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, 1996
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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 0-21390
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AFG Investment Trust B
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(Exact name of registrant as specified in its charter)
Delaware 04-3157230
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State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
98 N. Washington St., Fifth Floor,
Boston, MA 02114
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617)854-5800
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Securities registered pursuant to Section 12(b) of the Act NONE
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Title of each class Name of each exchange on which registered
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Securities registered pursuant to Section 12(g) of the Act:
665,494 Trust Beneficiary Interests
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(Title of class)
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(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
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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, 1996 (Part I and II)
AFG Investment Trust B
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 Trust's Securities and Related Security
Holder Matters 6
Item 6. Selected Financial Data 7
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
Item 8. Financial Statements and Supplementary Data 7
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 7
PART III
Item 10. Directors and Executive Officers of the Trust 8
Item 11. Executive Compensation 10
Item 12. Security Ownership of Certain Beneficial Owners
and Management 10
Item 13. Certain Relationships and Related Transactions 11
PART IV
Item 14. Exhibits, Financial Statement Schedules
and Reports on Form 8-K 13-15
2
PART I
Item 1. Business.
(a) General Development of Business
AFG Investment Trust B, (the "Trust") was organized as a Delaware
business trust in accordance with the Delaware Business Trust Act on May 28,
1992 for the purpose of acquiring and leasing to third parties a diversified
portfolio of capital equipment. Participants' capital initially consisted of
contributions of $1,000 from the Managing Trustee, AFG ASIT Corporation,
$1,000 from the Special Beneficiary, Equis Financial Group Limited
Partnership (formerly American Finance Group), a Massachusetts limited
partnership, ("EFG" or the "Advisor") and $100 from the Initial Beneficiary,
AFG Assignor Corporation, a wholly-owned affiliate of EFG. The Trust issued
665,494 Beneficiary Interests to 803 investors on September 8, 1992. The
Trust has one Managing Trustee, AFG ASIT Corporation, a Massachusetts
corporation and affiliate of EFG, and one Special Beneficiary, EFG. The
Managing Trustee and the Special Beneficiary are not required to make any
other capital contributions except as may be required under the Amended and
Restated Declaration of Trust (the "Trust Agreement").
(b) Financial Information About Industry Segments
The Trust 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 Trust 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 Trust's primary investment objectives are to acquire and
lease equipment which will:
1. Generate monthly cash distributions;
2. Preserve and protect Trust capital; and
3. Maximize residual value for ultimate sale.
The Trust has the additional objective of providing certain federal
income tax benefits.
The Closing Date of the offering of Beneficiary Interests was September
8, 1992. Significant operations commenced coincident with the Trust's initial
purchase of equipment and associated lease commitments on September 8, 1992.
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
Trust is expected to terminate by December 31 of the eleventh year following
its Closing Date, or December 31, 2003.
The Trust has no employees; however, it entered into an Advisory
Agreement with EFG. EFG'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 Advisor is compensated for such services
as described in the Trust Agreement, Item 13 herein, and in Note 4 to the
financial statements, included in Item 14, herein.
The Trust'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
3
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 Trust is largely
dependent upon the ability of the Managing Trustee 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
substantially all funds available for acquisitions have been invested in
equipment, subject to noncancellable lease agreements, the Trust will
encounter considerable competition when equipment is re-leased or sold at the
expiration of primary lease terms. The Trust will compete with lease programs
offered directly by manufacturers and other equipment leasing companies,
including business trusts and limited partnerships organized and managed
similarly to the Trust and including other EFG-sponsored partnerships and
trusts, which may seek to re-lease or sell equipment within their own
portfolios to the same customers as the Trust. Many competitors have greater
financial resources and more experience than the Trust, the Managing Trustee
and the Advisor.
The Trust Agreement provided for the reinvestment of Cash From Sales or
Refinancings in additional equipment until September 1996, a period of four
years following Closing. Upon the expiration of each primary lease term, the
Managing Trustee will determine whether to sell or re-lease the Trust's
equipment, depending on the economic advantages of each alternative. Over
time, the Trust will begin to liquidate its portfolio of equipment.
Revenue from major individual lessees which accounted for 10% or more of
lease revenue during the years ended December 31, 1996, 1995 and 1994 is
incorporated herein by reference to Note 2 to the financial statements in the
1996 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 agreement may cause equipment to be
returned to the Trust at a time when the Managing Trustee or the Advisor is
unable to arrange the sale or re-lease of such equipment. This could result
in the loss of a portion of potential lease revenues and weaken the Trust's
ability to repay related indebtedness.
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 Equipment Manager or Advisor to the Trust 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 and Chief Executive Officer. Equis Corporation
also owns a controlling 1% general partner interest in EFG's 99% limited
partner, GDE Acquisition Limited Partnership ("GDE LP"). Equis Corporation
and GDE LP were established in December 1994 by Mr. Engle 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 (the "Buyer"). AFG changed
its name to Equis Financial Group Limited Partnership after the sale was
concluded. Pursuant to terms of the sale agreements, EFG agreed not to
compete with the Buyer's lease origination business for a period of five
years; however, EFG is permitted to originate certain equipment leases,
principally those involving non-investment grade lessees and ocean-going
vessels, which are not in competition with the Buyer. In addition, the sale
agreements specifically reserved to EFG the rights to continue using the name
American Finance Group and its acronym in connection with the Trust and the
Other Investment Programs and to continue managing all assets owned by the
Trust and the Other Investment Programs, including the right to satisfy all
required equipment acquisitions utilizing either brokers or the Buyer.
Geoffrey A. MacDonald, Chairman of Equis Corporation and Gary D. Engle agreed
not to compete with the sold business on terms and conditions similar to
those for the Company.
4
(d) Financial Information About Foreign and Domestic Operations and Export
Not applicable.
Item 2. Properties.
Incorporated herein by reference to Note 3 to the financial statements in
the 1996 Annual Report.
Item 3. Legal Proceedings.
Incorporated herein by reference to Note 7 to the financial statements in
the 1996 Annual Report.
Item 4. Submission of Matters to a Vote of Security Holders.
Incorporated herein by reference to Note 8 to the financial statements in
the 1996 Annual Report.
5
PART II
Item 5. Market for the Trust's Securities and Related Security Holder Matters.
(a) Market Information
There is no public market for the resale of the Interests and it is not
anticipated that a public market for resale of the Interests will develop.
(b) Approximate Number of Security Holders
At December 31, 1996, there were 784 Beneficiaries in the Trust.
(c) Dividend History and Restrictions
Pursuant to Article VIII of the Trust Agreement, the Trust's
Distributable Cash From Operations and Distributable Cash From Sales or
Refinancings (each as defined below) are determined and distributed to the
Trust's Participants monthly. Each monthly distribution may vary in amount.
Currently, there are no restrictions that materially limit the Trust's
ability to distribute Distributable Cash From Operations and Distributable
Cash From Sales or Refinancings or that the Trust believes are likely to
materially limit the future distribution of Distributable Cash From
Operations and Distributable Cash From Sales or Refinancings. The Trust
expects to continue to distribute Distributable Cash From Operations and
Distributable Cash From Sales or Refinancings on a monthly basis.
Distributions in 1996 and 1995 were as follows:
Managing Special
Total Trustee Beneficiary Beneficiaries
-------------- -------------- ------------- -------------
Total 1996
distributions $ 1,039,491 $ 10,395 $ 85,758 $ 943,338
Total 1995
distributions 1,462,987 14,630 120,696 1,327,661
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$ 2,502,478 $ 25,025 $ 206,454 $ 2,270,999
-------------- -------------- ------------- -------------
-------------- -------------- ------------- -------------
Distributions payable at December 31, 1996 and 1995 were $200,199 and
$153,998, respectively.
"Distributable Cash From Operations" means the net cash provided by the
Trust's normal operations after general expenses and current liabilities of
the Trust 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 Trustee, and increased by any portion of such
reserves deemed by the Managing Trustee not to be required for Trust
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 reinvested in additional equipment
in accordance with Sections 4.2(b)(v) and 4.2(b)(vi) of the Trust Agreement,
or (b) the proceeds from the sale of an interest in a joint venture which are
reinvested in additional equipment, (ii) any accrued and unpaid Equipment
Management Fee and Acquisition Fees and Acquisition Expenses paid with
respect to additional equipment acquired through reinvestment of Cash From
Sales or Refinancings in accordance with Section 4.2(b)(v) of the Trust
Agreement and (iii) after Payout, any accrued and unpaid Subordinated Resale
Fees.
6
"Cash From Sales or Refinancings" means cash received by the Trust from
sale or refinancing transactions, as reduced by (i)(a) all debts and
liabilities of the Trust 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 Managing Trustee, but not including any Subordinated Resale Fees whether
or not then due and payable) and (b) general expenses and current liabilities
of the Trust and (c) any reserves for working capital and contingent
liabilities funded from such cash to the extent deemed reasonable by the
Managing Trustee and (ii) increased by any portion of such reserves deemed by
the Managing Trustee not to be required for Trust operations. In the event
the Trust accepts a note in connection with any sale or refinancing
transaction, all payments subsequently received in cash by the Trust with
respect to such note shall be included in Cash From Sales or Refinancings,
regardless of the treatment of such payments by the Trust for tax or
accounting purposes. If the Trust 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 Trust shall be made 90.75% to the
Beneficiaries, 8.25% to the Special Beneficiary and 1% to the Managing
Trustee.
"Payout" is defined as the first time when the aggregate amount of all
distributions to the Beneficiaries of Distributable Cash From Operations and
Distributable Cash From Sales or Refinancings equals the aggregate amount of
the Beneficiaries' original capital contributions plus a cumulative annual
distribution of 10% (compounded quarterly and calculated beginning with the
last day of the month of the Trust'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 Beneficiaries exceed the amount required to
satisfy the cumulative annual distribution of 10% (compounded quarterly) on
the Beneficiaries' aggregate unreturned capital contributions, such
calculation to be based on the aggregate unreturned capital contributions
outstanding on the first day of each month.
Distributable Cash From Operations and Distributable Cash From Sales or
Refinancings ("Distributions") must be distributed within 45 days after the
completion of each calendar month. Each Distribution is described in a
statement sent to the Beneficiaries.
Item 6. Selected Financial Data.
Incorporated herein by reference to the section entitled "Selected
Financial Data" in the 1996 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 1996 Annual Report.
Item 8. Financial Statements and Supplementary Data.
Incorporated herein by reference to the financial statements and
supplementary data included in the 1996 Annual Report.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
None.
7
PART III
Item 10. Directors and Executive Officers of the Trust.
(a-b) Identification of Directors and Executive Officers
The Trust has no Directors or Officers. As indicated in Item 1 of this
report, AFG ASIT Corporation is the Managing Trustee of the Trust. Under the
Trust Agreement, the Managing Trustee is solely responsible for the operation
of the Trust's properties and the Beneficiaries 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 Trustee as of March 15, 1997
are as follows:
DIRECTORS AND EXECUTIVE OFFICERS
OF THE MANAGING TRUSTEE (See Item 13)
Name Title Age Term
- -------------------- --------------------------- --- ---------------
Geoffrey A. MacDonald Chairman and a member Until a
of the Executive Committee successor is
of EFG and President and a duly elected
Director of the Managing and
Trustee 48 qualified
Gary D. Engle President and Chief Executive
Officer and member of the
Executive Committee of EFG
and a Director of the
Managing Trustee 48
Gary M. Romano Executive Vice President and
Chief Operating Officer of
EFG and Clerk of the
Managing Trustee 37
Michael J. Butterfield Vice President, Finance and
Treasurer of EFG and
Treasurer of the Managing
Trustee 37
James A. Coyne Senior Vice President of
EFG and Vice President of
the Managing Trustee 36
James F. Livesey Vice President, Aircraft
and Vessels of EFG 47
Sandra L. Simonsen Senior Vice President,
Information Systems of EFG 46
Gail D. Ofgant Vice President, Lease
Operations of EFG 31
(c) Identification of Certain Significant Persons
None.
(d) Family Relationship
No family relationship exists among any of the foregoing Directors or
Executive Officers.
8
(e) Business Experience
Mr. MacDonald, age 48, is a co-founder, Chairman and a member of the
Executive Committee of EFG and President and a Director of the Managing
Trustee. Mr. MacDonald was also a co-founder, Director and Senior Vice
President of EFG's predecessor corporation from 1980 to 1988. Mr. MacDonald
is Vice President of American Finance Group Securities Corp. and a limited
partner in Atlantic Acquisition Limited Partnership ("AALP"). Prior to
co-founding EFG's predecessors, 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 48, is President and Chief Executive Officer and a member
of the Executive Committee of EFG and President of AFG Realty Corporation.
Mr. Engle is Vice President and a Director of certain of EFG's affiliates and
a Director of the Managing Trustee. On December 16, 1994, Mr. Engle acquired
control of the Managing Trustee, EFG and each of EFG's subsidiaries. Mr.
Engle controls the general partner of AALP and is also a limited partner in
AALP. From 1987 to 1990, Mr. Engle was a principal and co-founder of Cobb
Partners Development, Inc., a real estate and mortgage banking company. From
1980 to 1987, Mr. Engle was Senior Vice President and Chief Financial Officer
of Arvida Disney Company, a large scale community development company owned
by Walt Disney Company. Prior to 1980, Mr. Engle served in various management
consulting and institutional brokerage capacities. Mr. Engle has an M.B.A.
from Harvard University and a B.S. degree from the University of
Massachusetts (Amherst).
Mr. Romano, age 37, is Executive Vice President and Chief Operating
Officer of EFG and certain of its affiliates and Clerk of the Managing
Trustee. Mr. Romano joined EFG in November 1989 and was appointed Executive
Vice President and Chief Operating Officer in April 1996. Prior to joining
EFG, Mr. Romano was Assistant Controller for a privately-held real estate
company which he joined in 1987. Mr. Romano held audit staff and manager
positions at Ernst & Whinney (now Ernst & Young LLP) from 1982 to 1986. Mr.
Romano is a C.P.A. and holds a B.S. degree from Boston College.
Mr. Butterfield, age 37, joined EFG in June 1992 and was appointed Vice
President, Finance and Treasurer of EFG and certain affiliates in April 1996,
and is Treasurer of the Managing Trustee. Prior to joining EFG, Mr.
Butterfield was an Audit Manager with Ernst & Young LLP, which he joined in
1987. Mr. Butterfield was employed in public accounting and industry
positions in New Zealand and London (U.K.) prior to coming to the United
States in 1987. Mr. Butterfield attained his Associate Chartered Accountant
(A.C.A.) professional qualification in New Zealand and has completed his
C.P.A. requirements in the United States. He holds a Bachelor of Commerce
degree from the University of Otago, Dunedin, New Zealand.
Mr. Coyne, age 36, is Senior Vice President of EFG. Mr. Coyne joined EFG
in 1989, remained until May 1993, and rejoined EFG in November 1994. From May
1993 through November 1994, he was with the Raymond Company, a private
investment firm, where he was responsible for financing corporate and real
estate acquisitions. From 1985 through 1989, Mr. Coyne was affiliated with a
real estate investment company and an equipment leasing company. Prior to
1985 he was with the accounting firm of Ernst & Whinney (now Ernst & Young
LLP). He has a BS in Business Administration from John Carroll University, a
Masters Degree in Accounting from Case Western Reserve University and is a
Certified Public Accountant.
Mr. Livesey, age 47, is Vice President, Aircraft and Vessels. Mr. Livesey
joined EFG in October, 1989, and was promoted to Vice President in January
1992. Prior to joining EFG, Mr. Livesey held sales and marketing positions
with two privately-held leasing firms. Mr. Livesey holds an M.B.A. from
Boston College and B.A. degree from Stonehill College.
Ms. Simonsen, age 46, joined EFG in February 1990. She became Senior Vice
President, Information Systems in April 1996. Prior to joining EFG, Ms.
Simonsen was Vice President, Information Systems with Investors Mortgage
Insurance Company which she joined in 1973. Ms. Simonsen provided systems
consulting for a subsidiary of American International Group and authored a
software program published by IBM. Ms. Simonsen holds a B.A. degree from
Wilson College.
9
Ms. Ofgant, age 31, joined EFG in July 1989, and is currently Vice
President, Lease Operations. Ms. Ofgant held the position of Manager, Lease
Operations at EFG through March, 1996. Prior to joining EFG, Ms. Ofgant was
employed by Security Pacific National Trust Company. Ms. Ofgant holds a BS
Degree in Finance from Providence College.
(f) Involvement in Certain Legal Proceedings
None.
(g) Promoters and Control Persons
See Item 10 (a-b) above.
Item 11. Executive Compensation.
(a) Cash Compensation
Currently, the Trust has no employees. However, under the terms of the
Trust Agreement, the Trust is obligated to pay all costs of personnel
employed full or part-time by the Trust, including officers or employees of
the Managing Trustee or its Affiliates. There is no plan at the present time
to make any officers or employees of the Managing Trustee or its Affiliates
employees of the Trust. The Trust has not paid and does not propose to pay
any options, warrants or rights to the officers or employees of the Managing
Trustee or its Affiliates.
(b) Compensation Pursuant to Plans
None.
(c) Other Compensation
Although the Trust has no employees, as discussed in Item 11(a), pursuant
to section 10.4(c) of the Trust Agreement, the Trust incurs a monthly charge
for personnel costs of EFG for persons engaged in providing administrative
services to the Trust. A description of the remuneration paid by the Trust to
the Managing Trustee and its Affiliates for such services is included in Item
13 of this report 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 Managing
Trustee 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 trust, the Trust has outstanding no
securities possessing traditional voting rights. However, as provided in
Section 11.2(a) of the Trust Agreement (subject to Section 11.2(b)), a
majority interest of the Beneficiaries have voting rights with respect to:
1. Amendment of the Trust Agreement;
2. Termination of the Trust;
10
3. Removal of the Managing Trustee; and
4. Approval or disapproval of the sale of all or substantially all of the
assets of the Trust (except in the orderly liquidation of the Trust upon its
termination and dissolution).
No person or group is known by the Managing Trustee to own beneficially
more than 5% of the Trust's 665,494 outstanding Interests as of March 1, 1997.
The ownership and organization of EFG is described in Item 1 of this report.
Item 13. Certain Relationships and Related Transactions.
The Managing Trustee of the Trust is AFG ASIT Corporation, an affiliate
of EFG.
(a) Transactions with Management and Others
All operating expenses incurred by the Trust are paid by EFG on behalf of
the Trust and EFG is reimbursed at its actual cost for such expenditures.
Fees and other costs incurred during the years ended December 31, 1996, 1995
and 1994, which were paid or accrued by the Trust to EFG or its Affiliates,
are as follows:
1996 1995 1994
---------- ---------- ----------
Equipment acquisition fees $ 36,673 $ 107,415 $ 147,800
Equipment management fees 249,205 244,800 188,998
Administrative charges 42,123 21,000 12,000
Reimbursable operating expenses
due to third parties 98,758 100,358 57,179
Interest on notes payable--affiliate -- -- 441
---------- ---------- ----------
Total $ 426,759 $ 473,573 $ 406,418
---------- ---------- ----------
---------- ---------- ----------
As provided under the terms of the Trust Agreement, EFG is compensated
for its services to the Trust. Such services include all aspects of
acquisition, management and sale of equipment. For acquisition services, EFG
is compensated by an amount equal to .28% of Asset Base Price paid by the
Trust. For acquisition services resulting from reinvestment, EFG is
compensated by an amount equal to 3% of Equipment Base Price paid by the
Trust. For management services, EFG is compensated by an amount equal to the
lesser of (i) 5% of gross operating lease rental revenue and 2% of gross full
payout lease rental revenue received by the Trust or (ii) fees which the
Managing Trustee reasonably believes to be competitive for similar services
for similar equipment. Both of these fees are subject to certain limitations
defined in the Trust Agreement. Compensation to EFG for services connected to
the remarketing 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
Trust Agreement.
Administrative charges represent amounts owed to EFG, pursuant to Section
10.4(c) of the Trust Agreement, for persons employed by EFG who are engaged
in providing administrative services to the Trust. Reimbursable operating
expenses due to third parties represent costs paid by EFG on behalf of the
Trust which are reimbursed to EFG.
All equipment was purchased from EFG or directly from external vendors.
The Trust's Purchase Price is determined by the method described in Note 2 to
the Trust's financial statements included in Item 14, herein.
All rents and proceeds from the sale of equipment are paid directly to
either EFG or to a lender. EFG temporarily deposits collected funds in a
11
separate interest-bearing escrow account prior to remittance to the Trust. At
December 31, 1996, the Trust was owed $154,395 by EFG for such funds and the
interest thereon. These funds were remitted to the Trust in January 1997.
(b) Certain Business Relationships
None.
(c) Indebtedness of Management to the Trust
None.
(d) Transactions with Promoters
See Item 13(a) above.
12
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, 1996 and 1995 *
Statement of Operations
for the years ended December 31, 1996, 1995 and 1994 *
Statement of Changes in Participants' Capital
for the years ended December 31, 1996, 1995 and 1994 *
Statement of Cash Flows
for the years ended December 31, 1996, 1995 and 1994 *
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 Declaration of Trust included as
Exhibit A to the Prospectus which is included in
Registration Statement on Form S-1 (No. 33-42946).
13 The 1996 Annual Report to security holders, a copy of which
is furnished for the information of the Securities and
Exchange Commission. Such Report, except for those portions
thereof which are incorporated herein by reference, is not
deemed "filed" with the Commission.
23 Consent of Independent Auditors.
99 (a) Lease agreement with OMI 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.
* Incorporated herein by reference to the appropriate portion of the 1996
Annual Report to security holders for the year ended December 31, 1996. (See
Part II)
13
Exhibit
Number
-----------
99 (b) Lease agreement with Alaska Airlines, 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.
99 (c) Lease agreement with Tarmac Mid-Atlantic, Incorporated was
filed in the Registrant's Annual Report on Form 10-K for
the year ended December 31, 1993 as Exhibit 28 (g) and is
incorporated herein by reference.
(b) Reports on Form 8-K
None.
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Exhibit 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report (Form
10-K) of AFG Investment Trust B of our report dated March 14, 1997, included
in the 1996 Annual Report to the Participants of AFG Investment Trust B.
ERNST & YOUNG LLP
Boston, Massachusetts
March 14, 1997
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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.
AFG Investment Trust B
By: AFG ASIT Corporation,
A Massachusetts corporation and the
Managing Trustee of the Registrant.
By: /s/Geoffrey A. MacDonald By: /s/ Gary D. Engle
-------------------------- -------------------------------
Geoffrey A. MacDonald Gary D. Engle
Chairman and a member of the President and Chief Executive
Executive Committee of EFG Officer and a member of the
and President and a Director of Executive Committee of EFG and a
the Managing Trustee Director of the Managing Trustee
(Principal Executive Officer)
Date: March 00,1997 Date: March 00, 1997
-------------------------- -----------------------------
By: /s/Gary M. Romano By: /s/ Michael J. Butterfield
-------------------------- -------------------------------
Gary M. Romano Michael J. Butterfield
Executive Vice President and Chief Vice President, Finance and
Operating Officer of EPG and Clerk Treasurer of EFG and Treasurer
of the Managing Trustee of the Managing Trustee
(Principal Financial Officer) (Principal Accounting Officer)
Date: March 00,1997 Date: March 00, 1997
-------------------------- -----------------------------
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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 Beneficiaries. A report will be
furnished to the Beneficiaries subsequent to the date hereof.
No proxy statement has been or will be sent to the Beneficiaries.
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