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 and
Exchange Act of 1934 For the fiscal quarter ended March 31, 1997.
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
For the transition period from to
Commission file number 1-9670
-------------------------------
PLM INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 94-3041257
(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 executive offices) (Zip Code)
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
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date: Common Stock - $.01
Par Value; Outstanding as of April 23, 1997 - 9,203,331 shares
<PAGE>
PLM INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
For the three months
ended March 31,
1997 1996
--------------------------
<S> <C> <C>
Revenues:
Operating leases $ 4,229 $ 5,046
Finance lease income 1,814 322
Management fees 2,861 2,553
Partnership interests and other fees 486 992
Acquisition and lease negotiation fees 178 1,555
Aircraft brokerage and services 674 687
Gain on the sale or disposition of assets, net 1,368 800
Other 841 446
--------------------------
Total revenues 12,451 12,401
Costs and expenses:
Operations support 4,164 5,113
Depreciation and amortization 2,205 2,709
General and administrative 1,916 2,095
--------------------------
Total costs and expenses 8,285 9,917
--------------------------
Operating income 4,166 2,484
Interest expense 2,642 1,442
Interest income 386 237
Other expense, net 21 26
--------------------------
Income before income taxes 1,889 1,253
Provision for income taxes 608 461
--------------------------
Net income to common shares $ 1,281 $ 792
==========================
Earnings per common share outstanding $ 0.14 $ 0.07
==========================
</TABLE>
See accompanying notes to these consolidated financial
statements.
<PAGE>
PLM INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
----------------------------------------
(in thousands)
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 13,995 $ 7,638
Receivables 3,966 5,286
Receivables from affiliates 4,802 6,019
Investment in direct finance leases, net 67,425 69,994
Loans receivable 6,017 5,718
Equity interest in affiliates 29,577 30,407
Assets held for sale -- 6,222
Transportation equipment held for operating leases 65,175 66,546
Less accumulated depreciation (41,618 ) (41,750 )
------------------------------------------
23,557 24,796
Commercial and industrial equipment held for operating leases 15,786 15,930
Less accumulated depreciation (3,182 ) (2,302 )
------------------------------------------
12,604 13,628
Restricted cash and cash equivalents 20,130 17,828
Other, net 11,887 11,213
------------------------------------------
Total assets $ 193,960 $ 198,749
==========================================
LIABILITIES, MINORITY INTEREST, AND SHAREHOLDERS' EQUITY
Liabilities:
Short-term secured debt $ 22,524 $ 30,966
Senior secured loan 25,000 25,000
Senior secured notes 18,000 18,000
Other secured debt 556 618
Nonrecourse securitization facility 47,674 45,392
Payables and other liabilities 16,024 16,757
Deferred income taxes 16,030 15,334
------------------------------------------
Total liabilities 145,808 152,067
Minority interest 367 362
Shareholders' Equity:
Common stock, $.01 par value, 50,000,000 shares authorized,
9,209,431 issued and outstanding at March 31, 1997 and
9,142,761 at December 31, 1996 117 117
Paid-in capital, in excess of par 77,778 77,778
Treasury stock (3,386,960 and 3,453,630 shares at
respective dates) (12,143 ) (12,382 )
------------------------------------------
65,752 65,513
Accumulated deficit (17,967 ) (19,193 )
------------------------------------------
Total shareholders' equity 47,785 46,320
------------------------------------------
Total liabilities, minority interest, and shareholders' equity $ 193,960 $ 198,749
==========================================
</TABLE>
See accompanying notes to these consolidated financial
statements.
<PAGE>
PLM INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS'
EQUITY For the Year Ended December 31, 1996 and the Three
Months Ended March 31, 1997
(in thousands)
<TABLE>
<CAPTION>
Common Stock
-----------------------------------------
Paid-in
Capital in Total
At Excess Treasury Accumulated Shareholders'
Par of Par Stock Deficit Equity
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balances, December 31, 1995 $ 117 $ 77,743 $ (5,931 ) $ (23,309 ) $ 48,620
Net income 4,095 4,095
Common stock repurchases (6,451 ) (6,451 )
Exercise of stock options 35 35
Translation gain 21 21
-------------------------------------------------------------------------------
Balances, December 31, 1996 117 77,778 (12,382 ) (19,193 ) 46,320
Net income 1,281 1,281
Reissuance of treasury stock 239 (38 ) 201
Translation loss (17 ) (17 )
===============================================================================
Balances, March 31, 1997 $ 117 $ 77,778 $ (12,143 ) $ (17,967 ) $ 47,785
===============================================================================
</TABLE>
See accompanying notes to these consolidated financial
statements.
<PAGE>
PLM INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
For the three months
ended March 31,
1997 1996
-------------------------------
<S> <C> <C>
Operating activities:
Net income $ 1,281 $ 792
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 2,205 2,709
Foreign currency translation (17 ) (14 )
Increase in deferred income taxes 696 494
Gain on sale or disposition of assets, net (1,368 ) (800 )
Undistributed residual value interests 108 (91 )
Minority interest in net income of subsidiaries 5 2
Increase (decrease) in payables and other liabilities 1,018 (759 )
Decrease (increase) in receivables and receivables from affiliates 2,537 (462 )
Cash distributions from affiliates in excess of income accrued 722 621
Increase in other assets (1,096 ) (584 )
-------------------------------
Net cash provided by operating activities 6,091 1,908
-------------------------------
Investing activities:
Additional investment in affiliates -- (3,076 )
Principal payments received on finance leases 3,832 650
Principal payments received on loans 478 --
Investment in direct finance leases (16,528 ) (15,327 )
Investment in loans receivable (777 ) --
Purchase of equipment (16,461 ) (21,905 )
Proceeds from the sale of transportation equipment for lease 4,717 381
Proceeds from the sale of assets held for sale 15,600 1,431
Proceeds from the sale of commercial and industrial
equipment to institutional investment program 7,556 14,424
Proceeds from the sale of commercial and industrial equipment to
third parties 10,373 --
Sale of investment in subsidiary -- 372
(Increase) decrease in restricted cash and restricted cash equivalents (2,302 ) 997
-------------------------------
Net cash provided by (used in) investing activities 6,488 (22,053 )
-------------------------------
</TABLE>
(Continued)
See accompanying notes to these consolidated financial
statements.
<PAGE>
PLM INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
For the three months
ended March 31,
1997 1996
-------------------------------
<S> <C> <C>
Financing activities:
Borrowings of short-term secured debt $ 23,360 12,550
Repayment of short-term secured debt (31,802 ) (4,844 )
Repayment of other secured debt (62 ) --
Borrowings under securitization facility 5,680 15,640
Repayment of securitization facility (3,398 ) (7,454 )
Repayment of subordinated debt -- (2,875 )
Repurchase of treasury stock -- (99 )
Proceeds from exercise of stock options -- 4
-------------------------------
Net cash (used in) provided by financing activities (6,222 ) 12,922
-------------------------------
Net increase (decrease) in cash and cash equivalents 6,357 (7,223 )
Cash and cash equivalents at beginning of period 7,638 13,764
===============================
Cash and cash equivalents at end of period $ 13,995 $ 6,541
===============================
Supplemental information - net cash paid for:
Interest $ 2,626 $ 1,178
===============================
Income taxes $ 15 $ 765
===============================
</TABLE>
See accompanying notes to these consolidated financial
statements.
<PAGE>
PLM INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1997
1. General
In the opinion of management, the accompanying unaudited consolidated financial
statements contain all adjustments necessary to present fairly PLM
International, Inc.'s (the Company's) financial position as of March 31, 1997
and December 31, 1996, the statements of income for the three months ended March
31, 1997 and 1996, the statements of cash flows for the three months ended March
31, 1997 and 1996, and the statements of changes in shareholders' equity for the
year ended December 31, 1996 and the three months ended March 31, 1997. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted from the accompanying consolidated financial statements.
For further information, reference should be made to the financial statements
and notes thereto included in the Company's Annual Report on Form 10-K for the
year ended December 31, 1996, on file with the Securities and Exchange
Commission.
2. Reclassifications
Certain amounts in the 1996 financial statements have been reclassified to
conform to the 1997 presentation.
3. Financing Transaction Activities
The Company's wholly-owned subsidiary, American Finance Group, Inc. (AFG),
originates and manages lease and loan transactions on new commercial and
industrial equipment. The majority of these leases are accounted for as finance
leases while some are accounted for as loans or operating leases. During the
three months ended March 31, 1997, the Company funded $16.5 million in equipment
which was placed on finance leases. Also during the first quarter of 1997, the
Company sold equipment on finance leases with an original equipment cost of
$15.4 million, which resulted in a net gain of $0.8 million. During the first
quarter of 1997, the Company funded loans of $0.8 million which were secured by
commercial and industrial equipment.
4. Equipment
Equipment held for operating leases includes transportation equipment and
commercial and industrial equipment which are depreciated over their estimated
useful lives.
During the first quarter of 1997, the Company funded $3.3 million in commercial
and industrial equipment which was placed on operating leases. Also during the
first quarter of 1997, the Company sold commercial and industrial equipment
which were on operating leases with an original cost of $3.2 million for its
approximate net book value .
The Company classifies assets as held for sale if the particular asset is
subject to a pending contract for sale or is held for sale to an affiliated
partnership. Equipment held for sale is valued at the lower of depreciated cost
or fair value less costs to sell. At December 31, 1996, the Company had a 25.5%
interest in a mobile offshore drilling unit (rig) with a net book value of $5.1
million held for sale to an affiliated program. Also at December 31, 1996, two
commuter aircraft with a combined net book value of $1.1 million were held for
sale. The rig was sold at cost to an affiliated program in March 1997. The two
commuter aircraft were sold in February 1997 for their approximate net book
value to an unaffiliated third party. During the first quarter of 1997, the
Company purchased an additional mobile offshore drilling unit for $10.5 million
which was subsequently resold during the quarter to an affiliated program at
cost. Also during the first quarter of 1997, the Company purchased a commercial
aircraft for $2.5 million which it subsequently sold to an unaffiliated third
party for a gain of $0.4 million. At March 31, 1997, the Company had no assets
held for sale.
Periodically, the Company will purchase groups of assets whose ownership may be
allocated among affiliated programs and the Company. Generally in these cases,
only assets that are on lease will be purchased by the affiliated programs. The
Company will generally assume the ownership and remarketing risks associated
with off-lease equipment. Allocation of the purchase price will be determined by
a combination of third party industry sources, recent transactions, and
published fair
<PAGE>
4. Equipment (continued)
market value references. During the three months ended March 31, 1996, the
Company realized $0.7 million of gains from the sale of 64 railcars purchased as
part of a group of assets by the Company in 1995.
5. Debt
Assets acquired and held on an interim basis for placement with affiliated
partnerships or purchased with the intent of permanent financing through the
Company's securitization facility have, from time to time, been partially funded
by a $50.0 million short-term equipment acquisition loan facility. This facility
expires on October 31, 1997. This facility is shared with EGFs IV, V, VI, VII
and Fund I. As of March 31, 1997, the Company's AFG subsidiary had borrowed
$22.5 million and EGF V had borrowed $1.1 million on this facility. There were
no other amounts outstanding on this line at March 31, 1997. All borrowings
under this line are guaranteed by the Company.
The Company has available a securitization facility for up to $80.0 million on a
nonrecourse basis that is secured primarily by direct finance leases, operating
leases, and loans on commercial and industrial equipment which generally have
terms of two to seven years. The facility is available for a one year period
expiring July 1997. As of March 31, 1997, there were $47.7 million in borrowings
outstanding under this facility which are payable through 2003.
6. Shareholders' Equity
On March 3, 1997, the Company announced that the Board of Directors had
authorized the repurchase of up to $5.0 million of the Company's common stock.
As of March 31, 1997, no shares had been repurchased under this Plan.
During the three months ended March 31, 1997, 66,670 shares were issued from
treasury stock as part of the senior management bonus program. Consequently, the
total common shares outstanding increased to 9,209,431 at March 31, 1997, from
the 9,142,761 outstanding at December 31, 1996. Net income per common share was
computed by dividing net income to common shares by the weighted average number
of shares and stock options deemed outstanding during the period. The weighted
average number of shares and stock options deemed outstanding during the three
months ended March 31, 1997 and 1996, were 9,311,874 and 11,044,269,
respectively.
7. Legal Matters
The Company is involved as plaintiff or defendant in various legal actions
incident to its business. Management does not believe that any of these actions
will be material to the financial condition of the Company.
In November 1995, James F. Schultz (Plaintiff), a former employee of PLM
International, filed and served a first amended complaint (the Complaint) in the
United States District Court for the Northern District of California (Case No.
C-95-2957 MMC) against the Company, the PLM International, Inc. Employee Stock
Ownership Plan (the ESOP), the ESOP's trustee, and certain individual employees,
officers, and/or directors of PLM International. The Complaint contains claims
for relief alleging breaches of fiduciary duties and various violations of the
Employee Retirement Income Security Act of 1974 (ERISA) arising principally from
purported defects in the structure, financing, and termination of the ESOP and
for interference with Plaintiff's rights under ERISA. Plaintiff seeks monetary
damages, rescission of the preferred stock transactions with the ESOP and/or
restitution of ESOP assets, and attorneys' fees, and costs under ERISA. In
January 1996, PLMI and other defendants filed a motion to
<PAGE>
7. Legal Matters (continued)
dismiss the Complaint for lack of subject matter jurisdiction, arguing the
plaintiff lacked standing. The motion was granted and on May 30, 1996, the Court
entered a judgment dismissing the Complaint for lack of subject matter
jurisdiction. Plaintiff has appealed to the U.S. Court of Appeals for the Ninth
Circuit, seeking a reversal of District Court's judgment. This matter was fully
briefed by the parties as of February 18, 1997. No date for oral argument has
yet been set.
As more fully described by the Company in its Form 10-K for the year ended
December 31, 1996, the Company and various of its affiliates are named as
defendants in a lawsuit filed as a class action on January 22, 1997, in the
Circuit Court of Mobile County, Mobile, Alabama, Case No. CV-97-251. On February
3, 1997, the state court filed an Order conditionally certifying the class
pursuant to the provisions of Rule 23 of the Alabama Rules of Civil Procedure
("ARCP"), as requested by plaintiffs in an ex parte motion filed on January 22,
1997. Defendants were not given notice of the motion, nor were they given an
opportunity to be heard regarding the issue of conditional class certification.
The Order specifies that the class shall consist of (with certain narrow
exceptions) all purchasers of limited partnership units in PLM Equipment Growth
Fund IV, PLM Equipment Growth Fund V, PLM Equipment Growth Fund VI, and PLM
Equipment Growth & Income Fund VII. In issuing the Order, the court emphasized
that the certification is conditional in accordance with Rule 23(d) of the ARCP,
and that the plaintiffs will bear the burden of proving each requisite element
of Rule 23 at the time of the evidentiary hearing on the issue of class
certification. To date, no such hearing date has been set. The defendants filed
a Notice of Removal of the lawsuit from the state court to the United States
District Court for the Southern District of Alabama, Southern Division (Civil
Action No. 97-0177-BH-C) on March 6, 1997, arguing that the parties are fully
diverse for the purposes of diversity jurisdiction pursuant to 28 U.S.C. Section
1441. The plaintiffs filed a motion to remand the class action to the state
court and defendants have responded to this motion. Defendants do not need to
respond to the complaint until after the federal court decides the motion to
remand. The Company believes the allegations of the complaint to be completely
without merit and intends to defend this matter vigorously.
8. Purchase Commitments
As of March 31, 1997, the Company, through its AFG subsidiary, had committed to
purchase $28.7 million of equipment for its commercial and industrial equipment
lease portfolio.
From April 1, 1997 to April 23, 1997, the Company, through its AFG subsidiary,
funded $3.5 million of commitments outstanding at March 31, 1997 for its
commercial and industrial equipment lease portfolio, and entered into new
commitments for $0.9 million.
As of April 23, 1997, the Company has committed to purchase 50 new refrigerated
trailers for $2.1 million.
9. Subsequent Event
In April 1997, the Company purchased and subsequently resold a Boeing 737
aircraft at a net gain of $0.4 million.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The Company is engaged in the funding and management of longer-term direct
finance leases, operating leases, and loans through its American Finance Group
subsidiary. Master lease agreements are entered into with predominately
investment-grade lessees and serve as the basis for marketing efforts. The
underlying assets represent a broad range of commercial and industrial
equipment, such as data processing, communications, materials handling, and
construction equipment. This is an important growth area for the Company.
Through AFG, the Company is also engaged in the management of an institutional
leasing investment program for which it originates leases and receives
acquisition and management fees.
The Company operates ten trailer rental facilities that engage in short-term and
mid-term operating leases. Equipment operated in these facilities consists of
dry van trailers leased to a variety of customers and refrigerated trailers used
primarily in the food distribution industry. The Company has plans to expand
this operation through selective acquisition of new or late-model used trailers.
The Company has syndicated investment programs from which it earns various fees
and equity interests. The Professional Lease Management Income Fund I (Fund I)
was structured as a limited liability company with a no front-end fee structure.
The previously syndicated limited partnership programs allowed the Company to
receive fees for the acquisition and initial lease of the equipment. The Fund I
program does not provide for acquisition and lease negotiation fees. The Company
invests the equity raised through syndication in transportation equipment which
is then managed on behalf of the investors. The equipment management activities
for these types of programs generate equipment management fees for the Company
over the life of the program, typically 10 to 12 years. The limited partnership
agreements generally entitle the Company to receive a 1% or 5% interest in the
cash distributions and earnings of the partnership subject to certain allocation
provisions. The Fund I agreement entitles the Company to a 15% interest in the
cash distributions and earnings of the program subject to certain allocation
provisions which will increase to 25% after the investors have received
distributions equal to their original invested capital.
On May 14, 1996, the Company announced the suspension of public
syndication of equipment leasing programs with the May 13, 1996 close of Fund I.
As a result of this decision, revenues earned from managed programs which
include management fees, partnership interests and other fees, and acquisition
and lease negotiation fees will be reduced in the future as the older programs
begin liquidation and the managed equipment portfolio becomes permanently
reduced.
The Company also owns a diversified portfolio of transportation equipment from
which it earns operating lease revenue and incurs operating expenses. The
Company's transportation equipment held for operating leases, which consists of
aircraft, marine containers, intermodal trailers, and storage equipment at March
31, 1997, is mainly equipment built prior to 1988. As equipment ages, the
Company continues to monitor the performance of its assets on lease and current
market conditions for leasing equipment in order to seek the best opportunities
for investment. Failure to replace equipment may result in shorter lease terms
and higher costs of maintaining and operating aged equipment, and, in certain
instances, limited remarketability.
<PAGE>
For the Three Months Ended March 31, 1997 versus March 31, 1996
The following analysis reviews the operating results of the Company:
Revenue:
<TABLE>
<CAPTION>
For the three months
ended March 31,
1997 1996
------------------------------
(in thousands)
<S> <C> <C>
Operating leases $ 4,229 $ 5,046
Finance lease income 1,814 322
Management fees 2,861 2,553
Partnership interests and other fees 486 992
Acquisition and lease negotiation fees 178 1,555
Aircraft brokerage and services 674 687
Gain on the sale or disposition of assets, net 1,368 800
Other 841 446
------------------------------
Total revenues $ 12,451 $ 12,401
</TABLE>
The fluctuations in revenues for the three months ended March 31, 1997 from the
same period in 1996 are summarized and explained below.
Operating lease revenue by equipment type:
<TABLE>
<CAPTION>
For the three months
ended March 31,
1997 1996
---------------------------
(in thousands)
<S> <C> <C>
Trailers $ 1,948 $ 2,157
Commercial and industrial equipment 1,243 1,020
Mobile offshore drilling units 604 --
Aircraft 269 1,424
Storage equipment 104 262
Marine containers 53 128
Railcars 8 55
---------------------------
$ 4,229 $ 5,046
</TABLE>
As of March 31, 1997, the Company owned transportation equipment held for
operating leases or held for sale with an original cost of $65.2 million, which
was $46.7 million less than the original cost of transportation equipment owned
and held for operating leases or held for sale at March 31, 1996. The reduction
in equipment, on an original cost basis, is a consequence of the Company's
strategic decision to dispose of certain underperforming transportation assets
resulting in a 73% net reduction in its aircraft portfolio and a 29% net
reduction in its marine container portfolio, compared to March 31, 1996. The
reduction in transportation equipment available for lease is the primary reason
aircraft, marine container, and railcar revenue were reduced as compared to the
prior year. The decrease in trailer lease revenue is primarily a result of
reduced utilization in the first quarter of 1997 compared to the same period in
1996. During part of the first quarter of 1997, the Company owned one mobile
offshore drilling unit as well as a 25.5% interest in another mobile offshore
drilling unit which generated $0.6 million in lease revenue. Both of these
drilling units were sold at the Company's cost to an affiliated program during
the quarter.
The decrease in operating lease revenues as a result of the reduction in
transportation equipment available for lease was partially offset by a $0.2
million increase in operating lease revenues generated by commercial and
industrial equipment leases on equipment sold during the quarter as well as
retained by the Company.
<PAGE>
Finance lease income:
The Company earns finance lease income for certain leases originated by its AFG
subsidiary which are either retained for long-term investment or sold to third
parties or to an institutional leasing investment program. Finance lease income
increased $1.5 million in the first quarter of 1997 compared to a similar period
in 1996. This increase is due to an increase in commercial and industrial assets
owned and on finance leases. At March 31, 1997 the original equipment cost of
assets on finance leases was $71.7 million compared to $15.2 million at March
31, 1996.
Management fees:
Management fees are, for the most part, based on the gross revenues
generated by equipment under management. The $0.3 million increase in management
fees during the quarter ended March 31, 1997, compared to the comparable prior
year quarter, resulted from an increase in management fees generated by gross
revenues of EGF VII and Fund I which acquired additional equipment during 1996
and the first quarter of 1997. These increases in management fees were partially
offset by a decrease in management fees caused by the disposition of equipment
in the Company's older programs and by decreases in lease rates for certain
types of equipment. With the termination of syndication activities in 1996,
management fees are expected to decrease in the future as the older programs
begin liquidation and the managed equipment portfolio becomes permanently
reduced. This future decrease will be offset, in part, by management fees earned
from the institutional leasing investment program managed by the Company's AFG
subsidiary.
Partnership interests and other fees:
The Company records as revenues its equity interest in the earnings of the
Company's affiliated programs. The net earnings and distribution levels from the
affiliated programs were $0.6 million and $0.7 million for the quarters ended
March 31, 1997 and 1996, respectively. In addition, a decrease of $0.1 million
in the Company's residual interests in the programs was recorded during the
quarter ended March 31, 1997. A net increase of $0.2 million was recorded during
the quarter ended March 31, 1996. Residual income is recognized on residual
interests based upon the general partner's share of the present value of the
estimated disposition proceeds of the equipment portfolio of the affiliated
partnership when the equipment is purchased. Net decreases in the recorded
residual values result when partnership assets are sold and the reinvestment
proceeds are less than the original investment in the sold equipment.
Acquisition and lease negotiation fees:
During the quarter ended March 31, 1997, no equipment was purchased on behalf of
the equipment growth funds compared to $23.8 million during the same quarter of
the prior year, resulting in a $1.3 million decrease in acquisition and lease
negotiation fees. Also during the quarter ended March 31, 1997, equipment
purchased and managed by AFG for the institutional investment program was $6.3
million compared to $13.3 million for the same period in 1996, resulting in an
additional decrease in acquisition and lease negotiation fees of $0.1 million.
As a result of the Company's decision to suspend syndication of equipment
leasing programs with the close of Fund I on May 13, 1996, and because Fund I
had a no front-end fee structure, acquisition and lease negotiation fees will
continue to decrease in future periods.
Aircraft brokerage and services:
Aircraft brokerage and services revenue, which represents revenue
earned by Aeromil Holdings, Inc., the Company's aircraft leasing and spare parts
brokerage subsidiary, remained approximately the same in the first quarter of
1997 as the first quarter of 1996. During the quarter ended March 31, 1997,
spare parts revenue increased by $0.2 million, offset by a reduction in revenue
related to the sale of the subsidiary's ownership interests in Austin Aero FBO
Ltd. to third parties in January 1996.
<PAGE>
Gain on the sale or disposition of assets, net:
During the quarter ended March 31, 1997, the Company recorded $1.4
million in gain on the sale or disposition of assets. Of this gain, $0.2 million
resulted from the sale or disposition of 163 trailers, 126 storage units, 22
marine containers and 2 commuter aircraft. Also, during the first quarter of
1997, the Company purchased and subsequently resold a commercial aircraft to an
unaffiliated third party for a net gain of $0.4 million. The Company also earned
$0.8 million from the sale of commercial and industrial equipment during the
first quarter of 1997. During the quarter ended March 31, 1996, the Company
recorded $0.8 million in gains from the sale or disposition of 74 marine
containers, 67 trailers, 67 railcars, and 5 storage units.
Other revenue:
Other revenue, which includes brokerage fees, financing income, and
underwriting income, increased due to a $0.2 million increase in brokerage fees
and a $0.2 million increase in financing income.
Costs, Expenses, and Other:
<TABLE>
<CAPTION>
For the three months
ended March 31,
1997 1996
-----------------------------
(in thousands)
<S> <C> <C>
Operations support $ 4,164 $ 5,113
Depreciation and amortization 2,205 2,709
General and administrative 1,916 2,095
Interest expense 2,642 1,442
Interest income 386 237
Other expense, net 21 26
</TABLE>
Operations support:
Operations support expense (including salary and office-related expenses for
operational activities, provision for doubtful accounts, equipment insurance,
repair and maintenance costs, equipment remarketing costs, and cost of goods
sold) decreased $0.9 million (19%) for the quarter ended March 31, 1997, from
the same quarter in 1996. The decrease resulted from a $0.4 million decrease in
equipment operating costs due to sales of the Company's transportation
equipment, a $0.4 million decrease in compensation expense due to headcount
reductions, and a $0.1 million decrease in bad debt expense.
Depreciation and amortization:
Depreciation and amortization expense decreased $0.5 million (19%) for
the quarter ended March 31, 1997, as compared to the quarter ended March 31,
1996. The decrease resulted from the reduction in depreciable transportation
equipment discussed in the operating lease revenue section, partially offset by
increased depreciation of commercial and industrial equipment.
General and administrative:
General and administrative expense decreased $0.2 million (9%) during the
quarter ended March 31, 1997, compared to the same quarter in 1996, primarily
due to lower professional service costs.
<PAGE>
Interest expense:
Interest expense increased $1.2 million (83%) during the quarter ended
March 31, 1997, compared to the same period in 1996, due to an increase in
borrowings on the nonrecourse securitization facility, the senior secured notes
facility, and the short-term equipment acquisition loan facility. The increase
in interest expense caused by these increased borrowings was partially offset by
lower interest expense resulting from the retirement of the subordinated debt
and the reduction in the amount outstanding on the senior secured loan.
Interest income:
Interest income increased $0.1 million (63%) in the quarter ended March 31,
1997, compared to the same quarter of 1996, as a result of higher average cash
balances in the first quarter of 1997 compared to the same period in 1996.
Income taxes:
For the three months ended March 31, 1997, the provision for income taxes was
$0.6 million, which represented an effective rate of 32%. For the same period in
1996, the provision for income taxes was $0.5 million, which represented an
effective rate of 37%.
Net income:
As a result of the foregoing, for the three months ended March 31,
1997, net income was $1.3 million resulting in net income per common share of
$0.14. For the same period in 1996, net income was $0.8 million resulting in net
income per common share of $0.07.
Liquidity and Capital Resources
Cash requirements historically have been satisfied through cash flow
from operations, borrowings, or sales of transportation equipment.
Liquidity in 1997 and beyond will depend, in part, on continued
remarketing of the equipment portfolio at similar lease rates, management of
existing sponsored programs, effectiveness of cost control programs, possible
additional equipment sales, and the volume of commercial and industrial
equipment leasing transactions for which the Company earns fees and a spread.
Management believes the Company can accomplish the preceding and will have
sufficient liquidity and capital resources for the future. Specifically, future
liquidity is influenced by the following:
(a) Debt Financing:
Senior Debt: The Company's $25.0 million senior loan with a syndicate of
insurance companies provides that equipment sale proceeds from pledged equipment
or cash deposits be placed into collateral accounts or used to purchase
additional equipment to the extent required to meet certain debt covenants. As
of March 31, 1997, the cash collateral balance was $15.0 million. The facility
required quarterly interest only payments through March 31, 1997, with quarterly
principal payments of $1.5 million plus interest charges beginning June 30,
1997, through termination of the loan in June 2001.
Senior Notes: On June 28, 1996, the Company closed a floating rate senior
secured note agreement which allows the Company to borrow up to $27.0 million
within a one year period. As of April 23, 1997, the Company had borrowed $18.0
million under this agreement.
<PAGE>
(a) Debt Financing (continued):
Bridge Financing: Assets acquired and held on an interim basis for
placement with affiliated partnerships or purchased for placement in the
Company's securitization facility have, from time to time, been partially funded
by a $50.0 million short-term equipment acquisition loan facility. This facility
expires on October 31, 1997. This facility, which is shared with Equipment
Growth Funds (EGFs) IV, V, VI, VII, and Fund I, allows the Company to purchase
equipment prior to the designated program or partnership being identified. As of
April 23, 1997, the Company had $20.5 million in borrowings and EGF V had $1.1
million in outstanding borrowings under this facility. The Company believes it
can renew this facility at substantially the same terms.
Securitized Debt: The Company has available a securitization facility
for up to $80.0 million on a nonrecourse basis secured by direct finance leases,
operating leases, and loans on commercial and industrial equipment which
generally have terms of two to seven years. The facility is available for a one
year period expiring July 1997. As of April 23, 1997, there were $51.1 million
in borrowings outstanding under this facility. The Company believes it can renew
this facility at substantially the same terms.
Interest Rate Swap Contracts: The Company has entered interest rate swap
agreements in order to manage the interest rate exposure associated with its
securitized debt. At March 31, 1997 the swap agreements had remaining terms
averaging 3.6 years, corresponding to the terms of the related debt. At March
31, 1997, a notional amount of $47.7 million of interest rate swap agreements
effectively fixed interest rates at an average of 7.27% on such obligations. In
the first quarter of 1997 interest expense was increased by $0.1 million due to
these arrangements.
(b) Commercial and Industrial Equipment Activities:
The Company earns finance lease or operating lease income for leases originated
and retained by its AFG subsidiary. The funding of leases requires the Company
to retain an equity interest in all leases financed through the securitization
facility. AFG also originated loans where it takes a security interest in the
assets. From January 1, 1997 through April 23, 1997, the Company purchased
commercial and industrial equipment with an original equipment cost of $19.1
million. A portion of these transactions has been financed, on an interim basis,
through the Company's bridge financing facility. Some equipment subject to
leases is sold to an institutional leasing investment program for which the
Company serves as the manager. Acquisition fees and management fees are received
for the sale and subsequent management of these leases. The Company believes
this lease origination operation is a growth area for the future.
As of March 31, 1997, the Company, through its AFG subsidiary, had
committed to purchase $28.7 million of equipment for its commercial and
industrial equipment lease portfolio.
From April 1, 1997, through April 23, 1997, the Company, through its AFG
subsidiary, funded $3.4 million of commitments outstanding at March 31, 1997,
for its commercial and industrial equipment lease portfolio, and entered into
new commitments for $0.9 million.
(c) Transportation Equipment Activities:
During the three months ended March 31, 1997, the Company generated proceeds of
$4.7 million from the sale of owned transportation equipment. On the sale of
assets which were collateralized as part of the senior loan facility, the net
proceeds were placed in a collateral account.
As of April 23, 1997, the Company has committed to purchase 50 new
refrigerated trailers for $2.1 million.
Over the last four years, the Company has downsized its transportation
equipment portfolio through the sale or disposal of underperforming assets. The
Company will continue to identify underperforming assets for sale or disposal as
necessary.
Management believes that through debt and equity financing, possible sales of
transportation equipment, and cash flows from operations, the Company will have
sufficient liquidity and capital resources to meet its projected future
operating needs.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
See Note 7 of Notes to Consolidated Financial Statements.
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits
10. PLM International, Inc. Mandatory Management Stock Bonus Plan
(B) Reports on Form 8-K
February 5, 1997 - Announced that PLM International, Inc. received a copy of a
class action complaint filed in the Circuit Court of Mobile, Alabama.
<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 INTERNATIONAL, INC.
/s/ David J. Davis
----------------------
David J. Davis
Vice President and Corporate
Controller
Date: April 23, 1997
PLM INTERNATIONAL, INC.
MANDATORY MANAGEMENT STOCK BONUS PLAN
1. Purpose
This plan's purpose is to compensate senior management for their
contributions to the growth and profits of the Company and its Subsidiaries and
increase their investment in the common stock of the Company, thereby enhancing
their incentive to build shareholder value, while conserving Company liquidity.
2. Definitions
For purposes of this Plan, the following terms will have the
definitions set forth below:
(a) "Allocation Ratio." A percentage determined by the Board not to
exceed 50 percent.
(b) "Company." PLM International, Inc.
(c) "Subsidiary" or "Subsidiaries". A corporation or corporations of
which the Company owns, directly or indirectly, shares having a
majority of the ordinary voting power for the election of directors.
(d) "Board." The Company's Board of Directors.
(e) "Bonus Compensation Plan." This phrase shall have the meaning
supplied by Section 4(a), below.
(f) "Bonus Share." The shares of common stock of the Company reserved
pursuant to Section 3 hereof and issued to a Recipient pursuant to this
Plan.
(g) "Cause." For purposes of this Plan, "cause" shall mean:
(i) the willful and continued failure by Recipient to perform
his or her employment duties (other than any failure resulting from
Recipient's incapacity due to physical or mental illness) after demand
for substantial performance is delivered by the Company or its
Subsidiary which demand specifically identifies the manner in which
Recipient has not substantially performed his or her duties;
(ii) the willfull and intentional act by the Recipient that
is, in the reasonable determination of the Company or its Subsidiary,
materially injurious to the Company, monetarily or otherwise;
(iii) the breach by the Recipient of any material covenant of
Recipient's employment agreement, if any, with the Company; or
(iv) the conviction of the Recipient of a crime involving an
act of moral turpitude or which is a felony resulting in or intended to
result, directly or indirectly, in gain or personal enrichment of the
Recipient, relations of the Recipient, or their affiliates at the
expense of the Company or its Subsidiary.
For purposes of this definition, no act or failure to act on
Recipient's part shall be considered willful unless done or omitted to
be done, by him or her not in good faith and without the reasonable
belief that his or her action(s) or omission(s) was in the best
interests of the Company or its Subsidiary.
(h) "Committee." The Compensation Committee as appointed from time to
time by the Board. No member of the Committee shall be eligible for
selection as a person to whom shares may be allocated pursuant to this
Plan or to whom stock options may be granted to employees of the
Company pursuant to any other plan of the Company or any of its
affiliates, at any time while he or she is serving on the Committee.
(i) "Date of Issuance." This term shall mean the date Bonus Shares are
allocated and granted to a Recipient pursuant to Board resolution.
(j) "Fair Value of a Bonus Share." The quoted closing price of the
Company's common stock on the Date of Issuance.
(k) "Plan." The PLM International, Inc. Mandatory Management Stock
Bonus Plan.
(l) "Recipient." An employee of the Company or a Subsidiary to whom
shares are allocated under this Plan, or such individual's designated
beneficiary, surviving spouse, estate, or legal representative. For
this purpose, however, any such beneficiary, spouse, estate, or legal
representative shall be considered as one person with the employee.
(m) "Restricted Period." This phrase shall have the meaning supplied by
Section 7(c), below.
3. Bonus Share Reserve
(a) Bonus Share Reserve. The Company will establish a Bonus Share
reserve to which will be credited 500,000 shares of the common stock of
the Company, par value $0.01 per share. Should the shares of the
Company's common stock, due to a stock split or stock dividend or
combination of shares or any other change, or exchange for other
securities, by reclassification, reorganization, merger, consolidation,
recapitalization or otherwise, be increased or decreased or changed
into, or exchanged for, a different number or kind of shares of stock
or other securities of the Company or of another corporation, the
number of shares then remaining in the Bonus Share reserve shall be
appropriately adjusted to reflect such action. If any such adjustment
results in a fractional share, the fraction shall be disregarded.
(b) Adjustments to Reserve. Upon the allocation of shares hereunder,
the reserve will be reduced by the number of Bonus Shares so allocated
and, upon the repurchase thereof pursuant to Section 7(d) or the
forfeiture thereof pursuant to Section 7(e), the reserve shall be
increased by such number of such shares, and such Bonus Shares may
again be the subject of allocations hereunder.
(c) Distributions of Bonus Shares. Distributions of Bonus Shares, as
the Board shall in its sole discretion determine, may be made from
authorized but unissued shares or from treasury shares. All shares
issued as Bonus Shares in accordance with the Plan shall be fully paid
and non-assessable and free from preemptive rights. All distributions
of Bonus Shares under this Plan shall be in compliance with ss.711 of
the American Stock Exchange Company Guide or such other equivalent
guideline.
4. Eligibility and Making of Allocations
(a) Eligible Employees. Any salaried executive employee of the Company
or any Subsidiary (including officers and directors, except for persons
serving as directors only) who participate in the Company's Executive
Management Bonus Pool or any other executive management bonus
compensation plan (together, "Bonus Compensation Plans") shall be
eligible to receive an allocation of Bonus Shares pursuant to this
Plan. Bonus shares allocated pursuant to this Plan are made in
substitution of cash compensation that would otherwise be earned by the
Recipient under a Bonus Compensation Plan. Bonus Shares are restricted
and subject to forfeiture pursuant to Section 7 of this Plan.
(b) Selection by the Committee. From those employees for whom a cash
bonus has been recommended under a Bonus Compensation Plan, the
Committee may from time to time select (i) those employees to whom it
recommends that the Board make allocations of Bonus Shares, and (ii)
the Allocation Ratio that should be applied to each such employee. In
selecting those employees whom it wishes to recommend for allocations
and in determining the Allocation Ratio it wishes to recommend, the
Committee shall consider the position and responsibilities of the
eligible employees, the value of their services to the Company and its
Subsidiaries and such other factors as the Committee deems pertinent.
(c) Review by Board of Committee's Recommendations. As promptly as
practicable after the Committee makes its recommendations pursuant to
(b), above, the Board will review the Committee's recommendations and,
in the Board's discretion, (i) determine from the list of employees
recommended by the Committee which employees should be allocated Bonus
Shares under this plan, and (ii) the Allocation Ratio that should be
applied to each such employee, provided, however, the Board may, in its
sole discretion, increase or decrease the Allocation Ratio to the
extent permitted under this Plan.
(d) Formula for Number of Bonus Shares. The number of Bonus Shares
allocable and granted to a Recipient shall be determined as follows:
amount of cash bonus due an employee under a Bonus Compensation Plan,
multiplied by the Allocation Ratio applicable to such Employee,
multiplied by 1.3334 (to compensate employees for the restricted nature
of the Bonus Shares and the risk of forfeiture) divided by the Fair
Value of a Bonus Share. No fractional shares may be issued under the
Plan. Cash bonuses due under a Bonus Compensation Plan will be reduced
by an amount equal to the amount of such cash bonus multiplied by the
Allocation Ratio applicable to a Recipient being granted Bonus Shares
under this Plan.
(e) Example. For example, a Recipient is to receive a cash bonus under
a Bonus Compensation Plan equal to $30,000. The Board has set the
Allocation Ratio at 50 percent. The Fair Value of a Bonus Share is
$5.00. The Recipient will be allocated 4,000 Bonus Shares computed as
follows: $30,000 x .50 x 1.3334 / 5.00. The Recipient's cash bonus
payable under the Bonus Compensation Plan will be $15,000 computed as
follows: $30,000 - [$30,000 x .50].
(f) Participation in Other Stock Option Plans. A person who has
received options to purchase stock under any stock option plan of the
Company or a Subsidiary may exercise the same in accordance with their
terms, and will not by reason thereof be ineligible to received Bonus
Shares under this Plan. A person who has received Bonus Shares
hereunder shall be eligible to, and may, be granted any option or other
rights to purchase stock pursuant to any stock option plan or stock
purchase plan of the Company presently in effect or hereafter adopted,
and he or she shall be eligible to receive additional allocations of
Bonus Shares under this Plan or under any other similar plan of the
Company.
(g) Limited on Number of Allocable Shares. The total number of Bonus
Shares which may allocated pursuant to this Plan will not exceed the
amount available in the Bonus Share reserve.
5. Form of Allocations
(a) Number Specified. Each grant shall specify the number of Bonus
Shares allocated as well as the Allocation Ratio and the Fair Value of
Bonus Shares.
(b) Notice. When a grant is made, the Board shall advise the Recipient
and the Company thereof by delivery of written notice in the form of
Exhibit A hereto annexed.
(c) Registration and Listing. All Bonus Shares granted pursuant to this
Plan shall be properly registered with the Securities and Exchange
Commission under the Securities Act of 1933. The Company shall take
such action as shall be necessary to cause any and all Bonus Shares
issued pursuant to this Plan and not previously listed to be promptly
listed on the American Stock Exchange and/or such other exchange(s) on
which shares of the same class as the Bonus Shares are then listed.
6. No Payment Required of Recipients
(a) No Payment Required. Recipients shall not be required to pay any
amounts to the Company upon allocation, grant, transfer or sale of the
Bonus Shares. The Company shall be entitled to make appropriate
withholding for income or employment taxes or other similar items.
(b) Investment Purpose. The Company may require that, in acquiring any
Bonus Shares, the Recipient agree with, and represent to, the Company
that the Recipient is acquiring such Bonus Shares for the purpose of
investment and with no present intent to transfer, sell, or otherwise
dispose of such shares as set forth in Exhibit B, below.
7. Restrictions
(a) Transfer/Issuance. Bonus Shares will be promptly transferred or
issued after the Date of Issuance and a certificate or certificates for
such shares shall be issued in the Recipient's name. The Recipient
shall thereupon be a shareholder of all the shares represented by the
certificate or certificates. As such, the Recipient will have all the
rights of a shareholder with respect to such shares, including the
right to vote such shares and to receive all dividends and other
distributions (subject to Section 7(b)) paid with respect to such
shares, provided, however, that the shares shall be subject to the
restrictions in Sections 7(d) and 7(e). Stock certificates representing
Bonus Shares will be imprinted with a legend stating that the shares
represented thereby may not be sold, exchanged, transferred, pledged,
hypothecated, or otherwise disposed of except in accordance with this
Plan's terms, and each transfer agent for the Common Stock shall be
instructed to like effect in respect of such shares. In aid of such
restrictions, the Recipient shall, immediately upon receipt of the
certificate(s) deposit such certificate(s) together with a stock power
or other instrument of transfer, appropriately endorsed in blank, with
an escrow agent designated by the Committee, under a deposit agreement
containing such terms and conditions as the Committee shall approve,
the expenses of such escrow to be borne by the Company.
(b) Stock Splits, Dividends, etc. If, due to a stock split, stock
dividend, combination of shares, or any other change or exchange for
other securities by reclassification, reorganization, merger,
consolidation, recapitalization or otherwise, the Recipient, as the
owner of Bonus Shares subject to restrictions hereunder, shall be
entitled to new, additional, or different shares of stock or
securities, the certificate or certificates for, or other evidences of,
such new, additional, or different shares or securities, together with
a stock power or other instrument of transfer appropriately endorsed,
also shall be imprinted with a legend as provided in Section 7(a) and
deposited by the Recipient with the escrow agent. If any of the
event(s) described in the preceding sentence occur, all Plan provisions
relating to restrictions and lapse of restrictions will apply to such
new, additional, or different shares or securities to the same extent
applicable to the Bonus Shares with respect to which they were
distributed, provided, however, that if the Recipient shall receive
rights, warrants or fractional interest in respect of any of such Bonus
Shares, such rights or warrants may be held, exercised, sold or
otherwise disposed of, and such fractional interests may be settled, by
the Recipient free and clear of the restrictions hereafter set forth.
(c) Restricted Period. The term "Restricted Period" with respect to
restricted Bonus Shares (after which restrictions shall lapse) means,
subject to Section 7(f) below, a period starting on the Date of
Issuance of such shares to the Recipient and ending on the date three
(3) years after the Date of Issuance, or as the Committee may otherwise
establish at the time of allocation of shares hereunder.
(d) Restrictions on Transfer of Bonus Shares. During the Restricted
Period applicable to Bonus Shares and except as otherwise specifically
provided in the Plan, none of such shares shall be sold, exchanged,
transferred, pledged, hypothecated, or otherwise disposed of unless the
Company shall offer to repurchase such shares for the then fair market
value of such shares, with appropriate adjustment for any change in the
Bonus Shares of the nature described in Section 7(b). Unless such
repurchase is otherwise prohibited by the laws of the State of
California or other applicable state or federal law currently in effect
at the time of an offer of Bonus Shares by the Company for repurchase
pursuant to the terms of this Plan, the Company shall repurchase said
shares and make payment in full therefor fifteen (15) days following
such offer. Fair market value of such shares shall be the quoted
closing price of the Company's common stock two days before payment for
such shares is made by the Company.
(e) During the Restricted Period, in the event a Recipient voluntarily
terminates his or her employment with the Company or any Subsidiary or
is terminated for Cause, any and all Bonus Shares for which
restrictions have not lapsed pursuant to Section 7(f) shall be
immediately forfeited by such Recipient and such Recipient shall no
longer have any rights, title or interests in such Bonus Shares,
related shares issued pursuant to Section 7(b) or any dividends or
distributions derived therefrom. Such Bonus Shares and related shares
will be surrendered to the Company by the escrow agent, will be placed
in the treasury of the Company, and will no longer be considered
outstanding.
(f) Lapse of Restricted Period. The restrictions and risks of
forfeiture set forth in Sections 7(d) and 7(e) hereof will lapse as
follows:
(i) as to 33.33% of Bonus Shares on the first anniversary of the
Date of Issuance, or
(ii) an additional 33.33% of Bonus Shares on the second
anniversary of the Date of Issuance, or
(iii) all remaining Bonus Shares on the third anniversary of the
Date of Issuance, or
(iv) upon the Recipient's death, or
(v) upon acceptance by the Board of an offer to acquire all or
substantially all of the Company's common stock or assets, or
(vi) upon announcement of an offer tendering for all or more
than 50 percent of the Company's outstanding common stock, or
(vii) upon resolution of the Board, or
(viii) upon termination of this Plan.
(g) Transfers Upon Death of Recipient. Nothing in this Plan will
preclude the transfer of Bonus Shares, on the Recipient's death, to the
Recipient's legal representatives or estate, nor preclude such
representatives from transferring any of such shares to the person(s)
entitled thereto by will or the laws of descent and distribution.
(h) Delivery of Written Notice. All notices in writing required
pursuant to Sections 5 or 7 will be sufficient only if actually
delivered or if sent via registered or certified mail, postage prepaid
to Recipient's home address, and will be conclusively deemed given on
the date of delivery, if delivered or on the second business day
following the date of such mailing, if mailed.
8. Finality of Determination
The Committee will administer this Plan and construe its provisions.
Any determination by the Committee (except insofar as it will make
recommendations only) in carrying out, administering, or construing this Plan
will be final and binding for all purposes and upon all interested persons and
their heirs, successors, and personal representatives.
9. Limitations
(a) No Right to Allocation. No person will at any time have any right
to receive an allocation or grant of Bonus Shares hereunder and no
person will have authority to enter into an agreement for the making of
an allocation or grant or to make any representation or warranty with
respect thereto.
(b) Rights of Recipients. Recipients of allocations will have no rights
in respect thereof other than those set forth in the Plan. Except as
provided in Section 7(g), such rights may not be assigned or
transferred except by will or by the laws of descent and distribution.
Any attempt to sell, exchange, transfer, pledge, hypothecate, or
otherwise dispose of any Bonus Shares held by the Recipient under
restrictions which have not yet lapsed, will be deemed null and void.
Before issuance of Bonus Shares, no such shares will be earmarked for
the Recipients' accounts nor will such Recipients have any rights as
stockholders with respect to such shares.
(c) No Right to Continued Employment. Neither the Company's action in
establishing the Plan, nor any action taken by it or by the Board or
the Committee under the Plan, nor any provision of the Plan, will be
construed as giving to any person the right to be retained in the
employ of the Company or any Subsidiary.
10. Amendment, Suspension or Termination of Plan
The Board may amend, suspend or terminate the Plan in whole or in part
at any time; provided that such amendment, suspension or termination will not
affect adversely rights or obligations with respect to allocations previously
made.
11. Governing Law.
The Plan will be governed by the laws of the State of California.
12. Expenses of Administration.
All costs and expenses incurred in the operation and administration of
this Plan will be borne by the Company.
<PAGE>
EXHIBIT "A" -- PLM INTERNATIONAL, INC.
MANDATORY MANAGEMENT STOCK OPTION PLAN
To: 1. ____________________, Recipient, and
2. Chief Financial Officer, PLM International, Inc.
This is to advise you that PLM International, Inc.'s Board of Directors
has on the date of this notice allocated to the Recipient above named a total of
___________ Bonus Shares under and pursuant to the Mandatory Management Stock
Bonus Plan. The applicable Allocation Ratio is _____ percent. The Fair Value of
Bonus Shares is $______/share. The cash compensation under your Bonus
Compensation Plan has been reduced by $15,000.
------------------------------
For the Board
Douglas P. Goodrich
Date: ___________________________
<PAGE>
EXHIBIT "B" -- PLM INTERNATIONAL, INC.
MANDATORY MANAGEMENT STOCK BONUS PLAN
To: Chief Financial Officer, PLM International, Inc.
I represent that the 7,778 Bonus Shares allocated to me pursuant to the
Company's Mandatory Management Stock Bonus Plan, upon receipt of these Bonus
Shares, will be deposited, together with a stock power duly endorsed in blank,
with an escrow agent appointed pursuant to Section 7(a) of the Plan, I represent
and agree that I am acquiring these Bonus Shares for investment and that I have
no present intention to transfer, sell or otherwise dispose of such shares,
except as permitted pursuant to the Plan and in compliance with applicable
securities laws. I acknowledge that these Bonus Shares are subject to
restrictions on transfer and subject to forfeiture as set forth in the Plan. I
agree further that I am acquiring these shares in accordance with, and subject
to, the terms, provisions and conditions of said Plan, to all of which I hereby
expressly assent. These agreements will bind and inure to the benefit of my
heirs, legal representatives, successors and assigns.
My address of record is:
My Social Security Number is:
Receipt of the above, together with the payment referred to, is hereby
acknowledged.
- -----------------------------------
Recipient:
PLM International, Inc.
By:
Date:
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