UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
FORM 10-K
[x] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the fiscal year ended December 31, 1996.
[ ] 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 0-15437
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PLM Transportation Equipment Partners IXA 1986
Income Fund (Exact name of registrant as specified
in its charter)
California 94-2992018
(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 ______
<PAGE>
PART I
ITEM 1. BUSINESS
(A) Background
On October 5, 1985, PLM Financial Services, Inc. (FSI), a wholly-owned
subsidiary of PLM International, Inc. (PLM International), filed a registration
statement on Form S-1 with the Securities and Exchange Commission. The Form S-1
was filed with respect to a proposed offering of 160,000 limited partnership
units (Units) in an equipment leasing program, PLM Transportation Equipment
Partners IX 1986 Income Fund (Registrant). The Registrant's program consisted of
four California limited partnerships: PLM Transportation Equipment Partners IXA
1986 Income Fund, PLM Transportation Equipment Partners IXB 1986 Income Fund,
PLM Transportation Equipment Partners IXC 1986 Income Fund, and PLM
Transportation Equipment Partners IXD 1986 Income Fund (each individually, the
Partnership, together, the Partnerships). The Registrant's offering became
effective on January 7, 1986. The Registrant's Partnerships engage in the
business of owning and leasing a diversified portfolio of transportation
equipment to be operated or leased to a variety of corporate lessees. FSI is the
general partner (General Partner) of each of the Partnerships.
The Partnerships were formed to engage in the business of owning and
managing diversified pools of transportation equipment. The objectives of each
Partnership are to invest in equipment which will:
(i) generate cash distributions to investors on a quarterly basis;
(ii)maintain substantial residual value for continued operation and
ultimate sale;
(iii) provide certain federal income tax benefits, including investment tax
credits, to the extent available, in 1986 and tax deductions in excess of
Partnership income during early years which investors may use to offset taxable
income from other sources.
(iv)to endeavor to reduce certain of the risks of equipment ownership by
acquiring a diversified portfolio of varying equipment types.
The 1986 Tax Reform Act (the Act) substantially altered some of the
Partnership objectives. Specifically, the ability of investors in the
Partnership to use tax deductions in excess of Partnership income to offset
taxable income from other sources was not only limited in duration by the Act
(no offsets were allowed after 1990), but also limited to a declining percentage
that could be applied against other income beginning in 1987.
The Act also eliminated the investment tax credit.
(B) Management of Partnership Equipment
The Partnerships have entered into equipment management agreements with PLM
Investment Management, Inc. (IMI), a wholly-owned subsidiary of FSI, for the
management of the equipment. IMI has agreed to perform services necessary to
manage transportation equipment on behalf of the Partnerships and to perform or
contract for the performance of obligations of the lessor under the
Partnerships' leases. In consideration for its services and pursuant to the
Partnership Agreements, IMI is entitled to a monthly management fee. Management
fees are calculated as 10% of cash flow available for distribution and are
payable monthly (See Financial Statements, notes 1 and 2.)
TEP IXA
The offering of limited partnership units (the "Units") of PLM Transportation
Equipment Partners IXA 1986 Income Fund (TEP IXA or the Partnership) closed on
May 23, 1986, having sold 24,285 Units. FSI contributed $100 for its 1% general
partnership interest in TEP IXA.
As of December 31, 1996, TEP IXA owned the following equipment: 88
trailers, 107 marine containers, and one sidelift. During 1996, TEP IXA sold or
disposed of two trailers, 10 railcars, and 18 marine containers. At December 31,
1996, all of the Partnership's trailer equipment was being operated in rental
yards owned and maintained by an affiliate of the General Partner. Revenue
collected under short-term rental agreements with the rental yards' customers
are credited to the owners of the related equipment as received. Direct expenses
associated with the equipment are charged directly to the Partnership. An
allocation of other direct expenses of the rental yard operations are billed to
the Partnership monthly. With the exception of one sidelift, all equipment was
either held in short-term rental facilities operated by an affiliate or on lease
as of December 31, 1996. Lessees of the TEP IXA equipment portfolio include, but
are not limited to Transamerica Leasing.
TEP IXB
The offering of Units of PLM Transportation Equipment Partners IXB 1986 Income
Fund (TEP IXB or the Partnership) closed on September 29, 1986, having sold
17,460 Units. FSI contributed $100 for its 1% general partnership interest in
TEP IXB.
As of December 31, 1996, TEP IXB owned the following equipment: 32
refrigerated over-the-road trailers, 26 marine containers, and one sidelift.
During 1996, TEP IXB sold or disposed of 14 railcars, nine trailers and four
marine containers. In addition, the entity in which the Partnership had a 50%
investment sold a commuter aircraft. At December 31, 1996, all of the
partnership's trailer equipment was being operated in rental yards owned and
maintained by an affiliate of the General Partner. Revenue collected under
short-term rental agreements with the rental yards' customers are credited to
the owners of the related equipment as received. Direct expenses associated with
the equipment are charged directly to the Partnership. An allocation of other
direct expenses of the rental yard operations are billed to the Partnership
monthly. With the exception of one sidelift, all equipment was either held in
short-term rental facilities operated by an affiliate or was on lease as of
December 31, 1996. Lessees of the TEP IXB equipment portfolio include but are
not limited to Transamerica Leasing.
TEP IXC
The offering of Units of PLM Transportation Equipment Partners IXC 1986 Income
Fund (TEP IXC or the Partnership) closed on December 22, 1986, having sold
16,914 Units. FSI contributed $100 for its 1% general partnership interest in
TEP IXC.
As of December 31, 1996, TEP IXC owned the following equipment: 125
trailers and five refrigerated marine containers. During 1996, TEP IXC sold or
disposed of 24 trailers, five railcars, and one marine container. In addition,
the entity in which the Partnership had a 30% investment sold a commuter
aircraft. At December 31, 1996, all of the Partnership's trailer equipment was
being operated in rental yards owned and maintained by an affiliate of the
General Partner. Revenue collected under short-term rental agreements with the
rental yards' customers are credited to the owners of the related equipment as
received. Direct expenses associated with the equipment are charged directly to
the Partnership. An allocation of other direct expenses of the rental yard
operations are billed to the Partnership monthly. All equipment was either held
in short-term rental facilities operated by an affiliate or on lease as of
December 31, 1996. The lessees of the TEP IXC equipment portfolio include but
are not limited to Transamerica Leasing.
TEP IXD
The offering of Units of PLM Transportation Equipment Partners IXD 1986 Income
Fund (TEP IXD or the Partnership) closed on March 30, 1987, having sold 9,529
Units. FSI contributed $100 for the 1% general partnership interest in TEP IXD.
As of December 31, 1996, TEP IXD owned the following equipment: 46 trailers
and 132 marine containers. During 1996, TEP IXD sold or disposed of 39 marine
containers and nine trailers. At December 31, 1996, all of the Partnership's
trailer equipment was being operated in rental yards owned and maintained by an
affiliate of the General Partner. Revenue collected under short-term rental
agreements with the rental yards' customers are credited to the owners of the
related equipment as received. Direct expenses associated with the equipment are
charged directly to the Partnership. An allocation of other direct expenses of
the rental yard operations are billed to the Partnership monthly. All equipment
in the TEP IXD portfolio was either held in short-term rental facilities
operated by an affiliate or on lease as of December 31, 1996. Lessees of the TEP
IXD equipment portfolio include but are not limited to Transamerica Leasing.
<PAGE>
(C) Competition
(1) Operating Leases vs. Full Payout Leases.
Generally, the equipment owned by the Partnerships is leased out on an operating
lease basis wherein the rents owed during the initial noncancelable term of the
lease are insufficient to recover the Partnerships' purchase price of the
equipment. The short-to mid-term nature of operating leases generally commands a
higher rental rate than longer term, full payout leases and offers lessees
relative flexibility in their equipment commitment. In addition, the rental
obligation under the operating lease need not be capitalized on the lessee's
balance sheet.
The Partnerships encounter considerable competition from lessors utilizing
full payout leases on new equipment, i.e., leases which have terms equal to the
expected economic life of the equipment. Full payout leases are written for
longer terms and for lower rates than the Partnerships offer. While some lessees
prefer the flexibility offered by a shorter term operating lease, other lessees
prefer the rate advantages possible with full payout lease. Competitors of the
Partnerships may write full payout leases at considerably lower rates, or larger
competitors with a lower cost of capital may offer operating leases at lower
rates, and as a result, the Partnerships may be at a competitive disadvantage.
(2) Manufacturers and Equipment Lessors
The Partnerships also compete with equipment manufacturers who offer operating
leases and full payout leases. Manufacturers may provide ancillary services
which the Partnerships cannot offer, such as specialized maintenance services
(including possible substitution of equipment), training, warranty services, and
trade-in privileges.
The Partnerships compete with many equipment lessors, including, among
others, ACF Industries, Inc. (Shippers Car Line Division), General Electric
Railcar Services Corporation, Greenbrier Leasing Company, and other limited
partnerships which lease the same types of equipment.
(D) Demand
The Partnerships invested in transportation-related capital equipment. The
Partnerships' equipment is used primarily for the transport of materials. The
following describes the markets for the Partnerships' equipment:
(1) Marine Containers
At the end of 1995, the consensus of industry sources was that 1996 would see
both higher container utilization and strengthening of per diem lease rates.
Such was not the case, as there was no appreciable cyclical improvement in the
container market following the traditional winter slowdown. Industry utilization
continues to be under pressure, with per diem rates being impacted as well.
A substantial portion of the Partnership's containers are on long-term
utilization leases that were entered into with Trans Ocean Leasing as lessee.
The industry has seen a major consolidation as Transamerica Leasing, late in the
fourth quarter of 1996, acquired Trans Ocean Leasing. Transamerica Leasing is
the second largest container leasing company in the world. Transamerica Leasing
is the substitute lessee for Trans Ocean Leasing. Long term, such industry
consolidation should bring more rationalization to the market and result in
higher utilization and per diem rates.
(2) Over-the-Road Dry Trailers
The over-the-road dry trailer market was weak in 1996, with utilization down
15%. The trailer industry experienced a record year in 1994 for new production,
and 1995 production levels were similar to 1994. However, in 1996, the truck
freight recession, along with an overbuilding situation, contributed to 1996's
poor performance. The year 1996 had too little freight and too much equipment
industrywide.
<PAGE>
(3) Over-the-Road Refrigerated Trailers
PLM experienced fairly strong demand levels in 1996 for its refrigerated
trailers. With over 15% of the fleet in refrigerated trailers, PLM and the
Partnerships are the largest supplier of short-term rental refrigerated trailers
in the United States.
(E) Government Regulations
The use, maintenance, and ownership of equipment is regulated by federal, state,
local, and/or foreign governmental authorities. Such regulations may impose
restrictions and financial burdens on the Partnerships' ownership and operation
of equipment, which may affect the Partnerships' liquidity. Changes in
government regulations, industry standards, or deregulation may also affect the
ownership, operation, and resale of the equipment. Substantial portions of the
Partnerships' equipment portfolio are either registered or operated
internationally. Such equipment may be subject to adverse political, government,
or legal actions, including the risk of expropriation or loss arising from
hostilities. Certain of the Partnerships' equipment is subject to extensive
safety and operating regulations which may require the removal from service or
extensive modification, of such equipment to meet these regulations at
considerable cost to the Partnership. Such regulations include (but are not
limited to):
(1) the Montreal Protocol on Substances that Deplete the Ozone Layer
and the U.S. Clean Air Act Amendments of 1990 which call for the
control and eventual replacement of substances that have been
found to cause or contribute significantly to harmful effects on
the stratospheric ozone layer and which are used extensively as
refrigerants in refrigerated marine cargo containers,
over-the-road trailers, etc.;
(2) the U.S. Department of Transportation's Hazardous Materials
Regulations which regulate the classification of and packaging
requirements for hazardous materials and which apply particularly
to the Partnerships' tankcars.
ITEM 2. PROPERTIES
The Partnerships neither own nor lease any properties other than the equipment
they have purchased for leasing purposes. At December 31, 1996, each Partnership
owned a portfolio of transportation equipment as described in Part I, Item 1. It
is not contemplated that any more equipment will be acquired.
The Partnerships maintain their principal offices at One Market, Steuart
Street Tower, Suite 800, San Francisco, California 94105-1301. All office
facilities are provided by FSI without reimbursement by the Partnerships.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Partnerships' limited partners during
the fourth quarter of its fiscal year ended December 31, 1996.
<PAGE>
PART II
ITEM 5. MARKET FOR THE PARTNERSHIPS' EQUITY AND RELATED UNITHOLDER MATTERS
Pursuant to the terms of the Partnerships' Agreements, the General Partner is
generally entitled to a 1% interest in the profits and losses and distributions
of each Partnership. The General Partner also is entitled to a special
allocation of net profit or gains from sale of each Partnerships' assets during
the liquidation phase in an amount equal to one ninety-ninth of the aggregate of
the capital contribution made by the Limited Partners. The General Partner is
the sole holder of such interests. Ownership of the remaining 99% interest in
the profits and losses and distributions of the respective Partnerships is
represented as follows as of December 31, 1996:
<TABLE>
<CAPTION>
TEP IXA TEP IXB TEP IXC TEP IXD
<S> <C> <C> <C> <C>
Holders of Limited
Partnership Units 1,012 615 534 328
</TABLE>
There are several secondary exchanges which may purchase or facilitate
transactions of limited partnership units. Secondary markets are characterized
as having few buyers for limited partnership interests and, therefore, generally
are viewed as inefficient vehicles for the sale of partnership units. There is
no public market for the Units and none is likely to develop. Moreover, the
Units are subject to substantial restrictions on transferability.
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
Table 5, below, lists selected financial data for the
respective Partnerships:
TABLE 5
For the years ended December 31,
<TABLE>
<CAPTION>
TEP IXA 1996 1995 1994 1993 1992
-------
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operating results:
Total revenues $ 778,338 $ 1,144,180 $ 752,029 $ 764,823 $ 1,041,370
Gain (loss) on disposition
of equipment 340,836 555,733 59,957 (53,590 ) 11,253
Net income (loss) 320,435 473,623 (132,809 ) (179,977 ) 203,877
At year-end:
Total assets $ 657,806 $ 2,044,123 $ 1,855,487 $ 2,568,780 $ 3,413,824
Total liabilities 14,409 43,300 30,418 111,336 68,331
Cash distributions $ 277,861 $ 297,869 $ 361,566 $ 708,072 $ 813,523
Cash distributions and special distributions
which represent a return of capital to
Limited Partners $ 1,343,851 $ -- $ 494,570 $ 700,991 $ 603,550
Special distributions $ 1,400,000 $ -- $ 138,000 $ -- $ --
Per weighted average limited partnership unit:
Net income (loss) $ 13.06 $ 19.31 $ (5.41 ) $ (7.34 ) $ 8.31
Cash distributions $ 11.33 $ 12.14 $ 14.74 $ 28.87 $ 33.16
Cash distributions and special distributions
which represent a return of capital to
Limited Partners $ 55.34 $ -- $ 20.37 $ 28.87 $ 24.85
Special distributions $ 57.07 $ -- $ 5.63 $ -- $ --
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TEP IXB 1996 1995 1994 1993 1992
-------
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operating results:
Total revenues $ 539,568 $ 671,144 $ 962,681 $ 956,072 1,024,899
Gain on disposition
of equipment 272,183 113,206 132,025 30,646 --
Equity in net income of unconsolidated
special purpose entity 250,928 -- -- -- --
Net income 473,377 83,006 279,472 282,593 386,866
At year-end:
Total assets $ 701,432 $ 1,158,613 $ 1,691,187 $ 2,275,596 $ 2,760,063
Total liabilities 13,274 92,454 33,858 35,912 18,337
Cash distributions $ 401,378 $ 474,176 $ 676,827 $ 784,635 $ 784,635
Cash distributions and special distributions
which represent a return of capital to
Limited Partners $ 374,221 $ 582,258 $ 576,532 $ 497,022 $ 393,792
Special distributions $ 450,000 $ 200,000 $ 185,000 $ -- $ --
Per weighted average limited partnership unit:
Net income $ 26.84 $ 4.71 $ 15.85 $ 16.02 $ 21.94
Cash distributions $ 22.76 $ 26.89 $ 38.38 $ 44.49 $ 44.49
Cash distributions and special distributions
which represent a return of capital to
Limited Partners $ 21.43 $ 33.35 $ 33.02 $ 28.47 $ 22.55
Special distributions $ 25.52 $ 11.34 $ 10.49 $ -- $ --
</TABLE>
<PAGE>
For the years ended December 31,
<TABLE>
<CAPTION>
TEP IXC 1996 1995 1994 1993 1992
-------
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operating results:
Total revenues $ 492,205 $ 916,158 $ 970,110 $ 837,998 $ 959,605
Gain (loss) on disposition
of equipment 114,942 229,599 2,561 14,139 (108,915 )
Equity in net income of unconsolidated
special purpose entity 111,247 -- -- -- --
Net income 105,040 259,541 154,881 36,888 65,987
At year-end:
Total assets $ 654,436 $ 1,161,779 $ 1,849,532 $ 2,057,830 $ 2,494,437
Total liabilities 17,905 16,462 56,790 31,384 21,764
Cash distributions $ 313,826 $ 406,966 $ 388,585 $ 483,115 $ 688,267
Cash distributions and special distributions
which represents a return of capital to
Limited Partners $ 503,698 $ 640,950 $ 231,367 $ 441,765 $ 616,057
Special distributions $ 300,000 $ 500,000 $ -- $ -- $ --
Per weighted average limited partnership unit:
Net income $ 6.15 $ 15.19 $ 9.07 $ 2.16 $ 3.86
Cash distributions $ 18.37 $ 23.82 $ 22.74 $ 28.28 $ 40.29
Cash distributions and special distributions
which represents a return of capital to
Limited Partners $ 29.78 $ 37.89 $ 13.68 $ 26.12 $ 36.42
Special distributions $ 17.56 $ 29.27 $ -- $ -- $ --
</TABLE>
<PAGE>
For the years ended December 31,
<TABLE>
<CAPTION>
TEP IXD 1996 1995 1994 1993 1992
-------
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operating results:
Total revenues $ 202,500 $ 374,362 $ 583,442 $ 743,878 $ 790,599
Gain on disposition
of equipment 44,879 83,235 17,133 53,478 94,829
Net income (loss) $ (16,671) $ 46,051 $ 193,690 $ 305,232 $ 269,939
At year-end:
Total assets $ 278,061 $ 575,694 $ 1,390,092 $ 1,600,584 $ 1,715,979
Total liabilities 11,462 8,338 5,060 10,588 7,221
Cash distributions $ 134,086 $ 263,727 $ 398,654 $ 423,994 $ 434,527
Cash distributions and special distributions
which represents a return of capital to
Limited Partners $ 281,245 $ 809,500 $ 202,915 $ 117,574 $ 336,192
Special distributions $ 150,000 $ 600,000 $ -- $ -- $ 175,000
Per weighted average limited partnership unit:
Net income (loss) $ (1.73 $ 4.78 $ 20.12 $ 31.71 $ 28.04
Cash distributions $ 13.93 $ 27.40 $ 41.42 $ 44.05 $ 45.14
Cash distributions and special distributions
which represents a return of capital to
Limited Partners $ 29.51 $ 84.95 $ 21.29 $ 12.34 $ 35.28
Special distributions $ 15.58 $ 62.34 $ -- $ -- $ 18.18
</TABLE>
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources
(A) Sources
The Partnerships' primary source of liquidity is operating cash flow. Proceeds
realized from the sale or disposal of equipment are generally distributed to the
partners. The Partnerships' original source of capital was proceeds from the
initial public offering of limited partnership units.
(B) Asset Sales
Equipment sales and dispositions prior to the Partnerships' planned liquidation
phase generally result from either the exercise by lessees of fair market value
purchase options provided for in certain leases, or the payment of stipulated
loss values on equipment lost or disposed of during the time it is subject to
lease agreements. Such disposal of equipment results unpredictably from the
wear, tear, and general risk of normal operations.
(C) Market Values
In March 1995, the Financial Accounting Standards Board (FASB) issued Statement
No. 121, "Accounting for the Impairment of Long-Lived Assets and Long-Lived
Assets to be Disposed Of" (SFAS 121). This standard is effective for years
beginning after December 15, 1995. In accordance with SFAS 121, the General
Partner reviews the carrying value of its equipment portfolio at least annually
in relation to expected future market conditions for the purpose of assessing
recoverability of the recorded amounts. If projected future lease revenue plus
residual values are less than the carrying value of the equipment, a loss on is
recorded. No adjustments to reflect impairment of individual equipment carrying
values were required for the years ended December 31, 1996, and 1995.
As of December 31, 1996, the General Partner estimated the current fair
market value of each Partnerships' equipment portfolio, including equipment
owned by unconsolidated special purpose entities (USPE's), to be approximately :
$1.0 million, $0.5 million, $1.0 million, and $0.7 million for TEP IXA, TEP IXB,
TEP IXC ,and TEP IXD, respectively.
(D) Government Regulations
The General Partner operates the Partnerships' equipment in accordance with
current regulations (see Item 1 (E) Government Regulations). However, the
continuing implementation of new or modified regulations by some of the
authorities mentioned previously, or others, may adversely affect the
Partnerships' ability to continue to own or operate equipment in their
portfolio. Additionally, regulatory systems vary from country to country, which
may increase the burden to the Partnerships of meeting regulatory compliance for
the same equipment operated between countries. These on-going changes in the
regulatory environment, both in the U.S. and internationally, cannot be
predicted with any certainty and thus preclude the General Partner from
accurately determining the impact of such changes on Partnership operations,
purchases and sales of equipment.
(E) Future Outlook
The General Partner intends to continue its strategy of closely matching the
level of cash distributions to that of net operating cash flows. However, as
stated above, the difficulty in predicting market conditions precludes the
General Partner from accurately determining the impact of this strategy on
liquidity. The Partnerships have entered into their liquidation phase and
pursuant to the original operating plan, the Partnerships continue to market
equipment for sale as current lease terms expire. The General Partner has not
planned any expenditures past January 1, 1997, nor is it aware of any
contingencies, that would require capital resources additional to those
discussed above.
<PAGE>
(F) Results of Operations - Year to Year Detail Comparison
Comparison of the Registrant's Operating Results for the Years Ended
December 31, 1996 and 1995
TEP IXA
(A) Revenues
(1) Lease revenue decreased to $414,957 in 1996 from $547,246 in 1995. The
following table lists lease revenues earned by equipment type:
For the year ended
December 31,
1996 1995
---------------------------------
Trailers $ 263,473 $ 366,821
Marine containers 112,994 118,625
Rail equipment 38,490 61,800
================================
$ 414,957 $ 547,246
================================
The decline was due primarily to the following:
(a) Trailer revenue decreased $103,348 from 1996 levels due to the decline
in utilization in the short-term rental facilities in 1996 compared to 1995
levels, and the sale or disposal of two trailers in 1996 and one in 1995;
(b) Marine container revenue decreased $5,631 due to a decline in
utilization from 1995 levels, and the disposal of 18 marine containers in 1996
and 10 in 1995;
(c) Rail revenue decreased $23,310 from 1996 levels due to the sale of all
railcars owned by the Partnership during the third quarter of 1996.
(2) Interest and other income decreased to $22,545 in 1996 from $41,201 in 1995
due primarily to lower cash balances available for investments and lower
interest rates earned on invested cash.
(3) For the year ended December 31, 1996, the Partnership realized a gain of
$340,836 on the sale or disposition of two trailers, 18 marine containers, and
10 railcars, compared to the same period in 1995, where the Partnership realized
a gain of $555,733 on the sale or disposition of one trailer, one commuter
aircraft, and 10 marine containers.
(B) Expenses
Total expenses for the years ended December 31, 1996 and 1995, were $457,903 and
$670,557, respectively. The decrease in 1996 expenses was attributable primarily
to decreased repairs and maintenance, depreciation expense, and general and
administrative expense, offset by an increase in bad debt expense.
(1) Direct Operating Expenses (defined as repairs and maintenance and insurance)
decreased to $64,875 in 1996 from $172,081 in 1995. This decrease was due to
decreases in repairs and maintenance for trailers in the short-term rental
facilities.
(2) Indirect Operating Expenses (defined as depreciation expense, management
fees, bad debt expense and general and administrative expenses) decreased to
$393,028 in 1996 from $498,476 in 1995. This change resulted from:
(a) a $114,277 decrease in depreciation expense from 1996 levels resulting
from the sale or disposal of two trailers, 18 marine containers, and 10 railcars
in 1996;
<PAGE>
(b) a $58,310 decrease in general and administrative expense from 1995
levels due primarily to sale of the aircraft in the prior year, lower accounting
costs, and lower administrative costs associated with the short-term rental
facilities in 1996 compared with 1995 levels;
(c) a $66,292 increase in bad debt expense due to the General Partner's
evaluation of the collectibility of the trade receivables.
(C) Net Income
As a result of all of the foregoing, net income for the year ended December 31,
1996, was $320,435 compared to $473,623 for the year ended December 31, 1995.
The Partnership's ability to operate or 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 for the year ended
December 31, 1996, is not necessarily indicative of future periods. In 1996, TEP
IXA distributed $1,661,082 to the Limited Partners, or $68.40 per weighted
average unit which included a special distribution of $57.07 per weighted
average unit.
The Partnership's performance for the year ended December 31, 1996, is not
necessarily indicative of future periods.
TEP IXB
(A) Owned equipment operations
Revenues less direct expenses (defined as repairs and maintenance and asset
specific insurance expense) on owned equipment decreased for the year ended
December 31, 1996, when compared to the same period of 1995. The following table
presents revenues less direct expenses by owned equipment type:
<TABLE>
<CAPTION>
For the twelve months
ended December 31,
1996 1995
------------------------------
<S> <C> <C>
Trailers $ 112,435 $ 151,982
Railcar equipment 62,676 79,981
Marine containers 26,750 34,153
</TABLE>
Trailers: Trailer revenues and direct expenses were $154,805 and $42,370,
respectively, for the twelve months ended December 31, 1996, compared to
$219,600 and $67,618, respectively, during the same period of 1995. The decrease
in net contribution was due to lower utilization of trailers in the short-term
rental facilities and the disposition of trailers;
Railcar equipment: Railcar revenues and direct expenses were $67,953 and $5,277,
respectively, for the twelve months ended December 31, 1996, compared to $86,537
and $6,556, respectively, during the same period of 1995. The decrease in net
contribution was due to the sale of all railcars owned by the Partnership in the
fourth quarter of 1996;
Marine containers: Marine container revenues and direct expenses were $26,960
and $210, respectively, for the twelve months ended December 31, 1996, compared
to $34,915 and $762, respectively, during the same period of 1995. The number of
marine containers owned by the Partnership has been declining due to sales and
dispositions. The result of this declining fleet is a decrease in marine
container net contribution.
<PAGE>
(B) Indirect expenses related to owned equipment
Total indirect expenses of $269,262 for the year ended December 31, 1996,
decreased from $366,772 for the same period of 1995. The variance is explained
as follows:
(a) a $49,160 decrease in general and administrative expenses from 1995
levels. This reflects the decreased accounting costs and administrative costs
associated with the short-term rental facilities;
(b) a $39,977 decrease in depreciation expense from 1995 levels reflecting
assets sales or dispositions during 1996 and 1995;
(c) a $8,373 decrease in bad debt expense due to the General Partner's
evaluation of the collectibility of trade receivables from trailer rental yard
lessees.
(C) For the twelve months ended December 31, 1996, the Partnership realized a
gain of $272,183 on the disposal of 14 railcars, four marine containers and nine
trailers compared to 1995, where the Partnership realized a gain of $113,206 on
the sale or disposition of 22 trailers and four marine containers.
(D) Interest and other income
Interest and other income decreased $4,849 in 1996 due primarily to lower
interest rate earned on available cash invested.
(E) Equity in net income of unconsolidated special purpose entity
Equity in net income of unconsolidated special purpose entity was $250,928 for
the twelve months ended December 31, 1996, and represents the operating income
generated from the Partnership's interest in an entity which owned an aircraft,
accounted for under the equity method (see Note 4 to the financial statements).
(C) Net Income
The Partnership generated net income of $473,377 for the year ended December 31,
1996, compared to $83,006 in the same period in 1995. The Partnership's ability
to operate or 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 for the year ended December 31, 1996, is not
necessarily indicative of future periods. For the year ended December 31, 1996,
the Partnership distributed $842,864 to the Limited Partners, or approximately
$48.28 per weighted average unit which included a special distribution of $25.52
per weighted average unit.
TEP IXC
(A) Owned equipment operations
Revenues less direct expenses (defined as repairs and maintenance and asset
specific insurance expenses) on owned equipment decreased in 1996 when compared
to the same period of 1995. The following table presents revenues less direct
expenses by owned equipment type:
<TABLE>
<CAPTION>
For the twelve months
ended December 31,
1996 1995
---------------------------------
<S> <C> <C>
Trailers $ 221,143 $ 397,903
Railcar equipment 21,708 34,192
Marine containers 5,501 11,266
</TABLE>
Trailers: Trailer revenues and direct expenses were $330,604 and $109,461,
respectively, for the twelve months ended December 31, 1996, compared to
$546,927 and $149,024, respectively, during the same period of 1995. The
decrease of net contribution was due to lower utilization of trailers in the
short-term rental facilities and the disposition of trailers;
Railcar equipment: Railcar revenues and direct expenses were $26,520 and $4,812,
respectively, for the twelve months ended December 31, 1996, compared to $41,059
and $6,867, respectively during the same period of 1995. The decrease in net
contribution was due to the sale of all railcars owned by the Partnership in the
fourth quarter of 1996;
Marine containers: Marine container revenues and direct expenses were $5,579 and
$78, respectively, for the twelve months ended December 31, 1996, compared to
$11,507 and $241, respectively, during the same period of 1995. The number of
marine containers owned by the Partnership has been declining due to sales and
dispositions. The result of this declining fleet is a decrease in marine
container net contribution.
(B) Indirect expenses related to owned equipment
Total indirect expenses of $384,061 for the year ended December 31, 1996,
decreased from $448,414 for the same period of 1995. The variance is explained
as follows:
(a) a $42,681 decrease in general and administrative expenses due to lower
accounting costs and administrative costs associated with the short-term rental
facilities due to a decreased volume of trailers operating in these facilities;
(b) a $26,636 decrease in depreciation expense from 1995 levels reflecting
asset sales during 1996 and 1995;
(c) a $2,193 decrease in management fees due to lower levels of operating
cash flow during the comparable periods. Monthly management fees are calculated
as the greater of 10% of the Partnership's Operating Cash Flow, or 1/12 of 1/2%
of the Partnership's Capital Contributions as defined in the Limited Partnership
Agreement;
(d) a $7,157 increase in bad debt expense due to the General Partner's
evaluation of the collectibility of trade receivables from trailer rental yard
lessees.
(C) For the year ended December 31, 1996, the Partnership realized a gain of
$114,942 on the sale of 24 trailers, five railcars and one marine container,
compared to the same period in 1995, when the Partnership realized a gain of
$229,599 on the sale or disposal of four trailers, five twin stack railcars, and
one marine container.
(D) Interest and other income decreased $4,106 due to a lower interest income
earned on available cash invested.
(E) Equity in net income of unconsolidated special purpose entity
Equity in net income of unconsolidated special purpose entity was $111,247 for
the year ended December 31, 1996, and represents the net income generated from
the Partnership's interest in an entity which owned an aircraft, accounted for
under the equity method (see Note 4 to the financial statements).
(F) Net Income
The Partnership's net income decreased to $105,040 for the year ended December
31, 1996, from $259,541 in the same period in 1995. The Partnership's ability to
operate or 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 for the year ended December 31, 1996, is not
necessarily indicative of future periods. For the year ended December 31, 1996,
the Partnership distributed $607,688 to the Limited Partners, or approximately
$35.93 per weighted average unit which included a special distribution of $18.37
per weighted average unit.
<PAGE>
TEP IXD
(A) Revenues
(1) Lease revenue decreased to $151,115 in 1996 from $267,141 in 1995. The
following table lists lease revenues earned by equipment type:
For the year ended
December 31,
1996 1995
---------------------------------
Trailers $ 100,780 $ 188,529
Marine containers 50,335 78,612
================================
$ 151,115 $ 267,141
================================
The decrease was due to the following:
(a) Trailer revenue decreased $87,749 in 1996 as compared to 1995 levels,
due to lower utilization in short-term rental facilities operated by an
affiliate of the General Partner and the sale of trailers during 1996;
(b) Marine container revenue decreased $28,277 in 1996 as compared to 1995
levels, primarily due to a decline in utilization levels in 1996 and the
disposal of marine containers during 1996.
(2) Interest and other income decreased to $6,506 in 1996 from $23,986 in 1995
due to decrease in interest rates and lower cash balances in interest bearing
accounts.
(3) Gain on disposition of equipment of $44,879 in 1996 resulted from the sale
or disposal of 39 marine containers and nine trailers. The gain on disposition
of equipment in 1995 totaled $83,235 which resulted from the sale or disposal of
45 marine containers and 30 trailers.
(B) Expenses
Total expenses for the years ended December 31, 1996 and 1995 were $219,171 and
$328,311, respectively. The decrease in 1996 expenses was attributable primarily
to decreased bad debt expense, repairs and maintenance, general and
administrative expenses, and depreciation.
(1) Direct Operating Expenses (defined as repairs and maintenance and insurance)
decreased to $30,997 in 1996 from $54,905 in 1995. This change resulted
primarily from the disposition of trailers and containers in 1996.
(2) Indirect Operating Expenses (defined as depreciation and amortization
expense, management fees, bad debt expense, and general and administrative
expenses) decreased to $188,174 in 1996 from $273,406 in 1995. This change
resulted from:
(a) a $33,903 decrease in bad debt expense due to the General Partner's
evaluation of the collectibility of trade receivables;
(b) a $31,308 decrease in general and administrative expenses due to lower
accounting costs and administrative costs associated with the short-term rental
facilities;
(c) a $19,593 decrease in depreciation expense from 1996 levels reflecting
assets sales during 1996 and 1995.
(C) Net Income (loss)
As a result of all of the foregoing, the Partnership incurred a net loss for the
year ended December 31, 1996 of $16,671 compared with a net income of $46,051
for the year ended December 31, 1995. In 1996, TEP IXD distributed $281,245 to
the Limited Partners, or $29.51 per weighted average unit which included a
special distribution of $15.58 per weighted average unit.
The Partnership's performance for the year ended December 31, 1996, is not
necessarily indicative of future periods.
Comparison of the Registrant's Operating Results for the Years Ended
December 31, 1995 and 1994
TEP IXA
(A) Revenues
(1) Lease revenue decreased to $547,246 in 1995 from $682,844 in 1994. The
following table lists lease revenues earned by equipment type:
For the year ended
December 31,
1995 1994
---------------------------------
Trailers $ 366,821 $ 473,072
Marine containers 118,625 130,722
Rail equipment 61,800 61,800
Aircraft -- 17,250
================================
$ 547,246 $ 682,844
================================
The decline was due primarily to the following:
(a) Trailer revenue decreased $106,251 from 1994 levels due to the decline
in utilization in the short-term rental facilities in 1995 compared to 1994
levels, and the sale or disposal of 12 trailers, one yardster and one forklift
in 1994. Additionally, one trailer was disposed of in 1995;
(b) Aircraft revenue decreased $17,250 due to the sale of a commuter
aircraft in the second quarter of 1995 which was structured as a sales-type
lease. The income from this lease financing is now reported as interest income;
(c) Marine container revenue decreased $12,097 due to the disposal of 10
marine containers in 1995 and 6 in 1994, and a decline in utilization from 1994
levels.
(2) Interest and other income increased to $41,201 in 1995 from $9,228 in 1994
due primarily to an increase of $31,000 in finance lease income as the
Partnership entered into a sales-type lease related to a commuter aircraft, and
secondarily to higher interest rates earned on invested cash.
(3) For the year ended December 31, 1995, the Partnership realized a gain of
$555,733 on the sale or disposition of one trailer, one commuter aircraft, and
10 marine containers, compared to the same period in 1994, where the Partnership
realized a gain of $59,957 on the sale or disposition of 12 trailers, one
yardster, one forklift, and six marine containers. The Partnership will receive
future lease payments totaling $234,000 with an additional balloon payment of
$919,012 at the end of the one-year lease term relating to the sales type lease
of the commuter aircraft.
(B) Expenses
Total expenses for the years ended December 31, 1995 and 1994, were $670,557 and
$884,838, respectively. The decrease in 1995 expenses was attributable primarily
to decreased bad debt expense and depreciation expense, offset by increases in
repairs and maintenance and general and administrative expense.
(1) Direct Operating Expenses (defined as repairs and maintenance and insurance)
increased to $172,081 in 1995 from $132,056 in 1994. This increase was due to
the refurbishment required on the Partnership's aircraft which came off-lease in
the beginning of 1995, partially offset by a decrease in repairs and maintenance
for trailers in the short-term rental facilities.
(2) Indirect Operating Expenses (defined as depreciation expense, management
fees, bad debt expense and general and administrative expenses) decreased to
$498,476 in 1995 from $752,782 in 1994. This change resulted from:
(a) a $167,819 decrease in bad debt expense due to the change in
management's estimate of doubtful accounts in 1995;
(b) a $124,901 decrease in depreciation expense from 1994 levels resulting
from the sale or disposal of one trailer, one commuter aircraft, and 10 marine
containers in 1995;
(c) a $38,667 increase in general and administrative expense from 1994
levels due primarily to higher administrative costs associated with the
short-term rental facilities in 1995 compared with 1994 levels due to a credit
of $16,000 which was received on the short-term rental facilities in 1994 due to
the closing one of the short-term rental facilities in 1994, no similar credit
was received in 1995 and an increase in audit fees.
(C) Net Income
As a result of all of the foregoing, net income for the year ended December 31,
1995, was $473,623 compared with a net loss of $132,809 for the year ended
December 31, 1994. In 1995, TEP IXA distributed $294,890 to the Limited
Partners, or $12.14 per weighted average Unit.
The Partnership's performance for the year ended December 31, 1995, is not
necessarily indicative of future periods.
TEP IXB
(A) Revenues
(1) Lease revenue decreased to $535,422 in 1995 from $813,960 in 1994. The
following table lists lease revenues earned by equipment type:
For the year ended
December 31,
1995 1994
---------------------------------
Trailers and tractors $ 219,599 $ 504,293
Aircraft 194,371 194,371
Rail equipment 86,537 75,741
Marine containers 34,915 39,555
================================
$ 535,422 $ 813,960
================================
The decline was due primarily to the following:
(a) Trailer and tractor revenue decreased $284,694 due to the sale of 22
trailers during 1995, and a decline in utilization in the short-term rental
facilities and the off-lease status of the sidelift at the beginning of 1995;
(b) Railcar revenue increased $10,796 due to the off-lease status of
railcars during 1994 and the sale of the letro porter in the third quarter of
1994;
(c) Marine container revenue decreased $4,640 due to the disposal of four
containers in 1995.
(2) Interest and other income increased to $22,516 in 1995 from $16,696 in 1994
due primarily to higher interest rates and higher cash balances in interest
bearing accounts.
(3) For the year ended December 31, 1995, the Partnership realized a gain of
$113,206 on the sale of 22 trailers and the disposition of four marine
containers, compared to the same period in 1994, where the Partnership realized
a gain of $132,025 on the sale of 13 tractors, six trailers, and one letro
porter and the disposition of five marine containers.
(B) Expenses
Total expenses for the years ended December 31, 1995 and 1994 were $588,138 and
$683,209, respectively. The decrease in 1995 expenses was attributable primarily
to decreased depreciation expense, management fees to affiliates, and bad debt
expense, partially offset by increased repairs and maintenance and general and
administrative expenses.
(1) Direct Operating Expenses (defined as repairs and maintenance and insurance)
increased to $137,511 in 1995 from $127,540 in 1994. This change resulted
primarily from an increase in the number of trailers coming off term leases
requiring refurbishment prior to transitioning to the short-term rental
facilities operated by an affiliate of the General Partner, and repairs required
on several of the Partnership's railcars.
(2) Indirect Operating Expenses (defined as depreciation and amortization
expense, management fees, bad debt expense and general and administrative
expenses) decreased to $450,627 in 1995 from $555,669 in 1994. This change
resulted primarily from:
(a) a $102,009 decrease in depreciation expense from 1994 levels reflecting
asset sales during 1995;
(b) a $11,895 decrease in management fees to affiliate from 1994 levels due
to the lower levels of operating cash flow in 1995 compared to 1994. Management
fees are calculated monthly as the greater of 10% of the Partnership's Operating
Cash Flow, or 1/12 of 1/2% of the Partnership's Gross Proceeds as defined in the
Limited Partnership Agreement;
(c) a $7,575 decrease in bad debt expense due to change in management's
estimate of doubtful accounts in 1995;
(d) a $16,437 increase in general and administrative expenses from 1994
levels. This reflects the increased administrative costs associated with the
short-term rental facilities due to an increased volume of trailers operating in
the facilities in 1995 as compared to 1994, and increase in audit fee.
(C) Net Income
As a result of all of the foregoing, net income for the year ended December 31,
1995, was $83,006 compared with net income of $279,472 for the year ended
December 31, 1994. In 1995, TEP IXB distributed $667,434 to the Limited
Partners, or $38.23 per weighted average Unit.
The Partnership's performance for the year ended December 31, 1995, is not
necessarily indicative of future periods.
TEP IXC
(A) Revenues
(1) Lease revenue decreased to $667,893 in 1995 from $958,179 in 1994. The
following table lists lease revenues earned by equipment type:
For the year ended
December 31,
1995 1994
---------------------------------
Trailers and tractors $ 546,927 $ 767,520
Rail equipment 41,059 104,808
Aircraft 68,400 76,088
Marine containers 11,507 9,763
================================
$ 667,893 $ 958,179
================================
The decrease was due to the following:
(a) Trailer revenue decreased $220,593 in 1995 as compared to 1994 levels,
due primarily to lower utilization in the short-term rental facilities in 1995,
as compared to 1994, and the sale of four trailers in 1995;
(b) Rail revenue decreased $63,749 in 1995 compared to 1994. The decrease
was due to the sale of five twin stack railcars in the first quarter of 1995;
(c) Aircraft revenue decreased $7,688 in 1995 as compared to 1994 levels.
The decrease resulted from the terms of the original lease agreement which
called for a decrease in rate in 1995.
(2) Interest and other income increased to $18,666 in 1995 from $9,370 in 1994
due primarily to higher interest rates and higher cash balances in interest
bearing accounts.
(B) Expenses
Total expenses for the years ended December 31, 1995 and 1994 were $656,617 and
$815,229, respectively. The decrease in 1995 expenses was attributable primarily
to decreases in bad debt expenses, depreciation expense, general and
administrative expense, repairs and maintenance, and management fees to
affiliate.
(1) Direct Operating Expenses (defined as repairs and maintenance and insurance)
decreased to $156,183 in 1995 from $187,140 in 1994. This decrease was due to a
decrease in the number of trailers coming off term lease requiring refurbishment
prior to transitioning to the short-term rental facilities operated by an
affiliate of the General Partner.
(2) Indirect Operating Expenses (defined as depreciation expense, management
fees, bad debt expense and general and administrative expenses) increased to
$500,434 in 1995 from $628,089 in 1994. This change resulted primarily from:
(a) a $46,501 decrease in bad debt expense due to change in management's
estimate of doubtful accounts in 1995;
(b) a $45,141 decrease in depreciation expense from 1994 reflecting asset
sales during 1995 and 1994;
(c) a $25,440 decrease in general and administrative expenses primarily due
to the decreased administrative costs associated with the short-term rental
facilities due to decline in utilization in the short-term rental facilities,
offset by an increase in audit fee;
(d) a $10,573 decrease in management fees due to decreased levels of
operating cash flow during 1994. Management fees are calculated as the greater
of 10% of the Partnership's Operating Cash Flow, or 1/12 of 1/2% of the
Partnership's Gross Proceeds as defined in the Limited Partnership Agreement.
(3) During 1995, the Partnership realized a gain of $229,599 on the sale of four
trailers, five railcars, and the disposition of one marine container, compared
to the same period in 1994 when the Partnership realized a gain of $2,561 on the
sale of four trailers and the disposition of three marine containers.
(C) Net Income
As a result of all of the foregoing, net income for the year ended December 31,
1995 was $259,541 compared with net income of $154,881 for the year ended
December 31, 1994. In 1995, TEP IXC distributed $897,896 to the Limited
Partners, or $53.09 per weighted average Unit.
The Partnership's performance for the year ended December 31, 1995, is
revaluation not necessarily indicative of future periods.
<PAGE>
TEP IXD
(A) Revenues
(1) Lease revenue decreased to $267,141 in 1995 from $545,035 in 1994. The
following table lists lease revenues earned by equipment type:
For the year ended
December 31,
1995 1994
---------------------------------
Trailers $ 188,529 $ 456,511
Marine containers 78,612 88,524
================================
$ 267,141 $ 545,035
================================
The decrease was due to the following:
(a) Trailer revenue decreased $267,982 in 1995 as compared to 1994 levels,
due to the sale of 30 trailers during 1995 and lower utilization in short-term
rental facilities operated by an affiliate of the General Partner;
(b) Marine container revenue decreased $9,912 in 1995 as compared to 1994
levels, primarily due to a decline in utilization levels in 1995 and the
disposal of 45 20-foot dry marine containers during 1995.
(2) Interest and other income increased to $23,986 in 1995 from $21,274 in 1994
due to an increase in interest rates and higher cash balances in interest
bearing accounts.
(3) Gain on disposition of equipment of $83,235 in 1995 resulted from the sale
or disposal of 45 marine containers and 30 trailers. The gain on disposition of
equipment in 1994 totaled $17,133 from the sale or disposal of 29 marine
containers and two trailers.
(B) Expenses
Total expenses for the years ended December 31, 1995 and 1994 were $328,311 and
$389,752, respectively. The decrease in 1995 expenses was attributable primarily
to decreased depreciation and management fees, offset slightly by an increase in
bad debt expense, repairs and maintenance, and general and administrative
expenses.
(1) Direct Operating Expenses (defined as repairs and maintenance and insurance)
decreased to $54,905 in 1995 from $57,449 in 1994. This change resulted
primarily from the refurbishment of 30 trailers prior to being sold.
(2) Indirect Operating Expenses (defined as depreciation and amortization
expense, management fees, bad debt expense, and general and administrative
expenses) decreased to $273,406 in 1995 from $332,303 in 1994. This change
resulted from:
(a) a $61,957 decrease in depreciation expense from 1994 levels reflecting
assets sales during 1995 and 1994;
(b) a $13,499 decrease in management fees to affiliate from 1994 levels due
to the lower level of operating cash flow during 1995. Management fees are
calculated as the greater of 10% of the Partnership's operating cash flow, or
1/12 of 1/2% of the Partnership's Gross Proceeds as defined in the Limited
Partnership Agreement;
(c) a $9,471 increase in bad debt expense due to change in management's
estimate of doubtful accounts in 1995.
(C) Net Income
As a result of all of the foregoing, net income for the year ended December 31,
1995 was $46,051 compared with net income of $193,690 for the year ended
December 31, 1994. In 1995, TEP IXD distributed $855,090 to the Limited
Partners, or $89.74 per weighted average Unit.
The Partnership's performance for the year ended December 31, 1995, is not
necessarily indicative of future periods.
Geographic Information
The Partnerships operate their equipment in international markets. Although
these operations expose the Partnerships to certain currency, political, credit
and economic risks, the General Partner believes these risks are minimal or has
implemented strategies to control the risks as follows: Currency risks are at a
minimum because all invoicing, with the exception of a small number of railcars
operating in Canada, is conducted in U.S. dollars. Political risks are minimized
generally through the avoidance of operations in countries that do not have a
stable judicial system and established commercial business laws. Credit support
strategies for lessees range from letters of credit supported by U.S. banks to
cash deposits. Although these credit support mechanisms generally allow the
Partnership to maintain its lease yield, there are risks associated with
slow-to-respond judicial systems when legal remedies are required to secure
payment or repossess equipment. Economic risks are inherent in all international
markets and the General Partner strives to minimize this risk with market
analysis prior to committing equipment to a particular geographic area. Refer to
the Financial Statements, Note 3 for information on the revenues, income, and
assets in various geographic regions.
Revenues and net operating income by geographic region are impacted by the time
period the asset is owned and the useful life ascribed to the asset for
depreciation purposes. Net income (loss) from equipment is significantly
impacted by depreciation charges which are greatest in the early years due to
the General Partner's decision to use the 200% declining balance method of
depreciation. The relationships of geographic revenues, net income (loss) and
net book value are expected to significantly change in the future as equipment
is sold in various equipment markets and geographic areas. An explanation of the
current relationships is presented below:
TEP IXA:
The Partnership's equipment on lease to U.S. domiciled lessees accounted for 73%
of the revenues generated by owned equipment while net income accounted for
$329,511 of the $320,435 in net income for the entire Partnership. The primary
reason for this relationship is due to the fact that the Partnership depreciates
its rail equipment over a fifteen year period versus twelve years for other
equipment types owned and leased in other geographic regions. Since all the
railcars owned by the Partnership were sold, the relationship of revenue to net
operating income for this geographic region will be based on only trailers in
the future. The trailers leased to U.S. domiciled lessees are expected to be
continuously profitable in the near future, as the revenue from the trailers
exceeds the operating costs, and the depreciation recorded by the partnership
declines in future periods.
TEP IXC:
The Partnership's owned equipment and equipment owned by USPE's on lease to U.S.
domiciled lessees accounted for 95% of the revenues generated by owned equipment
and equipment owned by USPE's while net income accounted for $84,619 of the
$105,040 in net income for the entire Partnership. Since all the railcars owned
by the Partnership were sold, the relationship of revenue to net income for this
geographic region will be based on only trailers in the future. The trailers
leased to U.S. domiciled lessees are expected to be continuously profitable in
the near future, as the revenue from the trailers exceeds the operating costs,
and the depreciation recorded by the partnership declines in future periods.
Australian operations consisted of an interest in an aircraft which was sold
during 1996.
Forward Looking Information
Except for historical information contained herein, the discussion in this Form
10-K contains forward-looking statements that involve risks and uncertainties,
such as statements of the Partnerships' plans, objectives, expectations and
intentions. The cautionary statements made in this Form 10-K should be read as
being applicable to all related forward-looking statements wherever they appear
in this Form 10-K. The Partnerships' actual results could differ materially from
those discussed here.
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements for the Partnerships are listed on the Index to
Financial Statements and Financial Statement Schedules included in Item 14 of
this Annual Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
(This space left intentionally blank)
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
As of the date of this Annual Report, the directors and executive officers of
PLM International (and key executive officers of its subsidiaries) are as
follows:
<TABLE>
<CAPTION>
Name Age Position
- -------------------------------------- ------------------- -------------------------------------------------------
<S> <C> <C>
J. Alec Merriam 61 Director, Chairman of the Board, PLM International,
Inc.; Director, PLM Financial Services, Inc.
Douglas P. Goodrich 50 Director and Senior Vice President, PLM
International; Director and President, PLM Financial
Services, Inc.; Senior Vice President PLM
Transportation Equipment Corporation; President, PLM
Railcar Management Services, Inc.
Walter E. Hoadley 80 Director, PLM International, Inc.
Robert L. Pagel 60 Director, Chairman of the Executive Committee, PLM
International, Inc.; Director, PLM Financial
Services, Inc.
Harold R. Somerset 62 Director, PLM International, Inc.
Robert N. Tidball 58 Director, President and Chief Executive Officer, PLM
International, Inc.
J. Michael Allgood 48 Vice President and Chief Financial Officer, PLM
International, Inc. and PLM Financial Services, Inc.
Stephen M. Bess 50 President, PLM Investment Management, Inc. and PLM
Securities Corp.; Vice President, PLM Financial
Services, Inc.
David J. Davis 40 Vice President and Corporate Controller, PLM
International and PLM Financial Services, Inc.
Frank Diodati 42 President, PLM Railcar Management Services Canada
Limited.
Steven O. Layne 42 Vice President, PLM Transportation Equipment
Corporation; Vice President and Director, PLM
Worldwide Management Services, Ltd..
Stephen Peary 48 Senior Vice President, General Counsel and Secretary,
PLM International, Inc.; Vice President, General
Counsel and Secretary, PLM Financial Services, Inc.,
PLM Investment Management, Inc., PLM Transportation
Equipment Corporation; Vice President, PLM
Securities, Corp.
Thomas L. Wilmore 54 Vice President, PLM Transportation Equipment
Corporation; Vice President, PLM Railcar Management
Services, Inc.
</TABLE>
J. Alec Merriam was appointed Chairman of the Board of Directors of PLM
International in September 1990, having served as a director since February
1988. In October 1988 he became a member of the Executive Committee of the Board
of Directors of PLM International. From 1972 to 1988 Mr. Merriam was Executive
Vice President and Chief Financial Officer of Crowley Maritime Corporation, a
San Francisco area-based company engaged in maritime shipping and transportation
services. Previously, he was Chairman of the Board and Treasurer of LOA
Corporation of Omaha, Nebraska and served in various financial positions with
Northern Natural Gas Company, also of Omaha.
Douglas P. Goodrich was elected to the Board of Directors in July 1996,
appointed Director and President of PLM Financial Services, Inc. in June, 1996,
and appointed Senior Vice President of PLM International in March 1994. Mr.
Goodrich has also served as Senior Vice President of PLM Transportation
Equipment Corporation since July 1989, and as President of PLM Railcar
Management Services, Inc. since September 1992 having been a Senior Vice
President since June 1987. Mr. Goodrich was an Executive Vice President of
G.I.C. Financial Services Corporation, a subsidiary of Guardian Industries Corp.
of Chicago, Illinois from December 1980 to September 1985.
Dr. Hoadley joined PLM International's Board of Directors and its Executive
Committee in September, 1989. He served as a Director of PLM, Inc. from November
1982 to June 1984 and PLM Companies, Inc. from October 1985 to February 1988.
Dr. Hoadley has been a Senior Research Fellow at the Hoover Institute since
1981. He was Executive Vice President and Chief Economist for the Bank of
America from 1968 to 1981 and Chairman of the Federal Reserve Bank of
Philadelphia from 1962 to 1966. Dr. Hoadley has also served as a Director of
Transcisco Industries, Inc. from February 1988 through August 1995.
Robert L. Pagel was appointed Chairman of the Executive Committee of the
Board of Directors of PLM International in September 1990, having served as a
director since February 1988. In October 1988 he became a member of the
Executive Committee of the Board of Directors of PLM International. From June
1990 to April 1991 Mr. Pagel was President and Co-Chief Executive Officer of The
Diana Corporation, a holding company traded on the New York Stock Exchange. He
is the former President and Chief Executive Officer of FanFair Corporation which
specializes in sports fans' gift shops. He previously served as President and
Chief Executive Officer of Super Sky International, Inc., a publicly traded
company, located in Mequon, Wisconsin, engaged in the manufacture of skylight
systems. He was formerly Chairman and Chief Executive Officer of Blunt, Ellis &
Loewi, Inc., a Milwaukee-based investment firm. Mr. Pagel retired from Blunt,
Ellis & Loewi in 1985 after a career spanning 20 years in all phases of the
brokerage and financial industries. Mr. Pagel has also served on the Board of
Governors of the Midwest Stock Exchange.
Harold R. Somerset was elected to the Board of Directors of PLM
International in July 1994. From February 1988 to December 1993, Mr. Somerset
was President and Chief Executive Officer of California & Hawaiian Sugar
Corporation (C&H), a recently-acquired subsidiary of Alexander & Baldwin, Inc.
Mr. Somerset joined C&H in 1984 as Executive Vice President and Chief Operating
Officer, having served on its Board of Directors since 1978, a position in which
he continues to serve. Between 1972 and 1984, Mr. Somerset served in various
capacities with Alexander & Baldwin, Inc., a publicly-held land and agriculture
company headquartered in Honolulu, Hawaii, including Executive Vice President -
Agricultures, Vice President, General Counsel and Secretary. In addition to a
law degree from Harvard Law School, Mr. Somerset also holds degrees in civil
engineering from the Rensselaer Polytechnic Institute and in marine engineering
from the U.S. Naval Academy. Mr. Somerset also serves on the Boards of Directors
for various other companies and organizations, including Longs Drug Stores,
Inc., a publicly-held company.
Robert N. Tidball was appointed President and Chief Executive Officer of
PLM International in March 1989. At the time of his appointment, he was
Executive Vice President of PLM International. Mr. Tidball became a director of
PLM International in April, 1989 and a member of the Executive Committee of the
Board of Directors of PLM International in September 1990. Mr. Tidball was
elected President of PLM Railcar Management Services, Inc. in January 1986. Mr.
Tidball was Executive Vice President of Hunter Keith, Inc., a Minneapolis-based
investment banking firm, from March 1984 to January 1986. Prior to Hunter Keith,
Inc., he was Vice President, a General Manager and a Director of North American
Car Corporation, and a Director of the American Railcar Institute and the
Railway Supply Association.
J. Michael Allgood was appointed Vice President and Chief Financial Officer
of PLM International in October 1992. Between July 1991 and October 1992, Mr.
Allgood was a consultant to various private and public sector companies and
institutions specializing in financial operational systems development. In
October 1987, Mr. Allgood co-founded Electra Aviation Limited and its holding
company, Aviation Holdings Plc of London where he served as Chief Financial
Officer until July 1991. Between June 1981 and October 1987, Mr. Allgood served
as a First Vice President with American Express Bank, Ltd. In February 1978, Mr.
Allgood founded and until June 1981, served as a director of Trade Projects
International/Philadelphia Overseas Finance Company, a joint venture with
Philadelphia National Bank. From March 1975 to February 1978, Mr. Allgood served
in various capacities with Citibank, N.A.
Stephen M. Bess was appointed President of PLM Securities Corp. in June,
1996 and President of PLM Investment Management, Inc. in August 1989, having
served as Senior Vice President of PLM Investment Management, Inc. beginning in
February 1984 and as Corporate Controller of PLM Financial Services, Inc.
beginning in October 1983. Mr. Bess served as Corporate Controller of PLM, Inc.,
beginning in December 1982. Mr. Bess was Vice President-Controller of Trans
Ocean Leasing Corporation, a container leasing company, from November 1978 to
November 1982, and Group Finance Manager with the Field Operations Group of
Memorex Corp., a manufacturer of computer peripheral equipment, from October
1975 to November 1978.
David J. Davis was appointed Vice President and Controller of PLM
International in January 1994. From March 1993 through January 1994, Mr. Davis
was engaged as a consultant for various firms, including PLM. Prior to that Mr.
Davis was Chief Financial Officer of LB Credit Corporation in San Francisco from
July 1991 to March 1993. From April 1989 to May 1991, Mr. Davis was Vice
President and Controller for ITEL Containers International Corporation which was
located in San Francisco. Between May 1978 and April 1989, Mr. Davis held
various positions with Transamerica Leasing Inc., in New York, including that of
Assistant Controller for their rail leasing division.
Frank Diodati was appointed President of PLM Railcar Management Services
Canada Limited in 1986. Previously, Mr. Diodati was Manager of Marketing and
Sales for G.E. Railcar Services Canada Limited.
Steven O. Layne was appointed Vice President, PLM Transportation Equipment
Corporation's Air Group in November 1992, and was appointed Vice President and
Director of PLM Worldwide Management Services, Ltd. in September, 1995. Mr.
Layne was its Vice President, Commuter and Corporate Aircraft beginning in July
1990. Prior to joining PLM, Mr. Layne was the Director, Commercial Marketing for
Bromon Aircraft Corporation, a joint venture of General Electric Corporation and
the Government Development Bank of Puerto Rico. Mr. Layne is a major in the
United States Air Force Reserves and senior pilot with 13 years of accumulated
service.
Stephen Peary became Vice President, Secretary, and General Counsel of PLM
International in February 1988 and Senior Vice President in March 1994. Mr.
Peary was Assistant General Counsel of PLM Financial Services, Inc. from August
1987 through January 1988. Previously, Mr. Peary was engaged in the private
practice of law in San Francisco. Mr. Peary is a graduate of the University of
Illinois, Georgetown University Law Center, and Boston University (Masters of
Taxation Program).
Thomas L. Wilmore was appointed Vice President - Rail, PLM Transportation
Equipment Corporation, in March 1994 and has served as Vice President, Marketing
for PLM Railcar Management Services, Inc. since May 1988. Prior to joining PLM,
Mr. Wilmore was Assistant Vice President Regional Manager for MNC Leasing Corp.
in Towson, Maryland from February 1987 to April 1988. From July 1985 to February
1987, he was President and Co-Owner of Guardian Industries Corp., Chicago,
Illinois and between December 1980 and July 1985, Mr. Wilmore was an Executive
Vice President for its subsidiary, G.I.C. Financial Services Corporation. Mr.
Wilmore also served as Vice President of Sales for Gould Financial Services
located in Rolling Meadows, Illinois from June 1978 to December 1980.
The directors of the General Partner are elected for a one-year term or
until their successors are elected and qualified. There are no family
relationships between any director or any executive officer of the General
Partner.
ITEM 11. EXECUTIVE COMPENSATION
The Partnerships have no directors, officers, or employees. The Partnerships
have no pension, profit sharing, retirement, or similar benefit plans in effect
as of December 31, 1996.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Security Ownership of Certain Beneficial Owners
At December 31, 1996, no investor is known by the General Partner to
beneficially own more than 5% of the Units of TEP IXA, TEP IXB, TEP
IXC, or TEP IXD.
(b) Security Ownership of Management
Neither the General Partner and its affiliates nor any officer or
director of the General Partner and its affiliates beneficially own any
Units of TEP IXA, TEP IXB, TEP IXC or TEP IXD.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
(a) Transactions with Management and Others.
During 1996, management fees paid or accrued to IMI were: $61,560,
$43,650, $43,160 and $23,822 for TEP IXA, TEP IXB, TEP IXC and TEP IXD,
respectively. During 1996, administrative services performed on behalf
of the Partnerships were reimbursed to FSI and its affiliates as
follows: $87,395, $56,302, $96,914 and $39,802 for TEP IXA, TEP IXB,
TEP IXC and TEP IXD, respectively.
During 1996, the unconsolidated special purpose entities (USPE's)
paid or accrued (based on the Partnership's proportional share of
ownership) management fees to IMI of : $572 for TEP IXC; administrative
services paid to FSI were: $113 and $1,468 for TEP IXB and TEP IXC,
respectively.
(b) Certain Business Relationships
None.
(c) Indebtedness of Management
None.
(d) Transactions with Promoters
None.
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. Financial Statements
The financial statements listed in the accompanying Index to
Financial Statements are filed as part of this Annual Report.
(b) Reports on Form 8-K
None.
(c) Exhibits
4. Limited Partnership Agreement of Partnership. Incorporated by
reference to the Partnership's Registration Statement on Form S-1
(Reg. No. 33-657) which became effective with the Securities and
Exchange Commission on January 7, 1986.
10. Management Agreement between Partnership and PLM Investment
Management, Inc. Incorporated by reference to the Partnership's
Registration Statement on Form S-1 (Reg. No. 33-657) which became
effective with the Securities and Exchange Commission on January
7, 1986.
24. Powers of Attorney.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Registrant has no directors or officers. The General Partner has signed on
behalf of the Registrant by duly authorized officers.
Date: March 14, 1997 PLM TRANSPORTATION EQUIPMENT PARTNERS IXA
1986 INCOME FUND
PARTNERSHIP
By: PLM Financial Services, Inc.
General Partner
By: /s/ Douglas P. Goodrich
---------------------------
Douglas P. Goodrich
President & Director
By: /s/ David J. Davis
---------------------------
David J. Davis
Vice President and
Corporate Controller
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below by the following directors of the Registrant's General
Partner on the dates indicated.
Name Capacity Date
*_____________________________
J. Alec Merriam Director-FSI March 14, 1997
*_____________________________
Robert L. Pagel Director-FSI March 14, 1997
* Stephen Peary, by signing his name hereto, does sign this document on behalf
of the persons indicated above pursuant to powers-of-attorney duly executed by
such persons and filed with the Securities and Exchange Commission.
/s/ Stephen Peary
- -----------------------
Stephen Peary
Attorney-in-Fact
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Registrant has no directors or officers. The General Partner has signed on
behalf of the Registrant by duly authorized officers.
Date: March 14, 1997 PLM TRANSPORTATION EQUIPMENT PARTNERS IXB
1986 INCOME FUND
PARTNERSHIP
By: PLM Financial Services, Inc.
General Partner
By: /s/ Douglas P. Goodrich
---------------------------
Douglas P. Goodrich
President & Director
By: /s/ David J. Davis
---------------------------
David J. Davis
Vice President and
Corporate Controller
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below by the following directors of the Registrant's General
Partner on the dates indicated.
Name Capacity Date
*_____________________________
J. Alec Merriam Director-FSI March 14, 1997
*_____________________________
Robert L. Pagel Director-FSI March 14, 1997
* Stephen Peary, by signing his name hereto, does sign this document on behalf
of the persons indicated above pursuant to powers-of-attorney duly executed by
such persons and filed with the Securities and Exchange Commission.
/s/ Stephen Peary
- -----------------------
Stephen Peary
Attorney-in-Fact
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Registrant has no directors or officers. The General Partner has signed on
behalf of the Registrant by duly authorized officers.
Date: March 14, 1997 PLM TRANSPORTATION EQUIPMENT PARTNERS IXC
1986 INCOME FUND
PARTNERSHIP
By: PLM Financial Services, Inc.
General Partner
By: /s/ Douglas P. Goodrich
-----------------------------
Douglas P. Goodrich
President & Director
By: /s/ David J. Davis
-----------------------------
David J. Davis
Vice President and
Corporate Controller
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below by the following directors of the Registrant's General
Partner on the dates indicated.
Name Capacity Date
*_____________________________
J. Alec Merriam Director-FSI March 14, 1997
*_____________________________
Robert L. Pagel Director-FSI March 14, 1997
* Stephen Peary, by signing his name hereto, does sign this document on behalf
of the persons indicated above pursuant to powers-of-attorney duly executed by
such persons and filed with the Securities and Exchange Commission.
/s/ Stephen Peary
- -----------------------
Stephen Peary
Attorney-in-Fact
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Registrant has no directors or officers. The General Partner has signed on
behalf of the Registrant by duly authorized officers.
Date: March 14, 1997 PLM TRANSPORTATION EQUIPMENT PARTNERS IXD
1986 INCOME FUND
PARTNERSHIP
By: PLM Financial Services, Inc.
General Partner
By: /s/ Douglas P. Goodrich
----------------------------
Douglas P. Goodrich
President & Director
By: /s/ David J. Davis
----------------------------
David J. Davis
Vice President and
Corporate Controller
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below by the following directors of the Registrant's General
Partner on the dates indicated.
Name Capacity Date
*_____________________________
J. Alec Merriam Director-FSI March 14, 1997
*_____________________________
Robert L. Pagel Director-FSI March 14, 1997
* Stephen Peary, by signing his name hereto, does sign this document on behalf
of the persons indicated above pursuant to powers-of-attorney duly executed by
such persons and filed with the Securities and Exchange Commission.
/s/ Stephen Peary
- -----------------------
Stephen Peary
Attorney-in-Fact
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IX 1986 INCOME FUND
(A Limited Partnership)
INDEX TO FINANCIAL STATEMENTS
(Item 14(a))
TEP IXA Page
Report of Independent Auditors 34
Balance sheets at December 31, 1996 and 1995 35
Statements of operations for the years
ended December 31, 1996, 1995, and 1994 36
Statements of changes in partners' capital for the years
ended December 31, 1996, 1995, and 1994 37
Statements of cash flows for the years
ended December 31, 1996, 1995, and 1994 38
Notes to financial statements 39-43
TEP IXB
Report of Independent Auditors 44
Balance sheets at December 31, 1996 and 1995 45
Statements of income for the years
ended December 31, 1996, 1995, and 1994 46
Statements of changes in partners' capital for the years
ended December 31, 1996, 1995, and 1994 47
Statements of cash flows for the years
ended December 31, 1996, 1995, and 1994 48
Notes to financial statements 49-53
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IX 1986 INCOME FUND
(A Limited Partnership)
INDEX TO FINANCIAL STATEMENTS
(Item 14(a))
TEP IXC Page
Report a of Independent Auditors 54
Balance sheets at December 31, 1996 and 1995 55
Statements of income for the years
ended December 31, 1996, 1995, and 1994 56
Statements of changes in partners' capital for the years
ended December 31, 1996, 1995, and 1994 57
Statements of cash flows for the years
ended December 31, 1996, 1995, and 1994 58
Notes to financial statements 59-64
TEP IXD
Report of Independent Auditors 65
Balance sheets at December 31, 1996 and 1995 66
Statements of operations for the years
ended December 31, 1996, 1995, and 1994 67
Statements of changes in partners' capital for the years
ended December 31, 1996, 1995, and 1994 68
Statements of cash flows for the years
ended December 31, 1996, 1995, and 1994 69
Notes to financial statements 70-72
All other financial statement schedules have been omitted as the required
information is not pertinent or is not present in amounts sufficient to require
submission of the schedule, or because the information required is included in
the financial statements and notes thereto.
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Partners
PLM Transportation Equipment Partners IXA 1986 Income Fund:
We have audited the financial statements of PLM Transportation Equipment
Partners IXA 1986 Income Fund as listed in the accompanying index. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
The Partnership has entered its liquidation phase and the General Partner is
actively pursuing the sale of all of the Partnership's equipment with the
intention of winding up the Partnership and distributing all available cash to
the Partners. Management's plans in regard to this matter are also described in
note 1.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of PLM Transportation Equipment
Partners IXA 1986 Income Fund as of December 31, 1996 and 1995 and the results
of its operations and its cash flows for each of the years in the three-year
period ended December 31, 1996 in conformity with generally accepted accounting
principles.
/S/ KPMG PEAT MARWICK LLP
- ----------------------------
SAN FRANCISCO, CALIFORNIA
March 14, 1997
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IXA 1986 INCOME FUND
(A Limited Partnership)
BALANCE SHEETS
December 31,
ASSETS
<TABLE>
<CAPTION>
1996 1995
--------------------------------------
<S> <C> <C>
Equipment held for operating leases, at cost $ 3,486,094 $ 4,242,401
Less accumulated depreciation (3,140,358 ) (3,567,969 )
-------------------------------------
Net equipment 345,736 674,432
Cash and cash equivalents 211,878 251,709
Accounts receivable, net of allowance for doubtful accounts of
$57,870 in 1996 and $57,022 in 1995 97,754 107,933
Net investment in sales-type lease -- 1,003,564
Due from affiliates -- 2,941
Prepaid insurance 2,438 3,544
-------------------------------------
Total assets $ 657,806 $ 2,044,123
=====================================
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Due to affiliates $ 5,059 $ --
Accounts payable 9,350 23,272
Lessee deposits and reserves -- 20,028
-------------------------------------
Total liabilities 14,409 43,300
Partners' capital (deficit):
Limited Partners (24,285 units) 743,918 2,087,769
General Partner (100,521 ) (86,946 )
-------------------------------------
Total partners' capital 643,397 2,000,823
-------------------------------------
Total liabilities and partners' capital $ 657,806 $ 2,044,123
=====================================
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IXA 1986 INCOME FUND
(A Limited Partnership)
STATEMENTS OF OPERATIONS
For the years ended December 31,
<TABLE>
<CAPTION>
1996 1995 1994
---------------------------------------------------
<S> <C> <C> <C>
Revenues:
Lease revenue $ 414,957 $ 547,246 $ 682,844
Interest and other income 22,545 41,201 9,228
Gain on disposition of equipment 340,836 555,733 59,957
----------------------------------------------------
Total revenue 778,338 1,144,180 752,029
Expenses:
Depreciation 196,247 310,524 435,425
Management fees to affiliate 61,560 60,713 60,966
Repairs and maintenance 59,036 162,279 122,538
Insurance expense 5,839 9,802 9,518
General and administrative expenses
to affiliates 87,395 122,635 108,298
Other general and administrative expenses 46,437 69,507 45,177
Provision for (recovery of) bad debts 1,389 (64,903 ) 102,916
----------------------------------------------------
Total expenses 457,903 670,557 884,838
----------------------------------------------------
Net income (loss) $ 320,435 $ 473,623 $ (132,809 )
====================================================
Partners' share of net income (loss):
Limited Partners - 99% $ 317,231 $ 468,887 $ (131,481 )
General Partner - 1% 3,204 4,736 (1,328 )
-------------------=================================
Total $ 320,435 $ 473,623 $ (132,809 )
====================================================
Net income (loss) per weighted average Limited
Partnership Unit (24,285 units) $ 13.06 $ 19.31 $ (5.41 )
====================================================
Cash distributions $ 277,861 $ 297,869 $ 361,566
====================================================
Cash distributions per weighted average Limited
Partnership Unit $ 11.33 $ 12.14 $ 14.74
====================================================
Special cash distributions $ 1,400,000 $ -- $ 138,000
====================================================
Special cash distributions per weighted average
Limited Partnership Unit $ 57.07 $ -- $ 5.63
====================================================
Total cash distributions per weighted average
Limited Partnership Unit $ 68.40 $ 12.14 $ 20.37
====================================================
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IXA 1986 INCOME FUND
(A Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the years ended December 31, 1996, 1995, and 1994
<TABLE>
<CAPTION>
Limited General
Partners Partner Total
-----------------------------------------------------
<S> <C> <C> <C>
Partners' capital (deficit)
at December 31, 1993 $ 2,539,823 $ (82,379 ) $ 2,457,444
Net loss (131,481 ) (1,328 ) (132,809 )
Quarterly cash distributions (357,950 ) (3,616 ) (361,566 )
Special distributions (136,620 ) (1,380 ) (138,000 )
-------------------------------------------------------
Partners' capital (deficit)
at December 31, 1994 1,913,772 (88,703 ) 1,825,069
Net income 468,887 4,736 473,623
Cash distributions (294,890 ) (2,979 ) (297,869 )
-------------------------------------------------------
Partners' capital (deficit)
at December 31, 1995 2,087,769 (86,946 ) 2,000,823
Net income 317,231 3,204 320,435
Quarterly cash distributions (275,082 ) (2,779 ) (277,861 )
Special distributions (1,386,000 ) (14,000 ) (1,400,000 )
-------------------------------------------------------
Partners' capital (deficit)
at December 31, 1996 $ 743,918 $ (100,521 ) $ 643,397
=======================================================
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IXA 1986 INCOME FUND
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
for the years ended December 31,
<TABLE>
<CAPTION>
1996 1995 1994
---------------------------------------------------
<S> <C> <C> <C>
Operating activities:
Net income (loss) $ 320,435 $ 473,623 $ (132,809 )
Adjustments to reconcile net
income (loss) to net cash
provided by operating activities:
Gain on disposition of
equipment (340,836 ) (555,733 ) (59,957 )
Depreciation 196,247 310,524 435,425
Changes in operating assets
and liabilities:
Accounts receivable, net 10,179 (73,313 ) 57,790
Due from affiliates 2,941 (2,941 ) 3,270
Prepaid insurance 1,106 79 2,684
Due to affiliates 5,059 (2,732 ) 2,673
Accounts payable (13,922 ) (30,840 ) (78,411 )
Lessee deposits and reserves (20,028 ) (3,546 ) (5,239 )
--------------------------------------------------
Net cash provided by operating
activities 161,181 115,121 225,426
Investing activities:
Proceeds from disposition of
equipment 473,285 50,179 263,417
Payments received on sales-type lease 1,003,564 86,436 --
Payments for purchase of capital
improvements -- (876 ) (25,793 )
--------------------------------------------------
Net cash provided by investing
activities 1,476,849 135,739 237,624
Cash flows used in financing activities:
Cash distributions paid to Limited Partners (1,661,082 ) (294,890 ) (494,570 )
Cash distributions paid to General Partner (16,779 ) (2,979 ) (4,996 )
--------------------------------------------------
Cash used in financing activities (1,677,861 ) (297,869 ) (499,566 )
--------------------------------------------------
Cash and cash equivalents:
Net decrease in cash and cash
equivalents (39,831 ) (47,009 ) (36,516 )
Cash and cash equivalents at
beginning of year 251,709 298,718 335,234
--------------------------------------------------
Cash and cash equivalents at
end of year $ 211,878 $ 251,709 $ 298,718
==================================================
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IXA 1986 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
1. Basis of presentation
Organization
PLM Transportation Equipment Partners IXA 1986 Income Fund, a
California limited partnership (the Partnership) was formed on
September 20, 1985. The Partnership engages in the business of owning
and leasing transportation equipment. The Partnership commenced
significant operations in June 1986. PLM Financial Services, Inc. (FSI)
is the General Partner. FSI is a wholly-owned subsidiary of PLM
International, Inc. (PLM International) and manages the affairs of the
Partnership.
The net income (loss) and distributions of the Partnership are
allocated 99% to the Limited Partners and 1% to the General Partner.
The General Partner is entitled to an incentive fee equal to 15% of
"Surplus Distributions" as defined in the Partnership Agreement,
remaining after the Limited Partners have received a certain minimum
rate of return.
These financial statements have been prepared on the accrual basis
of accounting in accordance with generally accepted accounting
principles. This requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Operations
The equipment of the Partnership is managed, under a continuing
equipment management agreement, by PLM Investment Management, Inc.
(IMI), a wholly-owned subsidiary of FSI. IMI receives a monthly
management fee from the Partnership for managing the equipment (see
Note 2). FSI, in conjunction with its subsidiaries, sells
transportation equipment to investor programs and third parties,
manages pools of transportation equipment under agreements with the
investor programs, and is a General Partner of other Limited
Partnerships.
The Partnership has entered its liquidation phase and the General
Partner is actively pursuing the sale of all of the Partnership's
equipment with the intention of winding up the Partnership and
distributing all available cash to the Partners.
Accounting for Leases
The Partnership's leasing operations generally consist of operating
leases. Under the operating lease method of accounting, the leased
asset is recorded at cost and depreciated over its estimated useful
life. Rental payments are recorded as revenue over the lease term.
Lease origination costs are capitalized and amortized over the term of
the lease.
Depreciation
Depreciation is computed on the double declining balance method based
upon estimated useful lives of 15 years for rail equipment, 12 years
for trailers, marine containers and aircraft and 8 years for tractors.
The depreciation method changes to straight-line when annual
depreciation expense using the straight-line method exceeds that
calculated by the 200% declining balance method. Major expenditures
which are expected to extend the useful lives or reduce future
operating expenses of equipment are capitalized.
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IXA 1986 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
1. Basis of presentation (continued)
Transportation Equipment
In March 1995, the Financial Accounting Standards Board (FASB) issued
Statement No. 121, "Accounting for the Impairment of Long-Lived Assets
and Long-Lived Assets to be Disposed Of" (SFAS 121). This standard is
effective for years beginning after December 15, 1995. In accordance
with FASB 121, the Partnership reviews the carrying value of its
equipment at least annually in relation to expected future market
conditions for the purpose of assessing recoverability of the recorded
amounts. If projected future lease revenue plus residual values are
less than the carrying value of the equipment, a loss on revaluation is
recorded. No adjustments to reflect impairment of individual equipment
carrying values were required for the years ended December 31, 1996 and
1995.
Repairs and Maintenance
Maintenance costs are usually the obligation of the lessee. If they are
not covered by the lessee they are charged against operations as
incurred.
Net Income (Loss) and Distribution per Limited Partnership Unit
Net income (loss) per Limited Partnership Unit is computed based on the
number of Limited Partnership Units outstanding during the period
(24,285 for 1996, 1995, and 1994).
Cash distributions are recorded when paid. Cash distributions to
investors in excess of net income are considered to represent a return
of capital. Cash distributions to Limited Partners of $1,343,851, $0,
and $494,570, in 1996, 1995, and 1994, respectively, were deemed to be
a return of capital.
Cash and Cash Equivalents
The Partnership considers highly liquid investments that are readily
convertible to known amounts of cash with original maturities of three
months or less as cash equivalents.
2. General Partner and Transactions with Affiliates
An officer of FSI contributed $100 of the Partnership's initial net
capital. Under the Equipment Management Agreement, IMI receives a
monthly management fee equal to the greater of 10% of the Partnership's
"operating cash flow" or 1/12 of 1/2% of the Partnership's "gross
proceeds" as defined in the Partnership Agreement. Management fees of
$5,059 were payable to IMI as of December 31, 1996 and 1995.
The Partnership reimbursed FSI and its affiliates $87,395,
$122,635, and $108,298 for administrative and other services performed
on behalf of the Partnership in 1996, 1995, and 1994, respectively.
As of December 31, 1996, all of the Partnership's trailer
equipment has been transferred into rental facilities operated by an
affiliate of the General Partner. Revenues are earned by billing the
rental facilities' customers monthly or quarterly under short-term
rental agreements and are distributed as collected to the owners of the
related equipment. Direct expenses associated with the equipment and an
allocation of indirect expense of rental facility operations are billed
to the Partnership.
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IXA 1986 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
2. General Partner and Transactions with Affiliates (continued)
At December 31, 1996, $5,059 was due to FSI and its affiliates
($2,941 was due from FSI and its affiliates at December 31, 1995).
3. Equipment
The components of equipment at December 31, 1996 and 1995 are as
follows:
<TABLE>
<CAPTION>
Equipment held for operating leases: 1996 1995
------------------------------------
<S> <C> <C>
Rail equipment $ -- $ 409,301
Marine containers 1,128,798 1,420,872
Trailers 2,357,296 2,412,228
------------------------------------
3,486,094 4,242,401
Less accumulated depreciation (3,140,358 ) (3,567,969 )
------------------------------------
Net equipment $ 345,736 $ 674,432
====================================
</TABLE>
Revenues are earned by placing the equipment under operating
leases which are billed monthly or quarterly. Rents for all equipment
are based on a fixed operating lease amount with the exception of
marine containers and trailers in the rental facilities. The
Partnership's marine containers are leased to the operator of
utilization-type pools which includes equipment owned by unaffiliated
parties. In such instances, revenues received by the Partnership
consist of a specified percentage of lease revenues generated by
leasing the pooled equipment to sub-lessees, after deducting certain
direct operating expenses of the pooled equipment.
With the exception of one sidelift with a carrying value of
$28,433, all equipment was either on lease or operating in
PLM-affiliated short-term rental facilities as of December 31, 1996.
All equipment was either operating in rental facilities or on lease as
of December 31, 1995. During 1996, the Partnership sold or disposed of
two trailers, 10 railcars, and 18 marine containers. During 1995, the
Partnership sold or disposed of one trailer and 10 marine containers.
Additionally, the Partnership entered into a sales-type lease related
to a commuter aircraft with a carrying value of $505,450 for a sales
price equal to the present value of the future lease payments
($1,090,000) less a $50,000 reserve for future costs to sell. Gross
lease payments of $234,000 were received over a one-year period,
commencing in June 1995, with an additional balloon payment of $919,012
due at the end of the lease term. The total net book value for the
disposed or sold equipment was $534,446 with a total sales price of
$1,090,000.
All leases are being accounted for as operating leases with
utilization-based rentals. Contingent rentals based upon utilization
amounted to $112,994 in 1996, $118,625 in 1995, and $130,722 in 1994.
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IXA 1986 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
3. Equipment (continued)
The lessees accounting for 10% or more of the total revenues during
1996, 1995 and 1994 was Transamerica Leasing (27% in 1996, 22% in 1995,
and 19% in 1994).
The Partnership owns certain equipment which is leased and
operated internationally. A limited number of the Partnership's
transactions are denominated in a foreign currency. The Partnership's
asset and liability accounts denominated in a foreign currency were
translated into U.S. dollars at the rates in effect at the balance
sheet dates, and revenue and expense items were translated at average
rates during the year. Gains or losses resulting from foreign currency
transactions are included in the results of operations and are not
material.
The Partnership leases its aircraft, railcars and trailers to
lessees domiciled in two geographic regions: Australia and United
States. The marine containers are leased to lessees in different
regions who operate the marine containers worldwide. The tables below
set forth geographic information about the Partnership's equipment
grouped by domicile of the lessee as of and for the years ended
December 31, 1996, 1995, and 1994:
<TABLE>
<CAPTION>
Revenues: Region 1996 1995 1994
----------------------------------------------
<S> <C> <C> <C> <C>
Various $ 112,994 $ 118,625 $ 130,722
United States 301,963 428,621 552,122
----------------------------------------------
Total revenues $ 414,957 $ 547,246 $ 682,844
==============================================
</TABLE>
The following table sets forth identifiable net income (loss)
information by region:
<TABLE>
<CAPTION>
Net income (loss): Region 1996 1995 1994
-------------------------------------------------
<S> <C> <C> <C> <C>
Various $ 99,860 $ 46,547 $ 45,147
United States 329,511 120,276 (127,495 )
Australia -- 378,782 --
------------------------------------------------
Total identifiable net income (loss) 429,371 545,605 (82,348 )
Administrative and other net loss (108,936 ) (71,982 ) (50,461 )
================================================
Total net income (loss) $ 320,435 $ 473,623 $ (132,809 )
================================================
</TABLE>
The net book value of these assets at December 31, 1996, 1995, and 1994
are as follows:
<TABLE>
<CAPTION>
Region 1996 1995 1994
------------------------------------------------
<S> <C> <C> <C> <C>
Various $ 88,552 $ 190,132 $ 288,847
United States 257,184 484,300 1,229,679
------------------------------------------------
Total equipment $ 345,736 $ 674,432 $ 1,518,526
================================================
</TABLE>
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IXA 1986 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
4. Income Taxes
The Partnership is not subject to income taxes as any income or loss is
included in the tax returns of the individual Partners. Accordingly, no
provision for income taxes has been made in the accounts of the
Partnership.
As of December 31, 1996, there were temporary differences of
approximately $1.3 million between the financial statement carrying
values of assets and liabilities and the federal income tax bases of
such assets and liabilities, principally due to differences in
depreciation methods, and equipment reserves.
5. Investment in Sales-type Lease
On January 31, 1996, the lessee under the sales-type lease of the Metro
III commuter aircraft exercised its option to buy the aircraft for
approximately $1.0 million.
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Partners
PLM Transportation Equipment Partners IXB 1986 Income Fund:
We have audited the financial statements of PLM Transportation Equipment
Partners IXB 1986 Income Fund as listed in the accompanying index. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
The Partnership has entered its liquidation phase and the General Partner is
actively pursuing the sale of all of the Partnership's equipment with the
intention of winding up the Partnership and distributing all available cash to
the Partners. Management's plans in regard to this matter are also described in
note 1.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of PLM Transportation Equipment
Partners IXB 1986 Income Fund as of December 31, 1996 and 1995 and the results
of its income and its cash flows for each of the years in the three-year period
ended December 31, 1996, in conformity with generally accepted accounting
principles.
/S/ KPMG PEAT MARWICK
- ----------------------------
SAN FRANCISCO, CALIFORNIA
March 14, 1997
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IXB 1986 INCOME FUND
(A Limited Partnership)
BALANCE SHEETS
December 31,
ASSETS
<TABLE>
<CAPTION>
1996 1995
--------------------------------------
<S> <C> <C>
Equipment held for operating leases, at cost $ 1,961,397 $ 2,908,067
Less accumulated depreciation (1,769,486 ) (2,408,060 )
-------------------------------------
Net equipment 191,911 500,007
Cash and cash equivalents 478,922 351,363
Investment in unconsolidated special purpose entity -- 222,128
Accounts receivable, net of allowance for doubtful accounts of
$22,285 in 1996 and $29,460 in 1995 28,720 82,668
Prepaid insurance 1,879 2,447
-------------------------------------
Total assets $ 701,432 $ 1,158,613
=====================================
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Due to affiliates $ 3,637 $ 3,637
Accounts payable 9,637 72,569
Lessee deposits -- 16,248
-------------------------------------
Total liabilities 13,274 92,454
Partners' capital (deficit):
Limited Partners (17,460 units) 758,143 1,132,364
General Partner (69,985 ) (66,205 )
-------------------------------------
Total partners' capital 688,158 1,066,159
-------------------------------------
, $ 701,432 $ 1,158,613
=====================================
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IXB 1986 INCOME FUND
(A Limited Partnership)
STATEMENTS OF INCOME
For the years ended December 31,
<TABLE>
<CAPTION>
1996 1995 1994
------------------------------------------------
<S> <C> <C> <C>
Revenues:
Lease revenue $ 249,718 $ 535,422 $ 813,960
Interest and other income 17,667 22,516 16,696
Gain on disposition of equipment 272,183 113,206 132,025
-----------------------------------------------
Total revenues 539,568 671,144 962,681
Expenses:
Depreciation 136,780 260,055 362,064
Management fees to affiliate 43,650 43,650 55,545
Repairs and maintenance 46,352 130,834 120,082
Insurance expense 3,512 6,677 7,458
General and administrative expenses
to affiliates 56,302 96,118 87,839
Other general and administrative expenses 30,517 42,425 34,267
Bad debt expense 6 8,379 15,954
-----------------------------------------------
Total expenses 317,119 588,138 683,209
Equity in net income of unconsolidated
special purpose entity 250,928 -- --
-----------------------------------------------
Net income $ 473,377 $ 83,006 $ 279,472
===============================================
Partners' share of net income:
Limited Partners - 99% $ 468,643 $ 82,176 $ 276,677
General Partner - 1% 4,734 830 2,795
-----------------==============================
Total $ 473,377 $ 83,006 $ 279,472
===============================================
Net income per weighted average Limited Partnership
Unit (17,460 units) $ 26.84 $ 4.71 $ 15.85
===============================================
Cash distributions $ 401,378 $ 474,176 $ 676,827
===============================================
Cash distributions per weighted average Limited
Partnership Unit $ 22.76 $ 26.89 $ 38.38
===============================================
Special cash distributions $ 450,000 $ 200,000 $ 185,000
===============================================
Special cash distribution per weighted average
Limited Partnership Unit $ 25.52 $ 11.34 $ 10.49
===============================================
Total cash distributions per weighted average
Limited Partnership Unit $ 48.28 $ 38.23 $ 48.87
===============================================
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IXB 1986 INCOME FUND
(A Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the years ended December 31, 1996, 1995, and 1994
<TABLE>
<CAPTION>
Limited General
Partners Partner Total
------------------------------------------------------
<S> <C> <C> <C>
Partners' capital (deficit)
at December 31, 1993 $ 2,294,154 $ (54,470 ) $ 2,239,684
Net income 276,677 2,795 279,472
Quarterly cash distributions (670,059 ) (6,768 ) (676,827 )
Special distributions (183,150 ) (1,850 ) (185,000 )
-----------------------------------------------------
Partners' capital (deficit)
at December 31, 1994 1,717,622 (60,293 ) 1,657,329
Net income 82,176 830 83,006
Quarterly cash distributions (469,434 ) (4,742 ) (474,176 )
Special distributions (198,000 ) (2,000 ) (200,000 )
-----------------------------------------------------
Partners' capital (deficit)
at December 31, 1995 1,132,364 (66,205 ) 1,066,159
Net income 468,643 4,734 473,377
Quarterly cash distributions (397,364 ) (4,014 ) (401,378 )
Special distributions (445,500 ) (4,500 ) (450,000 )
-----------------------------------------------------
Partners' capital (deficit)
at December 31, 1996 $ 758,143 $ (69,985 ) $ 688,158
=====================================================
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IXB 1986 INCOME FUND
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
for the years ended December 31,
<TABLE>
<CAPTION>
1996 1995 1994
-------------------------------------------------
<S> <C> <C> <C>
Operating activities:
Net income $ 473,377 $ 83,006 $ 279,472
Adjustments to reconcile net
income to net cash provided
by operating activities:
Gain from disposition of
equipment (272,183 ) (113,206 ) (132,025 )
Depreciation 136,780 260,055 362,064
Equity in net income from unconsolidated
special purpose entity (250,928 ) -- --
Changes in operating assets
and liabilities:
Accounts receivable, net 53,948 (16,217 ) 10,324
Prepaid insurance 568 513 2,339
Due to affiliates -- (2,426 ) (1,931 )
Accounts payable (62,932 ) 61,158 482
Lessee deposits (16,248 ) (136 ) (605 )
-----------------
-------------------------------
Net cash provided by operating
activities 62,382 272,747 520,120
------------------------------------------------
Investing activities:
Proceeds from disposition of equipment 443,499 265,627 378,108
Liquidation distributions from unconsolidated
special purpose entity 442,500 -- --
Distributions from unconsolidated special
purpose entity 30,556 -- --
Payments for purchase of capital improvements -- (4,895 ) --
------------------------------------------------
Net cash provided by investing activities 916,555 260,732 378,108
------------------------------------------------
Cash flows used in financing activities:
Cash distributions paid to Limited Partners (842,864 ) (667,434 ) (853,209 )
Cash distributions paid to General Partner (8,514 ) (6,742 ) (8,618 )
------------------------------------------------
Cash used in financing activities (851,378 ) (674,176 ) (861,827 )
------------------------------------------------
Cash and cash equivalents:
Net increase (decrease) in cash and
cash equivalents 127,559 (140,697 ) 36,401
Cash and cash equivalents at
beginning of year 351,363 492,060 455,659
------------------------------------------------
Cash and cash equivalents at
end of year $ 478,922 $ 351,363 $ 492,060
================================================
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IXB 1986 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
1. Basis of Presentation
Organization
PLM Transportation Equipment Partners IXB 1986 Income Fund, a
California limited partnership (the Partnership) was formed on
September 20, 1985. The Partnership engages in the business of owning
and leasing transportation equipment. The Partnership commenced
significant operations in October, 1986. PLM Financial Services, Inc.
(FSI) is the General Partner. FSI is a wholly-owned subsidiary of PLM
International, Inc. (PLM International) and manages the affairs of the
Partnership.
The net income (loss) and distributions of the Partnership are
allocated 99% to the Limited Partners and 1% to the General Partner.
The General Partner is entitled to an incentive fee equal to 15% of
"Surplus Distributions" as defined in the Partnership Agreement
remaining after the Limited Partners have received a certain minimum
rate of return.
These financial statements have been prepared on the accrual basis
of accounting in accordance with generally accepted accounting
principles. This requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Operations
The equipment of the Partnership is managed, under a continuing
equipment management agreement, by PLM Investment Management, Inc.
(IMI), a wholly-owned subsidiary of FSI. IMI receives a monthly
management fee from the Partnership for managing the equipment (see
Note 2). FSI, in conjunction with its subsidiaries, sells
transportation equipment to investors programs and third parties,
manages pools of transportation equipment under agreements with the
investor programs, and is a General Partner of other Limited
Partnerships.
The Partnership has entered its liquidation phase and the General
Partner is actively pursuing the sale of all of the Partnership's
equipment with the intention of winding up the Partnership and
distributing all available cash to the Partners.
Accounting for Leases
The Partnership's leasing operations generally consist of operating
leases. Under the operating lease method of accounting, the leased
asset is recorded at cost and depreciated over its estimated useful
life. Rental payments are recorded as revenue over the lease term.
Lease origination costs are capitalized and amortized over the term of
the lease.
Depreciation
Depreciation is computed on the double declining balance method based
upon estimated useful lives of 15 years for rail equipment, 12 years
for trailers, marine containers, and aircraft and 8 years for tractors.
The depreciation method changes to straight-line when annual
depreciation expense using the straight line method exceeds that
calculated by the 200% declining balance method. Major expenditures
which are expected to extend the useful lives or reduce future
operating expenses of equipment are capitalized.
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IXB 1986 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
1. Basis of Presentation (continued)
Transportation Equipment
In March 1995, the Financial Accounting Standards Board (FASB) issued
Statement No. 121, "Accounting for the Impairment of Long-Lived Assets
and Long-Lived Assets to be Disposed Of" (SFAS 121). This standard is
effective for years beginning after December 15, 1995. In accordance
with SFAS 121, the General Partner reviews the carrying value of its
equipment portfolio at least annually in relation to expected future
market conditions for the purpose of assessing recoverability of the
recorded amounts. If projected future lease revenue plus residual
values are less than the carrying value of the equipment, a loss on
revaluation is recorded. No adjustments to reflect impairment of
individual equipment carrying values were required for the years ended
December 31, 1996 and 1995.
Investment in Unconsolidated Special Purpose Entity
The Partnership had an interest in a special purpose entity which owned
transportation equipment. This interest was accounted for using the
equity method.
The Partnership's investment in the unconsolidated special purpose
entity included acquisition and lease negotiation fees paid by the
Partnership to TEC. The Partnership's equity interest in net income of
the unconsolidated special purpose entity is reflected net of
management fees paid or payable to IMI and the amortization of
acquisition and lease negotiation fees paid to TEC. The equipment owned
by this entity was sold in the third quarter of 1996.
Repairs and Maintenance
Maintenance costs are usually the obligation of the lessee. If they are
not covered by the lessee they are charged against operations as
incurred.
Net Income (Loss) and Distributions per Limited Partnership Unit
Net income (loss) per Limited Partnership Unit is computed based on the
number of Limited Partnership Units outstanding during the period
(17,460 for 1996, 1995, and 1994).
Cash distributions are recorded when paid. Cash distributions to
investors in excess of net income are considered to represent a return
of capital. Cash distributions to Limited Partners of $374,221,
$585,258, and $576,532 in 1996, 1995, and 1994, respectively, were
deemed to be a return of capital.
Cash and Cash Equivalents
The Partnership considers highly liquid investments that are readily
convertible to known amounts of cash with original maturities of three
months or less as cash equivalents.
2. General Partner and Transactions with Affiliates
An officer of FSI contributed $100 of the Partnership's initial net
capital. Under the Equipment Management Agreement, IMI receives a
monthly management fee attributable to either owned equipment or
interests in equipment owned by the USPE's equal to the greater of 10%
of the Partnership's "operating cash flow" or 1/12 of 1/2% of the
Partnership's "gross proceeds" as defined in the Partnership Agreement.
Partnership management fees of $3,637 were payable to IMI as of
December 31, 1996 and 1995.
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IXB 1986 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
2. General Partner and Transactions with Affiliates (continued)
The Partnership reimbursed FSI and its affiliates $56,302,
$96,118, and $87,839 for administrative and other services performed on
behalf of the Partnership in 1996, 1995, and 1994, respectively. The
Partnership's proportional share of USPE's administrative and other
services was $113 during 1996.
As of December 31, 1996, all of the Partnership's trailer
equipment has been transferred into rental facilities operated by an
affiliate of the General Partner. Revenues are earned by billing the
rental facilities' customers monthly or quarterly under short-term
rental agreements and are distributed as collected to the owners of the
related equipment. Direct expenses associated with the equipment and an
allocation of indirect expenses of rental facility operations are
billed to the Partnership.
At December 31, 1996 and 1995, $3,637 was due to FSI and affiliates.
3. Equipment
The components of owned equipment at December 31, 1996 and 1995 are as
follows:
<TABLE>
<CAPTION>
Equipment held for operating leases: 1996 1995
------------------------------------
<S> <C> <C>
Rail equipment $ -- $ 499,800
Marine containers 325,115 413,633
Trailers and tractors 1,636,282 1,994,634
------------------------------------
1,961,397 2,908,067
Less accumulated depreciation (1,769,486 ) (2,408,060 )
------------------------------------
Net equipment $ 191,911 $ 500,007
====================================
</TABLE>
Revenues are earned by placing the equipment under operating
leases and are billed monthly or quarterly. Rents for all equipment are
based on a fixed operating lease amount with the exception of marine
containers and trailers in the rental facilities. The Partnership's
marine containers are leased to the operator of utilization-type pools
which include equipment owned by unaffiliated parties. In such
instances revenues received by the Partnership consist of a specified
percentage of lease revenues generated by leasing the pooled equipment
to sub-lessees, after deducting certain direct operating expenses of
the pooled equipment.
With the exception of one sidelift with a carrying value of
$46,438, all equipment was either on lease or operating in
PLM-affiliated short-term rental facilities as of December 31, 1996.
With the exception of one trailer and one sidelift with a carrying
value of $79,024, all equipment was either on lease or operating in
PLM-affiliated short-term rental facilities as of December 31, 1995.
During 1996, the Partnership sold or disposed of nine trailers,
four marine containers, and 14 railcars with an aggregate net book
value of $171,316 for proceeds of $443,499. During 1995, the
Partnership sold or disposed of 22 trailers, 4 marine containers with
an aggregate book value of $152,421 for proceeds of $265,627.
The leases are being accounted for as operating leases with
utilization-based rentals. Contingent rentals based upon utilization
amounted to $26,960 in 1996, $34,915 in 1995, and $39,555 in 1994.
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IXB 1986 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
3. Equipment (continued)
The lessees accounting for 10% or more of the total revenues
during 1996, 1995 and 1994 were Skywest Airlines, Inc. (36% in 1995 and
24% in 1994), Van Wyk, Inc. (10% in 1994), M&H Food Cos. (13% in 1994),
and Transamerica Leasing (11% in 1996).
The Partnership owns certain equipment which is leased and
operated internationally A limited number of the Partnership's
transactions are denominated in a foreign currency. The Partnership's
asset and liability accounts denominated in a foreign currency were
translated into U.S. dollars at the rates in effect at the balance
sheet dates, and revenue and expense items were translated at average
rates during the year. Gains or losses resulting from foreign currency
transactions are included in the results of operations and are not
material.
The Partnership leases its aircraft, railcars and trailers to
lessees domiciled in the United States. The marine containers are
leased to lessees in different regions who operate the marine
containers worldwide.
4. Investment in Unconsolidated Special Purpose Entity (continued)
Prior to 1996, the Partnership accounted for operating activities
associated with joint ownership of rental equipment as undivided
interests, including its proportionate share of each asset with similar
wholly-owned assets in its financial statements. Under generally
accepted accounting principles, the effects of such activities, if
material, should be reported using the equity method of accounting.
Therefore, effective January 1, 1996, the Partnership adopted the
equity method to account for its investment in such jointly-held
assets.
The principal differences between the previous accounting method
and the equity method relate to the presentation of activities relating
to these assets in the statement of operations. Whereas, under equity
accounting the Partnership's proportionate share is presented as a
single net amount, "equity in net income (loss) of unconsolidated
special purpose entities", under the previous method, the Partnership's
statement of operations reflected its proportionate share of each
individual item of revenue and expense. Accordingly, the effect of
adopting the equity method of accounting has no cumulative effect on
previously reported partner's capital or on the Partnership's net
income (loss) for the period of adoption. Because the effects on
previously issued financial statements of applying the equity method of
accounting to investments in jointly-owned assets are not considered to
be material to such financial statements taken as a whole, previously
issued financial statements have not been restated. However, certain
items have been reclassified in the previously issued balance sheet to
conform to the current period presentation.
The following summarizes the financial information for the special
purpose entities and the Partnership's interest therein as of and for
the year ended December 31, 1996:
Net
Total USPE Interest of
Partnership
------------------------------
Net Investments $ -- $ --
Revenues -- --
Net Income 501,852 250,928
In 1996, the entity in which the Partnership had a 50% interest
sold a commuter aircraft. The Partnership received liquidating
distributions from the sale during the third quarter of 1996.
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IXB 1986 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
5. Income Taxes
The Partnership is not subject to income taxes as any income or loss is
included in the tax returns of the individual Partners. Accordingly, no
provision for income taxes has been made in the accounts of the
Partnership.
As of December 31, 1996, there were temporary differences of
approximately $898,636 between the financial statement carrying values
of assets and liabilities and the federal income tax bases of such
assets and liabilities, principally due to differences in depreciation
methods, and equipment reserves.
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Partners
PLM Transportation Equipment Partners IXC 1986 Income Fund:
We have audited the financial statements of PLM Transportation Equipment
Partners IXC 1986 Income Fund as listed in the accompanying index. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
The Partnership has entered its liquidation phase and the General Partner is
actively pursuing the sale of all of the Partnership's equipment with the
intention of winding up the Partnership and distributing all available cash to
the Partners. Management's plans in regard to this matter are also described in
note 1.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of PLM Transportation Equipment
Partners IXC 1986 Income Fund as of December 31, 1996 and 1995 and the results
of its income and its cash flows for each of the years in the three-year period
ended December 31, 1996, in conformity with generally accepted accounting
principles.
/S/ KPMG PEAT MARWICK LLP
- -----------------------------------
SAN FRANCISCO, CALIFORNIA
March 14, 1997
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IXC 1986 INCOME FUND
(A Limited Partnership)
BALANCE SHEETS
December 31,
ASSETS
<TABLE>
<CAPTION>
1996 1995
--------------------------------------
<S> <C> <C>
Equipment held for operating leases, at cost $ 3,088,393 $ 4,007,465
Less accumulated depreciation (2,767,149 ) (3,354,708 )
-------------------------------------
Net equipment 321,244 652,757
Cash and cash equivalents 264,450 248,504
Investment in unconsolidated special purpose entity -- 133,363
Accounts receivable, net of allowance for doubtful accounts of
$2,249 in 1996 and $9,684 in 1995 66,079 104,717
Prepaid expenses and other assets 2,663 22,438
-------------------------------------
Total assets $ 654,436 $ 1,161,779
=====================================
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Due to affiliates $ 3,523 $ 3,523
Accounts payable 14,382 12,939
-------------------------------------
Total liabilities 17,905 16,462
Partners' capital (deficit):
Limited Partners (16,914 units) 704,628 1,208,326
General Partner (68,097 ) (63,009 )
-------------------------------------
Total partners' capital 636,531 1,145,317
-------------------------------------
Total liabilities and partners' capital $ 654,436 $ 1,161,779
=====================================
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IXC 1986 INCOME FUND
(A Limited Partnership)
STATEMENTS OF INCOME
For the years ended December 31,
<TABLE>
<CAPTION>
1996 1995 1994
-----------------------------------------------
<S> <C> <C> <C>
Revenues:
Lease revenue $ 362,703 $ 667,893 $ 958,179
Interest and other income 14,560 18,666 9,370
Gain on disposition of equipment 114,942 229,599 2,561
----------------------------------------------
Total revenues 492,205 916,158 970,110
Expenses:
Depreciation 200,808 278,415 323,556
Management fees to affiliate 43,160 45,353 55,926
Repairs and maintenance 110,949 149,046 178,720
Insurance expense 5,414 7,137 8,420
General and administrative expenses
to affiliates 96,914 163,169 183,308
Other general and administrative expenses 48,856 28,343 33,644
(Recovery of ) provision for bad debts (7,689 ) (14,846 ) 31,655
----------------------------------------------
Total expenses 498,412 656,617 815,229
Equity in net income of unconsolidated
special purpose entity 111,247 -- --
----------------------------------------------
Net income $ 105,040 $ 259,541 $ 154,881
==============================================
Partners' share of net income:
Limited Partners - 99% $ 103,990 $ 256,946 $ 153,332
General Partner - 1% 1,050 2,595 1,549
-----------------=============================
Total $ 105,040 $ 259,541 $ 154,881
==============================================
Net income per weighted average Limited Partnership
Unit (16,914 units) $ 6.15 $ 15.19 $ 9.07
==============================================
Cash distributions $ 313,826 $ 406,966 $ 388,585
==============================================
Cash distributions per weighted average Limited
Partnership Unit $ 18.37 $ 23.82 $ 22.74
==============================================
Special distributions $ 300,000 $ 500,000 $ --
==============================================
Special distributions per weighted average Limited
Partnership Unit $ 17.56 $ 29.27 $ --
==============================================
Total distributions per weighted average Limited
Partnership Unit $ 35.93 $ 53.09 $ 22.74
==============================================
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IXC 1986 INCOME FUND
(A Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the years ended December 31, 1996, 1995, and 1994
<TABLE>
<CAPTION>
Limited General
Partners Partner Total
------------------------------------------------------
<S> <C> <C> <C>
Partners' capital (deficit)
at December 31, 1993 $ 2,080,643 $ (54,197 ) $ 2,026,446
Net income 153,332 1,549 154,881
Cash distributions (384,699 ) (3,886 ) (388,585 )
-----------------------------------------------------
Partners' capital (deficit)
at December 31, 1994 1,849,276 (56,534 ) 1,792,742
Net income 256,946 2,595 259,541
Quarterly cash distributions (402,896 ) (4,070 ) (406,966 )
Special distributions (495,000 ) (5,000 ) (500,000 )
-----------------------------------------------------
Partners' capital (deficit)
at December 31, 1995 1,208,326 (63,009 ) 1,145,317
Net income 103,990 1,050 105,040
Quarterly cash distributions (310,688 ) (3,138 ) (313,826 )
Special distributions (297,000 ) (3,000 ) (300,000 )
-----------------------------------------------------
Partners' capital (deficit)
at December 31, 1996 $ 704,628 $ (68,097 ) $ 636,531
=====================================================
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IXC 1986 INCOME FUND
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
for the years ended December 31,
<TABLE>
<CAPTION>
1996 1995 1994
-------------------------------------------------
<S> <C> <C> <C>
Operating activities:
Net income $ 105,040 $ 259,541 $ 154,881
Adjustments to reconcile net
income to net cash provided
by operating activities:
Gain from disposition of
equipment (114,942 ) (229,599 ) (2,561 )
Depreciation 200,808 278,415 323,556
Equity in net income from unconsolidated
special purpose entity (111,247 ) -- --
Changes in operating assets
and liabilities:
Accounts receivable, net 38,638 (3,549 ) 26,472
Prepaid expenses and other
assets 19,775 6,145 2,465
Due from affiliates -- 20,035 (13,519 )
Due to affiliates -- 3,523 --
Accounts payable 1,443 5,207 (14,091 )
Lessee deposits and reserves (27,601 ) (21,457 ) 44,005
------------------------------------------------
Net cash provided by operating
activities 111,914 318,261 521,208
------------------------------------------------
Investing activities:
Proceeds from disposition of
equipment 245,647 527,216 46,001
Liquidation distributions from unconsolidated
special purpose entity 269,500 -- --
Distributions from unconsolidated special
special purpose entity 2,711 -- --
Payments for purchase of capital
improvements -- (2,237 ) (3,925 )
------------------------------------------------
Net cash provided by investing
activities 517,858 524,979 42,076
Cash flows in financing activities:
Cash distributions paid to Limited Partners (607,688 ) (897,896 ) (384,699 )
Cash distributions paid to General Partner (6,138 ) (9,070 ) (3,886 )
------------------------------------------------
Cash used in financing activities (613,826 ) (906,966 ) (388,585 )
Cash and cash equivalents:
Net increase (decrease) in cash
and cash equivalents 15,946 (63,726 ) 174,699
Cash and cash equivalents at
beginning of year 248,504 312,230 137,531
------------------------------------------------
Cash and cash equivalents at
end of year $ 264,450 $ 248,504 $ 312,230
================================================
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IXC 1986 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
1. Basis of Presentation
Organization
PLM Transportation Equipment Partners IXC 1986 Income Fund, a
California limited partnership (the Partnership), was formed on
September 20, 1985. The Partnership engages in the business of owning
and leasing transportation equipment. The Partnership commenced
significant operations in December 1986. PLM Financial Services, Inc.
(FSI) is the General Partner. FSI is a wholly-owned subsidiary of PLM
International, Inc. (PLM International) and manages the affairs of the
Partnership.
The net income (loss) and distributions of the Partnership are
allocated 99% to the Limited Partners and 1% to the General Partner.
The General Partner is entitled to an incentive fee equal to 15% of
"Surplus Distributions" as defined in the Partnership Agreement
remaining after the Limited Partners have received a certain minimum
rate of return.
These financial statements have been prepared on the accrual basis
of accounting in accordance with generally accepted accounting
principles. This requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Operations
The equipment of the Partnership is managed, under a continuing
equipment management agreement, by PLM Investment Management, Inc.
(IMI), a wholly-owned subsidiary of FSI. IMI receives a monthly
management fee from the Partnership for managing the equipment (see
Note 2). FSI, in conjunction with its subsidiaries, sells
transportation equipment to investor programs and third parties,
manages pools of transportation equipment under agreements with the
investor programs, and is a General Partner of other Limited
Partnerships.
The Partnership has entered its liquidation phase and the General
Partner is actively pursuing the sale of all of the Partnership's
equipment with the intention of winding up the Partnership and
distributing all available cash to the Partners.
Accounting for Leases
The Partnership's leasing operations generally consist of operating
leases. Under the operating lease method of accounting, the leased
asset is recorded at cost and depreciated over its estimated useful
life. Rental payments are recorded as revenue over the lease term.
Lease origination costs are capitalized and amortized over the term of
the lease.
Depreciation
Depreciation is computed on the double declining balance method based
upon estimated useful lives of 15 years for rail equipment, 12 years
for trailers, marine containers, and aircraft, and 8 years for
tractors. The depreciation method changes to straight line when annual
depreciation expense using the straight-line method exceeds that
calculated by the 200% declining balance method. Major expenditures
which are expected to extend the useful lives or reduce future
operating expenses of equipment are capitalized.
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IXC 1986 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
1. Basis of Presentation (continued)
Transportation Equipment
In March 1995, the Financial Accounting Standards Board (FASB) issued
Statement No. 121, "Accounting for the Impairment of Long-Lived Assets
and Long-Lived Assets to be Disposed Of" (SFAS 121). This standard is
effective for years beginning after December 15, 1995. In accordance
with SFAS 121, the General Partner reviews the carrying value of its
equipment portfolio at least annually in relation to expected future
market conditions for the purpose of assessing recoverability of the
recorded amounts. If projected future lease revenue plus residual
values are less than the carrying value of the equipment, a loss on
revaluation is recorded. No adjustments to reflect impairment of
individual equipment carrying values were required for the years ended
December 31, 1996 and 1995.
Investment in Unconsolidated Special Purpose Entity
The Partnership had an interest in a special purpose entity which owned
transportation equipment. This interest was accounted for using the
equity method.
The Partnership's investment in unconsolidated special purpose
entity included acquisition and lease negotiation fees paid by the
Partnership to TEC. The Partnership's equity interest in net income of
unconsolidated special purpose entity is reflected net of management
fees paid or payable to IMI and the amortization of acquisition and
lease negotiation fees paid to TEC. The equipment owned by this entity
was sold in the second quarter of 1996.
Repairs and Maintenance
Maintenance costs are usually the obligation of the lessee. If they are
not covered by the lessee they are charged against operations as
incurred.
Net Income (Loss) and Distributions per Limited Partnership Unit
Net income (loss) per Limited Partnership Unit is computed based on the
number of Limited Partnership Units outstanding during the period
(16,914 for 1996, 1995, and 1994).
Cash distributions are recorded when paid. Cash distributions to
investors in excess of net income are considered to represent a return
of capital. Cash distributions to Limited Partners of $503,698,
$640,950, and $231,367 in 1996, 1995, and 1994, respectively, were
deemed to be a return of capital.
Cash and Cash Equivalents
The Partnership considers highly liquid investments that are readily
convertible to known amounts of cash with original maturities of three
months or less as cash equivalents for the purposes of this
presentation. Lessee security deposits held by the Partnership are
considered restricted cash.
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IXC 1986 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
2. General Partner and Transactions with Affiliates
An officer of FSI contributed $100 of the Partnership's initial net
capital. Under the Equipment Management Agreement, IMI receives a
monthly management fee attributable to either owned equipment or
interests in equipment owned by the USPE's equal to the greater of 10%
of the Partnership's "operating cash flow" or 1/12 of 1/2% of the
Partnership's "gross proceeds" as defined in the Partnership Agreement.
Partnership management fees of $3,523 were payable to IMI as of
December 31, 1996 and 1995.
The Partnership reimbursed FSI and its affiliates $96,914,
$163,169, and $183,308 for administrative and other services performed
on behalf of the Partnership in 1996, 1995, and 1994, respectively. The
Partnership's proportional share of USPE's administrative and other
services was $1,468 during 1996.
As of December 31, 1996, all of the Partnership's trailer
equipment has been transferred into rental facilities operated by an
affiliate of the General Partner. Revenues are earned by billing the
rental facilities' customers monthly or quarterly under short-term
rental agreements and are distributed as collected to the owners of the
related equipment. Direct expenses associated with the equipment and an
allocation of indirect expenses of the rental facility operations are
billed to the Partnership.
At December 31, 1996, $3,523 was due to FSI and its affiliates
($3,523 was due from FSI and its affiliates at December 31, 1995).
3. Equipment
The components of owned equipment at December 31, 1996 and 1995 are as
follows:
<TABLE>
<CAPTION>
Equipment held for operating leases: 1996 1995
------------------------------------
<S> <C> <C>
Rail equipment $ -- $ 178,501
Marine containers 114,623 137,548
Trailers and tractors 2,973,770 3,691,416
------------------------------------
3,088,393 4,007,465
Less accumulated depreciation (2,767,149 ) (3,354,708 )
------------------------------------
Net equipment $ 321,244 $ 652,757
====================================
</TABLE>
Revenues are earned by placing the equipment under operating
leases and are billed monthly or quarterly. Rents for all equipment are
based on a fixed operating lease amount with the exception of marine
containers and trailers in the rental facilities. The Partnership's
marine containers are leased to the operator of utilization-type pools
which include equipment owned by unaffiliated parties. In such
instances revenues received by the Partnership consist of a specified
percentage of lease revenues generated by leasing the pooled equipment
to sub-lessees, after deducting certain direct operating expenses of
the pooled equipment.
All equipment was either on lease or operating in PLM-affiliated
short-term rental facilities as of December 31, 1996 and 1995. During
1996, the Partnership sold or disposed of 24 trailers, five railcars,
and one marine containers with aggregate net book value of $130,705 for
proceeds of $245,647. During 1995, the Partnership sold or disposed of
four trailers, one marine container, and five twin stack railcars with
aggregate net book value of $297,617 for proceeds of $527,216
All leases are being accounted for as operating leases with
utilization-based rentals. Contingent rentals based upon utilization
amounted to $5,579 in 1996, $11,507 in 1995, and $9,763 in 1994.
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IXC 1986 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
3. Equipment (continued)
There were no lessees who accounted for 10% or more of total
revenues during 1996, 1995, and 1994.
The Partnership owns certain equipment which is leased and
operated internationally. A limited number of the Partnership's
transactions are denominated in a foreign currency. The Partnership's
asset and liability accounts denominated in a foreign currency were
translated into U.S. dollars at the rates in effect at the balance
sheet dates, and revenue and expense items were translated at average
rates during the year. Gains or losses resulting from foreign currency
transactions are included in the results of operations and are not
material.
The Partnership leases its aircraft, railcars and trailers to
lessees domiciled in two geographic region: Australia and United
States. The marine containers are leased to lessees in different
regions who operate the marine containers worldwide. The tables below
set forth geographic information about the Partnership's owned and
partially owned equipment grouped by domicile of the lessee as of and
for the years ended December 31, 1996, 1995, and 1994:
<TABLE>
<CAPTION>
Investments in unconsolidated
special purpose entity Owned Equipment
Total Equipment
Revenues: 1996 1996 1995 1994
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Region:
Various $ -- $ 5,579 $ 11,507 $ 9,763
United States -- 357,124 587,986 872,328
Australia 11,400 -- 68,400 76,088
-----------------------------------------------------------------------------
Total revenues $ 11,400 $ 362,703 $ 667,893 $ 958,179
=============================================================================
</TABLE>
The following table sets forth identifiable income (loss)
information by region:
<TABLE>
<CAPTION>
Investments in unconsolidated
special purpose entity Owned Equipment
Total Equipment
Net income (loss): 1996 1996 1995 1994
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Region:
Various $ -- $ 578 $ 2,628 $ 1,916
United States -- 84,619 293,972 223,260
Australia 111,247 -- 11,683 18,995
--------------------------------------------------------------------------
Total identifiable net
income 111,247 85,197 308,283 244,171
Administrative and
other net loss -- (91,404) (48,742 ) (89,290 )
--------------------------------------------------------------------------
Total net income $ 111,247 $ (6,207) $ 259,541 $ 154,881
==========================================================================
</TABLE>
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IXC 1986 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
3. Equipment (continued)
The net book value of these assets at December 31, 1996, 1995, and
1994 are as follows:
<TABLE>
<CAPTION>
Investments in
unconsolidated
special purpose Owned equipment
entity
Region 1996 1995 1996 1995 1994
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Various $ -- $ -- $ 12,262 $ 22,393 $ 35,083
United States -- -- 308,982 630,364 866,713
Australia -- 133,363 -- -- 199,635
---------------------------------------------------------------------
Total equipment held
for operating leases 133,363 321,244 652,757 1,101,431
Equipment held for sale United States -- -- -- 273,785
---------------------------------------------------------------------
Total equipment $ -- $ 133,363 $ 321,244 $ 652,757 $ 1,375,216
=====================================================================
</TABLE>
4. Investment in Unconsolidated Special Purpose Entity
Prior to 1996, the Partnership accounted for operating activities
associated with joint ownership of rental equipment as undivided
interests, including its proportionate share of each asset with similar
wholly-owned assets in its financial statements. Under generally
accepted accounting principles, the effects of such activities, if
material, should be reported using the equity method of accounting.
Therefore, effective January 1, 1996, the Partnership adopted the
equity method to account for its investment in such jointly-held
assets.
The principal differences between the previous accounting method
and the equity method relate to the presentation of activities relating
to these assets in the statement of operations. Whereas, under equity
accounting the Partnership's proportionate share is presented as a
single net amount, "equity in net income (loss) of unconsolidated
special purpose entities", under the previous method, the Partnership's
statement of operations reflected its proportionate share of each
individual item of revenue and expense. Accordingly, the effect of
adopting the equity method of accounting has no cumulative effect on
previously reported partner's capital or on the Partnership's net
income (loss) for the period of adoption. Because the effects on
previously issued financial statements of applying the equity method of
accounting to investments in jointly-owned assets are not considered to
be material to such financial statements taken as a whole, previously
issued financial statements have not been restated. However, certain
items have been reclassified in the previously issued balance sheet to
conform to the current period presentation.
The following summarizes the financial information for the special
purpose entities and the Partnership's interest therein as of and for
the year ended December 31, 1996:
Net
Total USPE Interest of
Partnership
------------------------------
Net Investments $ -- $ --
Revenues 38,000 11,400
Net Income 370,827 111,247
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IXC 1986 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
4. Investment in Unconsolidated Special Purpose Entity (continued)
In 1996, the entity in which the Partnership had a 30% interest
sold a commuter aircraft. The Partnership received liquidating
distributions from the sale during the second quarter of 1996.
5. Income Taxes
The Partnership is not subject to income taxes as any income or loss is
included in the tax returns of the individual Partners. Accordingly, no
provision for income taxes has been made in the accounts of the
Partnership.
As of December 31, 1996, there were temporary differences of
approximately $687,256 between the financial statement carrying values
of assets and liabilities and the federal income tax bases of such
assets and liabilities, principally due to differences in depreciation
methods, and equipment reserves.
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Partners
PLM Transportation Equipment Partners IXD 1986 Income Fund:
We have audited the financial statements of PLM Transportation Equipment
Partners IXD 1986 Income Fund as listed in the accompanying index. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
The Partnership has entered its liquidation phase and the General Partner is
actively pursuing the sale of all of the Partnership's equipment with the
intention of winding up the Partnership and distributing all available cash to
the Partners. Management's plans in regard to this matter are also described in
note 1.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of PLM Transportation Equipment
Partners IXD 1986 Income Fund as of December 31, 1996 and 1995 and the results
of its operations and its cash flows for each of the years in the three-year
period ended December 31, 1996 in conformity with generally accepted accounting
principles.
/S/ KPMG PEAT MARWICK LLP
- ------------------------------------
SAN FRANCISCO, CALIFORNIA
March 14, 1997
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IXD 1986 INCOME FUND
(A Limited Partnership)
BALANCE SHEETS
December 31,
ASSETS
<TABLE>
<CAPTION>
1996 1995
--------------------------------------
<S> <C> <C>
Equipment held for operating leases, at cost $ 1,463,355 $ 1,716,659
Less accumulated depreciation (1,280,566 ) (1,405,716 )
-------------------------------------
Net equipment 182,789 310,943
Cash and cash equivalents 77,140 191,840
Accounts receivable, net of allowance for doubtful accounts
of $29,601 in 1996 and $33,793 in 1995 15,839 48,723
Due from affiliates -- 7,639
Prepaid insurance and other assets 2,293 16,549
-------------------------------------
Total assets $ 278,061 $ 575,694
=====================================
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Due to affiliates $ 1,985 $ --
Accounts payable 9,477 8,338
-------------------------------------
Total liabilities 11,462 8,338
Partners' capital (deficit):
Limited Partners (9,529 units) 305,760 603,509
General Partner (39,161 ) (36,153 )
-------------------------------------
Total partners' capital 266,599 567,356
-------------------------------------
Total liabilities and partners' capital $ 278,061 $ 575,694
=====================================
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IXD 1986 INCOME FUND
(A Limited Partnership)
STATEMENTS OF OPERATIONS
For the years ended December 31,
<TABLE>
<CAPTION>
1996 1995 1994
-----------------------------------------------
<S> <C> <C> <C>
Revenues:
Lease revenue $ 151,115 $ 267,141 $ 545,035
Interest and other income 6,506 23,986 21,274
Gain on disposition of equipment 44,879 83,235 17,133
----------------------------------------------
Total revenues 202,500 374,362 583,442
Expenses:
Depreciation 90,577 110,170 172,127
Management fees to affiliate 23,822 24,250 37,749
Repairs and maintenance 29,462 51,729 53,741
Insurance expense 1,535 3,176 3,708
General and administrative expenses
to affiliates 39,802 68,871 83,259
Other general and administrative expenses 38,999 41,238 19,762
(Recovery of ) provision for bad debts (5,026 ) 28,877 19,406
----------------------------------------------
Total expenses 219,171 328,311 389,752
----------------------------------------------
Net income (loss) $ (16,671 ) $ 46,051 $ 193,690
==============================================
Partners' share of net income:
Limited Partners - 99% $ (16,504 ) $ 45,590 $ 191,753
General Partner - 1% (167 ) 461 1,937
----------------==============================
Total $ (16,671 ) $ 46,051 $ 193,690
==============================================
Net income (loss) per weighted average Limited
Partnership Unit (9,529 units) $ (1.73 ) $ 4.78 $ 20.12
==============================================
Cash distributions $ 134,086 $ 263,727 $ 398,654
==============================================
Cash distributions per weighted average Limited
Partnership Unit $ 13.93 $ 27.40 $ 41.42
==============================================
Special distributions $ 150,000 $ 600,000 $ --
==============================================
Special distributions per weighted average Limited
Partnership Unit $ 15.58 $ 62.34 $ --
==============================================
Total distributions per weighted average Limited
Partnership Unit $ 29.51 $ 89.74 $ 41.42
==============================================
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IXD 1986 INCOME FUND
(A Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the years ended December 31, 1996, 1995, and 1994
<TABLE>
<CAPTION>
Limited General
Partners Partner Total
------------------------------------------------------
<S> <C> <C> <C>
Partners' capital (deficit)
at December 31, 1993 $ 1,615,924 $ (25,928 ) $ 1,589,996
Net income 191,753 1,937 193,690
Cash distributions (394,668 ) (3,986 ) (398,654 )
-----------------------------------------------------
Partners' capital (deficit)
at December 31, 1994 1,413,009 (27,977 ) 1,385,032
Net income 45,590 461 46,051
Quarterly cash distributions (261,090 ) (2,637 ) (263,727 )
Special distributions (594,000 ) (6,000 ) (600,000 )
-----------------------------------------------------
Partners' capital (deficit)
at December 31, 1995 603,509 (36,153 ) 567,356
Net loss (16,504 ) (167 ) (16,671 )
Quarterly cash distributions (132,745 ) (1,341 ) (134,086 )
Special distributions (148,500 ) (1,500 ) (150,000 )
-----------------------------------------------------
Partners' capital (deficit)
at December 31, 1996 $ 305,760 $ (39,161 ) $ 266,599
=====================================================
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IXD 1986 INCOME FUND
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
for the years ended December 31,
<TABLE>
<CAPTION>
1996 1995 1994
-------------------------------------------------
<S> <C> <C> <C>
Operating activities:
Net (loss) income $ (16,671 ) $ 46,051 $ 193,690
Adjustments to reconcile net
income to net cash provided
by operating activities:
Gain on disposition of equipment (44,879 ) (83,235 ) (17,133 )
Depreciation 90,577 110,170 172,127
Changes in operating assets
and liabilities:
Accounts receivable, net 32,884 67,365 (17,359 )
Due from affiliates 7,639 (5,895 ) 3,663
Prepaid insurance and other
assets 14,256 21,119 18,595
Due to affiliates 1,985 -- --
Accounts payable 1,139 3,278 (5,528 )
------------------------------------------------
Net cash provided by operating
activities 86,930 158,853 348,055
Investing activities:
Proceeds from disposition of
equipment 82,456 371,932 47,315
------------------------------------------------
Net cash provided by investing
activities 82,456 371,932 47,315
Cash flows in financing activities:
Cash distributions paid to Limited Partners (281,245 ) (855,090 ) (394,667 )
Cash distributions paid to General Partner (2,841 ) (8,637 ) (3,987 )
------------------------------------------------
Cash used in financing activities (284,086 ) (863,727 ) (398.654 )
Cash and cash equivalents:
Net decrease in cash and
cash equivalents (114,700 ) (332,942 ) (3,284 )
Cash and cash equivalents at
beginning of year 191,840 524,782 528,066
------------------------------------------------
Cash and cash equivalents at
end of year $ 77,140 $ 191,840 $ 524,782
================================================
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IXD 1986 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
1. Basis of Presentation
Organization
PLM Transportation Equipment Partners IXD 1986 Income Fund, a
California limited partnership (the Partnership) was formed on
September 20, 1985. The Partnership is engaged in the business of
owning and leasing transportation equipment. The Partnership commenced
significant operations in March 1987. PLM Financial Services, Inc.
(FSI) is the General Partner. FSI is a wholly-owned subsidiary of PLM
International, Inc. (PLM International) and manages the affairs of the
Partnership.
The net income (loss) and distributions of the Partnership are
allocated 99% to the Limited Partners and 1% to the General Partner.
The General Partner is entitled to an incentive fee equal to 15% of
"Surplus Distributions" as defined in the Partnership Agreement
remaining after the Limited Partners have received a certain minimum
rate of return.
These financial statements have been prepared on the accrual basis
of accounting in accordance with generally accepted accounting
principles. This requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Operations
The equipment of the Partnership is managed, under a continuing
equipment management agreement, by PLM Investment Management, Inc.
(IMI), a wholly-owned subsidiary of FSI. IMI receives a monthly
management fee payable monthly from the Partnership for managing the
equipment (see Note 2). FSI, in conjunction with its subsidiaries,
sells transportation equipment to investor programs, manages pools of
transportation equipment under agreements with these programs, and is a
General Partner of other Limited Partnerships.
The Partnership has entered its liquidation phase and the General
Partner is actively pursuing the sale of all of the Partnership's
equipment with the intention of winding up the Partnership and
distributing all available cash to the Partners.
Accounting for Leases
The Partnership's leasing operations generally consist of operating
leases. Under the operating lease method of accounting, the leased
asset is recorded at cost and depreciated over its estimated useful
life. Rental payments are recorded as revenue over the lease term.
Lease origination costs are capitalized and amortized over the term of
the lease.
Depreciation
Depreciation is computed on the double declining balance method based
upon estimated useful lives of 12 years for trailers, marine
containers, and aircraft, and 8 years for tractors. The depreciation
method changes to straight line when annual depreciation expense using
the straight line method exceeds that calculated by the 200% declining
balance method. Major expenditures which are expected to extend the
useful lives or reduce future operating expenses of equipment are
capitalized.
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IXD 1986 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
1. Basis of Presentation (continued)
Transportation Equipment
In March 1995, the Financial Accounting Standards Board (FASB) issued
Statement No. 121, "Accounting for the Impairment of Long-Lived Assets
and Long-Lived Assets to be Disposed Of" (SFAS 121). This standard is
effective for years beginning after December 15, 1995. In accordance
with SFAS 121, the General Partner reviews the carrying value of its
equipment portfolio at least annually in relation to expected future
market conditions for the purpose of assessing recoverability of the
recorded amounts. If projected future lease revenue plus residual
values are less than the carrying value of the equipment, a loss on
revaluation is recorded. No adjustments to reflect impairment of
individual equipment carrying values were required for the years ended
December 31, 1996 and 1995.
Repairs and Maintenance
Maintenance costs are usually the obligation of the lessee. If they are
not covered by the lessee they are charged against operations as
incurred.
Net Income (Loss) and Distributions per Limited Partnership Unit
Net income (loss) per Limited Partnership Unit is computed based on the
number of Limited Partnership Units outstanding during the period
(9,529 for 1996, 1995 and 1994).
Cash distributions are recorded when paid. Cash distributions to
investors in excess of net income are considered to represent a return
of capital. Cash distributions to Limited Partners of $281,245,
$809,500, and $202,915, in 1996, 1995 and 1994, respectively, were
deemed to be a return of capital.
Cash and Cash Equivalents
The Partnership considers highly liquid investments that are readily
convertible to known amounts of cash with original maturities of three
months or less as cash equivalents for the purposes of this
presentation.
An officer of FSI contributed $100 of the Partnership's initial
net capital. Under the Equipment Management Agreement, IMI receives a
monthly management fee equal to the greater of 10% of the Partnership's
"operating cash flow" or 1/12 of 1/2% of the Partnership's "gross
proceeds" as defined in the Partnership Agreement. Management fees of
$1,985 were payable to IMI as of December 31, 1996 and 1995.
The Partnership reimbursed FSI and its affiliates $39,802 for
administrative and other services performed on behalf of the
Partnership in 1996 ($68,871 in 1995 and $83,259 in 1994).
As of December 31, 1996, all of the Partnership's trailer
equipment has been transferred into rental facilities operated by an
affiliate of the General Partner. Revenues are earned by billing the
rental facilities' customers monthly or quarterly under short-term
rental agreements and are distributed as collected to the owners of the
related equipment. Direct expenses associated with the equipment and an
allocation of indirect expenses of rental facility operations are
billed to the Partnership.
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IXD 1986 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
2. General Partner and Transactions with Affiliates
At December 31, 1996, $1,985 was due to FSI and its affiliates
($7,639 at December 31, 1995).
3. Equipment
The components of equipment at December 31, 1996 and 1995 are as
follows:
<TABLE>
<CAPTION>
Equipment held for operating leases: 1996 1995
------------------------------------
<S> <C> <C>
Marine containers $ 255,421 $ 330,886
Trailers 1,207,934 1,385,773
------------------------------------
1,463,355 1,716,659
Less accumulated depreciation (1,280,566 ) (1,405,716 )
------------------------------------
Net equipment $ 182,789 $ 310,943
====================================
</TABLE>
Revenues are earned by placing the equipment under operating leases
and are billed monthly or quarterly. Rents for all equipment are based
on a fixed operating lease amount with the exception of marine
containers and certain trailers. The Partnership's marine containers
are leased to the operator of utilization-type pools which include
equipment owned by unaffiliated parties. In such instances revenues
received by the Partnership consist of a specified percentage of lease
revenues generated by leasing the pooled equipment to sub-lessees,
after deducting certain direct operating expenses of the pooled
equipment.
All equipment was either on lease or operating in PLM-affiliated
short-term rental facilities as of December 31, 1996 and 1995. During
1996, the Partnership sold or disposed of 39 marine containers and nine
trailers with aggregate net book value of $37,577 for proceeds of
$82,456. During 1995, the Partnership sold or disposed of 45 marine
containers and 30 trailers with a net book value of $288,697 for the
proceeds of $371,932.
The leases are being accounted for as operating leases with
utilization-based rentals. Contingent rentals based upon utilization
amounted to $50,335 in 1996, $78,612 in 1995; and $88,524 in 1994.
The lessees accounting for 10% or more of the total revenues during
1996, 1995, and 1994 were Transamerica Leasing (33% in 1996, 16% in
1995, and 16% in 1994).
The Partnership leases its trailers to lessees domiciled in the
United States. The marine containers are leased to lessees in different
regions who operate the marine containers worldwide
4. Income Taxes
The Partnership is not subject to income taxes as any income or loss is
included in the tax returns of the individual Partners. Accordingly, no
provision for income taxes has been made in the accounts of the
Partnership.
As of December 31, 1996, there were temporary differences of
approximately $418,850 between the financial statement carrying values
of assets and liabilities and the federal income tax bases of such
assets and liabilities, principally due to differences in depreciation
methods.
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IX
1986 INCOME FUND
INDEX OF EXHIBITS
Exhibit Page
4. Limited Partnership Agreement of Registrant. *
10. Management Agreement between each Registrant and *
PLM Investment Management, Inc.
25. Powers of Attorney 74-76
- --------
* Incorporated by reference. See page 27 of this report.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned does hereby constitute and appoint Robert N.
Tidball, Stephen Peary, J. Michael Allgood and David J. Davis, jointly and
severally, his true and lawful attorneys-in-fact, each with power of
substitution, for him in any and all capacities, to do any and all acts and
things and to execute any and all instruments which said attorneys, or any of
them, may deem necessary or advisable to enable PLM Financial Services, Inc., as
General Partner of PLM Transportation Equipment Partners IXA 1986 Income Fund,
to comply with the Securities Exchange Act of 1934, as amended (the "Act"), and
any rules and regulations thereunder, in connection with the preparation and
filing with the Securities and Exchange Commission of annual reports on Form
10-K on behalf of PLM Transportation Equipment Partners IXA 1986 Income Fund,
including specifically, but without limiting the generality of the foregoing,
the power and authority to sign the name of the undersigned, in any and all
capacities, to such annual reports, to any and all amendments thereto, and to
any and all documents or instruments filed as a part of or in connection
therewith; and the undersigned hereby ratifies and confirms all that each of the
said attorneys, or his substitute or substitutes, shall do or cause to be done
by virtue hereof. This Power of Attorney is limited in duration until May 1,
1997 and shall apply only to the annual reports and any amendments thereto filed
with respect to the fiscal year ended December 31, 1996.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this
28th day of February, 1997.
/s/ J. Alec Merriam
- --------------------------------
J. Alec Merriam
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned does hereby constitute and appoint Robert N.
Tidball, Stephen Peary, J. Michael Allgood and David J. Davis, jointly and
severally, his true and lawful attorneys-in-fact, each with power of
substitution, for him in any and all capacities, to do any and all acts and
things and to execute any and all instruments which said attorneys, or any of
them, may deem necessary or advisable to enable PLM Financial Services, Inc., as
General Partner of PLM Transportation Equipment Partners IXA 1986 Income Fund,
to comply with the Securities Exchange Act of 1934, as amended (the "Act"), and
any rules and regulations thereunder, in connection with the preparation and
filing with the Securities and Exchange Commission of annual reports on Form
10-K on behalf of PLM Transportation Equipment Partners IXA 1986 Income Fund,
including specifically, but without limiting the generality of the foregoing,
the power and authority to sign the name of the undersigned, in any and all
capacities, to such annual reports, to any and all amendments thereto, and to
any and all documents or instruments filed as a part of or in connection
therewith; and the undersigned hereby ratifies and confirms all that each of the
said attorneys, or his substitute or substitutes, shall do or cause to be done
by virtue hereof. This Power of Attorney is limited in duration until May 1,
1997 and shall apply only to the annual reports and any amendments thereto filed
with respect to the fiscal year ended December 31, 1996.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this
28th day of February, 1997.
/s/ Robert L. Pagel
- --------------------------------
Robert L. Pagel
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned does hereby constitute and appoint Robert N.
Tidball, Stephen Peary, J. Michael Allgood and David J. Davis, jointly and
severally, his true and lawful attorneys-in-fact, each with power of
substitution, for him in any and all capacities, to do any and all acts and
things and to execute any and all instruments which said attorneys, or any of
them, may deem necessary or advisable to enable PLM Financial Services, Inc., as
General Partner of PLM Transportation Equipment Partners IXA 1986 Income Fund,
to comply with the Securities Exchange Act of 1934, as amended (the "Act"), and
any rules and regulations thereunder, in connection with the preparation and
filing with the Securities and Exchange Commission of annual reports on Form
10-K on behalf of PLM Transportation Equipment Partners IXA 1986 Income Fund,
including specifically, but without limiting the generality of the foregoing,
the power and authority to sign the name of the undersigned, in any and all
capacities, to such annual reports, to any and all amendments thereto, and to
any and all documents or instruments filed as a part of or in connection
therewith; and the undersigned hereby ratifies and confirms all that each of the
said attorneys, or his substitute or substitutes, shall do or cause to be done
by virtue hereof. This Power of Attorney is limited in duration until May 1,
1997 and shall apply only to the annual reports and any amendments thereto filed
with respect to the fiscal year ended December 31, 1996.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this
28th day of February, 1997.
/s/ Douglas P. Goodrich
- ----------------------------------
Douglas P. Goodrich
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 211,878
<SECURITIES> 0
<RECEIVABLES> 155,624
<ALLOWANCES> 57,870
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 3,486,094
<DEPRECIATION> (3,140,358)
<TOTAL-ASSETS> 657,806
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 643,397
<TOTAL-LIABILITY-AND-EQUITY> 657,806
<SALES> 0
<TOTAL-REVENUES> 778,338
<CGS> 0
<TOTAL-COSTS> 457,903
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 320,435
<INCOME-TAX> 0
<INCOME-CONTINUING> 320,435
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 320,435
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
