UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 For the fiscal quarter ended
June 30, 1996.
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to
Commission file number 33-32258
-----------------------
PLM EQUIPMENT GROWTH FUND V
(Exact name of registrant as specified in its charter)
California 94-3104548
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Market, Steuart Street Tower
Suite 900, San Francisco, CA 94105-1301
(Address of principal (Zip code)
executive offices)
Registrant's telephone number, including area code (415) 974-1399
-----------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ______
<PAGE>
PLM EQUIPMENT GROWTH FUND V
(A Limited Partnership)
BALANCE SHEETS
(in thousands of dollars)
ASSETS
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
-------------------------------------
<S> <C> <C>
Equipment held for operating leases $ 130,951 $ 159,314
Less accumulated depreciation (71,918) (85,564)
-------------------------------------
59,033 73,750
Equipment held for sale 3,095 --
-------------------------------------
Net Equipment 62,128 73,750
Cash and cash equivalents 16,242 5,583
Restricted cash 545 223
Investments in unconsolidated special purpose entities 19,427 16,158
Accounts and note receivable, net of allowance for
doubtful accounts of $82 in 1996 and $54 in 1995 1,914 2,583
Net Investment in direct finance lease 2,467 2,637
Deferred charges, net of accumulated amortization of
$1,288 in 1996 and $1,202 in 1995 485 512
Prepaid expenses and other assets 266 193
-------------------------------------
Total assets $ 103,474 $ 101,639
=====================================
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and accrued expenses $ 1,125 $ 890
Due to affiliates, net 1,278 1,116
Prepaid deposits and reserve for repairs 3,830 3,616
Note payable 38,000 38,000
--------------------------------------
Total liabilities 44,233 43,622
Partners' capital:
Limited Partners (9,169,019 Depositary Units at June 30,
1996 and 9,175,944 at December 31, 1995) 59,241 58,017
General Partner -- --
--------------------------------------
Total partners' capital 59,241 58,017
--------------------------------------
Total liabilities and partners' capital $ 103,474 $ 101,639
======================================
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM EQUIPMENT GROWTH FUND V
(A Limited Partnership)
STATEMENTS OF INCOME
(In thousands of dollars except per unit amounts)
<TABLE>
<CAPTION>
For the three months For the six months
ended June 30, ended June 30,
1996 1995 1996 1995
---------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues:
Lease revenue $ 7,159 $ 8,323 $ 15,121 $ 17,018
Interest and other income 438 290 630 605
Net gain on disposition of equipment 10,637 397 10,689 2,782
---------------------------------------------------------------
Total revenues 18,234 9,010 26,440 20,405
Expenses:
Depreciation and amortization 3,083 4,145 6,229 8,127
Management fees to affiliate 341 438 746 886
Repairs and maintenance 568 1,096 1,155 2,215
Interest expense 751 759 1,441 1,547
Marine equipment operating expenses 1,503 1,645 3,637 3,596
Insurance expense to affiliate 207 236 405 516
Other insurance expense 263 304 604 563
General and administrative
expenses to affiliates 215 133 356 253
Other general and administrative expenses 236 80 407 213
---------------------------------------------------------------
Total expenses 7,167 8,836 14,980 17,916
---------------------------------------------------------------
Equity in net loss of unconsolidated
special purpose entities (158) -- (502) --
---------------------------------------------------------------
Net income $ 10,909 $ 174 $ 10,958 $ 2,489
===============================================================
Partners' share of net income (loss):
Limited Partners $ 10,668 $ (67) $ 10,475 $ 2,004
General Partner 241 241 483 485
---------------------------------------------------------------
Total $ 10,909 $ 174 $ 10,958 $ 2,489
===============================================================
Net income (loss) per Depositary Unit
(9,177,118 Units in 1995 and 9,219,932
in 1994) $ 1.16 $ (0.01) $ 1.14 $ 0.22
===============================================================
Cash distributions $ 4,826 $ 4,835 $ 9,655 $ 9,680
===============================================================
Cash distributions per Depositary Unit $ 0.50 $ 0.50 $ 1.00 $ 1.00
===============================================================
</TABLE>
See accompanying notes to financial
statements.
PLM EQUIPMENT GROWTH FUND V
(A Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL For
the period from December 31, 1994 to June 30, 1996
(in thousands)
<TABLE>
<CAPTION>
Limited General
Partners Partner Total
-----------------------------------------------------
<S> <C> <C> <C>
Partners' capital at December 31, 1994 $ 75,893 $ $ 75,893
--
Net income 1,077 968 2,045
Repurchase of Depositary Units (579) -- (579)
Cash distributions (18,374) (968) (19,342)
-------------------------------------------------------
Partners' capital at December 31, 1995 58,017 -- 58,017
Net income 10,475 483 10,958
Repurchase of Depositary Units (79) -- (79)
Cash distributions (9,172) (483) (9,655)
-------------------------------------------------------
Partners' capital at June 30, 1996 $ 59,241 $ -- $ 59,241
=======================================================
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM EQUIPMENT GROWTH FUND V
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
For the six months ended
June 30,
1996 1995
--------------------------------------
<S> <C> <C>
Operating activities:
Net income $ 10,958 $ 2,489
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation and amortization 6,229 8,127
Net gain on disposition of equipment (10,689) (2,782 )
Cash distributions from unconsolidated special purpose entities
in excess of loss 2,650 --
Changes in operating assets and liabilities:
Increase in restricted cash (322) (30 )
Accounts and note receivable, net 677 1,442
Prepaid expenses and other assets (73) (7 )
Due to affiliates, net (140) 587
Accounts payable and accrued expenses 120 40
Prepaid deposits and reserve for repairs 214 474
--------------------------------------
Cash provided by operating activities 9,624 10,340
--------------------------------------
Investing activities:
Proceeds from disposition of equipment 22,242 12,499
Payments for purchase of equipment and capital
improvements (5,710) (17,498 )
Payments of acquisition-related fees to affiliate -- (779 )
Payments of lease negotiation fees to affiliate -- (173 )
Investment in equipment purchased and placed in
unconsolidated special purpose entities (5,919) --
Finance lease payments received 156 --
--------------------------------------
--------------------------------------
Cash provided by (used in) investing activities 10,769 (5,951 )
--------------------------------------
Financing activities:
Proceeds from short term note payable 5,610 --
Payments of short-term note payable (5,610) --
Cash distributions paid to an affiliate (483) (485 )
Cash distributions paid to the limited partners (9,172) (9,195 )
Repurchases of depositary units (79) (564 )
--------------------------------------
Cash used in financing activities (9,734) (10,244 )
--------------------------------------
Net increase (decrease) in cash and cash equivalents 10,659 (5,855 )
Cash and cash equivalents at beginning of period 5,583 20,200
--------------------------------------
Cash and cash equivalents at end of period $ 16,242 $ 14,345
======================================
Supplemental information:
Interest paid $ 1,507 $ 1,463
======================================
Supplemental disclosure of noncash investing and financing activities:
Sales proceeds included in accounts receivable $ 8 $ --
======================================
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM EQUIPMENT GROWTH FUND V
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
June 30, 1996
1. Opinion of Management
In the opinion of the management of PLM Financial Services,
Inc., the General Partner, the accompanying unaudited financial statements
contain all adjustments necessary, consisting primarily of normal recurring
accruals, to present fairly the financial position of PLM Equipment Growth Fund
V (the "Partnership") as of June 30, 1996, the statements of income for the
three and six months ended June 30, 1996 and 1995, the statements of cash flows
for the six months ending June 30, 1996 and 1995, and the statements of changes
in partners' capital for the period December 31, 1994 to June 30, 1996. 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 financial statements. For further
information, reference should be made to the financial statements and notes
thereto included in the Partnership's Annual Report on Form 10-K for the year
ended December 31, 1995, on file at the Securities and Exchange Commission.
2. Repurchase of Depositary Units
At December 31, 1995, the Partnership agreed to repurchase approximately 7,900
Depositary Units for an aggregate purchase price of $90,000. As of June 30,
1996, the Partnership repurchased 6,925 Depositary Units for $79,000 The General
Partner anticipates that the remaining Units will be repurchased during the next
three months.
3. Investments in Unconsolidated Special Purpose Entities
During the second half of 1995, the Partnership began to increase the level of
its participation in the ownership of large-ticket transportation assets to be
owned and operated jointly with affiliated programs. This trend has continued
during 1996.
Prior to 1996, the Partnership accounted for operating activities associated
with joint ownership of transportation equipment as undivided interests,
including its proportionate share of each asset with similar wholly-owned assets
in its financial statements. Under generally accepted accounting principles, the
effects of such activities, if material, should be reported using the equity
method of accounting. Therefore, effective January 1, 1996, the Partnership
adopted the equity method to account for its investment in such jointly-held
assets.
The principle differences between the previous accounting method and the equity
method relate to the presentation of activities relating to these assets in the
statement of operations. Whereas, under equity accounting the Partnership's
proportionate share is presented as a single net amount, equity in net income
(loss) of unconsolidated special purpose entities, under the previous method,
the Partnership's statement of operations reflected its proportionate share of
each individual item of revenue and expense. Accordingly, the effect of adopting
the equity method of accounting has no cumulative effect on previously reported
partner's capital or on the Partnership's net income (loss) for the period of
adoption. Because the effects on previously issued financial statements of
applying the equity method of accounting to investments in jointly-owned assets
are not considered to be material to such financial statements taken as a whole,
previously issued financial statements have not been restated. However, certain
items have been reclassified in the previously issued balance sheet to conform
to the current period presentation.
During the six months ended June 30, 1996, the Partnership purchased a partial
beneficial interest in a trust of five commercial aircraft for $5.6 million and
incurred acquisition and lease negotiation fees of $0.3 million to PLM
Transportation Equipment Corporation (TEC), an affiliate of the General Partner.
<PAGE>
PLM EQUIPMENT GROWTH FUND V
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
June 30, 1996
3. Investments in Unconsolidated Special Purpose Entities (continues)
The net investments in unconsolidated special purpose entities include the
following jointly-owned equipment (and related assets and liabilities) (in
thousands):
<TABLE>
<CAPTION>
June 30, December 31,
Ownership Equipment 1996 1995
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
50% Bulk carrier $ 3,761 $ 3,778
50% Product tanker 2,569 2,841
17% Two trusts owning three commercial aircraft, two
aircraft engines, and a portfolio of aircraft rotables 4,223 5,334
14% Trust that own seven commercial aircraft 3,562 4,205
20% Trust that own five commercial aircraft 5,312 --
---------------------------------
Net investments $ 19,427 $ 16,158
=================================
</TABLE>
4. Cash Distributions
Cash distributions are recorded when paid and totaled $4.8 million and $9.7
million for the three and six months ended June 30, 1996, respectively. Cash
distributions to Unit holders in excess of net income are considered to
represent a return of capital on a Generally Accepted Accounting Principle
(GAAP) basis. None of the cash distributions to the Limited Partners during the
six months ended June 30, 1996 were deemed to be a return of capital. Cash
distributions to the Limited Partners of $7.2 million for six months ended June
30, 1995, were deemed to be a return of capital. Cash distributions related to
the second quarter results of $3.2 million were paid or are payable during July
and August 1996, depending on whether the individual unit holder elected to
receive a monthly or quarterly distribution check.
5. Equipment
Owned equipment held for operating leases is stated at cost. Equipment held
for sale is stated at the lower of the equipment's depreciated cost or net
realizable value and is subject to a pending contract for sale. The components
of equipment are as follows (in thousands):
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
-------------------------------------
<S> <C> <C>
Marine vessels $ 52,259 $ 52,259
Mobile offshore drilling units -- 25,204
Marine containers 26,383 28,278
Aircraft 31,398 32,903
Rail equipment 11,233 11,041
Trailers 9,678 9,629
-------------------------------------
130,951 159,314
Less accumulated depreciation (71,918) (85,564)
-------------------------------------
59,033 73,750
Equipment held for sale 3,095 --
-------------------------------------
=====================================
Net equipment $ 62,128 $ 73,750
=====================================
</TABLE>
As of June 30, 1996, all of the Partnership's equipment was on lease or
operating in PLM-affiliated short-term trailer rental yards except for 16
railcars and 124 marine containers with an aggregate net book value of $1.1
million. As of December 31, 1995, all of the Partnership's equipment was on
lease or operating in PLM-affiliated short-term trailer rental yards.
During the six months ended June 30, 1996, the Partnership purchased a
commercial aircraft for $5.5 million and incurred acquisition and lease
negotiation fees of $0.3 million to TEC.
PLM EQUIPMENT GROWTH FUND V
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
June 30, 1996
5. Equipment (continued)
During the six months ended June 30, 1996, the Partnership disposed of 541
marine containers and 4 railcars with an aggregate net book value of $823,000
for proceeds of $991,000. The Partnership also sold a mobile offshore drilling
unit with a net book value of $10.7 million for proceeds of $21.3 million.
At June 30, 1996, two aircraft engines, which are currently on lease, are held
for sale. This equipment was sold on July 31, 1996, for proceeds of $6.0
million.
During the six months ended June 30, 1995, the Partnership disposed of 804
marine containers, one railcar, and one marine vessel with a net book value of
$5.0 million for proceeds of $4.7 million. The Partnership also sold 97
railcars, which were held for sale as of December 31, 1994, with a net book
value of $1,870,000 at the date of sale for proceeds of $2,631,000 and one
marine vessel, which was also held for sale, with a net book value of $3,990,000
at the date of sale for proceeds of $5,122,000. Included in the gain on sale of
the marine vessels, is the unused portion of accrued dry docking and commissions
related to the sale, a net of $1,170,000.
6. Debt
The General Partner has entered into a joint $35 million credit facility (the
"Committed Bridge Facility") on behalf of the Partnership, PLM Equipment Growth
Fund III, PLM Equipment Growth Fund IV, PLM Equipment Growth Fund VI, PLM
Equipment Growth & Income Fund VII and Professional Lease Management Income Fund
I ("Fund I"), all affiliated investment programs, TEC Acquisub, Inc. ("TECAI"),
an indirect wholly-owned subsidiary of the General Partner, and American Finance
Group, Inc. (AFG), a subsidiary of PLM International Inc., which may be used to
provide interim financing of up to (i) 70% of the aggregate book value or 50% of
the aggregate net fair market value of eligible equipment owned by the
Partnership or Fund I, plus (ii) 50% of unrestricted cash held by the borrower.
The Committed Bridge Facility became available on December 20, 1993, and was
amended and restated on May 31, 1996, to expire on May 23, 1997. The Committed
Bridge Facility also provides for a $5 million Letter of Credit Facility for the
eligible borrowers. Outstanding borrowings by Fund I, TECAI, AFG or PLM
Equipment Growth Funds III through VII reduce the amount available to each other
under the Committed Bridge Facility. Individual borrowings may be outstanding
for no more than 179 days, with all advances due no later than May 23, 1997. The
Committed Bridge Facility prohibits the Partnership from incurring any
additional indebtedness. Interest accrues at either the prime rate or adjusted
LIBOR plus 2.5% at the borrowers option and is set at the time of an advance of
funds. Borrowings by the Partnership are guaranteed by the General Partner. As
of August 9, 1996, the PLM Equipment Growth Fund VI had $9,000,000 in
outstanding borrowings under the Committed Bridge Facility, TECAI had
$23,911,000 in outstanding borrowings and neither the Partnership nor any of the
other programs had any outstanding borrowings.
7. Subsequent Event
The Partnership's loan agreement requires the Partnership to maintain specified
ratios of aggregate market value of certain assets over the outstanding loan
balance. As a result of the sale of the mobile offshore drilling unit on May 30,
1996, the Partnership deposited $10.8 million into a cash collateral account to
maintain compliance with this covenant.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
(I) RESULTS OF OPERATIONS
Comparison of the Partnership's Operating Results for the Three Months Ended
June 30, 1996 and 1995
(A) Owned equipment operations
Lease revenues less direct expenses (defined as repairs and maintenance, marine
equipment operating, and asset specific insurance expenses) on owned equipment
decreased during the second quarter of 1996 when compared to the same quarter of
1995. The following table presents lease revenues less direct expenses by owned
equipment type (in thousands):
<TABLE>
<CAPTION>
For the three months
ended June 30,
1996 1995
----------------------------
<S> <C> <C>
Aircraft and aircraft engines $ 1,319 $ 1,070
Marine vessels 1,380 899
Trailers 425 390
Rail equipment 342 489
Marine containers 799 1,058
Mobile offshore drilling unit 409 613
</TABLE>
Aircraft: Aircraft lease revenues and direct expenses were $1.3 million and
$10,000, respectively, for the three months ended June 30, 1996, compared to
$1.1 million and $4,000, respectively during the same quarter of 1995. The
increase in aircraft contribution was due to the purchase of six aircraft during
the later half of the second quarter of 1995. This equipment was on lease for
the entire quarter during 1996 compared to being on lease for only part of the
second quarter of 1995;
Marine vessels: Marine vessel lease revenues and direct expenses were $3.6
million and $2.2 million, respectively, for the three months ended 1996,
compared to $3.4 and $2.5 million, respectively during the same quarter of 1995.
The increase in marine vessel contribution was due primarily to one marine
vessel which is operating under a voyage charter during 1996 compared to
operating under a time charter during 1995. The increase was offset, in part, by
the sale of one of the Partnership's marine vessels during the later part of the
second quarter of 1995;
Trailers: Trailer lease revenues and direct expenses were $0.5 million and
$65,000, respectively, for the three months ended 1996, compared to $0.4 million
and $20,000, respectively during the same quarter of 1995. The trailer fleet
remained virtually the same for both periods, however, over the past twelve
months the number of trailers in the PLM affiliated short-term rental yards has
increased due to term leases which expired. These trailers are now earning a
higher utilization rate while in the rental yards compared to the fixed term
leases. Due to the increase of trailers in the PLM affiliated short-term rental
yards, repairs to maintain these trailers in running condition has also
increased;
Rail equipment: Rail equipment lease revenues and direct expenses were $566,000
and 224,000, respectively, for the three months ended 1996, compared to $599,000
and $110,000, respectively during the same quarter of 1995. Although the railcar
fleet remained relatively the same size for both quarters, the decrease in
railcar contribution resulted from running repairs required on certain of the
railcars in the fleet during 1996 which were not needed during 1995;
Marine containers: Marine container lease revenues and direct expenses were $0.8
million and $8,000, respectively, for the three months ended 1996, compared to
$1.1 million and $13,000, respectively during the same quarter of 1995. The
number of marine containers owned by the Partnership has been declining over the
past twelve months due to sales and dispositions. The result of this declining
fleet has resulted in a decrease in marine container net contribution.
Mobile offshore drilling unit: Mobile offshore drilling unit (MODU) lease
revenues and direct expenses were $0.4 million and $0, respectively, for the
three months ended 1996, compared to $0.6 million and $1,000, respectively
during the same quarter of 1995. The decrease in the MODU contribution was due
to the sale of this equipment during the later part of the second quarter of
1996;
(B) Indirect expenses related to owned equipment operations
Total indirect expenses of $4.6 million for the quarter ended June 30, 1996,
decreased from $5.2 million for the same period in 1995 due to a $0.7 million
decrease in depreciation and amortization expenses from 1995 levels reflecting
the sale of certain assets during 1996 and 1995, and the double declining
balance method of depreciation;
(C) Net gain on disposition of owned equipment
Net gain on disposition of equipment for the second quarter of 1996 totaled
$10.6 million which resulted mainly from the sale of a MODU with a net book
value of $10.7 million, for proceeds of $21.3 million. The remaining gain
resulted from the sale or disposal of 299 marine containers and one railcar,
with an aggregate net book value of $0.4 million for aggregate proceeds of $0.6
million. For the second quarter of 1995, the $0.4 million net gain on
disposition of equipment resulted from the sale or disposal of 574 marine
containers, one marine vessel, and one railcar with an aggregate net book value
of $4.7 million for proceeds of $4.4 million. Included in the gain on sale of
the marine vessel, is the unused portion of dry docking reserves in the amount
of $0.7 million.
(D) Interest and other income
Interest and other income increased $148,000 during the second quarter of 1996
due primarily to a business interruption claim of $0.2 million which was earned
during 1996 and interest earned from the finance lease which was not in place
during 1995. This increase was offset by a decrease in interest income earned on
cash investments during 1996 due to lower cash available for investment.
(E) Equity in net loss of unconsolidated special purpose entities represents net
loss generated from the operation of jointly-owned assets accounted for under
the equity method (see Note 2 to the financial statements).
<TABLE>
<CAPTION>
For the three months
ended June 30,
1996 1995
----------------------------
<S> <C> <C>
Aircraft, rotable components, and aircraft engines $ (127 ) $ --
Marine vessels (31 ) 163
</TABLE>
Aircraft, rotable components, and aircraft engines: As of June 30 1996, the
Partnership has a partial beneficial interest in four trusts which own 15
commercial aircraft, 2 aircraft engines and a portfolio of aircraft rotables.
Revenues earned by these trusts of $1.1 million were offset by depreciation and
amortization expense, management fees and administrative costs of $1.2 million.
This equipment was purchased during the later half of 1995 and the first quarter
of 1996.
Marine vessels: As of June 30, 1996, the Partnership owns a 50%-interest in two
marine vessels. The revenues generated by this equipment decreased $0.3 million
when compared to the same period of 1995 due to one of the marine vessels
switching to a time charter during 1996 from a voyage charter during the same
period of 1995. Marine operating expenses remained the same for both periods.
Depreciation expense decreased $0.1 million due to the double-declining balance
method of depreciation.
(F) Net Income
As a result of the foregoing, the Partnership's net income of $10.9 million for
the second quarter of 1996, increased from net income of $0.2 million during the
same period in 1995. The Partnership's ability to operate and liquidate assets,
secure leases, and re-lease those assets whose leases expire during the duration
of the Partnership is subject to many factors and the Partnership's performance
in the second quarter 1996 is not necessarily indicative of future periods. In
the second quarter 1996, the Partnership distributed $4.6 million to the
Unitholders, or $0.50 per Depositary Unit.
<PAGE>
Comparison of the Partnership's Operating Results for the Six Months Ended
June 30, 1996 and 1995
(A) Owned equipment operations
Lease revenues less direct expenses (defined as repairs and maintenance, marine
equipment operating, and insurance expenses) on owned equipment decreased during
the six months ended June 30, 1996 when compared to the same period of 1995. The
following table presents lease revenues less direct expenses by owned equipment
type (in thousands):
<TABLE>
<CAPTION>
For the six months
ended June 30,
1996 1995
----------------------------
<S> <C> <C>
Aircraft and aircraft engines $ 2,636 $ 1,903
Marine vessels 2,357 2,059
Trailers 760 720
Rail equipment 824 1,037
Marine containers 1,774 1,995
Mobile offshore drilling unit 1,060 1,231
</TABLE>
Aircraft: Aircraft lease revenues and direct expenses were $2.7 million and
$22,000, respectively, for the six months ended 1996, compared to $1.9 million
and $15,000, respectively during the same period of 1995. The increase was due
to the purchase of six aircraft during the later half of the second quarter
1995. This equipment was on lease for the entire six months ended June 30, 1996
compared to being on lease for only one month during 1995;
Marine vessels: Marine vessel lease revenues and direct expenses were $7.6
million and $5.3 million, respectively, for the six months ended 1996, compared
to $7.0 and $5.1 million, respectively during the same period of 1995. The
increase in marine vessel contribution was due primarily to one marine vessel
which is operating under a voyage charter during 1996 compared to operating
under a time charter during 1995. The increase was offset, in part, by the sale
of one of the Partnership's marine vessels during the later part of the second
quarter of 1995;
Trailers: Trailer lease revenues and direct expenses were $0.9 million and $0.1
million, respectively, for the six months ended 1996, compared to $0.8 and
$43.000, respectively during the same period of 1995. The trailer fleet remained
virtually the same for both periods, however, over the past twelve months the
number of trailers in the PLM affiliated short-term rental yards has increased
due to term leases which expired. These trailers are now earning a higher
utilization rate while in the rental yards compared to the fixed term leases.
Due to the increase of trailers in the PLM affiliated short-term rental yards,
repairs to maintain these trailers in running condition has also increased;
Rail equipment: Rail equipment lease revenues and direct expenses were $1.2
million and $339,000, respectively, for the six months ended 1996, compared to
$1.3 million and $269,000, respectively during the same period of 1995. The
decrease in railcar contribution is due to the sale of 98 railcars during the
later month of the second quarter of 1995, and running repairs required on
certain of the railcars in the fleet during 1996 which were not needed during
1995;
Marine containers: Marine container lease revenues and direct expenses were $1.8
million and $15,000, respectively, for the six months ended 1996, compared to
$2.1 million and $26,000, respectively during the same period of 1995. The
number of marine containers owned by the Partnership has been declining over the
past twelve months due to sales and dispositions. The result of this declining
fleet has resulted in a decrease in marine container net contribution.
Mobile offshore drilling unit: Mobile offshore drilling unit (MODU) lease
revenues and direct expenses were $1.1 million and $1,000, respectively, for the
six months ended 1996, compared to $1.2 million and $2,000, respectively during
the same quarter of 1995. The decrease in the MODU contribution was due to the
sale of this equipment during the later part of the second quarter of 1996;
(B) Indirect expenses related to owned equipment operations
Total indirect expenses of $9.2 million for the six months ended June 30, 1996,
decreased from $10.4 million for the same period in 1995 due to a $1.2 million
decrease in depreciation and amortization expenses from 1995 levels reflecting
the sale of certain assets during 1996 and 1995. The double declining balance
method of depreciation was offset, in part, by the purchase of six aircraft
during the later half of the second quarter 1995.
(C) Net gain on disposition of owned equipment
Net gain on disposition of equipment for the six months ended June 30, 1996
totaled $10.7 million which resulted from the sale of a MODU with a net book
value of $10.7 million for proceeds of $21.3 million, 541 marine containers and
4 railcars with an aggregate net book value of $823,000 for proceeds of
$991,000. Net gain on disposition of equipment during the six months ended June
30, 1995, was realized on the disposal of 804 marine containers, two marine
vessels, and 98 railcars with an aggregate net book value of $10.9 million for
proceeds of $12.5 million. Included in the gain on sale of one of the marine
vessels, is the unused portion of dry docking reserves and commissions in the
net amount of $1.2 million.
(D) Interest and other income
Interest and other income increased $25,000 during the six months ended June 30,
1996 due primarily to a business interruption claim of $0.2 million which was
earned during 1996 and interest earned from the finance lease which was not in
place during 1995. This increase was offset by a decrease in interest income
earned on cash investments during 1996 due to lower cash available for
investment.
(E) Equity in net loss of unconsolidated special purpose entities represents net
loss generated from the operation of jointly-owned assets accounted for under
the equity method (see Note 2 to the financial statements).
<TABLE>
<CAPTION>
For the six months
ended June 30,
1996 1995
----------------------------
<S> <C> <C>
Aircraft, rotable components, and aircraft engines $ (243 ) $ --
Marine vessels (259 ) 435
</TABLE>
Aircraft, rotable components, and aircraft engines: As of June 30 1996, the
Partnership has a partial beneficial interest in four trusts which own 15
commercial aircraft, 2 aircraft engines and a portfolio of aircraft rotables.
Revenues earned by these trusts of $1.8 million were offset by depreciation and
amortization expense, management fees and administrative costs of $2.0 million.
This equipment was purchased during the later half of 1995 and the first quarter
of 1996.
Marine vessels: As of June 30, 1996, the Partnership owns a 50%-interest in two
marine vessels. The revenues generated by this equipment decreased $1.0 million
when compared to the same period of 1995 due to one of the marine vessels
switching to a time charter during 1996 from a voyage charter during the same
period of 1995. Marine operating expenses decreased $0.2 when compare to the
same period of 1995 also due to the one marine vessel which switched to a time
charter during 1996 from a voyage charter during the same period of 1995.
Depreciation expense decreased $0.1 million due to the double-declining balance
method of depreciation..
(F) Net Income
As a result of the foregoing, the Partnership's net income of $11.0 million for
the six months ended June 30, 1996, increased from net income of $2.5 million
during the same period in 1995. The Partnership's ability to operate and
liquidate assets, secure leases, and re-lease those assets whose leases expire
during the duration of the Partnership is subject to many factors and the
Partnership's performance in the six months ended June 30. 1996 is not
necessarily indicative of future periods. In the six months ended June 30, 1996,
the Partnership distributed $9.2 million to the Unitholders, or $1.00 per
Depositary Unit.
(II) FINANCIAL CONDITION - CAPITAL RESOURCES, LIQUIDITY, DISTRIBUTIONS, AND
UNIT REDEMPTION PLAN
The Partnership purchased its initial equipment portfolio with capital raised
from its initial equity offering, and permanent debt financing of $38 million.
No further capital contributions from original partners are permitted under the
terms of the Partnership's Limited Partnership Agreement. The Partnership's
total outstanding debt, currently $38.0 million, can only be increased by a
maximum of $7.0 million subject to specific covenants in the existing debt
agreement. The Partnership relies on operating cash flow to meet its operating
obligations, make cash distributions to partners, and increase the Partnership's
equipment portfolio with any remaining available surplus cash.
The General Partner has entered into a joint $35 million credit facility (the
"Committed Bridge Facility") on behalf of the Partnership, PLM Equipment Growth
Fund III, PLM Equipment Growth Fund IV, PLM Equipment Growth Fund VI, PLM
Equipment Growth & Income Fund VII and Professional Lease Management Income Fund
I ("Fund I"), all affiliated investment programs, TEC Acquisub, Inc. ("TECAI"),
an indirect wholly-owned subsidiary of the General Partner, and American Finance
Group, Inc. (AFG), a subsidiary of PLM International Inc., which may be used to
provide interim financing of up to (i) 70% of the aggregate book value or 50% of
the aggregate net fair market value of eligible equipment owned by the
Partnership or Fund I, plus (ii) 50% of unrestricted cash held by the borrower.
The Committed Bridge Facility became available on December 20, 1993, and was
amended and restated on May 31, 1996, to expire on May 23, 1997. The Committed
Bridge Facility also provides for a $5 million Letter of Credit Facility for the
eligible borrowers. Outstanding borrowings by Fund I, TECAI, AFG or PLM
Equipment Growth Funds III through VII reduce the amount available to each other
under the Committed Bridge Facility. Individual borrowings may be outstanding
for no more than 179 days, with all advances due no later than May 23, 1997. The
Committed Bridge Facility prohibits the Partnership from incurring any
additional indebtedness. Interest accrues at either the prime rate or adjusted
LIBOR plus 2.5% at the borrowers option and is set at the time of an advance of
funds. Borrowings by the Partnership are guaranteed by the General Partner. As
of August 9, 1996, the PLM Equipment Growth Fund VI had $9,000,000 in
outstanding borrowings under the Committed Bridge Facility, TECAI had $23,911
,000 in outstanding borrowings and neither the Partnership nor any of the other
programs had any outstanding borrowings.
For the six months ended June 30, 1996, the Partnership generated sufficient
operating cash to meet its operating obligations, and maintain the current level
of distributions (total for six months ending June 30, 1996 of approximately
$9.7 million) to the partners. During the six months ended June 30, 1996, the
General Partner sold equipment for $22.2 million while reinvesting approximately
$5.7 million (including capital improvements and fees) in 100% owned equipment
and $5.9 million in jointly-owned assets.
Beginning January 1, 1994, the Partnership became obligated, under certain
conditions, to redeem up to 2% of the outstanding Depositary Units each year.
The purchase price to be offered for such outstanding Units will be equal to
110% of the unrecovered principal attributed to the Units - where unrecovered
principal is defined as the excess of the capital contribution attributable to a
Unit over the distributions from any source paid with respect to that Unit. At
December 31, 1995, the Partnership agreed to purchase approximately 7,900 Units
for an aggregate price of approximately $90,000. At June 30, 1996, the
Partnership repurchased 6,925 Depositary Units for $79,000. The General Partner
anticipates that the remaining Units will be repurchased during the next three
months with funds generated from operations.
The Partnership's loan agreement requires the Partnership to maintain specified
ratios of aggregate market value of certain assets over the outstanding loan
balance. As a result of the sale of the mobile offshore drilling unit on May 30,
1996, the Partnership deposited $10.8 million into a cash collateral account to
maintain compliance with this covenant.
(III) TRENDS
The Partnership's operation of a diversified equipment portfolio in a broad base
of markets is intended to reduce its exposure to volatility in individual
equipment sectors. Throughout 1995, and the first part of 1996, market
conditions, supply and demand equilibrium, and other factors varied in several
markets. In the container and refrigerated over-the-road trailer markets,
oversupply conditions, industry consolidations, and other factors resulted in
falling rates and lower returns. In the dry over-the-road trailer markets,
strong demand and a backlog of new equipment deliveries produced high
utilization and returns. The marine vessel, rail, and mobile offshore drilling
unit markets could be generally categorized by increasing rates as the demand
for equipment is increasing faster than new additions net of retirements.
Finally, demand for narrowbody Stage II aircraft, such as those owned by the
Partnership, has increased as expected savings from newer narrowbody aircraft
have not materialized and deliveries of the newer aircraft have slowed down.
These trends are expected to continue for the near term. These different markets
have had individual effects on the performance of Partnership equipment in some
cases resulting in declining performance, and in others, in improved
performance.
The ability of the Partnership to realize acceptable lease rates on its
equipment in the different equipment markets is contingent on many factors, such
as specific market conditions and economic activity, technological obsolescence,
governmental or other regulations, and others. The unpredictability of some of
these factors, or of their occurrence, makes it difficult for the General
Partner to clearly define trends or influences that may impact the performance
of the Partnership's equipment. The General Partner continuously monitors both
the equipment markets and the performance of the Partnership's equipment in
these markets. The General Partner may make an evaluation to reduce the
Partnership's exposure to equipment markets in which it determines that it
cannot operate equipment and achieve acceptable rates of return. Alternatively,
the General Partner may make a determination to enter equipment markets in which
it perceives opportunities to profit from supply-demand instabilities or other
market imperfections.
The Partnership intends to use excess cash flow, if any, after payment of
expenses, loan principal, and cash distributions to acquire additional equipment
during the first seven years of Partnership operations. The General Partner
believes these acquisitions may cause the Partnership to generate additional
earnings and cash flow for the Partnership.
(this space intentionally left blank)
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit
None.
(b) Reports on Form 8-K
None.
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PLM EQUIPMENT GROWTH FUND V
By: PLM Financial Services, Inc.
General Partner
Date: August 9, 1996 By: /s/ David J. Davis
------------------
David J. Davis
Vice President and
Corporate Controller
-15-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 16,242
<SECURITIES> 0
<RECEIVABLES> 1,914
<ALLOWANCES> 82
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 130,951
<DEPRECIATION> (71,918)
<TOTAL-ASSETS> 103,474
<CURRENT-LIABILITIES> 2,403
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 59,241
<TOTAL-LIABILITY-AND-EQUITY> 103,474
<SALES> 0
<TOTAL-REVENUES> 26,685
<CGS> 0
<TOTAL-COSTS> 13,539
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,441
<INCOME-PRETAX> 10,958
<INCOME-TAX> 0
<INCOME-CONTINUING> 10,958
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,958
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
