-----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, G7GqgSRhWfPeYB7cmcCB843cvZs9QoKeT6kBQ2OKqNMzK6K/xpJ1BN5QyA0YxspG K5iyEYmWF9x12593EGkzLA== 0000847517-97-000002.txt : 19970514 0000847517-97-000002.hdr.sgml : 19970514 ACCESSION NUMBER: 0000847517-97-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970513 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PLM EQUIPMENT GROWTH FUND IV CENTRAL INDEX KEY: 0000847517 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EQUIPMENT RENTAL & LEASING, NEC [7359] IRS NUMBER: 943090127 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-18789 FILM NUMBER: 97602720 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 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 March 31, 1997. [ ] 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 33-27746 ----------------------- 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, except unit amounts) ASSETS
March 31, December 31, 1997 1996 --------------------------------- Equipment held for operating leases, at cost $ 89,595 $ 89,766 Less accumulated depreciation (52,438 ) (50,784 ) -------------------------------- 37,157 38,982 Equipment held for sale -- 5,524 -------------------------------- Net equipment 37,157 44,506 Cash and cash equivalents 8,491 2,142 Restricted cash 552 552 Due from affiliates 357 357 Investments in unconsolidated special purpose entities 9,373 9,616 Accounts and notes receivable, net of allowance for doubtful accounts of $2,061 in 1997 and $2,329 in 1996 1,755 1,477 Deferred charges, net of accumulated amortization of $409 in 1997 and $414 in 1996 195 219 Prepaid expenses and other assets 67 140 -------------------------------- Total assets $ 57,947 $ 59,009 ================================ LIABILITIES AND PARTNERS' CAPITAL Liabilities: Accounts payable and accrued expenses $ 748 $ 1,027 Due to affiliates 148 304 Lessee deposits and reserve for repairs 2,787 3,519 Notes payable 29,250 29,250 -------------------------------- Total liabilities 32,933 34,100 Partners' capital: Limited partners (8,628,420 limited partnership units at March 31, 1997 and at December 31, 1996) 25,014 24,909 General Partner -- -- -------------------------------- Total partners' capital 25,014 24,909 -------------------------------- Total liabilities and partners' capital $ 57,947 $ 59,009 ================================
See accompanying notes to financial statements. PLM EQUIPMENT GROWTH FUND IV (A Limited Partnership) STATEMENTS OF OPERATIONS (in thousands, except per unit amounts)
For the Three Months Ended March 31, 1997 1996 ------------------------------- Revenues: Lease revenue $ 3,385 $ 4,556 Interest and other income 100 31 Net gain on disposition of equipment 2,340 9 ------------------------------ Total revenues 5,825 4,596 Expenses: Depreciation and amortization 1,782 2,405 Management fees to affiliate 184 206 Repairs and maintenance 248 1,288 Interest expense 713 751 Insurance expense to affiliates 67 47 Other insurance expense 129 161 Marine equipment operating expenses 308 554 General and administrative expenses to affiliates 235 122 Other general and administrative expense 392 208 (Recovery of) provision for bad debt expense (266 ) 909 ------------------------------ Total expenses 3,792 6,651 Equity in net loss of unconsolidated special purpose entities (111 ) (147 ) ------------------------------ Net income (loss) $ 1,922 $ (2,202 ) ============================== Partners' share of net income (loss): Limited partners $ 1,831 $ (2,293 ) General Partner 91 91 ------------------------------ Total $ 1,922 $ (2,202 ) ============================== Net income (loss) per weighted average limited partnership unit (8,628,420 units at March 31, 1997 and 8,642,413 units at March 31, 1996) $ 0.21 $ (0.27 ) ============================== Cash distributions $ 1,817 $ 1,818 ============================== Cash distributions per weighted average limited partnership unit $ 0.20 $ 0.20 ==============================
See accompanying notes to financial statements. PLM EQUIPMENT GROWTH FUND IV (A Limited Partnership) STATEMENT OF CHANGES IN PARTNERS' CAPITAL For the period from December 31, 1995 to March 31, 1997 (in thousands)
Limited General Partners Partner Total -------------------------------------------------- Partners' capital at December 31, 1995 $ 36,475 $ -- $ 36,475 Net income (loss) (4,482 ) 363 (4,119 ) Cash distributions (6,908 ) (363 ) (7,271 ) Repurchase of limited partnership units (176 ) -- (176 ) ------------------------------------------------- Partners' capital at December 31, 1996 24,909 -- 24,909 Net income 1,831 91 1,922 Cash distributions (1,726 ) (91 ) (1,817 ) -------------------------------------------------- Partner's capital at March 31, 1997 $ 25,014 $ -- $ 25,014 ==================================================
See accompanying notes to financial statements. PLM EQUIPMENT GROWTH FUND IV (A Limited Partnership) STATEMENTS OF CASH FLOWS (in thousands)
For the Three Months Ended March 31, 1997 1996 ---------------------------------- Operating activities: Net income (loss) $ 1,922 $ (2,202 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 1,782 2,405 Net gain on disposition of equipment (2,340 ) (9 ) Equity in net loss of unconsolidated special purpose entities 111 147 Changes in operating assets and liabilities: Restricted cash -- (100 ) Accounts and notes receivable, net (278 ) 861 Prepaid expenses and other assets 73 136 Due to affiliates (156 ) (192 ) Accounts payable and accrued expenses (279 ) 244 Lessee deposits and reserve for repairs (737 ) (119 ) Write-off of unused drydock accrual 990 -- ---------------------------------- ---------------------------------- Net cash provided by operating activities 1,088 1,171 ---------------------------------- Investing activities: Payments of capital improvements (1 ) (7 ) Distributions from unconsolidated special purpose entities 132 238 Proceeds from disposition of equipment 6,947 204 ---------------------------------- Net cash provided by investing activities 7,078 435 ---------------------------------- Financing activities: Repurchase of limited partnership units -- (60 ) Cash distributions paid to Limited partners (1,726 ) (1,727 ) Cash distributions paid to General Partner (91 ) (91 ) ---------------------------------- Net cash used in financing activities (1,817 ) (1,878 ) ---------------------------------- Cash and cash equivalents: Net increase (decrease) in cash and cash equivalents 6,349 (272 ) Cash and cash equivalents at beginning of period 2,142 1,236 ---------------------------------- Cash and cash equivalents at end of period $ 8,491 $ 964 ================================== Supplemental information: Interest paid $ 713 $ 751 ==================================
See accompanying notes to financial statements. PLM EQUIPMENT GROWTH FUND IV (A Limited Partnership) NOTES TO FINANCIAL STATEMENTS March 31, 1997 1. Opinion of Management In the opinion of the management of PLM Financial Services, Inc. (FSI), 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 March 31, 1997 and December 31, 1996, the statements of operations and cash flows for the three months ended March 31, 1997 and 1996, and the statement of changes in Partners' capital for the period from December 31, 1995 to March 31, 1997. Certain information and footnote 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, 1996, on file at the Securities and Exchange Commission. 2. Reclassification Certain amounts in the 1996 financial statements have been reclassified to conform to the 1997 presentation. 3. Cash Distribution Cash distributions are recorded when paid and totaled $1.8 million and $1.8 million for the three months ended March 31, 1997 and 1996. Cash distributions related to the first quarter results of $1.7 million will be paid during May 1997, depending on whether the individual unitholder elected to receive a monthly or quarterly distribution check. Cash distributions to unitholders in excess of net income are deemed to be a return of capital. Cash distributions to limited partners of $0 and $1.7 million, respectively, for the three months ended March 31, 1997 and 1996, were deemed to be a return of capital. 4. Investments in Unconsolidated Special Purpose Entities The net investments in unconsolidated special purpose entities (USPE) include the following jointly-owned equipment (and related assets and liabilities) (in thousands):
March 31 December 31, 1997 1996 ------------------------------------ 50% interest in an entity owning a bulk carrier $ 2,930 $ 3,165 17% interest in a trust owning six commercial aircraft 2,401 2,575 35% interest in two commercial aircraft on a direct finance lease 4,042 3,876 ------------------------------------ Net investments $ 9,373 $ 9,616 ====================================
5. General Partner and Transactions with Affiliates Partnership management fees of $0.1 million and $0.3 million were payable at March 31, 1997 and December 31, 1996, respectively. The Partnership's proportional share of the USPE management fees of $17,000 and $8,000 were payable as of March 31, 1997 and December 31, 1996, respectively. The Partnership's proportional share of the USPE management fees expenses for the quarter ended March 31, 1997 and 1996, respectively, was $20,000 and $33,000. An affiliate of the General Partner is reimbursed for administrative and data processing services directly attributable to the Partnership, which were $0.2 million and $0.1 million for the quarter PLM EQUIPMENT GROWTH FUND IV (A Limited Partnership) NOTES TO FINANCIAL STATEMENTS March 31, 1997 5. General Partner and Transactions with Affiliates ended March 31, 1997 and 1996, respectively. The Partnership's proportional share of the USPE administrative and data processing expenses was $8,000 and $5,000 for the quarter ended March 31, 1997 and 1996, respectively. The Partnership paid $67,000 and $47,000 at March 31, 1997 and 1996, respectively, to Transportation Equipment Indemnity Company, Ltd. (TEI) which provides marine insurance coverage and other insurance brokerage services. The Partnership's proportional share of USPE marine insurance coverage paid to TEI was $31,000 and $18,000 at March 31, 1997 and 1996, respectively. TEI is an affiliate of the General Partner. The balance in due from affiliates at March 31, 1997 and December 31, 1996, includes a $0.4 million due from TEI for a settlement on an insurance claim for one of the Partnership's marine vessel which was sold in 1995. This settlement was received by TEI in December of 1996. 6. Equipment Owned equipment held for operating leases is stated at cost. Equipment held for sale is stated at the lower of the equipment's depreciated cost or net realizable value and is subject to a pending contract for sale. Components of owned equipment are as follows (in thousands):
March 31, December 31, 1997 1996 --------------------------------- Equipment held for operating leases: Rail equipment $ 14,868 $ 14,867 Marine containers 15,364 15,498 Marine vessels 9,719 9,719 Aircraft 42,734 42,734 Trailers 6,910 6,948 -------------------------------- 89,595 89,766 Less accumulated depreciation (52,438 ) (50,784 ) -------------------------------- 37,157 38,982 Equipment held for sale -- 5,524 -------------------------------- Net equipment $ 37,157 $ 44,506 ================================
Equipment held for sale at December 31, 1996, included a marine vessel which was sold in the first quarter of 1997. As of March 31, 1997, all equipment was either on lease or operating in PLM-affiliated short-term trailer rental facilities, except for one aircraft, 23 railcars, and 85 marine containers. The net carrying value of equipment off-lease was $4.0 million at March 31, 1997. At December 31, 1996, one aircraft, three railcars, and 48 marine containers were off-lease with a net carrying value of $3.9 million. During the three months ended March 31, 1997, the Partnership sold or disposed of marine containers, trailers and a marine vessel with a net book value of $5.6 million and unused drydock reserves of $1.0 million, for proceeds of $6.9 million. During the three months ended March 31, 1996, the Partnership disposed of marine containers and a railcar with an aggregate net book value of $195,000 for aggregate proceeds of $204,000. PLM EQUIPMENT GROWTH FUND IV (A Limited Partnership) NOTES TO FINANCIAL STATEMENTS March 31, 1997 7. Contingencies As more fully described by the Partnership in its Form 10-K for the year ended December 31, 1996, PLM International, Inc. and various of its affiliates are named as defendants in a lawsuit filed as a class action on January 22, 1997, in the Circuit Court of Mobile County, Mobile, Alabama, Case No. CV-97-251. On February 3, 1997, the state court filed an Order conditionally certifying the class pursuant to the provisions of Rule 23 of the Alabama Rules of Civil Procedure (ARCP), as requested by plaintiffs in an ex parte motion filed on January 22, 1997. Defendants were not given notice of the motion, nor were they given an opportunity to be heard regarding the issue of conditional class certification. The Order specifies that the class shall consist of (with certain narrow exceptions) all purchasers of limited partnership units in the Partnership, PLM Equipment Growth Fund V, PLM Equipment Growth Fund VI, and PLM Equipment Growth & Income Fund VII. In issuing the Order, the court emphasized that the certification is conditional in accordance with Rule 23(d) of the ARCP, and that the plaintiffs will bear the burden of proving each requisite element of Rule 23 at the time of the evidentiary hearing on the issue of class certification. To date, no such hearing date has been set. The defendants filed a Notice of Removal of the lawsuit 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) on March 6, 1997, arguing that the parties are fully diverse for the purposes of diversity jurisdiction pursuant to 28 U.S.C. Section 1441. The plaintiffs filed a motion to remand the class action to the state court and have responded to this motion. Defendants do not need to respond to the complaint until after the federal court decides the motion to remand. PLM International, Inc. believes the allegations to be completely without merit and intends to defend this matter vigorously. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Comparison of the Partnership's Operating Results for the Three Months Ended March 31, 1997 and 1996 (A) Owned Equipment Operations Lease revenues less direct expenses (defined as repairs and maintenance, marine equipment operating, and asset specific insurance expenses) on owned equipment decreased during the first quarter of 1997 when compared to the same quarter of 1996. The following table presents lease revenues less direct expenses by owned equipment type (in thousands):
For the Three Months Ended March 31, 1997 1996 ---------------------------- Aircraft $ 1,119 $ 533 Marine vessels (94 ) 435 Trailers 405 445 Rail equipment 809 743 Marine containers 403 309 Mobile offshore drilling unit -- 87
Aircraft: Aircraft lease revenues and direct expenses were $1.1 million and $0.0 million, respectively, for the first quarter of 1997, compared to $1.3 million and $0.8 million, respectively, during the same quarter of 1996. The decrease in lease revenue was due to the off-lease status of an aircraft in the first quarter in 1997 when compared to the same quarter in 1996, when it was on-lease for the entire quarter. The decrease was offset, in part, by the purchase of a Dash 8-300 aircraft at the end of the second quarter of 1996, which was on-lease for the entire first quarter in 1997. Direct expenses decreased due to the overhaul of four engines on an aircraft in the first quarter of 1996 that was not required in 1997. Marine vessels: Marine vessel lease revenues and direct expenses were $0.4 million and $0.5 million respectively, for the first quarter of 1997, compared to $1.4 million and $1.0 million, respectively, during the same quarter of 1996. Marine vessel contribution decreased due to the sale of a marine vessel in the beginning of 1997. In addition, lease revenue decreased in the first quarter of 1997 for the remaining marine vessel due to lower re-lease rates as a result of a softer bulk carrier vessel market. Trailers: Trailer revenues and direct expenses were $0.5 million and $0.1 million, respectively, for the first quarter of 1997 and 1996. Trailer contributions remained the same due to the relative stability of the trailer fleet. Rail equipment: Railcar lease revenues and direct expenses were $0.9 million and $0.1 million, respectively, for the first quarter of 1997, compared to $0.9 million and $0.2 million, respectively, during the same quarter of 1996. Although the railcar fleet remained relatively the same size for both quarters, the decrease in railcar contribution resulted from running repairs required on certain of the railcars in the fleet during the first quarter of 1996 which were not needed during the first quarter of 1997. Marine containers: Marine container lease revenues and direct expenses were $0.4 million and $3,000, respectively, for the first quarter of 1997, compared to $0.3 million and $14,000, respectively, during the same quarter of 1996. Although the marine container fleet has been declining due to sales and dispositions, lease revenues increased due to a group of containers which earned higher revenues in the first quarter of 1997 as compared to the same period in 1996. Mobile offshore drilling unit (rig): The rig was sold in the second quarter of 1996, resulting in the elimination of contribution in the first quarter. Revenues and expenses were $0.1 million and $0, respectively, in the first quarter of 1996. (B) Indirect Expenses Related to Owned Equipment Operations Total indirect expenses of $3.0 million for the quarter ended March 31, 1997, decreased from $4.6 million for the same period in 1996. The variances are explained as follows: (a) A $0.6 million decrease in depreciation and amortization expenses from 1996 levels reflecting the sale of certain assets during 1997 and 1996 and the 200% declining balance depreciation method. (b) The $1.2 million decrease in bad debt expenses is due to the following: (1) A $0.6 million decrease in the reserve for a certain lessee resulting from the receipt of payments of unpaid invoices which were previously reserved for and the application of security deposits against uncollected outstanding receivable, (2) during 1996, $0.8 million of the uncollected outstanding receivables of a certain lessee that is no longer a lessee in this Partnership were reserved for; and (3) during 1997 an increase of $0.2 million in reserves were recorded reflecting the General Partner's evaluation of the collectibility of receivables due from certain lessees. (c) A $0.3 million increase in administrative expenses from 1996 levels resulting from additional legal fees needed to collect outstanding receivables due to the Partnership from aircraft lessees. (C) Net Gain on Disposition of Owned Equipment Net gain on disposition of equipment for the first quarter of 1997, totaled $2.3 million which resulted from the sale or disposal of marine containers, trailers and a marine vessel with a net book value of $5.6 million and unused drydock reserves of $1.0 million, for proceeds of $6.9 million. For the first quarter of 1996, the $9,000 net gain on disposition of equipment resulted from the sale or disposal of marine containers and a railcar with an aggregate net book value of $195,000 for aggregate proceeds of $204,000. (D) Equity in Net Loss of Unconsolidated Special Purpose Entities Net loss generated from the operation of jointly-owned assets accounted for under the equity method are as follows (in thousands).
For the three months ended March 31, 1997 1996 ---------------------------- Aircraft $ 180 $ (66 ) Marine vessel (291 ) (81 )
Aircraft: As of March 31, 1997, the Partnership owned a 35% interest in a trust owning two commercial aircraft on direct finance leases and a 17% interest in another trust which owns commercial aircraft. As of March 31, 1996, the Partnership owned a17% interest in a trust that owns commercial aircraft. Aircraft revenues and expenses were $0.4 million and $0.2 million, respectively, for the first quarter of 1997, compared to $0.3 million and $0.4 million, respectively, during the same quarter in 1996. The contribution for the investment in a trust owning commercial aircraft on an operating lease is significantly impacted by the depreciation charges which are greatest in the early years due to the use of the 200% declining balance method of depreciation. The Trust depreciates this aircraft investment over 6 years. The investment in the trust owning the aircraft on direct finance leases was acquired at the end of 1996 so it had no contribution in the first quarter of 1996. Marine vessel: As of March 31, 1997 and 1996, the Partnership had a50% interest in an entity which owns a marine vessel. Marine vessel revenues and expenses were $0.2 million and $0.5 million, respectively, for the first quarter of 1997, compared to $0.4 million and $0.5 million, respectively, during the same quarter in 1996. Lease revenue decreased in the first quarter of 1997, due to lower re-lease rates as a result of a softer bulk carrier vessel market. (E) Net Income (Loss) As a result of the foregoing, the Partnership's net income of $1.9 million for the first quarter of 1997, increased from net loss of $2.2 million during the same period in 1996. The Partnership's ability to operate and liquidate assets, secure leases, and re-lease those assets whose leases expire during the duration of the Partnership is subject to many factors and the Partnership's performance in the first quarter of 1997 is not necessarily indicative of future periods. In the first quarter of 1997, the Partnership distributed $1.7 million to the limited partners, or $0.20 per weighted average depositary unit. Financial Condition - Capital Resources and Liquidity The Partnership has ended its reinvestment phase pursuant to its Partnership Agreement. Due to this, the Partnership is prohibited from borrowing funds through its short-term joint $50 million credit facility. For the three months ended March 31, 1997, the Partnership generated sufficient operating cash (net cash provided by operating activities plus distributions from the unconsolidated special purpose entity) to meet its operating obligations and maintain working capital reserves, but used undistributed available cash from prior periods of approximately $0.6 million to maintain the current level of distributions ($1.8 million) to the partners. Outlook for the Future Since the Partnership is in its holding or passive liquidation phase, the General Partner will be 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 by the scheduled termination of the Partnership at the end of the year 2000. The Partnership intends to use cash flow from operations to satisfy its operating requirements, maintain working capital reserves, pay loan principal on debt, and pay cash distributions to the investors. 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: May 13, 1997 By: /s/ David J. Davis ----------------------------- David J. Davis Vice President and Corporate Controller EX-27 2
5 1,000 3-MOS DEC-31-1997 MAR-31-1997 8,491 0 1,755 2,061 0 0 89,595 52,438 57,947 0 0 0 0 0 25,014 57,947 0 5,825 0 3,079 0 0 713 1,922 0 1,922 0 0 0 1,922 0 0
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