniel J.
Roggemann, Martin F. Laughlin, and Geoffrey A. MacDonald (collectively the
"General Partners"). Messrs. Makaitis, Roggemann and Laughlin subsequently
elected to withdraw as Individual General Partners. The General Partners, each
of which is affiliated with American Finance Group ("AFG"), a Massachusetts
partnership, are not required to make any other capital contributions except as
may be required under the Uniform Act and Section 6.1(b) of the Amended and
Restated Agreement and Certificate of Limited Partnership (the "Restated
Agreement").
(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;
2. Preserve and protect invested capital; and
3. 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
September 29, 1987. The initial purchase of equipment and the associated lease
commitments occurred on September 29, 1987. 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 will terminate no later
than September 29, 1998.
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 Managing 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 when equipment is re-leased or sold at the expiration of primary
lease terms. The Partnership will compete with lease programs offered directly
by manufacturers and other equipment leasing companies, including limited
partnerships and trusts, 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 Managing General Partner and the Manager.
Generally, the Partnership is prohibited from reinvesting the proceeds
generated by refinancing or selling equipment. Accordingly, it is anticipated
that the Partnership will begin to liquidate its portfolio of equipment at the
expiration of the initial 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 Managing General Partner and the
Manager.
Revenue from major individual lessees which accounted for 10% or more of
lease revenue during the years ended December 31, 1994, 1993 and 1992 is
incorporated herein by reference to Note 2 to the financial statements in the
1994 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 Managing 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.
In 1991, Clou Investments (U.S.A.), Inc. ("CLOU"), a newly formed and
wholly-owned subsidiary of Clou Containers GmbH, purchased approximately a five
percent (5%) non-voting limited partnership interest (the "Minority Interest")
in Holdings Illinois. On October 29, 1992, AFG repurchased the Minority
Interest at the purchase price originally paid by CLOU.
(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 1994 Annual Report.
Item 3. Legal Proceedings.
Incorporated herein by reference to Note 7 to the financial statements in
the 1994 Annual Report.
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, 1994, there were 2,151 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 Managing General Partner prior to the end of the fiscal quarter; however,
the amount of such distribution reflects only amounts to which the Managing
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.
[CAPTION]
Distributions in 1994 and 1993 were as follows:
General Recognized
Total Partners Owners
Total 1994 distributions $ 2,277,434 $ 22,774 $ 2,254,660
Total 1993 distributions 2,277,434 22,774 2,254,660
Total $ 4,554,868 $ 45,548 $ 4,509,320
Distributions payable were $569,359 at both December 31, 1994 and 1993.
"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 Managing General Partner, and increased by any portion of such
reserves deemed by the Managing 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 Managing 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
Managing 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 Managing
General Partner, and (b) the proceeds from the sale of an interest in equipment
pursuant to any agreement governing a joint venture which the Managing 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 Partners, 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 Managing General Partner and (ii) increased by any portion of such reserves
deemed by the Managing 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
Recognized Owners and 1% to the General Partners until Payout and 85% to the
Recognized Owners and 15% to the General Partners after Payout.
"Payout" is defined as the first time when the aggregate amount of all
distributions to the Recognized Owners of Distributable Cash From Operations and
Distributable Cash From Sales or Refinancings equals the aggregate amount of the
Recognized Owners' original capital contributions plus a cumulative annual
return of 10% (compounded quarterly and calculated beginning with the last day
of the month of 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 Recognized Owners exceed the amount required to satisfy the
cumulative annual return of 10% (compounded quarterly) on the Recognized Owners'
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 of the year, beginning with the first full fiscal
quarter following the Partnership's Closing Date. Each Distribution is
described in a statement sent to the Recognized Owners.
Item 6. Selected Financial Data.
Incorporated herein by reference to the section entitled "Selected
Financial Data" in the 1994 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
1994 Annual Report.
Item 8. Financial Statements and Supplementary Data.
Incorporated herein by reference to the financial statements and
supplementary data included in the 1994 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 Incorporated is the Managing General Partner of the
Partnership. Under the Restated Agreement, as amended, the Managing General
Partner is responsible for the operation of the Partnership's properties and the
Recognized Owners have no right to participate in the control of such
operations. The names, titles and ages of the Directors and Executive Officers
of the Managing General Partner as of March 15, 1995 are as follows:
DIRECTORS AND EXECUTIVE OFFICERS OF THE
MANAGING GENERAL PARTNER (See Item 13)
Name Title Age Term
Geoffrey A. MacDonald Chief Executive Officer, 46 Until a
Chairman and a member of the successor
Executive Committee of AFG and is duly
President and a Director of the elected
Managing General Partner and
qualified
Gary D. Engle President, Chief Operating 46
Officer, and a member of the
Executive Committee of AFG and
Vice President and a Director
of the Managing General Partner
J. Patrick Dowdall Executive Vice President, General 47
Counsel, Secretary and a member
of the Executive Committee of AFG
and Vice President, Clerk and a
Director of the Managing General
Partner
Gary M. Romano Vice President and Controller 35
of AFG and the Managing General
Partner
Jeffrey F. Zerrer Senior Vice President, Lease 38
Marketing, of AFG and Vice
President of the Managing
General Partner
Joseph P. Tufts Vice President, Asset Management, 43
of AFG and the Managing General
Partner
Donald R. Dugan Vice President and Treasurer of 33
AFG and the Managing General
Partner
(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 46 is a co-founder, Chief Executive Officer, Chairman
and a member of the Executive Committee of AFG and President and a Director of
the Managing 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.
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 46 is President, Chief Operating Officer and a member of the
Executive Committee of AFG and President of AFG Realty. Mr. Engle is Vice
President, and a Director of certain of AFG's affiliates, including the Managing
General Partner. On December 16, 1994, Mr. Engle acquired control of AFG, the
Managing General Partner and each of AFG's subsidiaries. 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. Dowdall, age 47, joined AFG in January 1994 as General Counsel,
Executive Vice President, Secretary and a member of the Executive Committee of
AFG. Mr. Dowdall is also a Director, Vice President and Clerk of certain of
AFG's affiliates, including the Managing General Partner. Prior to joining AFG,
Mr. Dowdall was a Partner with Bingham, Dana & Gould. Mr. Dowdall holds a J.D.
degree from Harvard Law School, a Ph.D. in Government from Harvard University
and a B.A. degree from the University of Notre Dame.
Mr. Romano, age 35, is Vice President and Controller of AFG and certain of
its affiliates, including the Managing 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 development and management 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. Zerrer, age 38, joined AFG in May 1984 and was promoted to Regional
Vice President in 1987. In 1988, Mr. Zerrer was promoted to Vice President of
Marketing. In 1990, Mr. Zerrer was appointed Senior Vice President, Lease
Marketing, of AFG. Mr. Zerrer is also a Vice President of certain of AFG's
affiliates, including the Managing General Partner. Prior to joining AFG, Mr.
Zerrer was employed as a Regional Manager by Leasing Services, Inc. from 1982 to
1984 and previously by Chancellor Corporation (both equipment leasing
companies). Mr. Zerrer holds a B.S. degree from Northeastern University.
Mr. Tufts, age 43, joined AFG in August 1992 as Vice President, Asset
Management of AFG and certain of its affiliates, including the Managing General
Partner. Prior to joining AFG, Mr. Tufts was employed by McDonnell-Douglas
Capital Corporation as Director of Asset Management Operations from 1991 to 1992
and previously by Bank of New England Leasing from 1975 to 1991 as Vice
President of Asset Management. Mr. Tufts holds a B.A. degree from Bowdoin
College.
Mr. Dugan, age 33, is Vice President and Treasurer of AFG and certain of
its affiliates, including the Managing General Partner. Prior to joining AFG in
November 1989, Mr. Dugan was a Lieutenant in the United States Navy. Mr. Dugan
holds an M.B.A. from Boston College and a B.S. degree from the United States
Naval Academy.
(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 Managing General Partner or its Affiliates. There
is no plan at the present time to make any officers or employees of the Managing
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 Managing 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 10.4 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 the General Partners
or the Managing 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 Recognized Owners have
voting rights with respect to:
1. Amendment of the Restated Agreement;
2. Termination of the Partnership;
3. Removal of the General Partners; 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).
No person or group is known by the Managing General Partner to own
beneficially more than 5% of the Partnership's 1,127,330 outstanding Units as of
March 1, 1995.
The ownership and organization of AFG is described in Item 1 of this
report.
Item 13. Certain Relationships and Related Transactions.
The Managing General Partner of the Partnership is AFG Leasing
Incorporated, an affiliate of AFG.
(a) Transactions with Management and Others
[CAPTION]
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 the years ended
December 31, 1994, 1993 and 1992, which were paid or accrued by the Partnership
to AFG or its Affiliates, are as follows:
1994 1993 1992
Equipment management fees $ 92,431 $ 104,953 $ 217,961
Administrative charges 12,000 14,955 12,000
Reimbursable operating expenses
due to third parties 146,185 92,152 131,794
Total $ 250,616 $ 212,060 $ 361,755
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 or (ii) fees which the
Managing 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
10.4 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 acquired from AFG, one of its 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,
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, 1994, the Partnership was owed $125,811 by AFG for such funds
and the interest thereon. These funds were remitted to the Partnership in
January 1995.
(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, 1994 and 1993............................ *
Statement of Operations
for the years ended December 31, 1994, 1993 and 1992..... *
Statement of Changes in Partners' Capital
for the years ended December 31, 1994, 1993 and 1992..... *
Statement of Cash Flows
for the years ended December 31, 1994, 1993 and 1992..... *
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.
33-11160).
13 The 1994 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.
* Incorporated herein by reference to the appropriate portion of the 1994 Annual
Report to security holders for the year ended December 31, 1994. (See Part II)
Exhibit
Number
99 (a) Lease agreement with Northwest Airlines, Inc. was filed in
the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1991 as Exhibit 28 (b) and is incorporated
herein by reference.
99 (b) Lease agreement with Bally's Health and Tennis Corporation
was filed in the Registrant's Annual Report on Form 10-K for
the year ended December 31, 1993 as Exhibit 28 (d) and is
incorporated herein by reference.
99 (c) Lease agreement with Equicor, Inc. was filed in the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1993 as Exhibit 28 (e) and is incorporated
herein by reference.
(b) Reports on Form 8-K
Report on Form 8-K was filed electronically on January 4, 1995
describing the change of ownership and control of AFG.
Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report (Form
10-K) of American Income Partners III-B Limited Partnership of our report dated
February 24, 1995, included in the 1994 Annual Report to the Partners of
American Income Partners III-B Limited Partnership.
ERNST & YOUNG LLP
Boston, Massachusetts
February 24, 1995
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 PARTNERS III-B LIMITED PARTNERSHIP
By: AFG Leasing Incorporated,
a Massachusetts corporation and the
Managing General Partner of the Registrant.
By: /s/ GEOFFREY A. MACDONALD By: /s/ GARY D. ENGLE
Geoffrey A. MacDonald Gary D. Engle
Chief Executive Officer, President, Chief Operating
Chairman and a member of the Officer, and a member of the
Executive Committee of AFG and Executive Committee of AFG and
President and a Director of the Vice President and a Director
Managing General Partner of the Managing General Partner
(Principal Executive Officer) (Principal Financial Officer)
Date: March 30, 1995 Date: March 30, 1995
By: /s/ J. PATRICK DOWDALL By: /s/ GARY M. ROMANO
J. Patrick Dowdall Gary M. Romano
Executive Vice President, General Vice President and Controller
Counsel, Secretary and a member of of AFG and the Managing General
the Executive Committee of AFG Partner
and Vice President, Clerk and a (Principal Accounting Officer)
Director of the Managing General
Partner
Date: March 30, 1995 Date: March 30, 1995
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(D) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO
SECTION 12 OF THE ACT.
No annual report has been sent to the Recognized Owners. A report will be
furnished to the Recognized Owners subsequent to the date hereof.
No proxy statement has been or will be sent to the Recognized Owners.