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, 2000
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 800, SAN FRANCISCO, CA 94105-1301
(Address of principal (Zip code)
executive offices)
Registrant's telephone number, including area code: (415) 974-1399
-----------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes X No ______
<PAGE>
<TABLE>
<CAPTION>
PLM EQUIPMENT GROWTH FUND
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
(in thousands of dollars, except unit amounts)
March 31, December 31,
2000 1999
-------------------------------------
Assets
<S> <C> <C>
Equipment held for operating lease, at cost $ 24,074 $ 24,580
Less accumulated depreciation (20,924) (20,967)
-------------------------------------
Net equipment 3,150 3,613
Cash and cash equivalents 2,982 1,446
Accounts receivable, less allowance for doubtful accounts
of $83 in 2000 and $36 in 1999 383 365
Investments in unconsolidated special-purpose entities 1,343 1,755
Prepaid expenses and other assets 29 38
-------------------------------------
Total assets $ 7,887 $ 7,217
=====================================
Liabilities and partners' capital
Liabilities:
Accounts payable and accrued expenses $ 205 $ 337
Due to affiliates 38 63
Lessee deposits 25 63
-------------------------------------
Total liabilities 268 463
-------------------------------------
Partners' capital:
Limited partners (5,785,350 depositary units
as of March 31, 2000 and December 31, 1999) 7,619 6,754
General Partner -- --
-------------------------------------
Total partners' capital 7,619 6,754
-------------------------------------
Total liabilities and partners' capital $ 7,887 $ 7,217
=====================================
</TABLE>
See accompanying notes to financial statements.
<PAGE>
PLM EQUIPMENT GROWTH FUND
(A LIMITED PARTNERSHIP)
STATEMENTS OF INCOME
(in thousands of dollars, except weighted-average unit amounts)
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
REVENUES 2000 1999
<S> <C> <C>
Lease revenue $ 1,637 $ 1,672
Interest and other income 19 49
Net gain on disposition of equipment 19 89
------------------------
Total revenues 1,675 1,810
------------------------
EXPENSES
Depreciation 363 386
Repairs and maintenance 380 469
Insurance expense 9 9
Management fees to affiliate 87 114
General and administrative expenses to affiliates 68 77
Other general and administrative expenses 168 133
Provision for (recovery of ) bad debts 48 (103)
------------------------
Total expenses 1,123 1,085
------------------------
Equity in net income of unconsolidated
special-purpose entities 1,286 42
------------------------
Net income $ 1,838 $ 767
========================
PARTNERS' SHARE OF NET INCOME
Limited partners $ 1,828 $ 757
General Partner 10 10
------------------------
Total $ 1,838 $ 767
========================
Net income per weighted-average depositary unit $ 0.32 $ 0.13
========================
Cash distribution $ 973 $ 1,031
========================
Cash distribution per weighted-average depositary unit: $ 0.17 $ 0.18
========================
See accompanying notes to financial statements.
</TABLE>
<PAGE>
PLM EQUIPMENT GROWTH FUND
(A LIMITED PARTNERSHIP)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
FOR THE PERIOD FROM DECEMBER 31, 1998 TO MARCH 31, 2000
(in thousands of dollars)
<TABLE>
<CAPTION>
Limited General
Partners Partner Total
--------------------------------------------------------
<S> <C> <C> <C>
Partners' capital as of December 31, 1998 $ 12,327 $ -- $ 12,327
Net income 4,222 99 4,321
Cash distribution (3,811) (39) (3,850)
Special distribution (5,984) (60) (6,044)
--------------------------------------------------------
Partners' capital as of December 31, 1999 6,754 -- 6,754
Net income 1,828 10 1,838
Cash distribution (963) (10) (973)
---------------------------------------------------------
Partners' capital as of March 31, 2000 $ 7,619 $ -- $ 7,619
=========================================================
</TABLE>
See accompanying notes to financial statements.
<PAGE>
PLM EQUIPMENT GROWTH FUND
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
(in thousands of dollars)
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
2000 1999
----------------------------------
Operating activities
<S> <C> <C>
Net income $ 1,838 $ 767
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Depreciation 363 386
Net gain on disposition of equipment (19) (89)
Equity in net income from unconsolidated
special-purpose entities (1,286) (42)
Changes in operating assets and liabilities:
Accounts receivable, net (18) (31)
Prepaid expenses and other assets 9 9
Accounts payable and accrued expenses (132) 8
Due to affiliates (25) 52
Lessee deposits (38) 54
----------------------------------
Net cash provided by operating activities 692 1,114
----------------------------------
INVESTING ACTIVITIES
Payments for capital improvements -- (11)
Liquidation distributions from unconsolidated
special-purpose entities 1,824 --
Proceeds from disposition of equipment 119 148
Distributions from (additional investments in) unconsolidated
special-purpose entities (126) 18
----------------------------------
Net cash provided by investing activities 1,817 155
----------------------------------
FINANCING ACTIVITIES
Cash distribution paid to limited partners (963) (1,021)
Cash distribution paid to General Partner (10) (10)
----------------------------------
Net cash used in financing activities (973) (1,031)
----------------------------------
Net increase in cash and cash equivalents 1,536 238
Cash and cash equivalents at beginning of period 1,446 3,289
----------------------------------
Cash and cash equivalents at end of period $ 2,982 $ 3,527
==================================
</TABLE>
See accompanying notes to financial statements.
<PAGE>
PLM EQUIPMENT GROWTH FUND
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
1. OPINION OF MANAGEMENT
In the opinion of the management of PLM Financial Services, Inc. (FSI or 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, 2000 and 1999, the statements of income for the
three months ended March 31, 2000 and 1999, the statements of changes in
Partners' capital from December 31, 1998 to March 31, 2000, and the statements
of cash flows for the three months ended March 31, 2000 and 1999. Certain
information and note disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted from the accompanying financial statements. For further
information, reference should be made to the financial statements and notes
thereto included in the Partnership's Annual Report on Form 10-K for the year
ended December 31, 1999, on file at the Securities and Exchange Commission.
2. SCHEDULE OF PARTNERSHIP PHASES
The Partnership, in accordance with its limited partnership agreement, entered
its liquidation phase on January 1, 1998, and has commenced an orderly
liquidation of the Partnership assets. The Partnership will terminate on
December 31, 2006, unless terminated earlier upon the sale of all equipment or
by certain other events. The General Partner may no longer reinvest cash flows
and surplus funds in equipment. All future cash flows and surplus funds, if any,
are to be used for distributions to partners, except to the extent used to
maintain reasonable reserves. During the liquidation phase, the Partnership's
assets will continue to be recorded at the lower of the carrying amount or fair
value less cost to sell.
3. CASH DISTRIBUTIONS
Cash distributions are recorded when paid and may include amounts in excess of
net income that are considered to represent a return on capital. Operating cash
distributions were $1.0 million for the three months ended March 31, 2000 and
1999. Cash distributions to the limited partners in excess of net income are
considered to represent a return of capital. During the three months ended March
31, 2000 and 1999, cash distributions to unitholders of $0 and $0.3 million,
respectively, were deemed to be a return of capital
Operating cash distributions related to the results from the first quarter of
2000 of $1.0 million are to be paid during the second quarter of 2000. In
addition, the Partnership will make a special distribution of $1.4 million
during the second quarter of 2000.
4. TRANSACTIONS WITH GENERAL PARTNER AND AFFILIATES
The balance due to affiliates as of March 31, 2000, includes $38,000 due to FSI
and its affiliate for management fees. The balance due to affiliates as of
December 31, 1999 includes $0.1 million due to FSI and its affiliate for
management fees.
The Partnership's proportional share of USPE-affiliated management fees of
$17,000 and $0 were payable as of March 31, 2000 and 1999, respectively.
<PAGE>
PLM EQUIPMENT GROWTH FUND
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
4. TRANSACTIONS WITH GENERAL PARTNER AND AFFILIATES (CONTINUED)
The Partnership's proportional share of the affiliated expenses incurred by the
USPEs during 2000 and 1999 is listed in the following table (in thousands of
dollars):
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
2000 1999
---------------------------
<S> <C> <C>
Management fees $ 21 $ 5
Data processing and administrative
expenses 7 12
Insurance expense -- 5
</TABLE>
Transportation Equipment Indemnity Company, Ltd. (TEI), an affiliate of the
General Partner, will no longer provide certain marine insurance coverage as had
been provided in prior years. These services will be provided by an unaffiliated
third party. TEI was liquidated in the first quarter of 2000.
5. EQUIPMENT
The components of owned equipment were as follows (in thousands of dollars):
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
-----------------------------------
<S> <C> <C>
Rail equipment $ 21,367 $ 21,392
Trailers 1,520 1,617
Marine containers 1,187 1,571
-----------------------------------
24,074 24,580
Less accumulated depreciation (20,924) (20,967)
==================================
Net equipment $ 3,150 $ 3,613
==================================
</TABLE>
As of March 31, 2000, all equipment in the Partnership's owned equipment
portfolio was on lease or operating in PLM-affiliated short-term trailer rental
facilities, except for 14 marine containers and 7 railcars with an aggregate net
book value of $31,000. As of December 31, 1999, all equipment in the
Partnership's owned equipment portfolio was on lease or operating in
PLM-affiliated short-term trailer rental facilities, except for 11 railcars with
an aggregate net book value of $43,000.
Capital improvements to the Partnership's equipment of $0 and $11,000 were made
during the three months ended March 31, 2000, and March 31, 1999, respectively.
During the three months ended March 31, 2000, the Partnership sold or disposed
of marine containers, railcars, and trailers, with an aggregate net book value
of $0.1 million, for proceeds of $0.1 million.
During the three months ended March 31, 1999, the Partnership sold or disposed
of marine containers, trailers, and railcars with an aggregate net book value of
$0.1 million, for proceeds of $0.1 million.
<PAGE>
PLM EQUIPMENT GROWTH FUND
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
6. INVESTMENTS IN UNCONSOLIDATED SPECIAL-PURPOSE ENTITIES
The net investments in unconsolidated special-purpose entities included the
following jointly-owned equipment (and related assets and liabilities) (in
thousands of dollars):
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
-----------------------------------------
<S> <C> <C>
50% interest in an entity owning a product tanker $ 1,349 $ 1,397
50% interest in an entity that owned a Boeing 737-200A 7 371
18% interest in an entity that owned a Boeing 727-200 2 2
12% interest in an entity that owned a Boeing 767-200 ER (15) (15)
=========================================
Net investments $ 1,343 $ 1,755
=========================================
</TABLE>
During the first quarter of 2000, the General Partner sold the
Partnership's 50% interest in a Boeing 737-200A for proceeds of $1.8
million that resulted in a gain on disposition of $1.5 million.
7. OPERATING SEGMENTS
The Partnership operates primarily in three different segments, railcar
leasing, trailer leasing, and marine container leasing. Each equipment
leasing segment engages in short-term and mid-term operating leases to a
variety of customers. The following tables present a summary of the
operating segments (in thousands of dollars):
<TABLE>
<CAPTION>
Marine
Railcar Trailer Container All
For the quarter ended March 31, Leasing Leasing Leasing Other<F1>1 Total
2000
REVENUES
<S> <C> <C> <C> <C> <C>
Lease revenue $ 1,507 $ 81 $ 49 $ -- $ 1,637
Interest income and other -- -- -- 19 19
Net gain (loss) on disposition
of equipment 18 14 (13) $ -- 19
--------------------------------------------------------------
1,525 95 36 19 1,675
COST AND EXPENSES
Operations support 354 25 -- 10 389
Depreciation 323 21 19 -- 363
General and administrative 31 25 180 236
expenses
Management fees -- -- -- 87 87
Provision for bad debts 39 9 -- -- 48
---------------------------------------------------------------
Total costs and expenses 747 80 19 277 1,123
Equity in net income of USPEs -- -- -- 1,286 1,286
--------------------------------------------------------------
Net income $ 778 $ 15 $ 17 $ 1,028 $ 1,838
==============================================================
Total assets as of March 31, 2000 $ 2,598 $ 471 $ 461 $ 4,357 $ 7,887
==============================================================
<FN>
- -----------------------
<F1> 1 Includes revenues and costs not identifiable to a particular segment
such as interest expense, interest income and other, and certain operations
support and general and administrative expenses. Also includes income from and
assets related to an investment in an entity owning a marine vessel and an
interest in an entity owning an aircraft.
</FN>
</TABLE>
<PAGE>
PLM EQUIPMENT GROWTH FUND
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
7. OPERATING SEGMENTS (CONTINUED)
<TABLE>
<CAPTION>
Marine
Railcar Trailer Container All
For the quarter ended March 31, Leasing Leasing Leasing Other<F1>1 Total
1999
REVENUES
<S> <C> <C> <C> <C> <C>
Lease revenue $ 1,490 $ 134 $ 48 $ -- $ 1,672
Interest income and other -- -- -- 49 49
Net gain on disposition
of equipment 29 59 1 -- 89
---------------------------------------------------------------
Total revenues 1,519 193 49 49 1,810
COST AND EXPENSES
Operations support 441 31 -- 6 478
Depreciation 325 35 26 -- 386
General and administrative 45 35 1 129 210
expenses
Management fees -- -- -- 114 114
Provision for (recovery of) (100) 1 -- (4) (103)
bad debts
-----------------------------------------------------------------
Total costs and expenses 711 102 27 245 1,085
Equity in net income of USPEs -- -- -- 42 42
-----------------------------------------------------------------
Net income (loss) $ 808 $ 91 $ 22 $ (154 ) $ 767
=================================================================
Total assets as of March 31, 1999 $ 3,767 $ 502 $ 2,341 $ 6,260 $ 12,870
=================================================================
<FN>
- -----------------------
<F1> 1 Includes revenues and costs not identifiable to a particular segment
such as interest expense, interest income and other, and certain operations
support and general and administrative expenses. Also includes income from and
assets related to an investment in an entity owning a marine vessel and an
interest in an entity owning an aircraft.
</FN>
</TABLE>
8. NET INCOME PER WEIGHTED-AVERAGE PARTNERSHIP UNIT
Net income per weighted-average Partnership unit was computed by dividing
net income attributable to limited partners by the weighted-average number
of Partnership units deemed outstanding during the period. The
weighted-average number of Partnership units deemed outstanding during the
three months ended March 31, 2000 and 1999 was 5,785,350.
9. CONTINGENCIES
The Partnership, together with affiliates, has initiated litigation in
various official forums in India against a defaulting Indian airline lessee
to repossess Partnership property and to recover damages for failure to pay
rent and failure to maintain such property in accordance with relevant lease
contracts. The Partnership has repossessed all of its property previously
leased to such airline, and the airline has ceased operations. In response
to the Partnership's collection efforts, the airline filed counterclaims
against the Partnership in excess of the Partnership's claims against the
airline. The General Partner believes that the airline's counterclaims are
completely without merit, and the General Partner will vigorously defend
against such counterclaims. The General Partner believes the likelihood of
an unfavorable outcome from the counterclaims is remote.
<PAGE>
PLM EQUIPMENT GROWTH FUND
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
10. LIQUIDATION AND SPECIAL DISTRIBUTIONS
On January 1, 1998, the General Partner began the liquidation phase of the
Partnership with the intent to commence an orderly liquidation of the
Partnership assets. The General Partner is actively marketing the remaining
equipment portfolio with the intent of maximizing lease revenues and sale
proceeds. As sale proceeds are received the General Partner intends to
periodically declare special distributions to distribute the sale proceeds
to the partners. During the liquidation phase of the Partnership the
equipment will continue to be leased under operating leases until sold.
Operating cash flows, to the extent they exceed Partnership expenses, will
continue to be distributed on a quarterly basis to partners. The amounts
reflected for assets and liabilities of the Partnership have not been
adjusted to reflect liquidation values. The equipment portfolio continues
to be carried at the lower of depreciated cost or fair value less cost to
dispose. Although the General Partner estimates that there will be
distributions after liquidation of assets and liabilities, the amounts
cannot be accurately determined prior to actual liquidation of the
equipment. Any excess proceeds over expected Partnership obligations will
be distributed to the Partners throughout the liquidation period. Upon
final liquidation, the Partnership will be dissolved.
No special distributions were paid in the first quarter of 2000 and 1999.
The Partnership is not permitted to reinvest proceeds from sales or
liquidations of equipment. These proceeds, in excess of operational cash
requirements, are periodically paid out to limited partners in the form of
special distributions. The sales and liquidations occur because of certain
damaged equipment, the determination by the General Partner that it is the
appropriate time to maximize the return on an asset through sale of that
asset, and, in some leases, the ability of the lessee to exercise purchase
options.
11. SUBSEQUENT EVENT
On April 20, 2000, the General Partner for the Partnership announced that
effective immediately, it will not recognize any further transfers
involving trading of units in this partnership for the remainder of the
2000 calendar year. PLM Equipment Growth Fund is listed on the OTC Bulletin
Board under the symbol GFXPZ.
In making the announcement, the General Partner cited the Partnership's
need to continue to comply with Internal Revenue Service (IRS) Notice 88-75
and IRS Code Section 7704, which contain safe harbor provisions regarding
the maximum number of partnership units that can be traded during a
calendar year in order for a partnership not to be deemed a publicly traded
partnership for income tax purposes. Transfers for the remainder of the
year may only be processed, pursuant to IRS Code Section 7704, through a
qualified matching service. The General Partner will also continue to
recognize transfers specifically excluded from the safe harbor limitations,
referred to in the regulations as "transfers not involving trading," which
includes transfers at death, transfers between family members, and
transfers involving distributions from a qualified retirement plan
(this space left blank intentionally)
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(I) RESULTS OF OPERATIONS
COMPARISON OF PLM EQUIPMENT GROWTH FUND'S (THE PARTNERSHIP'S) OPERATING RESULTS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(A) Owned Equipment Operations
Lease revenues less direct expenses (defined as repairs and maintenance, and
asset-specific insurance expenses) on owned equipment decreased during the
quarter ended March 31, 2000, when compared to the same period of 1999. Gains or
losses from the sale of equipment interest, and other income, and certain
expenses such as depreciation and general and administrative expenses relating
to the operating segments (see Note 7 to the unaudited financial statements),
are not included in the owned equipment operation discussion because these
expenses are indirect in nature, not a result of operations but the result of
owning a portfolio of equipment. The following table presents lease revenues
less direct expenses by owned equipment type (in thousands of dollars):
For the Three Months
Ended March 31,
2000 1999
----------------------------
Railcars $ 1,152 $ 1,049
Trailers 56 103
Marine containers 48 48
Railcars: Railcar lease revenues and direct expenses were $1.5 million and $0.4
million, respectively, for the quarter ended March 31, 2000, compared to $1.5
million and $0.4 million, respectively, for the same period of 1999. Direct
revenues during the first quarter of 2000 remained approximately the same as the
same period in 1999 due to the low number of off-lease railcars in both periods,
direct expenses decreased by $0.1 million due to repairs required in the first
quarter 1999 which were not necessary in the first quarter of 2000.
Trailers: Trailer lease revenues and direct expenses were $0.1 million and
$25,000 respectively, for the quarter ended March 31, 2000, compared to $0.1
million and $31,000, respectively, for the same period of 1999. The number of
trailers owned by the Partnership has been declining over the past twelve months
due to sales and dispositions. The result of this declining fleet has been a
decrease in trailer contribution.
(B) Indirect Expenses Related to Owned Equipment Operations
Total indirect expenses of $0.7 million for the quarter ended March 31, 2000,
increased from $0.6 million for the same period of 1999. The increase is due
primarily to the recovery of a previously recorded bad debt in 1999. A similar
recovery did not occur in the first quarter of 2000.
(C) Net Gain on Disposition of Owned Equipment
The net gain on disposition of owned equipment for the first quarter of 2000
totaled $19,000, and resulted from the sale of marine containers, railcars, and
trailers, with an aggregate net book value of $0.1 million, for aggregate
proceeds of $0.1 million. For the first quarter of 1999, the net gain on sales
totaled $0.1 million, and resulted from the sale of marine containers, trailers,
and railcars with an aggregate net book value of $0.1 million, for aggregate
proceeds of $0.1 million.
<PAGE>
(D) Equity in Net Income (Loss) of Unconsolidated Special-Purpose Entities
(USPEs)
Net income (loss) generated from the operation of jointly-owned assets accounted
for under the equity method is shown in the following table by equipment type
(in thousands of dollars):
For the Three Months
Ended March 31,
2000 1999
----------------------------
Aircraft $ 1,368 $ (70)
Marine vessel (82) 112
============================
Equity in net income (loss) $ 1,286 $ 42
============================
Aircraft: As of March 31, 1999, the Partnership owned a 50% interest in an
entity which owned a commercial aircraft that was off lease during the first
quarter of 1999. During the first quarter of 2000, the gain from the sale of the
Partnership's interest in this USPE of $1.5 million, which was sold in the first
quarter of 2000, was offset by depreciation expense, direct expenses, and
administrative expenses of $0.1 million. During the same period of 1999,
depreciation expense, direct expenses, and administrative expenses was $0.2
million.
Marine vessel: As of March 31, 2000 and 1999, the Partnership had an interest in
an entity that owns a marine vessel. The Partnership's share of marine vessel
revenues and expenses was $0.8 million and $0.9 million, respectively, for the
quarters ended March 31, 2000, compared to $0.7 million and $0.6 million for the
same period in 1999. Marine vessel revenue increased $0.1 million in the first
quarter of 2000 due to higher charter rates when compared to the same period of
1999. Vessel expenses increased in the first quarter of 2000 due to higher
voyage costs when compared to the same period in 1999.
(E) Net Income
As a result of the foregoing, the Partnership's net income of $1.8 million for
the first quarter of 2000 increased from net income of $0.8 million during the
same period of 1999. The Partnership's ability to operate and liquidate assets,
secure leases and re-lease those assets whose leases expire is subject to many
factors. Therefore, the Partnership's performance in the first quarter of 2000
is not necessarily indicative of future periods. In the first quarter of 2000,
the Partnership distributed $1.0 million to the limited partners, or $0.17 per
weighted-average depositary unit.
(II) FINANCIAL CONDITION -- CAPITAL RESOURCES, LIQUIDITY, AND DISTRIBUTIONS
For the quarter ended March 31, 2000, the Partnership generated $0.6 million in
operating cash (net cash provided by operating activities less investments in a
USPE to fund its operations) to meet its operating obligations, but used
undistributed available cash from prior periods, proceeds from equipment sales,
and liquidating distributions from the USPE's of approximately $0.4 to maintain
the level of distributions (total of $1.0 million in the first quarter of 2000)
to the partners.
During the three months ended March 31, 2000, the General Partner sold equipment
on behalf of the Partnership and realized proceeds of approximately $0.1
million. The Partnership also received liquidating proceeds of $1.8 million from
the sale of its interest in an entity owning an aircraft.
The General Partner has not planned any expenditures, nor is it aware of any
contingencies that would cause the Partnership to require any additional capital
to that mentioned above.
The Partnership is in its active liquidation phase. As a result, 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 distribution levels may be reduced, significant asset sales
may result in potential special distributions to the partners.
The amounts reflected for assets and liabilities of the Partnership have not
been adjusted to reflect liquidation values. The equipment portfolio that is
actively being marketed for sale by the General Partner continues to be carried
at the lower of depreciated cost or fair value less cost of disposal. Although
the General Partner estimates that there will be distributions to the partners
after final disposal of assets and settlement of liabilities, the amounts cannot
be accurately determined prior to actual disposal of the equipment.
On April 20, 2000, the General Partner for the Partnership announced that
effective immediately, it will not recognize any further transfers involving
trading of units in this partnership for the remainder of the 2000 calendar
year. PLM Equipment Growth Fund (hereafter referred to as "the Partnership") is
listed on the OTC Bulletin Board under the symbol GFXPZ.
In making the announcement, the General Partner cited the Partnership's need to
continue to comply with Internal Revenue Service (IRS) Notice 88-75 and IRS Code
Section 7704, which contain safe harbor provisions regarding the maximum number
of partnership units that can be traded during a calendar year in order for a
partnership not to be deemed a publicly traded partnership for income tax
purposes. Transfers for the remainder of the year may only be processed,
pursuant to IRS Code Section 7704, through a qualified matching service. The
General Partner will also continue to recognize transfers specifically excluded
from the safe harbor limitations, referred to in the regulations as "transfers
not involving trading," which includes transfers at death, transfers between
family members, and transfers involving distributions from a qualified
retirement plan
(III) EFFECTS OF YEAR 2000
To date, the Partnership has not experienced any material Year 2000 (Y2K) issues
with either its internally developed software or purchased software. In
addition, to date the Partnership has not been impacted by any Y2K problems that
may have impacted our customers and suppliers. The General Partner continues to
monitor its systems for any potential Y2K issues.
(IV) OUTLOOK FOR THE FUTURE
Since the Partnership is in its active liquidation phase, the General Partner is
seeking to selectively re-lease or sell assets as the existing leases expire.
Sale decisions will cause the operating performance of the Partnership to
decline over the remainder of its life.
Several factors may affect the Partnership's operating performance in the
remainder of 2000 and beyond, including changes in the markets for the
Partnership's equipment and changes in the regulatory environment in which that
equipment operates.
Liquidation of the Partnership's equipment represents a reduction in the size of
the equipment portfolio and may result in a reduction of contribution to the
Partnership. Other factors affecting the Partnership's contribution in 2000 and
beyond include:
The cost of new marine containers has been at historic lows for the past several
years which has caused downward pressure on per diem lease rates. Recently, the
cost of marine containers have started to increase which, if this trend
continues, should translate into rising per diem lease rates
Railcar loading in North America have continued to be high, however a softening
in the market is expected during 2000, which may lead to lower utilization and
lower contribution to the Partnership as existing leases expire and renewal
leases are negotiated.
The ability of the Partnership to realize acceptable lease rates on its
equipment in the different equipment markets is contingent on many factors, such
as specific market conditions and economic activity, technological obsolescence,
and government or other regulations. The unpredictability of these factors, or
of their occurrence, makes it difficult for the General Partner to clearly
define trends or influences that may impact the performance of the Partnership's
equipment. The General Partner continually monitors both the equipment markets
and the performance of the Partnership's equipment in these markets. The General
Partner may decide to reduce the Partnership's exposure to those equipment
markets in which it determines that it cannot operate equipment and achieve
acceptable rates of return.
The Partnership intends to use excess cash flow, if any, from operations to
satisfy its operating requirements, and to pay cash distributions to the
Partners.
(V) FORWARD-LOOKING INFORMATION
Except for historical information contained herein, this Form 10-Q contains
forward-looking statements that involve risks and uncertainties, such as
statements of the Partnership's plans, objectives, expectations, and intentions.
The cautionary statements made in this Form 10-Q should be read as being
applicable to all related forward-looking statements wherever they appear in
this Form 10-Q. The Partnership's actual results could differ materially from
those discussed here.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Partnership's primary market risk exposure is that of currency devaluation
risk. During the first quarter of 2000, 81% of the Partnership's total lease
revenues from wholly- and partially-owned equipment came from non-United States
domiciled lessees. Most of the leases require payment in the United States
(U.S.) currency. If these lessees currency devalues against the U.S. dollar, the
lessees could potentially encounter difficulty in making the U.S. dollar
denominated lease payments.
(this space left blank intentionally)
<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 5, 2000 By: /s/ Richard K Brock
Richard K Brock
Chief Financial Officer
<PAGE>
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