UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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, 1997.
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 For the transition period from to
Commission file number 33-657
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PLM Transportation Equipment Partners IXD 1986
Income Fund
(Exact name of registrant as specified
in its charter)
California 94-2992021
(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
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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 were to invest in equipment which would:
(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. 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 (see Financial Statements, Notes
1 and 2). The Partnerships' management agreements with IMI are to co-terminate
with the dissolution of the Partnerships, unless the Partners vote to terminate
the agreement prior to that date or at the discretion of the General Partner.
TEP IXA
The offering of limited partnership units (the "Units") of PLM Transportation
Equipment Partners IXA 1986 Income Fund (TEP IXA) 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, 1997, TEP IXA owned 38 trailers. During 1997, TEP IXA sold or
disposed of trailers and marine containers. At December 31, 1997, all of the
Partnership's trailer equipment was being operated in rental yards owned and
maintained by an affiliate of the General Partner. Revenues 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 indirect
expenses of the rental yard operations is charged to the Partnership monthly.
TEP IXB
The offering of Units of PLM Transportation Equipment Partners IXB 1986 Income
Fund (TEP IXB) 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, 1997, TEP IXB owned 6 trailers. During 1997, TEP IXB sold or
disposed of trailers and marine containers. At December 31, 1997, all of the
Partnership's trailer equipment was being operated in rental yards owned and
maintained by an affiliate of the General Partner. Revenues 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 indirect
expenses of the rental yard operations is charged to the Partnership monthly.
TEP IXC
The offering of Units of PLM Transportation Equipment Partners IXC 1986 Income
Fund (TEP IXC) 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, 1997, TEP IXC owned 64 trailers. During 1997, TEP IXC
disposed of trailers and marine containers. At December 31, 1997, all of the
Partnership's trailer equipment was being operated in rental yards owned and
maintained by an affiliate of the General Partner. Revenues 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 indirect
expenses of the rental yard operations is charged to the Partnership monthly.
TEP IXD
The offering of Units of PLM Transportation Equipment Partners IXD 1986 Income
Fund (TEP IXD) 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, 1997, TEP IXD owned 22 trailers. During 1997, TEP IXD
disposed of marine containers and trailers. At December 31, 1997, all of the
Partnership's trailer equipment was being operated in rental yards owned and
maintained by an affiliate of the General Partner. Revenues 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 indirect
expenses of the rental yard operations is charged to the Partnership monthly.
(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 leases. 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,
Transport International Pool, Xtra Leasing, and other limited partnerships which
lease the same types of equipment.
(D) Demand
The Partnerships have investments in transportation-related capital equipment.
The Partnerships' equipment is used to transport materials and commodities,
rather than people.
(1) Over-the-Road Dry Trailers
The United States over-the-road dry trailer market began to recover in mid-1997,
as an oversupply of equipment from 1996 subsided. The strong domestic economy, a
continuing focus on integrated logistics planning by American companies, and
numerous service problems on Class I railroads contributed to the recovery in
the dry van market. In addition, federal regulations requiring antilock brake
systems on all new trailers, effective in March 1998, have helped stimulate new
trailer production, and the market is anticipated to remain strong in the near
future. There continues to be much consolidation of the trailer leasing industry
in North America, as the two largest lessors of dry vans now control over 60% of
the market. The reduced level of competition, coupled with anticipated continued
strong utilization, may lead to an increase in rates. Utilization on these
trailers increased in 1997.
(2) Over-the-Road Refrigerated Trailers
The temperature-controlled over-the-road trailer market recovered in 1997;
freight levels improved and equipment oversupply was reduced as industry players
actively retired older trailers and consolidated fleets. Most refrigerated
carriers posted revenue growth of between 2% and 5% in 1997, and accordingly are
planning fleet upgrades. In addition, with refrigeration and trailer
technologies changing rapidly and industry regulations becoming tighter,
trucking companies are managing their refrigerated fleets more effectively.
As a result of these changes in the refrigerated trailer market, it is
anticipated that trucking companies will utilize short-term trailer leases more
frequently to supplement their fleets. Such a trend should benefit the
Partnerships, which generally leases its equipment on a short-term basis from
rental yards owned and operated by PLM subsidiaries. The Partnerships'
utilization, especially in the second half of 1997, was significantly higher
than 1996 levels.
(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
<PAGE>
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) 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.
As of December 31, 1997, the Partnership is in compliance with the above
government regulations. Typically, costs related to extensive modifications are
passed on to the lessee of that equipment.
ITEM 2. PROPERTIES
The Partnerships neither own nor lease any properties other than the equipment
they have purchased for lease to others. As of December 31, 1997, each
Partnership owned a portfolio of transportation equipment as described in Part
I, Item 1. The Partnerships will not purchase any additional equipment but may
make capital repairs to the current portfolio of equipment which extend or
increase the economic life.
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, 1997.
(This space intentionally left blank.)
<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, 1997:
TEP IXA TEP IXB TEP IXC TEP IXD
Holders of limited
partnership units 1,012 614 534 329
Effective January 1, 1998, each of the Partnerships' remaining assets were
transferred into a liquidating trust. Under the terms of the trust agreement, no
transfers will be allowed except for those transfers relating to inheritance
issues and pension plan distributions.
(This space intentionally left blank.)
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
Table 1, below, lists selected financial data for the respective Partnerships:
TABLE 1
For the years ended December 31,
<TABLE>
<CAPTION>
TEP IXA 1997 1996 1995 1994 1993
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<S> <C> <C> <C> <C> <C>
Operating results:
Total revenues $ 514,310 $ 778,338 $ 1,144,180 $ 752,029 $ 764,823
Net gain (loss) on disposition
of equipment 257,476 340,836 555,733 59,957 (53,590)
Net income (loss) 212,853 320,435 473,623 (132,809) (179,977)
At year-end:
Total assets $ 443,842 $ 657,806 $ 2,044,123 $ 1,855,487 $ 2,568,780
Total liabilities 21,261 14,409 43,300 30,418 111,336
Cash distributions $ 65,714 $ 277,861 $ 297,869 $ 361,566 $ 708,072
Special distributions $ 367,955 $ 1,400,000 $ -- $ 138,000 $ --
Cash distributions and special distributions
which represent a return of capital to
limited partners
$ 341,261 $ 1,343,851 $ -- $ 494,570 $ 700,991
Per weighted-average limited partnership unit:
Net income (loss) $ 3.63 $ 13.06 $ 19.31 $ (5.41) $ (7.34)
Cash distributions $ 2.68 $ 11.33 $ 12.14 $ 14.74 $ 28.87
Special distributions $ 15.00 $ 57.07 $ -- $ 5.63 $ --
Cash distributions and special distributions
which represent a return of capital to
limited partners
$ 14.05 $ 55.34 $ -- $ 20.37 $ 28.87
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
For the years ended December 31,
TEP IXB 1997 1996 1995 1994 1993
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<S> <C> <C> <C> <C> <C>
Operating results:
Total revenues $ 188,685 $ 539,568 $ 671,144 $ 962,681 $ 956,072
Net gain on disposition
of equipment 135,655 272,183 113,206 132,025 30,646
Equity in net income of unconsolidated
special-purpose entity -- 250,928 -- -- --
Net income 22,375 473,377 83,006 279,472 282,593
At year-end:
Total assets $ 111,282 $ 701,432 $ 1,158,613 $ 1,691,187 $ 2,275,596
Total liabilities 13,357 13,274 92,454 33,858 35,912
Cash distributions $ 48,063 $ 401,378 $ 474,176 $ 676,827 $ 784,635
Special distributions $ 564,545 $ 450,000 $ 200,000 $ 185,000 $ --
Cash distributions and special distributions
which represent a return of capital to
limited partners
$ 606,482 $ 374,221 $ 582,258 $ 576,532 $ 497,022
Per weighted-average limited partnership unit:
Net income (loss) $ (3.78 ) $ 26.84 $ 4.71 $ 15.85 $ 16.02
Cash distributions $ 2.73 $ 22.76 $ 26.89 $ 38.38 $ 44.49
Special distributions $ 32.01 $ 25.52 $ 11.34 $ 10.49 $ --
Cash distributions and special distributions
which represent a return of capital to
limited partners
$ 34.74 $ 21.43 $ 33.35 $ 33.02 $ 28.47
</TABLE>
(This space intentionally left blank.)
<PAGE>
<TABLE>
<CAPTION>
For the years ended December 31,
TEP IXC 1997 1996 1995 1994 1993
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------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operating results:
Total revenues $ 473,344 $ 492,205 $ 916,158 $ 970,110 $ 837,998
Net gain on disposition
of equipment 210,332 114,942 229,599 2,561 14,139
Equity in net income of unconsolidated
special-purpose entity -- 111,247 -- -- --
Net income 115,466 105,040 259,541 154,881 36,888
At year-end:
Total assets $ 242,209 $ 654,436 $ 1,161,779 $ 1,849,532 $2,057,830
Total liabilities 14,444 17,905 16,462 56,790 31,384
Cash distributions $ 57,017 $ 313,826 $ 406,966 $ 388,585 $ 483,115
Special distributions $ 467,215 $ 300,000 $ 500,000 $ -- $ --
Cash distributions and special distributions
which represents a return of capital to
limited partners
$ 490,079 $ 503,698 $ 640,950 $ 231,367 $ 441,765
Per weighted-average limited partnership unit:
Net income $ 1.71 $ 6.15 $ 15.19 $ 9.07 $ 2.16
Cash distributions $ 3.34 $ 18.37 $ 23.82 $ 22.74 $ 28.28
Special distributions $ 27.35 $ 17.56 $ 29.27 $ -- $ --
Cash distributions and special distributions
which represents a return of capital to
limited partners
$ 28.98 $ 29.78 $ 37.89 $ 13.68 $ 26.12
</TABLE>
(This space intentionally left blank.)
<PAGE>
<TABLE>
<CAPTION>
For the years ended December 31,
TEP IXD 1997 1996 1995 1994 1993
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-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operating results:
Total revenues $ 278,228 $ 202,500 $ 374,362 $ 583,442 $ 743,878
Net gain on disposition
of equipment 189,003 44,879 83,235 17,133 53,478
Net income (loss) $ 132,689 $ (16,671) $ 46,051 $ 193,690 $ 305,232
At year-end:
Total assets $ 207,564 $ 278,061 $ 575,694 $ 1,390,092 $1,600,584
Total liabilities 19,327 11,462 8,338 5,060 10,588
Cash distributions $ 18,549 $ 134,086 $ 263,727 $ 398,654 $ 423,994
Special distributions $ 192,502 $ 150,000 $ 600,000 $ -- $ --
Cash distributions and special distributions
which represents a return of capital to
limited partners
$ 125,706 $ 281,245 $ 809,500 $ 202,915 $ 117,574
Per weighted-average limited partnership unit:
Net income (loss) $ 8.73 $ (1.73) $ 4.78 $ 20.12 $ 31.71
Cash distributions $ 1.93 $ 13.93 $ 27.40 $ 41.42 $ 44.05
Special distributions $ 20.00 $ 15.58 $ 62.34 $ -- $ --
Cash distributions and special distributions
which represents a return of capital to
limited partners
$ 13.20 $ 29.51 $ 84.95 $ 21.29 $ 12.34
</TABLE>
(This space intentionally left blank.)
<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
As discussed in Note 5 to each of the accompanying financial statements and (E)
below, the General Partner is actively marketing the remaining equipment
portfolio with the intent of maximizing sale proceeds.
(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, 1997, 1996, or 1995.
As of December 31, 1997, the General Partner estimated the current fair market
value of each Partnerships' equipment portfolio to be approximately : $0.2
million, $0.1 million, $0.4 million, and $0.1 million for TEP IXA, TEP IXB, TEP
IXC, and TEP IXD, respectively.
(D) Government Regulations
The General Partner operates the Partnership's 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
With the majority of the equipment portfolio now liquidated, the Partnerships'
remaining assets were transferred into a liquidating trust as of January 1, 1998
(see Note 5 to each of the accompanying financial statements). Any excess
proceeds over expected obligations will be distributed to the beneficiaries in
the liquidating trust.
<PAGE>
(F) Results of Operations - Year to Year Detail Comparison
(1) Comparison of the Registrant's Operating Results for the Years Ended
December 31, 1997 and 1996
TEP IXA
(a) Revenues
Lease revenue decreased to $242,415 in 1997 from $414,957 in 1996. The following
table lists lease revenues earned by equipment type:
For the Years Ended
December 31,
1997 1996
--------------------------------
Trailers $ 181,281 $ 263,473
Marine containers 61,134 112,994
Rail equipment -- 38,490
-----------------------------------
$ 242,415 $ 414,957
===================================
The decline was due primarily to the following:
(i) Trailer revenue decreased $82,192 from 1997 levels due to the disposition of
trailers during 1997 and 1996.
(ii) Marine container revenue decreased $51,860 due to the disposition of the
Partnership's remaining marine containers during 1997.
(iii) Rail revenue decreased $38,490 from 1997 levels due to the sale of the
Partnership's remaining railcars during the third quarter of 1996.
Interest and Other Income
Interest and other income decreased to $14,419 in 1997 from $22,545 in 1996 due
primarily to lower average cash balances available for investments.
Net Gain on Disposition of Equipment
For the year ended December 31, 1997, the Partnership realized a gain of
$257,476 on disposition of trailers and marine containers, compared to the same
period in 1996, where the Partnership realized a gain of $340,836 on the
disposition of trailers, marine containers, and railcars.
(d) Expenses
Total expenses for the years ended December 31, 1997 and 1996, were $301,457 and
$457,903, respectively. The decrease in 1997 expenses was attributable primarily
to decreased repairs and maintenance, depreciation expense, general and
administrative expense, and bad debt expense.
(1) Direct Operating Expenses (defined as repairs and maintenance and insurance)
decreased to $39,282 in 1997 from $64,875 in 1996. 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
$262,175 in 1997 from $393,028 in 1996. This change resulted from:
(i) a $62,035 decrease in depreciation expense from 1997 levels resulting
from the disposition of equipment in 1997 and 1996.
<PAGE>
(ii) a $47,855 decrease in general and administrative expense from 1996
levels due primarily to lower accounting and data processing costs, and lower
administrative costs associated with the short-term rental facilities due to a
decreased volume of trailers in these facilities.
(iii) a $20,116 decrease in bad debt expense primarily due to the
collection of receivables that were previously reserved for as bad debt.
(e) Net Income
As a result of the foregoing, net income for the year ended December 31, 1997,
was $212,853 compared to $320,435 for the year ended December 31, 1996. 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, 1997, is not necessarily indicative of future periods. In 1997, TEP
IXA distributed $429,332 to the limited partners, or $17.68 per weighted-average
unit which included a special distribution of $15.00 per weighted-average unit.
TEP IXB
Owned Equipment Operations
Lease revenues less direct expenses (defined as repairs and maintenance and
asset specific insurance expenses) on owned equipment decreased for the year
ended December 31, 1997 when compared to the same period of 1996. The following
table presents lease revenues less direct expenses by owned equipment type:
<TABLE>
<CAPTION>
For the Years Ended
December 31,
1997 1996
---------------------------------
<S> <C> <C>
Marine containers $ 14,998 $ 26,750
Trailers 11,335 112,435
Railcar equipment (324) 62,676
</TABLE>
Marine containers: Marine container revenues and direct expenses were $15,363
and $365, respectively, for the twelve months ended December 31, 1997, compared
to $26,960 and $210, respectively, during the same period of 1996. The decrease
in marine container net contribution resulted from the disposition of the
Partnership's remaining marine containers during 1997.
Trailers: Trailer revenues and direct expenses were $27,633 and $16,298,
respectively, for the twelve months ended December 31, 1997, compared to
$154,805 and $42,370, respectively, during the same period of 1996. The number
of trailers owned by the Partnership declined in 1997 due to sales and
dispositions. The result of this declining fleet was a decrease in trailer net
contribution.
Railcar equipment: Railcar revenues and direct expenses were zero and $324,
respectively, for the twelve months ended December 31, 1997, compared to $67,953
and $5,277, respectively, during the same period of 1996. The decrease in net
contribution was due to the sale of all railcars owned by the Partnership in the
fourth quarter of 1996.
(b) Indirect Expenses Related to Owned Equipment
Total indirect expenses of $149,323 for the year ended December 31, 1997,
decreased from $269,262 for the same period of 1996. Significant variance is
explained as follows:
(i) a $71,146 decrease in depreciation expense from 1996 levels reflecting
assets sales or dispositions during 1997 and 1996.
(ii) a $44,407 decrease in general and administrative expenses from 1996
levels. This reflects the decreased accounting and data processing costs, and
lower administrative costs associated with the short-term rental facilities due
to decreased volume of trailers in these facilities.
(iii) a $4,386 decrease in bad debt expense primarily due to the collection
of receivables that were previously reserved for as bad debt.
(c) Net Gain on Disposition of Equipment
For the twelve months ended December 31, 1997, the Partnership realized a gain
of $135,655 on the disposal of marine containers and trailers compared to 1996,
where the Partnership realized a gain of $272,183 on the disposal of railcars,
marine containers, and trailers.
(d) Interest and Other Income
Interest and other income decreased $7,633 in 1997 due primarily to lower
average cash balances available for investments.
(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).
The Partnership liquidated its interest in this entity in 1996.
(f) Net Income
As a result of the foregoing, the Partnership generated net income of $22,375
for the year ended December 31, 1997, compared to $473,377 in the same period in
1996. 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, 1997, is not necessarily indicative of future
periods. For the year ended December 31, 1997, the Partnership distributed
$606,482 to the limited partners, or approximately $34.74 per weighted-average
unit which included a special distribution of $32.01 per weighted-average unit.
TEP IXC
Owned Equipment Operations
Lease revenues less direct expenses (defined as repairs and maintenance and
asset specific insurance expenses) on owned equipment decreased for the year
ended December 31, 1997 when compared to the same period of 1996. The following
table presents lease revenues less direct expenses by owned equipment type:
<TABLE>
<CAPTION>
For the Years Ended
December 31,
1997 1996
---------------------------------------------------------------------------
<S> <C> <C>
Trailers $ 180,936 $ 221,143
Marine containers 3,113 5,501
Railcar equipment (104) 21,708
</TABLE>
Trailers: Trailer revenues and direct expenses were $251,235 and $70,299,
respectively, for the twelve months ended December 31, 1997, compared to
$330,604 and $109,461, respectively, during the same period of 1996. The number
of trailers owned by the Partnership declined in 1997 due to sales and
dispositions. The result of this declining fleet was a decrease in trailer net
contribution.
Marine containers: Marine container revenues and direct expenses were $3,248 and
$135, respectively, for the twelve months ended December 31, 1997, compared to
$5,579 and $78, respectively, during the same period of 1996. The decrease in
marine container net contribution resulted from the sale of the Partnership's
remaining marine containers during 1997.
<PAGE>
Railcar equipment: Railcar revenues and direct expenses were zero and $104,
respectively, for the twelve months ended December 31, 1997, compared to $26,520
and $4,812, respectively during the same period of 1996. The decrease in net
contribution was due to the sale of all railcars owned by the Partnership in the
fourth quarter of 1996.
(b) Indirect Expenses Related to Owned Equipment
Total indirect expenses of $287,340 for the year ended December 31, 1997,
decreased from $384,061 for the same period of 1996. Significant variance is
explained as follows:
(i) a $74,581 decrease in depreciation expense from 1996 levels reflecting
asset sales during 1997 and 1996.
(ii) a $45,632 decrease in general and administrative expenses due to lower
accounting and data processing costs, and lower administrative costs associated
with the short-term rental facilities due to a decreased volume of trailers
operating in these facilities.
(iii) a $24,379 increase in bad debt expense was primarily due to the
payment of receivables in 1996 that had been written off in prior years. There
was no similar payment of written off receivables in 1997.
(c) Net Gain on Disposition of Equipment
For the year ended December 31, 1997, the Partnership realized a gain of
$210,332 on the sale of trailers and marine containers, compared to the same
period in 1996, when the Partnership realized a gain of $114,942 on the sale of
trailers, railcars, and a marine container.
(d) Interest and Other Income
Interest and other income decreased $6,031 due to lower average cash balances
available for investments.
(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). The
Partnership liquidated its interest in this entity in 1996.
(f) Net Income
As a result of the foregoing, the Partnership's net income increased to $115,466
for the year ended December 31, 1997, from $105,040 in the same period in 1996.
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, 1997, is not necessarily indicative of future periods. For the year
ended December 31, 1997, the Partnership distributed $518,990 to the limited
partners, or approximately $30.69 per weighted-average unit which included a
special distribution of $27.35 per weighted-average unit.
<PAGE>
TEP IXD
(a) Revenues
Lease revenue decreased to $83,743 in 1997 from $151,115 in 1996. The following
table lists lease revenues earned by equipment type:
For the Years Ended
December 31,
1997 1996
--------------------------------
Trailers $ 46,835 $ 100,780
Marine containers 36,908 50,335
-----------------------------------
$ 83,743 $ 151,115
===================================
The decrease was due to the following:
(i) Trailer revenue decreased $53,945 in 1997 as compared to 1996 levels, due to
the sale of trailers during 1997 and 1996.
(ii) Marine container revenue decreased $13,427 in 1997 as compared to 1996
levels due to the sale of all the Partnership's marine container during 1997.
(b) Net Gain on Disposition of Equipment
Net gain on disposition of equipment of $189,003 in 1997 resulted from the sale
or disposal of marine containers and trailers. The gain on disposition of
equipment in 1996 totaled $44,879 which resulted from the sale or disposal of
marine containers and trailers.
(c) Expenses
Total expenses for the years ended December 31, 1997 and 1996 were $145,539 and
$219,171, respectively. The decrease in 1997 expenses was attributable primarily
to decreased repairs and maintenance, general and administrative expenses, and
depreciation, partially offset by an increase in bad debt expenses.
(1) Direct Operating Expenses (defined as repairs and maintenance and insurance)
decreased to $18,724 in 1997 from $30,997 in 1996. The decrease resulted
primarily from the disposition of trailers and containers in 1997 and 1996.
(2) Indirect Operating Expenses (defined as depreciation and amortization
expense, management fees, bad debt expense, and general and administrative
expenses) decreased to $126,815 in 1997 from $188,174 in 1996. This change
resulted from:
(i) a $40,262 decrease in general and administrative expenses due to lower
accounting and data processing costs, and lower administrative costs associated
with the short-term rental facilities due to decreased volume of trailers in
these facilities.
(ii) a $28,743 decrease in depreciation expense from 1996 levels reflecting
assets sales during 1997 and 1996.
(iii) an increase of $7,646 in bad debt expense was primarily due to the
payment of receivables in 1996 that had been written off in prior years. There
was no similar payment of written off receivables in 1997.
(d) Net Income (Loss)
As a result of all of the foregoing, the Partnership generated a net income for
the year ended December 31, 1997 of $132,689 compared with a net loss of $16,671
for the year ended December 31, 1996. 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, 1997, is not
necessarily indicative of future periods. For the year ended December 31, 1997,
TEP IXD distributed $208,941 to the limited partners, or $21.93 per
weighted-average unit which included a special distribution of $20.00 per
weighted-average unit.
(2) Comparison of the Registrant's Operating Results for the Years Ended
December 31, 1996 and 1995
TEP IXA
(a) Revenues
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 Years 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:
(i) 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 trailers in 1996 and 1995.
(ii) Marine container revenue decreased $5,631 due to a decline in utilization
from 1995 levels, and the disposal of marine containers in 1996 and 1995.
(iii) 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.
(b) Interest and Other Income
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.
(c) Net Gain on Disposition of Equipment
For the year ended December 31, 1996, the Partnership realized a gain of
$340,836 on the sale or disposition of trailers, marine containers, and
railcars, compared to the same period in 1995, where the Partnership realized a
gain of $555,733 on the sale or disposition of a trailer, a commuter aircraft,
and marine containers.
(d) 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:
(i) a $114,277 decrease in depreciation expense from 1996 levels resulting
from the sale or disposal of trailers, marine containers, and railcars in 1996.
(ii) 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.
(iii) a $66,292 increase in bad debt expense due to the General Partner's
evaluation of the collectibility of the trade receivables.
(e) Net Income
As a result 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
Lease revenues less direct expenses (defined as repairs and maintenance and
asset specific insurance expenses) on owned equipment decreased for the year
ended December 31, 1996 when compared to the same period of 1995. The following
table presents lease revenues less direct expenses by owned equipment type:
<TABLE>
<CAPTION>
For the Years 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.
(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. Significant variance is
explained as follows:
(i) 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.
(ii) a $39,977 decrease in depreciation expense from 1995 levels reflecting
assets sales or dispositions during 1996 and 1995.
(iii) 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) Net Gain on Disposition of Equipment
For the twelve months ended December 31, 1996, the Partnership realized a gain
of $272,183 on the disposal of railcars, marine containers, and trailers
compared to 1995, where the Partnership realized a gain of $113,206 on the sale
or disposition of trailers and 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).
(f) Net Income
As a result of the foregoing, 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
Lease revenues less direct expenses (defined as repairs and maintenance and
asset specific insurance expenses) on owned equipment decreased for the year
ended December 31, 1996 when compared to the same period of 1995. The following
table presents lease revenues less direct expenses by owned equipment type:
<TABLE>
<CAPTION>
For the Years 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. Significant variance is
explained as follows:
(i) 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.
(ii) a $26,636 decrease in depreciation expense from 1995 levels reflecting
asset sales during 1996 and 1995.
(iii) 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.
(iv) 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) Net Gain on Disposition of Equipment
For the year ended December 31, 1996, the Partnership realized a gain of
$114,942 on the sale of trailers, railcars, and a marine container, compared to
the same period in 1995, when the Partnership realized a gain of $229,599 on the
sale or disposal of trailers, twin stack railcars, and a marine container.
(d) Interest and Other Income
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
As a result of the foregoing, 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
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 Years 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:
(i) 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.
(ii) 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.
(b) Interest and Other Income
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.
(c) Net gain on Disposition of Equipment
Net gain on disposition of equipment of $44,879 in 1996 resulted from the sale
or disposal of marine containers and trailers. The gain on disposition of
equipment in 1995 totaled $83,235 which resulted from the sale or disposal of
marine containers and trailers.
(d) 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:
(i) a $33,903 decrease in bad debt expense due to the General Partner's
evaluation of the collectibility of trade receivables.
(ii) a $31,308 decrease in general and administrative expenses due to lower
accounting costs and administrative costs associated with the short-term rental
facilities.
(iii) a $19,593 decrease in depreciation expense from 1996 levels
reflecting assets sales during 1996 and 1995.
<PAGE>
(e) Net Income (Loss)
As a result 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.
Geographic Information
The Partnerships operated some of their equipment in international markets.
Although these operations exposed the Partnerships to certain currency,
political, credit and economic risks, the General Partner believed these risks
were minimal or had implemented strategies to control the risks as follows:
Currency risks were at a minimum because all invoicing, with the exception of a
small number of railcars operating in Canada, was conducted in U.S. dollars.
Political risks were minimized generally through the avoidance of operations in
countries that did not have a stable judicial system and established commercial
business laws. Credit support strategies for lessees ranged from letters of
credit supported by U.S. banks to cash deposits. Although these credit support
mechanisms generally allowed the Partnership to maintain its lease yield, there
were risks associated with slow-to-respond judicial systems when legal remedies
were required to secure payment or repossess equipment. Economic risks were
inherent in all international markets and the General Partner strove 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.
TEP IXA:
The Partnership's equipment on lease to U.S. domiciled lessees accounted for 75%
of the revenues generated by wholly-owned equipment while net income accounted
for $136,479 of the $212,853 in net income for the entire Partnership.
The Partnership's various marine containers, which were leased in various
regions throughout 1997, accounted for 25% of the lease revenues generated by
wholly-owned equipment, while the net income accounted for $161,194 for the
Partnership's total net income of $212,853. The Partnership sold its marine
containers during 1997.
TEP IXC:
The Partnership's owned equipment on lease to U.S. domiciled lessees accounted
for 99% of the revenues generated by wholly-owned equipment while net income
accounted for $178,785 of the $115,466 in net income for the entire Partnership.
The Partnership's various marine containers, which were leased in various
regions throughout 1997, accounted for 1% of the lease revenues generated by
wholly-owned equipment, while the net income accounted for $5,961 for the
Partnership's total net income of $115,466. The Partnership sold its marine
containers during 1997.
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.
Year 2000 Compliance
The General Partner is currently addressing the Year 2000 computer software
issue. The General Partner is creating a timetable for carrying out any program
modifications that may be required. The General Partner does not anticipate that
the cost of these modifications allocable to the Partnership will be material.
Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board issued two new
statements: SFAS No. 130, "Reporting Comprehensive Income," which requires
enterprises to report, by major component and in total, all changes in equity
from nonowner sources; and SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information," which establishes annual and interim
reporting standards for a public Partnership's operating segments and related
disclosures about its products, services, geographic areas, and major customers.
The Trustee has applied to the Securities and Exchange Commission (SEC) to
terminate the Trust's obligation to file Form 10-Q and Form 10-K. If approved by
the SEC, the Trustee will discontinue all future filings of these reports (see
Note 5). As such, it is not anticipated that these pronouncements will have an
impact on the Partnerships.
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 PLM INTERNATIONAL
AND PLM FINANCIAL SERVICES, INC.
As of the date of this annual report, the directors and executive officers of
PLM International (and key executive officers of its subsidiaries) and of PLM
Financial Services, Inc. are as follows:
<TABLE>
<CAPTION>
Name Age Position
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Robert N. Tidball 59 Chairman of the Board, Director, President,
and Chief Executive Officer, PLM International, Inc.;
Director, PLM Financial Services, Inc.;
Vice President, PLM Railcar Management Services, Inc.;
President, PLM Worldwide Management Services Ltd.
Randall L.-W. Caudill 50 Director, PLM International, Inc.
Douglas P. Goodrich 51 Director and Senior Vice President, PLM International;
Director and President, PLM Financial Services, Inc.;
President, PLM Transportation Equipment Corporation;
President, PLM Railcar Management Services, Inc.
Harold R. Somerset 63 Director, PLM International, Inc.
Robert L. Witt 57 Director, PLM International, Inc.
J. Michael Allgood 49 Vice President and Chief Financial Officer,
PLM International, Inc. and PLM Financial Services, Inc.
Stephen M. Bess 51 President, PLM Investment Management, Inc.
and PLM Securities Corp.;
Vice President and Director, PLM Financial Services, Inc.
Richard K Brock 35 Vice President and Corporate Controller,
PLM International, Inc. and PLM Financial Services, Inc.
Frank Diodati 43 President, PLM Railcar Management Services Canada Limited
Steven O. Layne 43 Vice President, PLM Transportation Equipment Corporation;
Vice President, PLM Worldwide Management Services Ltd.
Susan C. Santo 35 Vice President, Secretary, and General Counsel,
PLM International, Inc. and PLM Financial Services, Inc.
Thomas L. Wilmore 55 Vice President, PLM Transportation Equipment Corporation;
Vice President, PLM Railcar Management Services, Inc.
</TABLE>
Robert N. Tidball was appointed Chairman of the Board in August 1997 and
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. Mr. Tidball
was appointed Director of PLM Financial Services, Inc. in July 1997 and was
elected President of PLM Worldwide Management Services Limited in February 1998.
He has served as an officer of PLM Railcar Management Services, Inc. since June
1987. 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, he was Vice President, General Manager, and Director of
North American Car Corporation and a director of the American Railcar Institute
and the Railway Supply Association.
Randall L.-W. Caudill was elected to the Board of Directors in September 1997.
He is President of Dunsford Hill Capital Partners, a San Francisco-based
financial consulting firm serving emerging growth companies in the United States
and abroad, as well as a senior advisor to the investment banking firm of
Prudential Securities, where he has been employed since 1987. Mr. Caudill also
serves as a director of VaxGen, Inc. and SBE, Inc.
Douglas P. Goodrich was elected to the Board of Directors in July 1996,
appointed Senior Vice President of PLM International in March 1994, and
appointed Director and President of PLM Financial Services, Inc. in June 1996.
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 Corporation of
Chicago, Illinois, from December 1980 to September 1985.
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 Sugar),
a recently acquired subsidiary of Alexander & Baldwin, Inc. Mr. Somerset joined
C&H Sugar 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 of
Agriculture and 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 US 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 L. Witt was elected to the Board of Directors in June 1997. Since 1993,
Mr. Witt has been a principal with WWS Associates, a consulting and investment
group specializing in start-up situations and private organizations about to go
public. Prior to that, he was Chief Executive Officer and Chairman of the Board
of Hexcel Corporation, an international advanced materials company with sales
primarily in the aerospace, transportation, and general industrial markets. Mr.
Witt also serves on the boards of directors for various other companies and
organizations.
J. Michael Allgood was appointed Vice President and Chief Financial Officer of
PLM International in October 1992 and Vice President and Chief Financial Officer
of PLM Financial Services, Inc. in December 1992. Between July 1991 and October
1992, Mr. Allgood was a consultant to various private and public-sector
companies and institutions specializing in financial operations 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 Director of PLM Financial Services, Inc. in July
1997. Mr. Bess was appointed President of PLM Securities Corporation 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 Corporation, a manufacturer of computer peripheral equipment, from
October 1975 to November 1978.
Richard K Brock was appointed Vice President and Corporate Controller of PLM
International and PLM Financial Services, Inc. in June 1997, having served as an
accounting manager beginning in September 1991 and as Director of Planning and
General Accounting beginning in February 1994. Mr. Brock was a division
controller of Learning Tree International, a technical education company, from
February 1988 through July 1991.
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 of PLM Transportation Equipment
Corporation's Air Group in November 1992, and was appointed Vice President and
Director of PLM Worldwide Management Services Limited in September 1995. Mr.
Layne was its Vice President, Commuter and Corporate Aircraft beginning in July
1990. Prior to joining PLM, Mr. Layne was Director of 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 a senior pilot with 13 years of accumulated
service.
Susan C. Santo became Vice President, Secretary, and General Counsel of PLM
International and PLM Financial Services, Inc. in November 1997. She has worked
as an attorney for PLM International since 1990 and served as its Senior
Attorney since 1994. Previously, Ms. Santo was engaged in the private practice
of law in San Francisco. Ms. Santo received her J.D. from the University of
California, Hastings College of the Law.
Thomas L. Wilmore was appointed Vice President, Rail of PLM Transportation
Equipment Corporation in March 1994, and has served as Vice President of
Marketing for PLM Railcar Management Services, Inc. since May 1988. Prior to
joining PLM, Mr. Wilmore was Assistant Vice President and Regional Manager for
MNC Leasing Corporation in Towson, Maryland from February 1987 to April 1988.
From July 1985 to February 1987, he was President and co-owner of Guardian
Industries Corporation, Chicago, 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 PLM International, Inc. are elected for a three-year term and
the directors of PLM Financial Services, Inc. are elected for a one-year term or
until their successors are elected and qualified. No family relationships exist
between any director or executive officer of PLM International Inc. or PLM
Financial Services, Inc..
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, 1997.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Security Ownership of Certain Beneficial Owners
At December 31, 1997, 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.
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
(a) Transactions with Management and Others.
During 1997, management fees paid or accrued to IMI were: $60,713,
$43,650, $42,273 and $23,822 for TEP IXA, TEP IXB, TEP IXC and TEP IXD,
respectively. During 1997, administrative services performed on behalf of the
Partnerships were reimbursed to FSI and its affiliates as follows: $46,454,
$12,853, $67,777 and $14,528 for TEP IXA, TEP IXB, TEP IXC and TEP IXD,
respectively.
(b) Certain Business Relationships
None.
(c) Indebtedness of Management
None.
(d) Transactions with Promoters
None.
-16-
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 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 27, 1998 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/ Richard K Brock
----------------------------
Richard K Brock
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
*_____________________________
Robert N. Tidball Director-FSI March 27, 1998
*_____________________________
Douglas P. Goodrich Director-FSI March 27, 1998
*_____________________________
Stephen M. Bess Director-FSI March 27, 1998
* Susan C. Santo, by signing her 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/ Susan C. Santo
- --------------------------
Susan C. Santo
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 27, 1998 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/ Richard K Brock
-----------------------------
Richard K Brock
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
*_____________________________
Robert N. Tidball Director-FSI March 27, 1998
*_____________________________
Douglas P. Goodrich Director-FSI March 27, 1998
*_____________________________
Stephen M. Bess Director-FSI March 27, 1998
* Susan C. Santo, by signing her 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/ Susan C. Santo
- -------------------------------
Susan C. Santo
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 27, 1998 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/ Richard K Brock
----------------------------
Richard K Brock
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
*_____________________________
Robert N. Tidball Director-FSI March 27, 1998
*_____________________________
Douglas P. Goodrich Director-FSI March 27, 1998
*_____________________________
Stephen M. Bess Director-FSI March 27, 1998
* Susan C. Santo, by signing her 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/ Susan C. Santo
- ----------------------------
Susan C. Santo
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 27, 1998 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/ Richard K Brock
---------------------------
Richard K Brock
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
*_____________________________
Robert N. Tidball Director-FSI March 27, 1997
*_____________________________
Douglas P. Goodrich Director-FSI March 27, 1997
*_____________________________
Stephen M. Bess Director-FSI March 27, 1998
* Susan C. Santo, 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/ Susan C. Santo
- ---------------------------
Susan C. Santo
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, 1997 and 1996 35
Statements of income for the years
ended December 31, 1997, 1996, and 1995 36
Statements of changes in partners' capital for the years
ended December 31, 1997, 1996, and 1995 37
Statements of cash flows for the years
ended December 31, 1997, 1996, and 1995 38
Notes to financial statements 39-43
TEP IXB
Report of Independent Auditors 44
Balance sheets at December 31, 1997 and 1996 45
Statements of income for the years
ended December 31, 1997, 1996, and 1995 46
Statements of changes in partners' capital for the years
ended December 31, 1997, 1996, and 1995 47
Statements of cash flows for the years
ended December 31, 1997, 1996, and 1995 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 of Independent Auditors 54
Balance sheets at December 31, 1997 and 1996 55
Statements of income for the years
ended December 31, 1997, 1996, and 1995 56
Statements of changes in partners' capital for the years
ended December 31, 1997, 1996, and 1995 57
Statements of cash flows for the years
ended December 31, 1997, 1996, and 1995 58
Notes to financial statements 59-64
TEP IXD
Report of Independent Auditors 65
Balance sheets at December 31, 1997 and 1996 66
Statements of operations for the years
ended December 31, 1997, 1996, and 1995 67
Statements of changes in partners' capital for the years
ended December 31, 1997, 1996, and 1995 68
Statements of cash flows for the years
ended December 31, 1997, 1996, and 1995 69
Notes to financial statements 70-73
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 more fully
described in note 5.
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, 1997 and 1996 and the results
of its operations and its cash flows for each of the years in the three-year
period ended December 31, 1997 in conformity with generally accepted accounting
principles.
/S/ KPMG PEAT MARWICK LLP
- ------------------------------------
SAN FRANCISCO, CALIFORNIA
March 24, 1998
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IXA 1986 INCOME FUND
(A Limited Partnership)
BALANCE SHEETS
December 31,
<TABLE>
<CAPTION>
1997 1996
-----------------------------------------
<S> <C> <C>
Assets
Equipment held for operating leases, at cost $ 715,860 $ 3,486,094
Less accumulated depreciation (674,944) (3,140,358)
-----------------------------------------
Net equipment 40,916 345,736
Cash and cash equivalents 376,794 211,878
Accounts receivable, net of allowance for doubtful accounts of
$45,515 in 1997 and $57,870 in 1996 25,471 97,754
Prepaid insurance 661 2,438
-----------------------------------------
Total assets $ 443,842 $ 657,806
=========================================
Liabilities and partners' capital
Liabilities:
Accounts payable $ 16,202 $ 9,350
Due to affiliates 5,059 5,059
Total liabilities 21,261 14,409
Partners' capital (deficit):
Limited partners (24,285 units) 402,657 743,918
General Partner 19,924 (100,521)
-----------------------------------------
Total partners' capital 422,581 643,397
-----------------------------------------
Total liabilities and partners' capital $ 443,842 $ 657,806
=========================================
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IXA 1986 INCOME FUND
(A Limited Partnership)
STATEMENTS OF INCOME
For the years ended December 31,
<TABLE>
<CAPTION>
1997 1996 1995
--------------------------------------------------------
<S> <C> <C> <C>
Revenues
Lease revenue $ 242,415 $ 414,957 $ 547,246
Interest and other income 14,419 22,545 41,201
Net gain on disposition of equipment 257,476 340,836 555,733
--------------------------------------------------------
Total revenue 514,310 778,338 1,144,180
Expenses
Depreciation 134,212 196,247 310,524
Management fees to affiliate 60,713 61,560 60,713
Repairs and maintenance 34,516 59,036 162,279
Insurance expense 4,766 5,839 9,802
General and administrative expenses to affiliates 46,454 87,395 122,635
Other general and administrative expenses 39,523 46,437 69,507
Provision for (recovery of) bad debts (18,727) 1,389 (64,903)
--------------------------------------------------------
Total expenses 301,457 457,903 670,557
--------------------------------------------------------
Net income $ 212,853 $ 320,435 $ 473,623
========================================================
Partners' share of net income
Limited partners $ 88,071 $ 317,231 $ 468,887
General Partner 124,782 3,204 4,736
---------------------------------------------------------------------------------------
Total $ 212,853 $ 320,435 $ 473,623
========================================================
Net income per weighted-average limited
Partnership unit (24,285 units) $ 3.63 $ 13.06 $ 19.31
========================================================
Cash distributions $ 65,714 $ 277,861 $ 297,869
========================================================
Cash distributions per weighted-average limited
partnership unit $ 2.68 $ 11.33 $ 12.14
========================================================
Special cash distributions $ 367,955 $ 1,400,000 $ --
========================================================
Special cash distributions per weighted-average
limited partnership unit $ 15.00 $ 57.07 $ --
========================================================
Total cash distributions $ 433,669 $ 1,677,861 $ 297,869
=======================================================================================
Total cash distributions per weighted-average
limited partnership unit $ 17.68 $ 68.40 $ 12.14
========================================================
</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, 1997, 1996, and 1995
<TABLE>
<CAPTION>
Limited General
Partners Partner Total
------------------------------------------------------------
<S> <C> <C> <C>
Partners' capital (deficit) as of 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) as of December 31, 1995 2,087,769 (86,946) 2,000,823
Net income 317,231 3,204 320,435
Cash distributions (275,082 ) (2,779) (277,861)
Special distributions (1,386,000 ) (14,000) (1,400,000)
------------------------------------------------------------
Partners' capital (deficit) as of December 31, 1996 743,918 (100,521) 643,397
Net income 88,071 124,782 212,853
Cash distributions (65,057 ) (657) (65,714)
Special distributions (364,275 ) (3,680) (367,955)
Partners' capital as of December 31, 1997 $ 402,657 $ 19,924 $ 422,581
============================================================
</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>
1997 1996 1995
-----------------------------------------------------
<S> <C> <C> <C>
Operating activities
Net income $ 212,853 $ 320,435 $ 473,623
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation 134,212 196,247 310,524
Net gain on disposition of equipment (257,476) (340,836) (555,733)
Changes in operating assets and liabilities:
Accounts receivable, net 82,408 10,179 (73,313)
Due from affiliates -- 2,941 (2,941)
Prepaid insurance 1,777 1,106 79
Accounts payable 6,852 (13,922) (30,840)
Due to affiliates -- 5,059 (2,732)
Lessee deposits and reserves -- (20,028) (3,546)
---------------------------------------------------------
Net cash provided by operating activities 180,626 161,181 115,121
Investing activities
Proceeds from disposition of equipment 417,959 473,285 50,179
Payments received on sales-type lease -- 1,003,564 86,436
Payments for purchase of capital improvements -- -- (876)
---------------------------------------------------------
Net cash provided by investing activities 417,959 1,476,849 135,739
Financing activities
Cash distributions paid to Limited partners (429,332) (1,661,082) (294,890)
Cash distributions paid to General Partner (4,337) (16,779) (2,979)
---------------------------------------------------------
Net cash used in financing activities (433,669) (1,677,861) (297,869)
---------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 164,916 (39,831) (47,009)
Cash and cash equivalents at beginning of year 211,878 251,709 298,718
---------------------------------------------------------
Cash and cash equivalents at end of year $ 376,794 $ 211,878 $ 251,709
========================================================================================
Supplemental Information:
Sales proceeds included in accounts receivable $ 10,125 $ -- $ --
=========================================================
</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, 1997
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 or PLM International) and manages the affairs
of the Partnership.
The net income (loss) and distributions of the Partnership are
generally 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.
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, 1997
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, 1997,
1996, or 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 1997, 1996, and 1995). The General Partner is generally
allocated a 1% share of the net income (loss) and the limited partners
are allocated a 99% share of the net income (loss). The General Partner
received a special allocation of income in the amount of $122,653 in
1997. The Partnership agreement provides for a special allocation to
occur near the dissolution of the Partnership. No special allocation
was received in 1996 or 1995.
Cash distributions are recorded when paid. Cash distributions to
investors in excess of net income are considered to represent a return
of capital. Cash and special distributions to limited partners of
$341,261, $1,343,851, and $0, in 1997, 1996, and 1995, 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, 1997 and 1996.
The Partnership reimbursed FSI and its affiliates $46,454, $87,395, and
$122,635 for administrative and other services performed on behalf of
the Partnership in 1997, 1996, and 1995, respectively.
As of December 31, 1997, all of the Partnership's trailer equipment had
been transferred into rental facilities operated by an affiliate of the
General Partner. Revenues 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
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IXA 1986 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
2. General Partner and Transactions with Affiliates (continued)
the Partnership. An allocation of indirect expenses of the rental yard
operations is charged to the Partnership monthly.
3. Equipment
The components of equipment at December 31, 1997 and 1996 are as
follows:
<TABLE>
<CAPTION>
1997 1996
-------------------------------------
<S> <C> <C>
Trailers $ 715,860 $ 2,357,296
Marine containers -- 1,128,798
----------------------------------------
715,860 3,486,094
Less accumulated depreciation (674,944) (3,140,358)
----------------------------------------
Net equipment $ 40,916 $ 345,736
========================================
</TABLE>
Revenues are earned by placing the equipment under operating leases
that 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 were leased to the operator of utilization-type pools
which included equipment owned by unaffiliated parties. In such
instances, revenues received by the Partnership consisted 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.
As of December 31, 1997, all equipment was operating in PLM-affiliated
short-term rental facilities. As of December 31, 1996, 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 .
During 1997, the Partnership disposed of trailers and marine
containers. During 1996, the Partnership sold or disposed of trailers,
railcars, and marine containers.
All leases are being accounted for as operating leases with
utilization-based rentals. Contingent rentals based upon utilization
amounted to $61,134 in 1997, $112,994 in 1996, and $118,625 in 1995.
The only lessee accounting for 10% or more of the total revenues during
1997, 1996, or 1995 was Transamerica Leasing (25% in 1997, 27% in 1996,
and 22% in 1995).
The Partnership owned certain equipment which was leased and operated
internationally. A limited number of the Partnership's transactions
were denominated in a foreign currency. Gains or losses resulting from
foreign currency transactions are included in the results of operations
and are not material.
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IXA 1986 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
3. Equipment (continued)
The Partnership leased or leases its railcars and trailers to lessees
domiciled in United States as of December 31, 1997. The marine
containers were leased to lessees in different regions who operated 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, 1997, 1996, and
1995:
<TABLE>
<CAPTION>
Lease revenue 1997 1996 1995
---------------------------------------------------
<S> <C> <C> <C>
Region:
Rest of the world $ 61,134 $ 112,994 $ 118,625
United States 181,281 301,963 428,621
---------------------------------------------------
Total revenues $ 242,415 $ 414,957 $ 547,246
===================================================
</TABLE>
<TABLE>
<CAPTION>
The following table sets forth identifiable net income information by
region:
Net income 1997 1996 1995
-----------------------------------------------------
<S> <C> <C> <C>
Region:
Rest of the world $ 161,194 $ 99,860 $ 46,547
United States 136,479 329,511 120,276
Australia -- -- 378,782
-----------------------------------------------------
Total identifiable net income 297,673 429,371 545,605
Administrative and other net loss (84,820 ) (108,936) (71,982)
-----------------------------------------------------
Total net income $ 212,853 $ 320,435 $ 473,623
=====================================================
</TABLE>
The net book value of these assets at December 31, 1997, 1996, and 1995
are as follows:
<TABLE>
<CAPTION>
Net book value 1997 1996 1995
-----------------------------------------------
<S> <C> <C> <C>
Region:
Rest of the world $ -- $ 88,552 $ 190,132
United States 40,916 257,184 484,300
-----------------------------------------------
Total Equipment $ 40,916 $ 345,736 $ 674,432
===============================================
</TABLE>
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, 1997, there were temporary differences of
approximately $1.5 million between the financial statement carrying
values of assets and liabilities and the federal income tax bases of
such assets and liabilities. The differences were principally due to
the differences in depreciation methods and the tax treatment of
underwriting commissions and syndication costs.
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IXA 1986 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
5. Subsequent Event
With the disposal of the majority of the equipment portfolio, the
Partnership's remaining assets were transferred into a liquidating
trust as of January 1, 1998. The sole Beneficiaries of the liquidating
trust are the limited partners and the General Partner. The Trustees,
as designated by the General Partner, are three officers of the General
Partner. The amounts reflected for assets and liabilities of the
Partnership have not been adjusted to reflect liquidation values. The
equipment portfolio that is actively being marketed for sale by the
Trustees continues to be carried at the lower of depreciated cost or
fair value less cost of disposal. Although the Trustees estimate that
there will be distributions to the Beneficiaries after final disposal
of assets and settlement of liabilities, the amounts cannot be
accurately determined prior to actual disposal of the equipment. Cash
receipts (including proceeds from the sale of assets) in excess of
expected obligations and reasonable reserves will be distributed to the
Beneficiaries in the liquidating trust from time to time, but not less
often than annually. Upon final liquidation, the liquidating trust will
be dissolved.
For tax purposes, the liquidating trust will continue be treated as a
partnership under Internal Revenue Regulation Section
301.7701-3(b)(1)(i). Partnership tax returns will be filed until all
the liquidating trust assets are distributed.
The Trustees have applied to the Securities and Exchange Commission
(SEC) to terminate the Trust's obligation to file Form 10-Q and Form
10-K. If approved by the SEC, the Trustees will discontinue all future
filings of these reports.
6. Special Distributions
The General Partner paid special distributions of $15.00 and $57.07 per
weighted-average limited partnership unit during 1997 and 1996,
respectively. No special distributions were paid in 1995.
<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 more fully
described in note 5.
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, 1997 and 1996 and the results
of its operations and its cash flows for each of the years in the three-year
period ended December 31, 1997, in conformity with generally accepted accounting
principles.
/s/ KPMG PEAT MARWICK LLP
- ------------------------------
SAN FRANCISCO, CALIFORNIA
March 24, 1998
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IXB 1986 INCOME FUND
(A Limited Partnership)
BALANCE SHEETS
December 31,
<TABLE>
<CAPTION>
1997 1996
------------------------------------
<S> <C> <C>
Assets
Equipment held for operating leases, at cost $ 237,580 $ 1,961,397
Less accumulated depreciation (227,868) (1,769,486)
-----------------------------------------
Net equipment 9,712 191,911
Cash and cash equivalents 93,836 478,922
Accounts receivable, net of allowance for doubtful accounts of
$22,075 in 1997 and $22,285 in 1996 7,450 28,720
Prepaid insurance 284 1,879
-----------------------------------------
Total assets $ 111,282 $ 701,432
=========================================
Liabilities and partners' capital
Liabilities:
Accounts payable $ 9,720 $ 9,637
Due to affiliates 3,637 3,637
Total liabilities 13,357 13,274
Partners' capital (deficit):
Limited partners (17,460 units) 85,629 758,143
General Partner 12,296 (69,985)
-----------------------------------------
Total partners' capital 97,925 688,158
-----------------------------------------
Total liabilities and partners' capital $ 111,282 $ 701,432
=========================================
</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>
1997 1996 1995
-----------------------------------------------
<S> <C> <C> <C>
Revenues
Lease revenue $ 42,996 $ 249,718 $ 535,422
Interest and other income 10,034 17,667 22,516
Net gain on disposition of equipment 135,655 272,183 113,206
---------------------------------------------------
Total revenues 188,685 539,568 671,144
Expenses
Depreciation 65,634 136,780 260,055
Management fees to affiliate 43,650 43,650 43,650
Repairs and maintenance 15,279 46,352 130,834
Insurance expense 3,006 3,512 6,677
General and administrative expenses to affiliates 12,853 56,302 96,118
Other general and administrative expenses 30,268 30,517 42,425
Provision for (recovery of) bad debts (4,380 ) 6 8,379
---------------------------------------------------
Total expenses 166,310 317,119 588,138
Equity in net income of unconsolidated
special-purpose entity -- 250,928 --
---------------------------------------------------
Net income $ 22,375 $ 473,377 $ 83,006
===================================================
Partners' share of net income (loss)
Limited partners $ (66,032 ) $ 468,643 $ 82,176
General Partner 88,407 4,734 830
----------------------------------------------------------------------------------
Total $ 22,375 $ 473,377 $ 83,006
===================================================
Net income per weighted-average limited partnership
unit (17,460 units) $ (3.78 ) $ 26.84 $ 4.71
===================================================
Cash distribution $ 48,063 $ 401,378 $ 474,176
===================================================
Cash distribution per weighted-average limited
partnership unit $ 2.73 $ 22.76 $ 26.89
===================================================
Special cash distribution $ 564,545 $ 450,000 $ 200,000
===================================================
Special cash distribution per weighted-average
limited partnership unit $ 32.01 $ 25.52 $ 11.34
===================================================
Total cash distributions $ 612,608 $ 851,378 $ 674,176
==================================================================================
Total cash distributions per weighted-average
limited partnership unit $ 34.74 $ 48.28 $ 38.23
===================================================
</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, 1997, 1996, and 1995
<TABLE>
<CAPTION>
Limited General Partner
Partners Total
-----------------------------------------------------
<S> <C> <C> <C>
Partners' capital (deficit) as of December 31, 1994 $ 1,717,622 $ (60,293) $ 1,657,329
Net income 82,176 830 83,006
Cash distributions (469,434) (4,742) (474,176 )
Special distributions (198,000) (2,000) (200,000 )
---------------------------------------------------------
Partners' capital (deficit) as of December 31, 1995 1,132,364 (66,205) 1,066,159
Net income 468,643 4,734 473,377
Cash distributions (397,364) (4,014) (401,378 )
Special distributions (445,500) (4,500) (450,000 )
---------------------------------------------------------
Partners' capital (deficit) as of December 31, 1996 758,143 (69,985) 688,158
Net income (loss) (66,032) 88,407 22,375
Cash distributions (47,582) (481) (48,063 )
Special distributions (558,900) (5,645) (564,545 )
Partners' capital as of December 31, 1997 $ 85,629 $ 12,296 $ 97,925
=========================================================
</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>
1997 1996 1995
------------------------------------------------
<S> <C> <C> <C>
Operating activities
Net income $ 22,375 $ 473,377 $ 83,006
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation 65,634 136,780 260,055
Net gain from disposition of equipment (135,655) (272,183) (113,206)
Equity in net income from unconsolidated
special-purpose entity -- (250,928) --
Changes in operating assets and liabilities:
Accounts receivable, net 26,770 53,948 (16,217)
Prepaid insurance 1,595 568 513
Due to affiliates -- -- (2,426)
Accounts payable 83 (62,932) 61,158
Lessee deposits -- (16,248) (136)
----------------------------------------------------
Net cash provided by (used in) operating activities (19,198) 62,382 272,747
----------------------------------------------------
Investing activities
Proceeds from disposition of equipment 246,720 443,499 265,627
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 246,720 916,555 260,732
----------------------------------------------------
Financing activities
Cash distributions paid to limited partners (606,482) (842,864) (667,434)
Cash distributions paid to General Partner (6,126) (8,514) (6,742)
----------------------------------------------------
Net cash used in financing activities (612,608) (851,378) (674,176)
----------------------------------------------------
Net increase (decrease) in cash and cash equivalents (385,086) 127,559 (140,697)
Cash and cash equivalents at beginning of year 478,922 351,363 492,060
----------------------------------------------------
Cash and cash equivalents at end of year $ 93,836 $ 478,922 $ 351,363
===================================================================================
Supplemental Information:
Sales proceeds included in accounts receivable $ 5,500 $ -- $ --
====================================================
</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, 1997
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 or PLM International) and manages the affairs
of the Partnership.
The net income (loss) and distributions of the Partnership are
generally 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.
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, 1997
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, 1997, 1996, or 1995.
Investments in Unconsolidated Special-Purpose Entity
The Partnership had an interest in an unconsolidated 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 1997, 1996, and 1995). The General Partner is generally
allocated a 1% share of the net income (loss) and the limited partners
are allocated a 99% share of the net income (loss). The General Partner
received a special allocation of income in the amount of $88,183 in
1997. The Partnership agreement provides for a special allocation to
occur near the dissolution of the Partnership. No special allocation
was received in 1996 or 1995.
Cash distributions are recorded when paid. Cash distributions to
investors in excess of net income are considered to represent a return
of capital. Cash and special distributions to limited partners of
$606,482, $374,221, and $585,258 in 1997, 1996, and 1995, 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
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IXB 1986 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
2. General Partner and Transactions with Affiliates (continued)
Partnership's "operating cash flow" or 1/12 of1/2% 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, 1997
and 1996.
The Partnership reimbursed FSI and its affiliates $12,853, $56,302, and
$96,118 for administrative and other services performed on behalf of
the Partnership in 1997, 1996, and 1995, respectively. The
Partnership's proportional share of USPE's administrative and other
services was $113 during 1996. No administrative and other service
expenses were paid by the Partnership's proportional share of USPE's in
1997.
As of December 31, 1997, all of the Partnership's trailer equipment had
been transferred into rental facilities operated by an affiliate of the
General Partner. Revenues 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
indirect expenses of the rental yard operations is charged to the
Partnership monthly.
3. Equipment
The components of owned equipment at December 31, 1997 and 1996 are as
follows:
<TABLE>
<CAPTION>
1997 1996
------------------------------------
<S> <C> <C>
Trailers and tractors $ 237,580 $ 1,636,282
Marine containers -- 325,115
----------------------------------------
237,580 1,961,397
Less accumulated depreciation (227,868) (1,769,486)
----------------------------------------
Net equipment $ 9,712 $ 191,911
========================================
</TABLE>
Revenues are earned by placing the equipment under operating leases
that 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 were leased to the operator of utilization-type pools
which included equipment owned by unaffiliated parties. In such
instances revenues received by the Partnership consisted 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 operating in PLM-affiliated short-term rental
facilities as of December 31, 1997. As of December 31, 1996, 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 .
During 1997, the Partnership sold or disposed of trailers and marine
containers. During 1996, the Partnership sold or disposed of trailers,
marine containers, and railcars.
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IXB 1986 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
3. Equipment (continued)
The leases are being accounted for as operating leases with
utilization-based rentals. Contingent rentals based upon utilization
amounted to $15,363 in 1997, $26,960 in 1996, and $34,915 in 1995.
The lessees accounting for 10% or more of the total revenues during
1997, 1996, or 1995 were Transamerica Leasing (36% in 1997 and 11% in
1996) and Skywest Airlines, Inc. (36% in 1995).
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. Gains or losses resulting from
foreign currency transactions are included in the results of operations
and are not material.
The Partnership leases its trailers to lessees domiciled in the United
States. The marine containers were leased to lessees in different
regions who operated the marine containers worldwide.
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.
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 Interest of Partnership
Total USPE
---------------------------------
Net Investments $ -- $ --
Revenues -- --
Net Income 501,852 250,928
In 1996, the Partnership liquidated its 50% interest in an entity which
owned 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, 1997
5. Subsequent Event
With the disposal of the majority of the equipment portfolio, the
Partnership's remaining assets were transferred into a liquidating
trust as of January 1, 1998. The sole Beneficiaries of the liquidating
trust are the limited partners and the General Partner. The Trustees,
as designated by the General Partner, are three officers of the General
Partner. The amounts reflected for assets and liabilities of the
Partnership have not been adjusted to reflect liquidation values. The
equipment portfolio that is actively being marketed for sale by the
Trustees continues to be carried at the lower of depreciated cost or
fair value less cost of disposal. Although the Trustees estimate that
there will be distributions to the Beneficiaries after final disposal
of assets and settlement of liabilities, the amounts cannot be
accurately determined prior to actual disposal of the equipment. Cash
receipts (including proceeds from the sale of assets) in excess of
expected obligations and reasonable reserves will be distributed to the
Beneficiaries in the liquidating trust from time to time, but not less
often than annually. Upon final liquidation, the liquidating trust will
be dissolved.
For tax purposes, the liquidating trust will continue be treated as a
partnership under Internal Revenue Regulation Section
301.7701-3(b)(1)(i). Partnership tax returns will be filed until all
the liquidating trust assets are distributed.
The Trustees have applied to the Securities and Exchange Commission
(SEC) to terminate the Trust's obligation to file Form 10-Q and Form
10-K. If approved by the SEC, the Trustees will discontinue all future
filings of these reports.
6. Special Distributions
The General Partner paid special distributions of $32.01, $25.52, and
$11.34 per weighted-average limited partnership unit during 1997, 1996,
and 1995, respectively.
7. 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, 1997, there were temporary differences of
approximately $1.0 million between the financial statement carrying
values of assets and liabilities and the federal income tax bases of
such assets and liabilities. The differences were principally due to
the differences in depreciation methods and the tax treatment of
underwriting commissions and syndication costs.
<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 more fully
described in note 5.
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, 1997 and 1996 and the results
of its operations and its cash flows for each of the years in the three-year
period ended December 31, 1997, in conformity with generally accepted accounting
principles.
/S/ KPMG PEAT MARWICK LLP
- ------------------------------------
SAN FRANCISCO, CALIFORNIA
March 24, 1998
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IXC 1986 INCOME FUND
(A Limited Partnership)
BALANCE SHEETS
December 31,
<TABLE>
<CAPTION>
1997 1996
------------------------------------
<S> <C> <C>
Assets
Equipment held for operating leases, at cost $ 1,527,504 $ 3,088,393
Less accumulated depreciation (1,449,772) (2,767,149)
-----------------------------------------
Net equipment 77,732 321,244
Cash and cash equivalents 104,309 264,450
Accounts receivable, net of allowance for doubtful accounts of
$8,393 in 1997 and $2,249 in 1996 59,608 66,079
Prepaid expenses and other assets 560 2,663
-----------------------------------------
Total assets $ 242,209 $ 654,436
=========================================
Liabilities and partners' capital
Liabilities:
Accounts payable $ 10,921 $ 14,382
Due to affiliates 3,523 3,523
Total liabilities 14,444 17,905
Partners' capital (deficit):
Limited partners (16,914 units) 214,549 704,628
General Partner 13,216 (68,097)
-----------------------------------------
Total partners' capital 227,765 636,531
-----------------------------------------
Total liabilities and partners' capital $ 242,209 $ 654,436
=========================================
</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>
1997 1996 1995
----------------------------------------------
<S> <C> <C> <C>
Revenues
Lease revenue $ 254,483 $ 362,703 $ 667,893
Interest and other income 8,529 14,560 18,666
Net gain on disposition of equipment 210,332 114,942 229,599
--------------------------------------------------
Total revenues 473,344 492,205 916,158
Expenses
Depreciation 126,227 200,808 278,415
Management fees to affiliate 42,273 43,160 45,353
Repairs and maintenance 67,156 110,949 149,046
Insurance expense 4,943 5,414 7,137
General and administrative expenses
to affiliates 67,777 96,914 163,169
Other general and administrative expenses 32,812 48,856 28,343
Provision for (recovery of) bad debts 16,690 (7,689) (14,846)
--------------------------------------------------
Total expenses 357,878 498,412 656,617
Equity in net income of unconsolidated
special-purpose entity -- 111,247 --
Net income $ 115,466 $ 105,040 $ 259,541
==================================================
Partners' share of net income
Limited partners $ 28,911 $ 103,990 $ 256,946
General Partner 86,555 1,050 2,595
---------------------------------------------------------------------------------
Total $ 115,466 $ 105,040 $ 259,541
==================================================
Net income per weighted-average limited partnership
unit (16,914 units) $ 1.71 $ 6.15 $ 15.19
==================================================
Cash distributions $ 57,017 $ 313,826 $ 406,966
==================================================
Cash distributions per weighted-average limited
partnership unit $ 3.34 $ 18.37 $ 23.82
==================================================
Special distributions $ 467,215 $ 300,000 $ 500,000
==================================================
Special distributions per weighted-average limited
partnership unit $ 27.35 $ 17.56 $ 29.27
==================================================
Total cash distributions
$ 524,232 $ 613,826 $ 906,966
=================================================================================
Total distributions per weighted-average limited
partnership unit $ 30.69 $ 35.93 $ 53.09
==================================================
</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, 1997, 1996, and 1995
<TABLE>
<CAPTION>
Limited General Partner
Partners Total
-----------------------------------------------------
<S> <C> <C> <C>
Partners' capital (deficit) as of December 31, 1994 $ 1,849,276 $ (56,534) $ 1,792,742
Net income 256,946 2,595 259,541
Cash distributions (402,896) (4,070) (406,966)
Special distributions (495,000) (5,000) (500,000)
----------------------------------------------------------
Partners' capital (deficit) as of December 31, 1995 1,208,326 (63,009) 1,145,317
Net income 103,990 1,050 105,040
Cash distributions (310,688) (3,138) (313,826)
Special distributions (297,000) (3,000) (300,000)
----------------------------------------------------------
Partners' capital (deficit) as of December 31, 1996 704,628 (68,097) 636,531
Net income 28,911 86,555 115,466
Cash distributions (56,447) (570) (57,017)
Special distributions (462,543) (4,672) (467,215)
Partners' capital as of December 31, 1997 $ 214,549 $ 13,216 $ 227,765
==========================================================
</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>
1997 1996 1995
------------------------------------------------
<S> <C> <C> <C>
Operating activities
Net income $ 115,466 $ 105,040 $ 259,541
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation 126,227 200,808 278,415
Net gain from disposition of equipment (210,332) (114,942) (229,599)
Equity in net income from unconsolidated
special-purpose entity -- (111,247) --
Changes in operating assets and liabilities:
Accounts receivable, net 17,471 38,638 (3,549)
Prepaid expenses and other assets 2,103 19,775 6,145
Due from affiliates -- -- 20,035
Accounts payable (3,461) 1,443 5,207
Due to affiliates -- -- 3,523
Lessee deposits and reserves -- (27,601) (21,457)
----------------------------------------------------
Net cash provided by operating activities 47,474 111,914 318,261
----------------------------------------------------
Investing activities
Proceeds from disposition of equipment 316,617 245,647 527,216
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)
----------------------------------------------------
Net cash provided by investing activities 316,617 517,858 524,979
Financing activities
Cash distributions paid to limited partners (518,990) (607,688) (897,896)
Cash distributions paid to General Partner (5,242) (6,138) (9,070)
----------------------------------------------------
Net cash used in financing activities (524,232) (613,826) (906,966)
Net increase (decrease) in cash and cash equivalents (160,141) 15,946 (63,726)
Cash and cash equivalents at beginning of year 264,450 248,504 312,230
----------------------------------------------------
Cash and cash equivalents at end of year $ 104,309 $ 264,450 $ 248,504
===================================================================================
Supplemental Information
Sales proceeds included in accounts receivable $ 11,000 $ -- $ --
====================================================
</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, 1997
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 or PLM International) and manages the affairs
of the Partnership.
The net income (loss) and distributions of the Partnership are
generally 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.
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, 1997
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, 1997, 1996, or 1995.
Investments in Unconsolidated Special-Purpose Entity
The Partnership had an interest in an unconsolidated 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 1997, 1996, and 1995). The General Partner is generally
allocated a 1% share of the net income (loss) and the limited partners
are allocated a 99% share of the net income (loss). The General Partner
received a special allocation of income in the amount of $85,400 in
1997. The Partnership agreement provides for a special allocation to
occur near the dissolution of the Partnership. No special allocation
was received in 1996 or 1995.
Cash distributions are recorded when paid. Cash distributions to
investors in excess of net income are considered to represent a return
of capital. Cash and special distributions to limited partners of
$490,079, $503,698, and $640,950 in 1997, 1996, and 1995, 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.
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IXC 1986 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
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, 1997 and 1996.
The Partnership reimbursed FSI and its affiliates $67,777, $96,914, and
$163,169 for administrative and other services performed on behalf of
the Partnership in 1997, 1996, and 1995, respectively. The
Partnership's proportional share of USPE's administrative and other
services was $1,468 during 1996. There were no administrative and other
service expenses paid by the Partnership's proportional share of
ownership in USPE in 1997.
As of December 31, 1997, all of the Partnership's trailer equipment had
been transferred into rental facilities operated by an affiliate of the
General Partner. Revenues 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
indirect expenses of the rental yard operations is charged to the
Partnership monthly.
3. Equipment
The components of owned equipment at December 31, 1997 and 1996 are as
follows:
<TABLE>
<CAPTION>
1997 1996
------------------------------------
<S> <C> <C>
Trailers and tractors $ 1,527,504 $ 2,973,770
Marine containers -- 114,623
----------------------------------------
1,527,504 3,088,393
Less accumulated depreciation (1,449,772) (2,767,149)
----------------------------------------
Net equipment $ 77,732 $ 321,244
========================================
</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 were leased to the operator of utilization-type pools which
included equipment owned by unaffiliated parties. In such instances
revenues received by the Partnership consisted 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, 1997 and 1996.
During 1997, the Partnership sold or disposed of trailers and marine
containers. During 1996, the Partnership sold or disposed of trailers,
railcars, and a marine container.
All leases are being accounted for as operating leases with
utilization-based rentals. Contingent rentals based upon utilization
amounted to $3,248 in 1997, $5,579 in 1996, and $11,507 in 1995.
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IXC 1986 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
3. Equipment (continued)
There were no lessees who accounted for 10% or more of total revenues
during 1997, 1996, or 1995.
The Partnership owned certain equipment which was leased and operated
internationally. A limited number of the Partnership's transactions
were denominated in a foreign currency. Gains or losses resulting from
foreign currency transactions are included in the results of operations
and are not material.
The Partnership leases its trailers to lessees domiciled in United
States as of December 31, 1997. The marine containers were leased to
lessees in different regions who operated 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, 1997, 1996,
and 1995:
<TABLE>
<CAPTION>
Investments in
Unconsolidated Special- Owned Total
Equipment
Purpose Entity Equipment
Region: 1997 1996 1997 1996 1995
--------------------------- --------------------------- ---------------
<S> <C> <C> <C> <C> <C>
Lease revenue:
Rest of the world $ -- $ -- $ 3,248 $ 5,579 $ 11,507
United States -- -- 251,235 357,124 587,986
Australia -- 11,400 -- -- 68,400
---------------------------------------------------------------------------------
Total revenues $ -- $ 11,400 $ 254,483 $ 362,703 $ 667,893
=================================================================================
</TABLE>
The following table sets forth identifiable income (loss) information
by region:
<TABLE>
<CAPTION>
Investments in
Unconsolidated Special- Owned Total
Equipment
Purpose Entity Equipment
Region: 1997 1996 1997 1996 1995
--------------------------- ----------------------------- ---------------
<S> <C> <C> <C> <C> <C>
Net Income:
Rest of the world $ -- $ -- $ 5,961 $ 578 $ 2,628
United States -- -- 178,785 84,619 293,972
Australia -- 111,247 -- -- 11,683
---------------------------------------------------------------------------------
Total identifiable
net income
-- 111,247 184,746 85,197 308,283
Administrative and
other net loss
-- -- (69,280) (91,404) (48,742 )
---------------------------------------------------------------------------------
Total net income $ -- $ 111,247 $ 115,466 $ (6,207) $ 259,541
=================================================================================
</TABLE>
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IXC 1986 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
3. Equipment (continued)
The net book value of these assets at December 31, 1997, 1996, and 1995
are as follows:
<TABLE>
<CAPTION>
Investments in
unconsolidated special
purpose entity Owned Equipment
Region 1997 1996 1995 1997 1996 1995
---------------------------------------- -----------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Rest of the world $ -- $ -- $ -- $ -- $ 12,262 $ 22,393
United States -- -- -- 77,732 308,982 630,364
Australia -- -- 133,363 -- -- --
------------------------------------------------------------------------------------------
Total equipment $ -- $ -- $ 133,363 $ 77,732 $ 321,244 $ 652,757
==========================================================================================
</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.
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:
<TABLE>
<CAPTION>
Net Interest of Partnership
Total USPE
---------------------------------
<S> <C> <C>
Net Investments $ -- $ --
Revenues 38,000 11,400
Net Income 370,827 111,247
</TABLE>
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IXC 1986 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
4. Investment in Unconsolidated Special-purpose Entity (continued)
In 1996, the Partnership liquidated its 30% interest in an entity which
owned a commuter aircraft. The Partnership received liquidating
distributions from the sale during the second quarter of 1996.
5. Subsequent Event
With the disposal of the majority of the equipment portfolio, the
Partnership's remaining assets were transferred into a liquidating
trust as of January 1, 1998. The sole Beneficiaries of the liquidating
trust are the limited partners and the General Partner. The Trustees,
as designated by the General Partner, are three officers of the General
Partner. The amounts reflected for assets and liabilities of the
Partnership have not been adjusted to reflect liquidation values. The
equipment portfolio that is actively being marketed for sale by the
Trustees continues to be carried at the lower of depreciated cost or
fair value less cost of disposal. Although the Trustees estimate that
there will be distributions to the Beneficiaries after final disposal
of assets and settlement of liabilities, the amounts cannot be
accurately determined prior to actual disposal of the equipment. Cash
receipts (including proceeds from the sale of assets) in excess of
expected obligations and reasonable reserves will be distributed to the
Beneficiaries in the liquidating trust from time to time, but not less
often than annually. Upon final liquidation, the liquidating trust will
be dissolved.
For tax purposes, the liquidating trust will continue be treated as a
partnership under Internal Revenue Regulation Section
301.7701-3(b)(1)(i). Partnership tax returns will be filed until all
the liquidating trust assets are distributed.
The Trustees have applied to the Securities and Exchange Commission
(SEC) to terminate the Trust's obligation to file Form 10-Q and Form
10-K. If approved by the SEC, the Trustees will discontinue all future
filings of these reports.
6. Special Distributions
The General Partner paid special distributions of $27.35, $17.56, and
$29.27 per weighted-average limited partnership unit during 1997, 1996,
and 1995, respectively.
7. 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, 1997, there were temporary differences of
approximately $0.9 million between the financial statement carrying
values of assets and liabilities and the federal income tax bases of
such assets and liabilities. The differences were principally due to
the differences in depreciation methods and the tax treatment of
underwriting commissions and syndication costs.
<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 more fully
described in note 5.
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, 1997 and 1996 and the results
of its operations and its cash flows for each of the years in the three-year
period ended December 31, 1997 in conformity with generally accepted accounting
principles.
/s/ KPMG PEAT MARWICK LLP
- ----------------------------------
SAN FRANCISCO, CALIFORNIA
March 24, 1998
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IXD 1986 INCOME FUND
(A Limited Partnership)
BALANCE SHEETS
December 31,
<TABLE>
<CAPTION>
1997 1996
------------------------------------
<S> <C> <C>
Assets
Equipment held for operating leases, at cost $ 609,053 $ 1,463,355
Less accumulated depreciation (568,582) (1,280,566)
-----------------------------------------
Net equipment 40,471 182,789
Cash and cash equivalents 125,940 77,140
Accounts receivable, net of allowance for doubtful accounts
of $32,220 in 1997 and $29,601 in 1996 39,740 15,839
Prepaid insurance and other assets 1,413 2,293
-----------------------------------------
Total assets $ 207,564 $ 278,061
=========================================
Liabilities and partners' capital
Liabilities:
Accounts payable $ 17,342 $ 9,477
Due to affiliates 1,985 1,985
Total liabilities 19,327 11,462
Partners' capital (deficit):
Limited partners (9,529 units) 180,054 305,760
General Partner 8,183 (39,161)
-----------------------------------------
Total partners' capital 188,237 266,599
-----------------------------------------
Total liabilities and partners' capital $ 207,564 $ 278,061
=========================================
</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>
1997 1996 1995
---------------------------------------------
<S> <C> <C> <C>
Revenues
Lease revenue $ 83,743 $ 151,115 $ 267,141
Interest and other income 5,482 6,506 23,986
Net gain on disposition of equipment 189,003 44,879 83,235
--------------------------------------------------
Total revenues 278,228 202,500 374,362
Expenses
Depreciation 61,834 90,577 110,170
Management fees to affiliate 23,822 23,822 24,250
Repairs and maintenance 16,487 29,462 51,729
Insurance expense 2,237 1,535 3,176
General and administrative expenses to affiliates 14,528 39,802 68,871
Other general and administrative expenses 24,011 38,999 41,238
Provision for (recovery of) bad debts 2,620 (5,026) 28,877
--------------------------------------------------
Total expenses 145,539 219,171 328,311
--------------------------------------------------
Net income (loss) $ 132,689 $ (16,671) $ 46,051
==================================================
Partners' share of net income (loss)
Limited partners $ 83,235 $ (16,504) $ 45,590
General Partner 49,454 (167) 461
---------------------------------------------------------------------------------
Total $ 132,689 $ (16,671) $ 46,051
==================================================
Net income (loss) per weighted-average limited
partnership unit (9,529 units) $ 8.73 $ (1.73) $ 4.78
==================================================
Cash distributions $ 18,549 $ 134,086 $ 263,727
==================================================
Cash distributions per weighted-average limited
partnership unit $ 1.93 $ 13.93 $ 27.40
==================================================
Special distributions $ 192,502 $ 150,000 $ 600,000
==================================================
Special distributions per weighted-average limited
partnership unit $ 20.00 $ 15.58 $ 62.34
==================================================
Total cash distributions $ 211,051 $ 284,086 $ 863,727
=================================================================================
Total distributions per weighted-average limited
partnership unit $ 21.93 $ 29.51 $ 89.74
==================================================
</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, 1997, 1996, and 1995
<TABLE>
<CAPTION>
Limited General Partner
Partners Total
-----------------------------------------------------
<S> <C> <C> <C>
Partners' capital (deficit) as of December 31, 1994 $ 1,413,009 $ (27,977 ) $ 1,385,032
Net income 45,590 461 46,051
Cash distributions (261,090) (2,637 ) (263,727)
Special distributions (594,000) (6,000 ) (600,000)
----------------------------------------------------------
Partners' capital (deficit) as of December 31, 1995 603,509 (36,153 ) 567,356
Net loss (16,504) (167 ) (16,671)
Cash distributions (132,745) (1,341 ) (134,086)
Special distributions (148,500) (1,500 ) (150,000)
----------------------------------------------------------
Partners' capital (deficit) as of December 31, 1996 305,760 (39,161 ) 266,599
Net income 83,235 49,454 132,689
Cash distributions (18,364) (185 ) (18,549)
Special distributions (190,577) (1,925 ) (192,502)
Partners' capital at December 31, 1997 $ 180,054 $ 8,183 $ 188,237
==========================================================
</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>
1997 1996 1995
------------------------------------------------
<S> <C> <C> <C>
Operating activities
Net (loss) income $ 132,689 $ (16,671) $ 46,051
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation 61,834 90,577 110,170
Net gain on disposition of equipment (189,003) (44,879) (83,235)
Changes in operating assets and liabilities:
Accounts receivable, net 3,979 32,884 67,365
Due from affiliates -- 7,639 (5,895)
Prepaid insurance and other assets 880 14,256 21,119
Accounts payable 7,865 1,139 3,278
Due to affiliates -- 1,985 --
-----------------------------------------------------------------------------------
Net cash provided by operating activities 18,244 86,930 158,853
Investing activities
Proceeds from disposition of equipment 241,607 82,456 371,932
----------------------------------------------------
Net cash provided by investing activities 241,607 82,456 371,932
Financing activities
Cash distributions paid to limited partners (208,941) (281,245) (855,090)
Cash distributions paid to General Partner (2,110) (2,841) (8,637)
----------------------------------------------------
Net cash used in financing activities (211,051) (284,086) (863,727)
Net increase (decrease) in cash and cash equivalents 48,800 (114,700) (332,942)
Cash and cash equivalents at beginning of year 77,140 191,840 524,782
----------------------------------------------------
Cash and cash equivalents at end of year $ 125,940 $ 77,140 $ 191,840
===================================================================================
Supplemental Information
Sales proceeds included in accounts receivable $ 27,880 $ -- $ --
====================================================
</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, 1997
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 engages 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 or PLM International) and manages the affairs
of the Partnership.
The net income (loss) and distributions of the Partnership are
generally 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, manages pools of
transportation equipment under agreements with these programs, and is a
General Partner of other Limited partnerships.
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, 1997
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, 1997, 1996, or 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 1997, 1996 and 1995). The General Partner is generally
allocated a 1% share of the net income (loss) and the limited partners
are allocated a 99% share of the net income (loss). The General Partner
received a special allocation of income in the amount of $48,127 in
1997. The Partnership agreement provides for a special allocation to
occur near the dissolution of the Partnership. No special allocation
was received in 1996 or 1995.
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 $125,706,
$281,245, and $809,500 in 1997, 1996, and 1995, 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
$1,985 were payable to IMI as of December 31, 1997 and 1996.
The Partnership reimbursed FSI and its affiliates $14,528, $39,802,
$68,871 for administrative and other services performed on behalf of
the Partnership in 1997, 1996, and 1995, respectively.
As of December 31, 1997, all of the Partnership's trailer equipment had
been transferred into rental facilities operated by an affiliate of the
General Partner. Revenues 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
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IXD 1986 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
2. General Partner and Transactions with Affiliates (continued)
the Partnership. An allocation of indirect expenses of the rental yard
operations is charged to the Partnership monthly.
3. Equipment
The components of equipment at December 31, 1997 and 1996 are as
follows:
<TABLE>
<CAPTION>
1997 1996
------------------------------------
<S> <C> <C>
Trailers $ 609,053 $ 1,207,934
Marine containers -- 255,421
----------------------------------------
609,053 1,463,355
Less accumulated depreciation (568,582) (1,280,566)
----------------------------------------
Net equipment $ 40,471 $ 182,789
========================================
</TABLE>
Revenues are earned by placing the equipment under operating leases
that are billed monthly or quarterly. The Partnership's marine
containers were leased to the operator of utilization-type pools which
included equipment owned by unaffiliated parties. In such instances
revenues received by the Partnership consisted 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, 1997 and 1996. During
1997, the Partnership sold or disposed of marine containers and
trailers with aggregate net book value of $80,484 for proceeds of
$269,487. During 1996, the Partnership sold or disposed of marine
containers and trailers with aggregate net book value of $37,577 for
proceeds of $82,456.
The leases are being accounted for as operating leases with
utilization-based rentals. Contingent rentals based upon utilization
amounted to $36,908 in 1997, $50,335 in 1996, and $78,612 in 1995.
The only lessee accounting for 10% or more of the total revenues during
1997, 1996, or 1995 was Transamerica Leasing (44% in 1997, 33% in 1996,
and 16% in 1995).
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, 1997, there were temporary differences of
approximately $0.6 million between the financial statement carrying
values of assets and liabilities and the federal income tax bases of
such assets and liabilities. The differences were principally due to
the differences in depreciation methods and the tax treatment of
underwriting commissions and syndication costs.
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS IXD 1986 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
5. Subsequent Event
With the disposal of the majority of the equipment portfolio, the
Partnership's remaining assets were transferred into a liquidating
trust as of January 1, 1998. The sole Beneficiaries of the liquidating
trust are the limited partners and the General Partner. The Trustees,
as designated by the General Partner, are three officers of the General
Partner. The amounts reflected for assets and liabilities of the
Partnership have not been adjusted to reflect liquidation values. The
equipment portfolio that is actively being marketed for sale by the
Trustees continues to be carried at the lower of depreciated cost or
fair value less cost of disposal. Although the Trustees estimate that
there will be distributions to the Beneficiaries after final disposal
of assets and settlement of liabilities, the amounts cannot be
accurately determined prior to actual disposal of the equipment. Cash
receipts (including proceeds from the sale of assets) in excess of
expected obligations and reasonable reserves will be distributed to the
Beneficiaries in the liquidating trust from time to time, but not less
often than annually. Upon final liquidation, the liquidating trust will
be dissolved.
For tax purposes, the liquidating trust will continue be treated as a
partnership under Internal Revenue Regulation Section
301.7701-3(b)(1)(i). Partnership tax returns will be filed until all
the liquidating trust assets are distributed.
The Trustees have applied to the Securities and Exchange Commission
(SEC) to terminate the Trust's obligation to file Form 10-Q and Form
10-K. If approved by the SEC, the Trustees will discontinue all future
filings of these reports.
6. Special Distributions
The General Partner paid special distributions of $20.00, $15.58, and
$62.34 per weighted-average limited partnership unit during 1997, 1996, and
1995, respectively.
<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 75-86
- --------
* Incorporated by reference. See page 27 of this report.
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned does hereby constitute and appoint Robert N.
Tidball, Susan Santo, J. Michael Allgood and Richard Brock, 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 IXD 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 IXD 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,
1998 and shall apply only to the annual reports and any amendments thereto filed
with respect to the fiscal year ended December 31, 1997.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this
13th day of February, 1998.
/s/ Stephen M. Bess
- -----------------------------------
Stephen M. Bess
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned does hereby constitute and appoint Robert N.
Tidball, Susan Santo, J. Michael Allgood and Richard Brock, 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 IXD 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 IXD 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,
1998 and shall apply only to the annual reports and any amendments thereto filed
with respect to the fiscal year ended December 31, 1997.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this
17th day of February, 1998.
/s/ Robert N. Tidball
- -----------------------------------
Robert N. Tidball
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned does hereby constitute and appoint Robert N.
Tidball, Susan Santo, J. Michael Allgood and Richard Brock, 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 IXD 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 IXD 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,
1998 and shall apply only to the annual reports and any amendments thereto filed
with respect to the fiscal year ended December 31, 1997.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this
12th day of February, 1998.
/s/ Douglas P. Goodrich
- -----------------------------------
Douglas P. Goodrich
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 125,940
<SECURITIES> 0
<RECEIVABLES> 71,960
<ALLOWANCES> (32,220)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 609,053
<DEPRECIATION> (568,582)
<TOTAL-ASSETS> 207,564
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 188,237
<TOTAL-LIABILITY-AND-EQUITY> 207,564
<SALES> 0
<TOTAL-REVENUES> 278,228
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 145,539
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 132,689
<INCOME-TAX> 0
<INCOME-CONTINUING> 132,689
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 132,689
<EPS-PRIMARY> 8.73
<EPS-DILUTED> 8.73
</TABLE>
