-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, N7fhgjRwOGiJgWinH2evkBbsOkqHvTJCDNotLlSJtCTA2UhH+ehhZ3BqvCzOSYLM Qt9NDXNHCfTJQnsnOX87ew== 0000814677-99-000012.txt : 19991224 0000814677-99-000012.hdr.sgml : 19991224 ACCESSION NUMBER: 0000814677-99-000012 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991223 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PLM INTERNATIONAL INC CENTRAL INDEX KEY: 0000814677 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EQUIPMENT RENTAL & LEASING, NEC [7359] IRS NUMBER: 943041257 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: SEC FILE NUMBER: 001-09670 FILM NUMBER: 99780003 BUSINESS ADDRESS: STREET 1: STEUART ST TOWER STE 800 STREET 2: ONE MARKET PLZ CITY: SAN FRANCISCO STATE: CA ZIP: 94105 BUSINESS PHONE: 4159741399 10-Q/A 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------------------------------- FORM 10-Q/A [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL QUARTER ENDED SEPTEMBER 30, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO COMMISSION FILE NUMBER 1-9670 ------------------------------- PLM INTERNATIONAL, INC. (Exact name of registrant as specified in its charter) DELAWARE 94-3041257 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) ONE MARKET, STEUART STREET TOWER, SUITE 800, SAN FRANCISCO, CA 94105-1301 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (415) 974-1399 ---------------------------------------------------------------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: common stock - $.01 par value; outstanding as of December 22, 1999 - 7,803,995 shares. PLM INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF INCOME (in thousands of dollars, except per share amounts)
For the Three Months For the Nine Months Ended September 30, Ended September 30, 1999 1998 1999 1998 ------------------------------------------------------------- REVENUES Operating lease income $ 9,783 $ 5,390 $ 23,453 $ 14,734 Finance lease income 2,700 3,535 8,588 9,229 Management fees 2,137 2,550 6,776 7,649 Partnership interests and other fees 263 61 579 742 Acquisition and lease negotiation fees -- 872 1,079 3,083 Gain on the sale or disposition of assets, net 429 1,308 2,059 3,603 Aircraft brokerage and services -- 204 -- 1,090 Other 832 1,003 2,622 2,645 -------------------------------------------------------------- Total revenues 16,144 14,923 45,156 42,775 -------------------------------------------------------------- COSTS AND EXPENSES Operations support 5,416 4,451 14,018 12,917 Depreciation and amortization 4,321 2,844 11,383 8,891 General and administrative 1,322 2,003 4,851 6,174 -------------------------------------------------------------- Total costs and expenses 11,059 9,298 30,252 27,982 -------------------------------------------------------------- Operating income 5,085 5,625 14,904 14,793 Interest expense (3,742) (3,989) (11,249) (10,663) Interest income 204 518 680 1,212 Other income (expenses), net 700 15 (398) 478 ------------------------------------------------------------- Income before income taxes 2,247 2,169 3,937 5,820 Provision for income taxes 870 807 1,543 2,274 ------------------------------------------------------------- Net income before cumulative effect of accounting change 1,377 1,362 2,394 3,546 Cumulative effect of accounting change -- -- (236) -- ------------------------------------------------------------- Net income to common shares $ 1,377 $ 1,362 $ 2,158 $ 3,546 ============================================================== Basic earnings per weighted-average common share outstanding $ 0.17 $ 0.16 $ 0.27 $ 0.42 ============================================================== Diluted earnings per weighted-average common share outstanding $ 0.17 $ 0.16 $ 0.26 $ 0.41 ==============================================================
See accompanying notes to these consolidated financial statements. PLM INTERNATIONAL, INC. CONSOLIDATED BALANCE SHEETS (in thousands of dollars, except share amounts) ASSETS
September 30, December 31, 1999 1998 ---------------------------------------- Cash and cash equivalents $ 2,675 $ 8,786 Receivables (net of allowance for doubtful accounts of $0.7 million as of September 30, 1999 and $0.4 million as of December 31, 1998) 8,499 7,282 Receivables from affiliates 3,213 2,944 Investment in direct finance leases, net 120,548 145,088 Loan receivable 23,445 23,493 Equity interest in affiliates 19,743 22,588 Assets held for sale 8,004 -- Trailers held for operating leases 97,344 63,044 Less accumulated depreciation (19,304) (15,516) ------------------------------------------- 78,040 47,528 Commercial and industrial equipment held for operating leases 30,411 24,520 Less accumulated depreciation (10,773) (7,831) ------------------------------------------- 19,638 16,689 Restricted cash and cash equivalents 10,018 10,349 Other, net 5,773 7,322 ------------------------------------------- Total assets $ 299,596 $ 292,069 =========================================== LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Short term warehouse facilities $ 27,700 $ 34,420 Senior secured notes 22,559 28,199 Senior secured loan 10,294 14,706 Other secured debt 40,420 13,142 Nonrecourse securitized debt 110,679 111,222 Payables and other liabilities 13,907 21,768 Deferred income taxes 23,042 18,415 ------------------------------------------- Total liabilities 248,601 241,872 Shareholders' equity: Common stock ($.01 par value, 50,000,000 shares authorized, 7,977,974 issued and outstanding as of September 30, 1999 and 8,159,919 as of December 31, 1998) 112 112 Paid-in capital, in excess of par 75,057 74,947 Treasury stock (4,057,781 shares as of September 30, 1999 and 3,875,836 shares as of December 31, 1998) (16,542) (15,072) Accumulated deficit (7,632) (9,790) -------------------------------------------- Total shareholders' equity 50,995 50,197 ------------------------------------------- Total liabilities and shareholders' equity $ 299,596 $ 292,069 ===========================================
See accompanying notes to these consolidated financial statements. PLM INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME For the Year Ended December 31, 1998 and the Nine Months Ended September 30, 1999 (in thousands of dollars)
Accumulated Common Stock Deficit & ------------------------------------------- Paid-in Accumulated At Capital in Other Total Par Excess Treasury Comprehensive Comprehensive Shareholders' of Par Stock Income Income Equity ----------------------------------------------------------------------------------------------- Balances, December 31, 1997 $ 112 $ 74,650 $ (13,435) $ (14,779) $ 46,548 Comprehensive income Net income 4,857 $ 4,857 4,857 Other comprehensive income: Foreign currency translation income 132 132 132 ================= Comprehensive income $ 4,989 ================= Exercise of stock options 218 211 429 Common stock repurchases (2,059) (2,059) Reissuance of treasury stock 79 211 290 ------------------------------------------------------ ------------ Balances, December 31, 1998 112 74,947 (15,072) (9,790) 50,197 Comprehensive income Net income 2,158 $ 2,158 2,158 ================= Exercise of stock options 9 570 579 Common stock repurchases (2,149) (2,149) Reissuance of treasury stock, net 101 109 210 ---------------------------------------------------------- -------------- Balances, September 30, 1999 $ 112 $ 75,057 $ (16,542) $ (7,632) $ 50,995 =========================================================== ==============
See accompanying notes to these consolidated financial statements. PLM INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands of dollars)
For the Nine Months Ended September 30, 1999 1998 -------------------------------- OPERATING ACTIVITIES Net income $ 2,158 $ 3,546 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 11,383 8,891 Cumulative effect of accounting change, net of tax of $165 236 -- Write off of costs associated with initial public offering of AFG 975 -- Foreign currency translation -- (80) Deferred income tax expense (benefit) 4,627 2,576 Gain on sale or disposition of assets, net (2,059) (3,603) Loss on sale of investment in subsidiary -- 245 Undistributed residual value interests 716 1,032 Minority interest in net loss of subsidiaries -- (100) Increase (decrease) in payables and other liabilities (1,643) (3,351) (Increase) decrease in receivables and receivables from affiliates (1,486) 1,555 Amortization of organization and offering costs 2,129 2,129 (Increase) decrease in other assets (124) 438 --------------------------------- Net cash provided by operating activities 16,912 13,278 --------------------------------- INVESTING ACTIVITIES Principal payments received on finance leases 25,813 23,115 Principal payments received on loans 6,185 3,511 Investment in direct finance leases (34,791) (108,522) Investment in loans receivable (6,137) (19,659) Purchase of property, plant, and equipment (512) (199) Purchase of transportation equipment and capital improvements (57,985) (41,849) Purchase of commercial and industrial equipment held for operating lease (20,283) (22,543) Proceeds from the sale of transportation equipment for lease 394 6,150 Proceeds from the sale of assets held for sale 13,801 22,366 Proceeds from the sale of commercial and industrial equipment on finance lease 24,973 30,756 Proceeds from the sale of commercial and industrial equipment on operating lease 16,753 25,859 Sale of investment in subsidiary -- 176 Decrease in restricted cash and restricted cash equivalents 331 8,183 -------------------------------- Net cash used in investing activities (31,458) (72,656) (continued)
PLM INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands of dollars)
For the Nine Months Ended September 30, 1999 1998 -------------------------------- FINANCING ACTIVITIES Borrowings of short-term warehouse credit facilities $ 77,128 $ 122,945 Repayment of short-term warehouse credit facilities (83,848) (101,485) Borrowings of senior secured notes -- 5,000 Repayment of senior secured notes (5,640) (3,765) Repayment of senior secured loan (4,412) (4,412) Borrowings of other secured debt 28,570 173 Repayment of other secured debt (1,292) (114) Borrowings of nonrecourse securitized debt 41,705 64,578 Repayment of nonrecourse securitized debt (42,248) (21,783) Proceeds from exercise of stock options 579 411 Reissuance of treasury stock, net 42 -- Purchase of stock (2,149) (1,017) -------------------------------- Net cash provided by financing activities 8,435 60,531 -------------------------------- Net (decrease) increase in cash and cash equivalents (6,111) 1,153 Cash and cash equivalents at beginning of period 8,786 5,224 ================================ Cash and cash equivalents at end of period $ 2,675 $ 6,377 ================================ SUPPLEMENTAL INFORMATION Net cash paid for interest $ 11,777 $ 10,171 =============================== Net cash paid for income taxes $ 212 $ 1,529 ===============================
See accompanying notes to these consolidated financial statements. PLM INTERNATIONAL, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 1999 1. GENERAL In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary, consisting primarily of normal recurring accruals, to present fairly PLM International, Inc. and its wholly- and majority-owned subsidiaries (the Company's) financial position as of September 30, 1999 and December 31, 1998, statements of income for the three and nine months ended September 30, 1999 and 1998, statements of changes in shareholders' equity and comprehensive income for the year ended December 31, 1998 and the nine months ended September 30, 1999 and statements of cash flows for the nine months ended September 30, 1999 and 1998. Certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted from the accompanying consolidated financial statements. For further information, reference should be made to the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1998, on file with the Securities and Exchange Commission. 2. RECLASSIFICATIONS Certain prior-period amounts have been reclassified to conform to the current period's presentation. 3. FINANCING TRANSACTION ACTIVITIES American Finance Group, Inc., originates and manages lease and loan transactions on primarily new commercial and industrial equipment that is financed by nonrecourse securitized debt for the Company's own account or sold to unaffiliated investors. The Company uses one of its warehouse credit facilities to finance the acquisition of these assets prior to permanent financing by nonrecourse securitized debt or sale. The majority of these transactions are accounted for as direct finance leases, while some transactions qualify as operating leases or loans. During the nine months ended September 30, 1999, the Company funded $34.8 million in equipment that was placed on finance lease. Also during the nine months ended September 30, 1999, the Company sold equipment on finance lease with an original equipment cost of $40.5 million, resulting in a net gain of $0.4 million. During the nine months ended September 30, 1999, the Company funded $6.1 million in loans to customers. 4. EQUIPMENT Equipment held for operating lease includes trailers and commercial and industrial equipment that is depreciated on the straight-line method down to the equipment's estimated salvage value. During the nine months ended September 30, 1999, the Company funded $20.3 million in commercial and industrial equipment that was placed on operating lease. During the nine months ended September 30, 1999, the Company sold commercial and industrial equipment that was on operating lease for a net gain of $1.7 million. During the first nine months of 1999, the Company purchased trailers for $36.2 million and sold trailers with a net book value of $0.4 million for $0.4 million. The Company classifies equipment as held for sale if the particular asset is subject to a pending contract for sale or is held for sale to an affiliated program. Equipment held for sale is valued at the lower of the depreciated cost or the fair value less costs to sell. During the first nine months of 1999, the Company 4. EQUIPMENT (continued) purchased marine containers for $21.8 million, and sold marine containers for $13.8 million to affiliated programs at cost, which approximated their fair market value. As of September 30, 1999, the Company held marine containers with a net book value of $8.0 million for sale to affiliated programs. As of December 31, 1998, the Company had no equipment held for sale. 5. DEBT The Company has warehouse credit facilities for PLM Financial Services, Inc. (FSI) and AFG. FSI has a $24.5 million warehouse credit facility to be used to acquire assets on an interim basis prior to sale to affiliated programs or unaffiliated third parties, and to purchase trailers prior to obtaining permanent financing. FSI's facility is shared with PLM Equipment Growth Fund VI, PLM Equipment Growth & Income Fund VII, and Professional Lease Management Income Fund I, LLC. Borrowings under this facility by the other eligible borrowers reduce the amount available to be borrowed by the Company. All borrowings under this facility are guaranteed by the Company. AFG has a $60.0 million warehouse credit facility to be used to acquire assets on an interim basis prior to placement in the Company's nonrecourse securitization facility or sale to unaffiliated third parties. These facilities expire on December 14, 1999. The Company believes it will be able to renew these facilities on substantially the same terms upon expiration. As of September 30, 1999, FSI and PLM Equipment Growth Fund VI had $7.6 million and $1.0 million in borrowings outstanding on the $24.5 million facility and there were no other borrowings outstanding on the facility by any of the other eligible borrowers. As of September 30, 1999, AFG had $20.1 million in borrowings outstanding on its $60.0 million facility. The Company has available a nonrecourse securitization facility to be used to acquire assets by AFG, secured by direct finance leases, operating leases, and loans on commercial and industrial equipment that generally have terms from one to seven years. The facility allowed the Company to borrow up to $150.0 million through October 12, 1999. In October 1999, this facility was amended to extend the facility through October 10, 2000 and reduce the amount available to be borrowed to $125.0 million. Repayment of the facility matches the terms of the underlying leases. As of September 30, 1999, there were $105.5 million in borrowings under this facility. The Company is required to hedge the interest rate exposure to the Company on at least 90% of the aggregate discounted lease balance (ADLB) of those leases and loans used as collateral in its nonrecourse securitization facility. As of September 30, 1999, 90% of the ADLB had been hedged. During the first nine months of 1999, the Company made principal payments of $2.4 million on its nonrecourse notes payable remaining. As of September 30, 1999, the Company had $5.2 million in nonrecourse notes payable. Principal and interest on the notes are due monthly beginning April 1998 through March 2001. The notes bear interest ranging from 8.32% to 9.5% per annum and are secured by direct finance leases for commercial and industrial equipment that have terms corresponding to the repayment of the notes. In the second quarter of 1999, the Company entered into a $15.0 million credit facility loan agreement bearing interest at LIBOR plus 1.5%. This facility allows the Company to borrow up to $15.0 million within a one-year period. As of September 30, 1999, the Company had borrowed $8.6 million under this facility. Principal payments of $0.1 million are due quarterly beginning August 2000, with a final payment of $1.4 million due August 2006. During the first nine months of 1999, the Company entered into four $5.0 million debt agreements bearing interest at 6.20%, 6.81%, 6.90%, and 7.05%, respectively, each with payments of $0.1 million due monthly through 2006, with a final payment of $1.3 million, $1.3 million, $1.3 million, and $1.2 million, respectively, due in 2006, secured by certain trailer equipment. In return for favorable financing terms, these agreements give beneficial tax treatment in these secured trailers to the lenders. During the first nine months of 1999, the Company repaid $4.4 million of the senior secured loan, $5.6 million of the senior secured notes, and $1.3 million of the other secured debt, in accordance with the debt repayment schedules. 6. SHAREHOLDERS' EQUITY During the first nine months of 1999, the Company repurchased 359,215 shares of the Company's common stock for $2.1 million, under the $5.0 million common stock repurchase program authorized by the Company's Board of Directors in December 1998. As of September 30, 1999, 422,515 shares had been repurchased under this plan, for a total of $2.5 million. During the nine months ended September 30, 1999, 27,486 shares were issued from treasury stock as part of the senior management bonus program (net of forfeited shares), 6,784 shares were issued from treasury stock as a stock grant, and 143,000 shares were issued for the exercise of stock options. Consequently, the total common shares outstanding decreased to 7,977,974 as of September 30, 1999 from the 8,159,919 outstanding as of December 31, 1998. Net income per basic weighted-average common share outstanding was computed by dividing net income to common shares by the weighted-average number of shares deemed outstanding during the period. The weighted-average number of shares deemed outstanding for the basic earnings per share calculation during the three months ended September 30, 1999 was 8,061,551 and during the three months ended September 30, 1998 was 8,356,102. The weighted-average number of shares deemed outstanding for the basic earnings per share calculation during the nine months ended September 30, 1999 was 8,097,489, and during the nine months ended September 30, 1998 was 8,358,214. The weighted-average number of shares deemed outstanding, including potentially dilutive common shares, for the diluted earnings per weighted-average share calculation during the three months ended September 30, 1999 was 8,137,547, and during the three months ended September 30, 1998 was 8,503,075. The weighted-average number of shares deemed outstanding, including potentially dilutive common shares, for the diluted earnings per weighted-average share calculation during the nine months ended September 30, 1999 was 8,204,268, and during the nine months ended September 30, 1998 was 8,518,381. 7. LEGAL MATTERS The Company and various of its wholly-owned subsidiaries are named as defendants in a lawsuit filed as a purported class action in January 1997 in the Circuit Court of Mobile County, Mobile, Alabama, Case No. CV-97-251 (the Koch action). Plaintiffs, who filed the complaint on their own and on behalf of all class members similarly situated, are six individuals who invested in certain California limited partnerships for which the Company's wholly-owned subsidiary, PLM Financial Services, Inc. (FSI), acts as the general partner, including PLM Equipment Growth Fund IV (Fund IV), PLM Equipment Growth Fund V (Fund V), PLM Equipment Growth Fund VI (Fund VI), and PLM Equipment Growth & Income Fund VII (Fund VII) (the Partnerships). The complaint asserts eight causes of action against all defendants, as follows: fraud and deceit, suppression, negligent misrepresentation and suppression, intentional breach of fiduciary duty, negligent breach of fiduciary duty, unjust enrichment, conversion, and conspiracy. Plaintiffs allege that each defendant owed plaintiffs and the class certain duties due to their status as fiduciaries, financial advisors, agents, and control persons. Based on these duties, plaintiffs assert liability against defendants for improper sales and marketing practices, mismanagement of the Partnerships, and concealing such mismanagement from investors in the Partnerships. Plaintiffs seek unspecified compensatory and recissory damages, as well as punitive damages, and have offered to tender their limited partnership units back to the defendants. In March 1997, the defendants removed the Koch action from the state court to the United States District Court for the Southern District of Alabama, Southern Division (Civil Action No. 97-0177-BH-C) (the court) based on the court's diversity jurisdiction, and the court denied plaintiffs' motion to remand, which denial was upheld on appeal. In December 1997, the court granted defendants motion to compel arbitration of the named plaintiffs' claims, based on an agreement to arbitrate contained in the limited partnership agreement of each Partnership. Plaintiffs appealed this decision, but in June 1998 voluntarily dismissed their appeal pending settlement of the Koch action, as discussed below. In June 1997, the Company and the affiliates who are also defendants in the Koch action were named as defendants in another purported class action filed in the San Francisco Superior Court, San Francisco, 7. LEGAL MATTERS (Continued) California, Case No. 987062 (the Romei action). The plaintiff is an investor in Fund V, and filed the complaint on her own behalf and on behalf of all class members similarly situated who invested in certain California limited partnerships for which FSI acts as the general partner, including the Partnerships. The complaint (as amended in August 1997) alleges the same facts and the same nine causes of action as in the Koch action, plus additional causes of action against all of the defendants, including alleged unfair and deceptive practices, constructive fraud, unjust enrichment, a claim for treble damages and violations of the California Securities Law of 1968. In July 1997, defendants filed with the district court for the Northern District of California (Case No. C-97-2847 WHO) a petition (the petition) under the Federal Arbitration Act seeking to compel arbitration of plaintiff's claims and for an order staying the state court proceedings pending the outcome of the arbitration. In October 1997, the district court denied the Company's petition to compel arbitration, but in November 1997, agreed to hear the Company's motion for reconsideration of this order. The hearing on this motion has been taken off calendar and the district court has dismissed the petition pending settlement of the Romei action, as discussed below. The state court action continues to be stayed pending such resolution. In May 1998, all parties to the Koch and Romei actions entered into a memorandum of understanding related to the settlement of those actions (the monetary settlement), following which the parties agreed to an additional equitable settlement (the equitable settlement). The terms of the monetary settlement and the equitable settlement are contained in a Stipulation of Settlement that was filed with the court. The monetary settlement provides for a settlement and release of all claims against defendants in exchange for payment for the benefit of the class of up to $6.0 million. The final settlement amount will depend on the number of claims filed by authorized claimants who are members of the class, the amount of the administrative costs incurred in connection with the settlement, and the amount of attorneys' fees awarded by the court. The Company will pay up to $0.3 million of the monetary settlement, with the remainder being funded by an insurance policy. The equitable settlement provides, among other things: (a) for the extension of the operating lives of Funds V, VI, and VII by judicial amendment to each of their partnership agreements, such that FSI, the general partner of each such partnership, be permitted to reinvest partnership funds in additional equipment into the year 2004, and will liquidate the partnerships' equipment in 2006; (b) that FSI is entitled to earn front-end fees (including acquisition and lease negotiation fees) up to 20% in excess of the compensatory limitations set forth in the North American Securities Administrator's Association's Statement of Policy; (c) for a one-time repurchase of up to 10% of the outstanding units of Funds V, VI, and VII by the respective partnership at 80% of such partnership's net asset value; and (d) for the deferral of a portion of FSI's management fees until such time as certain performance thresholds have, if ever, been met by the partnerships. The equitable settlement also provides for payment of the equitable class attorneys' fees from partnership funds in the event, if ever, that distributions paid to investors in Funds V, VI, and VII during the extension period reach a certain internal rate of return. Defendants will continue to deny each of the claims and contentions and admit no liability in connection with the monetary and equitable settlements. The court, among other things, preliminarily approved the monetary and equitable settlements in June 1999, and set a final fairness hearing for November 16, 1999. For settlement purposes, the monetary settlement class (the monetary class) consists of all investors, limited partners, assignees, or unit holders who purchased or received by way of transfer or assignment any units in the Partnerships between May 23, 1989 and June 29, 1999. The equitable settlement class (the equitable class) consists of all investors, limited partners, assignees or unit holders who on June 29, 1999 held any units in Funds V, VI, and VII, and their assigns and successors in interest. The monetary settlement remains subject to certain conditions, including but not limited to notice to the monetary class for purposes of the monetary settlement and final approval of the monetary settlement by the court following a final fairness hearing. The equitable settlement remains subject to numerous conditions, including but not limited to: (a) notice to the equitable class, (b) review and clearance by the SEC, and dissemination to the members of the equitable class, of solicitation statements regarding the proposed extensions, (c) disapproval by less than 50% of the limited partners in Funds V, VI, and VII of 7. LEGAL MATTERS (Continued) the proposed amendments to the limited partnership agreements, (d) judicial approval of the proposed amendments to the limited partnership agreements, and (e) final approval of the equitable settlement by the court following a final fairness hearing. The monetary settlement, if approved, will go forward regardless of whether the equitable settlement is approved or not. The Company continues to believe that the allegations of the Koch and Romei actions are completely without merit and intends to continue to defend this matter vigorously if the monetary settlement is not consummated. The Company is involved as plaintiff or defendant in various other legal actions incidental to its business. Management does not believe that any of these actions will be material to the financial condition of the Company. 8. PURCHASE COMMITMENTS As of September 30, 1999, the Company had committed to purchase $16.3 million of equipment for its commercial and industrial lease and finance receivable portfolio. From October 1, 1999 to October 28, 1999, the Company funded $4.4 million of the commitments outstanding as of September 30, 1999 for its commercial and industrial lease and finance receivable portfolio. As of October 28, 1999, the Company had committed to purchase $14.5 million of equipment for its commercial and industrial lease and finance receivable portfolio. As of September 30, 1999, the Company had committed to purchase $10.0 million of marine containers. As of September 30, 1999, the Company had accrued $3.4 million for marine containers, which the Company has taken delivery of and the Company had classified these containers as assets held for sale. 9. OPERATING SEGMENTS The Company operates in three operating segments: trailer leasing, commercial and industrial equipment leasing and financing, and the management of investment programs and other transportation equipment leasing. The trailer leasing segment includes 22 trailer rental facilities that engage in short to mid-term operating leases of refrigerated and dry van trailers to a variety of customers and management of trailers for the investment programs. The management of investment programs and other transportation equipment leasing segment involves managing its syndicated investment programs, from which it earns fees and equity interests, and arranging short to mid-term operating leases of other transportation equipment. The commercial and industrial equipment leasing and financing segment originates finance and operating leases and loans on commercial and industrial equipment that is financed through a securitization facility, brokers equipment, and manages institutional programs owning commercial and industrial equipment. The Company evaluates the performance of each segment based on profit or loss from operations before allocating general and administrative expenses and before allocating income taxes. The segments are managed separately because each operation requires different business strategies. 9. OPERATING SEGMENTS (continued) The following tables present a summary of the operating segments (in thousands of dollars):
Commercial Management and of Investment Industrial Programs Equipment and Other Leasing Transportation Trailer and Equipment For the three months ended September 30, 1999 Leasing Financing Leasing Other1 Total - ---------------------------------------------- ----------------------------------------------------------------------------- REVENUES Lease income $7,069 $ 5,139 $ 275 $ -- $ 12,483 Fees earned 227 171 2,002 -- 2,400 (Loss) gain on sale or disposition of assets, (29) 458 -- -- 429 net Other 10 489 333 -- 832 ----------------------------------------------------------------------------- Total revenues 7,277 6,257 2,610 -- 16,144 ----------------------------------------------------------------------------- COSTS AND EXPENSES Operations support 3,365 1,295 691 65 5,416 Depreciation and amortization 2,053 2,149 119 -- 4,321 General and administrative expenses -- -- -- 1,322 1,322 ----------------------------------------------------------------------------- Total costs and expenses 5,418 3,444 810 1,387 11,059 ----------------------------------------------------------------------------- Operating income (loss) 1,859 2,813 1,800 (1,387) 5,085 Interest expense, net (902) (2,173) (463) -- (3,538) Other income, net -- -- 700 -- 700 ----------------------------------------------------------------------------- Income (loss) before income taxes $ 957 $ 640 $ 2,037 $(1,387) $ 2,247 ============================================================================= Total assets as of September 30, 1999 $83,781 $173,919 $35,084 $ 6,812 $299,596 ============================================================================= 1 Includes costs not identifiable to a particular segment such as general and administrative and certain operations support expenses.
Commercial Management and of Investment Industrial Programs Equipment and Other Leasing Transportation Trailer and Equipment For the three months ended September 30, 1999 Leasing Financing Leasing Other Total - ------------------------------------------- ----------------------------------------------------------------------------- REVENUES Lease income $ 2,721 $ 5,630 $ 574 $ -- $ 8,925 Fees earned 306 530 2,647 -- 3,483 Gain on sale or disposition of assets, net 40 1,025 243 -- 1,308 Other -- 658 549 -- 1,207 ----------------------------------------------------------------------------- Total revenues 3,067 7,843 4,013 -- 14,923 ----------------------------------------------------------------------------- COSTS AND EXPENSES Operations support 1,205 1,291 1,311 644 4,451 Depreciation and amortization 1,014 1,623 207 -- 2,844 General and administrative expenses -- -- -- 2,003 2,003 ----------------------------------------------------------------------------- Total costs and expenses 2,219 2,914 1,518 2,647 9,298 ----------------------------------------------------------------------------- Operating income (loss) 848 4,929 2,495 (2,647) 5,625 Interest expense, net (414) (2,935) (122) -- (3,471) Other income, net -- -- 15 -- 15 ----------------------------------------------------------------------------- Income (loss) before income taxes $ 434 $ 1,994 $ 2,388 $(2,647) $ 2,169 ============================================================================= Total assets as of September 30, 1998 $38,692 $219,095 $32,179 $9,147 $299,113 ============================================================================= 1 Includes costs not identifiable to a particular segment such as general and administrative and certain operations support expenses.
9. OPERATING SEGMENTS (CONTINUED)
Commercial Management and of Investment Industrial Programs Equipment and Other Leasing Transportation Trailer and Equipment For the nine months ended September 30, 1999 Leasing Financing Leasing Other2 Total - -------------------------------------------- ----------------------------------------------------------------------------- REVENUES Lease income $ 15,746 $ 15,407 $ 888 $ -- $ 32,041 Fees earned 628 578 7,228 -- 8,434 Loss on sale or disposition of assets, net (41) 2,100 -- -- 2,059 Other 10 1,591 1,021 -- 2,622 ----------------------------------------------------------------------------- Total revenues 16,343 19,676 9,137 -- 45,156 ----------------------------------------------------------------------------- COSTS AND EXPENSES Operations support 7,754 4,075 1,579 610 14,018 Depreciation and amortization 5,292 5,732 359 -- 11,383 General and administrative expenses -- -- -- 4,851 4,851 ----------------------------------------------------------------------------- Total costs and expenses 13,046 9,807 1,938 5,461 30,252 ----------------------------------------------------------------------------- Operating income (loss) 3,297 9,869 7,199 (5,461) 14,904 Interest expense, net (2,090) (6,836) (1,520) (123) (10,569) Other income (expenses), net -- (1,098) 700 -- (398) ----------------------------------------------------------------------------- Income (loss) before income taxes $ 1,207 $ 1,935 $ 6,379 $(5,584) $ 3,937 ============================================================================= Cumulative effect of accounting change, net of tax $ -- $ (236) $ -- $ -- $ (236) ============================================================================= Total assets as of September 30, 1999 $ 83,781 $173,919 $35,084 $ 6,812 $299,596 ============================================================================= 2 Includes costs not identifiable to a particular segment such as general and administrative and certain operations support expenses.
Commercial Management and of Investment Industrial Programs Equipment and Other Leasing Transportation Trailer and Equipment For the nine months ended September 30, 1998 Leasing Financing Leasing Other2 Total - --------------------------------------------- ------------------------------------------------------------------------------- REVENUES Lease income $ 6,154 $ 15,622 $ 2,187 $ -- $ 23,963 Fees earned 822 1,333 9,319 -- 11,474 Gain on sale or disposition of assets, net 113 2,111 1,379 -- 3,603 Other 3 1,276 2,456 -- 3,735 ------------------------------------------------------------------------------- Total revenues 7,092 20,342 15,341 -- 42,775 ------------------------------------------------------------------------------- COSTS AND EXPENSES Operations support 3,148 3,412 5,044 1,313 12,917 Depreciation and amortization 2,541 5,430 920 -- 8,891 General and administrative expenses -- -- -- 6,174 6,174 ------------------------------------------------------------------------------- Total costs and expenses 5,689 8,842 5,964 7,487 27,982 ------------------------------------------------------------------------------- Operating income (loss) 1,403 11,500 9,377 (7,487) 14,793 Interest expense, net (1,096) (7,483) (872) -- (9,451) Other income (expenses), net (1) 479 -- 478 ------------------------------------------------------------------------------- Income (loss) before income taxes $ 306 $ 4,017 $ 8,984 $(7,487) $ 5,820 =============================================================================== Total assets as of September 30, 1998 $38,692 $219,095 $32,179 $ 9,147 $299,113 ============================================================================== 2 Includes costs not identifiable to a particular segment such as general and administrative and certain operations support expenses.
10. CUMULATIVE EFFECT OF ACCOUNTING CHANGE FROM DISCONTINUED OPERATIONS, NET OF TAX In April 1998, the American Institute of Certified Public Accountants issued Statement of Position 98-5, "Reporting on the Costs of Start-Up Activities," which requires costs related to start-up activities to be expensed as incurred. The statement requires that initial application be reported as a cumulative effect of a change in accounting principle. The Company adopted this statement during the first quarter of 1999, at which time it took a $0.2 million charge, net of tax of $0.2 million, related to start-up costs of its commercial and industrial equipment operations which is being accounted for as discontinued operations. This charge had an effect of reducing basic earnings per weighted-average common share and diluted earnings per weighted-average common share by $0.03 for the nine months ended September 30, 1999. 11. STOCK OFFERING During 1998, AFG filed a registration statement with the U.S. Securities and Exchange Commission for the purpose of undertaking an initial public offering of common stock. During the first quarter of 1999, the Company's Board of Directors determined that it was in the Company's best interest to sell AFG rather than proceed with a stock offering. As a result of this decision, the Company wrote off $1.0 million of costs related to the proposed initial public offering during 1999, which is included in other expenses, net, on the consolidated statements of income. 12. SUBSEQUENT EVENTS In October 1999, the Company sold $4.6 million of containers held for sale to an affiliated program at its cost, which approximated their fair market value. In October 1999, the Company amended its nonrecourse securitization facility to extend the facility through October 10, 2000 and reduce the amount available to be borrowed under this facility to $125.0 million. In October 1999, the Company entered into two debt agreements totaling $5.0 million bearing interest at 6.71%, with payments of $0.1 million due monthly beginning November of 1999 and a final payment of $0.8 million due November 2006, secured by certain trailer equipment. In return for favorable financing terms, these agreements give beneficial tax treatment in these secured trailers to the lenders. On October 26, 1999, the Company agreed to sell its wholly -owned subsidiary, American Finance Group, Inc., for approximately $33 million in cash to Guaranty Federal Bank, subject to closing adjustments which are not expected to be material. Consummation of the transaction is subject to various conditions, including the approval of PLM shareholders, and closing of the transaction is expected to occur only after such approval has been secured and all other conditions have been satisfied. If the transaction is approved, AFG will be treated for accounting purposes as a discontinued operation of PLM International, Inc. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS TRAILER LEASING The Company operates 22 trailer rental facilities that engage in short-term and mid-term operating leases. Nineteen of these facilities operate predominantly refrigerated trailers used to transport temperature-sensitive commodities, consisting primarily of food products. Three facilities operate only dry van (non-refrigerated) trailers. The Company intends to move virtually all of its dry van trailers to these facilities. In 1999, the Company has opened three new refrigerated trailer yards. MANAGEMENT OF INVESTMENT PROGRAMS AND OTHER TRANSPORTATION EQUIPMENT LEASING The Company has syndicated investment programs from which it earns various fees and equity interests. Professional Lease Management Income Fund I, LLC (Fund I) was structured as a limited liability company with a no front-end fee structure. The previously syndicated limited partnership programs allow the Company to receive fees for the acquisition and initial leasing of the equipment. The Fund I program does not provide for acquisition and lease negotiation fees. The Company invested the equity raised through syndication for these programs in transportation equipment and related assets, which it then manages on behalf of the investors. The equipment management activities for these types of programs generate equipment management fees for the Company over the life of a program. The limited partnership agreements generally entitle the Company to receive a 1% or 5% interest in the cash distributions and earnings of a partnership, subject to certain allocation provisions. The Fund I agreement entitles the Company to a 15% interest in the cash distributions and earnings of the program, subject to certain allocation provisions. The Company's interest in the earnings and distributions of Fund I will increase to 25% after the investors have received distributions equal to their original invested capital. In 1996, the Company announced the suspension of public syndication of equipment leasing programs with the close of Fund I. As a result of this decision, revenues earned from managed programs, which include management fees, partnership interests and other fees, and acquisition and lease negotiation fees, will be reduced in the future as the older programs liquidate and the managed equipment portfolio for these programs becomes permanently reduced. The Company will occasionally own transportation equipment prior to sale to affiliated programs. During this period, the Company earns lease revenue and incurs interest expense. COMMERCIAL AND INDUSTRIAL EQUIPMENT LEASING AND FINANCING The Company funds and manages long-term direct finance leases, operating leases, and loans through its American Finance Group, Inc. (AFG) subsidiary. Master lease agreements are entered into with predominantly investment-grade lessees and serve as the basis for marketing efforts. The underlying assets represent a broad range of commercial and industrial equipment, such as point-of-sale, materials handling, computer and peripheral, manufacturing, general-purpose plant and warehouse, communications, medical, and construction and mining equipment. Through AFG, the Company is also engaged in the management of institutional programs for which it receives management fees. In previous years, the Company acquired equipment for the institutional programs for which it earned acquisition fees, but the Company does not anticipate acquiring equipment for the institutional programs in the future. The Company also earns syndication fees for arranging purchases and sales of equipment between other unaffiliated third parties. In the third quarter of 1999, the Company entered into a non-binding letter of intent to sell its wholly-owned commercial and industrial leasing subsidiary American Finance Group, Inc. (AFG). COMPARISON OF THE COMPANY'S OPERATING RESULTS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998 The following analysis reviews the operating results of the Company: REVENUES For the Three Months Ended September 30, 1999 1998 --------------------------------- (in thousands of dollars) Operating lease income $ 9,783 $ 5,390 Finance lease income 2,700 3,535 Management fees 2,137 2,550 Partnership interests and other fees 263 61 Acquisition and lease negotiation fees -- 872 Gain on the sale or disposition of assets, net 429 1,308 Aircraft brokerage and services -- 204 Other 832 1,003 -------------------------------- Total revenues $ 16,144 $ 14,923 The fluctuations in revenues for the three months ended September 30, 1999, compared to the same quarter in 1998, are summarized and explained below. OPERATING LEASE INCOME BY TYPE: For the Three Months Ended September 30 1999 1998 ----------------------------- (in thousands of dollars) Refrigerated and dry van over-the-road trailers $ 7,069 $ 2,721 Commercial and industrial equipment 2,439 2,094 Lease income from assets held for sale 263 128 Intermodal trailers -- 451 Other 12 (4) ------------------------------ Total operating lease income $ 9,783 $ 5,390 Operating lease income includes revenues generated from assets held for operating leases and assets held for sale that are on lease. Operating lease income increased $4.4 million during the third quarter of 1999, compared to the same quarter of 1998, due to the following: (a) A $4.3 million increase in operating lease income was generated from refrigerated and dry van trailer equipment, of which $3.9 million was due to an increase in the amount of these types of equipment owned and on operating lease, and $0.4 million was due to higher utilization. For the quarter ended September 30, 1999, the average investment in refrigerated and dry van trailer equipment was $92.1 million, compared to $44.7 million for the third quarter of 1998. (b) A $0.3 million increase in operating lease income from commercial and industrial equipment was due to an increase in the amount of these types of equipment owned and on operating lease. (c) A $0.1 million increase in operating lease income generated from assets held for sale. During the third quarter of 1999, the Company owned marine containers, which generated $0.3 million in operating lease income. As of September 30, 1999, these marine containers are held for sale. During the third quarter of 1998, the Company owned a 14.7% interest in an entity owning a marine vessel that generated $0.1 million in operating lease income. The Company sold its interest in the entity that owned the marine vessel, at cost, which approximated the fair market value, to an affiliated program during the third quarter of 1998. These increases in operating lease income were partially offset by a $0.5 million decrease in operating lease income from intermodal trailers due to the sale of all of the Company's intermodal trailers during August 1998. FINANCE LEASE INCOME: The Company earns finance lease income for certain leases originated by its AFG subsidiary that are either retained for long-term investment or sold to third parties. Finance lease income decreased $0.8 million in the third quarter of 1999, compared to the same quarter in 1998, due to a decrease in commercial and industrial assets that were on finance lease. For the quarter ended September 30, 1999, the average investment in direct finance leases was $122.6 million, compared to $165.2 million for the third quarter of 1998. MANAGEMENT FEES: Management fees are, for the most part, based on the gross revenues generated by equipment under management. Management fees were $2.1 million and $2.6 million for the quarters ended September 30, 1999 and 1998, respectively. The decrease in management fees resulted from a net decrease in managed equipment from the PLM Equipment Growth Fund (EGF) programs. With the termination of syndication activities in 1996, management fees from the older programs are decreasing and are expected to continue to decrease as the programs liquidate their equipment portfolios. PARTNERSHIP INTERESTS AND OTHER FEES: The Company records as revenues its equity interest in the earnings of the Company's affiliated programs. The net earnings and distribution levels from the affiliated programs were $0.3 million and $0.5 million for the quarters ended September 30, 1999 and 1998, respectively. In addition, a decrease of $0.1 million and $0.4 million in the Company's residual interests in the programs was recorded during the quarters ended September 30, 1999 and 1998, respectively. The decrease in net earnings and distribution levels and residual interests in 1999, compared to 1998, resulted mainly from the disposition of equipment in certain of the EGF programs. Residual income is based on the general partner's share of the present value of the estimated disposition proceeds of the equipment portfolios of the affiliated partnerships when the equipment is purchased. Net decreases in the recorded residual values result when partnership assets are sold and the proceeds are less than the original investment in the sold equipment. ACQUISITION AND LEASE NEGOTIATION FEES: During the quarter ended September 30, 1999, the Company did not purchase any equipment on behalf of the EGF programs and no acquisition and lease negotiation fees were recorded. This is compared to the Company's purchase of $10.0 million in transportation and other equipment during the quarter ended September 30, 1998, resulting in a $0.5 million decrease in acquisition and lease negotiation fees. During the quarter ended September 30, 1999, no equipment was purchased by AFG for the institutional investment programs, compared to $11.9 million for the same quarter in 1998, resulting in a $0.4 million comparative decrease in acquisition and lease negotiation fees. The Company does not expect to sell assets in the future to the institutional programs. It will, however, continue to manage the existing portfolios for these programs. Because of the Company's decision to halt syndication of equipment leasing programs with the close of Fund I in 1996 and because Fund I has a no front-end fee structure, acquisition and lease negotiation fees will be substantially reduced in the future. GAIN ON THE SALE OR DISPOSITION OF ASSETS, NET: During the quarter ended September 30, 1999, the Company recorded $0.4 million gain on sale or disposition of assets. Of this gain, $0.5 million resulted from the sale or disposition of commercial and industrial equipment. The gain on sale was partially offset by a loss of $29,000 which resulted from the sale or disposition of transportation equipment. During the quarter ended September 30, 1998, the Company recorded $1.3 million in gain on the sale or disposition of assets. Of this gain, $0.3 million resulted from the sale or disposition of trailers, and $1.0 million related to the sale of commercial and industrial equipment. AIRCRAFT BROKERAGE AND SERVICES: Aircraft brokerage and services revenue decreased $0.2 million during the quarter ended September 30, 1999, compared to the same quarter of 1998, due to the sale of the Company's aircraft leasing and spare parts brokerage subsidiary in August 1998. COSTS AND EXPENSES For the Three Months Ended September 30, 1999 1998 ----------------------------------------- (in thousands of dollars) Operations support $ 5,416 $ 4,451 Depreciation and amortization 4,321 2,844 General and administrative 1,322 2,003 ----------------------------------------- Total costs and expenses $ 11,059 $ 9,298 OPERATIONS SUPPORT: Operations support expense, including salary and office-related expenses for operational activities, equipment insurance, repair and maintenance costs, equipment remarketing costs, costs of goods sold, and provision for doubtful accounts, increased $1.0 million (22%) for the quarter ended September 30, 1999, compared to the quarter ended September 30, 1998. Operations support expenses related to the trailer leasing segment increased $2.2 million due to the expansion of its trailer rental operations. This increase was offset by a $1.2 million decrease in operations support expenses related to the management of investment programs and other transportation equipment leasing segment, and other expenses mainly related to the sale of the Company's aircraft leasing and spare parts brokerage subsidiary in August 1998, and the sale of other transportation equipment including intermodal trailers (discussed in the operating lease income section). DEPRECIATION AND AMORTIZATION: Depreciation and amortization expenses increased $1.5 million (52%) for the quarter ended September 30, 1999, compared to the quarter ended September 30, 1998. The increase in depreciation and amortization expenses resulted from increase in depreciation of $1.0 million for refrigerated trailer equipment on operating lease and an increase in depreciation of $0.5 million for commercial and industrial equipment. GENERAL AND ADMINISTRATIVE: General and administrative expenses decreased $0.7 million (34%) during the quarter ended September 30, 1999, compared to the same quarter in 1998, primarily due to a $0.4 million decrease in compensation and benefits expenses due to a decrease in staffing, $0.2 million decrease in professional services, and $0.1 million decrease in rent and office related expenses due to a decrease in staffing and office space requirements. OTHER INCOME AND EXPENSES For the Three Months Ended September 30, 1999 1998 ----------------------------------------- (in thousands of dollars) Interest expense $ (3,742) $ (3,989) Interest income 204 518 Other income, net 700 15 INTEREST EXPENSE: Interest expense decreased $0.2 million (6%) during the quarter ended September 30, 1999, compared to the same quarter in 1998. The decrease in interest expense resulted from the reductions in the amounts outstanding on the senior secured loan and AFG warehouse facility. This decrease was partially offset by an increase in interest expense due to an increase in borrowings to fund trailer purchases. INTEREST INCOME: Interest income decreased $0.3 million (61%) during the quarter ended September 30, 1999, compared to the same quarter of 1998, as a result of lower average cash balances during the quarter ended September 30, 1999, compared to the same quarter of 1998. OTHER INCOME, NET: Other income of $0.7 million for the quarter ended September 30, 1999 represents mileage income received from the railroads. PROVISION FOR INCOME TAXES: For the three months ended September 30, 1999, the provision for income taxes was $0.9 million, representing an effective rate of 39%. For the three months ended September 30, 1998, the provision for income taxes was $0.8 million, representing an effective rate of 37%. The increase in the effective tax rate was due to disallowed losses from a foreign subsidiary. NET INCOME As a result of the foregoing, for the three months ended September 30, 1999, net income was $1.4 million, resulting in basic and diluted earnings per weighted-average common share outstanding of $0.17. For the same quarter in 1998, net income was $1.4 million, resulting in basic and diluted earnings per weighted-average common share outstanding of $0.16. Comparison of the Company's Operating Results for the Nine Months Ended September 30, 1999 and 1998 The following analysis reviews the operating results of the Company: REVENUES
For the Nine Months Ended September 30, 1999 1998 ----------------------------------------- (in thousands of dollars) Operating lease income $ 23,453 $ 14,734 Finance lease income 8,588 9,229 Management fees 6,776 7,649 Partnership interests and other fees 579 742 Acquisition and lease negotiation fees 1,079 3,083 Gain on the sale or disposition of assets, net 2,059 3,603 Aircraft brokerage and services -- 1,090 Other 2,622 2,645 ----------------------------------------- Total revenues $ 45,156 $ 42,775
The fluctuations in revenues for the nine months ended September 30, 1999, compared to the nine months ended September 30, 1998, are summarized and explained below. OPERATING LEASE INCOME BY TYPE:
For the Nine Months Ended September 30, 1999 1998 ----------------------------------------- (in thousands of dollars) Refrigerated and dry van over-the-road trailers $ 15,746 $ 6,153 Commercial and industrial equipment 6,819 6,393 Lease income from assets held for sale 850 412 Intermodal trailers -- 1,630 Other 38 146 ----------------------------------------- Total operating lease income $ 23,453 $ 14,734
Operating lease income includes revenues generated from assets held for operating leases and assets held for sale that are on lease. Operating lease income increased $8.7 million during the nine months ended September 30, 1999, compared to the same period of 1998, due to the following: (a) A $9.6 million increase in operating lease income was generated from refrigerated and dry van trailer equipment of which $7.0 million was due to an increase in the amount of these types of equipment owned and on operating lease, and $2.6 million was due to higher utilization. For the nine months ended September 30, 1999, the average investment in refrigerated and dry van trailer equipment was $80.1 million, compared to $42.1 million for the same period of 1998. (b) A $0.4 million increase in operating lease income was generated from assets held for sale. During the nine months ended September 30, 1999, the Company purchased $21.8 million in marine containers and sold $13.8 million to affiliated programs at cost, which approximated their fair market value. The Company earned $0.9 million in operating lease income on these marine containers during the nine months ended September 30, 1999. During the nine months ended September 30, 1998, the Company owned an entity owning a marine vessel that generated $0.4 million in operating lease income. The Company sold its interest in the entity that owned the marine vessel at cost, which approximated fair market value, to an affiliated program during 1998. (c) A $0.4 million increase in operating lease income was generated from commercial and industrial equipment, due to an increase in the amount of these types of equipment owned and on operating lease. These increases in operating lease income were partially offset by the following: (a) A $1.6 million decrease in operating lease income from intermodal trailers due to the sale of all of the Company's intermodal trailers in 1998. (b) A $0.1 million decrease in other operating lease income was due to the Company's strategic decision to dispose of certain transportation assets and exit certain equipment markets. FINANCE LEASE INCOME: The Company earns finance lease income for certain leases originated by its AFG subsidiary that are either retained for long-term investment or sold to third parties. Finance lease income decreased $0.6 million in the nine months ended September 30, 1999, compared to the same period in 1998, due to a decrease in commercial and industrial assets that were on finance lease. For the nine months ended September 30, 1999, the average investment in direct finance leases was $132.8 million, compared to $144.1 million for the nine months ended September 30, 1998. MANAGEMENT FEES: Management fees are, for the most part, based on the gross revenues generated by equipment under management. Management fees were $6.8 million and $7.6 million for the nine months ended September 30, 1999 and 1998, respectively. The decrease in management fees resulted from a net decrease in managed equipment from the PLM Equipment Growth Fund (EGF) programs. With the termination of syndication activities in 1996, management fees from the older programs are decreasing and are expected to continue to decrease as the programs liquidate their equipment portfolios. PARTNERSHIP INTERESTS AND OTHER FEES: The Company records as revenues its equity interest in the earnings of the Company's affiliated programs. The net earnings and distribution levels from the affiliated programs were $1.1 million and $1.5 million for the nine months ended September 30, 1999 and 1998, respectively. In addition, a decrease of $0.6 million and $0.8 million in the Company's residual interests in the programs was recorded during the nine months ended September 30, 1999 and 1998, respectively. The decrease in net earnings, distribution levels and residual interests in 1999, compared to 1998, resulted mainly from the disposition of equipment in certain of the EGF programs. Residual income is based on the general partner's share of the present value of the estimated disposition proceeds of the equipment portfolios of the affiliated partnerships when the equipment is purchased. Net decreases in the recorded residual values result when partnership assets are sold and the proceeds are less than the original investment in the sold equipment. ACQUISITION AND LEASE NEGOTIATION FEES: During the nine months ended September 30, 1999, the Company, on behalf of the EGF programs, purchased transportation and other equipment for $37.1 million. The Company did not take acquisition and lease negotiation fees on $16.6 million of this equipment, as the Company has reached certain fee limitations for one of its limited partnership programs per the partnership agreement. This is compared to the Company's purchase of $42.9 million in transportation and other equipment during the nine months ended September 30, 1998, resulting in a $1.3 million decrease in acquisition and lease negotiation fees. During the nine months ended September 30, 1999, no equipment was purchased by AFG for the institutional investment programs, compared to $26.0 million for the same period in 1998, resulting in a $0.7 million decrease in acquisition and lease negotiation fees. The Company does not expect to sell assets in the future to the institutional programs. It will, however, continue to manage the existing portfolios for these programs. Because of the Company's decision to halt syndication of equipment leasing programs with the close of Fund I in 1996 and because Fund I has a no front-end fee structure, acquisition and lease negotiation fees will be substantially reduced in the future. GAIN (LOSS) ON THE SALE OR DISPOSITION OF ASSETS, NET: During the nine months ended September 30, 1999, the Company recorded $2.1 million gain on sale or disposition of assets. Of this gain, $2.1 million resulted from the sale or disposition of commercial and industrial equipment. The gain on sale was partially offset by the loss of $41,000 resulted from the sale or disposition of transportation equipment. During the nine months ended September 30, 1998, the Company recorded $3.6 million in gain on the sale or disposition of assets. Of this gain, $1.0 million resulted from the sale or disposition of an aircraft engine, a 20% interest in a commuter aircraft, and trailers, and $2.1 million related to the sale of commercial and industrial equipment. Also during the nine months ended September 30, 1998, the Company purchased and subsequently sold railcars to an unaffiliated third party for a net gain of $0.5 million. AIRCRAFT BROKERAGE AND SERVICES: Aircraft brokerage and services revenue decreased $1.1 million during the nine months ended September 30, 1999, compared to the same period of 1998, due to the sale of the Company's aircraft leasing and spare parts brokerage subsidiary in August 1998. COSTS AND EXPENSES
For the Nine Months Ended September 30, 1999 1998 ----------------------------------------- (in thousands of dollars) Operations support $ 14,018 $ 12,917 Depreciation and amortization 11,383 8,891 General and administrative 4,851 6,174 ----------------------------------------- Total costs and expenses $ 30,252 $ 27,982
OPERATIONS SUPPORT: Operations support expense, including salary and office-related expenses for operational activities, equipment insurance, repair and maintenance costs, equipment remarketing costs, costs of goods sold, and provision for doubtful accounts, increased $1.1 million (9%) for the nine months ended September 30, 1999, compared to the same period of 1998. Operations support expense related to the trailer leasing segment increased $4.6 million due to the expansion of PLM Rental, with the addition of a total of twelve rental yards in 1998 and 1999 and new trailers to existing yards. Operations support expense related to the commercial and industrial equipment leasing and financing segment increased $0.7 million due to an increase in compensation and benefits expenses resulting from the expansion of the commercial and industrial equipment lease portfolio, and a new bonus program initiated in 1999 to retain AFG employees during AFG's potential sale. These increases were offset by a $4.2 million decrease in operations support expenses related to the management of investment programs and other transportation equipment leasing segment, and other expenses mainly related to the sale of the Company's aircraft leasing and spare parts brokerage subsidiary in August 1998, and the sale of other transportation equipment including intermodal trailers (discussed in the operating lease income section). DEPRECIATION AND AMORTIZATION: Depreciation and amortization expenses increased $2.5 million (28%) for the nine months ended September 30, 1999, compared to the nine months ended September 30, 1998. The increase resulted from an increase in depreciation of $2.8 million from refrigerated trailer equipment on operating lease, and an increase in depreciation of $0.3 million from commercial and industrial equipment, which was partially offset by the reduction of $0.6 million in depreciation expense from intermodal trailers and other equipment. GENERAL AND ADMINISTRATIVE: General and administrative expenses decreased $1.3 million (21%) during the nine months ended September 30, 1999, compared to the same period in 1998, primarily due to a $0.7 million decrease in rent and office related expenses, a $0.5 million decrease in compensation and benefits expenses, and a $0.1 million decrease in insurance expenses. These decreases were due to a decrease in staffing and office space requirements. OTHER INCOME AND EXPENSES For the Nine Months Ended September 30, 1999 1998 ----------------------------------------- (in thousands of dollars) Interest expense $ (11,249) $ (10,663) Interest income 680 1,212 Other (expenses) income, net (398) 478 INTEREST EXPENSE: Interest expense increased $0.6 million (5%) during the nine months ended September 30, 1999, compared to the same period in 1998. Interest expense related to the trailer leasing segment increased $1.0 million due to an increase in borrowings to fund trailer purchases. The increase in interest expense was partially offset by a decrease in interest expense due to the reductions in the amounts outstanding on the senior secured loan and AFG warehouse facility. INTEREST INCOME: Interest income decreased $0.5 million (44%) during the nine months ended September 30, 1999, compared to the same period of 1998, as a result of lower average cash balances during the nine months ended September 30, 1999, compared to the same period of 1998. OTHER (EXPENSES) INCOME, NET: Other expense of $0.4 million for the nine months ended September 30, 1999 represents $1.0 million in expense related to the proposed initial public offering of AFG (during the first quarter of 1999, the Company's Board of Directors determined that it was in the Company's best interest to sell AFG rather than proceed with a stock offering, and therefore wrote off all associated offering costs) and $0.1 million in expenses related to the settlement of a lawsuit, partially offset by $0.7 million of mileage income received from the railroads. During the nine months ended September 30, 1998, the Company recorded other income of $0.7 million related to the settlement of a lawsuit against Tera Power Corporation and others, and recorded expense of $0.3 million related to a legal settlement for the Koch and Romei actions (refer to Note 7). PROVISION FOR INCOME TAXES: For the nine months ended September 30, 1999, the provision for income taxes was $1.5 million, representing an effective rate of 39%. For the nine months ended September 30, 1998, the provision for income taxes was $2.3 million, representing an effective rate of 39%. CUMULATIVE EFFECT OF ACCOUNTING CHANGE: In April 1998, the American Institute of Certified Public Accountants issued Statement of Position 98-5, "Reporting on the Costs of Start-Up Activities," which requires costs related to start-up activities to be expensed as incurred. The statement requires that initial application be reported as a cumulative effect of a change in accounting principle. The Company adopted this statement during the first quarter of 1999, at which time it took a $0.2 million charge, net of tax of $0.2 million, related to start-up costs of its commercial and industrial equipment operations which is being accounted for as discontinued operations. NET INCOME As a result of the foregoing, for the nine months ended September 30, 1999, net income was $2.2 million, resulting in basic and diluted earnings per weighted-average common share outstanding of $0.27 and $0.26, respectively. For the same period in 1998, net income was $3.5 million, resulting in basic and diluted earnings per weighted-average common share outstanding of $0.42 and $0.41, respectively. LIQUIDITY AND CAPITAL RESOURCES Cash requirements have historically been satisfied through cash flow from operations, borrowings, and the sale of equipment. Liquidity in the remainder of 1999 and beyond will depend, in part, on the continued remarketing of the equipment portfolio at similar lease rates, the management of existing sponsored programs, the effectiveness of cost control programs, the purchase and sale of equipment, the volume of trailer equipment leasing transactions, additional borrowings, and the potential proceeds from the sale of AFG. Management believes the Company can accomplish the preceding and that it will have sufficient liquidity and capital resources for the next twelve months. Future liquidity is influenced by the factors summarized below. DEBT FINANCING: NONRECOURSE SECURITIZED DEBT: The Company has available a nonrecourse debt facility for up to $125.0 million, secured by direct finance leases, operating leases, and loans on commercial and industrial equipment at AFG that generally have terms of one to seven years. The facility is available for a one-year period expiring October 10, 2000. Repayment of the facility matches the terms of the underlying leases. As of September 30, 1999, $105.5 million in borrowings was outstanding under this facility. As of October 28, 1999, $104.4 million in borrowings was outstanding under this facility. In addition to the $125.0 million nonrecourse debt facility discussed above, as of September 30, 1999 and October 28, 1999, the Company also had $5.2 million and $5.0 million, respectively, in nonrecourse notes payable secured by direct finance leases on commercial and industrial equipment at AFG that have terms corresponding to the note repayment schedule that began April 1998 and ends March 2001. The notes bear interest from 8.32% to 9.5% per annum. FSI WAREHOUSE CREDIT FACILITY: Assets acquired and held on an interim basis by FSI for sale to affiliated programs or third parties have, from time to time, been partially funded by this warehouse credit facility. This facility is also used to temporarily finance the purchase of trailers prior to permanent financing being obtained. This facility expires on December 14, 1999. The Company believes it will be able to renew this facility on substantially the same terms upon its expiration. This facility is shared with EGF VI, PLM Equipment Growth & Income Fund VII (EGF VII), and Fund I. Borrowings under this facility by the other eligible borrowers reduce the amount available to be borrowed by the Company. All borrowings under this facility are guaranteed by the Company. This facility provides 80% financing for transportation assets purchased by the Company. The Company can hold assets under this facility for up to 150 days. Interest accrues at prime or LIBOR plus 162.5 basis points, at the option of the Company. As of September 30, 1999, the Company and EGF VI had $7.6 million and $1.0 million outstanding borrowings under this facility, respectively. As of October 28, 1999, the Company had $0.9 million in borrowings outstanding under this facility, and there were no borrowings outstanding under this facility by any other eligible borrowers. AFG WAREHOUSE CREDIT FACILITY: Assets acquired and held on an interim basis by AFG for placement in the Company's securitization facility or for sale to unaffiliated third parties have, from time to time, been partially funded by a $60.0 million warehouse credit facility. The facility expires December 14, 1999; however, the Company believes it will be able to renew this facility on substantially the same terms upon its expiration. This facility provides for financing of 100% of the present value of the lease stream of commercial and industrial equipment for up to 90% of original equipment cost of the assets held on this facility. Borrowings secured by investment-grade lessees can be held under this facility until the facility's expiration. Borrowings secured by noninvestment-grade lessees may be outstanding for 120 days. Interest accrues at prime or LIBOR plus 137.5 basis points, at the option of the Company. As of September 30, 1999, the Company had $20.1 million outstanding under this facility. As of October 28, 1999, the Company had $21.1 million outstanding under this facility. SENIOR SECURED NOTES: The Company's senior secured notes agreement, which had an outstanding balance of $22.6 million as of September 30, 1999 and October 28, 1999, bears interest at LIBOR plus 240 basis points. The Company has pledged substantially all of its future management fees, acquisition and lease negotiation fees, data processing fees, and partnership distributions as collateral to the facility. The facility required quarterly interest-only payments through August 15, 1997, with principal plus interest payments beginning November 15, 1997. Principal payments of $1.9 million are payable quarterly through termination of the loan on August 15, 2002. SENIOR SECURED LOAN: The Company's senior loan with a syndicate of insurance companies, which had an outstanding balance of $10.3 million as of September 30, 1999 and October 28, 1999, provides that equipment sale proceeds from pledged equipment or cash deposits be placed into a collateral account or used to purchase additional equipment to the extent required to meet certain debt covenants. Pledged equipment for this loan consists of the storage equipment and virtually all trailer equipment purchased prior to August 1998. As of September 30, 1999, the cash collateral balance for this loan was $2,000 and is included in restricted cash and cash equivalents on the Company's balance sheet. The facility bears interest at 9.78% and required quarterly interest payments through June 30, 1997, with quarterly principal payments of $1.5 million plus interest charges beginning June 30, 1997 and continuing until termination of the loan in June 2001. OTHER SECURED DEBT: As of September 30, 1999, the Company had $31.8 million in six debt agreements, bearing interest from 5.35% to 7.05%, each with payments of $0.1 million due monthly in advance. The debt is secured by certain trailer equipment. In the second quarter of 1999, the Company entered into a $15.0 million credit facility loan agreement bearing interest at LIBOR plus 1.5%. This facility allows the Company to borrow up to $15.0 million within a one-year period. As of September 30, 1999, the Company had borrowed $8.6 million under this facility. Payments of $0.1 million are due quarterly beginning August 2000, with a final payment of $1.4 million due August 2006. INTEREST-RATE SWAP CONTRACTS: The Company has entered into interest-rate swap agreements in order to manage the interest-rate exposure associated with its nonrecourse securitized debt. As of September 30, 1999, the swap agreements had a weighted-average duration of 1.40 years, corresponding to the terms of the related debt. As of September 30, 1999, a notional amount of $94.8 million of interest-rate swap agreements effectively fixed interest rates at an average of 6.52% on such obligations. For the nine months ended September 30, 1999, interest expense increased by $0.5 million due to these arrangements. TRAILER LEASING: The Company operates 22 trailer rental facilities that engage in short-term and mid-term operating leases. Nineteen of these facilities operate predominantly refrigerated trailers used to transport temperature-sensitive commodities, consisting primarily of food products. Three facilities operate only dry van (non-refrigerated) trailers. The Company intends to move virtually all of its dry van trailers to these facilities. In 1999, the Company has opened three new refrigerated trailer yards. During the nine months ended September 30, 1999, the Company purchased $36.2 million of primarily refrigerated trailers and sold refrigerated and dry van trailers with a net book value of $0.4 million for proceeds of $0.4 million. The net proceeds from the sale of assets that were collateralized as part of the senior loan facility were placed in a collateral account. OTHER TRANSPORTATION EQUIPMENT LEASING AND OTHER: During the first nine months of 1999, the Company purchased marine containers for $21.8 million, and the Company sold $13.8 million to affiliated programs, at cost, which approximated their fair market value. In October 1999, the Company sold an additional $4.6 million of these marine containers to an affiliated program, at cost which approximated their fair value. STOCK REPURCHASE PROGRAM: In December 1998, the Company announced that its Board of Directors had authorized the repurchase of up to $5.0 million of the Company's common stock. As of October 28, 1999, 422,515 shares had been repurchased under this plan for a total of $2.5 million. Management believes that, through debt and equity financing, possible sales of equipment, proceeds from the potential sale of AFG, and cash flows from operations, the Company will have sufficient liquidity and capital resources to meet its projected future operating needs over the next twelve months. EFFECTS OF THE YEAR 2000: It is possible that the Company's currently installed computer systems, software products, and other business systems, or those of the Company's vendors, service providers, and customers, working either alone or in conjunction with other software or systems, may not accept input of, store, manipulate, and output dates on or after January 1, 2000 without error or interruption, a possibility commonly known as the "Year 2000" or "Y2K" problem. The Company has established a special Year 2000 oversight committee to review the impact of Year 2000 issues on its business systems in order to determine whether such systems will retain functionality after December 31, 1999. As of September 30, 1999, the Company has completed inventory, assessment, remediation, and testing stages of its Year 2000 review of its core business information systems. Specifically, the Company (a) has integrated Year 2000-compliant programming code into its existing internally customized and internally developed transaction processing software systems and (b) the Company's accounting and asset management software systems have been made Year 2000 compliant. In addition, numerous other software systems provided by vendors and service providers have been replaced with systems represented by the vendor or service provider to be Year 2000 functional. These systems have been fully tested as of September 30, 1999 and are compliant. As of September 30, 1999, the Company has spent $0.1 million to become Year 2000 compliant and does not anticipate any additional Year 2000-compliant expenditures. Some risks associated with the Year 2000 problem are beyond the ability of the Company to control, including the extent to which third parties can address the Year 2000 problem. The Company is communicating with vendors, services providers, and customers in order to assess the Year 2000 compliance readiness of such parties and the extent to which the Company is vulnerable to any third-party Year 2000 issues. As part of this process, vendors and service providers were ranked in terms of the relative importance of the service or product provided. All service providers and vendors who were identified as of medium to high relative importance were surveyed to determine Year 2000 status. The Company has received satisfactory responses to Year 2000 readiness inquiries from surveyed service providers and vendors. It is possible that certain of the Company's equipment lease portfolio may not be Year 2000 compliant. The Company has contacted equipment manufacturers of the portion of the Company's leased equipment portfolio identified as date sensitive to assure Year 2000 compliance or to develop remediation strategies. The Company does not expect that non-Year 2000 compliance of its leased equipment portfolio will have an adverse material impact on its financial statements. The Company has surveyed the majority of its lessees and the majority of those surveyed have responded satisfactorily to Year 2000 readiness inquiries. There can be no assurance that the software systems of such parties will be converted or made Year 2000 compliant in a timely manner. Any failure by such other parties to make their respective systems Year 2000 compliant could have a material adverse effect on the business, financial position, and results of operations of the Company. The Company has made and will continue an ongoing effort to recognize and evaluate potential exposure relating to third-party Year 2000 noncompliance. The Company will implement a contingency plan if the Company determines that third-party noncompliance would have a material adverse effect on the Company's business, financial position, or results of operation. The Company is currently developing a contingency plan to address the possible failure of any systems, vendors or service providers due to Year 2000 problems. For the purpose of such contingency planning, a reasonably likely worst case scenario primarily anticipates an inability to access systems and data on a temporary basis resulting in possible delay in reconciliation of funds received or payment of monies owed. The Company is evaluating whether there are additional scenarios which have not been identified. Contingency planning will encompass strategies up to and including manual processes. The Company anticipates that these plans will be completed by December 31, 1999. ACCOUNTING PRONOUNCEMENTS: In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," which standardizes the accounting for derivative instruments, including certain derivative instruments embedded in other contracts, by requiring that an entity recognize those items as assets or liabilities in the statement of financial position and measure them at fair market value. FASB Statement No. 137, "Accounting for Derivatives, Instruments, and Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133, an amendment of FASB Statement No. 133," issued in June 1999, defers the effective date of Statement No. 133. Statement No. 133, as amended, is now effective for all fiscal quarters of all fiscal years beginning after June 15, 2000. As of September 30, 1999, the Company is reviewing the effect SFAS No. 133 will have on the Company's consolidated financial statements. FORWARD-LOOKING INFORMATION: Except for historical information contained herein, the discussion in this Form 10-Q contains forward-looking statements that contain risks and uncertainties, such as statements of the Company's plans, objectives, expectations, and intentions. The cautionary statements made in this Form 10-Q should be read as being applicable to all related forward-looking statements wherever they appear in this Form 10-Q. The Company's actual results could differ materially from those discussed here. Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company's primary market risk exposure is that of interest rate risk. A change in the U.S. prime interest rate, LIBOR rate, or lender's cost of funds based on commercial paper market rates, would affect the rate at which the Company could borrow funds under its various borrowing facilities. Increases in interest rates to the Company, which may cause the Company to raise the implicit rates charged to its customers, could in turn, result in a reduction in demand for the Company's lease financing. The Company's warehouse credit facilities, $8.6 million of other secured debt, and the senior secured notes are variable rate debt. The Company estimates a 1 percent increase or decrease in the Company's variable rate debt would result in an increase or decrease, respectively, in interest expense of $0.2 million in 1999, $0.1 million in 2000, $0.2 million in 2001, $0.1 million in 2002, $0.1 million in 2003, and $0.1 million thereafter. The Company estimates a 2 percent increase or decrease in the Company's variable rate debt would result in an increase or decrease, respectively, in interest expense of $0.4 million in 1999, $0.3 million in 2000, $0.3 million in 2001, $0.2 million in 2002, $0.1 million in 2003, and $0.3 million thereafter. All of the Company's other financial assets and liabilities are at fixed rates. PART II - OTHER INFORMATION Item 1. LEGAL PROCEEDINGS See Note 8 to the consolidated financial statements. Item 5. OTHER INFORMATION The Company has agreed to sell its wholly -owned subsidiary, American Finance Group, Inc., for approximately $29 million in cash to Guaranty Federal Bank, subject to closing adjustments which are not expected to be material. Consummation of the transaction is subject to various conditions, including the approval of PLM shareholders, and closing of the transaction is expected to occur only after such approval has been secured and all other conditions have been satisfied. A copy of the agreement relating to such sale is attached as Exhibit 10.7. Item 6. EXHIBITS AND REPORTS ON FORM 8-K (A) Exhibits 10.1 Severance Agreement among PLM International, Inc. and certain employees dated August 1999. 10.2 Amendment #1 dated April 2, 1999 to Master Lease Agreement among PLM International, Inc. and Wells Fargo Equipment Finance, Inc. dated April 2, 1999. 10.3 Master Lease Agreement among PLM International, Inc. and Associates Leasing, Inc. dated August 25, 1999. 10.4 Master Lease Agreement among PLM Rental Inc. and Fleet Capital, Inc. dated September 23, 1999. 10.5 Amendment #2 dated October 12, 1999 to Master Lease Agreement among PLM International, Inc. and Wells Fargo Equipment Finance, Inc. dated April 2, 1999. 10.6 Master Lease Agreement among PLM Rental Inc. and US Bancorp dated September 22, 1999. 10.7 Stock Sales Agreement among PLM International, Inc. and Guaranty Federal Bank dated October 26, 1999. (B) Reports on Form 8-K Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PLM INTERNATIONAL, INC. /s/ Richard K Brock -------------------------------------- Richard K Brock Vice President and Corporate Controller Date: October 28, 1999 EX-27 2
5 1,000 9-MOS DEC-31-1999 SEP-30-1999 12,693 0 155,705 0 0 0 97,344 (19,304) 299,596 0 211,652 0 0 0 58,627 299,596 0 45,156 0 30,252 (398) 0 (11,249) 3,937 1,543 2,394 0 (236) 0 2,158 0.27 0.26
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