Exhibit 13
AMERICAN INCOME PARTNERS V
American Income Partners V-A Limited Partnership
Annual Report to the Partners, December 31, 1999
AMERICAN INCOME PARTNERS V-A LIMITED PARTNERSHIP
INDEX TO ANNUAL REPORT TO THE PARTNERS
Page
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SELECTED FINANCIAL DATA 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 3-8
FINANCIAL STATEMENTS:
Report of Independent Auditors 9
Statement of Financial Position
at December 31, 1999 and 1998 10
Statement of Operations
for the years ended December 31, 1999, 1998 and 1997 11
Statement of Changes in Partners' Capital
for the years ended December 31,1999,1998 and 1997 12
Statement of Cash Flows
for the years ended December 31,1999,1998 and 1997 13
Notes to the Financial Statements 14-26
ADDITIONAL FINANCIAL INFORMATION:
Schedule of Excess (Deficiency) of Total Cash
Generated to Cost of Equipment Disposed 27
Statement of Cash and Distributable Cash
From Operations, Sales and Refinancings 28
Schedule of Costs Reimbursed to the General Partner
and its Affiliates as Required by Section 10.4 of the
Amended and Restated Agreement and Certificate
of Limited Partnership 29
SELECTED FINANCIAL DATA
The following data should be read in conjunction with Management's
Discussion and Analysis of Financial Condition and Results of Operations and the
financial statements.
For each of the five years in the period ended December 31, 1999:
Summary of
Operations 1999 1998 1997 1996 1995
---------- ----------- ------------ ----------- ----------- -----------
Lease revenue $ 91,942 $ 466,883 $ 1,626,206 $ 3,616,524 $ 3,993,645
Net income (loss) $ 1,570,441 $ (361,806) $ 698,307 $ 2,922,308 $ 974,602
Per Unit:
Net income (loss) $ 1.08 $ (0.25) $ 0.48 $ 2.01 $ 0.67
Cash distributions $ 0.38 $ 0.38 $ 0.47 $ 4.18 $ 2.00
Financial Position
------------------
Total assets $ 4,374,707 $ 4,155,864 $ 3,794,549 $ 4,266,781 $ 9,980,073
Total long-term obligations $ -- $ -- $ -- $ 144,594 $ 2,231,365
Partners' capital $ 3,983,777 $ 2,902,855 $ 3,621,873 $ 3,792,601 $ 6,952,468
2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Year ended December 31, 1999 compared to the year
ended December 31, 1998 and the year ended December 31, 1998
compared to the year ended December 31, 1997
Certain statements in this annual report of American Income Partners V-A
Limited Partnership (the "Partnership") that are not historical fact constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995 and are subject to a variety of risks and
uncertainties. There are a number of factors that could cause actual results to
differ materially from those expressed in any forward-looking statements made
herein. These factors include, but are not limited to, the outcome of the Class
Action Lawsuit described in Note 7 to the accompanying financial statements, and
the remarketing of the Partnership's equipment.
Overview
The Partnership was organized in 1989 as a direct-participation equipment
leasing program to acquire a diversified portfolio of capital equipment
subject to lease agreements with third parties. Presently, the Partnership is
a Nominal Defendant in a Class Action Lawsuit, the outcome of which could
significantly alter the nature of the Partnership's organization and its
future business operations. See Note 7 to the accompanying financial
statements. Pursuant to the Restated Agreement, as amended, the Partnership
is scheduled to be dissolved by December 31, 2000. However, the General
Partner does not expect that the Partnership will be dissolved until such
time that the Class Action Lawsuit is adjudicated and settled. In the absence
of a final settlement being effected before December 31, 2000, dissolution of
the Partnership would most likely be deferred until a later date.
Year 2000 Issue
The Partnership uses information systems provided by Equis Financial Group
Limited Partnership ("EFG") and has no information systems of its own. EFG
completed all Year 2000 readiness work prior to December 31, 1999 and did not
experience any significant problems. Additionally, EFG is not aware of any
outside customer or vendor that experienced a Year 2000 issue that would have a
material effect on the Partnership's results of operations, liquidity, or
financial position. However, EFG has no means of ensuring that all customers,
vendors and third-party servicers have conformed to Year 2000 standards. The
effect of this risk to the Partnership is not determinable.
Results of Operations
For the year ended December 31, 1999, the Partnership recognized lease
revenue of $91,942 compared to $466,883 and $1,626,206 for the years ended
December 31, 1998 and 1997, respectively. The decrease in lease revenue from
1998 to 1999 resulted principally from the sale of the Partnership's interest in
two aircraft which provided a total of $9,221 and $362,357 of lease revenue for
the years ended December 31, 1999 and 1998, respectively (see further discussion
below). The decrease in lease revenue from 1997 to 1998 resulted principally
from the exchange of the Partnership's interest in a vessel during 1997 (see
below). In 1997, the Partnership recognized lease revenue of $1,110,453 related
to this vessel including $991,703 representing a prepayment of the remaining
contracted rent due under the vessel's lease agreement. In the future, lease
revenue will continue to decline due to lease term expirations and equipment
sales.
The Partnership's equipment portfolio (until the second quarter of 1999)
included certain assets in which the Partnership held a proportionate ownership
interest. In such cases, the remaining interests were owned by an affiliated
equipment leasing program sponsored by EFG. Proportionate equipment ownership
enabled the Partnership to further diversify its equipment portfolio at
inception by participating in the ownership of selected assets, thereby reducing
the general levels of risk which could have resulted from a concentration in any
single equipment type, industry or lessee. The Partnership and each affiliate
individually reported, in proportion to their respective ownership interests,
their respective shares of assets, liabilities, revenues, and expenses
associated with the equipment.
3
Interest income for the year ended December 31, 1999 was $264,870 compared
to $202,483 and $131,575, for the years ended December 31, 1998 and 1997,
respectively. Interest income is generated principally from temporary investment
of rental receipts and equipment sale proceeds in short-term instruments.
Interest income included $77,145 in both 1999 and 1998, and $15,215 in 1997
earned on a note receivable from Semele Group, Inc. ("Semele") (see Note 4 to
the accompanying financial statements). The note receivable from Semele is
scheduled to mature in April 2001. The amount of future interest income is
expected to fluctuate as a result of changing interest rates and the amount of
cash available for investment, among other factors. See discussion below
regarding on investment made by the Partnership in 2000.
In 1999, the Partnership sold fully depreciated equipment to existing
lessees and third parties. These sales resulted in a net gain, for financial
statement purposes, of $1,568,063 compared to $19,725, on fully depreciated
equipment in 1998. The net gain in 1999 includes $1,523,200 related to the sale
of the Partnership's interests in two aircraft (see further discussion below).
The results of future sales of equipment will be dependent upon the condition
and type of equipment being sold and its marketability at the time of sale.
In 1997, the Partnership sold fully depreciated equipment resulting in a net
gain, for financial statement purposes, of $102,027. In addition, during 1997,
the Partnership also exchanged its interest in a vessel with an original cost
and net book value of $3,666,680 and $1,385,750, respectively. In connection
with this transaction, the Partnership realized proceeds of $1,027,101, which
resulted in a net loss for financial statement purposes, of $358,649. In
addition, as this vessel was disposed of prior to the expiration of the related
lease term, the Partnership received a prepayment of the remaining contracted
rent due under the vessel's lease agreement (see above).
The ultimate realization of residual value for any type of equipment is
dependent upon many factors, including EFG'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. EFG 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 for each asset is comprised of all primary
lease term revenue generated from that asset, together with its residual value.
The latter consists of cash proceeds realized upon the asset's sale in addition
to all other cash receipts obtained from renting the asset on a re-lease,
renewal or month-to-month basis. The 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 was $80,952 and $392,082 for the years ending December
31, 1998 and 1997 respectively. The Partnership's equipment was fully
depreciated during 1998. Management fees were approximately 5% of lease revenue
during each of the years ended December 31, 1999, 1998, and 1997.
Interest expense was $3,390, or less than 1% of lease revenue for the year
ending December 31, 1997. The Partnership's notes payable were fully amortized
during the year ending December 31, 1997.
Write-down of investment securities-affiliate was $303,022 for the year
ended December 31, 1998. The General Partner determined that the decline in
market value of its Semele common stock was other-than-temporary at December
31,1998. As a result, the Partnership wrote down the cost of the Semele common
stock from $15 per share to $4.125 per share (the quoted price of Semele stock
on NASDAQ at December 31, 1998). See further discussion below.
Operating expenses were $349,837, $643,579 and $326,077 for the years ended
December 31, 1999, 1998 and 1997, respectively. Operating expenses in 1999
include approximately $26,000 related to the refurbishment of an aircraft engine
(see discussion below) and approximately $52,000 accrued for certain legal and
administrative expenses related to the Class Action Lawsuit described in Note 7
to the financial statements. During the year ended December 31, 1998, the
Partnership incurred or accrued approximately $305,000 for such costs related to
the Class Action Lawsuit. In addition, the Partnership expensed $83,776 related
to the
4
refurbishment an aircraft engine and engine leasing costs (see Note 7 to the
financial statements). Significant operating expenses were incurred during the
year ended December 31, 1997 due to heavy maintenance and airframe overhaul
costs incurred in connection with the Partnership's interests in two Boeing 727
aircraft. Other operating expenses consist principally of professional service
costs, such as audit and legal fees, as well as printing, distribution and other
remarketing expenses. In certain cases, equipment storage or repairs and
maintenance costs may be incurred in connection with equipment being remarketed.
Liquidity and Capital Resources and Discussion of Cash Flows
In connection with a preliminary settlement agreement for the Class Action
Lawsuit described in Note 7 to the accompanying financial statements, the
Partnership is permitted to invest in new equipment or other business
activities, subject to certain limitations. On March 8, 2000, the Partnership
invested $2,160,000 in a debt instrument that matures in September 2002. (See
Notes 7 and 8 to the accompanying financial statements for additional
information concerning this transaction.)
The Partnership by its nature is a limited life entity. As an equipment
leasing program, the Partnership's principal operating activities derive from
asset rental transactions. Historically, the Partnership's principal source of
cash from operations was provided by the collection of periodic rents, however,
in 1999 the principal source of such cash resulted from the receipt of interest
income. Cash inflows are used to pay management fees and operating costs. In
addition, in 1997 cash inflows were used to pay debt service obligations
associated with leveraged leases. Operating activities generated a net cash
outflow of $74,217 in 1999, and net cash inflows of $359,965 and $1,605,911 in
1998 and 1997, respectively. Net cash from operating activities in 1997 included
lease termination rents as described above. Future renewal, re-lease and
equipment sale activities will cause a decline in the Partnership's lease
revenues and corresponding sources of operating cash. The amount of future
interest income is expected to fluctuate as a result of changing interest rates
and the level of cash available for investment, among other factors. Overall,
expenses associated with rental activities, such as management fees, and net
cash flow from operating activities will also decline as the Partnership
experiences a higher frequency of remarketing events.
Cash realized from asset disposal transactions is reported under investing
activities on the accompanying Statement of Cash Flows. During the year ended
December 31, 1999, the Partnership realized net cash proceeds of $1,568,063
compared to $19,725 and $102,027 in 1998 and 1997, respectively. Future inflows
of cash from asset disposals will vary in timing and amount and will be
influenced by many factors including, but not limited to, the frequency and
timing of lease expirations, the type of equipment being sold, its condition and
age, and future market conditions.
In January 1999, upon expiration of the lease term, the Partnership and
certain affiliated investment programs (collectively, the "Programs") entered
into an agreement to sell a Boeing 727-251 ADV jet aircraft to the lessee for
$2,450,000. In aggregate, the Partnership received $548,800 for its interest in
this aircraft. The Partnership's interest in the aircraft had a cost of
$2,175,454 and was fully depreciated, resulting in a net gain, for financial
statement purposes, of $548,800.
In November 1998, the Programs entered into a separate agreement to sell
their ownership interests in a different Boeing 727-251 ADV jet aircraft and
three engines (collectively the "Aircraft") to a third party (the "Purchaser")
for $4,350,000. In December 1998, the Purchaser remitted $3,350,000 for the
Aircraft, excluding one of three engines which had been damaged while the
Aircraft was leased to Transmeridian Airlines ("Transmeridian"). (See Note 7 to
the accompanying financial statements regarding legal action undertaken by the
Programs related to Transmeridian and the damaged engine). The Purchaser also
deposited $1,000,000 into a third-party escrow account (the "Escrow") pending
repair of the damaged engine and re-installation of the refurbished engine on
the Aircraft. Upon installation, the escrow agent was obligated to transfer the
Escrow amount plus interest thereon to the Programs. The engine was refurbished
at the expense of the Programs. The associated cost was approximately $374,000,
of which the Partnership's share was approximately $84,000. The Partnership
accrued $58,000 of these costs in 1998 and the balance was accrued or incurred
in the year ended December 31, 1999.
5
The Programs also were required to reimburse the Purchaser for its cost to
lease a substitute engine during the period that the damaged engine was being
repaired. This cost was approximately $114,000, of which the Partnership's share
was approximately $26,000, all of which was accrued in 1998 in connection with
the litigation referenced above.
In addition, the purchase and sale agreement permitted the Purchaser to
return the Aircraft to the Programs, subject to a number of conditions, for
$4,350,000, reduced by an amount equivalent to $450 multiplied by the number of
flight hours since the Aircraft's most recent C Check. Among the conditions
precedent to the Purchaser's returning the Aircraft, the Purchaser must have
completed its intended installation of hush-kitting on the Aircraft to conform
to Stage 3 noise regulations. This work was completed in January 1999. The
Purchaser's return option was to expire on May 15, 1999.
Due to the contingent nature of the sale, the Partnership deferred
recognition of the sale and a resulting gain until expiration of the Purchaser's
return option on May 15, 1999. The Partnership's share of the December proceeds
was $750,400, which amount was deposited into EFG's customary escrow account and
transferred to the Partnership, together with the Partnership's other December
rental receipts, in January 1999. At December 31, 1998, the entire amount was
classified as other liabilities, with an equal amount included in accounts
receivable -- affiliate on the accompanying Statement of Financial Position.
Upon the installation of the refurbished engine on the Aircraft, the remainder
of the sale consideration, or $1,000,000 and the interest thereon, was released
from the escrow account to the Programs. The Partnership's share of this payment
was $227,548, including interest of $3,548. In aggregate, the Partnership
received sales proceeds of $974,400 for its interest in the Aircraft. The
Partnership's interest in the Aircraft had a cost of $2,420,734 and was fully
depreciated, resulting in a net gain, for financial statement purposes, of
$974,400.
At December 31, 1999, the Partnership was due aggregate future minimum lease
payments of $14,378 from contractual lease agreements (see Note 2 to the
financial statements). At the expiration of the individual renewal lease terms
underlying the Partnership's future minimum lease payments, the Partnership will
sell the equipment or enter re-lease or renewal agreements when considered
advantageous by the General Partner and EFG. Such future remarketing activities
will result in the realization of additional cash inflows in the form of
equipment sale proceeds or rents from renewals and re-leases, the timing and
extent of which cannot be predicted with certainty. This is because the timing
and extent of remarketing events often is dependent upon the needs and interests
of the existing lessees. Some lessees may choose to renew their lease contracts,
while others may elect to return the equipment. In the latter instances, the
equipment could be re-leased to another lessee or sold to a third-party.
As a result of the vessel exchange in 1997, the Partnership became the
beneficial owner of 341,435 shares of Semele common stock (valued at $512,153
($1.50 per share) at the time of the exchange transaction). This investment was
reduced by a dividend of $68,287 received in 1997 representing a return of
equity to the Partnership. The Partnership also received a beneficial interest
in the Semele Note of $771,450 in connection with the exchange. The Semele Notes
bears an annual interest rate of 10% and is scheduled to mature in April 2001.
The note also requires mandatory principal reductions, if and to the extent that
net proceeds are received by Semele from the sale or refinancing of Semele's
Rancho Malibu property.
On June 30, 1998, Semele effected a 1-for-300 reverse stock split followed
by a 30-for-1 forward stock split resulting in a reduction of the number of
shares of Semele common stock owned by the Partnership to 34,144 shares. During
the year ended December 31, 1998, the Partnership decreased the carrying value
of its investment in Semele common stock to $4.125 per share (the quoted price
of the Semele stock on NASDAQ at December 31, 1998) resulting in an unrealized
loss in 1998 of $115,232. In 1997, the Partnership recorded an unrealized loss
of $187,790 relate to its investment in the Semele common stock. Each of these
losses was reported as a component of comprehensive income or loss, included in
partners' capital. At December 31, 1998, the General Partner determined that the
decline in market value of the Semele common stock was other-than-temporary. As
a result, the Partnership wrote down the cost of the Semele stock to $4.125 per
share for a total realized loss of $303,022 in 1998. During the year ended
December 31, 1999, the Partnership increased the carrying value of its
investment in Semele common stock to $5.75 per share (the quoted price on the
NASDAQ SmalICap market at December 31, 1999), resulting in an unrealized gain in
1999 of $55,484. This gain was reported as a component of comprehensive income
included in partners' capital.
6
The Partnership obtained long-term financing in connection with certain
equipment leases. The repayments of principal related to such indebtedness are
reported as a component of financing activities. The Partnership's notes
payables were fully amortized during the year ended December 31, 1997.
There are no formal restrictions under the Restated Agreement, as amended,
that materially limit the Partnership's ability to pay cash distributions,
except that the General Partner may suspend or limit cash distributions to
ensure that the Partnership maintains sufficient working capital reserves to
cover, among other things, operating costs and potential expenditures, such as
refurbishment costs to remarket equipment upon lease expiration. Liquidity is
especially important as the Partnership matures and sells equipment, because the
remaining equipment base consists of fewer revenue-producing assets that are
available to cover prospective cash disbursements. Insufficient liquidity could
inhibit the Partnership's ability to sustain its operations or maximize the
realization of proceeds from remarketing its remaining assets.
Cash distributions to the General Partner and Recognized Owners have been
declared and generally paid within fifteen days following the end of each
calendar quarter. The payment of such distributions is reported under financing
activities on the accompanying Statement of Cash Flows. For the year ended
December 31, 1999, the Partnership declared total cash distributions of
Distributable Cash From Operations and Distributable Cash From Sales and
Refinancing of $545,003. In accordance with the Restated Agreement, as amended,
the Recognized Owners were allocated 95% of these distributions, or $517,753,
and the General Partner was allocated 5%, or $27,250. The fourth quarter 1999
cash distribution was paid on January 14, 2000.
Cash distributions paid to the Recognized Owners consist of both a return of
and a return on capital. Cash distributions do not represent and are not
indicative of yield on investment. Actual yield on investment cannot be
determined with any certainty until conclusion of the Partnership and will be
dependent upon the collection of all future contracted rents, the generation of
renewal and/or re-lease rents, and the residual value realized for each asset at
its disposal date.
The Partnership's future cash distributions will be adversely affected by
the bankruptcy of a former lessee of the Partnership, Midway Airlines, Inc.
("Midway"). In 1993, the Partnership's interests in two DC-9-30 aircraft leased
by Midway were transferred to a designee of the lender in lieu of foreclosure.
Although this bankruptcy had no immediate adverse effect on the Partnership's
cash flow, as the Partnership had almost fully leveraged its ownership interest
in the underlying aircraft, this event resulted in the Partnership's loss of any
future interest in the residual value of the aircraft. Notwithstanding such
adverse impact, the overall investment results to be achieved by the Partnership
will be dependent upon the collective performance results of all of the
Partnership's equipment leases.
The Partnership's capital account balances for federal income tax and for
financial reporting purposes are different primarily due to differing treatments
of income and expense items for income tax purposes in comparison to financial
reporting purposes (generally referred to as permanent or timing differences;
see Note 6 to the financial statements presented in the Partnership's 1999
Annual Report). For instance, selling commissions, organization and offering
costs pertaining to syndication of the Partnership's limited partnership units
are not deductible for federal income tax purposes, but are recorded as a
reduction of partners' capital for financial reporting purposes. Therefore, such
differences are permanent differences between capital accounts for financial
reporting and federal income tax purposes. Other differences between the bases
of capital accounts for federal income tax and financial reporting purposes
occur due to timing differences. Such items consist of the cumulative difference
between income or loss for tax purposes and financial statement income or loss,
the difference between distributions (declared vs. paid) for income tax and
financial reporting purposes, and the treatment of unrealized gains or losses on
investment securities, if any, for book and tax purposes. The principal
component of the cumulative difference between financial statement income or
loss and tax income or loss results from different depreciation policies for
book and tax purposes.
For financial reporting purposes, the General Partner has accumulated a
capital deficit at December 31, 1999. This is the result of aggregate cash
distributions to the General Partner being in excess of its capital contribution
of $1,000 and its allocation of financial statement net income or loss.
Ultimately, the existence of a capital deficit for the General Partner for
financial reporting purposes is not indicative of any further capital
obligations to the
7
Partnership by the General Partner. The Restated Agreement, as amended, requires
that upon the dissolution of the Partnership, the General Partner will be
required to contribute to the Partnership an amount equal to any negative
balance which may exist in the General Partner's tax capital account. At
December 31, 1999, the General Partner had a positive tax capital account
balance.
The outcome of the Class Action Lawsuit described in Note 7 to the
accompanying financial statements will be the principal factor in determining
the future of the Partnership's operations. The proposed settlement to that
lawsuit, if effected, will materially change the future organizational structure
and business interests of the Partnership, as well as its cash distribution
policies. In addition, commencing with the first quarter of 2000, the General
Partner believes that it will be in the Partnership's best interests to suspend
the payment of quarterly cash distributions pending final resolution of the
Class Action Lawsuit. Accordingly, future cash distributions are not expected to
be paid until the Class Action Lawsuit is adjudicated.
8
REPORT OF INDEPENDENT AUDITORS
To the Partners of American Income Partners V-A Limited Partnership:
We have audited the accompanying statements of financial position of
American Income Partners V-A Limited Partnership, as of December 31, 1999 and
1998, and the related statements of operations, changes in partners' capital,
and cash flows for each of the three years in the period ended December 31,
1999. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of American Income Partners V-A
Limited Partnership at December 31, 1999 and 1998, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31,1999, in conformity with accounting principles generally accepted in
the United States.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The Additional Financial Information
identified in the Index to Annual Report to the Partners is presented for
purposes of additional analysis and is not a required part of the basic
financial statements. Such information has been subjected to the auditing
procedures applied in our audits of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
ERNST & YOUNG LLP
Boston, Massachusetts
March 10, 2000
9
AMERICAN INCOME PARTNERS V-A LIMITED PARTNERSHIP
STATEMENT OF FINANCIAL POSITION
December 31, 1999 and 1998
1999 1998
---- ----
ASSETS
Cash and cash equivalents $ 3,397,803 $ 2,448,960
Rents receivable 1,766 6,643
Accounts receivable - affiliate 7,360 787,967
Note receivable - affiliate 771,450 771,450
Investment securities - affiliate 196,328 140,844
Equipment at cost, net of accumulated
depreciation of $681,290 and $5,498,839
at December 31, 1999 and 1998, respectively -- --
----------- -----------
Total assets $ 4,374,707 $ 4,155,864
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Accrued liabilities $ 248,367 $ 350,276
Accrued liabilities - affiliate 6,313 6,864
Deferred rental income -- 9,219
Other liabilities -- 750,400
Cash distributions payable to partners 136,250 136,250
----------- -----------
Total liabilities 390,930 1,253,009
----------- -----------
Partners' capital (deficit):
General Partner (1,331,783) (1,385,829)
Limited Partnership Interests
(1,380,661 Units; initial purchase
price of $25 each) 5,315,560 4,288,684
----------- -----------
Total partners' capital 3,983,777 2,902,855
----------- -----------
Total liabilities and partners' capital $ 4,374,707 $ 4,155,864
=========== ===========
The accompanying notes are an integral part of
these financial statements.
10
AMERICAN INCOME PARTNERS V-A LIMITED PARTNERSHIP
STATEMENT OF OPERATIONS
for the years ended December 31, 1999, 1998 and 1997
1999 1998 1997
---- ---- ----
Income:
Lease revenue $ 91,942 $ 466,883 $ 1,626,206
Interest income 187,725 125,338 116,360
Interest income - affiliate 77,145 77,145 15,215
Gain on sale of equipment 1,568,063 19,725 102,027
Loss on exchange of equipment -- -- (358,649)
----------- ----------- -----------
Total income 1,924,875 689,091 1,501,159
----------- ----------- -----------
Expenses:
Depreciation -- 80,952 392,082
Interest expense -- -- 3,390
Equipment management fees 4,597 23,344 81,303
Write-down of investment securities
- affiliate -- 303,022 --
Operating expenses - affiliate 349,837 643,579 326,077
----------- ----------- -----------
Total expenses 354,434 1,050,897 802,852
----------- ----------- -----------
Net income (loss) $ 1,570,441 $ (361,806) $ 698,307
=========== =========== ===========
Net income (loss)
per limited partnership unit $ 1.08 $ (0.25) $ 0.48
=========== =========== ===========
Cash distributions declared
per limited partnership unit $ 0.38 $ 0.38 $ 0.47
=========== =========== ===========
The accompanying notes are an integral part of
these financial statements.
11
AMERICAN INCOME PARTNERS V-A LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
for the years ended December 31, 1999, 1998 and 1997
General Recognized Owners
Partner --------------------
Amount Units Amount Total
------ ----- ------ -----
Balance at December 31, 1996 (1,341,341) 1,380,661 5,133,942 3,792,601
Net income - 1997 34,915 -- 663,392 698,307
Unrealized loss on investment securities (9,390) -- (178,400) (187,790)
----------- ----------- ----------- -----------
Comprehensive income 25,525 -- 484,992 510,517
----------- ----------- ----------- -----------
Cash distributions declared (34,062) -- (647,183) (681,245)
----------- ----------- ----------- -----------
Balance at December 31, 1997 (1,349,878) 1,380,661 4,971,751 3,621,873
Net loss - 1998 (18,091) -- (343,715) (361,806)
Unrealized loss on investment securities (5,762) -- (109,470) (115,232)
Less: Reclassification adjustment for
write-down of investment securities 15,152 -- 287,870 303,022
----------- ----------- ----------- -----------
Comprehensive loss (8,701) -- (165,315) (174,016)
----------- ----------- ----------- -----------
Cash distributions declared (27,250) -- (517,752) (545,002)
----------- ----------- ----------- -----------
Balance at December 31, 1998 (1,385,829) 1,380,661 4,288,684 2,902,855
Net income -1999 78,522 -- 1,491,919 1,570,441
Unrealized gain on investment securities 2,774 -- 52,710 55,484
----------- ----------- ----------- -----------
Comprehensive income 81,296 -- 1,544,629 1,625,925
----------- ----------- ----------- -----------
Cash distributions declared (27,250) -- (517,753) (545,003)
----------- ----------- ----------- -----------
Balance at December 31, 1999 $(1,331,783) 1,380,661 $ 5,315,560 $ 3,983,777
=========== ========= =========== ===========
The accompanying notes are an integral part of
these financial statements.
12
AMERICAN INCOME PARTNERS V-A LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
for the years ended December 31, 1999, 1998 and 1997
1999 1998 1997
---- ---- ----
Cash flows from (used in) operating activities:
Net income (loss) $ 1,570,441 $ (361,806) $ 698,307
Adjustments to reconcile net income (loss)
to net cash from (used in) operating
activities:
Depreciation -- 80,952 392,082
Gain on sale of equipment (1,568,063) (19,725) (102,027)
Write-down of investment securities - affiliate -- 303,022 --
Loss on exchange of equipment -- -- 358,649
Decrease in allowance for doubtful accounts -- -- (5,000)
Non-cash proceeds on termination rents -- -- (256,502)
Changes in assets and liabilities:
Decrease (increase) in:
Rents receivable 4,877 (2,672) 215,367
Accounts receivable - affiliate 780,607 (720,139) 416,530
Increase (decrease) in:
Accrued interest -- -- (1,836)
Accrued liabilities (101,909) 341,076 (29,230)
Accrued liabilities - affiliate (551) (10,004) (79,123)
Deferred rental income (9,219) (1,139) (1,306)
Other liabilities (750,400) 750,400 --
----------- ----------- -----------
Net cash from (used in) operating activities (74,217) 359,965 1,605,911
----------- ----------- -----------
Cash flows from investing activities:
Dividend received -- -- 68,287
Proceeds from equipment sales 1,568,063 19,725 102,027
----------- ----------- -----------
Net cash from investing activities 1,568,063 19,725 170,314
----------- ----------- -----------
Cash flows used in financing activities:
Principal payments - notes payable -- -- (144,594)
Distributions paid (545,003) (545,002) (726,660)
----------- ----------- -----------
Net cash used in financing activities (545,003) (545,002) (871,254)
----------- ----------- -----------
Net increase (decrease) in cash and cash equivalents 948,843 (165,312) 904,971
Cash and cash equivalents at beginning of year 2,448,960 2,614,272 1,709,301
----------- ----------- -----------
Cash and cash equivalents at end of year $ 3,397,803 $ 2,448,960 $ 2,614,272
=========== =========== ===========
Supplemental disclosure of cash flow information:
Cash paid during the year for interest $ -- $-- $ 5,226
=========== =========== ===========
The accompanying notes are an integral part of
these financial statements.
13
AMERICAN INCOME PARTNERS V-A LIMITED PARTNERSHIP
Notes to the Financial Statements
December 31, 1999
NOTE 1 - ORGANIZATION AND PARTNERSHIP MATTERS
American Income Partners V-A Limited Partnership (the "Partnership") was
organized as a limited partnership under the Massachusetts Uniform Limited
Partnership Act (the "Uniform Act") on July 24,1989 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
General Partner (AFG Leasing IV Incorporated) and $100 from the Initial Limited
Partner (AFG Assignor Corporation). On September 29, 1989, the Partnership
issued 1,380,661 units, representing assignments of limited partnership
interests (the "Units"), to 1,815 investors. Unitholders and Limited Partners
(other than the Initial Limited Partner) are collectively referred to as
Recognized Owners. The Partnership has one General Partner, AFG Leasing IV
Incorporated, a Massachusetts corporation formed in 1987 and an affiliate of
Equis Financial Group Limited Partnership (formerly known as American Finance
Group), a Massachusetts limited partnership ("EFG"). The common stock of the
General Partner is owned by AF/AIP Programs Limited Partnership, of which EFG
and a wholly-owned subsidiary are the 99% limited partners and AFG Programs,
Inc., which is wholly-owned by EFG, is the 1% general partner. 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(b) of the Amended and Restated
Agreement and Certificate of Limited Partnership (the "Restated Agreement, as
amended").
Significant operations commenced September 29, 1989 when the Partnership
made its initial equipment purchase. Pursuant to the Restated Agreement, as
amended, Distributable Cash From Operations and Distributable Cash From Sales or
Refinancings will be allocated 95% to the Recognized Owners and 5% to the
General Partner.
Under the terms of a management agreement between the Partnership and AF/AIP
Programs Limited Partnership and the terms of an identical management agreement
between AF/AIP Programs Limited Partnership and EFG (collectively, the
"Management Agreement") management services are provided by EFG to the
Partnership at fees which the General Partner believes to be competitive for
similar services (see Note 5).
EFG is a Massachusetts limited partnership formerly known as American
Finance Group ("AFG"). AFG was established in 1988 as a Massachusetts general
partnership and succeeded American Finance Group, Inc., a Massachusetts
corporation organized in 1980. EFG and its subsidiaries (collectively, the
"Company") are engaged in various aspects of the equipment leasing business,
including EFG's role as Manager or Advisor to the Partnership and several other
direct-participation equipment leasing programs sponsored or co-sponsored by EFG
(the "Other Investment Programs"). The Company arranges to broker or originate
equipment leases, acts as remarketing agent and asset manager, and provides
leasing support services, such as billing, collecting, and asset tracking.
The general partner of EFG, with a 1% controlling interest, is Equis
Corporation, a Massachusetts corporation owned and controlled entirely by Gary
D. Engle, its President, Chief Executive Officer and sole Director. Equis
Corporation also owns a controlling 1% general partner interest in EFG's 99%
limited partner, GDE Acquisition Limited Partnership ("GDE LP"). Mr. Engle
established Equis Corporation and GDE LP in December 1994 for the sole purpose
of acquiring the business of AFG.
In January 1996, the Company sold certain assets of AFG relating primarily
to the business of originating new leases, and the name "American Finance
Group", and its acronym, to a third-party. AFG changed its name to Equis
Financial Group Limited Partnership after the sale was concluded. Pursuant to
terms of the sale agreements, EFG specifically reserved the rights to continue
using the name American Finance Group and its acronym in connection with the
Partnership and the Other Investment Programs and to continue managing all
assets owned by the Partnership and the Other Investment Programs.
14
AMERICAN INCOME PARTNERS V-A LIMITED PARTNERSHIP
Notes to the Financial Statements
(Continued)
NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Statement of Cash Flows
The Partnership considers liquid investment instruments purchased with a
maturity of three months or less to be cash equivalents. From time to time, the
Partnership invests excess cash with large institutional banks in federal agency
discount notes and in reverse repurchase agreements with overnight securities.
Under the terms of the agreements, title to the underlying securities passes to
the Partnership. The securities underlying the agreements are book entry
securities. At December 31, 1999, the Partnership had $3,282,141 invested in
federal agency discount notes, repurchase agreements secured by U.S. Treasury
Bills or interests in U.S. Government securities, or other highly liquid
overnight investments.
Revenue Recognition
Rents are payable to the Partnership monthly or quarterly 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. In certain instances, the Partnership may enter
renewal or re-lease agreements which expire beyond the Partnership's anticipated
dissolution date. This circumstance is not expected to prevent the orderly
wind-up of the Partnership's business activities as the General Partner and EFG
would seek to sell the then-remaining equipment assets either to the lessee or
to a third party, taking into consideration the amount of future noncancellable
rental payments associated with the attendant lease agreements. See also Note 7
regarding the Class Action Lawsuit. Future minimum rents of $14,378 are due as
follows:
For the year ending December 31, 2000 $ 10,418
2001 3,960
---------
Total $ 14,378
---------
Revenue from major individual lessees which accounted for 10% or more of
lease revenue during the years ended December 31, 1999, 1998 and 1997 is as
follows:
1999 1998 1997
---- ---- ----
Tenneco Packaging Company $ 25,951 $ -- $ --
International Paper $ 21,475 $ -- $ --
Amoco Corporation $ 16,487 $ -- $ --
Sunworld International Airlines, Inc. $ 9,221 $ 174,720 $ 174,720
Transmeridian Airlines $ -- $ 187,637 $ --
Gearbulk Shipowning Ltd. (formerly Kristian
Gerhard Jebsen Skipsrederi A/S) $ -- $ -- $1,110,453
Use of Estimates
The preparation of the financial statements in conformity with generally
accepted accounting principles requires the use of estimates and assumptions
that affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.
15
AMERICAN INCOME PARTNERS V-A LIMITED PARTNERSHIP
Notes to the Financial Statements
(Continued)
Equipment on Lease
All equipment was acquired from EFG, one of its Affiliates or from
third-party sellers. Equipment Cost means the actual cost paid by the
Partnership to acquire the equipment, including acquisition fees. Where
equipment was acquired from EFG or an Affiliate, Equipment Cost reflects the
actual price paid for the equipment by EFG or the Affiliate plus all actual
costs incurred by EFG or the Affiliate while carrying the equipment, including
all liens and encumbrances, less the amount of all primary term rents earned by
EFG or the Affiliate prior to selling the equipment. Where the seller of the
equipment was a third party, Equipment Cost reflects the seller's invoice price.
Depreciation
The Partnership's depreciation policy was intended to allocate the cost of
the equipment over the period during which it produced economic benefit. The
principal period of economic benefit was considered corresponded to each asset's
primary lease term, which term generally represents the period of greatest
revenue potential for each asset. Accordingly, to the extent that an asset was
held on primary lease term, the Partnership depreciated the difference between
(i) the cost of the asset and (ii) the estimated residual value of the asset on
a straight-line basis over such term. For purposes of this policy, estimated
residual values represented estimates of equipment values at the date of primary
lease expiration. To the extent that an asset was held beyond its primary lease
term, the Partnership continued to depreciate the remaining net book value of
the asset on a straight-line basis over the asset's remaining economic life.
The ultimate realization of residual value for any type of equipment is
dependent upon many factors, including EFG'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.
Investment Securities - Affiliate
The Partnership's investment in Semele Group, Inc. is considered to be
available-for-sale and as such is carried at fair value with unrealized gains
and losses reported as a separate component of Partner's Capital.
Other-than-temporary declines in market value are recorded as write-down of
investment securities in the Statement of Operations (see Note 4). Unrealized
gains or losses on the Partnership's available-for-sale securities, are required
to be included in comprehensive income. During the year ended December 31,1999,
total comprehensive income amounted to $1,625,925.
Accrued Liabilities - Affiliate
Unpaid operating expenses paid by EFG on behalf of the Partnership and
accrued but unpaid administrative charges and management fees are reported as
Accrued Liabilities - Affiliate (see Note 5).
Contingencies
It is the Partnership's policy to recognize a liability for goods and
services during the period when the goods or services are received. To the
extent that the Partnership has a contingent liability, meaning generally a
liability the payment of which is subject to the outcome of a future event, the
Partnership recognizes a liability in accordance with Statement of Financial
Accounting Standards No. 5 "Accounting for Contingencies" ("SFAS No. 5"). SFAS
No. 5 requires the recognition of contingent liabilities when the amount of
liability can be reasonably estimated and the liability is likely to be
incurred.
The Partnership is a Nominal Defendant in a Class Action Lawsuit. In 1998, a
settlement proposal to resolve that litigation was negotiated and remains
pending (see Note 7). The Partnership's estimated exposure for costs anticipated
to be incurred in pursuing the settlement proposal is approximately $357,000
consisting principally of
16
AMERICAN INCOME PARTNERS V-A LIMITED PARTNERSHIP
Notes to the Financial Statements
(Continued)
legal fees and other professional service costs. These costs are expected to be
incurred regardless of whether the proposed settlement ultimately is effected
and, therefore, the Partnership accrued approximately $305,000 of these costs in
1998 following the Court's approval of the settlement plan. The cost estimate is
subject to change and is monitored by the General Partner based upon the
progress of the settlement proposal and other pertinent information. As a
result, the Partnership accrued and expensed an additional $52,000 for such
costs in 1999.
Allocation of Profits and Losses
For financial statement purposes, net income or loss is allocated to each
Partner according to their respective ownership percentages (95% to the
Recognized Owners and 5% to the General Partner). See Note 6 concerning
allocation of income or loss for income tax purposes.
Net Income (Loss) and Cash Distributions Per Unit
Net income (loss) and cash distributions per Unit are based on 1,380,661
Units outstanding during each of the three years in the period ended December
31, 1999 and computed after allocation of the General Partner's 5% share of net
income (loss) and cash distributions.
Provision for Income Taxes
No provision or benefit from income taxes is included in the accompanying
financial statements. The Partners are responsible for reporting their
proportionate shares of the Partnership's taxable income or loss and other tax
attributes on their tax returns.
NOTE 3- EQUIPMENT
The following is a summary of equipment owned by the Partnership at December
31, 1999. Remaining Lease Term (Months), as used below, represents the number of
months remaining from December 31, 1999 under contracted lease terms and is
presented as a range when more than one lease agreement is contained in the
stated equipment category. A Remaining Lease Term equal to zero reflects
equipment either held for sale or release or being leased on a month-to-month
basis. In the opinion of EFG, the acquisition cost of the equipment did not
exceed its fair market value.
Remaining
Lease Term Equipment
Equipment Type (Months) at Cost Location
-------------- ------- ------- --------
Materials handling 0-21 $ 640,298 IL/IN/MA/MI/NC/NY/PA/SC/TX
Communications 0 40,992 MO
----------
Total equipment cost 681,290
Accumulated depreciation (681,290)
---------
Equipment, net of accumulated depreciation $ --
=========
Generally, the costs associated with maintaining, insuring and operating the
Partnership's equipment are incurred by the respective lessees pursuant to terms
specified in their individual lease agreements with the Partnership.
17
AMERICAN INCOME PARTNERS V-A LIMITED PARTNERSHIP
Notes to the Financial Statements
(Continued)
As equipment is sold to third parties, or otherwise disposed of, the
Partnership recognizes a gain or loss equal to the difference between the net
book value of the equipment at the time of sale or disposition and the proceeds
realized upon sale or disposition. The ultimate realization of estimated
residual value in the equipment is dependent upon, among other things, EFG's
ability to maximize proceeds from selling or re-leasing the equipment upon the
expiration of the primary lease terms. At December 31, 1999, the Partnership was
not holding any equipment not subject to a lease and no equipment was held for
sale or re-lease.
In November 1998, the Partnership and certain affiliated investment programs
(collectively, the "Programs") entered into an agreement to sell their ownership
interests in a Boeing 727-251 ADV jet aircraft and three engines (collectively
the "Aircraft") to a third party (the "Purchaser") for $4,350,000. In December
1998, the Purchaser remitted $3,350,000 for the Aircraft, excluding one of three
engines which had been damaged while the Aircraft was leased to Transmeridian
Airlines ("Transmeridian"). (See Note 7 to the financial statements regarding
legal action undertaken by the Programs related to Transmeridian and the damaged
engine). The Purchaser also deposited $1,000,000 into a third-party escrow
account (the "Escrow") pending repair of the damaged engine and re-installation
of the refurbished engine on the Aircraft. Upon installation, the escrow agent
was obligated to transfer the Escrow amount plus interest thereon to the
Programs. The engine was refurbished at the expense of the Programs. The
associated cost was approximately $374,000, of which the Partnership's share was
approximately $84,000. The Partnership accrued $58,000 of these costs in 1998
and the balance was accrued or incurred in the year ended December 31, 1999.
The Programs also were required to reimburse the Purchaser for its cost to
lease a substitute engine during the period that the damaged engine was being
repaired. This cost was approximately $114,000, of which the Partnership's share
was approximately $26,000, all of which was accrued in 1998 in connection with
the litigation referenced above.
In addition, the purchase and sale agreement permitted the Purchaser to
return the Aircraft to the Programs, subject to a number of conditions, for
$4,350,000, reduced by an amount equivalent to $450 multiplied by the number of
flight hours since the Aircraft's most recent C-Check. Among the conditions
precedent to the Purchaser's returning the Aircraft, the Purchaser must have
completed its intended installation of hush-kitting on the Aircraft to conform
to Stage 3 noise regulations. This work was completed in January 1999. The
Purchaser's return option was to expire on May 15, 1999.
Due to the contingent nature of the sale, the Partnership deferred
recognition of the sale and a resulting gain until expiration of the Purchaser's
return option on May 15, 1999. The Partnership's share of the December proceeds
was $750,400, which amount was deposited into EFG's customary escrow account and
transferred to the Partnership, together with the Partnership's other December
rental receipts, in January 1999. At December 31, 1998, the entire amount was
classified as other liabilities, with an equal amount included in accounts
receivable -- affiliate on the Statement of Financial Position. Upon the
installation of the refurbished engine on the Aircraft, the remainder of the
sale consideration, or $1,000,000 and the interest thereon, was released from
the escrow account to the Programs. The Partnership's share of this payment was
$227,548, including interest of $3,548. In aggregate, the Partnership received
sales proceeds of $974,400 for its interest in the Aircraft. The Partnership's
interest in the Aircraft had a cost of $2,420,734 and was fully depreciated,
resulting in a net gain, for financial statement purposes, of $974,400.
NOTE 4- INVESTMENT SECURITIES - AFFILIATE I NOTE RECEIVABLE - AFFILIATE
On April 30, 1997, the vessel partnerships, in which the Partnership and
certain affiliated investment programs are limited partners and through which
the Partnership and the affiliated investment programs shared economic interests
in three cargo vessels (the "Vessels") leased by Gearbulk Shipowning Ltd
(formerly Kristian Gerhard Jebsen Skipsrederi A/S) (the "Lessee"), exchanged
their ownership interests in the Vessels for aggregate
18
AMERICAN INCOME PARTNERS V-A LIMITED PARTNERSHIP
Notes to the Financial Statements
(Continued)
consideration of $11,565,375, consisting of 1,987,000 newly issued shares (at
$1.50 per share) of common stock in Semele Group, Inc. ("Semele") (formerly
Banyan Strategic Land Fund II), a purchase money note of $8,219,500 (the "Note")
and cash of $365,375. Semele is a Delaware corporation organized on April 14,
1987 and has its common stock listed on NASDAQ Small Cap Market effective
January 5,1999 (previously NASDAQ). At the date of the exchange transaction, the
common stock of Semele had a net book value of approximately $1.50 per share and
closing market value of $1.00 per share. Semele has one principal real estate
asset consisting of an undeveloped 274 acre parcel of land near Malibu,
California ("Rancho Malibu").
The exchange was organized through an intermediary company (Equis Exchange
LLC, 99% owned by Semele and 1% owned by EFG), which was established for the
sole purpose of facilitating the exchange. There were no fees paid to EFG by
Equis Exchange LLC or Semele or by any other party that otherwise would not have
been paid to EFG had the Partnership sold its beneficial interest in the Vessels
directly to the Lessee. The Lessee prepaid all of its remaining contracted
rental obligations and purchased the Vessels in two closings occurring on May
6,1997 and May 12, 1997. The Note was repaid with $3,800,000 of cash and
delivery of a $4,419,500 note from Semele (the "Semele Note").
As a result of the exchange transaction and its original 46.46% beneficial
ownership interest in Larkfield, one of the three Vessels, the Partnership
received $735,201 in cash, became the beneficial owner of 341,435 shares of
Semele common stock (valued at $512,153 ($1.50 per share) at the time of the
exchange transaction) and received a beneficial interest in the Semele Note of
$771,450. The Semele Note bears an annual interest rate of 10% and is scheduled
to mature in April 2001. The note also requires mandatory principal reductions,
if and to the extent that net proceeds are received by Semele from the sale or
refinancing of Rancho Malibu. The Partnership recognized interest income of
$77,145 in both 1999 and 1998 and $15,215 in 1997, related to the Semele Note.
The Partnership's interest in the vessel had an original cost and net book value
of $3,666,680 and $1,385,750, respectively. The proceeds realized by the
Partnership of $1,027,101 resulted in a net loss, for financial statement
purposes, of $358,649. In addition, as this vessel was disposed of prior to the
expiration of the related lease term, the Partnership received a prepayment of
the remaining contracted rent due under the vessel's lease agreement of
$991,703.
Cash equal to the amount of the Semele Note was placed in escrow for the
benefit of Semele in a segregated account pending the outcome of certain
shareholder proposals. Specifically, as part of the exchange, Semele agreed to
seek consent ("Consent") from its shareholders to: (1) amend its certificate of
incorporation and by-laws; (2) make additional amendments to restrict the
acquisition of its common stock in a way to protect Semele's net operating loss
carry-forwards, and (3) engage EFG to provide administrative services to Semele,
which services EFG will provide at cost. On October 21, 1997, such Consent was
obtained from Semele's shareholders. The Consent also allowed for (i) the
election of a new Board of Directors nominated by EFG for terms of up to three
years and an increase in the size of the Board to as many as nine members,
provided a majority of the Board shall consist of members independent of Semele,
EFG or any affiliate; and (ii) an amendment extending Semele's life to perpetual
and changing its name from Banyan Strategic Land Fund II. Contemporaneously with
the Consent being obtained, Semele declared a $0.20 per share dividend to be
paid on all shares, including those beneficially owned by the Partnership. A
dividend of $68,287 was paid to the Partnership on November 17, 1997. This
dividend represented a return of equity to the Partnership, which
proportionately reduced the Partnership's investment in Semele. Subsequent to
the exchange transaction, Gary D. Engle, President and Chief Executive Officer
of EFG, was elected to the Board of Directors and appointed Chief Executive
Officer of Semele and James A. Coyne, Executive Vice President of EFG was
appointed Semele's President and Chief Operating Officer, and was elected to the
Board of Directors.
On June 30, 1998, Semele effected a 1-for-300 reverse stock split followed
by a 30-for-1 forward stock split resulting in a reduction of the number of
shares of Semele common stock owned by the Partnership to 34,144 shares. During
the year ended December 31, 1998, the Partnership decreased the carrying value
of its investment in Semele common stock to $4,125 per share (the quoted price
of the Semele stock on NASDAQ at
19
AMERICAN INCOME PARTNERS V-A LIMITED PARTNERSHIP
Notes to the Financial Statements
(Continued)
December 31, 1998) resulting in an unrealized loss in 1998 of $115,232. In 1997,
the Partnership recorded an unrealized loss of $187,790 relate to its investment
in the Semele common stock. Each of these losses was reported as a component of
comprehensive income or loss, included in partners' capital. At December 31,
1998, the General Partner determined that the decline in market value of the
Semele common stock was other-than-temporary. As a result, the Partnership wrote
down the cost of the Semele stock to $4,125 per share for a total realized loss
of $303,022 in 1998. During the year ended December 31, 1999, the Partnership
increased the carrying value of its investment in Semele common stock to $5.75
per share (the quoted price on the NASDAQ SmallCap market at December 31, 1999),
resulting in an unrealized gain in 1999 of $55,484. This gain was reported as a
component of comprehensive income included in partners' capital.
NOTE 5- RELATED PARTY TRANSACTIONS
All operating expenses incurred by the Partnership are paid by EFG on behalf
of the Partnership and EFG is reimbursed at its actual cost for such
expenditures. Fees and other costs incurred during each of the years ended
December 31, 1999, 1998 and 1997 which were paid or accrued by the Partnership
to EFG or its Affiliates, are as follows:
1999 1998 1997
---- ---- ----
Equipment management fees $ 4,597 $ 23,344 $ 81,303
Administrative charges 92,651 58,836 55,668
Reimbursable operating expenses
due to third parties 257,186 584,743 270,409
----------- ----------- -----------
Total $ 354,434 $ 666,923 $ 407,380
----------- ----------- -----------
As provided under the terms of the Management Agreement, EFG is compensated
for its services to the Partnership. Such services include acquisition and
management of equipment. For acquisition services, EFG was compensated by an
amount equal to 2.23% of Equipment Base Price paid by the Partnership. For
management services, EFG is compensated by an amount equal to 5% of gross
operating lease rental revenue and 2% of gross full payout lease rental revenue
received by the Partnership. Both acquisition and management fees are subject to
certain limitations defined in the Management Agreement.
Administrative charges represent amounts owed to EFG, pursuant to Section
10.4 of the Amended and Restated Agreement and Certificate of Limited
Partnership (the "Restated Agreement, as amended"), for persons employed by EFG
who are engaged in providing administrative services to the Partnership.
All equipment was acquired from EFG, one of its Affiliates or from
third-party sellers. The Partnership's Purchase Price was determined by the
method described in Note 2, Equipment on Lease.
All rents and proceeds from the sale of equipment are paid directly to EFG.
EFG temporarily deposits collected funds in a separate interest-bearing escrow
account prior to remittance to the Partnership. At December 31, 1999, the
Partnership was owed $7,360 by EFG for such funds and the interest thereon.
These funds were remitted to the Partnership in January 2000.
20
AMERICAN INCOME PARTNERS V-A LIMITED PARTNERSHIP
Notes to the Financial Statements
(Continued)
Certain affiliates of the General Partner own Units in the Partnership as
follows:
Number of Percent of Total
Affiliate Units Owned Outstanding Units
--------- ----------- -----------------
Atlantic Acquisition Limited
Partnership 125,843 9.11%
Old North Capital Limited
Partnership 4,452 0.32%
Atlantic Acquisition Limited Partnership ("AALP") and Old North Capital
Limited Partnership ("ONC") are both Massachusetts limited partnerships formed
in 1995 and affiliates of EFG. The general partners of AALP and ONC are
controlled by Gary D. Engle. In addition, the limited partnership interests of
ONC are owned by Semele. Gary D. Engle is Chairman and CEO of Semele.
NOTE 6-INCOME TAXES
The Partnership is not a taxable entity for federal income tax purposes.
Accordingly, no provision for income taxes has been recorded in the accounts of
the Partnership.
For financial statement purposes, the Partnership allocates net income or
loss to each class of partner according to their respective ownership
percentages (95% to the Recognized Owners and 5% to the General Partner). This
convention differs from the income or loss allocation requirements for income
tax and Dissolution Event purposes as delineated in the Restated Agreement, as
amended. For income tax purposes, the Partnership allocates net income or net
loss, in accordance with the provisions of such agreement. The Restated
Agreement, as amended, requires that upon dissolution of the Partnership, the
General Partner will be required to contribute to the Partnership an amount
equal to any negative balance which may exist in the General Partner's tax
capital account. At December 31, 1999, the General Partner had a positive tax
capital account balance.
The following is a reconciliation between net income (loss) reported for
financial statement and federal income tax reporting purposes for the years
ended December 31, 1999, 1998 and 1997:
1999 1998 1997
---- ---- ----
Net income (loss) $ 1,570,441 $ (361,806) $ 698,307
Financial statement depreciation
less than tax depreciation (109,207) (340,912) (162,802)
Deferred rental income (9,219) (1,139) (1,306)
Other (579,981) 337,798 148,614
----------- ----------- -----------
Net income (loss) for federal income tax
reporting purposes $ 872,034 $ (366,059) $ 682,813
=========== =========== ===========
The principal component of "Other" consists of the difference between the
tax and financial statement gain or loss on equipment disposals.
The following is a reconciliation between partners' capital reported for
financial statement and federal income tax reporting purposes for the years
ended December 31, 1999 and 1998:
21
AMERICAN INCOME PARTNERS V-A LIMITED PARTNERSHIP
Notes to the Financial Statements
(Continued)
1999 1998
---- ----
Partners' capital $ 3,983,777 $ 2,902,855
Unrealized gain on investment securities (55,484) --
Add back selling commissions and organization
and offering costs 3,878,114 3,878,114
Financial statement distributions in excess of
tax distributions -- 6,812
Cumulative difference between federal income tax
and financial statement income (loss) 337,786 1,036,193
----------- -----------
Partners' capital for federal income tax reporting purposes $ 8,144,193 $ 7,823,974
=========== ===========
Unrealized gain on investment securities, financial statement distributions
in excess of tax distributions and cumulative difference between federal income
tax and financial statement income (loss) represent timing differences.
NOTE 7- LEGAL PROCEEDINGS
In January 1998, certain plaintiffs (the "Plaintiffs") filed a class and
derivative action, captioned Leonard Rosenblum, et al. v. Eguis Financial Group
Limited Partnership, et al., in the United States District Court for the
Southern District of Florida (the "Court") on behalf of a proposed class of
investors in 28 equipment leasing programs sponsored by EFG, including the
Partnership (collectively, the "Nominal Defendants"), against EFG and a number
of its affiliates, including the General Partner, as defendants (collectively,
the "Defendants"). Certain of the Plaintiffs, on or about June 24, 1997, had
filed an earlier derivative action, captioned Leonard Rosenblum. et al. v. Eguis
Financial Group Limited Partnership, et al., in the Superior Court of the
Commonwealth of Massachusetts on behalf of the Nominal Defendants against the
Defendants. Both actions are referred to herein collectively as the "Class
Action Lawsuit".
The Plaintiffs have asserted, among other things, claims against the
Defendants on behalf of the Nominal Defendants for violations of the Securities
Exchange Act of 1934, common law fraud, breach of contract, breach of fiduciary
duty, and violations of the partnership or trust agreements that govern each of
the Nominal Defendants. The Defendants have denied, and continue to deny, that
any of them have committed or threatened to commit any violations of law or
breached any fiduciary duties to the Plaintiffs or the Nominal Defendants.
On July 16, 1998, counsel for the Defendants and the Plaintiffs executed a
Stipulation of Settlement setting forth terms pursuant to which a settlement of
the Class Action Lawsuit is intended to be achieved and which, among other
things, is expected to reduce the burdens and expenses attendant to continuing
litigation. The Stipulation of Settlement was preliminarily approved by the
Court on August 20, 1998 when the Court issued its "Order Preliminarily
Approving Settlement, Conditionally Certifying Settlement Class and Providing
for Notice of, and Hearing on, the Proposed Settlement" (the "August 20 Order").
On March 12, 1999, counsel for the Plaintiffs and the Defendants entered
into an amended stipulation of settlement (the "Amended Stipulation") which was
filed with the Court on March 12, 1999. The Amended Stipulation was
preliminarily approved by the Court by its "Modified Order Preliminarily
Approving Settlement,
22
AMERICAN INCOME PARTNERS V-A LIMITED PARTNERSHIP
Notes to the Financial Statements
(Continued)
Conditionally Certifying Settlement Class and Providing For Notice of, and
Hearing On, the Proposed Settlement" dated March 22, 1999 (the "March 22
Order"). The Amended Stipulation, among other things, divided the Class Action
Lawsuit into two separate sub-classes that could be settled individually. On May
26, 1999, the Court issued an Order and Final Judgment approving settlement of
one of the sub-classes. Settlement of the second sub-class, involving the
Partnership and 10 affiliated partnerships (collectively referred to as the
"Exchange Partnerships"), remains pending due, in part, to the complexity of the
proposed settlement pertaining to this class.
In February 2000, counsel for the Plaintiffs and the Defendants entered into
a second amended stipulation of settlement (the "Second Amended Stipulation")
which modified certain of the settlement terms contained in the Amended
Stipulation. The Second Amended Stipulation was preliminarily approved by the
Court by its "Second Modified Order Preliminarily Approving Settlement,
Conditionally Certifying Settlement Class and Providing For Notice of, and
Hearing On, the Proposed Settlement" dated March 6, 2000 (the "March 2000
Order"). Prior to issuing a final order approving the settlement of the second
sub-class involving the Partnership, the Court will hold a fairness hearing that
will be open to all interested parties and permit any party to object to the
settlement. The investors of the Partnership and all other plaintiff sub-class
members will receive a Notice of Settlement and other information pertinent to
the settlement of their claims that will be mailed to them in advance of the
fairness hearing.
The settlement of the second sub-class is premised on the consolidation of
the Exchange Partnerships' net assets (the "Consolidation"), subject to certain
conditions, into a single successor company ("Newco"). Under the proposed
Consolidation, the partners of the Exchange Partnerships would receive both
common stock in Newco and a cash distribution; and thereupon the Exchange
Partnerships would be dissolved. In addition, EFG would contribute certain
management contracts, operations personnel, and business opportunities to Newco
and cancel its current management contracts with all of the Exchange
Partnerships. Newco would operate principally as a finance company and would use
its best efforts to list its shares on the NASDAQ National Market or another
national exchange or market as soon after the Consolidation as Newco deems that
market conditions and its business operations are suitable for listing its
shares and Newco has satisfied all necessary regulatory and listing
requirements. The potential benefits and risks of the Consolidation will be
presented in a Solicitation Statement that will be mailed to all of the partners
of the Exchange Partnerships as soon as the associated regulatory review process
is completed and at least 60 days prior to the fairness hearing. A preliminary
Solicitation Statement was filed with the Securities and Exchange Commission on
August 24, 1998 and remains pending. Class members will be notified of the
actual fairness hearing date when it is confirmed.
One of the principal objectives of the Consolidation is to create a company
that would have the potential to generate more value for the benefit of existing
limited partners than other alternatives, including continuing the Partnership's
customary business operations until all of its assets are disposed in the
ordinary course of business. To facilitate the realization of this objective,
the Amended Stipulation provided, among other things, that commencing March
22, 1999, the Exchange Partnerships could collectively invest up to 40% of the
total aggregate net asset values of all of the Exchange Partnerships in any
investment, including additional equipment and other business activities that
the general partners of the Exchange Partnerships and EFG reasonably believed to
be consistent with the anticipated business interests and objectives of Newco,
subject to certain limitations. The Second Amended Stipulation, among other
things, quantified the 40% limitation using a whole dollar amount of $32 million
in the aggregate.
On March 8, 2000, the Exchange Partnerships collectively invested $32
million as permitted by the Second Amended Stipulation approved by the Court.
The Partnership's portion of the aggregate investment is $2,160,000. The
investment consists of a term loan to Echelon Residential Holdings LLC, a
newly-formed real estate development company that will be owned by several
investors, including James A. Coyne, Executive Vice President of EFG. Mr. Coyne,
in his individual capacity, is the only investor in Echelon Residential Holdings
LLC who is related to EFG. The loan proceeds were used by Echelon Residential
Holdings LLC in the formation of a subsidiary, Echelon Residential LLC, that in
turn acquired various real estate assets from Echelon International Corporation,
a Florida based real estate company. The loan has a term of 30 months maturing
on September 7,
23
AMERICAN INCOME PARTNERS V-A LIMITED PARTNERSHIP
Notes to the Financial Statements
(Continued)
2002 and bears interest at the annual rate of 14% for the first 24 months and
18% for the final six months of the term. Interest accrues and compounds
monthly but is not payable until maturity. Echelon Residential Holdings LLC
has pledged a security interest in all of its right, title and interest in
and to its membership interests in Echelon Residential LLC to the Exchange
Partnerships as collateral.
In the absence of the Court's authorization to enter into new investment
activities, the Partnership's Restated Agreement, as amended, would not permit
such activities without the approval of limited partners owning a majority of
the Partnership's outstanding Units. Consistent with the Amended Stipulation,
the Second Amended Stipulation provides terms for unwinding any new investment
transactions in the event that the Consolidation is not effected or the
Partnership objects to its participation in the Consolidation.
The Second Amended Stipulation, as well as the Amended Stipulation and the
original Stipulation of Settlement, prescribe certain conditions necessary to
effect a final settlement, including providing the partners of the Exchange
Partnerships with the opportunity to object to the participation of their
partnership in the Consolidation. Assuming the proposed settlement is effected
according to present terms, the Partnership's share of legal fees and expenses
related to the Class Action Lawsuit and the Consolidation is estimated to be
approximately $357,000, of which approximately $305,000 was accrued and expensed
by the Partnership in 1998 and approximately $52,000 was accrued and expensed in
1999.
While the Court's August 20 Order enjoined certain class members, including
all of the partners of the Partnership, from transferring, selling, assigning,
giving, pledging, hypothecating, or otherwise disposing of any Units pending the
Court's final determination of whether the settlement should be approved, the
March 22 Order permitted the partners to transfer Units to family members or as
a result of the divorce, disability or death of the partner. No other transfers
are permitted pending the Court's final determination of whether the settlement
should be approved. The provision of the August 20 Order which enjoined the
General Partners of the Exchange Partnerships from, among other things,
recording any transfers not in accordance with the Court's order remains
effective.
There can be no assurance that settlement of the sub-class involving the
Exchange Partnerships will receive final Court approval and be effected. There
also can be no assurance that all or any of the Exchange Partnerships will
participate in the Consolidation because if limited partners owning more than
one-third of the outstanding Units of a partnership object to the Consolidation,
then that partnership will be excluded from the Consolidation. Notwithstanding
the extent of delays experienced thus far in achieving a final settlement of the
Class Action Lawsuit with respect to the Exchange Partnerships, the General
Partner and its affiliates, in consultation with counsel, continue to feel that
there is a reasonable basis to believe that a final settlement of the sub-class
involving the Exchange Partnerships ultimately will be achieved. However, in the
absence of a final settlement approved by the Court, the Defendants intend to
defend vigorously against the claims asserted in the Class Action Lawsuit.
Neither the General Partner nor its affiliates can predict with any degree of
certainty the cost of continuing litigation to the Partnership or the ultimate
outcome.
In addition to the foregoing, the Partnership is a party to other lawsuits
that have arisen out of the conduct of its business, principally involving
disputes or disagreements with lessees over lease terms and conditions as
described below:
Action involving Transmeridian Airlines
On November 9, 1998, First Security Bank, N.A., as trustee of the
Partnership and certain affiliated investment programs (collectively, the
"Plaintiffs), filed an action in Superior Court of the Commonwealth of
Massachusetts in Suffolk County against Prime Air, Inc. d/b/a Transmeridian
Airlines ("Transmeridian"), Atkinson & Mullen Travel, Inc., and Apple Vacations,
West, Inc., both d/b/a Apple Vacations, asserting various causes of action for
24
AMERICAN INCOME PARTNERS V-A LIMITED PARTNERSHIP
Notes to the Financial Statements
(Continued)
declaratory judgment and breach of contract. The action subsequently was removed
to United States District Court for the District of Massachusetts. Transmeridian
filed counterclaims for breach of contract, quantum meruit, conversion, breach
of the implied covenant of good faith and fair dealing, and violation of M.G.L.
c. 93A. The Plaintiffs subsequently filed an Amended Complaint asserting claims
for breaches of contract and covenant of good faith and fair dealing against
Transmeridian and breach of guaranty against Apple Vacations.
The Plaintiffs are seeking damages for, among other things, breach of
contract arising out of Transmeridian's refusal to repair or replace burned
engine blades found in one engine during a pre-return inspection of an aircraft
leased by Transmeridian from the Plaintiffs, a Boeing 727-251 ADV aircraft (the
"Aircraft"). The estimated cost to repair the engine and lease a substitute
engine during the repair period was approximately $488,000. Repairs were
completed in June 1999. The Plaintiffs intend to enforce written guarantees
issued by Apple Vacations that absolutely and unconditionally guarantee
Transmeridian's performance under the lease agreement and are seeking recovery
of all costs, lost revenue and monetary damages in connection with this matter.
Notwithstanding the foregoing, the Plaintiffs were required to advance the cost
of repairing the engine and leasing a substitute engine and cannot be certain
whether the guarantees will be enforced. Therefore, the Partnership accrued and
expensed its share of these costs, or approximately $84,000 in 1998 and $26,000
in 1999. Discovery is ongoing and a trial date has been tentatively scheduled
for January 15, 2001. The General Partner plans to vigorously pursue this
action; however, it is too early to predict the Plaintiffs' likelihood of
success. This aircraft was sold in June 1999.
Action involving National Steel Corporation
EFG, on behalf of the Partnership and certain affiliated investment programs
(collectively, the "Plaintiffs"), filed an action in the Commonwealth of
Massachusetts Superior Court, Department of the Trial Court in and for the
County of Suffolk on July 27, 1995, for damages and declaratory relief against a
lessee of the Partnership, National Steel Corporation ("National Steel"). The
Complaint sought reimbursement from National Steel of certain sales and/or use
taxes paid to the State of Illinois in connection with equipment leased by
National Steel from the Plaintiffs and other remedies provided under the Master
Lease Agreement ("MLA"). On August 30, 1995, National Steel filed a Notice of
Removal, which removed the case to United States District Court, District of
Massachusetts. On September 7, 1995, National Steel filed its Answer to the
Plaintiff's Complaint along with Affirmative Defenses and Counterclaims and
sought declaratory relief, alleging breach of contract, implied covenant of good
faith and fair dealing, and specific performance. The Plaintiffs filed an Answer
to National Steel's Counterclaims on September 29, 1995. The parties discussed
settlement with respect to this matter for some time; however, the negotiations
were unsuccessful. The Plaintiffs filed an Amended and Supplemental Complaint
alleging further default under the MLA and filed a motion for Summary Judgment
on all claims and Counterclaims. The Court held a hearing on the Plaintiffs
motion in December 1997 and later entered a decision dismissing certain of
National Steel's Counterclaims, finding in favor of the Plaintiffs on certain
issues and in favor of National Steel on other issues. On May 11, 1999, the
parties executed a comprehensive settlement agreement to resolve all outstanding
issues, including reimbursement to the Partnership for the disputed sales tax
items referenced above. This matter did not have a material effect on the
Partnership's financial position or results of operations.
Action involving Northwest Airlines, Inc.
On September 22, 1995, Investors Asset Holding Corp. and First Security
Bank, N.A., trustees of the Partnership and certain affiliated investment
programs (collectively, the "Plaintiffs"), filed an action in United States
District Court for the District of Massachusetts against a lessee of the
Partnership, Northwest Airlines, Inc. ("Northwest"). The Complaint alleges that
Northwest did not fulfill its maintenance obligations under its Lease Agreements
with the Plaintiffs and seeks declaratory judgment concerning Northwest's
obligations and monetary damages. Northwest filed an Answer to the Plaintiffs'
Complaint and a motion to transfer the venue of this proceeding to Minnesota.
The Court denied Northwest's motion. On June 29, 1998, a United States
Magistrate Judge recommended entry of partial summary judgment in favor of the
Plaintiffs. Northwest appealed this decision. On April 15, 1999, the United
States District Court Judge adopted the Magistrate Judge's
25
AMERICAN INCOME PARTNERS V-A LIMITED PARTNERSHIP
Notes to the Financial Statements
(Continued)
recommendation and entered partial summary judgment in favor of the Plaintiffs
on their claims for declaratory judgment. The Plaintiffs have made a demand upon
Northwest for settlement. If no settlement is reached, the Plaintiffs will
proceed to trial for an assessment of damages. No firm trial date has been
established at this time; however, if a trial should become necessary, it is not
expected to occur before November 2000. The General Partner believes that the
Plaintiffs claims ultimately will prevail and that the Partnership's financial
position will not be adversely affected by the outcome of this action.
NOTE 8- SUBSEQUENT EVENT
On March 8, 2000, the Exchange Partnerships (see Note 7) collectively loaned
$32 million to Echelon Residential Holdings LLC, a newly-formed real estate
development company that will be owned by several investors, including James A.
Coyne, Executive Vice President of EFG. Mr. Coyne, in his individual capacity,
is the only investor in Echelon Residential Holdings LLC who is related to EFG.
The Partnership's participation in the loan is $2,160,000. Echelon
Residential Holdings LLC, through a subsidiary (Echelon Residential LLC),
used the loan proceeds to acquire various real estate assets from Echelon
International Corporation, a Florida based real estate company. The loan has
a term of 30 months maturing on September 7, 2002 and bears interest at the
annual rate of 14% for the first 24 months and 18% for the final six months
of the term. Interest accrues and compounds monthly but is not payable until
maturity. In connection with the transaction, Echelon Residential Holdings
LLC has pledged a security interest in all of its right, title and interest
in and to its membership interests in Echelon Residential LLC to the Exchange
Partnerships as collateral.
26
ADDITIONAL FINANCIAL INFORMATION
AMERICAN INCOME PARTNERS V-A LIMITED PARTNERSHIP
SCHEDULE OF EXCESS (DEFICIENCY) OF TOTAL CASH GENERATED TO COST
OF EQUIPMENT DISPOSED
for the years ended December 31, 1999, 1998 and 1997
The Partnership classifies all rents from leasing equipment as lease
revenue. Upon expiration of the primary lease terms, equipment may be sold,
rented on a month-to-month basis or re-leased for a defined period under a new
or extended lease agreement. The proceeds generated from selling or re-leasing
the equipment, in addition to any month-to-month revenues, represent the total
residual value realized for each item of equipment. Therefore, the financial
statement gain or loss, which reflects the difference between the net book value
of the equipment at the time of sale or disposition and the proceeds realized
upon sale or disposition, may not reflect the aggregate residual proceeds
realized by the Partnership for such equipment.
The following is a summary of cash excess associated with equipment
dispositions occurring in the years ended December 31, 1999, 1998 and 1997:
1999 1998 1997
---- ---- ----
Rents earned prior to disposal of
equipment, net of interest charges $ 4,744,936 $ 616,787 $ 1,800,550
Sale proceeds realized upon
disposition of equipment 1,568,063 19,725 102,027
----------- ----------- -----------
Total cash generated from rents
and equipment sale proceeds 6,312,999 636,512 1,902,577
Original acquisition cost of equipment
disposed 4,817,549 406,571 1,551,218
----------- ----------- -----------
Excess of total cash generated to cost
of equipment disposed $ 1,495,450 $ 229,941 $ 351,359
=========== =========== ===========
27
AMERICAN INCOME PARTNERS V-A LIMITED PARTNERSHIP
STATEMENT OF CASH AND DISTRIBUTABLE CASH FROM OPERATIONS
SALES AND REFINANCINGS
for the year ended December 31,1999
Sales and
Operations Refinancings Total
----------- ----------- -----------
Net income $ 2,378 $ 1,568,063 $ 1,570,441
Add:
Management fees 4,597 -- 4,597
----------- ----------- -----------
Cash from operations, sales and
refinancings 6,975 1,568,063 1,575,038
Less:
Management fees (4,597) -- (4,597)
----------- ----------- -----------
Distributable cash from operations,
sales and refinancings 2,378 1,568,063 1,570,441
Other sources and uses of cash:
Cash at beginning of year 2,448,960 -- 2,448,960
Net change in receivables and
accruals (76,595) -- (76,595)
Less:
Cash distributions paid -- (545,003) (545,003)
----------- ----------- -----------
Cash at end of year $ 2,374,743 $ 1,023,060 $ 3,397,803
=========== =========== ===========
28
AMERICAN INCOME PARTNERS V-A LIMITED PARTNERSHIP
SCHEDULE OF COSTS REIMBURSED TO THE
GENERAL PARTNER AND ITS AFFILIATES AS REQUIRED
BY SECTION 10.4 OF THE AMENDED AND RESTATED
AGREEMENT AND CERTIFICATE OF LIMITED PARTNERSHIP
December 31, 1999
For the year ended December 31, 1999, the Partnership reimbursed the General
Partner and its Affiliates for the following costs:
Operating expenses $ 450,840
29