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 March 31, 1998
[ ] 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 800, San Francisco, CA 94105-1301
(Address of principal (Zip code)
executive offices)
Registrant's telephone number, including area code: (415) 974-1399
-----------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ____
PLM EQUIPMENT GROWTH FUND V
(A Limited Partnership)
BALANCE SHEETS
(in thousands of dollars, except unit amounts)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
-------------------------------------
<S> <C> <C>
Assets
Equipment held for operating lease, at cost $ 113,546 $ 104,902
Less accumulated depreciation (64,197) (62,320 )
---------------------------------------
Net equipment 49,349 42,582
Cash and cash equivalents 3,226 9,884
Restricted cash 111 111
Accounts and note receivable, net of allowance for doubtful
accounts of $107 in 1998 and $113 in 1997 3,372 3,229
Investments in unconsolidated special-purpose entities 17,067 22,758
Prepaid expenses and other assets 60 114
Deferred charges, net of accumulated amortization of
$978 in 1998 and $948 in 1997 457 435
Equipment acquisition deposit -- 920
---------------------------------------
Total assets $ 73,642 $ 80,033
=======================================
Liabilities and partners' capital
Liabilities:
Accounts payable and accrued expenses $ 950 $ 1,826
Due to affiliates 379 477
Lessee deposits and reserve for repairs 1,752 1,644
Note payable 30,000 32,000
---------------------------------------
Total liabilities 33,081 35,947
---------------------------------------
Partners' capital:
Limited partners (9,082,308 limited partnership units as of
March 31, 1998 and 9,086,608 as of December 31, 1997) 40,561 44,086
General Partner -- --
---------------------------------------
Total partners' capital 40,561 44,086
---------------------------------------
Total liabilities and partners' capital $ 73,642 $ 80,033
=======================================
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM EQUIPMENT GROWTH FUND V
(A Limited Partnership)
STATEMENTS OF OPERATIONS
(in thousands of dollars, except weighted-average unit amounts)
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
1998 1997
---------------------------------
<S> <C> <C>
Revenues
Lease revenue $ 5,212 $ 7,868
Interest and other income 161 150
Net gain on disposition of equipment 135 78
----------------------------------
Total revenues 5,508 8,096
Expenses
Depreciation and amortization 2,641 4,119
Management fees to affiliate 257 376
Repairs and maintenance 325 667
Equipment operating expenses 991 1,786
Interest expense 533 667
Insurance expense to affiliate 9 259
Other insurance expense 71 196
General and administrative expenses to affiliates 237 248
Other general and administrative expenses 140 135
Provision for bad debt 6 338
----------------------------------
Total expenses 5,210 8,791
----------------------------------
Equity in net income of unconsolidated special-purpose entities 36 149
Net income (loss) $ 334 $ (546)
==================================
Partners' share of net income (loss)
Limited partners $ 143 $ (739)
General Partner 191 193
----------------------------------
Total $ 334 $ (546)
==================================
Net income (loss) per weighted-average limited partnership unit
(9,084,809 units
and 9,160,485 units as of March 31,
1998 and 1997, respectively) $ 0.02 $ (0.08)
==================================
Cash distributions $ 3,825 $ 3,861
==================================
Cash distributions per weighted-average limited partnership unit $ 0.40 $ 0.40
==================================
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM EQUIPMENT GROWTH FUND V
( A Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL For the period from December 31, 1996
to March 31, 1998 (in thousands of dollars)
<TABLE>
<CAPTION>
Limited General
Partners Partner Total
----------------------------------------------------------
<S> <C> <C> <C>
Partners' capital as of December 31, 1996 $ 52,296 $ -- $ 52,296
Net income 7,154 767 7,921
Repurchase of limited partnership units (785) -- (785)
Cash distributions (14,579) (767) (15,346)
------------------------------------------------------------
Partners' capital as of December 31, 1997 44,086 -- 44,086
Net income 143 191 334
Repurchase of limited partnership units (34) -- (34)
Cash distributions (3,634) (191) (3,825)
------------------------------------------------------------
Partners' capital as of March 31, 1998 $ 40,561 $ -- $ 40,561
============================================================
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM EQUIPMENT GROWTH FUND V
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
(in thousands of dollars)
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
1998 1997
---------------------------
<S> <C> <C>
Operating activities:
Net income (loss) $ 334 $ (546)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 2,641 4,119
Net gain on disposition of equipment (135 ) (78)
Equity in net income from unconsolidated
special-purpose entities (36 ) (149)
Changes in operating assets and liabilities, net:
Restricted cash -- (39)
Accounts and note receivable, net (143 ) (174)
Prepaid expenses and other assets 54 66
Accounts payable and accrued expenses (876 ) 88
Due to affiliates (98 ) (294)
Lessee deposits and reserve for repairs 108 392
-----------------
---------------
Net cash provided by operating activities 1,849 3,385
-------------------------------
Investing activities:
Payments for equipment purchases and capital improvements (8,280 ) (73)
Payments of acquisition fees to affiliate (414 ) --
Payments of lease negotiation fees to affiliate (92 ) --
Liquidation proceeds from unconsolidated
special-purpose entity 3,724 --
Distributions from unconsolidated special-purpose entities 2,003 1,720
Proceeds from disposition of equipment 411 192
-------------------------------
Net cash (used in) provided by investing activities (2,648 ) 1,839
-------------------------------
Financing activities:
Payments of short-term note payable -- (1,400)
Payments of note payable (2,000 ) (1,500)
Cash distributions paid to limited partners (3,634 ) (3,668)
Cash distributions paid to General Partner (191 ) (193)
Repurchase of limited partnership units (34 ) (438)
Payment for loan costs -- (1)
-------------------------------
Net cash used in financing activities (5,859 ) (7,200)
-------------------------------
Net decrease in cash and cash equivalents (6,658 ) (1,976)
Cash and cash equivalents at beginning of period 9,884 4,662
-------------------------------
Cash and cash equivalents at end of period $ 3,226 $ 2,686
===============================
Supplemental information:
Interest paid $ 569 $ 702
=============================
Supplemental disclosure of noncash investing and financing activities:
Sales proceeds included in accounts receivable $ 4 $ --
===============================
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM EQUIPMENT GROWTH FUND V
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
March 31, 1998
1. Opinion of Management
In the opinion of the management of PLM Financial Services, Inc. (FSI or the
General Partner), the accompanying unaudited financial statements contain all
adjustments necessary, consisting primarily of normal recurring accruals, to
present fairly the financial position of PLM Equipment Growth Fund V (the
Partnership) as of March 31, 1998 and December 31, 1997, the statements of
operations for the three months ended March 31, 1998 and 1997, the statements of
changes in partners' capital for the period from December 31, 1996 to March 31,
1998, and the statements of cash flows for the three months ended March 31, 1998
and 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 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, 1997, on file with the Securities and
Exchange Commission.
2. Repurchase of Limited Partnership Units
In 1997, the Partnership agreed to repurchase approximately 9,000 limited
partnership units for an aggregate purchase price of up to $0.1 million. During
the three months ended March 31, 1998, the Partnership had repurchased 4,300
limited partnership units for $34,000. The General Partner may repurchase the
additional units in the future.
3. Cash Distributions
Cash distributions are recorded when paid and totaled $3.8 million and $3.9
million for the three months ended March 31, 1998 and 1997, respectively. Cash
distributions to limited partners in excess of net income represent a return of
capital. Cash distributions to the limited partners of $3.5 million and $3.7
million for the three months ended March 31, 1998 and 1997, respectively, were
deemed to be a return of capital. Cash distributions of $2.7 million relating to
the results from the first quarter of 1998 were paid during the second quarter
of 1998.
4. Transactions with General Partner and Affiliates
The Partnership's proportional share of the affiliated expenses incurred by the
unconsolidated special-purpose entities (USPEs) during 1998 and 1997 is listed
in the following table (in thousands of dollars):
For the Three Months
Ended March 31,
1998 1997
------------------------------
Management fees $ 91 $ 77
Insurance expense 2 92
Data processing and administrative
expenses 26 17
Transportation Equipment Indemnity Company, Ltd. (TEI), an affiliate of the
General Partner, provided certain marine insurance coverage for Partnership
equipment and other insurance brokerage services during 1998 and 1997. TEI did
not provide the same insurance coverage during 1998 as had been provided during
1997. These services were provided by an unaffiliated third party.
The balance due to affiliates as of March 31, 1998 includes $0.3 million due to
FSI and its affiliate for management fees and $0.1 million due to affiliated
USPEs. The balance due to affiliates as of December 31, 1997 includes $0.4
million due to FSI and its affiliate for management fees and $0.1 million due to
affiliated USPEs.
<PAGE>
PLM EQUIPMENT GROWTH FUND V
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
March 31, 1998
4. Transactions with General Partner and Affiliates (continued)
The Partnership's proportional share of USPE-affiliated management fees of $0.1
million was payable as of March 31, 1998 and December 31, 1997.
During the three months ended March 31, 1998, the Partnership purchased a marine
vessel at a cost of $9.2 million and paid FSI $0.5 million for acquisition and
lease negotiation fees.
5. Equipment
Owned equipment held for operating lease is stated at cost. The components of
owned equipment held for operating leases are as follows (in thousands of
dollars):
March 31, December 31,
1998 1997
-----------------------------------
Aircraft $ 49,838 $ 49,838
Marine vessels 25,890 16,276
Marine containers 16,634 17,592
Rail equipment 11,500 11,500
Trailers 9,684 9,696
------------- --------------
113,546 104,902
Less accumulated depreciation (64,197 ) (62,320)
Net equipment $ 49,349 $ 42,582
============= ==============
As of March 31, 1998 and December 31, 1997, all of the equipment was on lease or
operating in PLM-affiliated short-term trailer rental facilities.
During March 1998, the Partnership purchased a marine vessel for $9.6 million
including acquisition fees of $0.4 million paid to FSI. The Partnership made a
deposit of $0.9 million toward this purchase in 1997, which is included in the
balance sheet at December 31, 1997 as an equipment acquisition deposit.
During the three months ended March 31, 1998, the Partnership disposed of marine
containers and trailers with an aggregate net book value of $0.3 million for
$0.4 million.
During the three months ended March 31, 1997, the Partnership disposed of marine
containers, trailers, and a railcar, with an aggregate net book value of $0.1
million for proceeds of $0.2 million.
6. Investments in Unconsolidated Special-Purpose Entities
The net investments in USPEs include the following jointly-owned equipment (and
related assets and liabilities) (in thousands of dollars):
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
---------------------------------------
<S> <C> <C>
48% interest in an entity owning a product tanker $ 7,849 $ 8,266
25% interest in a trust owning two commercial aircraft on direct
finance lease 2,870 2,863
17% interest in two trusts owning three commercial aircraft, two
aircraft engines, and a portfolio of aircraft rotables 2,552 4,027
50% interest in an entity owning a bulk carrier 2,260 2,277
50% interest in an entity owning a product tanker 1,534 1,547
60% interest in a trust owning a commercial aircraft 2 3,778
Net investments $ 17,067 $ 22,758
============= ===============
</TABLE>
<PAGE>
PLM EQUIPMENT GROWTH FUND V
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
March 31, 1998
6. Investments in Unconsolidated Special-Purpose Entities (continued)
During the three months ended March 31, 1998, the Partnership received
liquidating proceeds of $3.7 million from the sale of its interest in an entity
that owned a commercial aircraft with a net book value of $3.7 million.
7. Debt
The Partnership made the regularly scheduled installment payment to the lender
of the senior loan of $2.0 million and $1.5 million during the three months
ended March 31, 1998 and 1997, respectively.
The General Partner entered into a short-term, joint $50.0 million credit
facility. As of March 31, 1998, American Finance Group, Inc., a subsidiary of
PLM International, Inc., had borrowings of $38.7 million under the short-term
joint $50.0 million credit facility. No other eligible borrower had any
outstanding borrowings.
8. Contingencies
PLM International, Inc. (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). The plaintiffs, who filed the complaint on their own and on behalf of
all class members similarly situated, are six individuals who allegedly invested
in certain California limited partnerships for which FSI acts as the General
Partner, including the Partnership, PLM Equipment Growth Fund IV, PLM Equipment
Growth Fund VI, and PLM Equipment Growth & Income Fund VII (the Growth Funds).
The complaint asserts eight causes of action against all defendants, as follows:
fraud and deceit, suppression, negligent misrepresentation and suppression,
intentional breach of fiduciary duty, negligent breach of fiduciary duty, unjust
enrichment, conversion, and conspiracy. Additionally, plaintiffs allege a cause
of action against PLM Securities Corp. for breach of third-party beneficiary
contracts in violation of the National Association of Securities Dealers rules
of fair practice. Plaintiffs allege that each defendant owed plaintiffs and the
class certain duties due to their status as fiduciaries, financial advisors,
agents, general partner, and control persons. Based on these duties, plaintiffs
assert liability against the defendants for improper sales and marketing
practices, mismanagement of the Growth Funds, and concealing such mismanagement
from investors in the Growth Funds. Plaintiffs seek unspecified compensatory and
recissory damages, as well as punitive damages, and have offered to tender their
limited partnership units back to the defendants.
On March 6, 1997, the defendants removed 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) based on the district court's diversity
jurisdiction, following which plaintiffs filed a motion to remand the action to
the state court. On September 24, 1997, the district court denied plaintiffs'
motion and dismissed without prejudice the individual claims of the California
class representative, reasoning that he had been fraudulently joined as a
plaintiff. On October 3, 1997, plaintiffs filed a motion requesting that the
district court reconsider its ruling or, in the alternative, that the court
modify its order dismissing the California plaintiff's claims so that it is a
final appealable order, as well as certify for an immediate appeal to the
Eleventh Circuit Court of Appeals that part of its order denying plaintiffs'
motion to remand. On October 7, 1997, the district court denied each of these
motions. In responses to such denial, plaintiffs filed a petition for writ of
mandamus with the Eleventh Circuit, which was denied on November 18, 1997. On
November 24, 1997, plaintiffs filed with the Eleventh Circuit a petition for
rehearing and consideration by the full court of the order denying the petition
for a writ of mandamus, which petition was supplemented by plaintiffs on January
27, 1998.
<PAGE>
PLM EQUIPMENT GROWTH FUND V
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
March 31, 1998
8. Contingencies (continued)
On October 10, 1997, defendants filed a motion to compel arbitration of
plaintiffs' claims, based on an agreement to arbitrate contained in the limited
partnership agreement of each Growth Fund, and to stay further proceedings
pending the outcome of such arbitration. Notwithstanding plaintiffs' opposition,
the district court granted the motion on December 8, 1997. On December 15, 1997,
plaintiffs filed with the Eleventh Circuit a notice of appeal from the district
court's order granting defendants' motion to compel arbitration and to stay the
proceedings, and of the district court's September 24, 1997 order denying
plaintiffs' motion to remand and dismissing the claims of the California
plaintiff. Plaintiffs filed an amended notice of appeal on December 31, 1997.
Appellate briefs have not yet been filed in this matter. The Company believes
that the allegations of the Koch action are completely without merit and intends
to continue 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 plaintiff is an investor in the Partnership, and filed
the complaint on her own behalf and on behalf of all class members similarly
situated who invested in certain California limited partnerships for which FSI
acts as the General Partner, including the Growth Funds. The complaint alleges
the same facts and the same nine causes of action as in the Koch action, 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, constructive fraud, unjust
enrichment, violations of California Corporations Code Section 1507, and a claim
for treble damages under California Civil Code Section 3345.
On July 31, 1997, the defendants filed with the district court for the Northern
District of California (Case No. C-97-2847 WHO) a petition under the Federal
Arbitration Act seeking to compel arbitration of plaintiff's claims and for an
order staying the state court proceedings pending the outcome of the
arbitration. In connection with this motion, plaintiff agreed to a stay of the
state court action pending the district court's decision on the petition to
compel arbitration. By memorandum and order dated October 23, 1997, the district
court denied the Company's petition to compel arbitration. On November 5, 1997,
the Company filed an expedited motion for leave to file a motion for
reconsideration of this order, which motion was granted on November 14, 1997.
The parties have agreed to have oral argument on the reconsideration motion set
for July 22, 1998. The state court action has been stayed pending the district
court's decision on this motion.
In connection with her opposition to the Company's petition to compel
arbitration, on August 22, 1997 the plaintiff filed an amended complaint with
the state court alleging two new causes of action for violations of the
California Securities Law of 1968 (California Corporations Code Sections 25400
and 25500), and for violation of California Civil Code Sections 1709 and 1710.
Plaintiff has also served certain discovery requests on defendants. Because of
the stay, no response to the amended complaint or to the discovery is currently
required. The Company believes that the allegations of the amended complaint in
the Romei action are completely without merit and intends to defend this matter
vigorously.
9. Subsequent Event
During May 1998, the Partnership borrowed $1.6 million from the short-term,
joint $50.0 million credit facility.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
(I) RESULTS OF OPERATIONS
Comparison of the Partnership's Operating Results for the Three Months Ended
March 31, 1998 and 1997
(A) Owned Equipment Operations
Lease revenues less direct expenses on owned equipment (defined as expenses for
repair and maintenance, equipment operating, and asset-specific insurance)
decreased during the three months ended March 31, 1998 when compared to the same
period of 1997. The following table presents lease revenues less direct expenses
by owned equipment type (in thousands of dollars):
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
1998 1997
-------------------------------
<S> <C> <C>
Aircraft and aircraft engines $ 2,206 $ 2,438
Rail equipment 586 584
Marine containers 526 471
Trailers 515 423
Marine vessels (2) 1,055
</TABLE>
Aircraft and aircraft engines: Aircraft lease revenues and direct expenses were
$2.2 million and $21,000, respectively, for the three months ended March 31,
1998, compared to $2.5 million and $20,000, respectively, during the same period
of 1997. The decrease in aircraft contribution was due to the sale of two
commuter aircraft and an aircraft engine during 1997.
Rail equipment: Rail equipment lease revenues and direct expenses were $0.6
million and $40,000, respectively, for the three months ended March 31, 1998 and
1997.
Marine containers: Marine container lease revenues and direct expenses were $0.5
million and $3,000, respectively, for the three months ended March 31, 1998,
compared to $0.5 million and $5,000, respectively, during the same period of
1997.
Trailers: Trailer lease revenues and direct expenses were $0.7 million and $0.1
million, respectively, for the three months ended March 31, 1998, compared to
$0.6 million and $0.2 million, respectively, during the same period of 1997.
Trailer contribution increased during the first quarter of 1998 due to fewer
maintenance repairs needed to trailers that transitioned into the PLM affiliated
rental yards.
Marine vessels: Marine vessel lease revenues and direct expenses were $1.2
million and $1.2 million, respectively, for the three months ended March 31,
1998, compared to $3.7 million and $2.6 million, respectively, during the same
period of 1997. The decrease in marine vessel contribution was due to the sale
of two marine vessels during the fourth quarter of 1997. The purchase of an
additional marine vessel on the last day of the first quarter of 1998 did not
have a material impact on lease revenues or direct expenses.
(B) Indirect Expenses Related to Owned Equipment Operations
Total indirect expenses of $3.8 million for the quarter ended March 31, 1998
decreased from $5.9 million for the same period in 1997. Significant variances
are explained as follows:
(1) A $1.5 million decrease in depreciation and amortization expenses from 1997
levels was caused by the sale of two marine vessels and two commuter aircraft
during 1997, along with the double-declining balance method of depreciation.
These decreases were partially offset by the purchase of a marine vessel during
the first quarter of 1998.
(2) A $0.3 million decrease in bad debt expenses was due to a decrease in the
estimate of the uncollectable amounts due from certain lessees.
(3) A $0.1 million decrease in interest expense was due to a lower average
balance outstanding on the notes payable when compared to the same period of
1997.
(4) A $0.1 million decrease in management fees to affiliate was due to lower
lease revenues.
(C) Net Gain on Disposition of Owned Equipment
The net gain on the disposition of equipment for the first quarter of 1998
totaled $0.1 million, which resulted from the sale of marine containers and
trailers, with an aggregate net book value of $0.3 million, for proceeds of $0.4
million. Net gain on disposition of equipment for the first quarter of 1997
totaled $0.1 million, which resulted from the sale of marine containers,
trailers, and a railcar, with an aggregate net book value of $0.1 million, for
proceeds of $0.2 million.
(D) Equity in Net Income of Unconsolidated Special-Purpose Entities (USPEs)
Net income (loss) generated from the operation of jointly-owned assets accounted
for under the equity method is shown in the following table by equipment type
(in thousands of dollars):
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
1998 1997
-------------------------------
<S> <C> <C>
Aircraft, rotable components, and aircraft engines $ 65 $ 308
Marine vessels (29) (159 )
Equity in net income of USPEs $ 36 $ 149
===============================
</TABLE>
Aircraft, rotable components, and aircraft engines: As of March 31, 1998 and
1997, the Partnership had an interest in two trusts that own three commercial
aircraft, two aircraft engines, and a portfolio of aircraft rotables, and also
had an interest in an entity owning two commercial aircraft on a direct finance
lease. During the first quarter of 1998, revenues of $0.3 million were offset by
depreciation and administrative expenses of $0.2 million. During the same period
of 1997, lease revenues of $0.6 million were offset by depreciation and
administrative expenses of $0.3 million. The decrease in lease revenues is due
to the renewal of the leases for three commercial aircraft, two aircraft
engines, and a portfolio of aircraft rotables at a lower rate than was in place
during the same period of 1997.
Marine vessels: As of March 31, 1998, the Partnership owned an interest in three
marine vessels. As of March 31, 1997, the Partnership owned an interest in two
marine vessels. During the first quarter of 1998, lease revenues of $1.6 million
were offset by depreciation and administrative expenses of $1.6 million. During
the same period of 1997, lease revenues of $0.8 million were offset by
depreciation and administrative expenses of $1.0 million. The primary reason for
the increase in lease revenues and depreciation and administrative expenses
during 1998 was the purchase of an interest in an entity that owns a marine
vessel in the third quarter of 1997.
(E) Net Income (Loss)
As a result of the foregoing, the Partnership's net income for the quarter ended
March 31, 1998 was $0.3 million, compared to a net loss of $0.5 million during
the same period in 1997. The Partnership's ability to operate and liquidate
assets, secure leases, and re-lease those assets whose leases expire is subject
to many factors, and the Partnership's performance in the first quarter of 1998
is not necessarily indicative of future periods. In the first quarter of 1998,
the Partnership distributed $3.6 million to the limited partners, or $0.40 per
weighted-average limited partnership unit.
(II) FINANCIAL CONDITION - CAPITAL RESOURCES, LIQUIDITY, AND DISTRIBUTIONS
For the three months ended March 31, 1998, the Partnership generated $3.9
million in operating cash (net cash provided by operating activities plus
distributions from USPEs) to meet its operating obligations and maintain the
current level of distributions (total for the three months ended March 31, 1998
of $3.8 million) to the partners.
During the three months ended March 31, 1998, the General Partner sold owned
equipment and investments in USPEs and received aggregate proceeds of $4.1
million. The Partnership purchased a marine vessel for $9.7 million including
acquisition and lease negotiation fees of $0.5 million paid to FSI. The
Partnership made a $0.9 million deposit on this marine vessel in 1997.
The Partnership made the regularly scheduled installment payment to the lender
of the senior loan of $2.0 million during the three months ended March 31, 1998.
The Partnership is scheduled to make quarterly installments of $2.0 million to
the lender through the year 2001.
The General Partner has entered into a short-term joint $50.0 million credit
facility. As of May 12, 1998, the Partnership had $1.6 million in outstanding
borrowings and American Finance Group, Inc., a wholly owned subsidiary of PLM
International, Inc., had $37.6 million in outstanding borrowings. No other
eligible borrower had any outstanding borrowings.
(III) YEAR 2000 COMPLIANCE
The General Partner is currently addressing the year 2000 computer software
issue and is creating a timetable for carrying out any program modifications
that may be required. The General Partner does not anticipate that the cost of
those modifications allocable to the Partnership will be material.
(IV) ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued two new
statements: SFAS No. 130, "Reporting Comprehensive Income," which requires
enterprises to report, by major component and in total, all changes in equity
from nonowner sources; and SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information," which establishes annual and interim
reporting standards for a public company's operating segments and related
disclosures about its products, services, geographic areas, and major customers.
Both statements are effective for the Partnership's fiscal year ended December
31, 1998. The effect of adoption of these statements will be limited to the form
and content of the Partnership's disclosures and will not impact the
Partnership's results of operations, cash flow, or financial position.
(V) OUTLOOK FOR THE FUTURE
Several factors may affect the Partnership's operating performance in 1998 and
beyond, including changes in the markets for the Partnership's equipment and
changes in the regulatory environment in which that equipment operates.
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.
The ability of the Partnership to realize acceptable lease rates on its
equipment in the different equipment markets is contingent on many factors, such
as specific market conditions and economic activity, technological obsolescence,
and government or other regulations. The unpredictability of 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 continually monitors both the
equipment markets and the performance of the Partnership's equipment in these
markets. The General Partner may decide to reduce the Partnership's exposure to
those equipment markets in which it determines that it cannot operate equipment
and achieve acceptable rates of return. 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, which concludes December
31, 1998. The General Partner believes that these acquisitions may cause the
Partnership to generate additional earnings and cash flow for the Partnership.
(VI) FORWARD-LOOKING INFORMATION
Except for the historical information contained herein, this Form 10-Q contains
forward-looking statements that involve risks and uncertainties, such as
statements of the Partnership's plans, objectives, expectations, and intentions.
The cautionary statements made in this Form 10-Q should be read as being
applicable to all related forward-looking statements wherever they appear in
this Form 10-Q. The Partnership's actual results could differ materially from
those discussed here.
(this space intentionally left blank)
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None.
(b) Reports on Form 8-K
None.
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PLM EQUIPMENT GROWTH FUND V
By: PLM Financial Services, Inc.
General Partner
Date: May 13, 1998 By: /s/ Richard K Brock
-------------------
Richard K Brock
Vice President and
Corporate Controller
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 3,337
<SECURITIES> 0
<RECEIVABLES> 3,479
<ALLOWANCES> (107)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 113,546
<DEPRECIATION> (64,197)
<TOTAL-ASSETS> 73,642
<CURRENT-LIABILITIES> 0
<BONDS> 30,000
0
0
<COMMON> 0
<OTHER-SE> 40,561
<TOTAL-LIABILITY-AND-EQUITY> 73,642
<SALES> 0
<TOTAL-REVENUES> 5,508
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,671
<LOSS-PROVISION> 6
<INTEREST-EXPENSE> 533
<INCOME-PRETAX> 334
<INCOME-TAX> 0
<INCOME-CONTINUING> 334
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 334
<EPS-PRIMARY> 0.02
<EPS-DILUTED> 0.02
</TABLE>
