UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
FORM 10-Q
[x] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the quarter ended March 31, 1996.
or
[ ] 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
-----------------------
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
-----------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ______
<PAGE>
PLM EQUIPMENT GROWTH FUND
(A Limited Partnership)
BALANCE SHEETS
(in thousands, except unit amounts)
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
-----------------------------------
<S> <C> <C>
Equipment held for operating leases, at cost $ 49,565 $ 52,762
Less accumulated depreciation (35,258) (36,198)
-----------------------------------
14,307 16,564
Equipment held for sale 1,283 2,298
-----------------------------------
Net equipment 15,590 18,862
Cash and cash equivalents 372 1,474
Restricted cash 246 332
Investments in unconsolidated special purpose entities 16,203 16,871
Accounts receivable, less allowance for doubtful accounts
of $315 at March 31, 1996, and $55 at December 31, 1995 1,220 1,282
Prepaid expenses and other assets 121 85
Deferred charges, net of accumulated amortization of
$30 at March 31, 1996, and $17 at December 31, 1995 142 155
-----------------------------------
Total assets $ 33,894 $ 39,061
===================================
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and accrued expenses $ 402 $ 665
Due (from) to affiliates (84) 100
Security deposits 110 126
Prepaid deposits and reserve for repairs 820 836
Notes payable 14,870 23,000
-----------------------------------
Total liabilities 16,118 24,727
Partners' capital (deficit):
Limited Partners (5,785,350 Depositary Units
at March 31, 1996, and 5,810,150 Depositary
Units at December 31, 1995) 18,015 14,609
General Partner (239) (275)
-----------------------------------
Total partners' capital 17,776 14,334
-----------------------------------
Total liabilities and partners' capital $ 33,894 $ 39,061
===================================
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM EQUIPMENT GROWTH FUND
(A Limited Partnership)
STATEMENTS OF INCOME
(in thousands, except per unit amounts)
<TABLE>
<CAPTION>
For the three months
ended March 31,
1996 1995
-------------------------
<S> <C> <C>
Revenues:
Lease revenue $ 2,842 $ 6,020
Interest and other income 69 77
Net gain on disposition of equipment 11,338 643
---------------------------
Total revenues 14,249 6,740
Expenses:
Depreciation and amortization 963 2,286
Management fees to affiliate 140 336
Repairs and maintenance 437 807
Interest expense 401 531
Insurance expense to affiliates -- 94
Other insurance expense 22 74
Marine equipment operating expenses -- 688
General and administrative expenses to affiliate 216 218
Other general and administrative expenses 107 103
---------------------------
Total expenses 2,286 5,137
Equity in net loss of unconsolidated special purpose entities (585) --
---------------------------
Net income $ 11,378 $ 1,603
===========================
Partners' share of net income:
Limited Partners $ 11,264 $ 1,569
General Partner 114 34
---------------------------
Total $ 11,378 $ 1,603
===========================
Net income per Depositary
Unit (5,785,350 Units at March
31, 1996; 5,836,297 Units at
March 31, 1995) $ 1.95 $ 0.27
===========================
Cash distributions $ 3,375 $ 3,397
===========================
Cash distributions per Depositary Unit $ 0.58 $ 0.58
===========================
Special distributions $ 4,398 $ --
===========================
===========================
Special distributions per Depositary Unit $ 0.75 $ --
===========================
Total distributions per Depositary Unit $ 1.33 $ 0.58
===========================
</TABLE>
See accompanying notes to financial statements.
<PAGE>
PLM EQUIPMENT GROWTH FUND
(A Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the year ended December 31, 1995 and the three months ended
March 31, 1996
(in thousands)
<TABLE>
<CAPTION>
Limited General
Partners Partner Total
------------------------------------------------------
<S> <C> <C> <C>
Partners' capital (deficit) at December 31, 1994 $ 24,374 $ (311) $ 24,063
Net income 4,063 171 4,234
Repurchase of Depositary Units (414) -- (414)
Cash distributions (13,414) (135) (13,549)
------------------------------------------------------
Partners' capital (deficit) at December 31, 1995 14,609 (275) 14,334
Net income 11,264 114 11,378
Repurchase of Depositary Units (163) -- (163)
Cash distributions (3,341) (34) (3,375)
Special distributions (4,354) (44) (4,398)
------------------------------------------------------
Partners' capital (deficit) at March 31, 1996 $ 18,015 $ (239) $ 17,776
======================================================
</TABLE>
See accompanying notes to financial statements.
<PAGE>
PLM EQUIPMENT GROWTH FUND
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
For the three months
ended March 31,
1996 1995
----------------------------------
<S> <C> <C>
Operating activities:
Net income $ 11,378 $ 1,603
Adjustment to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 963 2,286
Net gain on disposition of equipment (11,338) (643)
Cash distributions from unconsolidated special
purpose entities in excess of income 668 --
Changes in operating assets and liabilities:
Accounts receivable, net 62 87
Due to affiliates (184) (99)
Prepaid expenses and other assets (36) 7
Restricted cash 1 (966)
Accounts payable and accrued expenses (263) (228)
Security deposits (16) 106
Prepaid deposits and reserve for repairs (16) (113)
----------------------------------
Net cash provided by operating activities 1,219 2,040
----------------------------------
Investing activities:
Payments for capital improvements and
equipment purchases (58) (12)
Proceeds from disposition of equipment 13,718 1,168
----------------------------------
Net cash provided by investing activities 13,660 1,156
----------------------------------
Financing activities:
Principal repayment under note payable (8,130) --
Decrease (increase) in restricted cash 85 (106)
Cash distributions paid to Limited Partners (3,341) (3,363)
Cash distributions paid to General Partner (34) (34)
Special distributions paid to Limited Partners (4,354) --
Special distributions paid to General Partner (44) --
Repurchases of Depositary Units (163) (140)
----------------------------------
Net cash used in financing activities (15,981) (3,643)
----------------------------------
Net decrease in cash and cash equivalents (1,102) (447)
Cash and cash equivalents at beginning of period 1,474 2,542
----------------------------------
Cash and cash equivalents at end of period $ 372 $ 2,095
==================================
Supplemental information:
Interest paid $ 409 $ 508
==================================
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM EQUIPMENT GROWTH FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
March 31, 1996
1. Opinion of Management
In the opinion of the management of PLM Financial Services, Inc., the
General Partner, the accompanying unaudited financial statements contain
all adjustments necessary, consisting primarily of normal recurring
accruals, to present fairly the financial position of PLM Equipment Growth
Fund (the Partnership) as of March 31, 1996, the statements of income for
the three months ended March 31, 1996 and 1995, the statements of changes
in Partners' capital for the year ended December 31, 1995 and the three
months ended March 31, 1996, and the statements of cash flows for the three
months ended March 31, 1996 and 1995. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles (GAAP) have been
condensed or omitted from the accompanying financial statements. For
further information, reference should be made to the financial statements
and notes thereto included in the Partnership's Annual Report on Form 10-K
for the year ended December 31, 1995, on file at the Securities and
Exchange Commission.
2. Investments in Unconsolidated Special Purpose Entities
Prior to 1996, the Partnership accounted for operating activities
associated with joint ownership of rental equipment as undivided interests,
including its proportionate share of each asset with similar wholly-owned
assets in its financial statements. Under generally accepted accounting
principles, the effects of such activities, if material, should be reported
using the equity method of accounting. Therefore, effective January 1,
1996, the Partnership adopted the equity method to account for its
investment in such jointly-held assets.
The principle differences between the previous accounting method and the
equity method relate to the presentation of activities relating to these
assets in the statement of operations. Whereas, under equity accounting the
Partnership's proportionate share is presented as a single net amount,
"Equity in net income (loss) of unconsolidated special purpose entities",
under the previous method, the Partnership's income statement reflected its
proportionate share of each individual item of revenue and expense.
Accordingly, the effect of adopting the equity method of accounting has no
cumulative effect on previously reported partner's capital or on the
Partnership's net income (loss) for the period of adoption. Because the
effects on previously issued financial statements of applying the equity
method of accounting to investments in jointly-owned assets are not
considered to be material to such financial statements taken as a whole,
previously issued financial statements have not been restated. However,
certain items have been reclassified in the previously issued balance sheet
to conform to the current period presentation.
The net investments in unconsolidated special purpose entities include the
following jointly-owned equipment (and related assets and liabilities) (in
thousands):
<TABLE>
<CAPTION>
March 31, December 31,
% Ownership Equipment 1996 1995
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
50% Product Tanker $ 2,484 $ 2,615
50% G.E. Aircraft engine 700 731
50% Boeing 737-200 2,049 2,368
50% Fairchild Metro III 150 170
55% Mobile Offshore drilling unit 7,286 7,295
70% Fairchild Metro III 342 358
12% Beoing 767-200 3,192 3,334
---------------------------------
Net investments $ 16,203 $ 16,871
=================================
</TABLE>
<PAGE>
PLM EQUIPMENT GROWTH FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
March 31, 1996
2. Investments in Unconsolidated Special Purpose Entities (continued)
At March 31, 1996, certain jointly-owned equipment was subject to pending
contracts for sale. The Partnership's investment in these assets is
reported in "Investment in unconsolidated special purpose entities". The
assets held for sale consisted of a 55%-owned mobile offshore drilling unit
for sale for $17.3 million, with a net book value of $7.5 million and a
70%-owned commuter aircraft for sale for $0.6 million, with a net book
value of $0.3 million. At December 31, 1995, investments in unconsolidated
special purpose entities included the Partnership's investment in a
55%-owned mobile offshore drilling unit that was subject to a pending
contract for sale.
The Partnership had one 50%-owned commuter aircraft, included in
investments in unconsolidated special purpose entities, with a carrying
value of $1.3 million, which was off lease at March 31, 1996.
3. Distributions
Distributions are recorded when paid. Operating cash distributions were
$3.4 million for the three months ended March 31, 1996 and 1995,
respectively. In addition, a $4.4 million special distribution was paid to
the partners during the three months ended March 31, 1996, from the
proceeds of seven offshore supply vessels sold in January 1996,
representing approximately 8% of the Partnership's portfolio on an original
cost basis. There were no special distributions paid to partners during the
three months ended March 31, 1995. Cash distributions to Unitholders in
excess of net income are considered to represent a return of capital.
During the quarter ended March 31, 1995, cash distributions to Unitholders
of $1.8 million were deemed to be a return of capital.
Cash distributions of $1.7 million ($0.289 per Depositary Unit) were
declared on March 11, 1996, and are to be paid on May 15, 1996, to the
Unitholders of record as of May 29, 1996.
4. Depositary Unit Repurchase Plan
The Partnership has engaged in a program to repurchase up to 250,000
Depositary Units. During the three months ended March 31, 1996, the
Partnership had repurchased 24,800 Depositary Units at a cost of $163,000.
As of March 31, 1996, the Partnership had repurchased a total of 199,650
Depositary Units at a cost of $2.6 million.
5. Delisting of Partnership Units
The General Partner delisted the Partnership's Depositary units from the
American Stock Exchange (AMEX) on April 8, 1996. The last day for trading
on the AMEX was March 22, 1996. Under the Internal Revenue Code (the Code)
the Partnership was classified as a Publicly Traded Partnership. The Code
treats all Publicly Traded Partnerships as corporations if they are
publicly traded after December 31, 1997. Treating the Partnership as a
corporation would mean the Partnership itself would have become a taxable,
rather than a "flow through" entity. As a taxable entity, the income of the
Partnership would have become subject to federal taxation at both the
partnership level and at the investor level to the extent that income would
have been distributed to an investor. In addition, the General Partner
believed that the trading price of the Depositary Units would have become
distorted when the Partnership began the final liquidation of the
underlying equipment portfolio. In order to avoid taxation of the
Partnership as a corporation and to prevent unfairness to Unitholders, the
General Partner delisted the Partnership's Depositary Units from the AMEX.
While the Partnership's Depositary Units are no longer publicly traded on a
national stock exchange, the General Partner continues to manage the
equipment of the Partnership and prepare and distribute quarterly and
annual reports and Forms 10-Q and 10-K in accordance with the Securities
and Exchange Commission requirements. In addition, the General Partner
continues to provide pertinent tax reporting forms and information to
Unitholders. The General Partner anticipates an informal market for the
Partnership's units may develop in the secondary marketplace similar to
that which currently exists for non-publicly traded partnerships.
<PAGE>
PLM EQUIPMENT GROWTH FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
March 31, 1996
6. Equipment
Owned equipment held for operating leases is stated at cost. Equipment held
for sale is stated at the lower of the equipment's depreciated cost or
estimated net realizable value and is subject to a pending contract for
sale.
The components of owned equipment are as follows (in thousands):
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
---------------------------------
<S> <C> <C>
Railcar equipment $ 24,161 $ 24,339
Marine containers 8,512 8,728
Aircraft and aircraft engines 6,299 8,992
Trailers 10,593 10,703
---------------------------------
49,565 52,762
Less accumulated depreciation (35,258) (36,198)
---------------------------------
14,307 16,564
Equipment held for sale 1,283 2,298
---------------------------------
=================================
Net equipment $ 15,590 $ 18,862
=================================
</TABLE>
At March 31, 1996, equipment held for sale included one aircraft engine for
sale for $1.2 million with a net book value of $1.3 million, subject to a
pending contract for sale. At December 31, 1995, equipment held for sale
included seven offshore supply vessels with a net book value of $2.3
million, which were sold in January 1996, for $13.4 million.
Revenues are earned by placing the equipment under operating leases which
are generally billed monthly or quarterly. Some of the Partnership's 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 equipment to sublessees, after deducting
certain direct operating expenses of the pooled equipment. Rents for
railcars are based on mileage traveled or a fixed rate; rents for all other
equipment are based on fixed rates.
As of March 31, 1996, all equipment in the Partnership's portfolio was on
lease or operating in PLM-affiliated short-term trailer rental facilities
except for 57 marine containers, 1 aircraft engine, and 2 railcars with
carrying values of $0.1 million, $0.2 million, and $16,000, respectively.
In the third quarter of 1994, the Partnership ended its reinvestment phase
in accordance with the Limited Partnership Agreement; therefore, no
equipment was purchased during the quarters ended March 31, 1996 and 1995.
Capital improvements to the Partnership's equipment, totaling $58,000 and
$12,000 were made during the quarters ended March 31, 1996 and 1995,
respectively.
During the three months ended March 31, 1996, the Partnership sold or
disposed of 7 offshore supply vessels, 82 marine containers, 6 trailers,
and 7 railcars with an aggregate net book value of $2.4 million for
proceeds of $13.7 million. During the three months ended March 31, 1995,
the Partnership sold or disposed of 87 marine containers, 6 trailers, and
12 railcars with an aggregate net book value of $0.6 million for aggregate
proceeds of $1.2 million.
7. Debt
On March 31, 1996, the Partnership made its scheduled $7.0 million debt
payment as required by the $23 million adjustable rate senior secured note
agreement, and made an additional $1.1 million debt payment with equipment
sales proceeds to reduce the outstanding debt obligation to $14.9 million.
<PAGE>
PLM EQUIPMENT GROWTH FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
March 31, 1996
8. Subsequent Events
During April 1996, the Partnership sold a 70%-owned commuter aircraft with
a net book value of $0.5 million, for $0.6 million. The equipment was
included in investments in unconsolidated special purpose entities as of
March 31, 1996.
During May 1996, the Partnership sold an aircraft engine with a net book
value of $1.3 million, for $1.2 million. The equipment was included in
equipment held for sale as of March 31, 1996.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(I) RESULTS OF OPERATIONS
Comparison of the Partnership's Operating Results for the Three Months Ended
March 31, 1996 and 1995
(A) Revenues
Total revenues of $14.2 million for the quarter ended March 31, 1996, increased
from $6.7 million for the same quarter in 1995. The increase was due to higher
net gain on disposition of equipment.
(1) Lease revenues decreased to $2.8 million for the quarter ended March 31,
1996, compared to $6.0 million in the same quarter of 1995. The following table
presents lease revenues by equipment type (in thousands):
<TABLE>
<CAPTION>
For the three months
ended March 31,
1996 1995
----------------------------
<S> <C> <C>
Railcar equipment $ 1,684 $ 1,768
Marine vessels 139 1,928
Aircraft and aircraft engines 120 775
Trailers 514 659
Marine containers 385 444
Mobile offshore drilling unit -- 446
============================
$ 2,842 $ 6,020
============================
</TABLE>
Although net income was not affected by the change in accounting for
investments in unconsolidated special purpose entities, lease revenues decreased
$1.3 million in the first quarter ended 1996, which included $0.5 million, $0.4
million, and $0.4 million in decreases for marine vessel, aircraft and aircraft
engine, and mobile offshore drilling unit revenue, respectively, which
represented revenue for jointly-owned assets (refer to the "Equity in net loss
of unconsolidated special purpose entities" section below). The remaining
decreases in 1996 lease revenues are explained below:
(a) A $0.3 million decrease in aircraft and aircraft engine lease revenue
resulting from the sale of one 50%-owned commercial aircraft and one commuter
aircraft during the second quarter of 1995, and the remarketing of an aircraft
engine in 1996;
(b) A $1.3 million decrease in marine vessel lease revenue due to the sale
of one of the Partnership's 50%-owned marine vessels in the second quarter of
1995, and due to the sale of seven offshore supply vessels in 1996;
(c) A $0.1 million decrease in railcar lease revenue resulting from the
sale of 7 railcars during 1996, and 18 railcars during 1995;
(d) A $0.1 million decrease in trailer lease revenue resulting from the
sale of 6 trailers during 1996, and 45 trailers during 1995, and due to lower
utilization rates;
(e) A $0.1 million decrease in marine container lease revenue due to the
sale of 82 marine containers during 1996, and 396 marine containers during 1995.
<PAGE>
(2) Net gain on disposition of equipment for the first quarter 1996 totaled
$11.3 million which resulted mainly from the sale of seven offshore supply
vessels with a net book value of $2.3 million, for proceeds of $13.4 million.
The remaining gain resulted from the sale or disposal of 82 marine containers, 6
trailers, and 7 railcars, with an aggregate net book value of $0.1 million for
aggregate proceeds of $0.3 million. For the first quarter of 1995, the $0.6
million net gain on disposition of equipment resulted from the sale or disposal
of 87 marine containers, 6 trailers, and 12 railcars with an aggregate net book
value of $0.6 million, for aggregate proceeds of $1.2 million.
(B) Expenses
Total expenses for the three months ended March 31, 1996 of $2.3 million,
decreased from $5.1 million for the same period in 1995. Although net income was
not affected as a result of the change in accounting for investments in
unconsolidated special purpose entities, expenses decreased $1.9 million in the
first quarter of 1996, which included $0.8 million, $0.2 million, $0.3 million,
$0.4 million, $0.1 million and $0.1 million decreases in depreciation, repairs
and maintenance, marine equipment operating, bad debt, management fees, and
insurance expenses, respectively, all relating to jointly-owned assets (refer to
the "Equity in net loss of unconsolidated special purpose entities" section
below). The remaining decreases in 1996 expenses are explained below:
(a) A $0.2 million decrease in repairs and maintenance expenses and a $0.4
million decrease in marine equipment operating expenses resulting from the sale
of one of the Partnership's 50%-owned marine vessels during the second quarter
of 1995, the sale of seven offshore supply vessels in 1996, and the sale of
railcars during 1996 and 1995;
(b) A $0.5 million decrease in depreciation and amortization expense from
1995 levels primarily due to the sale of certain assets during 1996 and 1995.
(C) Equity in net loss of unconsolidated special purpose entities represents net
loss generated from jointly-owned assets. At March 31, 1996, the Partnership had
a 50%-interest in a marine vessel, an aircraft engine, a commercial aircraft and
a commuter aircraft; a 55%-interest in a mobile offshore drilling unit; a
12%-interest in a commercial aircraft; and a 70%-interest in a commuter
aircraft, which were all accounted for under the equity method. The 50%-owned
commuter aircraft was off lease and being remarketed during the first quarter of
1996, resulting in a $0.1 million net loss during that quarter. Further net loss
resulted in the first quarter of 1996, of $0.4 million related to the 50%-owned
commercial aircraft for bad debt expense to reflect the General Partner's
evaluation of the collectibility of receivables due from the aircraft's lessee
that encountered financial difficulties.
(D) Net Income
As a result of the foregoing, the Partnership's net income of $11.4 million for
the first quarter of 1996, increased from net income of $1.6 million during the
same period in 1995. The Partnership's ability to operate and liquidate assets,
secure leases, and re-lease those assets whose leases expire during the duration
of the Partnership is subject to many factors and the Partnership's performance
in the first quarter 1996 is not necessarily indicative of future periods. In
the first quarter 1996, the Partnership distributed $7.8 million to the
Unitholders, or $1.33 per Depositary Unit, which included a special distribution
of $4.4 million, or $0.75 per depositary unit.
(II) 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 $14.9 million, cannot be
increased. The Partnership relies on operating cash flow and proceeds from the
disposition of equipment to meet its operating obligations and to make cash
distributions to the Limited Partners.
<PAGE>
For the three months ended March 31, 1996, the General Partner generated
sufficient operating cash flows to meet its operating obligations and to make
distributions to the partners.
Pursuant to the Limited Partnership Agreement, the Partnership ceased
during the third quarter of 1994 to reinvest in additional equipment. Equipment
sales now result in partial liquidation of the Partnership's portfolio, with
proceeds being used for payment of debt and distributions to partners. The
General Partner will pursue a strategy of selectively re-leasing equipment to
achieve competitive returns, or selling equipment that is underperforming or
whose operation becomes prohibitively expensive in the period prior to the final
liquidation of the Partnership.
On March 31, 1996, the Partnership made its scheduled $7.0 million debt
payment as required by the $23 million adjustable rate senior secured note
agreement, and made an additional $1.1 million debt payment with equipment sales
proceeds to reduce the outstanding debt obligation to $14.9 million. In
addition, a $4.9 million principal payment is due on December 31, 1997, with the
remaining principal balance due on December 31, 1998. The Partnership intends to
retire the debt with proceeds from the sales of equipment during the liquidation
phase of the Partnership.
As of the first quarter of 1996, the cash distribution rate has been
reduced to more closely reflect current and expected net cash flows from
operations. Continued weak market conditions in certain equipment sectors and
equipment sales have reduced overall lease revenues in the Partnership to the
point where reductions in distribution levels are now necessary. In addition,
with the onset of the equipment liquidation phase of the Partnership in 1997,
the size of the Partnership's remaining equipment portfolio, and, in turn, the
amount of net cash flows from operations, will continue to become progressively
smaller as assets are sold. Although operating distribution levels will be
reduced, significant asset sales may result in potential special distributions
to Unitholders.
(III) DELISTING OF PARTNERSHIP UNITS
The General Partner delisted the Partnership's Depositary units from the
American Stock Exchange (AMEX) on April 8, 1996. The last day for trading on the
AMEX was March 22, 1996. For the past three years, the Partnership engaged in a
plan to purchase up to 250,000 Depositary Units. During the three months ended
March 31, 1996, the Partnership repurchased 24,800 Depositary Units at a cost of
$163,000. As of March 31, 1996, the Partnership had repurchased a total of
199,650 Depositary Units at a cost of $2.6 million.
(IV) TRENDS
The Partnership continues to pursue a strategy of selectively re-leasing
equipment to achieve competitive returns, or selling equipment that is
underperforming or whose operation becomes prohibitively expensive. During 1996,
marine container and refrigerated over-the-road trailer markets, oversupply
conditions, industry consolidation, and other factors are expected to result in
falling rates and lower returns. In the dry over-the-road trailer markets,
strong demand and back log of new equipment deliveries is expected to produce
high utilization and returns. The marine vessel, railcar and mobile offshore
drilling unit markets may produce increased rates as demand for equipment is
increasing faster than new additions, net of retirements. These different
markets are expected to have individual affects on the Partnership's ability to
re-lease and achieve competitive returns and to sell equipment.
With the onset of the Partnership's equipment liquidation phase in 1997,
the Partnership may choose to sell equipment rather than re-lease if market
conditions are optimal. As the Partnership sells equipment, the size of the
remaining equipment portfolio will become smaller, and in turn, the net cash
flows from operations, and therefore, distributions levels will be reduced. Cash
flows from operations will be used to pay loan principal on debt and pay
operating distributions to unitholders. Significant asset sales may result in
potential special distributions to Unitholders.
<PAGE>
PART II - OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None.
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PLM EQUIPMENT GROWTH FUND
By: PLM Financial Services, Inc.
General Partner
Date: May 13, 1996 By: /s/ David J. Davis
------------------
David J. Davis
Vice President and
Corporate Controller
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 372
<SECURITIES> 0
<RECEIVABLES> 1,535
<ALLOWANCES> 315
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 49,565
<DEPRECIATION> (35,258)
<TOTAL-ASSETS> 33,894
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 17,776
<TOTAL-LIABILITY-AND-EQUITY> 33,894
<SALES> 0
<TOTAL-REVENUES> 14,249
<CGS> 0
<TOTAL-COSTS> 1,885
<OTHER-EXPENSES> 0
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<INCOME-PRETAX> 11,378
<INCOME-TAX> 0
<INCOME-CONTINUING> 11,378
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,378
<EPS-PRIMARY> 1.95
<EPS-DILUTED> 1.95
</TABLE>
