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, 2000
[ ] 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 01-19203
_______________________
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>
June 30, December 31,
2000 1999
----------------------------------
<S> <C> <C>
ASSETS
Equipment held for operating lease, at cost $ 103,418 $ 102,326
Less accumulated depreciation (75,552) (72,847)
-----------------------------------
Net equipment 27,866 29,479
Cash and cash equivalents 2,249 4,188
Restricted cash 486 441
Accounts receivable, net of allowance for doubtful
accounts of $63 in 2000 and $47 in 1999 2,460 2,187
Investments in unconsolidated special-purpose entities 9,089 9,633
Deferred charges, net of accumulated amortization of
$181 in 2000 and $148 in 1999 68 101
Prepaid expenses and other assets 24 54
-----------------------------------
Total assets $ 42,242 $ 46,083
===================================
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and accrued expenses $ 308 $ 501
Due to affiliates 3,439 304
Lessee deposits and reserve for repairs 2,764 2,788
Note payable 11,314 15,484
-----------------------------------
Total liabilities 17,825 19,077
-----------------------------------
Partners' capital:
Limited partners (9,065,911 limited partnership units as of
June 30, 2000 and 9,067,911 as of December 31, 1999) 24,417 27,006
General Partner -- --
-----------------------------------
Total partners' capital 24,417 27,006
-----------------------------------
Total liabilities and partners' capital $ 42,242 $ 46,083
===================================
</TABLE>
See accompanying notes to financial statements.
PLM EQUIPMENT GROWTH FUND V
(A Limited Partnership)
STATEMENTS OF INCOME
(in thousands of dollars, except weighted-average unit amounts)
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2000 1999 2000 1999
--------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES
Lease revenue $ 5,923 $ 5,362 $ 11,613 $ 10,195
Interest and other income 34 54 73 100
Net gain on disposition of equipment 55 45 96 105
--------------------------------------------------------------
Total revenues 6,012 5,461 11,782 10,400
--------------------------------------------------------------
Expenses
Depreciation and amortization 2,032 2,296 4,075 4,559
Repairs and maintenance 393 406 1,068 881
Equipment operating expenses 1,375 820 2,686 1,338
Insurance expense 77 91 126 214
Management fees to affiliate 291 266 568 506
Interest expense 270 316 539 681
General and administrative expenses
to affiliates 198 205 421 454
Other general and administrative expenses 257 165 463 290
Provision for (recovery of ) bad debts (1 ) 33 26 25
--------------------------------------------------------------
Total expenses 4,892 4,598 9,972 8,948
--------------------------------------------------------------
Equity in net income (loss) of unconsolidated
special-purpose entities 406 (105 ) 383 1,402
--------------------------------------------------------------
Net income $ 1,526 $ 758 $ 2,193 $ 2,854
==============================================================
PARTNERS' SHARE OF NET INCOME:
Limited partners $ 1,407 $ 639 $ 1,954 $ 2,615
General Partner 119 119 239 239
--------------------------------------------------------------
Total $ 1,526 $ 758 $ 2,193 $ 2,854
==============================================================
Limited partners' net income per
weighted-average limited partnership unit $ 0.16 $ 0.07 $ 0.22 $ 0.29
==============================================================
Cash distribution $ 2,386 $ 2,188 $ 4,772 $ 3,844
==============================================================
Cash distribution per weighted-average
limited partnership unit $ 0.25 $ 0.23 $ 0.50 $ 0.40
==============================================================
</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, 1998 to June 30, 2000
(in thousands of dollars)
<TABLE>
<CAPTION>
Limited General
Partners Partner Total
--------------------------------------------------------
<S> <C> <C> <C>
Partners' capital as of December 31, 1998 $ 34,406 $ -- $ 34,406
Net income 824 478 1,302
Purchase of limited partnership units (85) -- (85)
Cash distribution (8,139) (478) (8,617)
-------------------------------------------------------
Partners' capital as of December 31, 1999 27,006 -- 27,006
Net income 1,954 239 2,193
Purchase of limited partnership units (10) -- (10)
Cash distribution (4,533) (239) (4,772)
-------------------------------------------------------
Partners' capital as of June 30, 2000 $ 24,417 $ -- $ 24,417
=======================================================
</TABLE>
See accompanying notes to financial statements.
PLM EQUIPMENT GROWTH FUND V
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
(in thousands of dollars)
<TABLE>
<CAPTION>
For the Six Months
Ended June 30,
2000 1999
----------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 2,193 $ 2,854
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 4,075 4,559
Net gain on disposition of equipment (96) (105)
Equity in net income from unconsolidated
special-purpose entities (383) (1,402)
Changes in operating assets and liabilities, net:
Restricted cash (45) --
Accounts receivable, net (255) (649)
Prepaid expenses and other assets 30 57
Accounts payable and accrued expenses (193) (139)
Due to affiliates 35 67
Lessee deposits and reserve for repairs (24) (163)
---------------------------
Net cash provided by operating activities 5,337 5,079
---------------------------
INVESTING ACTIVITIES
Payments for purchase of equipment and capitalized improvements (2,677) (1,255)
Distribution from liquidation of unconsolidated special-purpose entity -- 3,553
Distributions from unconsolidated special-purpose entities 927 874
Payments of acquisition fees to affiliate -- (56)
Payments of lease negotiation fees to affiliate -- (13)
Proceeds from disposition of equipment 326 415
---------------------------
Net cash (used in) provided by investing activities (1,424) 3,518
---------------------------
FINANCING ACTIVITIES
Payments of note payable (4,170) (4,233)
Proceeds of short-term loan from affiliate 4,500 --
Payments of short-term loan from affiliate (1,400) --
Cash distributions paid to limited partners (4,533) (3,605)
Cash distributions paid to General Partner (239) (239)
Purchase of limited partnership units (10) (85)
---------------------------
Net cash used in financing activities (5,852) (8,162)
---------------------------
Net (decrease) increase in cash and cash equivalents (1,939) 435
Cash and cash equivalents at beginning of period 4,188 1,774
---------------------------
Cash and cash equivalents at end of period $ 2,249 $ 2,209
===========================
SUPPLEMENTAL INFORMATION
Interest paid $ 570 $ 730
===========================
</TABLE>
See accompanying notes to financial statements.
PLM EQUIPMENT GROWTH FUND V
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
1. OPINION OF MANAGEMENT
In the opinion of the management of PLM Financial Services, Inc. (FSI or the
General Partner), the accompanying unaudited financial statements contain all
adjustments necessary, consisting primarily of normal recurring accruals, to
present fairly the financial position of PLM Equipment Growth Fund V (the
Partnership) as of June 30, 2000 and December 31, 1999, the statements of income
for the three months and six months ended June 30, 2000 and 1999, the statements
of changes in partners' capital for the period from December 31, 1998 to June
30, 2000, and the statements of cash flows for the six months ended June 30,
2000 and 1999. Certain information and note disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted from the accompanying financial
statements. For further information, reference should be made to the financial
statements and notes thereto included in the Partnership's Annual Report on Form
10-K for the year ended December 31, 1999, on file at the Securities and
Exchange Commission.
2. SCHEDULE OF PARTNERSHIP PHASES
Beginning in the Partnership's seventh year of operations, which commenced on
January 1, 1999, the General Partner stopped purchasing additional equipment.
Surplus cash, less reasonable reserves, will be distributed to the partners.
Beginning in the Partnership's ninth year of operations, which commences on
January 1, 2001, the General Partner intends to begin an orderly liquidation of
the Partnership's assets. The Partnership will be terminated by December 31,
2010, unless terminated earlier upon sale of all equipment and by certain other
events.
3. PURCHASE OF LIMITED PARTNERSHIP UNITS
The Partnership agreed to purchase approximately 2,300 limited partnership units
in 2000 for an aggregate purchase price of up to $12,500. During the six months
ended June 30, 2000, the Partnership purchased 2,000 limited partnership units
for $10,000. The General Partner may purchase the additional units in the
future.
4. CASH DISTRIBUTIONS
Cash distributions are recorded when paid and may include amounts in excess of
net income that are considered to represent a return of capital. For the three
months ended June 30, 2000 and 1999, cash distributions totaled $2.4 million and
$2.2 million, respectively. For the six months ended June 30, 2000 and 1999,
cash distributions totaled $4.8 million and $3.8 million, respectively. Cash
distributions of $2.6 million and $1.0 million to the limited partners during
the six months ended June 30, 2000 and 1999, respectively, were deemed to be a
return of capital.
Cash distributions related to the results from the second quarter of 2000 of
$1.7 million, will be paid during the third quarter of 2000.
5. TRANSACTIONS WITH GENERAL PARTNER AND AFFILIATES
The balance due to affiliates as of June 30, 2000, included $3.1 million due to
FSI for a short-term loan, $0.2 million due to its affiliates for management
fees and data processing services, and $0.1 million due to affiliated
unconsolidated special-purpose entities (USPEs). The balance due to affiliates
as of December 31, 1999, included $0.2 million due to FSI and its affiliates for
management fees and $0.1 million due to affiliated USPEs.
During the six months ended June 30, 2000, the Partnership borrowed $4.5 million
from the General Partner for a short-term loan and repaid $1.4 million to the
General Partner. The General Partner charged the Partnership $41,000 in interest
using market interest rates. The Partnership will pay the General Partner market
interest rates on the remaining balance of the short-term loan until the loan is
fully paid.
PLM EQUIPMENT GROWTH FUND V
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
5. 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 June 30, 2000 and December 31, 1999.
The Partnership's proportional share of the affiliated expenses incurred by
USPEs during 2000 and 1999 is listed in the following table (in thousands of
dollars):
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2000 1999 2000 1999
--------------------------------------------------------------
<S> <C> <C> <C> <C>
Management fees $ 87 $ 13 $ 161 $ 26
Data processing and administrative
expenses 15 16 31 38
</TABLE>
6. EQUIPMENT
The components of owned equipment were as follows (in thousands of dollars):
June 30, December 31,
2000 1999
---------------------------------
Aircraft $ 55,071 $ 52,402
Marine vessels 20,276 20,276
Railcars 11,304 11,328
Trailers 9,225 9,245
Marine containers 7,542 9,075
----------- -----------
103,418 102,326
Less accumulated depreciation (75,552) (72,847)
----------- -----------
Net equipment $ 27,866 $ 29,479
=========== ===========
As of June 30, 2000, all owned equipment in the Partnership's portfolio was
either on lease or operating in PLM-affiliated short-term trailer rental
facilities except for six railcars and a marine vessel with a net book value of
$3.7 million. As of December 31, 1999, all owned equipment in the Partnership's
portfolio was either on lease or operating in PLM-affiliated short-term trailer
rental facilities.
During the six months ended June 30, 2000, the Partnership purchased a hush-kit
for one of the Partnership's McDonnell Douglas DC-9 commercial aircraft for $2.7
million. The Partnership was required to install the hush-kit per the
Partnership' lease agreement for this aircraft.
During the six months ended June 30, 2000, the Partnership disposed of marine
containers, trailers, and a railcar with an aggregate net book value of $0.2
million, for $0.3 million. During the six months ended June 30, 1999, the
Partnership disposed of marine containers and trailers with an aggregate net
book value of $0.3 million, for $0.4 million.
On May 24, 2000, FSI, on behalf of the Partnership, entered into an asset
purchase agreement to sell the refrigerated and dry trailer assets of the
Partnership. Closing of the transaction is contingent on numerous conditions. If
the sale is completed, the General Partner estimates that the Partnership's sale
proceeds to be approximately $3.3 million and will result in a gain of
approximately $1.1 million. Since the sale of the trailers is contingent upon
certain conditions being met, the Partnership's refrigerated and dry trailers
are not classified as assets held for sale.
PLM EQUIPMENT GROWTH FUND V
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
7. 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>
June 30, December 31,
2000 1999
----------------------------------
<S> <C> <C>
48% interest in an entity owning a product tanker $ 5,185 $ 5,885
25% interest in a trust owning two commercial aircraft on direct
finance lease 2,385 2,535
50% interest in an entity owning a product tanker 1,519 1,333
50% interest in an entity that owned a bulk carrier -- (120)
------------ ------------
Net investments $ 9,089 $ 9,633
============ ============
</TABLE>
As of June 30, 2000 and December 31, 1999, all jointly-owned equipment in the
Partnership's USPE portfolio was on lease.
8. OPERATING SEGMENTS
The Partnership operates in five primary operating segments: aircraft leasing,
marine vessel leasing, railcar leasing, marine container leasing, and trailer
leasing. Each equipment leasing segment engages in short-term to mid-term
operating leases to a variety of customers.
The following tables present a summary of the operating segments (in thousands
of dollars):
<TABLE>
<CAPTION>
Marine Marine
Aircraft Vessel Railcar Container Trailer
For the quarter ended June 30, 2000 Leasing Leasing Leasing Leasing Leasing Other<F1> Total
-------------------------------------- --------- --------- --------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Lease revenue $ 2,165 $ 2,411 $ 602 $ 108 $ 637 $ -- $ 5,923
Interest income and other 2 -- -- -- -- 32 34
Gain on disposition of equipment -- -- 19 29 7 -- 55
------------------------------------------------------------------------
Total revenues 2,167 2,411 621 137 644 32 6,012
COSTS AND EXPENSES
Operations support 21 1,465 122 1 227 9 1,845
Depreciation and amortization 1,251 371 139 113 144 14 2,032
Interest expense -- -- -- -- -- 270 270
Management fees to affiliate 83 121 42 5 40 -- 291
General and administrative expenses 56 22 16 -- 124 237 455
Provision for (recovery of) bad debts -- -- (2 ) -- 1 -- (1 )
------------------------------------------------------------------------
Total costs and expenses 1,411 1,979 317 119 536 530 4,892
------------------------------------------------------------------------
Equity in net income of USPEs 87 319 -- -- -- -- 406
------------------------------------------------------------------------
========================================================================
Net income (loss) $ 843 $ 751 $ 304 $ 18 $ 108 $ (498 ) $ 1,526
========================================================================
Total assets as of June 30, 2000 $ 18,751 $ 12,679 $ 3,162 $ 1,405 $ 3,418 $ 2,827 $ 42,242
========================================================================
<FN>
<F1>Includes certain interest income and costs not identifiable to a particular
segment, such as interest expense, certain amortization, general and
administrative and operations support expenses.
</FN>
</TABLE>
PLM EQUIPMENT GROWTH FUND V
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
8. OPERATING SEGMENTS (CONTINUED)
<TABLE>
<CAPTION>
Marine Marine
Aircraft Vessel Railcar Container Trailer
For the quarter ended June 30, 1999 Leasing Leasing Leasing Leasing Leasing Other<F1> Total
--------------------------------------- --------- --------- --------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Lease revenue $ 2,052 $ 1,900 $ 606 $ 188 $ 616 $ -- $ 5,362
Interest income and other 8 2 -- 5 -- 39 54
Gain (loss) on disposition of equipment -- -- -- 62 (17) -- 45
------------------------------------------------------------------------
Total revenues 2,060 1,902 606 255 599 39 5,461
COSTS AND EXPENSES
Operations support 17 970 117 1 199 13 1,317
Depreciation and amortization 1,308 466 154 156 166 46 2,296
Interest expense -- -- -- -- -- 316 316
Management fees to affiliate 80 95 41 9 41 -- 266
General and administrative expenses 6 11 11 -- 149 193 370
Provision for bad debts -- -- 13 1 19 -- 33
------------------------------------------------------------------------
Total costs and expenses 1,411 1,542 336 167 574 568 4,598
------------------------------------------------------------------------
Equity in net income (loss) of USPEs 99 (204) -- -- -- -- (105)
------------------------------------------------------------------------
========================================================================
Net income (loss) $ 748 $ 156 $ 270 $ 88 $ 25 $ (529) $ 758
========================================================================
Total assets as of June 30, 1999 $ 22,230 $ 20,658 $ 3,752 $ 2,506 $ 3,709 $ 2,978 $ 55,833
========================================================================
Marine Marine
For the six months ended Aircraft Vessel Railcar Container Trailer
June 30, 2000 Leasing Leasing Leasing Leasing Leasing Other<F1> Total
---------------------------------- --------- --------- --------- --------- --------- --------- -----------
REVENUES
Lease revenue $ 4,018 $ 4,982 $ 1,216 $ 194 $ 1,203 $ -- $ 11,613
Interest income and other 7 3 -- -- -- 63 73
Gain on disposition of equipment -- -- 19 74 3 -- 96
------------------------------------------------------------------------
Total revenues 4,025 4,985 1,235 268 1,206 63 11,782
COSTS AND EXPENSES
Operations support 239 2,932 277 3 411 18 3,880
Depreciation and amortization 2,497 742 280 240 288 28 4,075
Interest expense -- -- -- -- -- 539 539
Management fees to affiliate 145 249 91 9 74 -- 568
General and administrative expenses 111 30 27 -- 265 451 884
Provision for bad debts -- -- 2 -- 24 -- 26
------------------------------------------------------------------------
Total costs and expenses 2,992 3,953 677 252 1,062 1,036 9,972
------------------------------------------------------------------------
Equity in net income of USPEs 222 161 -- -- -- -- 383
------------------------------------------------------------------------
========================================================================
Net income (loss) $ 1,255 $ 1,193 $ 558 $ 16 $ 144 $ (973 ) $ 2,193
========================================================================
Total assets as of June 30, 2000 $ 18,751 $ 12,679 $ 3,162 $ 1,405 $ 3,418 $ 2,827 $ 42,242
========================================================================
<FN>
<F1>Includes certain interest income and costs not identifiable to a particular
segment, such as interest expense, certain amortization, general and
administrative and operations support expenses.
</FN>
</TABLE>
PLM EQUIPMENT GROWTH FUND V
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
8. OPERATING SEGMENTS (CONTINUED)
<TABLE>
<CAPTION>
Marine Marine
For the six months ended Aircraft Vessel Railcar Container Trailer
June 30, 1999 Leasing Leasing Leasing Leasing Leasing Other<F1> Total
---------------------------------- --------- --------- --------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Lease revenue $ 4,244 $ 3,041 $ 1,208 $ 447 $ 1,255 $ -- $ 10,195
Interest income and other 17 2 -- 5 -- 76 100
Gain (loss) on disposition of -- -- -- 124 (19) -- 105
equipment
------------------------------------------------------------------------
Total revenues 4,261 3,043 1,208 576 1,236 76 10,400
COSTS AND EXPENSES
Operations support 32 1,761 235 2 378 25 2,433
Depreciation and amortization 2,589 932 308 320 334 76 4,559
Interest expense -- -- -- -- -- 681 681
Management fees to affiliate 175 152 82 22 75 -- 506
General and administrative expenses 13 19 22 -- 301 389 744
Provision for (recovery of) bad -- -- 16 (3) 12 -- 25
debts
------------------------------------------------------------------------
Total costs and expenses 2,809 2,864 663 341 1,100 1,171 8,948
------------------------------------------------------------------------
Equity in net income (loss) of USPEs 1,670 (268) -- -- -- -- 1,402
------------------------------------------------------------------------
========================================================================
Net income (loss) $ 3,122 $ (89) $ 545 $ 235 $ 136 $ (1,095) $ 2,854
========================================================================
Total assets as of June 30, 1999 $ 22,230 $ 20,658 $ 3,752 $ 2,506 $ 3,709 $ 2,978 $ 55,833
========================================================================
<FN>
<F1>Includes certain interest income and costs not identifiable to a particular
segment, such as interest expense, certain amortization, general and
administrative and operations support expenses.
</FN>
</TABLE>
9. DEBT
The Partnership made the regularly scheduled installment payment of $3.8 million
to the lender of the note payable during the six months ended June 30, 2000, and
accrued or paid the quarterly interest payment at a rate of LIBOR plus 1.2% per
annum (7.95% at June 30, 2000 and 7.30% December 31, 1999). The Partnership also
paid the lender of the senior note an additional $0.4 million from equipment
sales proceeds, as required by the loan agreement.
10. NET INCOME PER WEIGHTED-AVERAGE PARTNERSHIP UNIT
Net income per weighted-average Partnership unit was computed by dividing net
income attributable to limited partners by the weighted-average number of
Partnership units deemed outstanding during the period. The weighted-average
number of Partnership units deemed outstanding during the three and six months
ended June 30, 2000, was 9,066,094 and 9,066,877, respectively. The
weighted-average number of Partnership units deemed outstanding during the three
and six months ended June 30, 1999, was 9,073,779 and 9,076,014, respectively.
11. CONTINGENCIES
PLM International (the Company) and various of its wholly-owned subsidiaries are
named as defendants in a lawsuit filed as a purported class action in January
1997 in the Circuit Court of Mobile County, Mobile, Alabama, Case No. CV-97-251
(the Koch action). The named plaintiffs are six individuals who invested in PLM
Equipment Growth Fund IV (Fund IV), PLM Equipment Growth Fund V (Fund V), PLM
Equipment Growth Fund VI (Fund VI), and PLM Equipment Growth & Income Fund VII
(Fund VII) (the Funds), each a California limited partnership for which the
Company's wholly-owned subsidiary, FSI, acts as the General Partner. The
complaint asserts causes of action against all defendants for fraud and deceit,
suppression, negligent misrepresentation, negligent and intentional breaches of
fiduciary duty, unjust enrichment, conversion, and conspiracy. Plaintiffs allege
that each defendant owed plaintiffs and the class certain duties due to their
status as fiduciaries, financial advisors, agents, and control persons. Based on
these duties, plaintiffs assert liability against defendants for improper sales
and marketing practices, mismanagement of the Funds, and concealing such
mismanagement from investors in the Funds. Plaintiffs seek unspecified
compensatory damages, as well as punitive damages, and have offered to tender
their limited partnership units back to the defendants.
In March 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) (the court) based on the court's
diversity jurisdiction. In December 1997, the court granted defendants motion to
compel arbitration of the named plaintiffs' claims, based on an agreement to
arbitrate contained in the limited partnership agreement of each Partnership.
Plaintiffs appealed this decision, but in June 1998 voluntarily dismissed their
appeal pending settlement of the Koch action, as discussed below.
In June 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 Fund V, and filed the complaint
on her own behalf and on behalf of all class members similarly situated who
invested in the Funds. The complaint alleges the same facts and the same causes
of action as in the Koch action, plus additional causes of action against all of
the defendants, including alleged unfair and deceptive practices and violations
of state securities law. In July 1997, defendants filed a petition (the
petition) in federal district court under the Federal Arbitration Act seeking to
compel arbitration of plaintiff's claims. In October 1997, the district court
denied the Company's petition, but in November 1997, agreed to hear the
Company's motion for reconsideration. Prior to reconsidering its order, the
district court dismissed the petition pending settlement of the Romei action, as
discussed below. The state court action continues to be stayed pending such
resolution.
In February 1999 the parties to the Koch and Romei actions agreed to settle the
lawsuits, with no admission of liability by any defendant, and filed a
Stipulation of Settlement with the court. The settlement is divided into two
parts, a monetary settlement and an equitable settlement. The monetary
settlement provides for a settlement and release of all claims against
defendants in exchange for payment for the benefit of the class of up to $6.6
million. The final settlement amount will depend on the number of claims filed
by class members, the amount of the administrative costs incurred in connection
with the settlement, and the amount of attorneys' fees awarded by the court to
plaintiffs' attorneys. The Company will pay up to $0.3 million of the monetary
settlement, with the remainder being funded by an insurance policy. For
settlement purposes, the monetary settlement class consists of all investors,
limited partners, assignees, or unit holders who purchased or received by way of
transfer or assignment any units in the Funds between May 23, 1989 and June 29,
1999. The monetary settlement, if approved, will go forward regardless of
whether the equitable settlement is approved or not.
The equitable settlement provides, among other things, for: (a) the extension
(until January 1, 2007) of the date by which FSI must complete liquidation of
the Funds' equipment, (b) the extension (until December 31, 2004) of the period
during which FSI can reinvest the Funds' funds in additional equipment, (c) an
increase of up to 20% in the amount of front-end fees (including acquisition and
lease negotiation fees) that FSI is entitled to earn in excess of the
compensatory limitations set forth in the North American Securities
Administrator's Association's Statement of Policy; (d) a one-time repurchase by
each of Funds V, VI and VII of up to 10% of that partnership's outstanding units
for 80% of net asset value per unit; and (e) the deferral of a portion of the
management fees paid to an affiliate of FSI until, if ever, certain performance
thresholds have been met by the Funds. Subject to final court approval, these
proposed changes would be made as amendments to each Partnership's limited
partnership agreement if less than 50% of the limited partners of each
Partnership vote against such amendments. The limited partners will be provided
the opportunity to vote against the amendments by following the instructions
contained in solicitation statements that will be mailed to them after being
filed with the Securities and Exchange Commission. The equitable settlement also
provides for payment of additional attorneys' fees to the plaintiffs' attorneys
from Partnership funds in the event, if ever, that certain performance
thresholds have been met by the Funds. The equitable settlement class consists
of all investors, limited partners, assignees or unit holders who on June 29,
1999 held any units in Funds V, VI, and VII, and their assigns and successors in
interest.
The court preliminarily approved the monetary and equitable settlements in June
1999. The monetary settlement remains subject to certain conditions, including
notice to the monetary class and final approval by the court following a final
fairness hearing. The equitable settlement remains subject to certain
conditions, including: (a) notice to the equitable class, (b) disapproval of the
proposed amendments to the partnership agreements by less than 50% of the
limited partners in one or more of Funds V, VI, and VII, and (c) judicial
approval of the proposed amendments and final approval of the equitable
settlement by the court following a final fairness hearing. No hearing date is
currently scheduled for the final fairness hearing. The Company continues to
believe that the allegations of the Koch and Romei actions are completely
without merit and intends to continue to defend this matter vigorously if the
monetary settlement is not consummated.
The Partnership has initiated litigation in various official forums in India
against the defaulting Indian airline lessees to repossess Partnership property
and to recover damages for failure to pay rent and failure to maintain such
property in accordance with relevant lease contracts. The Partnership has
repossessed its property previously leased to such airline, and the airline has
ceased operations. In response to the Partnership's collection efforts, the
airline filed counter-claims against the Partnership in excess of the
Partnership's claims against the airline. The General Partner believes that the
airlines' counterclaims are completely without merit, and the General Partner
will vigorously defend against such counterclaims. The General Partner believes
the likelihood of an unfavorable outcome from the counterclaims is remote.
The Company is involved as plaintiff or defendant in various other legal actions
incidental to its business. Management does not believe that any of these
actions will be material to the financial condition of the Company.
(This space intentionally left blank)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
(I) RESULTS OF OPERATIONS
Comparison of PLM Equipment Growth Fund V's (the Partnership's) Operating
Results for the Three Months Ended June 30, 2000 and 1999
(A) Owned Equipment Operations
Lease revenues less direct expenses (defined as repairs and maintenance,
equipment operating, and asset-specific insurance expenses) on owned equipment
increased during the three months ended June 30, 2000, when compared to the same
period of 1999. Gains or losses from the sale of equipment, interest and other
income, and certain expenses such as depreciation and amortization and general
and administrative expenses relating to the operating segments (see Note 8 to
the financial statements), are not included in the owned equipment operation
discussion because they are indirect in nature and not a result of operations,
but the result of owning a portfolio of equipment. The following table presents
lease revenues less direct expenses by segment (in thousands of dollars):
For the Three Months
Ended June 30,
2000 1999
---------------------------
Aircraft $ 2,144 $ 2,035
Marine vessels 946 930
Railcars 480 489
Trailers 410 417
Marine containers 107 187
Aircraft: Aircraft lease revenues and direct expenses were $2.2 million and
$21,000, respectively, for the three months ended June 30, 2000, compared to
$2.1 million and $17,000, respectively, during the same period of 1999. The
increase in aircraft lease revenues of $0.1 million was due to two aircraft
being on-lease three months during the quarter ended June 30, 2000, compared to
the same period of 1999, when these aircraft were on-lease for two months.
Marine vessels: Marine vessel lease revenues and direct expenses were $2.4
million and $1.5 million, respectively, for the three months ended June 30,
2000, compared to $1.9 million and $1.0 million, respectively, during the same
period of 1999.
The increase in marine vessel lease revenues of $0.5 million during the quarter
ended June 30, 2000 was due to one marine vessel that earned $1.2 million in
additional voyage lease revenues due to higher lease rates when compared to the
same period of 1999, offset in part, by a decrease of $0.6 million caused by
another marine vessel that was off-lease during the three months ended June 30,
2000 compared to the same period of 1999, when it was on-lease.
As a result of the additional voyage lease revenues, direct expenses also
increased $0.5 million during the quarter ended June 30, 2000 when compared to
the same period of 1999.
Railcars: Railcar lease revenues and direct expenses were $0.6 million and $0.1
million, respectively, for the three months ended June 30, 2000 and 1999.
Trailers: Trailer lease revenues and direct expenses were $0.6 million and $0.2
million, respectively, for the three months ended June 30, 2000 and 1999.
Marine containers: Marine container lease revenues and direct expenses were $0.1
million and $1,000, respectively, for the three months ended June 30, 2000,
compared to $0.2 million and $1,000, respectively, during the same period of
1999. The number of marine containers owned by the Partnership has been
declining due to sales and dispositions during 2000 and 1999 resulting in a
decrease to marine container contribution.
(B) Indirect Expenses Related to Owned Equipment Operations
Total indirect expenses of $3.0 million for the quarter ended June 30, 2000
decreased from $3.3 million for the same period in 1999. Significant variances
are explained as follows:
(i) A $0.3 million decrease in depreciation and amortization expenses from
1999 levels was caused primarily by the double-declining balance method of
depreciation which results in greater depreciation in the first years an asset
is owned.
(ii) A $46,000 decrease in interest expense was due to a lower average
outstanding debt balance in the second quarter of 2000 when compared to the same
period of 1999.
(iii) A $0.1 million increase in general and administrative expenses was
due primarily to additional costs associated with the re-lease of a commercial
aircraft during 2000 compared to the same period of 1999.
(C) Net Gain on Disposition of Owned Equipment
The net gain on the disposition of equipment for the second quarter of 2000
totaled $0.1 million, which resulted from the sale of marine containers, a
railcar, and a trailer with a net book value of $0.1 million, for proceeds of
$0.2 million. The net gain on the disposition of equipment for the second
quarter of 1999 totaled $45,000, which resulted from the sale of marine
containers and trailers with an aggregate net book value of $0.1 million, for
proceeds of $0.2 million.
(D) Equity in Net Income (Loss) of Unconsolidated Special-Purpose Entities
(USPEs)
Net income (loss) generated from the operation of jointly-owned assets accounted
for under the equity method of accounting is shown in the following table by
equipment type (in thousands of dollars):
For the Three Months
Ended June 30,
2000 1999
--------------------------
Marine vessels $ 319 $ (204)
Aircraft 87 99
==========================
Equity in net income (loss) of USPEs $ 406 $ (105)
==========================
Marine vessels: As of June 30, 2000, the Partnership owned an interest in two
entities owning a total of two marine vessels. As of June 30, 1999, the
Partnership owned an interest in three entities owning a total of three marine
vessels. During the second quarter of 2000, lease revenues of $1.7 million were
offset by depreciation expense, direct expenses, and administrative expenses of
$1.4 million. During the same period of 1999, lease revenues of $1.2 million
were offset by depreciation expense, direct expenses, and administrative
expenses of $1.4 million.
Lease revenues increased $0.6 million during the three months ended June 30,
2000 when compared to the same period of 1999. The increase in lease revenues is
due to the following:
1. One marine vessel that was on voyage charter during the quarters ended June
30, 2000 and 1999, earned $0.9 million in higher lease revenues due to an
increase in voyage lease rates when compared to the same period of 1999.
2. The other marine vessel, while on time charter during the quarters ended June
30, 2000 and 1999, earned a lower lease rate which caused lease revenues to
decrease $0.1 million during the quarter ended June 30, 2000 compared to the
same period of 1999.
3. The sale of the Partnership's interest in a marine vessel during the fourth
quarter of 1999 caused lease revenues to also decrease $0.1 million during the
three months ended June 30, 2000 compared to the same period of 1999.
Depreciation expense, direct expenses, and administrative expenses remained
relatively the same, however certain direct expenses for the marine vessel on
voyage charter increased $0.3 million due to increased usage of this marine
vessel during the quarter ended June 30, 2000 when compared to the same period
of 1999. The increase caused by this marine vessel was offset by the sale of the
Partnership's interest in a marine vessel during the fourth quarter of 1999,
which caused depreciation expense, direct expenses, and administrative expenses
to decrease $0.3 million during the three months ended June 30, 2000.
Aircraft: As of June 30, 2000 and 1999, the Partnership had an interest in an
entity owning two commercial aircraft on a direct finance lease. During the
three months ended June 30, 2000, revenues of $0.1 were offset by amortization
expense, direct expenses, and administrative expenses of $10,000. During the
same period of 1999, revenues of $0.1 million were offset by amortization
expense, direct expenses, and administrative expenses of $9,000.
(E) Net Income
As a result of the foregoing, the Partnership's net income for the three months
ended June 30, 2000 was $1.5 million, compared to net income of $0.8 million
during the same period in 1999. The Partnership's ability to operate assets,
liquidate assets, secure leases, and re-lease those assets whose leases expire
is subject to many factors, and the Partnership's performance in the second
quarter of 2000 is not necessarily indicative of future periods. In the second
quarter of 2000, the Partnership distributed $2.3 million to the limited
partners, or $0.25 per weighted-average limited partnership unit.
COMPARISON OF THE PARTNERSHIP'S OPERATING RESULTS FOR THE SIX MONTHS ENDED JUNE
30, 2000 AND 1999
(A) Owned Equipment Operations
Lease revenues less direct expenses on owned equipment decreased during the six
months ended June 30, 2000, when compared to the same period of 1999. The
following table presents lease revenues less direct expenses by segment (in
thousands of dollars):
For the Six Months
Ended June 30,
2000 1999
---------------------------
Aircraft $ 3,779 $ 4,212
Marine vessels 2,050 1,280
Railcars 939 973
Trailers 792 877
Marine containers 191 445
Aircraft: Aircraft lease revenues and direct expenses were $4.0 million and $0.2
million, respectively, for the six months ended June 30, 2000, compared to $4.2
million and $32,000, respectively, during the same period of 1999. A decrease in
aircraft lease revenues of $0.2 million was due to a commercial aircraft being
off-lease for two months during the six months ended June 30, 2000 that was
on-lease for six months during the same period of 1999. Direct expenses
increased $0.2 million during the six months ended June 30, 2000 due to required
repairs to the off-lease commercial aircraft. A similar expense was not required
during the same period of 1999.
Marine vessels: Marine vessel lease revenues and direct expenses were $5.0
million and $2.9 million, respectively, for the six months ended June 30, 2000,
compared to $3.0 million and $1.8 million, respectively, during the same period
of 1999.
The increase in marine vessel lease revenues of $2.0 million during the six
months ended June 30, 2000 was due to one marine vessel that earned $2.6 million
in additional voyage lease revenues due to an increase in voyage lease rates
when compared to the same period of 1999, offset in part, by a decrease of $0.6
million caused by another marine vessel that was off-lease for three months
during the six months ended June 30, 2000, compared to the same period of 1999,
when it was on-lease six months.
As a result of the additional voyage, direct expenses also increased $1.1
million during the six months ended June 30, 2000 when compared to the same
period of 1999.
Railcars: Railcar lease revenues and direct expenses were $1.2 million and $0.3
million, respectively, for the six months ended June 30, 2000, compared to $1.2
million and $0.2 million, respectively, during the same period of 1999. The
decrease in railcar contribution was due to repairs to certain railcars in 2000
that were not needed during the same period of 1999.
Trailers: Trailer lease revenues and direct expenses were $1.2 million and $0.4
million, respectively, for the six months ended June 30, 2000, compared to $1.3
million and $0.4 million, respectively, during the same period of 1999. Trailer
contribution decreased $0.1 million during the six months ended June 30, 2000
due to lower lease revenues of $0.1 million resulting from lower utilization on
the trailers in the short-term rental facilities when compared to the same
period of 1999.
Marine containers: Marine container lease revenues and direct expenses were $0.2
million and $3,000, respectively, for the six months ended June 30, 2000,
compared to $0.4 million and $2,000, respectively, during the same period of
1999. The number of marine containers owned by the Partnership has been
declining due to sales and dispositions during 2000 and 1999 resulting in a
decrease to marine container contribution.
(B) Indirect Expenses Related to Owned Equipment Operations
Total indirect expenses of $6.1 million for the six months ended June 30, 2000
decreased from $6.5 million for the same period in 1999. Significant variances
are explained as follows:
(i) A $0.5 million decrease in depreciation and amortization expenses from
1999 levels was caused primarily by the double-declining balance method of
depreciation which results in greater depreciation in the first years an asset
is owned.
(ii) A $0.1 million decrease in interest expense was due to a lower average
outstanding debt balance during the six months ended June 30, 2000 when compared
to the same period of 1999.
(iii) A $0.1 million increase in management fees to affiliate was due to
increased lease revenues during the six months ended June 30, 2000 when compared
to the same period of 1999.
(iv) A $0.1 million increase in general and administrative expenses was
primarily due to additional costs associated with the re-lease of a commercial
aircraft during 2000 when compared to the same period of 1999.
(C) Net Gain on Disposition of Owned Equipment
The net gain on the disposition of equipment for the six months ended June 30,
2000 totaled $0.1 million, which resulted from the sale of marine containers,
trailers, and a railcar with a net book value of $0.2 million, for proceeds of
$0.3 million. The net gain on the disposition of equipment for the six months
ended June 30, 1999 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.
(D) Equity in Net Income (Loss) of Unconsolidated Special-Purpose Entities
Net income (loss) generated from the operation of jointly-owned assets accounted
for under the equity method of accounting is shown in the following table by
equipment type (in thousands of dollars):
For the Six Months
Ended June 30,
2000 1999
--------------------------
Aircraft, rotable components, and aircraft engines $ 222 $ 1,670
Marine vessels 161 (268)
==========================
Equity in net income of USPEs $ 383 $ 1,402
==========================
Aircraft, rotable components, and aircraft engines: As of June 30, 2000 and
1999, the Partnership had an interest in an entity owning two commercial
aircraft on a direct finance lease. During the six months ended June 30, 2000,
revenues of $0.2 were offset by direct expenses and administrative expenses of
$25,000. During the same period of 1999, revenues of $0.2 million and the gain
from the sale of the Partnership's interest in two trusts that owned a total of
three commercial aircraft, two aircraft engines, and a portfolio of aircraft
rotables of $1.6 million were offset by depreciation expense, direct expenses,
and administrative expenses of $0.1 million. Direct expenses and administrative
expenses decreased $0.1 million during the six months ended June 30, 2000 due to
the sale of the Partnership's interest in two trusts and the recovery of a
$48,000 accounts receivable in 2000 that had previously been reserved as a bad
debt. A similar recovery did not occur during the same period of 1999.
Marine vessels: As of June 30, 2000, the Partnership owned an interest in two
entities owning a total of two marine vessels. As of June 30, 1999, the
Partnership owned an interest in three entities owning a total of three marine
vessels. During the six months ended June 30, 2000, lease revenues of $3.2
million were offset by depreciation expense, direct expenses, and administrative
expenses of $3.0 million. During the same period of 1999, lease revenues of $2.8
million were offset by depreciation expense, direct expenses, and administrative
expenses of $3.1 million.
Lease revenues increased $0.4 million during the six months ended June 30, 2000
when compared to the same period of 1999. The increase in lease revenues is due
to the following:
1. One marine vessel that was on voyage charter during the six months ended June
30, 2000 and 1999, earned $1.0 million in higher lease revenues due to an
increase in voyage lease rates when compared to the same period of 1999.
2. The other marine vessel, while on time charter during the six months ended
June 30, 2000 and 1999, earned a lower lease rate which caused lease revenues to
decrease $0.2 million during the quarter ended June 30, 2000 compared to the
same period of 1999.
3. The sale of the Partnership's interest in a marine vessel during the fourth
quarter of 1999 caused lease revenues to also decrease $0.4 million during the
six months ended June 30, 2000 when compared to the same period of 1999.
Depreciation expense, direct expenses, and administrative expenses decreased
$0.1 million during the six months ended June 30, 2000 when compared to the same
period of 1999. Certain direct expenses, however, for the marine vessel on
voyage charter increased $0.5 million due to increased usage of this marine
vessel during the six months ended June 30, 2000 when compared to the same
period of 1999. The increase caused by this marine vessel was offset by the sale
of the Partnership's interest in a marine vessel during the fourth quarter of
1999, which caused depreciation expense, direct expenses, and administrative
expenses to decrease $0.7 million during the six months ended June 30, 2000.
(E) Net Income
As a result of the foregoing, the Partnership's net income for the six months
ended June 30, 2000 was $2.2 million, compared to net income of $2.9 million
during the same period in 1999. The Partnership's ability to operate assets,
liquidate assets, secure leases, and re-lease those assets whose leases expire
is subject to many factors, and the Partnership's performance in the six months
ended June 30, 2000 is not necessarily indicative of future periods. In the six
months ended June 30, 2000, the Partnership distributed $4.5 million to the
limited partners, or $0.50 per weighted-average limited partnership unit.
(II) FINANCIAL CONDITION - CAPITAL RESOURCES, LIQUIDITY, AND DISTRIBUTIONS
For the six months ended June 30, 2000, the Partnership generated $6.3 million
in operating cash (net cash provided by operating activities plus
non-liquidating distributions from USPEs) to meet its operating obligations and
pay cash distributions (total for the six months ended June 30, 2000 of $4.8
million) to the partners.
During the six months ended June 30, 2000, the Partnership sold owned equipment
and received aggregate proceeds of $0.3 million.
During the six months ended June 30, 2000, the Partnership purchased a hush-kit
for one of the Partnership's McDonnell Douglas DC-9 commercial aircraft for $2.7
million. The Partnership was required to install the hush-kit per the
Partnership's lease agreement for this aircraft.
Accounts receivable increased $0.3 million during the six months ended June 30,
2000 due to an increase in unpaid outstanding invoices from one lessee of $0.2
million and an increase of $0.4 million due from the ship manager of the marine
vessel on voyage charter. The increases caused by the additional amounts due
from these two customers were offset in part, by the timing of $0.3 million in
cash receipts.
Investments in USPEs decreased $0.5 million due to cash distribution of $0.9
million to the Partnership from the USPEs offset in part, by $0.4 million income
that was recorded as the Partnership's from operations of USPEs during the six
months ended June 30, 2000.
Accounts payable decreased $0.2 million during the six months ended June 30,
2000 due to the timing of payments.
During the six months ended June 30, 2000, the Partnership borrowed $4.5 million
from the General Partner for a short-term loan and repaid $1.4 million to the
General Partner. The General Partner charged the Partnership $41,000 in interest
using market interest rates.
The Partnership is scheduled to make quarterly installments of $1.9 million
under its notes payable through the year 2001 and, in some instances, a
percentage of equipment sale proceeds. During the six months ended June 30,
2000, the Partnership made the regularly scheduled installment payment of $3.8
million to the lender of the note payable. The Partnership also made an
additional principal payment of $0.4 million from the proceeds of equipment
sales.
(III) OUTLOOK FOR THE FUTURE
Since the Partnership is in its holding or passive liquidation phase, the
General Partner will be seeking to selectively re-lease or sell assets as the
existing leases expire. Sale decisions will cause the operating performance of
the Partnership to decline over the remainder of its life.
Several factors may affect the Partnership's operating performance during the
remainder of 2000 and beyond, including changes in the markets for the
Partnership's equipment and changes in the regulatory environment in which that
equipment operates.
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.
Factors affecting the Partnership's contribution during the remainder of 2000
and beyond include:
1. The cost of new marine containers has been at historic lows for the past
several years which has caused downward pressure on per diem lease rates.
Recently, the cost of marine containers have started to increase which, if this
trend continues, should translate into rising per diem lease rates. However,
some of the Partnership's refrigerated marine containers have become
delaminated. This condition lowers the demand for these marine containers which
has lead to declining lease rates and lower utilization.
2. Depressed economic conditions in Asia during most of 1999 has led to
declining freight rates for dry bulk marine vessels. As Asia begins its economic
recovery and in the absence of new additional orders, this market would be
expected to stabilize and improve over the next one to two years.
3. The Partnership owns an anchor handling supply marine vessel that is
off-lease. If the economic conditions remain the same, the General Partner would
expect to re-lease this marine vessel at a rate lower than the rate that was in
the previous lease.
4. Railcar loading in North America have continued to be high, however a
softening in the market in the last quarter of 1999, is leading to lower
utilization and lower contribution to the Partnership as existing leases expire
and renewal leases are negotiated.
The ability of the Partnership to realize acceptable lease rates on its
equipment in the different equipment markets is contingent on many factors, such
as specific market conditions and economic activity, technological obsolescence,
and government or other regulations. The unpredictability of 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
equipment markets in which it determines it cannot operate equipment to achieve
acceptable rates of return.
The Partnership intends to use cash flow from operations to satisfy its
operating requirements, pay loan principal and interest on debt, and pay cash
distributions to the partners.
Beginning in the Partnership's seventh year of operations, which commenced on
January 1, 1999, the General Partner stopped purchasing additional equipment.
Surplus cash, less reasonable reserves, will be distributed to the partners.
Beginning in the Partnership's ninth year of operations, the General Partner
intends to begin an orderly liquidation of the Partnership's assets. The
Partnership will be terminated by December 31, 2010, unless terminated earlier
upon sale of all equipment and by certain other events.
(IV) 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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Partnership's primary market risk exposures are that of interest rate and
currency risk. The Partnership's note payable is a variable rate debt. The
Partnership estimates a one percent increase or decrease in the Partnership's
variable rate debt would result in an increase or decrease, respectively, in
interest expense of $0.1 million for the remaining six months of 2000 and
$37,000 in 2001. The Partnership estimates a two percent increase or decrease in
the Partnership's variable rate debt would result in an increase or decrease,
respectively, in interest expense of $0.1 million for the remaining six months
of 2000 and $0.1 million in 2001.
During the six months ended June 30, 2000, 84% of the Partnership's total lease
revenues from wholly- and partially-owned equipment came from non-United States
domiciled lessees. Most of the Partnership's leases require payment in United
States (U.S.) currency. If these lessees currency devalues against the U.S.
dollar, the lessees could potentially encounter difficulty in making the U.S.
dollar denominated lease payments.
(This space intentionally left blank)
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None.
(b) Reports on Form 8-K
None.
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 7, 2000 By: /s/ Richard K Brock
Richard K Brock
Vice President and
Chief Financial Officer
