-----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, JNls8bvQXOi7ZPl4pIF+6ZbvHEjKrvvkegDCbDZQ+9qol1FS4LCCE+KwS32cxTb5 CM2MsN6Y1uB5ZsIn+iPUfA== /in/edgar/work/0000812072-00-000031/0000812072-00-000031.txt : 20001108 0000812072-00-000031.hdr.sgml : 20001108 ACCESSION NUMBER: 0000812072-00-000031 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001107 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PLM EQUIPMENT GROWTH FUND IV CENTRAL INDEX KEY: 0000847517 STANDARD INDUSTRIAL CLASSIFICATION: [7359 ] IRS NUMBER: 943090127 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-18789 FILM NUMBER: 754195 BUSINESS ADDRESS: STREET 1: STEUART STREET TOWER STE 900 STREET 2: C/O ONE MARKET PLAZA CITY: SAN FRANCISCO STATE: CA ZIP: 94105-1399 BUSINESS PHONE: 4159741399 MAIL ADDRESS: STREET 1: ONE MARKET STREET 2: STEUART STREET TOWER STE 900 CITY: SAN FRANCISCO STATE: CA ZIP: 94105-1301 10-Q 1 0001.txt PLM EQUIPMENT GROWTH FUND 4 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________ FORM 10-Q [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal quarter ended September 30, 2000 [ ] 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 0-18789 _______________________ PLM EQUIPMENT GROWTH FUND IV (Exact name of registrant as specified in its charter) California 94-3090127 (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 (Zip Code) executive offices) 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 PLM EQUIPMENT GROWTH FUND IV (A Limited Partnership) BALANCE SHEETS (in thousands of dollars, except unit amounts)
September 30, December 31, 2000 1999 ------------------------------------ ASSETS Equipment held for operating leases, at cost $ 39,685 $ 45,468 Less accumulated depreciation (32,537) (34,920) ------------------------------------ Net equipment 7,148 10,548 Cash and cash equivalents 2,884 5,587 Restricted cash 147 147 Accounts receivable, less allowance for doubtful accounts of $2,480 in 2000 and $2,843 in 1999 177 440 Investments in unconsolidated special-purpose entities 3,124 3,415 Prepaid expenses and other assets 4 48 ------------------------------------ Total assets $ 13,484 $ 20,185 ==================================== LIABILITIES AND PARTNERS' CAPITAL Liabilities: Accounts payable and accrued expenses $ 141 $ 292 Due to affiliates 176 211 Lessee deposits and reserve for repairs 276 340 ------------------------------------ Total liabilities 593 843 ------------------------------------ Partners' capital: Limited partners (8,628,420 limited partnership units as of September 30, 2000 and December 31, 1999) 12,891 19,342 General Partner -- -- ------------------------------------ Total partners' capital 12,891 19,342 ------------------------------------ Total liabilities and partners' capital $ 13,484 $ 20,185 ====================================
See accompanying notes to financial statements. PLM EQUIPMENT GROWTH FUND IV (A Limited Partnership) STATEMENTS OF INCOME (in thousands of dollars, except weighted-average unit amounts)
For the Three Months For the Nine Months Ended September 30, Ended September 30, 2000 1999 2000 1999 ------------------------------------------------------------ REVENUES Lease revenue $ 1,110 $ 2,019 $ 3,476 $ 6,537 Interest and other income 28 45 114 110 Net gain on disposition of equipment 154 2,444 253 4,451 ---------------------------------------------------------- Total revenues 1,292 4,508 3,843 11,098 ---------------------------------------------------------- EXPENSES Depreciation and amortization 587 1,063 1,787 3,415 Repairs and maintenance 243 232 811 2,390 Equipment operating expenses 18 212 89 655 Management fees to affiliate 62 114 209 369 Interest expense -- 203 -- 824 General and administrative expenses to affiliates 106 116 322 381 Other general and administrative expenses 196 163 473 523 (Recovery of) provision for bad debt expense (28) 16 (174) 40 Loss on revaluation 106 -- 106 -- ---------------------------------------------------------- Total expenses 1,290 2,119 3,623 8,597 ---------------------------------------------------------- Equity in net income of unconsolidated special- purpose entities 83 105 549 91 ---------------------------------------------------------- Net income $ 85 $ 2,494 $ 769 $ 2,592 ========================================================== PARTNERS' SHARE OF NET INCOME Limited partners $ 41 $ 2,449 $ 408 $ 2,456 General Partner 44 45 361 136 ---------------------------------------------------------- Total $ 85 $ 2,494 $ 769 $ 2,592 ========================================================== Limited partners'net income per weighted-average partnership unit $ 0.01 $ 0.28 $ 0.05 $ 0.28 ========================================================== Cash distribution $ 885 $ 908 $ 2,679 $ 2,725 Special cash distribution -- -- 4,541 -- ---------------------------------------------------------- Total distribution $ 885 $ 908 $ 7,220 $ 2,725 ========================================================== Per weighted-average partnership unit: Cash distribution $ 0.10 $ 0.10 $ 0.30 $ 0.30 Special cash distribution -- -- 0.50 -- ---------------------------------------------------------- Total distribution per weighted-average partnership unit $ 0.10 $ 0.10 $ 0.80 $ 0.30 ==========================================================
See accompanying notes to financial statements. PLM EQUIPMENT GROWTH FUND IV (A Limited Partnership) STATEMENTS OF CHANGES IN PARTNERS' CAPITAL For the period from December 31, 1998 to September 30, 2000 (in thousands of dollars)
Limited General Partners Partner Total --------------------------------------------------- Partners' capital as of December 31, 1998 $ 16,567 $ -- $ 16,567 Net income 6,226 182 6,408 Cash distribution (3,451) (182) (3,633) ---------------------------------------------------- Partners' capital as of December 31, 1999 19,342 -- 19,342 Net income 408 361 769 Cash distribution (2,545) (134) (2,679) Special cash distribution (4,314) (227) (4,541) ---------------------------------------------------- Partner's capital as of September 30, 2000 $ 12,891 $ -- $ 12,891 ====================================================
See accompanying notes to financial statements. PLM EQUIPMENT GROWTH FUND IV (A Limited Partnership) STATEMENTS OF CASH FLOWS (in thousands of dollars)
For the Nine Months Ended September 30, 2000 1999 ---------------------------- OPERATING ACTIVITIES Net income $ 769 $ 2,592 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 1,787 3,415 Net gain on disposition of equipment (253 ) (4,451 ) Loss on revaluation 106 -- Equity in net income of unconsolidated special-purpose entities (549 ) (91 ) Changes in operating assets and liabilities: Accounts receivable, net 263 234 Prepaid expenses and other assets 44 (21) Accounts payable and accrued expenses (151) (326) Due to affiliates (35) (37) Lessee deposits and reserve for repairs (64) (393) ---------------------------- Net cash provided by operating activities 1,917 922 ---------------------------- INVESTING ACTIVITIES Payments for capitalized improvements (7) (5) Proceeds from disposition of equipment 1,767 10,352 Distribution from unconsolidated special-purpose entities 840 523 ---------------------------- Net cash provided by investing activities 2,600 10,870 ---------------------------- FINANCING ACTIVITIES Principal payments of notes payable -- (8,250) Cash distribution paid to limited partners (2,545) (2,589) Cash distribution paid to General Partner (134) (136) Special cash distribution paid to limited partners (4,314) -- Special cash distribution paid to General Partner (227) -- ---------------------------- Net cash used in financing activities (7,220) (10,975) ---------------------------- Net (decrease) increase in cash and cash equivalents (2,703) 817 Cash and cash equivalents at beginning of year 5,587 778 ---------------------------- Cash and cash equivalents at end of period $ 2,884 $ 1,595 ============================ Supplemental information Interest paid $ -- $ 824 ============================
See accompanying notes to financial statements. PLM EQUIPMENT GROWTH FUND IV (A Limited Partnership) NOTES TO FINANCIAL STATEMENTS September 30, 2000 1. OPINION OF MANAGEMENT In the opinion of the management of PLM Financial Services, Inc. (FSI or the General Partner), the accompanying unaudited financial statements contain all adjustments necessary, consisting primarily of normal recurring accruals, to present fairly the financial position of PLM Equipment Growth Fund IV (the Partnership) as of September 30, 2000 and December 31, 1999, the statements of income for the three and nine months ended September 30, 2000 and 1999, the statements of changes in partners' capital for the period from December 31, 1998 to September 30, 2000, and the statements of cash flows for the nine months ended September 30, 2000 and 1999. 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 financial statements. For further information, reference should be made to the financial statements and notes thereto included in the Partnership's Annual Report on Form 10-K for the year ended December 31, 1999, on file with the Securities and Exchange Commission. 2. SCHEDULE OF PARTNERSHIP PHASES On January 1, 1999, the Partnership entered its liquidation phase and has commenced an orderly liquidation of the Partnership assets. The Partnership will terminate on December 31, 2009, unless terminated earlier upon sale of all equipment or by certain other events. The General Partner anticipates that the liquidation of Partnership assets will be completed in 2001. During the liquidation phase, the Partnership's assets will continue to be recorded at the lower of carrying amount or fair value less costs to sell. 3. RECLASSIFICATION Certain amounts in the 1999 financial statements have been reclassified to conform to the 2000 presentation. 4. CASH DISTRIBUTIONS Cash distributions are recorded when paid and may include amounts in excess of net income that are considered to represent a return of capital. For the nine months ended September 30, 2000 and 1999, cash distributions totaled $2.7 million. For the three months ended September 30, 2000 and 1999, cash distributions totaled $0.9 million. In addition, a $4.5 million special distribution was paid to the partners during the nine months ended September 30, 2000, from the proceeds realized on the sale of equipment and liquidating distibutions from unconsolidated special purpose entities (USPEs). No special distributions were paid in the nine months ended September 30, 1999 or the three months ended September 30, 1999 or 2000. Cash distributions to the limited partners of $6.4 million and $0.1 million, respectively, for the nine months ended September 30, 2000 and 1999, were deemed to be a return of capital. Cash distributions related to the results from the third quarter of 2000, of $0.9 million, will be paid during the fourth quarter of 2000. PLM EQUIPMENT GROWTH FUND IV (A Limited Partnership) NOTES TO FINANCIAL STATEMENTS September 30, 2000 5. TRANSACTIONS WITH GENERAL PARTNER AND AFFILIATES (CONTINUED) The balance due to affiliates as of September 30, 2000, includes $29,000 due to FSI for management fees and data processing services, and $0.1 million due to affiliated unconsolidated special-purpose entities. The balance due to affiliates as of December 31, 1999, includes $0.1 million due to FSI for management fees and $0.1 million due to affiliated unconsolidated special-purpose entities. The Partnership's proportional share of management fees related to USPEs of $5,000 and $25,000 were payable as of September 30, 2000 and December 31, 1999, respectively. The Partnership's proportional share of the affiliated expenses incurred by the USPEs during 2000 and 1999 is listed in the following table (in thousands of dollars):
For the Three Months For the Nine Months Ended September 30, Ended September 30, 2000 1999 2000 1999 ---------------------------------------------------------------- Management fees $ 4 $ 20 $ 13 $ 47 Data processing and administrative expenses -- 2 5 8
6. EQUIPMENT The components of owned equipment were as follows (in thousands of dollars): September 30, December 31, 2000 1999 -------------------------------------- Aircraft $ 20,440 $ 20,440 Railcars 13,343 13,454 Marine containers 5,902 8,073 Trailers -- 3,501 -------------------------------------- 39,685 45,468 Less accumulated depreciation (32,537 ) (34,920 ) -------------------------------------- Net equipment $ 7,148 $ 10,548 ====================================== As of September 30, 2000, all equipment was on lease, except for one commercial aircraft, 37 railcars, and 163 marine containers, with an aggregate net book value of $1.4 million. As of December 31, 1999, all equipment was either on lease or operating in PLM-affiliated short-term trailer rental facilities, except for one commercial aircraft, seven railcars, and 221 marine containers, with an aggregate net book value of $2.1 million. During the nine months ended September 30, 2000, the Partnership disposed of all of its trailers and certain marine containers and railcars with an aggregate net book value of $1.5 million, for aggregate proceeds of $1.8 million. During the nine months ended September 30, 1999, the Partnership disposed of aircraft, marine containers, railcars, and trailers with an aggregate net book value of $5.9 million, for aggregate proceeds of $10.4 million. PLM EQUIPMENT GROWTH FUND IV (A Limited Partnership) NOTES TO FINANCIAL STATEMENTS September 30, 2000 7. INVESTMENTS IN UNCONSOLIDATED SPECIAL-PURPOSE ENTITIES The net investments in USPEs included the following jointly-owned equipment (and related assets and liabilities) (in thousands of dollars):
September 30, December 31, 2000 1999 ---------------------------------- 35% interest in a trust owning two DC-9 stage III commercial aircraft on direct finance lease $ 3,138 $ 3,548 50% interest in an entity that sold a bulk-carrier (14) (133) ------------------------------- Net investments $ 3,124 $ 3,415 ================================
As of September 30, 2000 and December 31, 1999, the remaining jointly-owned equipment in the Partnership's USPE portfolio was on lease. 8. OPERATING SEGMENTS The Partnership operates or operated in five different segments: aircraft leasing, railcar leasing, marine container leasing, marine vessel leasing, and trailer leasing. Each equipment leasing segment engages in short-term to mid-term operating leases to a variety of customers. The following tables present a summary of the operating segments (in thousands of dollars):
Marine Marine Aircraft Railcar Container Vessel Trailer All FOR THE QUARTER ENDED SEPTEMBER 30, Leasing Leasing Leasing Leasing Leasing Other(1) Total 2000 REVENUES Lease revenue $ 196 $ 701 $ 20 $ -- $ 193 $ -- $ 1,110 Interest income and other -- -- -- -- -- 28 28 Gain (loss) on disposition of -- (3) 28 -- 129 -- 154 equipment ------------------------------------------------------------------------- Total revenues 196 698 48 -- 322 28 1,292 COSTS AND EXPENSES Operations support 23 151 2 -- 79 6 261 Depreciation 336 104 86 -- 61 -- 587 Management fees to affiliates 4 44 1 -- 13 -- 62 General and administrative expenses 39 20 -- -- 99 144 302 Recovery of bad debts -- (27) -- -- (1) -- (28) Loss on revaluation -- -- -- -- 106 -- 106 ------------------------------------------------------------------------- Total costs and expenses 402 292 89 -- 357 150 1,290 ------------------------------------------------------------------------- Equity in net income (loss) of USPEs 115 -- -- (32) -- -- 83 ------------------------------------------------------------------------- Net income (loss) $ (91) $ 406 $ (41) $ (32) $ (35) $ (122) $ 85 ========================================================================= Total assets as of September 30, 2000 $ 5,571 $ 4,388 $ 629 $ (14 ) $ 22 $ 2,888 $ 13,484 =========================================================================
(1) Includes certain interest income and costs not identifiable to a particular segment, such as certain operations support and general and administrative expenses. PLM EQUIPMENT GROWTH FUND IV (A Limited Partnership) NOTES TO FINANCIAL STATEMENTS September 30, 2000 8. OPERATING SEGMENTS (CONTINUED)
Marine Marine Aircraft Railcar Container Vessel Trailer All FOR THE QUARTER ENDED SEPTEMBER 30, Leasing Leasing Leasing Leasing Leasing Other(1) Total 1999 REVENUES Lease revenue $ 643 $ 751 $ (18) $ 374 $ 269 $ -- $ 2,019 Interest income and other 2 -- -- -- -- 43 45 Gain (loss) on disposition of 2,427 14 11 -- (8 ) -- 2,444 equipment ------------------------------------------------------------------------- Total revenues 3,072 765 (7) 374 261 43 4,508 COSTS AND EXPENSES Operations support 37 120 1 188 89 9 444 Depreciation and amortization 591 155 146 81 80 10 1,063 Interest expense -- -- -- -- -- 203 203 Management fees to affiliates 26 53 (1) 19 17 -- 114 General and administrative expenses 39 28 2 44 52 114 279 Provision for bad debts -- 6 -- -- 10 -- 16 ------------------------------------------------------------------------- Total costs and expenses 693 362 148 332 248 336 2,119 ------------------------------------------------------------------------- Equity in net income (loss) of USPEs 132 -- -- (27 ) -- -- 105 ------------------------------------------------------------------------- Net income (loss) $ 2,511 $ 403 $ (155) $ 15 $ 13 $ (293) $ 2,494 ========================================================================= Total assets as of September 30, 1999 $ 8,373 $ 4,910 $ 1,575 $ 3,608 $ 1,804 $ 1,841 $ 22,111 ========================================================================= Marine Marine Aircraft Railcar Container Vessel Trailer All FOR THE NINE MONTHS ENDED SEPTEMBER Leasing Leasing Leasing Leasing Leasing Other(2) Total 30, 2000 Revenues Lease revenue $ 588 $ 2,191 $ 62 $ -- $ 635 $ -- $ 3,476 Interest income and other 2 -- -- -- -- 112 114 Gain (loss) on disposition of -- (13) 154 -- 112 -- 253 equipment ------------------------------------------------------------------------- Total revenues 590 2,178 216 -- 747 112 3,843 Costs and expenses Operations support 126 511 5 -- 207 51 900 Depreciation 1,007 323 271 -- 186 -- 1,787 Management fees to affiliates 12 145 3 -- 49 -- 209 General and administrative expenses 103 82 1 -- 213 396 795 Recovery of bad debts (9) (23) -- -- (142) -- (174) Loss on revaluation -- -- -- -- 106 -- 106 ------------------------------------------------------------------------- Total costs and expenses 1,239 1,038 280 -- 619 447 3,623 ------------------------------------------------------------------------- Equity in net income of USPEs 426 -- -- 123 -- -- 549 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Net income (loss) $ (223) $ 1,140 $ (64) $ 123 $ 128 $ (335) $ 769 ========================================================================= Total assets as of September 30, 2000 $ 5,571 $ 4,388 $ 629 $ (14 ) $ 22 $ 2,888 $ 13,484 =========================================================================
(1) Includes certain interest income and costs not identifiable to a particular segment, such as interest expense, and amortization expense, and certain operations support and general and administrative expenses. (2) Includes certain interest income and costs not identifiable to a particular segment, such as certain operations support and general and administrative expenses. PLM EQUIPMENT GROWTH FUND IV (A Limited Partnership) NOTES TO FINANCIAL STATEMENTS September 30, 2000 8. OPERATING SEGMENTS (CONTINUED)
Marine Marine Aircraft Railcar Container Vessel Trailer All FOR THE NINE MONTHS ENDED SEPTEMBER Leasing Leasing Leasing Leasing Leasing Other(1) Total 30, 1999 REVENUES Lease revenue $ 2,385 $ 2,373 $ 123 $ 834 $ 822 $ -- $ 6,537 Interest income and other 6 -- -- -- -- 104 110 Gain (loss) on disposition of 4,598 (130) 63 -- (80) -- 4,451 equipment ------------------------------------------------------------------------- Total revenues 6,989 2,243 186 834 742 104 11,098 COSTS AND EXPENSES Operations support 1,441 497 3 833 245 26 3,045 Depreciation and amortization 1,983 481 449 242 231 29 3,415 Interest expense -- -- -- -- -- 824 824 Management fees to affiliates 102 167 6 42 52 -- 369 General and administrative expenses 201 83 7 55 198 360 904 Provision for bad debts -- 12 -- -- 28 -- 40 ------------------------------------------------------------------------- Total costs and expenses 3,727 1,240 465 1,172 754 1,239 8,597 ------------------------------------------------------------------------- Equity in net income (loss) of USPEs 403 -- -- (312) -- -- 91 ------------------------------------------------------------------------- Net income (loss) $ 3,665 $ 1,003 $ (279) $ (650) $ (12) $ (1,135) $ 2,592 ========================================================================= Total assets as of September 30, 1999 $ 8,373 $ 4,910 $ 1,575 $ 3,608 $ 1,804 $ 1,841 $ 22,111 =========================================================================
(1) Includes certain interest income and costs not identifiable to a particular segment, such as interest expense, and amortization expense, and certain operations support and general and administrative expenses. 9. NET INCOME PER WEIGHTED-AVERAGE PARTNERSHIP UNIT Net income per weighted-average Partnership unit was computed by dividing net income attributable to limited partners by the weighted-average number of Partnership units deemed outstanding during the period. The weighted-average number of Partnership units deemed outstanding during the three and nine months ended September 30, 2000 and 1999 was 8,628,420. 10. CONTINGENCIES PLM International (the Company) and various of its wholly owned subsidiaries are defendants in a class action lawsuit filed in January 1997 and which is pending in the United States District Court for the Southern District of Alabama, Southern Division (Civil Action No. 97-0177-BH-C) (the court). The named plaintiffs are six individuals who invested in the Partnership, PLM Equipment Growth Fund V (Fund V), PLM Equipment Growth Fund VI (Fund VI), and PLM Equipment Growth & Income Fund VII (Fund VII) (the Funds), each a California limited partnership for which the Company's wholly owned subsidiary, PLM Financial Services, Inc. (FSI), acts as the General Partner. The complaint asserts causes of action against all defendants for fraud and deceit, suppression, negligent misrepresentation, negligent and intentional breaches 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 Funds, and concealing such mismanagement from investors in the Funds. Plaintiffs seek unspecified compensatory damages, as well as punitive damages. PLM EQUIPMENT GROWTH FUND IV (A Limited Partnership) NOTES TO FINANCIAL STATEMENTS September 30, 2000 10. CONTINGENCIES (CONTINUED) 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, 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 the Funds. The complaint alleges the same facts and the same causes of action as in the Koch action, plus additional causes of action against all of the defendants, including alleged unfair and deceptive practices and violations of state securities law. In July 1997, defendants filed a petition (the petition) in federal district court under the Federal Arbitration Act seeking to compel arbitration of plaintiff's claims. In October 1997, the district court denied the Company's petition, but in November 1997, agreed to hear the Company's motion for reconsideration. Prior to reconsidering its order, the district court dismissed the petition pending settlement of the Romei action, as discussed below. The state court action continues to be stayed pending such resolution. In February 1999 the parties to the Koch and Romei actions agreed to settle the lawsuits, with no admission of liability by any defendant, and filed a Stipulation of Settlement with the court. The settlement is divided into two parts, a monetary settlement and an equitable settlement. 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 $6.6 million. The final settlement amount will depend on the number of claims filed by class members, the amount of the administrative costs incurred in connection with the settlement, and the amount of attorneys' fees awarded by the court to plaintiffs' attorneys. The Company will pay up to $0.3 million of the monetary settlement, with the remainder being funded by an insurance policy. For settlement purposes, the monetary settlement 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 Funds between May 23, 1989 and August 30, 2000. The monetary settlement, if approved, will go forward regardless of whether the equitable settlement is approved or not. The equitable settlement provides, among other things, for: (a) the extension (until January 1, 2007) of the date by which FSI must complete liquidation of the Funds' equipment, (b) the extension (until December 31, 2004) of the period during which FSI can reinvest the Funds' funds in additional equipment, (c) an increase of up to 20% in the amount of front-end fees (including acquisition and lease negotiation fees) that FSI is entitled to earn in excess of the compensatory limitations set forth in the North American Securities Administrator's Association's Statement of Policy; (d) a one-time repurchase by each of Funds V, VI and VII of up to 10% of that partnership's outstanding units for 80% of net asset value per unit; and (e) the deferral of a portion of the management fees paid to an affiliate of FSI until, if ever, certain performance thresholds have been met by the Funds. Subject to final court approval, these proposed changes would be made as amendments to each Fund's limited partnership agreement if less than 50% of the limited partners of each Partnership vote against such amendments. The equitable settlement also provides for payment of additional attorneys' fees to the plaintiffs' attorneys from Partnership funds in the event, if ever, that certain performance thresholds have been met by the Funds. The equitable settlement class consists of all investors, limited partners, assignees or unit holders who on August 30, 2000 held any units in Funds V, VI, and VII, and their assigns and successors in interest. PLM EQUIPMENT GROWTH FUND IV (A Limited Partnership) NOTES TO FINANCIAL STATEMENTS September 30, 2000 10. CONTINGENCIES (CONTINUED) The court preliminarily approved the monetary and equitable settlements in August 2000, and information regarding each of the settlements was sent to class members in September 2000. The monetary settlement remains subject to certain conditions, including final approval by the court following a final fairness hearing. The equitable settlement remains subject to certain conditions, including disapproval of the proposed amendments to the partnership agreements by less than 50% of the limited partners in one or more of Funds V, VI, and VII, judicial approval of the proposed amendments and final approval of the equitable settlement by the court following a final fairness hearing. A final fairness hearing has been scheduled for November 29, 2000. 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 Partnership, together with affiliates, has initiated litigation in various official forums in India against each of two defaulting Indian airline lessees to repossess Partnership property and to recover damages for failure to pay rent and failure to maintain such property in accordance with relevant lease contracts. The Partnership has repossessed all of its property previously leased to such airlines, and the airlines have ceased operations. In response to the Partnership's collection efforts, the two airlines each filed counter-claims against the Partnership in excess of the Partnership's claims against the airlines. The General Partner believes that the airlines' counterclaims are completely without merit, and the General Partner will vigorously defend against such counterclaims. The General Partner believes an unfavorable outcome from the counterclaims is remote. The Partnership is involved as plaintiff or defendant in various other legal actions incident to its business. Management does not believe that any of these actions will be material to the financial condition of the Company. 11. LIQUIDATION AND SPECIAL DISTRIBUTIONS On January 1, 1999, the General Partner began the liquidation phase of the Partnership with the intent to commence an orderly liquidation of the Partnership assets. The General Partner is actively marketing the remaining equipment portfolio with the intent of maximizing sale proceeds. As sale proceeds are received the General Partner intends to periodically declare special distributions to distribute the sale proceeds to the partners. During the liquidation phase of the Partnership the equipment will continue to be leased under operating leases until sold. Operating cash flows, to the extent they exceed Partnership expenses, will continue to be distributed on a quarterly basis to partners. The amounts reflected for assets and liabilities of the Partnership have not been adjusted to reflect liquidation values. The equipment portfolio continues to be carried at the lower of depreciated cost or fair value less cost to dispose. Although the General Partner estimates that there will be distributions after liquidation of assets and liabilities, the amounts cannot be accurately determined prior to actual liquidation of the equipment. Any excess proceeds over expected Partnership obligations will be distributed to the Partners throughout the liquidation period. Upon final liquidation, the Partnership will be dissolved. PLM EQUIPMENT GROWTH FUND IV (A Limited Partnership) NOTES TO FINANCIAL STATEMENTS September 30, 2000 11. LIQUIDATION AND SPECIAL DISTRIBUTIONS (CONTINUED) The Partnership is not permitted to reinvest proceeds from sales or liquidations of equipment. These proceeds, in excess of operational cash requirements, are periodically paid out to partners in the form of special distributions. The sales and liquidations occur due to the determination by the General Partner that it is the appropriate time to maximize the return on an asset through sale of that asset, and, in some leases, the ability of the lessee to exercise purchase options. In the nine months ended September 30, 2000, the General Partner paid special distributions of $0.50 per weighted-average limited partnership unit. No special distibutions were paid in the nine months ended September 30, 1999. (This space is intentionally left blank.) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (I) RESULTS OF OPERATIONS COMPARISON OF THE PLM EQUIPMENT GROWTH FUND IV'S (THE PARTNERSHIP'S) OPERATING RESULTS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 (A) Owned Equipment Operations Lease revenues less direct expenses (defined as repairs and maintenance and equipment operating expenses) on owned equipment decreased during the third quarter of 2000 compared to the same period of 1999. Gains or losses from the sale of equipment, and interest and other income and certain expenses such as depreciation and amortization and general and administrative expenses relating to the operating segments (see Note 8 to the financial statements), are not included in the owned equipment operation discussion because they are indirect in nature and not a result of operations but the result of owning a portfolio of equipment. The following table presents lease revenues less direct expenses by segment (in thousands of dollars): For the Three Months Ended September 30, 2000 1999 ---------------------------- Railcars $ 550 $ 631 Aircraft 173 606 Trailers 114 180 Marine containers 18 (19) Marine vessel -- 186 Railcars: Railcar lease revenues and direct expenses were $0.8 million and $0.1 million, respectively, for the third quarter of 2000 and 1999. The decrease in railcar contribution in the third quarter of 2000 was due to the disposition of railcars in 1999 and 2000. Aircraft: Aircraft lease revenues and direct expenses were $0.2 million and $23,000, respectively, for the third quarter of 2000, compared to $0.6 million and $37,000, respectively, during the same period of 1999. The decrease in aircraft contribution in the third quarter of 2000 was due to the disposition of aircraft in 1999. Trailers: Trailer lease revenues and direct expenses were $0.2 million and $0.1 million, respectively, for the third quarter of 2000, compared to $0.3 million and $0.1 million, respectively, during the same period of 1999. The decrease in trailer contribution in the third quarter of 2000 was due to the disposition of trailers in 1999 and 2000. Marine vessel: Marine vessel lease revenues and direct expenses were $0.4 million and $0.2 million, respectively, for the third quarter of 1999. The Partnership's remaining wholly-owned marine vessel was sold in the fourth quarter of 1999. (B) Indirect Expenses Related to Owned Equipment Operations Total indirect expenses of $1.0 million for the third quarter of 2000 decreased from $1.7 million for the same period in 1999. Significant variances are explained as follows: (i) A $0.5 million decrease in depreciation and amortization expenses from 1999 levels resulted from a $0.3 million decrease due to the sale of certain assets during 2000 and 1999 and a $0.2 million decrease resulting from the use of the double-declining balance depreciation method which results in greater depreciation in the first years an asset is owned. (ii) A $0.2 million decrease in interest expense was due to the repayment of the Partnership's outstanding debt in 1999. (iii) A $0.1 million decrease in management fees to an affiliate resulted from the lower levels of lease revenues on owned equipment in the third quarter of 2000, when compared to the same period in 1999. (iv) Loss on revaluation of equipment increased $0.1 million during the third quarter of 2000 compared to the same period in 1999. In the third quarter of 2000, the Partnership reduced the carrying value of its trailers to their estimated net realizable value. No revaluation of equipment was required during the same period in 1999. (C) Net Gain on Disposition of Owned Equipment The net gain on disposition of equipment for the third quarter of 2000 totaled $0.2, which resulted from the sale or disposal of marine containers, trailers and railcars with an aggregate net book value of $1.2 million, for proceeds of $1.4 million. For the third quarter of 1999, net gain on disposition of equipment totaled $2.4 million, which resulted from the sale or disposal of an aircraft, trailers, marine containers and railcars with an aggregate net book value of $2.6 million, for proceeds of $5.0 million. (D) Equity in Net Income (Loss) of Unconsolidated Special-Purpose Entities (USPEs) Net income (loss) generated from the operation of jointly-owned assets accounted for under the equity method is shown in the following table by equipment type (in thousands of dollars): For the Three Months Ended September 30, 2000 1999 ---------------------------- Aircraft $ 115 $ 132 Marine vessel (32) (27) ---------------------------- Equity in net income of USPEs $ 83 $ 105 ============================ Aircraft: As of September 30, 2000 and 1999, the Partnership had an interest in a trust that owns two commercial aircraft on direct finance lease. Aircraft revenues and expenses were $0.1 million and $17,000, respectively, for the third quarter of 2000, compared to $0.1 million and $14,000, respectively, during the same period in 1999. Marine vessel: As of September 30, 2000, the Partnership had no remaining interests in entities which owned marine vessels. Marine vessel revenues and expenses were $0.3 million and $0.3 million, respectively, during the third quarter of 1999. The Partnership's remaining partially-owned marine vessel was sold in the fourth quarter of 1999. (E) Net Income As a result of the foregoing, the Partnership's net income was $0.1 million for the third quarter of 2000, compared to net income of $2.5 million during the same period of 1999. The Partnership's ability to operate and liquidate assets, secure leases, and re-lease those assets whose leases expire is subject to many factors, and the Partnership's performance in the quarter ended September 30, 2000 is not necessarily indicative of future periods. In the third quarter of 2000, the Partnership distributed $0.8 million to the limited partners, or $0.10 per weighted-average limited partnership unit. COMPARISON OF THE PARTNERSHIP'S OPERATING RESULTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 (A) Owned Equipment Operations Lease revenues less direct expenses (defined as repairs and maintenance and equipment operating expenses) on owned equipment decreased during the nine months ended September 30, 2000 compared to the same period of 1999. The following table presents lease revenues less direct expenses by segment (in thousands of dollars): For the Nine Months Ended September 30, 2000 1999 ---------------------------- Railcars $ 1,680 $ 1,876 Aircraft 462 944 Trailers 428 577 Marine containers 57 120 Marine vessel -- 1 Railcars: Railcar lease revenues and direct expenses were $2.2 million and $0.5 million, respectively, for the nine months ended September 30, 2000, compared to $2.4 million and $0.5 million, respectively, during the same period in 1999. The decrease in railcar contribution in the nine months ended September 30, 2000 was due to the disposition of railcars in 1999 and 2000. Aircraft: Aircraft lease revenues and direct expenses were $0.6 million and $0.1 million, respectively, for the nine months ended September 30, 2000, compared to $2.4 million and $1.4 million, respectively, during the same period of 1999. The decrease in aircraft contribution in the nine months ended September 30, 2000 was due to the disposition of aircraft in 1999. Trailers: Trailer lease revenues and direct expenses were $0.6 million and $0.2 million, respectively for the nine months ended September 30, 2000, compared to $0.8 million and $0.2 million, respectively, during the same period of 1999. The decrease in trailer contribution in the nine months ended September 30, 2000 was due to the disposition of trailers in 1999 and 2000. Marine containers: Marine container lease revenues and direct expenses were $0.1 million and $5,000, respectively, for the nine months ended September 30, 2000, compared to $0.1 million and $3,000, respectively, during the same period of 1999. The decrease in marine container contribution in the nine months ended September 30, 2000 was due to the disposition of marine containers in 1999 and 2000. Marine vessel: Marine vessel lease revenues and direct expenses were $0.8 million and $0.8 million, respectively, for the nine months ended September 30, 1999. The Partnership's remaining wholly-owned marine vessel was sold in the fourth quarter of 1999. (B) Indirect Expenses Related to Owned Equipment Operations Total indirect expenses of $2.7 million for the nine months ended September 30, 2000 decreased from $5.6 million for the same period in 1999. Significant variances are explained as follows: (i) A $1.6 million decrease in depreciation and amortization expenses from 1999 levels resulted from a $1.1 million decrease due to the sale of certain assets during 2000 and 1999 and a $0.5 million decrease resulting from the use of the double-declining balance depreciation method which results in greater depreciation the first years an asset is owned. (ii) A $0.8 million decrease in interest expense was due to the repayment of the Partnership's outstanding debt in 1999. (iii) The $0.2 million decrease in the bad debt expense was due to the collection of $0.2 million receivable in the nine months ended September 30, 2000 that had previously been reserved for as bad debts. A similar recovery did not occur in 1999. (iv) A $0.1 million decrease in administrative expenses from 1999 levels due to reduced professional services required by the Partnership, resulting primarily from the reduced equipment portfolio. (v) A $0.2 million decrease in management fee to an affiliate resulted from the lower levels of lease revenues on owned equipment in the nine months ended September 30, 2000, when compared to the same period in 1999. (vi) The Partnership recorded a loss on revaluation of equipment of $0.1 million in the nine months ended September 30, 2000 in order to reduce the carrying value of its trailers to their estimated net realizable value. No revaluation of equipment was required during the same period in 1999. (C) Net Gain on Disposition of Owned Equipment The net gain on disposition of equipment for the nine months ended September 30, 2000 totaled $0.3 million, which resulted from the sale or disposal of marine containers, trailers and railcars with an aggregate net book value of $1.5 million, for aggregate proceeds of $1.8 million. For the nine months ended September 30, 1999, net gain on disposition of equipment totaled $4.5 million, which resulted from the sale or disposal of an aircraft, marine containers, trailers and railcars with an aggregate net book value of $5.9 million, for aggregate proceeds of $10.4 million. (D) Equity in Net Income (Loss) of Unconsolidated Special-Purpose Entities Net income (loss) generated from the operation of jointly-owned assets accounted for under the equity method is shown in the following table by equipment type (in thousands of dollars): For the Nine Months Ended September 30, 2000 1999 ---------------------------- Aircraft $ 426 $ 403 Marine vessel 123 (312) ---------------------------- Equity in net income of USPEs $ 549 $ 91 ============================ Aircraft: As of September 30, 2000 and 1999, the Partnership had an interest in a trust that owns two commercial aircraft on direct finance lease. Aircraft revenues and expenses were $0.4 million and $(19,000), respectively, for the nine months ended September 30, 2000, compared to $0.4 million and $45,000, respectively, during the same period in 1999. The decrease in expenses was due to a $0.1 million collection of a receivable that had been previously written-off as a bad debt. A similar event did not occur during the same period of 1999. Marine vessel: As of September 30, 2000, the Partnership had no remaining interests in entities which owned marine vessels. Marine vessel revenues and expenses were $0.1 million and $(5,000), respectively, for the nine months ended September 30, 2000, compared to $0.7 million and $1.0 million, respectively, during the same period in 1999. Revenues decreased $0.7 million in the nine months ended September 30, 2000 due to the sale of the Partnership's only remaining marine vessel in the fourth quarter of 1999. This decrease was partially offset by the receipt of $0.1 million for an insurance claim in the nine months ended September 30, 2000. Expenses decreased as a result of the sale of the marine vessel. (E) Net Income As a result of the foregoing, the Partnership's net income was $0.8 million for the nine months ended September 30, 2000, compared to net income of $2.6 million during the same period of 1999. The Partnership's ability to operate and liquidate assets, secure leases, and re-lease those assets whose leases expire is subject to many factors, and the Partnership's performance in the nine months ended September 30, 2000 is not necessarily indicative of future periods. In the nine months ended September 30, 2000, the Partnership distributed $2.5 million to the limited partners, or $0.30 per weighted-average limited partnership unit. In addition, a special distribution of $4.3 million or $0.50 per weighted-average limited partnership unit was made in the nine months of 2000. There were no special distributions in the nine months ended September 30, 1999. (II) FINANCIAL CONDITION -- CAPITAL RESOURCES AND LIQUIDITY For the nine months ended September 30, 2000, the Partnership generated $2.8 million in operating cash (net cash provided by operating activities plus non-liquidating distributions from USPEs) to meet its operating obligations, but used undistributed available cash from prior periods and proceeds from equipment sales and liquidating distibutions from USPEs of approximately $4.4 million to make the distributions (total of $7.2 million in the nine months ended September 30, 2000, which includes a special distribution of $4.5 million) to the partners. During the nine months ended September 30, 2000, the Partnership sold or disposed of marine containers, trailers, and railcars with an aggregate net book value of $1.5 million, for aggregate proceeds of $1.8 million. Accounts receivable decreased $0.3 million during the nine months ended September 30, 2000 due to the timing of receipt of payments from lessees and the reduction in lease revenues. Accounts payable and accrued expenses decreased $0.2 million during the nine months ended September 30, 2000 due to a decrease in trade accounts payable resulting from the reduction of the size of the Partnership's equipment portfolio. Lessee deposits and reserve for repairs decreased $0.1 million during the nine months ended September 30, 2000 due to the decrease in reserves resulting from the sale of marine containers in 2000. The General Partner has not planned any expenditures, nor is it aware of any contingencies that would cause the Partnership to require any additional capital to that mentioned above. The Partnership is in its active liquidation phase. As a result, the size of the Partnership's remaining equipment portfolio and, in turn, the amount of net cash flows from operations will continue to become progressively smaller as assets are sold. Although distribution levels may be reduced, significant asset sales may result in potential special distributions to the partners. The amounts reflected for assets and liabilities of the Partnership have not been adjusted to reflect liquidation values. The equipment portfolio that is actively being marketed for sale by the General Partner continues to be carried at the lower of depreciated cost or fair value less cost of disposal. Although the General Partner estimates that there will be distributions to the partners after final disposal of assets and settlement of liabilities, the amounts cannot be accurately determined prior to actual disposal of the equipment. (III) OUTLOOK FOR THE FUTURE The Partnership is in its active liquidation phase. The General Partner is seeking to selectively re-lease or sell assets as the existing leases expire. Sale decisions will cause the operating performance of the Partnership to decline over the remainder of its life. The General Partner anticipates that the liquidation of Partnership assets will be completed in 2001. Several factors may affect the Partnership's operating performance in 2000 and beyond, including changes in the markets for the Partnership's equipment and changes in the regulatory environment in which that equipment operates. Liquidation of the Partnership's equipment and its investment in a USPE will cause a reduction in the size of the equipment portfolio and may result in a reduction of contribution to the Partnership. Other factors affecting the Partnership's contribution in the year 2000 include: 1. One of the Partnership's aircraft has been off-lease for approximately three years. This Stage II aircraft required extensive repairs and maintenance and the Partnership has had difficulty selling the aircraft. This aircraft will remain off-lease until it is sold. 2. The cost of new marine containers had been at historic lows for the past several years which has caused downward pressure on per diem lease rates. Recently, the cost of marine containers have started to increase which, if this trend continues, should translate into rising per diem lease rates. However, some of the Partnership's refrigerated marine containers have experienced a roof delimination problem which has limited their re-lease opportunities. These marine containers are currently off lease and the General Partner plans to dispose of these containers. 3. Railcar loadings in North America have continued to be high, however a softening in the market is expected and will lead to lower utilization and lower contribution to the Partnership as existing leases expire and renewal leases are negotiated. The ability of the Partnership to realize acceptable lease rates on its equipment in the different equipment markets is contingent on many factors, such as specific market conditions and economic activity, technological obsolescence, and government or other regulations. The unpredictability of some of these factors, or of their occurrence, makes it difficult for the General Partner to clearly define trends or influences that may impact the performance of the Partnership's equipment. The General Partner continually monitors both the equipment markets and the performance of the Partnership's equipment in these markets. The General Partner may make an evaluation to reduce the Partnership's exposure to equipment markets in which it determines that it cannot operate equipment and achieve acceptable rates of return. The Partnership intends to use cash flow from operations and proceeds from disposition of equipment to satisfy its operating requirements, maintain working capital reserves, and pay cash distributions to the investors. (IV) FORWARD-LOOKING INFORMATION Except for the 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 Partnership'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 Partnership's actual results could differ materially from those discussed here. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Partnership's primary market risk exposure is that of currency devaluation risk. During the first nine months of 2000, 79% of the Partnership's total lease revenues from wholly- and partially-owned equipment came from non-United States domiciled lessees. Most of the leases require payment in United States (U.S.) currency. If these lessees currency devalues against the U.S. dollar, the lessees could encounter difficulty in making the U.S. dollar denominated lease payments. PART II -- OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits None. (b) Reports on Form 8-K None. 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 EQUIPMENT GROWTH FUND IV By: PLM Financial Services, Inc. General Partner Date: November 6, 2000 By: /s/Richard K Brock Richard K Brock Chief Financial Officer EX-27 2 0002.txt FDS --
5 PLM EQUIPMENT GROWTH FUND 4 0000847517 PLM EQUIPMENT GROWTH FUND 4 1,000 U.S.DOLLARS 9-MOS DEC-31-2000 JAN-01-2000 SEP-30-2000 1 3,031 0 2,657 (2,480) 0 0 39,685 (32,537) 13,484 0 0 0 0 0 12,891 13,484 0 3,843 0 0 3,797 (174) 0 769 0 769 0 0 0 769 0.80 0.80
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