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 June 30, 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 July 23, 1997 - 9,184,884 shares
<PAGE>
PLM INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended June 30, Ended June 30,
1997 1996 1997 1996
------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues:
Operating leases $ 3,429 $ 4,111 $ 7,658 $ 9,157
Finance lease income 1,984 724 3,798 1,046
Management fees 2,797 2,893 5,658 5,446
Partnership interests and other fees 507 300 993 1,292
Acquisition and lease negotiation fees 585 1,109 763 2,664
Aircraft brokerage and services 661 729 1,335 1,416
Gain on the sale or disposition of assets, net 1,233 993 2,601 1,793
Other 694 697 1,535 1,143
------------------------------------------------------------
Total revenues 11,890 11,556 24,341 23,957
------------------------------------------------------------
Costs and expenses:
Operations support 4,058 6,108 8,222 11,221
Depreciation and amortization 2,141 2,907 4,346 5,616
General and administrative 2,810 1,664 4,726 3,759
------------------------------------------------------------
Total costs and expenses 9,009 10,679 17,294 20,596
------------------------------------------------------------
Operating income 2,881 877 7,047 3,361
Interest expense (2,352 ) (1,541 ) (4,994 ) (2,983 )
Interest income 452 286 838 523
Other (expense) income, net (3 ) 416 (24 ) 390
------------------------------------------------------------
Income before income taxes 978 38 2,867 1,291
Provision for (benefit from) income taxes 330 (223 ) 938 238
------------------------------------------------------------
Net income to common shares $ 648 $ 261 $ 1,929 $ 1,053
============================================================
Earnings per weighted-average common share
outstanding $ 0.07 $ 0.02 $ 0.21 $ 0.10
============================================================
</TABLE>
See accompanying notes to these consolidated financial statements.
<PAGE>
PLM INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
------------------------------------------
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 7,951 $ 7,638
Receivables 3,461 5,286
Receivables from affiliates 6,309 6,019
Investment in direct finance leases, net 68,213 69,994
Loans receivable 5,516 5,718
Equity interest in affiliates 28,756 30,407
Assets held for sale - 6,222
Transportation equipment held for operating leases 61,467 66,546
Less accumulated depreciation (38,028 ) (41,750 )
----------------------------------------
23,439 24,796
Commercial and industrial equipment held for
operating leases 15,982 15,930
Less accumulated depreciation (4,038 ) (2,302 )
----------------------------------------
11,944 13,628
Restricted cash and cash equivalents 21,946 17,828
Other, net 11,261 11,213
----------------------------------------
Total assets $ 188,796 $ 198,749
========================================
LIABILITIES, MINORITY INTEREST, AND SHAREHOLDERS' EQUITY
Liabilities:
Short-term secured debt $ 7,141 $ 30,966
Senior secured loan 23,529 25,000
Senior secured notes 27,000 18,000
Other secured debt 521 618
Nonrecourse securitization facility 52,343 45,392
Payables and other liabilities 13,332 16,757
Deferred income taxes 16,217 15,334
----------------------------------------
Total liabilities 140,083 152,067
Minority interest 370 362
Shareholders' equity:
Common stock ($0.01 par value, 50,000,000 shares
authorized, 9,191,864 issued and outstanding at
June 30, 1997 and 9,142,761 at December 31, 1996) 117 117
Paid-in capital, in excess of par 77,778 77,778
Treasury stock (3,404,527 and 3,453,630 shares at
respective dates) (12,189 ) (12,382 )
----------------------------------------
65,706 65,513
Accumulated deficit (17,363 ) (19,193 )
----------------------------------------
Total shareholders' equity 48,343 46,320
----------------------------------------
Total liabilities, minority interest, and shareholders' equity $ 188,796 $ 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 Six Months Ended June 30, 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 1,929 1,929
Common stock repurchases (46 ) (46 )
Reissuance of treasury stock 239 (38 ) 201
Translation loss (61 ) (61 )
===============================================================================
Balances, June 30, 1997 $ 117 $ 77,778 $ (12,189 ) $ (17,363 ) $48,343
===============================================================================
</TABLE>
See accompanying notes to these consolidated financial
statements.
<PAGE>
PLM INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
For the Six Months
Ended June 30,
1997 1996
-------------------------------
<S> <C> <C>
Operating activities:
Net income $ 1,929 $ 1,053
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 4,346 5,616
Foreign currency translation (61 ) 52
Increase in deferred income taxes 883 222
Gain on sale or disposition of assets, net (2,601 ) (1,793 )
Undistributed residual value interests 208 294
Minority interest in net income of subsidiaries 8 7
Increase (decrease) in payables and other liabilities 962 (2,723 )
Decrease in receivables and receivables from affiliates 1,535 2,252
Cash distributions from affiliates in excess of income accrued 1,443 1,342
Increase in other assets (323 ) (478 )
-------------------------------
Net cash provided by operating activities 8,329 5,844
-------------------------------
Investing activities:
Additional investment in affiliates - (4,956 )
Principal payments received on finance leases 8,589 1,510
Principal payments received on loans 979 -
Investment in direct finance leases (30,528 ) (36,170 )
Investment in loans receivable (777 ) -
Purchase of equipment (22,930 ) (33,287 )
Proceeds from the sale of transportation equipment for lease 9,958 6,254
Proceeds from the sale of assets held for sale 15,600 1,431
Proceeds from the sale of commercial and industrial equipment 24,699 24,160
Sale of investment in subsidiary - 372
Increase in restricted cash and restricted cash equivalents (4,118 ) (5,184 )
-------------------------------
Net cash provided by (used in) investing activities 1,472 (45,870 )
-------------------------------
</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 Six Months
Ended June 30,
1997 1996
-------------------------------
<S> <C> <C>
Financing activities:
Borrowings of short-term secured debt $ 31,910 $ 33,444
Repayment of short-term secured debt (55,735 ) (8,595 )
Repayment of senior secured loan (1,471 ) -
Repayment of other secured debt (97 ) (39 )
Borrowings under senior secured notes 9,000 -
Borrowings under securitization facility 14,394 15,866
Repayment of securitization facility (7,443 ) (7,681 )
Repayment of subordinated debt - (2,875 )
Purchase of treasury stock (46 ) (348 )
Proceeds from exercise of stock options - 35
-------------------------------
Net cash (used in) provided by financing activities (9,488 ) 29,807
-------------------------------
Net increase (decrease) in cash and cash equivalents 313 (10,219 )
Cash and cash equivalents at beginning of period 7,638 13,764
===============================
Cash and cash equivalents at end of period $ 7,951 $ 3,545
===============================
Supplemental information - net cash paid for:
Interest $ 4,786 $ 2,688
===============================
Income taxes $ 43 $ 1,283
===============================
</TABLE>
See accompanying notes to these consolidated financial
statements.
<PAGE>
PLM INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1997
1. General
In the opinion of management, the accompanying unaudited consolidated financial
statements contain all adjustments necessary, consisting primarily of normal
recurring accruals, to present fairly PLM International, Inc.'s (the Company's)
financial position as of June 30, 1997 and December 31, 1996; the statements of
income for the three and six months ended June 30, 1997 and 1996; the statements
of cash flows for the six months ended June 30, 1997 and 1996; and the
statements of changes in shareholders' equity for the year ended December 31,
1996 and the six months ended June 30, 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 primarily new commercial
and industrial equipment. While the majority of these leases are accounted for
as finance leases, some are accounted for as loans or operating leases. During
the six months ended June 30, 1997, the Company funded $30.5 million in
equipment that was placed on finance lease. Also during the six months ended
June 30, 1997, the Company sold equipment on finance lease with an original
equipment cost of $22.7 million, resulting in a net gain of $1.2 million. During
the six months ended June 30, 1997, the Company funded loans of $0.8 million
that were secured by commercial and industrial equipment.
4. Equipment
Equipment held for operating lease includes transportation equipment and
commercial and industrial equipment, which is depreciated over their estimated
useful lives.
During the six months ended June 30, 1997, the Company funded $4.0 million in
commercial and industrial equipment, which was placed on operating lease. During
the six months ended June 30, 1997, the Company sold commercial and industrial
equipment that was on operating lease with an original cost of $3.2 million for
a net gain of $16,000.
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 the depreciated
cost or the fair value less costs to sell. As of 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 that was held for sale to an affiliated program. Also as
of December 31, 1996, two commuter aircraft with a combined net book value of
$1.1 million were held for sale. The rig was sold to an affiliated program at
its original cost 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 six months ended June
30, 1997, the Company purchased two commercial aircraft for $5.0 million and
trailers for $2.8 million. The aircraft were subsequently sold to an
unaffiliated third party for a gain of $0.8 million. As of June 30, 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 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
<PAGE>
4. Equipment (continued)
combination of third-party industry sources, recent transactions, and published
fair market value references. During the six months ended June 30, 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 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.
The facility, which is shared with PLM Equipment Growth Funds IV, V, and VI, PLM
Equipment Growth & Income Fund VII, and Professional Lease Management Income
Fund I, LLC, allows the Company to purchase equipment prior to the designated
program or partnership being identified. As of June 30, 1997, the Company's AFG
subsidiary had borrowed $7.1 million from this loan facility. No other amounts
were outstanding under this facility as of June 30, 1997. All borrowings under
this facility 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 by direct finance leases, operating leases,
and loans on commercial and industrial equipment that generally have terms from
two to seven years. The facility is available for a one-year period expiring
June 1998. As of June 30, 1997, outstanding borrowings totaled $52.3 million
under this facility, 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 June 30, 1997, 10,900 shares, for a total of $46,000, had been repurchased
under this plan.
During the six months ended June 30, 1997, 60,003 shares (net of forfeited
shares) were issued from treasury stock as part of the senior management bonus
program. During the six months ended June 30, 1997, 10,900 shares were
repurchased. Consequently, the total common shares outstanding increased to
9,191,864 as of June 30, 1997, from the 9,142,761 outstanding as of December 31,
1996. Net income per weighted-average common share outstanding was computed by
dividing net income to common shares by the weighted-average number of shares
deemed outstanding during the period. The weighted-average number of shares
deemed outstanding for the earnings per share calculation during the three
months ended June 30, 1997 and 1996 was 9,439,973 and 10,947,381, respectively.
The weighted-average number of shares deemed outstanding for the earnings per
share calculation during the six months ended June 30, 1997 and 1996 was
9,378,256 and 10,996,981, respectively.
On March 12, 1989, the Company distributed rights as a dividend on each
outstanding share of common stock. Upon the occurrence of certain events,
characterized as unsolicited or abusive attempts to acquire control of the
Company, the rights would have become exercisable. On June 10, 1997, the Company
announced the redemption of these rights for $0.01 per right. Shareholders of
record as of June 24, 1997 will be paid a total of $0.1 million for the
redemption of the rights on July 24, 1997.
7. Legal Matters
In November 1995, 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 (ESOP), the
ESOP's trustee, and certain individual employees, officers, and directors of the
Company. The
<PAGE>
7. Legal Matters (continued)
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 out of purported defects in the structure,
financing, and termination of the ESOP and 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 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 the District Court's judgment. This matter was
fully briefed by the parties as of February 1997. The Ninth Circuit has
scheduled oral argument on this matter for September 17, 1997 at 9:00 am.
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 (the Koch
action). 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 Funds IV, V, and 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 Koch
action 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 Koch action to the state court and defendants have
responded to this motion. The federal court has not yet ruled on this motion,
and defendants do not need to respond to the complaint until after such motion
is decided. The Company believes that the allegations of the Koch action are
completely without merit and intends to defend this matter vigorously.
On June 5, 1997, the Company and the affiliates who are also defendants in the
Koch action were named as defendants in another purported class action filed in
the San Francisco Superior Court, San Francisco, California, Case No. 987062
(the Romei action). The named plaintiff has alleged the same facts and the same
nine causes of action as is in the Koch action (as described in the Company's
Form 10-K for the year ended December 31, 1996), plus five additional causes of
action against all of the defendants, as follows: violations of California
Business and Professions Code Sections 17200, et seq. for alleged unfair and
deceptive practices, a claim for constructive fraud, a claim for unjust
enrichment, a claim for violations of California Corporations Code Section 1507,
and a claim for treble damages under California Civil Code Section 3345. The
plaintiff is an investor in PLM Equipment Growth Fund V, and filed the complaint
on her own behalf and on behalf of all class members similarly situated who
invested in certain California limited partnerships sponsored by PLM Securities,
for which PLM Financial Services, Inc. acts as the general partner, including
PLM Equipment Growth Funds IV, V, and VI, and PLM Equipment Growth & Income Fund
VII.
The Company and the other defendants removed the Romei action to the United
States District Court for the Northern District of California (Case No.
C-97-2450 SC) on June 30, 1997, based on the federal court's diversity
jurisdiction. The defendants then filed a motion to compel arbitration of the
plaintiffs' claims, based on an agreement to arbitrate contained in the PLM
Equipment Growth Fund V limited partnership agreement, to which plaintiff is a
party. A hearing on this motion to compel arbitration has been scheduled for
August 22, 1997, although the district court may decide the motion without such
argument. The Company believes that the allegations of the Romei action are
completely without merit and intends to defend this matter vigorously.
<PAGE>
7. Legal Matters (continued)
The Company is involved as plaintiff or defendant in various other 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.
8. Purchase Commitments
As of June 30, 1997, the Company, through its AFG subsidiary, had committed to
purchase $120.5 million of equipment for its commercial and industrial equipment
lease portfolio, to be held by the Company or sold to the Company's
institutional leasing investment program or to third parties.
From July 1, 1997 to July 23, 1997, the Company, through its AFG subsidiary,
funded $10.0 million of the commitments outstanding as of June 30, 1997 for its
commercial and industrial equipment lease portfolio.
As of July 23, 1997, the Company had committed to purchase $110.5 million of
equipment for its commercial and industrial equipment lease portfolio.
9. Subsequent Event
During July 1997, the Company purchased for $9.0 million a 47.5% interest in an
entity that owns a marine vessel. The remaining 52.5% interest in the entity was
purchased by an affiliated program. The Company intends to sell its interest in
the entity to an affiliated program.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
A major activity of the Company is the funding and management of longer-term
direct finance leases, operating leases, and loans through its American Finance
Group, Inc. (AFG) 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. 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 10 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 is selling certain of
its older trailers and is replacing them with 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, LLC (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 it then manages on behalf of the investors. The equipment
management activities for these types of programs generates equipment management
fees for the Company over the life of a 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 a partnership, subject to
certain allocation provisions. The Fund I agreement entitles the Company to a
15% interest in the cash distributions and earnings of a 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 lease, which consists of
aircraft, marine containers, intermodal trailers, and storage equipment as of
June 30, 1997, is equipment mainly built prior to 1988. As equipment ages, the
Company continues to monitor the performance of its assets on lease and the
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 June 30, 1997 versus June 30, 1996
The following analysis reviews the operating results of the Company:
Revenues
<TABLE>
<CAPTION>
For the Three Months
Ended June 30,
1997 1996
------------------------------
(in thousands)
<S> <C> <C>
Operating leases $ 3,429 $ 4,111
Finance lease income 1,984 724
Management fees 2,797 2,893
Partnership interests and other fees 507 300
Acquisition and lease negotiation fees 585 1,109
Aircraft brokerage and services 661 729
Gain on the sale or disposition of assets, net 1,233 993
Other 694 697
------------------------------
Total revenues $ 11,890 $ 11,556
</TABLE>
The fluctuations in revenues for the three months ended June 30, 1997, compared
to the same period in 1996, are summarized and explained below.
Operating lease revenues by equipment type:
<TABLE>
<CAPTION>
For the Three Months
Ended June 30,
1997 1996
---------------------------
(in thousands)
<S> <C> <C>
Trailers $ 1,912 $ 1,802
Commercial and industrial equipment 1,261 778
Aircraft 102 1,139
Storage equipment 95 282
Marine containers 51 92
Railcars 8 18
---------------------------
$ 3,429 $ 4,111
</TABLE>
Operating lease revenues include revenues generated from assets held for
operating leases and assets held for sale that are on lease. As of June 30,
1997, the Company owned transportation equipment held for operating lease with
an original cost of $61.5 million, which was $35.3 million less than the
original cost of transportation equipment owned and held for operating lease or
held for sale as of June 30, 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, and resulted in a 72% net
reduction in its aircraft portfolio and a 33% net reduction in its marine
container portfolio, compared to these portfolios as of June 30, 1996. The
reduction in transportation equipment available for lease is the primary reason
aircraft and marine container revenues were reduced, compared to the prior year.
The $0.2 million decrease in storage equipment lease revenue is due to an
agreement the Company entered into in January 1997 to lease all of its storage
equipment assets to a third party on a triple-net operating lease, as opposed to
short-term operating leases, resulting in both lower storage equipment operating
lease revenues and operating expenses.
The decrease in operating lease revenues as a result of the reduction in
transportation equipment available for lease and the storage equipment agreement
was partially offset by a $0.5 million increase in operating lease revenues
generated by commercial and industrial equipment and by a $0.1 million increase
in trailer lease revenues as a result of higher lease rates received on new
trailer additions.
<PAGE>
Finance lease income:
The Company earns finance lease income for certain leases originated by its AFG
subsidiary that are either retained for long-term investment or sold to third
parties or to an institutional leasing investment program. Finance lease income
increased $1.3 million in the second quarter of 1997, compared to the same
period in 1996, reflecting an increase in commercial and industrial assets owned
and on operating finance lease. For the quarter ended June 30, 1997, the average
investment in direct finance leases was $67.8 million, compared to $23.1 million
for the second quarter of 1996.
Management fees:
Management fees are, for the most part, based on the gross revenues
generated by equipment under management. The $0.1 million decrease in management
fees during the quarter ended June 30, 1997, compared to the comparable prior
year's quarter, resulted from a decrease in management fees caused by the
disposition of equipment in the Company's older programs. 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 decrease has been and is expected to
continue to 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
June 30, 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 June 30, 1997. A net decrease of $0.4 million in the Company's residual
interests in the programs was recorded during the quarter ended June 30, 1996.
Residual income is based on the general partner's share of the present value of
the estimated disposition proceeds of the equipment portfolio of affiliated
partnerships 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 June 30, 1997, on behalf of the equipment growth funds,
the Company signed a memorandum of agreement to purchase a 52.5% interest in an
entity that owns a marine vessel (the purchase was completed in July 1997) for
$10.0 million, compared to $17.4 million of equipment purchased on behalf of the
equipment growth funds during the same quarter of the prior year, resulting in a
$0.4 million decrease in acquisition and lease negotiation fees. Also during the
quarter ended June 30, 1997, equipment purchased for the institutional leasing
investment program managed by AFG was $1.3 million, compared to $7.6 million for
the same period in 1996, resulting in an additional decrease in acquisition and
lease negotiation fees of $0.1 million. Because 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 has a no front-end fee structure, acquisition
and lease negotiation fees will be substantially reduced in the future.
Gain on the sale or disposition of assets, net:
During the quarter ended June 30, 1997, the Company recorded a $1.2
million net gain on the sale or disposition of assets. Of this gain, $0.4
million resulted from the sale or disposition of 323 trailers, 78 marine
containers, 4 storage units, 2 railcars, and 2 commuter aircraft. Also, during
the second 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 $0.4 million from the sale of commercial and
industrial equipment during the second quarter of 1997. During the quarter ended
June 30, 1996, the Company recorded a $1.0 million net gain on the sale or
disposition of assets. Of this gain, $0.6 million resulted from the sale or
disposition of 138 trailers, 50 marine containers, 5 commuter aircraft, 2
railcars, and 1 storage unit, and $0.4 million related to the sale of commercial
and industrial equipment.
Costs and Expenses
<TABLE>
<CAPTION>
For the Three Months
Ended June 30,
1997 1996
-------------------------------
(in thousands)
<S> <C> <C>
Operations support $ 4,058 $ 6,108
Depreciation and amortization 2,141 2,907
General and administrative 2,810 1,664
--------------------------------
Total costs and expenses $ 9,009 $ 10,679
</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 $2.1 million (34%) for the quarter ended June 30, 1997, compared
to the same quarter in 1996. The decrease resulted from a $1.4 million charge
related to the termination of syndication activities recorded in the second
quarter of 1996, a $0.5 million decrease in compensation expense due to staff
reductions, and a $0.2 million decrease in equipment operating costs due to
sales of the Company's transportation equipment.
Depreciation and amortization:
Depreciation and amortization expenses decreased $0.8 million (26%) for
the quarter ended June 30, 1997, compared to the quarter ended June 30, 1996.
The decrease resulted from the reduction in depreciable transportation equipment
(discussed in the operating lease revenue section), and was partially offset by
increased depreciation of commercial and industrial equipment.
General and administrative:
General and administrative expenses increased $1.1 million (69%) during the
quarter ended June 30, 1997, compared to the same quarter in 1996, which was
primarily due to a $0.2 million increase in compensation and benefits expenses,
a $0.2 million increase in legal fees related to the Koch action (refer to Note
7 to the consolidated financial statements), a $0.5 million increase in costs
related to a submission of matters to a vote of security holders, and a $0.3
million credit recorded in the second quarter of 1996 related to the Employee
Stock Ownership Plan (ESOP), which were partially offset by a $0.1 million
decrease in rent expense.
Other Income and Expenses
<TABLE>
<CAPTION>
For the Three Months
Ended June 30,
1997 1996
------------------------------
(in thousands)
<S> <C> <C>
Interest expense $ (2,352 ) $ (1,541 )
Interest income 452 286
Other (expense) income, net (3 ) 416
Provision for (benefit from) income taxes 330 (223 )
</TABLE>
Interest expense:
Interest expense increased $0.8 million (53%) during the quarter ended
June 30, 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 $0.2 million (58%) in the quarter ended June 30, 1997,
compared to the same quarter of 1996, as a result of higher average cash
balances in the second quarter of 1997, compared to the same period in 1996.
Other (expense) income, net:
Other income was $0.4 million during the quarter ended June 30, 1996, due to the
sale of 32 wind turbines that had previously been written off. No similar income
was recorded during the quarter ended June 30, 1997.
Income taxes:
For the three months ended June 30, 1997, the provision for income taxes was
$0.3 million, which represented an effective rate of 34%. For the same period in
1996, the benefit from income taxes was $0.2 million, which reflected an
adjustment for taxes related to the ESOP.
Net Income
As a result of the foregoing, for the three months ended June 30, 1997, net
income was $0.6 million, resulting in net income per weighted-average common
share outstanding of $0.07. For the same period in 1996, net income was $0.3
million, resulting in net income per weighted-average common share outstanding
of $0.02.
For the Six Months Ended June 30, 1997 versus June 30, 1996
The following analysis reviews the operating results of the Company:
Revenues
<TABLE>
<CAPTION>
For the Six Months
Ended June 30,
1997 1996
------------------------------
(in thousands)
<S> <C> <C>
Operating leases $ 7,658 $ 9,157
Finance lease income 3,798 1,046
Management fees 5,658 5,446
Partnership interests and other fees 993 1,292
Acquisition and lease negotiation fees 763 2,664
Aircraft brokerage and services 1,335 1,416
Gain on the sale or disposition of assets, net 2,601 1,793
Other 1,535 1,143
------------------------------
Total revenues $ 24,341 $ 23,957
</TABLE>
The fluctuations in revenues for the six months ended June 30, 1997, compared to
the same period in 1996, are summarized and explained below.
<PAGE>
Operating lease revenues by equipment type:
<TABLE>
<CAPTION>
For the Six Months
Ended June 30,
1997 1996
----------------------------
(in thousands)
<S> <C> <C>
Trailers $ 3,860 $ 3,958
Commercial and industrial 2,504 1,798
Mobile offshore drilling units 604 -
Aircraft 370 2,565
Storage equipment 199 544
Marine containers 104 219
Railcars 17 73
----------------------------
$ 7,658 $ 9,157
</TABLE>
Operating lease revenues include revenues generated from assets held for
operating leases and assets held for sale that are on lease. As of June 30,
1997, the Company owned transportation equipment held for operating leases with
an original cost of $61.5 million, which was $35.3 million less than the
original cost of transportation equipment owned and held for operating leases or
held for sale as of June 30, 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, and resulted in a 72% net
reduction in its aircraft portfolio, a 33% net reduction in its marine container
portfolio, and a 100% net reduction in its railcar portfolio, compared to these
portfolios as of June 30, 1996. The reduction in transportation equipment
available for lease is the primary reason aircraft, marine container, and
railcar revenue were all reduced, compared to the prior year's comparable
period. The $0.3 million decrease in storage equipment lease revenue is due to
an agreement the Company entered into in January 1997 to lease all of its
storage equipment assets to a third party on a triple-net operating lease, as
opposed to short-term operating leases, resulting in both lower storage
equipment operating lease revenues and operating expenses. Trailer lease revenue
decreased due to reduced utilization for the six months ended June 30, 1997, as
compared to the same period in the prior year.
The decrease in operating lease revenues as a result of the reduction in
transportation equipment available for lease and the storage equipment agreement
was partially offset by a $0.7 million increase in operating lease revenues
generated by commercial and industrial equipment leases. In addition, during the
six months ended June 30, 1997, the Company owned one mobile offshore drilling
unit as well as a 25.5% interest in another mobile offshore drilling unit, which
together 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 first
quarter of 1997.
Finance lease income:
The Company earns finance lease income for certain leases originated by its AFG
subsidiary that are either retained for long-term investment or sold to third
parties or to an institutional leasing investment program. Finance lease income
increased $2.8 million during the six months ended June 30, 1997, compared to
the same period in 1996, due to an increase in commercial and industrial assets
owned and on finance lease. For the six months ended June 30, 1997, the average
investment in direct finance leases was $69.1 million, compared to $15.4 million
for the same period of 1996.
Management fees:
Management fees are, for the most part, based on the gross revenues
generated by equipment under management. Management fees increased $0.2 million
during the six months ended June 30, 1997, compared to the same period of the
prior year. Although management fees related to Fund I and the institutional
leasing investment program managed by the Company's AFG subsidiary increased,
<PAGE>
management fees from the remaining older programs declined due to a net decrease
in managed equipment. With the termination of syndication activities in 1996,
management fees are expected to decrease in the future as older programs begin
liquidation and the managed equipment portfolio becomes permanently reduced.
This decrease has been and is expected to continue to 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 $1.2 million and $1.5 million for the six months ended
June 30, 1997 and 1996, respectively. In addition, a decrease of $0.2 million in
the Company's residual interests in the programs was recorded during both the
six months ended June 30, 1997 and 1996. Residual income is based on 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 six months ended June 30, 1997, on behalf of the equipment growth
funds, the Company signed a memorandum of agreement to purchase a 52.5% interest
in an entity that owns a marine vessel (the purchase was completed in July 1997)
for $10.0 million, compared to $41.2 million of equipment purchased on behalf of
the equipment growth funds during the same period of the prior year, resulting
in a $1.7 million decrease in acquisition and lease negotiation fees. Also
during the six months ended June 30, 1997, equipment purchased for the
institutional leasing investment program managed by AFG was $7.6 million,
compared to $18.5 million for the same period in 1996, resulting in an
additional decrease in acquisition and lease negotiation fees of $0.2 million.
Because of the Company's decision to halt syndication of equipment leasing
programs with the close of Fund I on May 13, 1996, and because Fund I has a no
front-end fee structure, acquisition and lease negotiation fees will be
substantially reduced in the future.
Gain on the sale or disposition of assets, net:
During the six months ended June 30, 1997, the Company recorded $2.6
million in net gains on the sale or disposition of assets. Of this gain, $0.6
million resulted from the sale or disposition of 486 trailers, 130 storage
units, 100 marine containers, 4 commuter aircraft, and 2 railcars. Also during
the six months ended June 30, 1997, the Company purchased and subsequently
resold two commercial aircraft to an unaffiliated third party for a net gain of
$0.8 million and earned $1.2 million from the sale of commercial and industrial
equipment. During the six months ended June 30, 1996, the Company recorded a
$1.8 million net gain on the sale or disposition of assets. Of this gain, $1.4
million resulted from the sale or disposition of 205 trailers, 124 marine
containers, 69 railcars, 6 storage units, and 5 commuter aircraft, and $0.4
million related to the sale of commercial and industrial equipment.
Other:
Other revenues increased $0.4 million during the six months ended June
30, 1997, compared to the comparable prior year's period, due to increased
revenue earned from financing income and brokerage fees.
<PAGE>
Costs and Expenses
<TABLE>
<CAPTION>
For the Six Months
Ended June 30,
1997 1996
------------------------------
(in thousands)
<S> <C> <C>
Operations support $ 8,222 $ 11,221
Depreciation and amortization 4,346 5,616
General and administrative 4,726 3,759
------------------------------
Total costs and expenses $ 17,294 $ 20,596
</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 costs of goods
sold) decreased $3.0 million (27%) for the six months ended June 30, 1997,
compared to the same period in 1996. The decrease resulted from a $1.4 million
charge related to the termination of syndication activities recorded during the
six months ended June 30, 1996, a $0.9 million decrease in compensation expense
due to staff reductions, a $0.5 million decrease in equipment operating costs
due to sales of the Company's transportation equipment, a $0.1 million decrease
in rent expense, and a $0.1 million decrease in travel and entertainment
expense.
Depreciation and amortization:
Depreciation and amortization expenses decreased $1.3 million (23%) for
the six months ended June 30, 1997, compared to the six months ended June 30,
1996. The decrease resulted from the reduction in depreciable transportation
equipment (discussed in the operating lease revenue section), and was partially
offset by increased depreciation of commercial and industrial equipment.
General and administrative:
General and administrative expenses increased $1.0 million (26%) during the six
months ended June 30, 1997, compared to the same period in 1996, due to a $0.4
million increase in compensation and benefits expenses, a $0.2 million increase
in legal fees related to the Koch action (refer to Note 7 to the consolidated
financial statements), a $0.5 million increase in costs related to a submission
of matters to a vote of security holders, and a $0.3 million credit recorded in
the second quarter of 1996 related to the ESOP, which were partially offset by a
$0.2 million decrease in consulting expense, a $0.1 million decrease in computer
services expense, and a $0.1 million decrease in rent expense.
Other Income and Expenses
<TABLE>
<CAPTION>
For the Six Months
Ended June 30,
1997 1996
------------------------------
(in thousands)
<S> <C> <C>
Interest expense $ (4,994 ) $ (2,983 )
Interest income 838 523
Other (expense) income, net (24 ) 390
Provision for (benefit from) income taxes 938 238
</TABLE>
<PAGE>
Interest expense:
Interest expense increased $2.0 million (67%) during the six months
ended June 30, 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 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 $0.3 million (60%) in the six months ended
June 30, 1997, compared to the same period in 1996, as a result of higher
average cash balances for the six months ended June 30, 1997, compared to the
same period in 1996.
Other (expense) income, net:
Other income was $0.4 million during the six months ended June 30, 1996, due to
the sale of 32 wind turbines during the second quarter of 1996 that had
previously been written off. No similar income was recorded during the six
months ended June 30, 1997.
Income taxes:
For the six months ended June 30, 1997, the provision for income taxes was $0.9
million, which represented an effective rate of 33%. For the same period in
1996, the provision for income taxes was $0.2 million, which represented an
effective rate of 18% and reflected an adjustment for taxes related to the ESOP.
Net Income
As a result of the foregoing, for the six months ended June 30, 1997,
net income was $1.9 million, resulting in net income per weighted-average common
share outstanding of $0.21. For the same period in 1996, net income was $1.1
million, resulting in net income per weighted-average common share outstanding
of $0.10.
Liquidity and Capital Resources
Cash requirements historically have been satisfied through cash flow
from operations, borrowings, or sales of equipment.
Liquidity in 1997 and beyond will depend, in part, on the continued
remarketing of the equipment portfolio at similar lease rates, the management of
existing sponsored programs, the 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. Future liquidity is
influenced by the following:
Debt financing:
Senior Debt: The Company's $23.5 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 June 30, 1997, the cash collateral balance was $16.2 million. The facility
required quarterly interest 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 that allowed the Company to borrow up to $27.0 million
within a one-year period. On June 27, 1997, the Company drew down an additional
$9.0 million on this facility and the outstanding balance as of July 23, 1997
was $27.0 million. Beginning in November 1997, the Company will be required to
make quarterly principal payments of $1.35 million.
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. The facility, which is shared with PLM Equipment
Growth Funds (EGFs) IV, V, and VI, PLM Equipment Growth & Income Fund VII, and
Professional Lease Management Fund I, LLC, allows the Company to purchase
equipment prior to the designated program or partnership being identified. As of
July 23, 1997, the Company had $19.1 million in borrowings, and EGF VI had $10.6
million in outstanding borrowings under this facility. The Company believes it
can renew this facility on 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 that
generally have terms from two to seven years. The facility is available for a
one-year period expiring June 1998. As of July 23, 1997, there were $52.9
million in borrowings outstanding under this facility.
Interest Rate Swap Contracts: The Company has entered into interest rate swap
agreements in order to manage the interest rate exposure associated with its
securitized debt. As of June 30, 1997, the swap agreements had remaining terms
averaging 2.9 years, corresponding to the terms of the related debt. At June 30,
1997, a notional amount of $52.3 million of interest rate swap agreements
effectively fixed interest rates at an average of 7.36% on such obligations. For
the six months ended June 30, 1997, interest expense was increased by $0.2
million due to these arrangements.
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 in which it takes a security interest in the
assets. From January 1, 1997 through July 23, 1997, the Company purchased
commercial and industrial equipment with an original equipment cost of $45.3
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 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 June 30, 1997, the Company, through its AFG subsidiary, had committed
to purchase $120.5 million of equipment for its commercial and industrial
equipment lease portfolio, to be held by the Company or sold to the Company's
institutional leasing investment program or to third parties.
From July 1, 1997 through July 23, 1997, the Company, through its AFG
subsidiary, funded $10.0 million of commitments outstanding as of June 30, 1997
for its commercial and industrial equipment lease portfolio.
Transportation equipment activities:
During the six months ended June 30, 1997, the Company generated proceeds of
$10.0 million from the sale of owned transportation equipment. The net proceeds
on the sale of assets that were collateralized as part of the senior loan
facility were placed in a collateral account.
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 analyze its transportation equipment portfolio for
underperforming assets to sell or dispose of as necessary.
During July 1997, the Company purchased for $9.0 million a 47.5% interest in an
entity that owns a marine vessel. The remaining 52.5% interest in the entity was
purchased by an affiliated program. The Company intends to sell its interest in
the entity to an affiliated program.
Management believes that through debt and equity financing, possible sales of
equipment, and cash flows from operations, the Company will have sufficient
liquidity and capital resources to meet its projected future operating needs.
Forward-looking information:
Except for historical information contained herein, the discussion in this Form
10-Q contains forward-looking statements that contain risks and uncertainties,
such as statements of the Company'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 Company's actual results could differ materially from
those discussed here.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
See Note 7 of Notes to Consolidated Financial Statements.
Item 4. Submission of Matters to a Vote of Security Holders
At the Annual Meeting of Stockholders, held June 10, 1997, six proposals were
submitted to a vote of the Company's security holders.
1. Robert N. Tidball was re-elected to the Board of Directors of the Company.
Robert L. Witt was elected to the Board of Directors of the Company. The votes
cast in the election were as follows:
Votes
- -------------------------------------------------------------------------------
Nominee For Withheld
Robert N. Tidball 3,632,044 650,617
Robert L. Witt 3,246,699 1,035,962
Hans P. Jebsen 2,817,307 58,120
Malcolm G. Witter 2,831,742 43,685
Directors whose terms continued after the Annual Meeting of Stockholders, held
June 10, 1997 are as follows:
Class II (Terms Expire in 1998)
J. Alec Merriam
Robert L. Pagel
Class III (Terms Expire in 1999)
Douglas P. Goodrich
Harold R. Somerset
2. The proposal to eliminate the Shareholder Rights Plan was approved.
Votes
- -------------------------------------------------------------------------------
For Against Abstentions
5,009,556 2,020,855 117,121
3. The recommendation to repeal Article Eleventh of the Company's Certificate of
Incorporation was approved.
Votes
- -------------------------------------------------------------------------------
For Against Abstentions
4,468,459 2,544,898 134,175
<PAGE>
4. The recommendation to amend the Company's Certificate of Incorporation so
that the Company would not be governed by Section 203 of Delaware General
Corporation Law was approved.
Votes
- -------------------------------------------------------------------------------
For Against Abstentions
3,682,823 3,336,870 127,839
5. The proposal to amend Section 11 to the Company's Bylaws to add a new section
concerning stockholder meetings in the event of certain cash tender offers was
not approved.
Votes
- -------------------------------------------------------------------------------
For Against Abstentions
4,073,148 2,954,642 119,742
6. The recommendation to create a special committee dedicated to increase
shareholder value was not approved.
Votes
- -------------------------------------------------------------------------------
For Against Abstentions
3,375,674 3,309,825 462,033
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 INTERNATIONAL, INC.
/s/ Richard Brock
--------------------------
Richard Brock
Vice President and
Corporate Controller
Date: July 23, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 7,951
<SECURITIES> 0
<RECEIVABLES> 3,461
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 77,449
<DEPRECIATION> (42,066)
<TOTAL-ASSETS> 188,796
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 65,706
0
0
<OTHER-SE> (17,363)
<TOTAL-LIABILITY-AND-EQUITY> 48,343
<SALES> 0
<TOTAL-REVENUES> 24,341
<CGS> 0
<TOTAL-COSTS> 17,294
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,994
<INCOME-PRETAX> 2,867
<INCOME-TAX> 938
<INCOME-CONTINUING> 1,929
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,929
<EPS-PRIMARY> 0.21
<EPS-DILUTED> 0.21
</TABLE>
