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, 1994.
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to
Commission file number 0-15436
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PLM EQUIPMENT GROWTH FUND
(Exact name of registrant as specified in its charter)
California 94-2998816
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Market, Steuart Street Tower
Suite 900, 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 ______
Indicate the number of units outstanding of each of the issuer's
classes of partnership units, as of the latest practicable date:
Class Outstanding at March 28, 1995
Limited Partnership Depositary Units 5,838,597
General Partnership Units: 1
An index of exhibits filed with this form 10-K is located at page 50.
Total number of pages: 53
<PAGE>
PART I
ITEM 1. BUSINESS
(A) Background
On January 28, 1986, PLM Financial Services, Inc. ("FSI" or the "General
Partner"), a wholly-owned subsidiary of PLM International, Inc. ("PLM
International"), filed a Registration Statement on Form S-1 with the Securities
and Exchange Commission with respect to a proposed offering of 6,000,000 limited
partnership units (the "Units") in PLM Equipment Growth Fund, a California
limited partnership (the "Partnership", the "Registrant" or "EGF"). The
Partnership's offering became effective on May 20, 1986. FSI, as general
partner, owns a 1% interest in the Partnership. The Partnership engages in the
business of owning and leasing transportation equipment to various commodity
shippers and transportation companies.
The Partnership was formed to engage in the business of owning and
managing a diversified pool of used and new transportation-related equipment and
certain other items of equipment. The Partnership's primary objectives are:
(i) to acquire, until the conclusion of the reinvestment phase which ended
during the third quarter of 1994, a diversified portfolio of long lived, low
obsolescence, high residual value equipment with the net proceeds of the initial
partnership offering, supplemented by debt financing if deemed appropriate by
the General Partner. The General Partner places the equipment on lease or under
other contractual agreements with credit worthy lessees and operators of
equipment;
(ii) to generate sufficient net operating cash flow from lease operations
to meet liquidity requirements and to generate cash distributions to the Limited
Partners until such time as the General Partner commences the orderly
liquidation of the Partnership assets or unless the Partnership is terminated
earlier upon sale of all Partnership property or by certain other events;
(iii) to selectively sell and purchase other equipment to add to the
Partnership's initial equipment portfolio. The General Partner intends to sell
equipment when it believes that, due to market conditions, market prices for
equipment exceed inherent equipment values or expected future benefits from
continual ownership of a particular asset will not equal or exceed other
equipment investment opportunities. Proceeds from these sales, together with
excess net operating cash flow from operations that remains after cash
distributions have been made to the Limited Partners, were used to acquire
additional equipment throughout the seven year reinvestment phase;
(iv) to preserve and protect the value of the portfolio through quality
management, maintaining diversity, and constantly monitoring equipment markets.
The offering of the Units of the Partnership closed on May 19, 1987. On June 1,
1989, the Units of the Partnership began trading on the American Stock Exchange.
Thereupon, each Unitholder received a depositary receipt representing ownership
of the number of Units owned by such Unitholder. As of December 31, 1994, there
were 5,848,197 depositary units ("Depositary Units") outstanding. The General
Partner contributed $100 for its 1% general partner interest in the Partnership.
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It is anticipated that in the eleventh year of operations of the
Partnership, the General Partner will begin to liquidate the assets of the
Partnership in an orderly fashion, unless the Partnership is terminated earlier
upon sale of all of the Partnership's equipment or by certain other events.
During the third quarter of 1994, the reinvestment phase concluded; therefore,
cash flow and surplus funds, if any, may not be reinvested but are to be used
for the repayment of outstanding debt, or for distributions to Partners, except
to the extent used to maintain reasonable reserves.
(This space intentionally left blank.)
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Table 1, below, lists the equipment and the cost of the equipment in the
Partnership portfolio at December 31, 1994 (in thousands of dollars):
TABLE 1
<TABLE>
<CAPTION>
Units Type Manufacturer Cost
----- ---- ------------ ----
<S> <C> <C> <C>
0.50 Bulk carrier Kochi Jyuko $ 4,725 1
0.50 Product tanker Kaldnes M/V 8,277 1
7 Off-shore supply vessels Various 9,262
0.50 DC-9 commercial aircraft McDonnell Douglas 4,699 1
1 727 commercial aircraft Boeing 6,221
0.50 Commuter aircraft Saab 2,400 1
0.70 Metro III commuter aircraft Fairchild 2,131 2
0.50 Metro III commuter aircraft Fairchild 1,492 1
0.50 Aircraft engine CFM 56 General Electric 1,639 1
0.50 737 commercial aircraft Boeing 8,084 1
.12 767 commercial aircraft Boeing 4,905 3
1.0 Aircraft engine General Electric 2,750
903 Tank railcars Various 22,449
10 Twin stack railcars Gunderson, Inc. 1,426
22 Locomotives Gen. Elec. Motor Corp. 2,166
2,055 Various marine containers Various 3,754
456 Refrigerated marine containers Various 6,065
69 Dry storage trailers Various 413
225 Dry trailers Various 2,007
160 Dry piggyback trailers Various 2,240
177 Refrigerated trailers Various 5,262
0.55 Mobile offshore drilling unit Ingalls Ship Building 15,544 4
4 Cartage trailers Various 24
71 Piggyback refrigerated trailers Various 1,188
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Total equipment $119,123 5
========
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1 Jointly owned: EGF (50%) and an affiliated partnership.
2 Jointly owned: EGF (70%) and an affiliated partnership.
3 Jointly owned: EGF (12%) and two affiliated partnerships.
4 Jointly owned: EGF (55%) and an affiliated partnership.
5 Includes proceeds from capital contributions, operations and Partnership
borrowings invested in equipment. Includes costs capitalized, subsequent
to the date of acquisitions, and equipment acquisition fees paid to PLM
Transportation Equipment Corporation, a wholly-owned subsidiary of FSI.
All Equipment was used equipment at the time of purchase, except for one
Fairchild Metro III aircraft.
</TABLE>
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The equipment is generally leased under operating leases with terms of one
to six years. Some of the Partnership's marine vessels and marine containers are
leased to operators of utilization-type pools with equipment owned by
unaffiliated parties. In such instances, revenues received by the Partnership
consist of a specified percentage of revenues generated by leasing the pooled
equipment to sublessees, after deducting certain direct operating expenses of
the pooled equipment.
At December 31, 1994, approximately 99% of the Partnership's trailer
equipment operated in rental yards owned and maintained by PLM Rental, Inc., the
short-term trailer rental subsidiary of PLM International. Revenues collected
under short-term rental agreements with the rental yards' customers are
distributed monthly to the owners of the related equipment. Direct expenses
associated with the equipment and an allocation of other direct expenses of the
rental yard operations are billed to the Partnership.
The lessees of the equipment include, but are not limited to: Trans Ocean
Ltd., Petro Canada, Skywest Aviation Inc., and British Midlands Airways. As of
December 31, 1994, all of the equipment was either operating in short-term
rental facilities, on lease, or under other contractual agreements, except 96
marine containers.
(B) Management of Partnership Equipment
The Partnership has entered into an equipment management agreement with PLM
Investment Management, Inc. ("IMI"), a wholly-owned subsidiary of FSI, for the
management of the equipment. IMI has agreed to perform all services necessary to
manage the transportation equipment on behalf of the Partnership and to perform
or contract for the performance of all obligations of the lessor under the
Partnership's leases. In consideration for its services and pursuant to the
Partnership Agreement, IMI is entitled to a monthly management fee (refer to
Notes 1 and 2 to the Financial Statements).
(C) Competition
(1) Operating Leases vs. Full Payout Leases
Generally, the equipment owned by the Partnership is primarily leased out on an
operating lease basis wherein the rents owed during the initial noncancelable
term of the lease are insufficient to recover the Partnership's purchase price
of the equipment. The short-to mid-term nature of operating leases generally
commands a higher rental rate than the longer term, full payout leases and
offers lessees relative flexibility in their equipment commitment. In addition,
the rental obligation under an operating lease need not be capitalized on the
lessee's balance sheet.
The Partnership encounters 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 monthly rates than the Partnership offers. While some
lessees prefer the flexibility offered by a shorter term operating lease, other
lessees prefer the rate advantages possible with a full payout lease.
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Competitors of the Partnership 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 Partnership may be at a
competitive disadvantage.
(2) Manufacturers and Equipment Lessors
The Partnership also competes with equipment manufacturers who offer operating
leases and full payout leases. Manufacturers may provide ancillary services
which the Partnership cannot offer, such as specialized maintenance service
(including possible substitution of equipment), training, warranty services, and
trade-in privileges.
The Partnership competes with many equipment lessors, including ACF
Industries, Inc. (Shippers Car Line Division), American Finance Group, General
Electric Railcar Services Corporation, Greenbrier Leasing Company, Polaris
Aircraft Leasing Corp., GPA Group Plc., and other limited partnerships which
lease the same types of equipment.
(D) Demand
The Partnership invests in transportation-related capital equipment and in
"relocatable environments," examples of which include mobile offshore drilling
units, storage units, and relocatable buildings. A general distinction can be
drawn between equipment used for the transport of either materials and
commodities or people. With the exception of aircraft leased to passenger air
carriers, the Partnership's equipment is used primarily for the transport of
materials. "Relocatable environments" refer to capital equipment constructed to
be self-contained in function but transportable.
The following describes the markets for the Partnership's equipment:
(1) Aircraft
The world air transport industry is poised for recovery from losses experienced
during the first few years of the 1990s. The losses incurred by air carriers
during the early 1990s were primarily attributable to the general worldwide
recession. Over the last two years, the U.S. domestic economy has emerged from
recession and is expected to continue to grow during 1995, although at a more
moderate pace than the previous year. Analysts expect the economies of other
regions of the world to follow the U.S. economic lead and stabilize or show
gradual growth in 1995.
Many air industry observers anticipate, however, that any recovery in the
air transport industry will lag the current general economic rebound. The
effects of fundamental restructuring by air carriers in recent years are just
beginning to be manifested as improved performance. Substantial deliveries of
new aircraft in the U.S. market are not expected before 1996 to 1997, when
current orders for new aircraft mature and are subsequently filled. Demand for
aircraft in Europe, Asia, and the Middle East, with the exception of the Indian
Subcontinent, is expected to remain weak. Carriers in these markets are still
focusing on cost
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cutting and restructuring, and continue to experience a general decline in
profitability.
Latin American, Eastern European, and African markets are not expected to
grow substantially due to political and economic instability in these regions.
Most notably, the ongoing turmoil and uncertainty in the Mexican economy, the
dominant participant in the Latin American market, will impede growth in demand
for air transport capacity in this region.
The Partnership owns predominantly aircraft that are affected by FAA
regulatory requirements. However, the bulk of this equipment is on long-term
leases in foreign markets and has been commanding lease rates higher than those
available in the U.S. Those aircraft operating in the U.S. that are affected by
the FAA regulatory requirements will either be moved into foreign markets, as
applicable, or remain on lease in the U.S. maximizing what economic value is
attainable until they must be retired from service.
(2) Aircraft Engines
Airlines generally maintain an inventory of spare engines. This allows airlines
to remove engines from aircraft for maintenance service and overhaul, and
replace the engine undergoing repair with a spare engine from inventory. The
aircraft then returns to service with minimal downtime.
The Partnerships own Stage III engines. Stage III engines meet the most
stringent regulatory operating requirements and thus are not subject to current
regulatory obsolescence. The Partnership's engines can be placed on Airbus 300's
and Boeing 737's (manufacturers engine designation CFM 56-3 B series and C
series) and the McDonnell Douglas DC-10-30 (manufacturers engine designation
CF6- 50C2).
Demand for engines that can be placed in service on the A300 and Boeing
737 should remain relatively strong as these airplanes represent the most
widespread type of aircraft in the world's air fleet. In contrast, the supply of
spare DC- 10-30 engines is greater than the current demand. This is the result
of the diminishing demand for and retirement of DC-10-30 aircraft. This
diminishing demand is expected to persist into the near future.
(3) Marine Containers
In the second-half of 1994, marine cargo container utilization rates firmed for
the first time in a year and a half. This stabilization resulted from a further
consolidation within the container leasing industry, pick-up in world-wide
demand, and more moderate new equipment orders by the leasing and shipping
communities.
The major event of the year was the consolidation of the second and third
largest container lessors. This combination effectively created a counter-weight
to the largest lessor's dominating position in the market with number one and
number two now controlling 32% and 22% market shares, respectively. The leasing
community generally considered this combination good for the industry as the
high
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costs per TEU paid in this combination was expected to lead to rate stability
and restrained purchase programs.
Simultaneously, as the world's major economies rebounded from 1993
doldrums, increased demand in 1994 for containers reduced the 1993 year-end
over-supply. Utilization rates improved in the second half of the year for both
dry and refrigerated containers, although the positive effects have not yet
materially affected per-diem rates. Industry forecasts are for a continued
strengthening of the container markets in 1995, with per-diem rates rising
somewhat after falling 8% - 12% over the last 24 months. The major on going
effect of the 1993 and early 1994 container leasing market recession has been
the greater attention placed on selling of older equipment into secondary
markets. The Partnership owns predominately older containers, and will continue
to be impacted by this industry trend of selling older equipment.
The manufacturing industry continues to migrate to lower cost and export-
oriented areas. As happened with Japan in the mid-1980's, the strong currency
and appreciating local wages decreased the formerly dominant Korean
manufacturer's price competitiveness. As a result, Chinese production surged
making China the dominant dry container export country in the world.
Nevertheless, lessors and shipping lines reduced their overall production orders
somewhat from 1993 levels as their focus became better utilization of existing
fleet resources.
(4) Railcars
The railroad industry produced strong financial results in 1994, following a
similar year in 1993. The continuing strong results produced by the industry are
attributable to the ongoing growth of the U.S. domestic economy, improved
operational efficiency, and a stable rail fleet size.
Railroad performance generally parallels that of the U.S. economy, which
grew at an approximate 3.5% to 4% rate in 1994. Rail transport is the primary
overland mover of bulk materials, and thus reflects the demand for goods and raw
materials in the economy as a whole. Overall, 1994 car loadings increased by
approximately 5% over 1993 levels, with particularly significant increases in
the movement of chemicals, coal, lumber, and machinery.
The rail industry is also transforming itself to improve operational
efficiency. This has been manifested in reduced turn-around times between loads
and a reduction in unloaded miles traveled, both of which are necessary to
maximize available rail capacity.
Finally, the domestic supply of railcars available for service during the
year has remained relatively stable. The excess of new railcar deliveries over
older railcar retirements is expected to increase the entire fleet by less than
1%. To produce the total new car additions of approximately 51,000 per year,
manufacturers are already operating at capacity. With no additional
manufacturing capacity to radically increase the size of the fleet, and with
continuing growth of the domestic economy leading to sustained demand for rail
transport, 1995 railroad performance should continue to be strong.
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(5) Marine Vessels
PLM International sponsored partnerships own primarily small to medium-sized dry
bulk vessels. Market conditions for these vessels in 1994 remained relatively
unchanged from 1993. Vessel supply and demand conditions remained in relative
equilibrium, as underlying demand for transport of dry bulk materials remained
substantially unchanged, and day rates remained relatively static.
The implementation and enforcement of COFR (Certificate of Financial
Responsibility) provisions by the U.S. Coast Guard in 1995 appeared to
contribute to the upturn in day and spot rates experienced by tanker vessels
during the latter part of 1994. COFR requires petroleum product carrying ship
owners and operators to provide evidence of sufficient financial resources to
pay for any damages in the event of an oil spill or vessel accident while
trading in U.S. waters. Generally, tanker vessel operators, anticipating the
effects of COFR in 1995, accelerated delivery of petroleum products during the
latter part of 1994, resulting in the increased demand and subsequent increases
in day rates experienced in this market.
The General Partner operates many of the Partnerships' vessels in spot
charters and pooled vessel operations. In contrast to longer term fixed-rate
time and bareboat charters, spot charters and pooled operations provide the
greatest flexibility to meet fluctuating demand conditions and achieve the
highest average return for vessels subject to these types of operations during
this time period. Despite the day rate upturn experienced in the tanker market
during the latter part of 1994, supply and demand conditions for the majority of
the Partnerships' vessels are expected to remain relatively stable. While a
significant portion of the world's bulk and tanker fleets are nearing retirement
age, new building in 1995 is expected to mitigate any fundamental change in the
supply and demand equilibrium in the vessel markets.
(6) Mobile Offshore Drilling Units
Worldwide demand for offshore drilling services in 1994 was essentially equal to
1993; however, the geographic requirement for such services changed
significantly from previous years. International demand for mobile offshore
drilling units ("rigs") declined to a five-year low, while that for the U.S.
Gulf of Mexico reached a four-year high. Strong natural gas demand in the United
States and weak oil prices in late 1993 and early 1994 are the recognized causes
of these market shifts. Composite worldwide rig utilization was approximately
79%, 3% lower than 1993.
The worldwide fleet shrank in 1994 as three rigs were retired while no
rigs were added or ordered to be built. The most important trend in the market
was the continued consolidation of the ranks of drilling contractors as two
major mergers occurred in 1994. The mergers were of sufficient size to have the
discernible effect of stabilizing prices for offshore drilling services in a
year of low utilization.
Increasing oil prices seen in the latter half of 1994, and the need to
replenish natural gas reserves in the Gulf of Mexico, are expected to strengthen
the offshore drilling market in 1995. Additionally, industry projections show
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strong increases in the drilling requirements throughout the Middle East and
Southeast Asia. Improvements in these markets, coupled with the stable demand in
the Gulf of Mexico, should lead to higher rates for drilling services in the
near future and, ultimately, higher residual values for rigs.
(7) Trailers
Both the over-the-road and intermodal trucking industries produced strong
financial results in 1994, continuing a series of improving financial results
which began in 1991-1992. These results are attributable to the ongoing growth
of the U.S. domestic economy, a focus in the trailer industry on cost
efficiencies, and rate stability due to a shortage of trailers.
Over-the-road and intermodal trailer performance generally parallels that
of the U.S. domestic economy. Similar to railroads, trailer transport is a
primary overland mover of bulk materials and finished goods and thus reflects
demand for these products in current economic conditions. Overall increases in
trailer results reflect the approximate 3.5% to 4% growth of the U.S. economy in
1994.
While 1994 was a record year for new trailer production, the backlog of
orders requires a delivery time of approximately nine (9) months for new units.
To meet their immediate demand for transport resulting from shortages of new
units, many trucking companies have turned to the short-term leasing market to
add additional capacity. For short-term lessors, this has meant high levels of
utilization and rate stability.
The General Partner continues to transfer trailers with expiring lease
terms to the short-term trailer rental facilities operated by PLM Rental, Inc.
The General Partner believes the strong performance of units in these rental
facilities reflects the demand for short-term leases mentioned above and expects
this trend to continue as long as the current shortage of trailers exists.
(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 Partnership's ownership and operation
of equipment. Changes in government regulations, industry standards, or
deregulation may also affect the ownership, operation, and resale of the
equipment. Substantial portions of the Partnership's 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 Partnership's
equipment is subject to extensive safety and operating regulations which may
require the removal from service or extensive modification of such equipment to
meet these regulations at considerable cost to the Partnership. Such regulations
include (but are not limited to):
(1) the U.S. Oil Pollution Act of 1990 (which established liability for
operators and owners of vessels, mobile offshore drilling units, etc. that
create environmental pollution);
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(2) the U.S. Department of Transportation's Aircraft Capacity Act
of 1990 (which limits or eliminates the operation of commercial aircraft
in the U.S. that do not meet certain noise, aging, and corrosion
criteria);
(3) 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 of
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.);
(4) the U.S. Department of Transportation's Hazardous Materials
Regulations (which regulate the classification of and packaging
requirements for hazardous materials and which apply particularly to the
Partnership's tank cars);
ITEM 2. PROPERTIES
The Partnership neither owns nor leases any properties other than the equipment
it has purchased for leasing purposes. At December 31, 1994, the Partnership
owned a portfolio of transportation equipment as described in Part I, Table 1.
The Partnership maintains its principal office at One Market, Steuart
Street Tower, Suite 900, San Francisco, California 94105-1301. All office
facilities are provided by FSI without reimbursement by the Partnership.
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 Partnership's limited partners during
the fourth quarter of its fiscal year ended December 31, 1994.
Part II
ITEM 5. MARKET FOR THE PARTNERSHIP'S EQUITY AND RELATED DEPOSITARY UNIT MATTERS
The Partnership's Depositary Units began trading (under the ticker symbol "GFX")
on June 1, 1989, on the American Stock Exchange ("AMEX"). As of March 28, 1995,
there were 5,838,597 Depositary Units outstanding. There are approximately 8,806
Depositary Unitholders of record as of the date of this report.
Pursuant to the terms of the Partnership Agreement, the General Partner is
generally entitled to a 1% interest in the profits and losses and distributions
of the Partnership. The General Partner also is entitled to a special allocation
of any gains from sale of the Partnership's assets during the liquidation phase
in an amount sufficient to eliminate any negative balance in the General
Partner's capital account. The Partnership has engaged in a plan to repurchase
up to 250,000 Depositary Units. In the twelve months ended December 31, 1994,
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the Partnership purchased and cancelled 11,700 Depositary Units at a cost of
$168,000. As of December 31, 1994, the Partnership had purchased a cumulative
total of 136,803 Depositary Units at a cost of $2.1 million.
Table 2, below, sets forth the high and low reported prices of the
Partnership's Depositary Units for 1994 and 1993 as reported by the AMEX as well
as cash distributions paid per Depositary Unit.
TABLE 2
Reported Trade Cash
Prices Distributions
Paid Per
Calendar Period High Low Depositary Unit
1994
1st Quarter $ 16.38 $ 14.13 $ 0.575
2nd Quarter $ 16.38 $ 14.00 $ 0.575
3rd Quarter $ 15.25 $ 14.00 $ 0.575
4th Quarter $ 15.38 $ 12.25 $ 0.575
1993
1st Quarter $ 18.00 $ 14.50 $ 0.575
2nd Quarter $ 16.25 $ 12.50 $ 0.575
3rd Quarter $ 16.00 $ 14.38 $ 0.575
4th Quarter $ 15.50 $ 13.50 $ 0.575
The Partnership has engaged in a plan to repurchase a limited number of
Depositary Units. During the first, second, third, and fourth quarters of 1993,
the Partnership repurchased 7,500, 30,500, 29,000, and 16,503 Depositary Units
at a total cost of $109,000, $444,000, $423,000, and $249,000, respectively.
During the first, second, third, and fourth quarters of 1994, the Partnership
repurchased 3,600, 3,000, 2,500 and 2,600 Depositary Units at a total cost of
$53,000, $44,000, $37,000, and $34,000, respectively. During the period from
January 1, 1995 to March 24, 1995, the Partnership repurchased 9,600 Depositary
Units at a total cost of $113,000.
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ITEM 6. SELECTED FINANCIAL DATA
Table 3, below, lists selected financial data for the Partnership:
<TABLE>
TABLE 3
For the years ended December 31,
(thousands of dollars, except per unit amounts)
<CAPTION>
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Operating results:
Total revenues $25,659 $24,278 $27,470 $ 44,596 $ 36,215
Net gain (loss) on
disposition of
equipment 1,585 838 (194) 8,956 870
Loss on revaluation
of equipment (1,989) (1,380) (7,934) (167) --
Net income (loss) 75 1,725 (7,492) 9,204 3,398
At year-end:
Total assets $56,669 $70,482 $82,196 $109,690 $111,897
Total liabilities 32,606 32,746 31,201 36,897 34,224
Notes payable 28,000 28,000 28,000 28,000 28,000
Cash distributions $13,580 $13,759 $13,830 $ 13,885 $ 13,619
Per Depositary Unit:
Net income (loss) $(0.01)1 $ 0.271 $(1.27)1 $ 1.521 $ 0.56
Cash distributions $ 2.30 $ 2.30 $ 2.30 $ 2.30 $ 2.25
--------
1 After reduction of income of $117 ($0.02 per Depositary Unit) in 1994,
$128 ($0.02 per Depositary Unit) in 1993, $158 ($0.03 per Depositary
Unit) in 1992, and $60 ($0.01 per Depositary Unit) in 1991 representing
special allocations to the General Partner resulting from an amendment
to the Partnership Agreement.
</TABLE>
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Introduction
Management's Discussion and Analysis of Financial Condition and Results of
Operations relates to the Financial Statements of PLM Equipment Growth Fund (the
"Partnership"). The following discussion and analysis of operations focuses on
the performance of the Partnership's equipment in various sectors of the
transportation industry and its effect on the Partnership's overall financial
condition.
The analysis is organized in the following manner:
- Results of Operations - Year Over Year Summary and Factors Affecting
Performance
- Financial Condition - Capital Resources, Liquidity, and Distributions
- Outlook for the Future
- Results of Operations - Year to Year Detail Comparison
(A) Results of Operations
(1) Year over Year Summary
The Partnership's net operating income before depreciation, amortization,
gain/loss on sales, and loss on revaluation declined by approximately 9% in 1994
from 1993. Reductions in operating income generated by the Partnership's rig and
container portfolios and increased overhead expenses were partially offset by
additional investment in trailer equipment and the increased revenue generated
by these additions along with increased year over year performance by the
existing trailer fleet. An investment in a 12% interest in a commercial stage
III aircraft in late 1993 contributed to operating income generated by the
Partnership's aircraft portfolio. However, this contribution was offset by
reductions in income resulting from aircraft sales. While lease turnover
occurred in the Partnership's marine vessel portfolio, and, to a lesser degree,
rail portfolios, the net effect of such re-leases on fund net income was
relatively small. Interest expense increased as the base rate of interest on the
Partnership's floating rate debt rose.
(2) Factors Affecting Performance
(a) Re-leasing Activity and Repricing Exposure to Current Economic
Conditions
The exposure of the Partnership's equipment portfolio to repricing risk occurs
whenever the leases for the equipment expire or are otherwise terminated and the
equipment must be remarketed. Major factors influencing the current market rate
for transportation equipment include supply and demand for similar or comparable
types or kinds of transport capacity, desirability of the equipment in the lease
market, market conditions for the particular industry segment in which the
equipment is to be leased, various regulations concerning the use of the
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equipment, and others. The Partnership experienced repricing exposure in 1994
primarily in its aircraft, marine vessel, marine container, and rig portfolios.
(i) Aircraft: Aircraft contribution was relatively unchanged from 1993 to
1994. Sales of two of the Partnership's aircraft and the resulting decrease in
the year over year net contribution was offset by the net contribution generated
by the purchase of a 12% interest in a commercial Stage III aircraft. For a more
thorough discussion of market conditions and those factors impacting lease rates
for aircraft, see the section in "Demand" on aircraft.
(ii) Marine Vessels: In 1994, one of the Partnership's marine vessels
(owned 50% by the Partnership) transitioned from time charter operations to
"spot" or "voyage" charter markets, while the Partnership's remaining marine
vessel (owned 50% by the Partnership) transitioned from a "bareboat" charter to
"pooled" vessel operations. Spot, voyage, and pooled charters are usually of
short duration, and reflect the short-term demand and pricing trends in the
vessel market, while bareboat charters are essentially fixed-rate net leases.
While for periods of time in 1994, spot, voyage, or pool rates exceeded those in
1993, such net rates were higher on average in 1993.
Despite the higher average rates of 1993, the net contribution, generated
by the marine vessel portfolio, excluding the effects of insurance settlements
for vessel claims, declined in 1994 over the prior year mainly due to increases
in operating expenses as one of the Partnership's marine vessels transitioned
from a "bareboat" charter, where the lessee pays for all operating costs, into a
pool where most costs are absorbed by the lessor. For a more thorough discussion
of market conditions and those factors impacting rates for marine vessels, see
the section in "Demand" on marine vessels.
(iii) Marine Containers: The majority of the Partnership's marine
container portfolio is operated on utilization-based leasing pools, and as such
was highly exposed to repricing activity. Overall, marine container net
contribution in 1994 declined 27% from 1993 levels, of which approximately 15%
was due to changes in market rates. The remaining change is due mainly to the
reduction in marine containers in service as approximately 19% of the
Partnership's marine container fleet was disposed of during the year. For a more
thorough discussion of market conditions and those factors impacting rates for
marine containers, see the section in "Demand" on marine containers.
(iv) Rig: In the beginning of 1994, the Partnership's General Partner
reevaluated geographic dynamics of future worldwide oil production. The General
Partner concluded that there would be a greater long-term opportunity in the
Gulf of Mexico than in the Indian Subcontinent. With the intent of capturing
this opportunity, the Partnership negotiated an extension of the existing lease
on its rig with the provision that the rig move to the Gulf of Mexico. This
decision mitigated the potential repricing risk and off-lease time at the end of
the original lease, which was scheduled to expire in February of 1995. However,
in the short term, the lease reflects the market lease rate in the Gulf of
Mexico, which is 75% of the previous rate. For a more thorough discussion of
market conditions and those factors impacting rates for rigs, see the section in
"Demand" on rigs.
-14-
<PAGE>
(v) Other Equipment: While market conditions and other factors may have
had some impact on lease rates in markets in which the Partnership owns the
remainder of its equipment portfolio, the majority of this equipment was
unaffected. See "Demand" for a discussion of conditions in these equipment
areas.
(b) Reinvestment Risk
(i) Reinvestment of Cash Flow and Surplus Funds: During the first seven
years of operations, the Partnership invested surplus cash in additional
equipment after fulfilling operating requirements and paying distributions to
the partners. Subsequent to the end of the reinvestment period which ended
during the third quarter of 1994, the Partnership will continue to operate for
an additional three years, then begin an orderly liquidation over an anticipated
two year period.
Nonoperating funds are generated from the sale of equipment prior to the
Partnership's planned liquidation phase, the receipt of funds realized from the
payment of stipulated loss values on equipment lost or disposed during the time
it is subject to lease agreements, or the exercise of purchase options written
into certain lease agreements. Equipment sales generally result from evaluations
by the General Partner that continued ownership of certain equipment is either
inadequate to meet Partnership performance goals, or that market conditions,
market values, and other considerations indicate it is the appropriate time to
sell certain equipment.
(ii) Reinvestment Risk: Reinvestment risk occurs when 1) the Partnership
cannot generate sufficient surplus cash after fulfillment of operating
obligations and distributions to reinvest in additional equipment during the
reinvestment phase of Partnership operations; 2) equipment is sold or liquidated
for less than threshold amounts; 3) proceeds from sales, losses, or surplus cash
available for reinvestment cannot be reinvested at threshold lease rates, or 4)
proceeds from sales, losses, or surplus cash available for reinvestment cannot
be deployed in a timely manner.
For the year ended December 31, 1994, the Partnership generated sufficient
operating revenues to meet its operating obligations including interest expense.
Cash distributions of $13.6 million included both funds generated from current
period operations and cash available, but not distributed in prior periods.
During the year, the Partnership received proceeds of approximately $3.1
million from the liquidation or sale of 566 marine containers, 57 railcars, 48
trailers, two commercial aircraft, and five barges. The Partnership reinvested
approximately $1.0 million in a capital improvement for the rig and
approximately $0.9 million in the purchase of trailers. The General Partner will
use approximately $1.2 million in remaining sales and disposal proceeds to
prepay scheduled principal payments on the Partnership's outstanding permanent
debt during 1995.
The Partnership entered the eighth full year of operations during the
third quarter of 1994. Pursuant to section 2.02 (p) of the Limited Partnership
Agreement, surplus funds (as defined in the above mentioned Agreement) are no
longer being reinvested.
-15-
<PAGE>
(c) Equipment Valuation
The General Partner prepares an evaluation of the carrying value of the
Partnership's equipment portfolio at least annually, using, among other sources,
independent third-party appraisals, values reported in trade publications, and
comparative values from arms-length transactions for similar equipment.
Concurrently, the General Partner evaluates whether the current fair market
value of equipment represents the effect of current market conditions or
permanent impairment of value (e.g., technological obsolescence, etc.).
Equipment whose carrying value is determined to be permanently impaired, without
possibility of being leased at an acceptable rate, has its carrying value
adjusted to its estimated net realizable value. The carrying value of two
commercial aircraft and one aircraft engine were reduced by approximately $1.7
million and $0.3 million, respectively, in 1994. The implicit impact of such
reductions is anticipated future lower sales proceeds.
As of December 31, 1994, the General Partner estimated the current fair
market value of the Partnership's equipment portfolio to be approximately $81.0
million.
(B) Financial Condition - Capital Resources, Liquidity and Distributions
The General Partner purchased the Partnership's initial equipment portfolio with
capital raised from its initial equity offering and permanent debt financing. No
further capital contributions from original partners are permitted under the
terms of the Partnership's Limited Partnership Agreement, while the
Partnership's total outstanding indebtedness, currently $28.0 million, cannot be
increased. The Partnership relies on operating cash flow to meet its operating
obligations and to make cash distributions to the Limited Partners.
For the year ended December 31, 1994, the General Partner generated
sufficient operating revenues to meet its operating obligations, but used
undistributed available cash from prior periods of approximately $2.0 million to
maintain the current level of distributions (total 1994 of $13.6 million) to the
partners. During the year, the General Partner sold equipment for approximately
$3.1 million while reinvesting approximately $1.9 million (including capital
improvements).
(C) Outlook for the Future
Several factors may affect the Partnership's operating performance in 1995 and
beyond, including changes in the markets for the Partnership's equipment and
changes in the regulatory environment in which that equipment operates.
(1) Repricing and Reinvestment Risk
Certain of the Partnership's aircraft, marine vessels, railcars, and trailers
will be remarketed in 1995 as existing leases expire, exposing the Partnership
to considerable repricing risk/opportunity. Additionally, the General Partner
has selected certain underperforming equipment, or equipment whose continued
operation may become prohibitively expensive, for sale. In either case, the
General Partner intends to re-lease or sell equipment at prevailing market
rates;
-16-
<PAGE>
however, the General Partner cannot predict these future rates with any
certainty at this time, and cannot accurately assess the effect of such activity
on future Partnership performance.
(2) Impact of Government Regulations on Future Operations
The General Partner operates the Partnership's equipment in accordance with
current applicable regulations (see Item 1, Section 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 Partnership's ability to continue to own or operate
equipment in its portfolio. Additionally, regulatory systems vary from country
to country, which may increase the burden to the Partnership of meeting
regulatory compliance for the same equipment operated between countries.
Currently, the General Partner has observed rising insurance costs to operate
certain vessels into U.S. ports resulting from implementation of the U.S. Oil
Pollution Act of 1990. Ongoing changes in the regulatory environment, both in
the U.S. and internationally, cannot be predicted with any accuracy, and
preclude the General Partner from determining the impact of such changes on
Partnership operations or sale of equipment.
(3) Additional Capital Resources and Distribution Levels
The Partnership's initial contributed capital comprised the proceeds from its
initial offering, supplemented later by permanent debt in the amount of $28.0
million. The General Partner has not planned any expenditures, nor is it aware
of any contingencies, that would cause it to require any additional capital to
that mentioned above.
Pursuant to the Limited Partnership Agreement, the Partnership has ceased
to reinvest in additional equipment. The General Partner has attempted to
assemble an equipment portfolio capable of achieving a level of operating cash
flow for the remaining life of the Partnership sufficient to meet its
obligations and sustain a predictable level of distributions to the partners.
The General Partner believes the current level of distributions to the
partners can be maintained throughout 1995 using cash from operations, and
proceeds from sales or dispositions if necessary. Subsequent to this period, the
General Partner will evaluate the level of distributions the Partnership can
sustain over extended periods of time, and together with other considerations,
may adjust the level of distributions accordingly. In the long term, the
difficulty in predicting market conditions precludes the General Partner from
accurately determining the impact on liquidity or distribution levels.
The Partnership's permanent debt obligation matures in September, 1995.
The General Partner intends to refinance part or all of this debt so that its
maturity coincides with the liquidation phase of the Partnership, and to retire
this refinanced debt with proceeds from sales of equipment during the
liquidation phase of the Partnership.
-17-
<PAGE>
(D) Results of Operations - Year to Year Detail Comparison
Comparison of the Partnership's Operating Results for the Years Ended
December 31, 1994 and 1993
(A) Revenues
Total revenues of $25.7 million for the year ended December 31, 1994 increased
from $24.3 million in 1993.
(1) Lease revenues increased to $23.4 million for the year ended December 31,
1994, from $23.2 million in 1993. The following table lists lease revenues
earned by equipment type (in thousands):
For the year ended
December 31,
1994 1993
---- ----
Rail equipment $ 7,002 $ 7,384
Marine vessels 6,015 5,201
Aircraft 4,021 3,963
Trailers 2,376 2,196
Marine containers 1,832 2,393
Mobile offshore drilling units 2,112 2,108
-------- --------
$ 23,358 $ 23,245
======== ========
The increase in 1994 lease revenues was primarily attributable to:
(a) an increase of $0.8 million in marine vessel revenue resulting from one
of the Partnership's marine vessels transferring from bareboat charter into a
marine vessel pool which earns higher daily rates but also assumes all
operational costs;
(b) an increase of $0.2 million in trailer lease revenue resulting from the
purchase of additional trailers in 1993 and 1994 which were placed in the rental
yard facilities;
(c) an increase of $0.1 million in aircraft revenue resulting from higher
utilization rates in 1994;
(d) a decrease of $0.6 million in marine container lease revenue resulting
from marine container dispositions and lower lease and utilization rates;
(e) a decrease of $0.4 million in railcar lease revenue resulting from the
sale of 224 railcars at the end of the first quarter of 1993 and 57 railcars
throughout 1994.
(2) Interest and other income of $0.7 million for 1994 increased $0.5 million
from 1993 due to $0.5 million in settlements received in 1994 for damage claims
involving three of the Partnership's marine vessels.
-18-
<PAGE>
(3) During 1994, the Partnership had a $1.6 million net gain on the disposition
of equipment which resulted from the sale or disposition of two commercial
aircraft, five barges, 566 marine containers, 57 railcars, and 48 trailers which
had an aggregate net book value of $1.5 million for proceeds of $3.1 million.
During 1993, the Partnership had a $0.8 million net gain on the
disposition of equipment which resulted from the sale or disposition of one
marine vessel, 914 marine containers, 224 railcars, and 97 trailers with an
aggregate net book value of $3.0 million for proceeds of $3.8 million.
(B) Expenses
Total expenses of $25.6 million for the year ended December 31, 1994 increased
from $22.6 million in 1993. The increase in 1994 was primarily attributable to
higher marine operating expenses, repositioning expense, a loss on a legal
settlement, loss on revaluation of equipment, and interest expense, partially
offset by depreciation and amortization, lower repairs and maintenance,
insurance, and other general and administrative expenses.
(1) Direct operating expenses (defined as repairs and maintenance, insurance
expenses, marine equipment operating expenses, and repositioning expense)
increased to $7.5 million in 1994 from $5.2 million in 1993. The increase
resulted from:
(a) an increase of $1.8 million in marine equipment operating expenses due to
one of the Partnership's marine vessels transferring from bareboat charter,
where the lessee is responsible for most operating costs, into a marine vessel
pool where the Partnership is responsible for all operating costs which are
allocated on a pro rata basis within the pool;
(b) a decrease of $0.3 million in repairs and maintenance expenses resulting
primarily from a decrease in marine vessel repairs due to the sale of one marine
vessel in the second quarter of 1993, and the sale of 57 railcars throughout
1994, offset partially by an increase in expenses related to the repositioning
of the mobile offshore drilling unit;
(c) a decrease of $0.1 million in insurance expense resulting from a refund
of $0.1 million from an insurance pool which the Partnership's marine vessels
participate in due to lower than estimated claims in the pool;
(d) during the year ended December 31, 1994, the Partnership recorded a $0.9
million expense resulting from the repositioning of the mobile offshore drilling
unit from the Indian ocean to the Gulf of Mexico.
(2) Indirect operating expenses (defined as depreciation and amortization
expense, management fees, interest expense, bad debt expense, and general and
administrative expenses ) decreased to $15.4 million in 1994 from $16.0 million
in 1993. The decrease resulted from:
(a) a decrease of $0.8 million in depreciation and amortization expense
reflecting the Partnership's use of the double-declining depreciation method,
and the sale of certain assets during 1993 and 1994;
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<PAGE>
(b) a decrease of $0.1 million in general and administrative expense
due to decreased office and administrative costs;
(c) an increase of $0.4 million in interest expense resulting from an
increase in the LIBOR rate of interest on the Partnership's debt.
(3) During the year ended December 31, 1994, the Partnership recorded a $2.0
million loss on revaluation of equipment resulting from the $1.0 million and
$0.7 million reductions in carrying values of two commercial aircraft to their
estimated net realizable values and from the $0.3 million reduction in the
carrying value of one aircraft engine to its estimated net realizable value. For
the year ended December 31, 1993, the Partnership recorded a $1.4 million loss
on revaluation of equipment resulting from the $0.2 and $1.2 million reductions
in carrying values of 50 pulpwood cars and the Partnership's 50% interest in one
marine vessel, respectively, to their estimated net realizable values.
(4) During the year ended December 31, 1994, the Partnership recorded a $0.7
million loss on a legal settlement involving a dispute with one of the
Partnership's marine vessel charterers over the ability of the marine vessel to
trade to Cuba on charterer's instructions.
(C) Net Income
As a result of the foregoing, the Partnership's net income was $0.1 million in
1994, compared to $1.7 million in 1993. The Partnership's ability to operate and
liquidate assets, secure leases, and re-lease those assets whose leases expire
during the duration of the Partnership is subject to many factors, and the
Partnership's performance in 1994 is not necessarily indicative of future years.
In 1994, the Partnership distributed $13.5 million to the Limited Partners, or
$2.30 per Depositary Unit.
Comparison of Partnership's Operating Results for the Years Ended December 31,
1993 and 1992
(A) Revenues
Total revenues for the years ended December 31, 1993 and 1992, were $24.3
million and $27.5 million, respectively. The decrease in 1993 revenues was
attributable to a decrease in lease rates on certain of the Partnership's
equipment, the sale of equipment in 1993 and 1992, a decrease in interest and
other income, partially offset by an increase in the gain on disposition of
equipment.
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<PAGE>
(1) Lease revenue decreased from $26.5 million in 1992 to $23.2 million in 1993.
The following table lists lease revenues earned by equipment type (in
thousands):
For the year ended
December 31,
1993 1992
---- ----
Rail equipment $ 7,384 $ 7,950
Marine vessels 5,201 7,772
Aircraft 3,963 4,210
Trailers 2,196 2,038
Marine containers 2,393 2,499
Mobile offshore drilling units 2,108 2,055
-------- --------
$ 23,245 $ 26,524
======== ========
The decrease in 1993 lease revenues is attributable to:
(a) marine vessel revenues decreased $2.6 million due to the sale of
one of the Partnership's marine vessels during the third quarter of 1992 and
another during the second quarter of 1993;
(b) railcar revenues decreased $0.6 million resulting from the sale of
224 coalcars during the first quarter of 1993 and a reduction in railcars on
full service leases which command higher lease rates than other operating leases
but also require the Partnership to be responsible for repairs and maintenance;
(c) aircraft revenues decreased $0.2 million resulting from the sale of
one of the Partnership's commercial aircraft in the third quarter of 1992 and a
decrease in lease rates for remarketed aircraft, offset, in part, by lease
revenues generated from the purchase of an aircraft engine acquired during the
first quarter of 1993;
(d) trailer revenues increased $0.2 million in 1993 which reflects the
movement of trailers during 1992 and 1993 into the rental yard facilities where
per diem rentals command higher lease rates than term rentals. The purchase of
trailers throughout 1993 contributed additional revenue.
(2) Interest and other income decreased from $1.1 million in 1992 to $0.2
million in 1993. This decrease resulted primarily from the following:
(a) in 1992 the Partnership recognized $0.6 million as revenue as a
result of the lessee of a commercial aircraft forfeiting certain engine
reserves;
(b) a reduction of $0.2 million in interest income due to a reduction
in the interest rates on the Partnership's investments.
(3) Net gain (loss) on disposition of equipment was a net gain of $0.8 million
in 1993 and a net loss of $0.2 million in 1992. In 1993, the Partnership sold
one marine vessel with a net book value of $1.1 million for $1.5 million. In
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<PAGE>
addition, during 1993 the Partnership sold or disposed of 97 trailers, 914
marine containers, and 224 railcars with an aggregate net book value of $1.9
million for $2.3 million. In 1992 the Partnership sold or disposed of one
railcar, 415 trailers, 304 marine containers, two aircraft, and one marine
vessel with an aggregate net book value of $9.4 million for $9.2 million.
(B) Expenses
The Partnership's total expenses for the years ended December 31, 1993 and 1992,
were $22.6 million and $35.0 million respectively. The decrease was primarily
attributable to reduced depreciation, insurance expense, marine equipment
operating expenses, and loss on revaluation of equipment partially offset by
higher general and administrative expenses.
(1) Direct operating expenses (defined as repairs and maintenance, insurance
expenses, and marine equipment operating expenses) decreased from $8.2 million
in 1992 to $5.2 million in 1993. This decline resulted primarily from the
following:
(a) marine equipment operating expenses decreased $2.6 million due to
the sale of one of the Partnership's marine vessels during the third quarter of
1992 and one vessel during the second quarter of 1993;
(b) insurance expense to affiliate and other insurance expense
decreased $0.3 million due to the sale of the two vessels.
(2) Indirect operating expenses (defined as depreciation and amortization
expense, management fees, interest expense, general and administrative and bad
debt expenses) decreased from $18.9 million in 1992 to $16.0 million in 1993.
This change resulted primarily from the following:
(a) depreciation and amortization expense decreased $2.9 million
reflecting the Partnership's use of the double-declining balance method of
depreciation and the sale of certain Partnership assets;
(b) interest expense decreased $0.2 million due to a reduction in the
base rate of interest charged on the Partnership's debt;
(c) management fees to affiliate decreased $0.1 million due to a
decrease in the Partnership's operating cash flow;
(d) bad debt expense decreased $0.1 million due to improved
collectability of lease receivables;
(e) general and administrative expenses increased $0.4 million due to
insurance recoveries and a property tax adjustment received by the Partnership
in 1992.
(3) Loss on revaluation of equipment in 1993 results from the Partnership
reducing the carrying values of its 50% interest in one marine vessel by $1.2
million and in 50 pulpwood railcars by $0.2 million to their estimated net
realizable value. In 1992, the Partnership reduced the carrying value of 224
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<PAGE>
railcars, 114 containers, and four aircraft by $7.5 million to their estimated
net realizable value. In 1992, the Partnership also reduced the carrying value
of its 50% interest in a commuter aircraft, which is held for sale, by an
additional $0.4 million to its estimated net realizable value.
(C) Net Income (Loss)
As a result of all the foregoing, the Partnership's net income was $1.7 million
for the year ended December 31, 1993, compared with a net loss of $7.5 million,
for the year ended December 31, 1992. During 1993, the Partnership distributed
$13.6 million to the Limited Partners, or $2.30 per Depositary Unit.
Trends
Rigs, marine containers, and marine vessels performed below historic norms in
1994. By year end, the markets had rebounded for marine containers and marine
vessels; but, the rig market remained soft, due primarily to low oil and gas
prices. These conditions have resulted in lower lease rates, attrition, and
reduced values for these types of equipment, and have correspondingly
significantly impacted partnership cash flow. The General Partner will closely
monitor the effects of these factors on the Partnership's financial condition,
and as stated previously, take appropriate actions regarding underperforming
equipment.
The return of lease rates on certain types of equipment to their
historical levels is dependent on a number of factors including improved
international economic conditions, the absence of technological obsolescence,
new government regulations, and increased industry-specific demand.
The Partnership intends to use excess cash flow, if any, after payment
of expenses, for loan principal and cash distributions to investors.
Subsequent Event
On March 16, 1995, the Partnership declared quarterly distributions of $0.575
per outstanding depositary unit payable May 15, 1995 to unitholders of record as
of March 31, 1995.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements for the Partnership are listed in the Index to
Financial Statements included in Item 14 of this Annual Report.
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<PAGE>
Table 4, below, is a summary of the results of operations on a
quarterly basis for the Partnership for the years ended December 31, 1994 and
1993:
<TABLE>
TABLE 4
Three months ended:
(thousands of dollars, except unit amounts)
<CAPTION>
March 31 June 30 Sept. 30 Dec. 31
-------- ------- -------- -------
1994
<S> <C> <C> <C> <C>
Total revenues $5,888 $5,577 $6,177 $ 8,017(2)
Net gain (loss) on
disposition of
equipment (96) (94) 562 1,213(2)
Loss on revaluation of
equipment -- (960)1 -- (1,029)3
Net income (loss) 1,531 (530)1 (389) (537)3
Net income (loss) per
Depositary Unit $ 0.26 $(0.10) $(0.07) $(0.10)
Cash distributions $3,385 $3,400 $3,398 $ 3,397
Cash distributions
per Depositary Unit $0.575 $0.575 $0.575 $ 0.575
Number of Depositary
Units at end of
quarter 5,853,897 5,853,197 5,848,997 5,848,197
1 During the quarter ended June 30, 1994, the Partnership reduced the carrying
value of one commercial aircraft by $1.0 million to its estimated net
realizable value and sold the aircraft.
2 Includes a gain from the sale of two railcars, 209 marine containers, and
three barges which had an aggregate net book value of $0.3 million and sold
for $0.8 million. Includes a gain from the sale of one commercial aircraft
with related engine reserves of $0.7 million, and from a $0.3 million
increase in lease revenues for both the marine vessels and the rig.
3 During the quarter ended December 31, 1994, the Partnership reduced the
carrying value of one commercial aircraft by $0.7 million and one aircraft
engine by $0.3 million to their estimated net realizable values.
</TABLE>
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<PAGE>
<TABLE>
TABLE 4
Three months ended:
(thousands of dollars, except per unit amounts)
<CAPTION>
March 31 June 30 Sept. 30 Dec. 31
-------- ------- -------- -------
1993
<S> <C> <C> <C> <C>
Total revenues $6,610 $6,696 $ 5,486 $5,486
Net gain on
disposition of
equipment 11 545 73 209
Loss on revaluation of
equipment -- (71)1 (800)2 (509)1,2
Net income (loss) 1,467 1,417 1 (1,356)2 1971,2
Net income (loss) per
Depositary Unit $ 0.24 $ 0.24 $ (0.23) $ 0.02
Cash distributions $3,451 $3,447 $ 3,430 $3,431
Cash distributions
per Depositary Unit $0.575 $0.575 $ 0.575 $0.575
Number of Depositary
Units at end of
quarter 5,935,900 5,891,100 5,878,100 5,859,897
--------
1 At June 30, 1993, the Partnership reduced the carrying value of 50
pulpwood railcars by $0.1 million. At December 31, 1993, the
Partnership further reduced the carrying value of these 50 pulpwood
railcars by $0.1 million to their estimated net realizable value.
2 At September 30, 1993, the Partnership reduced the carrying value of
its 50% interest in one marine vessel by $0.8 million. At December 31,
1993, the Partnership further reduced the carrying value of the same
50% interest in one marine vessel by $0.4 million to its estimated net
realizable value.
</TABLE>
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<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
(This space intentionally left blank.)
-26-
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP
As of the date of this Annual Report the directors and executive officers of PLM
International (and key executive officers of its subsidiaries) are as follows:
<TABLE>
<CAPTION>
Name Age Position
<S> <C> <C>
J. Alec Merriam 59 Director, Chairman of the Board,
PLM International, Inc.; Director,
PLM Financial Services, Inc.
Allen V. Hirsch 41 Director, Vice Chairman of the
Board, Executive Vice President of
PLM International, Inc.; Director
and President, PLM Financial
Services Inc.; President, PLM
Securities Corp., and PLM
Transportation Equipment
Corporation.
Walter E. Hoadley 78 Director, PLM International, Inc.
Robert L. Pagel 58 Director, Chairman of the
Executive Committee, PLM
International, Inc.; Director, PLM
Financial Services, Inc.
Harold R. Somerset 60 Director, PLM International, Inc.
Robert N. Tidball 56 Director, President and Chief
Executive Officer, PLM
International, Inc.
J. Michael Allgood 46 Vice President and Chief Financial
Officer, PLM International, Inc.
and PLM Financial Services, Inc.
Stephen M. Bess 48 President, PLM Investment
Management, Inc.; Vice President,
PLM Financial Services, Inc.
David J. Davis 38 Vice President and Corporate
Controller, PLM International and
PLM Financial Services, Inc.
Frank Diodati 40 President, PLM Railcar Management
Services Canada Limited
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Name Age Position
<S> <C> <C>
Douglas P. Goodrich 48 Senior Vice President, PLM
International; Senior Vice
President PLM Transportation
Equipment Corporation; President,
PLM Railcar Management Services,
Inc.
Dirk Langeveld 43 Senior Vice President, PLM
Transportation Equipment
Corporation
Steven O. Layne 40 Vice President, PLM Transportation
Equipment Corporation
Stephen Peary 46 Senior Vice President, General
Counsel and Secretary, PLM
International,Inc.; Vice
President, General Counsel and
Secretary, PLM Financial Services,
Inc., PLM Investment Management,
Inc., PLM Transportation Equipment
Corporation; Vice President, PLM
Securities Corp.
Thomas L. Wilmore 52 Vice President, PLM Transportation
Equipment Corporation; Vice
President, PLM Railcar Management
Services Inc.
</TABLE>
J. Alec Merriam was appointed Chairman of the Board of Directors
of PLM International in September 1990, having served as a director since
February 1988. In October 1988 he became a member of the Executive Committee of
the Board of Directors of PLM International. From 1972 to 1988 Mr. Merriam was
Executive Vice President and Chief Financial Officer of Crowley Maritime
Corporation, a San Francisco area-based company engaged in maritime shipping and
transportation services. Previously, he was Chairman of the Board and Treasurer
of LOA Corporation of Omaha, Nebraska, and served in various financial positions
with Northern Natural Gas Company, also of Omaha.
Allen V. Hirsch became Vice Chairman of the Board and a Director
of PLM International in April 1989. He is an Executive Vice President of PLM
International and President of PLM Securities Corp. Mr. Hirsch became the
President of PLM Financial Services, Inc. in January 1986 and President of PLM
Investment Management, Inc. and PLM Transportation Equipment Corporation in
August 1985, having served as a Vice President of PLM Financial Services, Inc.
and Senior Vice President of PLM Transportation Equipment Corporation beginning
in August 1984, and as a Vice President of PLM Transportation Equipment
Corporation beginning in July 1982 and of PLM Securities Corp. from July 1982 to
October 1, 1987. He joined PLM, Inc. in July 1981, as Assistant to the Chairman.
Prior to joining PLM, Inc., Mr. Hirsch was a Research Associate at the Harvard
Business School. From January 1977 through September 1978, Mr. Hirsch was a
consultant with the Booz, Allen and Hamilton Transportation Consulting
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<PAGE>
Division, leaving that employment to obtain his master's degree in business
administration.
Dr. Hoadley joined PLM International's Board of Directors and its
Executive Committee in September, 1989. He served as a Director of PLM, Inc.
from November 1982 to June 1984 and PLM Companies, Inc. from October 1985 to
February 1988. Dr. Hoadley has been a Senior Research Fellow at the Hoover
Institute since 1981. He was Executive Vice President and Chief Economist for
the Bank of America from 1968 to 1981 and Chairman of the Federal Reserve Bank
of Philadelphia from 1962 to 1966. Dr. Hoadley has served as a Director of
Transcisco Industries, Inc. since February 1988.
Robert L. Pagel was appointed Chairman of the Executive Committee
of the Board of Directors of PLM International in September 1990, having served
as a director since February 1988. In October 1988 he became a member of the
Executive Committee of the Board of Directors of PLM International. From June
1990 to April 1991 Mr. Pagel was President and Co-Chief Executive Officer of The
Diana Corporation, a holding company traded on the New York Stock Exchange. He
is the former President and Chief Executive Officer of FanFair Corporation which
specializes in sports fan's gift shops. He previously served as President and
Chief Executive Officer of Super Sky International, Inc., a publicly traded
company, located in Mequon, Wisconsin, engaged in the manufacture of skylight
systems. He was formerly Chairman and Chief Executive Officer of Blunt, Ellis &
Loewi, Inc., a Milwaukee based investment firm. Mr. Pagel retired from Blunt,
Ellis & Loewi in 1985 after a career spanning 20 years in all phases of the
brokerage and financial industries. Mr. Pagel has also served on the Board of
Governors of the Midwest Stock Exchange.
Harold R. Somerset was elected to the Board of Directors of PLM
International in July 1994. From February 1988 to December 1993, Mr. Somerset
was President and Chief Executive Officer of California & Hawaiian Sugar
Corporation ("C&H"), a recently acquired subsidiary of Alexander & Baldwin, Inc.
Mr. Somerset joined C&H in 1984 as Executive Vice President and Chief Operating
Officer, having served on its Board of Directors since 1978, a position in which
he continues to serve. Between 1972 and 1984, Mr. Somerset served in various
capacities with Alexander & Baldwin, Inc., a publicly-held land and agriculture
company headquartered in Honolulu, Hawaii, including Executive Vice President -
Agricultures, Vice President, General Counsel and Secretary. In addition to a
law degree from Harvard Law School, Mr. Somerset also holds degrees in civil
engineering from the Rensselaer Polytechnic Institute and in marine engineering
from the U.S. Naval Academy. Mr. Somerset also serves on the Boards of Directors
for various other companies and organizations, including Longs Drug Stores,
Inc., a publicly-held company headquartered in Maryland.
Robert N. Tidball was appointed President and Chief Executive
Officer of PLM International in March 1989. At the time of his appointment, he
was Executive Vice President of PLM International. Mr. Tidball became a director
of PLM International in April 1989 and a member of the Executive Committee of
the Board of Directors of PLM International in September 1990. Mr. Tidball was
elected President of PLM Railcar Management Services, Inc. in January 1986. Mr.
Tidball was Executive Vice President of Hunter Keith, Inc., a Minneapolis based
investment banking firm, from March 1984 to January 1986. Prior to Hunter Keith,
Inc., he was Vice President, a General Manager and a Director of North
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<PAGE>
American Car Corporation, and a Director of the American Railcar Institute and
the Railway Supply Association.
J. Michael Allgood was appointed Vice President and Chief
Financial Officer of PLM International in October 1992. Between July 1991 and
October 1992, Mr. Allgood was a consultant to various private and public sector
companies and institutions specializing in financial operational systems
development. In October 1987, Mr. Allgood co-founded Electra Aviation Limited
and its holding company, Aviation Holdings Plc of London where he served as
Chief Financial Officer until July 1991. Between June 1981 and October 1987, Mr.
Allgood served as a First Vice President with American Express Bank, Ltd. In
February 1978, Mr. Allgood founded and until June 1981, served as a director of
Trade Projects International/Philadelphia Overseas Finance Company, a joint
venture with Philadelphia National Bank. From March 1975 to February 1978, Mr.
Allgood served in various capacities with Citibank, N.A.
Stephen M. Bess was appointed President of PLM Investment
Management, Inc. in August 1989, having served as Senior Vice President of PLM
Investment Management, Inc. beginning in February 1984 and as Corporate
Controller of PLM Financial Services, Inc. beginning in October 1983. Mr. Bess
served as Corporate Controller of PLM, Inc., beginning in December 1982. Mr.
Bess was Vice President-Controller of Trans Ocean Leasing Corporation, a
container leasing company, from November 1978 to November 1982, and Group
Finance Manager with the Field Operations Group of Memorex Corp., a manufacturer
of computer peripheral equipment, from October 1975 to November 1978.
David J. Davis was appointed Vice President and Controller of PLM
International in January 1994. From March 1993 through January 1994, Mr. Davis
was engaged as a consultant for various firms, including PLM. Prior to that Mr.
Davis was Chief Financial Officer of LB Credit Corporation in San Francisco from
July 1991 to March 1993. From April 1989 to May 1991, Mr. Davis was Vice
President and Controller for ITEL Containers International Corporation which is
located in San Francisco. Between May 1978 and April 1989, Mr. Davis held
various positions with Transamerica Leasing Inc., in New York, including that of
Assistant Controller for their rail leasing division.
Frank Diodati was appointed President of PLM Railcar Management
Services Canada Limited in 1986. Previously, Mr. Diodati was manager of
Marketing and Sales for G.E. Railcar Services Canada Limited.
Douglas P. Goodrich was appointed Senior Vice President of PLM
International in March 1994. Mr. Goodrich has also served as Senior Vice
President of PLM Transportation Equipment Corporation since July 1989, and as
President of PLM Railcar Management Services, Inc. since September 1992 having
been a Senior Vice President since June 1987. Mr. Goodrich was an Executive Vice
President of G.I.C. Financial Services Corporation, a subsidiary of Guardian
Industries Corp. of Chicago, Illinois from December 1980 to September 1985.
Dirk Langeveld was appointed Vice President of PLM Transportation
Equipment Corporation's Marine Division in June 1990 and Senior Vice President
in January 1991. Mr. Langeveld was Executive Vice President, Chief Operation
Officer, and a Director of Marine Transport Lines from 1987 to 1990. From 1977
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<PAGE>
to 1987 Mr. Langeveld was employed by Stolt Tankers and Terminals Inc. in a
variety of executive positions in the United States and the Far East.
Steven O. Layne was appointed Vice President, PLM Transportation
Equipment Corporation's Air Group in November 1992. Mr. Layne was its Vice
President, Commuter and Corporate Aircraft beginning in July 1990. Prior to
joining PLM, Mr. Layne was the Director, Commercial Marketing for Bromon
Aircraft Corporation, a joint venture of General Electric Corporation and the
Government Development Bank of Puerto Rico. Mr. Layne is a major in the United
States Air Force Reserves and Senior Pilot with 13 years of accumulated service.
Stephen Peary became Vice President, Secretary, and General
Counsel of PLM International in February 1988 and Senior Vice President in March
1994. Mr. Peary was Assistant General Counsel of PLM Financial Services, Inc.
from August 1987 through January 1988. Previously, Mr. Peary was engaged in the
private practice of law in San Francisco. Mr. Peary is a graduate of the
University of Illinois, Georgetown University Law Center, and Boston University
(Masters of Taxation Program).
Thomas L. Wilmore was appointed Vice President - Rail, PLM
Transportation Equipment Corporation, in March 1994 and has served as Vice
President, Marketing for PLM Railcar Management Services, Inc. since May 1988.
Prior to joining PLM, Mr. Wilmore was Assistant Vice President Regional Manager
for MNC Leasing Corp. in Towson, Maryland from February 1987 to April 1988. From
July 1985 to February 1987, he was President and Co-Owner of Guardian Industries
Corp., Chicago, Illinois and between December 1980 and July 1985, Mr. Wilmore
was an Executive Vice President for its subsidiary, G.I.C. Financial Services
Corporation. Mr. Wilmore also served as Vice President of Sales for Gould
Financial Services located in Rolling Meadows, Illinois from June 1978 to
December 1980.
The directors of the General Partner are elected for a one-year
term or until their successors are elected and qualified. There are no family
relationships between any director or any executive officer of the General
Partner.
ITEM 11. EXECUTIVE COMPENSATION
The Partnership has no directors, officers or employees. The Partnership has no
pension, profit-sharing, retirement or similar benefit plan in effect as of
December 31, 1994.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Security Ownership of Certain Beneficial Owners
The General Partner is generally entitled to a 1% interest in the
profits and losses and distributions of the Partnership. At
December 31, 1994, no investor was known by the General Partner
to beneficially own more than 5% of the Depositary Units of the
Partnership.
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<PAGE>
(b) Security Ownership of Management
Table 5, below, sets forth, as of the date of this report, the
amount and percent of the Partnership's outstanding Depositary
Units beneficially owned by each of the directors and executive
officers and all directors and executive officers as a group of
the General Partner and its affiliates:
TABLE 5
Percent of
Depositary Depositary
Name Units Units
Allen V. Hirsch 600 *
Robert N. Tidball 400 *
Stephen M. Bess 305 *
J. Alec Merriam 1,000 *
All directors and
executive officers
as a group (4 people) 2,305 *
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a) Transactions with Management and Others
During 1994, management fees to IMI were $1.7 million. During
1994, the Partnership reimbursed FSI or its affiliates $0.6
million for administrative services and data processing expenses
performed on behalf of the Partnership. The Partnership paid
Transportation Equipment Indemnity Company Ltd. ("TEI"), a
wholly-owned, Bermuda- based subsidiary of PLM International,
$0.1 million for insurance coverages during 1994, which amounts
were paid substantially to third party reinsurance underwriters
or placed in risk pools managed by TEI on behalf of affiliated
partnerships and PLM International which provide threshold
coverages on marine vessel loss of hire and hull and machinery
damage. All pooling arrangement funds are either paid out to
cover applicable losses or refunded pro rata by TEI.
(b) Certain Business Relationships
None.
(c) Indebtedness of Management
None.
(d) Transactions With Promoters
None.
--------
* Represents less than one percent of outstanding Depositary Units.
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<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. Financial Statements
The financial statements listed in the accompanying Index
to Financial Statements are filed as part of this Annual
Report.
(b) Reports on Form 8-K
None.
(c) Exhibits
Limited Partnership Agreement of Partnership.
Incorporated by reference to the Partnership's
Registration Statement on Form S-1 (Reg. No.
33-2834) which became effective with the Securities
and Exchange Commission on May 20, 1986.
Amendment, dated November 18, 1991, to Limited
Partnership Agreement of Partnership.
Management Agreement between the Partnership and PLM
Investment Management, Inc. Incorporated by
reference to the Partnership's Registration
Statement on Form S-1 (Reg. No. 33-2834) which
became effective with the Securities and Exchange
Commission on May 20, 1986.
$28.0 million Loan Agreement, dated as of August 29,
1989. Incorporated by reference to the Partnership's
Annual Report on Form 10-K filed with the Securities
and Exchange Commission on April 2, 1990.
Amendment No. 1, dated March 26, 1990, to Loan
Agreement.
25. Powers of Attorney.
(This space intentionally left blank.)
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<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Partnership has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
The Partnership has no directors or officers. The General Partner has
signed on behalf of the Partnership by duly authorized officers.
Dated: March 28, 1995 PLM EQUIPMENT GROWTH FUND
PARTNERSHIP
By: PLM Financial Services, Inc.
General Partner
By: *
Allen V. Hirsch
President
By: /s/ David J. Davis
David J. Davis
Vice President and
Corporate Controller
* Stephen Peary, by signing his name hereto, does sign this document on behalf
of the person indicated above pursuant to powers of attorney duly executed by
such persons and filed with the Securities and Exchange Commission.
/s/ Stephen Peary
Stephen Peary
Attorney-in-Fact
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<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below by the following directors of the Partnership's General
Partner on the dates indicated.
Name Capacity Date
**************
Allen V. Hirsch Director - FSI March 28, 1995
**************
J. Alec Merriam Director - FSI March 28, 1995
**************
Robert L. Pagel Director - FSI March 28, 1995
* Stephen Peary, by signing his name hereto, does sign this document on behalf
of the persons indicated above pursuant to powers of attorney duly executed by
such persons and filed with the Securities and Exchange Commission.
/s/ Stephen Peary
Stephen Peary
Attorney-in-Fact
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<PAGE>
PLM EQUIPMENT GROWTH FUND
(A Limited Partnership)
INDEX TO FINANCIAL STATEMENTS
(Item 14(a))
Page
Report of Independent Auditors 37
Balance sheets at December 31, 1994 and 1993 38
Statements of operations for the years ended
December 31, 1994, 1993, and 1992 39
Statements of changes in partners' capital for the years
ended December 31, 1994, 1993, and 1992 40
Statements of cash flows for the years ended
December 31, 1994, 1993, and 1992 41
Notes to financial statements 42-49
All other financial statement schedules have been omitted as the required
information is not pertinent to the Registrant or is not material, or because
the information required is included in the financial statements and notes
thereto.
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<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Partners
PLM Equipment Growth Fund:
We have audited the financial statements of PLM Equipment Growth Fund as listed
in the accompanying index to financial statements (Item 14 (a)) for the years
ended December 31, 1994, 1993, and 1992. 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.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of PLM Equipment Growth Fund as of
December 31, 1994 and 1993 and the results of its operations and its cash flows
for the years ended December 31, 1994, 1993, and 1992 in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
San Francisco, California
March 17, 1995
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<PAGE>
PLM EQUIPMENT GROWTH FUND
(A Limited Partnership)
BALANCE SHEETS
December 31,
(in thousands, except unit amounts)
ASSETS
1994 1993
---- ----
Equipment held for operating leases, at cost $ 119,123 $ 129,371
Less accumulated depreciation (69,122) (68,273)
--------- ---------
50,001 61,098
Equipment held for sale -- 1,316
--------- ---------
Net equipment 50,001 62,414
Cash and cash equivalents 2,542 3,556
Restricted cash 1,952 2,188
Accounts receivable, less allowance for
doubtful accounts of $203 in 1994
and $212 in 1993 1,919 1,852
Due from affiliates -- 74
Prepaid expenses and other assets 210 196
Deferred charges, net of accumulated
amortization of $942 in 1994 and
$812 in 1993 45 202
--------- ---------
Total assets $ 56,669 $ 70,482
========= =========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and accrued expenses $ 1,921 $ 1,606
Due to affiliates 230 --
Security deposits 518 808
Prepaid deposits and reserve for repairs 1,937 2,332
Note payable 28,000 28,000
--------- ---------
Total liabilities 32,606 32,746
Partners' capital (deficit):
Limited Partners (5,848,197 Depositary Units
at December 31, 1994 and 5,859,897
at December 31, 1993) 24,374 38,047
General Partner (311) (311)
--------- ---------
Total partners' capital 24,063 37,736
--------- ---------
Total liabilities and partners' capital $ 56,669 $ 70,482
========= =========
See accompanying notes to financial
statements.
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<PAGE>
PLM EQUIPMENT GROWTH FUND
(A Limited Partnership)
STATEMENTS OF OPERATIONS
For the years ended December 31,
(thousands of dollars, except per unit amounts)
1994 1993 1992
---- ---- ----
Revenues:
Lease revenue $ 23,358 $ 23,245 $ 26,524
Interest and other income 716 195 1,140
Net gain (loss) on disposition of
equipment 1,585 838 (194)
-------- -------- --------
Total revenues 25,659 24,278 27,470
Expenses:
Depreciation and amortization 10,349 11,188 14,045
Management fees to affiliate 1,695 1,742 1,820
Repairs and maintenance 3,541 3,817 3,802
Interest expense 1,693 1,325 1,522
Insurance expense to affiliate 112 208 377
Other insurance expense 465 457 601
Marine equipment operating expenses 2,482 731 3,373
General and administrative
expenses to affiliates 647 502 548
Other general and administrative
expenses 942 1,159 761
Bad debt expense 76 44 179
Loss on revaluation of equipment 1,989 1,380 7,934
Repositioning expense 879 -- --
Loss on legal settlement 714 -- --
-------- -------- --------
Total expenses 25,584 22,553 34,962
-------- -------- --------
Net income (loss) $ 75 $ 1,725 $ (7,492)
======== ======== ========
Partners' share of net income (loss):
Limited Partners $ (43) $ 1,580 $ (7,576)
General Partner 118 145 84
-------- -------- --------
Total $ 75 $ 1,725 $ (7,492)
======== ======== ========
Net income (loss) per Depositary Unit
(5,848,197 units - 1994;
5,859,897 units - 1993;
5,943,400 units - 1992) $ (0.01) $ 0.27 $ (1.27)
======== ======== ========
Cash distributions $ 13,580 $ 13,759 $ 13,830
======== ======== ========
Cash distributions per Depositary
Unit $ 2.30 $ 2.30 $ 2.30
======== ======== ========
See accompanying notes to financial
statements.
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<PAGE>
PLM EQUIPMENT GROWTH FUND
(A Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS'
CAPITAL For the years ended December 31,
1994, 1993, and 1992
(in thousands)
Limited General
Partners Partner Total
Partners' capital (deficit) at
December 31, 1991 $ 73,058 $ (264) $ 72,794
Repurchase of Depositary Units (476) -- (476)
Net (loss) income (7,576) 84 (7,492)
Cash distributions (13,692) (138) (13,830)
---------- ---------- ----------
Partners' capital (deficit) at
December 31, 1992 51,314 (318) 50,996
Repurchase of Depositary Units (1,225) -- (1,225)
Net income 1,580 145 1,725
Cash distributions (13,622) (138) (13,760)
---------- ---------- ----------
Partners' capital (deficit) at
December 31, 1993 38,047 (311) 37,736
Repurchase of Depositary Units (168) -- (168)
Net (loss) income (43) 118 75
Cash distributions (13,462) (118) (13,580)
---------- ---------- ----------
Partners' capital (deficit) at
December 31, 1994 $ 24,374 $ (311) $ 24,063
========== ========== ==========
See accompanying notes to financial
statements.
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<PAGE>
<TABLE>
PLM EQUIPMENT GROWTH FUND
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
For the years ended December 31,
(in thousands)
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Operating activities:
Net income (loss) $ 75 $ 1,725 $ (7,492)
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities:
Depreciation and amortization 10,349 11,188 14,045
Net (gain) loss on disposition of equipment (1,585) (838) 194
Loss on revaluation of equipment 1,989 1,380 7,934
(Increase) decrease in accounts receivable,
net (67) (48) 336
(Increase) decrease in prepaid expenses
and other assets (14) 39 (121)
Decrease (increase) in restricted cash 236 (1,282) 815
Increase (decrease) in due to/from
affiliates 304 79 (1,378)
Increase in accounts payable
and accrued expenses 315 666 280
(Decrease) increase in security deposits (290) 110 (198)
Increase (decrease) in prepaid deposits
and reserve for repairs 255 768 (1,286)
-------- -------- --------
Net cash provided by operating activities 11,567 13,787 13,129
Investing activities:
Payments for purchase of equipment (1,915) (7,023) (16,961)
Payments of acquisition fees to affiliate -- -- (788)
Payment of equipment acquisition deposits -- -- (2,800)
Return of equipment acquisition deposits -- 50 --
Proceeds from disposition of equipment 3,082 3,761 9,213
Decrease in accounts payable and accrued
expenses -- -- (1,021)
Payments of lease negotiation fees
to affiliate -- -- (158)
-------- -------- --------
Net cash provided by (used in) investing
activities 1,167 (3,212) (12,515)
-------- -------- --------
Financing activities:
Cash distributions paid to partners (13,580) (13,759) (13,830)
Repurchases of Depositary Units (168) (1,225) (476)
-------- -------- --------
Net cash used in financing activities (13,748) (14,984) (14,306)
-------- -------- --------
Net decrease in cash and cash equivalents (1,014) (4,409) (13,692)
Cash and cash equivalents at beginning of
year 3,556 7,965 21,657
-------- -------- --------
Cash and cash equivalents at end of year $ 2,542 $ 3,556 $ 7,965
======== ======== ========
Supplemental information:
Interest paid $ 1,553 $ 1,325 $ 1,408
======== ======== ========
</TABLE>
See accompanying notes to financial
statements.
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<PAGE>
PLM EQUIPMENT GROWTH FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1994
1. Basis of Presentation
Organization
PLM Equipment Growth Fund, a California limited partnership (the
"Partnership") was formed on January 28, 1986. The Partnership engages in
the business of owning and leasing primarily used transportation
equipment. The Partnership commenced significant operations in August
1986. Depositary Units evidencing limited partner ownership interests in
the Partnership trade on the American Stock Exchange under the symbol
"GFX." PLM Financial Services, Inc. ("FSI") is the General Partner. FSI is
a wholly-owned subsidiary of PLM International, Inc. ("PLM
International").
The Partnership will terminate on December 31, 2006, unless terminated
earlier upon sale of all equipment or by certain other events. Since the
third quarter of 1994, in accordance with the Partnership agreement, the
General Partner has stopped reinvesting excess cash and is using these
funds, if any, for the repayment of outstanding debt and for distributions
to the Partners. Beginning in the Partnership's eleventh year of
operation, the General Partner intends to begin an orderly liquidation of
the Partnership's assets.
FSI 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 (see net income (loss) and
distributions per Depositary Unit, below). The General Partner is entitled
to an incentive fee equal to 15% of "Surplus Distributions" as defined in
the Limited Partnership Agreement remaining after the Limited Partners
have received a certain minimum rate of return.
Operations
The equipment of the Partnership is managed, under a continuing 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, syndicates investor programs, 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.
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<PAGE>
PLM EQUIPMENT GROWTH FUND
A Limited Partnership
NOTES TO FINANCIAL STATEMENTS
December 31, 1994
1. Basis of Presentation (continued)
Translation of Foreign Currency Transactions
The Partnership is a domestic partnership, however, a limited number of
the Partnership's transactions are denominated in a foreign currency. The
Partnership's asset and liability accounts denominated in a foreign
currency were translated into U.S. dollars at the rates in effect at the
balance sheet dates, and revenue and expense items were translated at
average rates during the year. Gains or losses resulting from foreign
currency transactions are included in the results of operations and are
not material.
Depreciation and Amortization
Depreciation of equipment held for operating leases is computed on 150%
declining balance, or 200% declining balance method based upon estimated
useful lives of 9 to 12 years for aircraft, 15 to 18 years for railcars
and 12 years for marine containers, marine vessels, mobile offshore
drilling units, and trailers. Both accelerated depreciation methods
convert to straight line when annual depreciation expense using the
straight line method exceeds that calculated by the accelerated method.
Acquisition fees have been capitalized as part of the cost of the
equipment. Lease negotiation fees are amortized over the initial equipment
lease term. Debt placement fees and issuance costs are amortized over the
term of the loan for which they were paid. Major expenditures which are
expected to extend the useful lives or reduce future operating expenses
for equipment are capitalized.
Revaluation of Equipment
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.
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. To meet the maintenance obligations of certain aircraft
airframes and engines, escrow accounts are prefunded by the lessees.
Estimated costs associated with marine vessel drydockings are accrued and
charged to income ratably over the period prior to such drydocking. The
reserve accounts are included in the balance sheet as prepaid deposits and
reserve for repairs. The prefunded amounts are included in the balance
sheet as restricted cash.
Net Income (Loss) and Distributions per Depositary Unit
The net income (loss) and distributions of the Partnership are generally
allocated 99% to the Limited Partners and 1% to the General Partner. The
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<PAGE>
PLM EQUIPMENT GROWTH FUND
A Limited Partnership
NOTES TO FINANCIAL STATEMENTS
December 31, 1994
1. Basis of Presentation (continued)
Net Income (Loss) and Distributions per Depositary Unit (continued)
Limited Partners' net income (loss) and distributions are allocated among
the Limited Partners based on the number of Depositary Units owned by each
Limited Partner. The General Partner received a special allocation of
income in the amount of $117,000 in 1994, $128,000 in 1993, and $158,000
in 1992 resulting from a 1991 amendment to the Partnership Agreement.
Cash distributions are recorded when paid. Cash distributions of $3.4
million ($0.575 per Depositary Unit) were declared on December 15, 1994
and paid on February 15, 1995 to the unitholders of record as of December
31, 1994. Cash distributions to investors in excess of net income are
considered to represent a return of capital on a Generally Accepted
Accounting Principals (GAAP) basis. Cash distributions to Limited Partners
of $13.5 million, $12.0 million and $13.7 million in 1994, 1993, and 1992,
respectively, were deemed to be a return of capital.
Cash, Cash Equivalents, and Restricted Cash
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. The carrying amount of cash
equivalents approximates fair market value due to the short term nature of
the investments. Lessee security deposits and required reserves held by
the Partnership are considered restricted cash.
Reclassifications
Certain amounts in the 1993 financial statements have been reclassified to
conform to the 1994 presentation.
2. General Partner and Transactions with Affiliates
FSI contributed $100 of the Partnership's initial capital. Under the
equipment management agreement, IMI receives a monthly management fee
equal to the greater of (i) 10% of "Cash Flow," or (ii) 1/12 of 1/2% of
the book value of the equipment portfolio subject to reduction in certain
events described in the Limited Partnership Agreement. Management fees
were $1.7 million during 1994 ($1.7 million in 1993, $1.8 million in
1992). Additionally, the Partnership reimbursed FSI and its affiliates
$0.6 million for administrative services and data processing expenses
performed on behalf of the Partnership in 1994 ($0.5 million in both 1993
and 1992).
In 1994, 1993, and 1992, the Partnership incurred no lease negotiation or
equipment acquisition fees, to PLM Transportation Equipment Corporation
("TEC"). TEC is a wholly-owned subsidiary of FSI.
-44-
<PAGE>
PLM EQUIPMENT GROWTH FUND
A Limited Partnership
NOTES TO FINANCIAL STATEMENTS
December 31, 1994
2. General Partner and Transactions with Affiliates (continued)
The Partnership paid $0.1 million, $0.2 million, and $0.4 million in 1994
1993, and 1992, respectively, to Transportation Equipment Indemnity,
Company, Ltd. ("TEI") which provides marine insurance coverage for
Partnership equipment and other insurance brokerage services to the
Partnership. TEI is an affiliate of the General Partner. A substantial
portion of these amounts were paid to third party reinsurance underwriters
or placed in risk pools managed by TEI on behalf of affiliated
partnerships and PLM International which provide threshold coverages on
marine vessel loss of hire and hull and machinery damage. All pooling
arrangement funds are either paid out to cover applicable losses or
refunded pro rata by TEI.
As of December 31, 1994, approximately 99% of the Partnership's trailer
equipment has been transferred into rental facilities operated by an
affiliate of the General Partner. Revenues collected under short-term
rental agreements with rental facilities' customers are distributed
monthly to the owners of the related equipment. Direct expenses associated
with the equipment and an allocation of indirect expenses of the rental
yard operations are billed to the Partnership.
The Partnership jointly owns certain equipment in conjunction with
affiliated partnerships. In 1994, this equipment included three commuter
aircraft, three commercial aircraft, one bulk carrier marine vessel, one
product tanker, one aircraft engine and one mobile offshore drilling unit.
At December 31, 1994, $0.2 million was due to FSI and its affiliates. At
December 31, 1993, $0.1 million was due from FSI and its affiliates.
-45-
<PAGE>
PLM EQUIPMENT GROWTH FUND
A Limited Partnership
NOTES TO FINANCIAL STATEMENTS
December 31, 1994
3. Equipment
Equipment held for operating leases is stated at cost. Equipment held for
sale is stated at the lower of the equipment's depreciated cost or
estimated net realizable value and is subject to a pending contract for
sale. The components of equipment at December 31, 1994 and 1993, are as
follows (in thousands):
Equipment held for operating leases:
1994 1993
---- ----
Rail equipment $ 23,641 $ 26,948
Marine containers 9,819 12,236
Marine vessels 22,264 22,696
Aircraft 36,721 42,258
Trailers 11,134 10,696
Mobile offshore drilling unit 15,544 14,537
--------- ---------
119,123 129,371
Less accumulated depreciation (69,122) (68,273)
--------- ---------
50,001 61,098
Equipment held for sale -- 1,316
--------- ---------
Net equipment $ 50,001 $ 62,414
========= =========
Revenues are earned by placing the equipment under operating leases which
are billed monthly or quarterly. Some of the Partnership's marine vessels
and marine containers are leased to operators of utilization-type leasing
pools which include equipment owned by unaffiliated parties. In such
instances revenues received by the Partnership consist of a specified
percentage of revenues generated by leasing the pooled equipment to
sub-lessees, after deducting certain direct operating expenses of the
pooled equipment. Rents for other equipment are based on fixed rates.
As of December 31, 1994, all equipment in the Partnership's portfolio was
on lease or operating in PLM-affiliated short-term trailer rental
facilities, except 96 marine containers off lease with an aggregate net
book value of $0.3 million. At December 31, 1993, the Partnership had 125
marine containers and one commercial aircraft off lease with an aggregate
net book value of $1.5 million.
During 1994, the Partnership purchased a capital improvement for the
mobile offshore drilling unit for $1.0 million and 40 refrigerated
trailers for $0.9 million. During 1993, the Partnership purchased one jet
engine for $2.8 million, a 12% interest in one commercial aircraft for
$4.9 million (affiliated partnerships purchased the remaining ownership
interests), and 225 over-the-road trailers for $2.0 million.
-46-
<PAGE>
PLM EQUIPMENT GROWTH FUND
A Limited Partnership
NOTES TO FINANCIAL STATEMENTS
December 31, 1994
3. Equipment (continued)
During 1994, the Partnership sold or disposed of two commercial aircraft
with an aggregate net book value of $0.4 million net of engine reserves of
$0.7 million for proceeds of $1.1 million. During 1994, the Partnership
also sold or disposed of five barges, 566 marine containers, 57 railcars,
and 48 trailers with an aggregate net book value of $1.1 million for
proceeds of $2.0 million. During 1993, the Partnership sold one marine
vessel with a net book value of $1.1 million for $1.5 million. In
addition, during 1993 the Partnership sold or disposed of 97 trailers, 914
marine containers, and 224 railcars with an aggregate net book value of
$1.8 million for $2.2 million.
At December 31, 1993, equipment held for sale included one commercial
aircraft with a net book value of $1.3 million. During 1994, the
Partnership reduced the carrying value of this commercial aircraft by $1.0
million to its estimated net realizable value, and the aircraft was sold
in the second quarter. During 1994, the Partnership also reduced the
carrying value of one commercial aircraft by $0.7 million, and one
aircraft engine by $0.3 million, to their estimated net realizable values
of $1.3 million and $1.6 million, respectively. During 1993, the
Partnership reduced the carrying value of 50 pulpwood railcars by $0.1
million to their estimated net realizable value, and the railcars were
subsequently sold. Additionally in 1993, the Partnership reduced the
carrying value of the Partnership's 50% interest in one marine vessel by
$1.2 million to its estimated net realizable value of $4.1 million. During
1992, the Partnership reduced the carrying value of one marine vessel by
$0.2 million to its estimated net realizable value, and the marine vessel
was sold in July 1992. During 1992, the Partnership also reduced the
carrying value of one commercial aircraft by $1.8 million to its estimated
net realizable value of $0.6 million, and the aircraft was sold in August
1992. Additionally in 1992, the Partnership reduced the carrying value of
three commercial aircraft, held for operating leases, its 50% interest in
one commuter aircraft, 114 marine containers, and 224 coal cars by $5.9
million to their aggregate estimated net book value of $7.2 million. The
commuter aircraft, 114 marine containers, and the coal cars were
subsequently sold.
All leases are being accounted for as operating leases. Future minimum
rentals under noncancelable leases at December 31, 1994, during each of
the next five years are approximately $10.5 million - 1995; $6.6 million -
1996; $5.0 million - 1997; $3.4 million - 1998; $2.0 million - 1999.
Contingent rentals based upon utilization were approximately $2.6 million,
$3.1 million, and $5.9 million in 1994, 1993, and 1992, respectively.
The Partnership owns certain equipment which is leased and operated
internationally. Respective revenues and expenses (including depreciation
and
-47-
<PAGE>
PLM EQUIPMENT GROWTH FUND
A Limited Partnership
NOTES TO FINANCIAL STATEMENTS
December 31, 1994
3. Equipment (continued)
amortization) for these assets for the years ended December 31,
1994, 1993, and 1992 are as follows (in thousands):
1994 1993 1992
---- ---- ----
Revenues:
Rail equipment $5,518 $5,694 $6,023
Mobile offshore drilling unit 2,112 2,109 2,055
Marine vessels 6,495 5,638 6,031
Marine containers 1,832 2,746 2,439
Aircraft 2,591 3,021 2,285
Expenses:
Rail equipment $2,028 $3,466 $3,234
Mobile offshore drilling unit 3,517 2,133 2,304
Marine vessels 5,300 5,534 8,015
Marine containers 1,112 1,269 1,128
Aircraft 1,624 2,646 2,176
The net book value of these assets at December 31, 1994 and 1993
is as follows (in thousands):
1994 1993
---- ----
Rail equipment $ 8,471 $ 9,644
Mobile offshore drilling unit 9,510 10,370
Marine vessels 8,226 10,024
Marine containers 4,183 5,744
Aircraft 7,991 14,887
There were no lessees accounting for 10% or more of total revenues
during 1994. The only lessee accounting for 10% or more of the
total revenues during 1993 was Scanports Shipping (11%). There
were no lessees accounting for 10% or more of the total revenues
during 1992.
4. Note Payable
The Partnership has arranged a $28.0 million nonrecourse unsecured
loan with a bank. The terms of the loan provide for quarterly
payment of interest only at LIBOR plus 1.25 percent per annum
(7.25% at December 31, 1994, and 4.75% at December 31, 1993). The
loan is due September 30, 1995. The Partnership intends, and
believes it will be able to, refinance the debt prior to maturity.
At December 31, 1994 and 1993, $28.0 million was outstanding on
this loan. The loan limits additional borrowings and specifies
covenants relating to tangible net worth, collateral coverage, and
ratios for market value and composition of the equipment owned by
the Partnership.
The General Partner believes that the book value of the notes
payable approximates fair value due to its variable interest rate.
-48-
<PAGE>
PLM EQUIPMENT GROWTH FUND
A Limited Partnership
NOTES TO FINANCIAL STATEMENTS
December 31, 1993
5. Income Taxes
The Partnership is not subject to income taxes as any income or
loss is included in the tax returns of the individual Partners.
Accordingly, no provision for income taxes has been made in the
financial statements of the Partnership.
As of December 31, 1994, there were temporary differences of
approximately $12.5 million between the financial statement
carrying values of certain assets and liabilities and the federal
income tax bases of such assets and liabilities, primarily due to
differences in depreciation methods and equipment reserves.
6. Subsequent Event
On March 16, 1995, the Partnership declared quarterly
distributions of $0.575 per outstanding depositary unit, payable
May 15, 1995 to unitholders of record as of March 31, 1995.
-49-
<PAGE>
PLM EQUIPMENT GROWTH FUND
INDEX OF EXHIBITS
Exhibit Page
4. Limited Partnership Agreement of Registrant *
Amendment to Limited Partnership Agreement of
Registrant *
10.1 Management Agreement between Registrant and
PLM Investment Management, Inc. *
10.2 $28.0 Million Loan Agreement, dated as of
August 29, 1989 *
25. Powers of Attorney 51
--------
* Incorporated by reference. See page 33 of this report.
-50-
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned does hereby constitute and appoint Robert N.
Tidball, Stephen Peary, J. Michael Allgood and David J. Davis, jointly and
severally, his true and lawful attorneys-in-fact, each with power of
substitution, for him in any and all capacities, to do any and all acts and
things and to execute any and all instruments which said attorneys, or any of
them, may deem necessary or advisable to enable PLM Financial Services, Inc., as
General Partner of PLM Equipment Growth 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
Equipment Growth 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, 1995 and shall apply only to the annual reports and any
amendments thereto filed with respect to the fiscal year ended December 31,
1994.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this
29th day of March, 1995.
-------------------------------------
Allen V. Hirsch
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned does hereby constitute and appoint Robert N.
Tidball, Stephen Peary, J. Michael Allgood and David J. Davis, jointly and
severally, his true and lawful attorneys-in-fact, each with power of
substitution, for him in any and all capacities, to do any and all acts and
things and to execute any and all instruments which said attorneys, or any of
them, may deem necessary or advisable to enable PLM Financial Services, Inc., as
General Partner of PLM Equipment Growth 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 Equpment
Growth 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,
1995 and shall apply only to the annual reports and any amendments thereto filed
with respect to the fiscal year ended December 31, 1994.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this
29th day of March, 1995.
-----------------------------------
Robert L. Pagel
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned does hereby constitute and appoint Robert N.
Tidball, Stephen Peary, J. Michael Allgood and David J. Davis, jointly and
severally, his true and lawful attorneys-in-fact, each with power of
substitution, for him in any and all capacities, to do any and all acts and
things and to execute any and all instruments which said attorneys, or any of
them, may deem necessary or advisable to enable PLM Financial Services, Inc., as
General Partner of PLM Equipment Growth 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
Equipment Growth 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, 1995 and shall apply only to the annual reports and any
amendments thereto filed with respect to the fiscal year ended December 31,
1994.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this
29th day of March, 1995.
-----------------------------------
J. Alec Merriam
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Article 5 FDS for PLM International Equipment Growth Fund 10-K for the year
ended December 31, 1994.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 2,542
<SECURITIES> 0
<RECEIVABLES> 2,122
<ALLOWANCES> 203
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 119,123
<DEPRECIATION> 69,122
<TOTAL-ASSETS> 56,669
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 24,063
<TOTAL-LIABILITY-AND-EQUITY> 56,669
<SALES> 0
<TOTAL-REVENUES> 25,659
<CGS> 0
<TOTAL-COSTS> 23,891
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,693
<INCOME-PRETAX> 75
<INCOME-TAX> 0
<INCOME-CONTINUING> 75
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 75
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
