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, 1997
[ ] 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 33-83216-01
-----------------------
PROFESSIONAL LEASE MANAGEMENT INCOME FUND I, L.L.C.
(Exact name of registrant as specified in its charter)
Delaware 94-3209289
(State or other jurisdict (I.R.S. Employer
incorporation or organization) Identification No.)
One Market, Steuart Street Tower
Suite 800, San Francisco, CA 94105-1301
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (415) 974-1399
-----------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
<PAGE>
PROFESSIONAL LEASE MANAGEMENT INCOME FUND I, L.L.C.
(A Delaware Limited Liability Company)
BALANCE SHEETS
(in thousands of dollars, except unit amounts)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
<S> <C> <C>
Assets:
Equipment held for operating leases, at cost $ 89,365 $ 70,333
Less accumulated depreciation (19,733 ) (12,189 )
Net equipment 69,632 58,144
Cash and cash equivalents 5,704 1,692
Restricted cash - 223
Investment in unconsolidated special-purpose entities 26,686 25,349
Accounts receivable, net of allowance for doubtful accounts
of $371 in 1997 and $36 in 1996 1,743 1,534
Prepaid expenses 345 505
Deferred charges, net of accumulated amortization
of $185 in 1997 and $134 in 1996 434 308
Total assets $ 104,544 $ 87,755
Liabilities and members' equity:
Liabilities:
Accounts payable and accrued expenses $ 293 $ 430
Due to affiliates 262 163
Lessee deposits and reserves for repairs 1,085 873
Notes payable 25,000 -
Total liabilities 26,640 1,466
Members' equity:
Class A members (4,999,581 units as of June 30, 1997
and December 31, 1996) 77,716 86,024
Class B Member 188 265
Total members' equity 77,904 86,289
Total liabilities and members' equity $ 104,544 $ 87,755
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PROFESSIONAL LEASE MANAGEMENT INCOME FUND I, L.L.C.
(A Delaware Limited Liability Company)
STATEMENTS OF OPERATIONS
(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,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Revenues:
Lease revenue $ 4,108 $ 2,117 $ 7,625 $ 4,274
Interest and other income 167 445 215 700
Net gain on disposition of equipment - - 4 -
Total revenues 4,275 2,562 7,844 4,974
Expenses:
Depreciation and amortization 4,025 1,551 7,602 3,057
Marine equipment operating expenses 233 219 475 477
Repairs and maintenance 290 243 559 523
Interest expense 459 - 505 9
Insurance expense to affiliate 2 2 9 4
Other insurance expense 91 44 144 132
Management fees to affiliate 199 143 432 256
General and administrative expenses
to affiliates 155 162 508 214
Other general and administrative expenses 206 73 328 154
Total expenses 5,660 2,437 10,562 4,826
Equity in net income (loss) of unconsolidated
special-purpose entities 78 (18 ) 215 (65 )
Net (loss) income $(1,307 ) $ 107 $ (2,503 ) $ 83
Members' share of net (loss) income:
Class A Members $(1,709 ) $ (84 ) $ (3,308 ) $ (108 )
Class B Member 402 191 805 191
Total $(1,307 ) $ 107 $ (2,503 ) $ 83
Net loss per weighted-average
Class A unit (4,999,581 units as of
June 30, 1997 and 1996) $ (0.34 ) $ (0.02 ) $ (0.66 ) $ (0.02 )
Cash distributions $ 2,941 $ 2,376 $ 5,882 $ 3,999
Cash distributions per weighted-average
Class A units $ 0.50 N/A $ 1.00 N/A
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PROFESSIONAL LEASE MANAGEMENT INCOME FUND I, L.L.C.
(A Delaware Limited Liability Company)
STATEMENTS OF CHANGES IN MEMBERS' EQUITY
For the period from December 31, 1995 to June 30, 1997
(in thousands of dollars)
<TABLE>
<CAPTION>
Class A Class B Total
<S> <C> <C> <C>
Members' equity as of December 31, 1995 $ 54,836 $ 306 $ 55,142
Members' capital contributions 43,364 5,069 48,433
Syndication costs - (5,062 ) (5,062 )
Net (loss) income (3,705 ) 1,313 (2,392 )
Distributions (8,471 ) (1,361 ) (9,832 )
Members' equity as of December 31, 1996 86,024 265 86,289
Net (loss) income (3,308 ) 805 (2,503 )
Distributions (5,000 ) (882 ) (5,882 )
Members' equity as of June 30, 1997 $ 77,716 $ 188 $ 77,904
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PROFESSIONAL LEASE MANAGEMENT INCOME FUND I, L.L.C.
(A Delaware Limited Liability Company)
STATEMENTS OF CASH FLOWS
(in thousands of dollars)
<TABLE>
<CAPTION>
For the Six Months
Ended June 30,
1997 1996
<S> <C> <C>
Operating activities
Net (loss) income $ (2,503 ) $ 83
Adjustments to reconcile net (loss) income to net cash
provided by operating activities:
Depreciation and amortization 7,602 3,057
Gain on disposition of equipment (4 ) -
Equity in net (income) loss of unconsolidated
special-purpose entities (215 ) 65
Changes in operating assets and liabilities:
Restricted cash 223 -
Accounts receivable, net (209 ) (398 )
Prepaid expenses 160 22
Accounts payable and accrued expenses (137 ) (479 )
Due to affiliates 99 (328 )
Lessee deposits and reserves for repairs 212 36
Net cash provided by operating activities 5,228 2,058
Investing activities:
Payments for purchase of equipment (19,062 ) (1,984 )
Investment in and equipment purchased and placed
in unconsolidated special-purpose entities (5,100 ) (9,068 )
Proceeds from disposition of equipment 27 -
Distributions from unconsolidated special-purpose
entities 3,978 3,609
Net cash used in investing activities (20,157 ) (7,443 )
Financing activities:
Proceeds from notes payable 25,000 -
Cash distributions to Class A members (5,000 ) (3,495 )
Cash distributions to Class B Member (882 ) (504 )
Payments of placement fees (177 ) -
Class A members' capital contribution - 43,364
Increase in subscriptions in escrow - (6,260 )
Increase in restricted cash from subscriptions
in escrow, net - 6,316
Net cash provided by financing activities 18,941 39,421
Net increase in cash and cash equivalents 4,012 34,036
Cash and cash equivalents at beginning of period 1,692 6,804
Cash and cash equivalents at end of period $ 5,704 $ 40,840
Supplemental information:
Cash items:
Interest paid $ 505 $ 9
Noncash items:
Syndication and offering costs paid by Class B Member $ - $ 5,053
</TABLE>
See accompanying notes to financial statements.
<PAGE>
PROFESSIONAL LEASE MANAGEMENT INCOME FUND I, L.L.C.
(A Delaware Limited Liability Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 1997
1. Opinion of Management
In the opinion of the management of PLM Financial Services, Inc. (FSI or
the Manager), the accompanying unaudited financial statements contain all
adjustments necessary, consisting primarily of normal recurring accruals,
to present fairly the financial position of Professional Lease Management
Income Fund I, L.L.C. (Fund I or the Company) as of June 30, 1997 and
December 31, 1996, the statements of operations for the three and six
months ended June 30, 1997 and 1996, the statements of changes in members'
equity for the period from December 31, 1995 to June 30, 1997, and the
statements of cash flow for the six months ended June 30, 1997 and 1996.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted from the accompanying financial
statements. For further information, reference should be made to the
financial statements and notes thereto included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1996, on file at the
Securities and Exchange Commission.
2. Reclassifications
Certain amounts in the 1996 financial statements have been reclassified to
conform to the 1997 presentation.
3. Net Income (Loss) and Cash Distributions
After giving effect to the special allocations set forth in Sections
3.08(b) and 3.17 of the Company's operating agreement, net profits and net
loss shall be allocated 1% to Class B members and 99% to the Class A
members. During the six months ended June 30, 1997, the Manager received a
special allocation of income of $838,000.
Cash distributions are recorded when paid and totaled $2.9 million and $2.4
million for the three months ended June 30, 1997 and 1996, respectively,
and $5.9 million and $4.0 million for the six months ended June 30, 1997
and 1996. Cash distributions to Class A unitholders in excess of net income
are considered to represent a return of capital using the generally
accepted accounting principle basis. Cash distributions to Class A
unitholders of $5.0 million and $3.5 million for the six months ended June
30, 1997 and 1996, respectively, were deemed to be a return of capital.
Cash distributions related to the results from the second quarter of 1997,
of $1.3 million, were paid or are payable during July and August 1997,
depending on whether the individual Class A unitholders elected to receive
a monthly or quarterly distribution check.
<PAGE>
PROFESSIONAL LEASE MANAGEMENT INCOME FUND I, L.L.C.
(A Delaware Limited Liability Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 1997
4. Investments in Unconsolidated Special-Purpose Entities
The net investments in unconsolidated special-purpose entities (USPEs)
included the following jointly-owned equipment (and related assets and
liabilities) (in thousands):
<TABLE>
<CAPTION>
June 30, December 31
% Ownership Equipment 1997 1996
<S> <C> <C>
61% Mobile offshore drilling unit $ 10,460 $ -
33% Two trusts consisting of:
Three 737-200A Stage II
commercial aircraft
Two aircraft engines
Portfolio of rotable components 6,934 8,767
25% Trust consisting of four 737-200A
Stage II commercial aircraft 3,744 3,981
50% Cargo marine vessel 2,979 3,011
17% Trust consisting of six 737-200A
Stage II commercial aircraft 2,569 2,684
35% Mobile offshore drilling unit - 6,906
Total investments $ 26,686 $ 25,349
</TABLE>
During the six months ended June 30, 1997, the Company purchased an
additional 26% interest in a mobile offshore drilling unit for $5.1
million, bringing its initial investment of 35% up to 61%.
5. Transactions with Manager and Affiliates
Company management fees of $0.2 million and $0.2 million were payable as of
June 30, 1997 and December 31, 1996, respectively. The Company's
proportional share of USPE management fees of $0.1 million and $23,000 were
payable as of June 30, 1997 and December 31, 1996, respectively.
The Company's proportional share of the affiliated expenses incurred
by the USPEs during 1997 and 1996 is listed in the following table
(in thousands):
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended June 30, Ended June 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Management fees $ 99 $ 61 $ 184 $ 122
Data processing and administrative
expenses 25 19 44 41
Insurance expense 1 - 5 -
</TABLE>
Transportation Equipment Indemnity Company, Ltd. (TEI) provides marine
insurance coverage for Company equipment and other insurance brokerage
services. TEI is an affiliate of the Manager.
<PAGE>
PROFESSIONAL LEASE MANAGEMENT INCOME FUND I, L.L.C.
(A Delaware Limited Liability Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 1997
6. Equipment
Components of equipment are as follows (in thousands):
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
<S> <C> <C>
Aircraft $ 24,605 $ 24,605
Marine vessel 20,757 12,257
Rail equipment 18,937 18,876
Trailers 14,566 14,595
Mobile offshore drilling unit 10,500 --
89,365 70,333
Less accumulated depreciation (19,733 ) (12,189 )
Net equipment $ 69,632 $ 58,144
</TABLE>
During the six months ended June 30, 1997, the Company purchased a mobile
offshore drilling unit and a marine vessel for $19.1 million. During the
six months ended June 30, 1996, the Company purchased 50 new refrigerated
trailers and 1 box car for $2.0 million.
During the six months ended June 30, 1997, the Company sold trailers with a
net book value of $22,000, for proceeds of $27,000. There were no sales or
disposals of equipment in the six months of 1996.
As of June 30, 1997, all equipment was either on lease or operating in
PLM-affiliated short-term trailer rental facilities, except for 105
railcars with a carrying value of $5.1 million. As of December 31, 1996,
all equipment was either on lease or operating in PLM-affiliated short-term
trailer rental facilities, except for 14 railcars with a carrying value of
$0.3 million.
7. Debt
During the first six months of 1997, the Company completed two draw-downs
totaling $25.0 million by issuing two notes related to the long-term senior
note agreement entered into in December 1996. A total of $24.1 million of
the proceeds was used to fund additional equipment acquisitions during the
six months ended June 30, 1997. This included $5.1 million in investments
in equipment placed into USPEs. The Company anticipates utilizing the
remaining debt proceeds to purchase equipment during the third quarter of
1997. During the six months ended June 30, 1997, a $0.2 million placement
fee was paid to the lender in connection with this loan agreement.
As of June 30, 1997, the Company did not have any borrowings with the
short-term $50.0 million joint credit facility, and American Finance
Group, Inc., a wholly-owned subsidiary of PLM International, Inc.,
had $7.1 million in outstanding borrowings under the short-term committed
bridge facility. None of the other programs had any outstanding
borrowings. The Company's senior note agreement limits the borrowings
available to the Company under this short-term credit facility to the
lesser of $10.0 million or 50% of the outstanding senior note
balance.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
(I) RESULTS OF OPERATIONS
Comparison of the Company's Operating Results for the Three Months Ended
June 30, 1997 and 1996
(A) Owned Equipment Operations
Lease revenues less direct expenses (defined as repair and maintenance, marine
equipment operating, and asset-specific insurance expenses) on owned equipment
increased during the second quarter of 1997, compared to the same quarter of
1996. The following table presents lease revenues less direct expenses by owned
equipment type (in thousands):
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
1997 1996
<S> <C> <C>
Aircraft $ 1,248 $ 162
Trailers 778 425
Rail equipment 698 621
Mobile offshore drilling unit 483 --
Marine vessel 304 406
</TABLE>
Aircraft: Aircraft lease revenues and direct expenses were $1.2 million and
$12,000, respectively, for the second quarter of 1997, compared to $0.2 million
and $4,000, respectively, during the same quarter of 1996. Aircraft contribution
increased due to the purchase of four 737-200A Stage II commercial aircraft at
the end of the third quarter of 1996. These aircraft were on lease for the
entire second quarter of 1997.
Trailers: Trailer revenues and direct expenses were $0.9 million and $0.1
million, respectively, for the second quarter of 1997, compared to $0.4 million
and $17,000, respectively, during the same quarter of 1996. Trailer contribution
increased due to the purchase of additional trailers throughout 1996. These
trailers were operating in the short-term rental facilities for the entire
second quarter of 1997.
Rail equipment: Railcar lease revenues and direct expenses were $0.8 million and
$0.1 million, respectively, for the second quarter of 1997, compared to $0.8
million and $0.2 million, respectively, during the same quarter of 1996. Lease
revenue remained relatively stable in the second quarter of 1997, compared to
the same period in 1996. Expenses decreased due to lower running repairs in the
second quarter of 1997, compared to the same period in 1996. Although the
Company purchased additional railcars in the last two months of 1996, these
railcars were off lease throughout 1997 and did not impact the contribution for
the second quarter of 1997.
Mobile offshore drilling unit (rig): Revenues and direct expenses were $0.5
million and $18,000, respectively, in the second quarter of 1997. This rig was
purchased in the first quarter of 1997 and earned a full quarter of revenue in
the second quarter of 1997.
Marine vessel: Marine vessel lease revenues and direct expenses were $0.6
million and $0.3 million, respectively, for the second quarter of 1997, compared
to $0.7 million and $0.3 million, respectively, during the same quarter of 1996.
Marine vessel contribution decreased due to lower re-lease rates for a marine
vessel as a result of a softer bulk carrier vessel market; this decrease was
offset slightly by an increase in lease revenue due to the purchase of a marine
vessel at the end of the second quarter of 1997.
(B) Interest and Other Income
Interest and other income decreased $0.3 million due to lower cash balances
available for investment in the second quarter of 1997, compared to the same
period in 1996.
<PAGE>
(C) Indirect Expenses Related to Owned Equipment Operations
Total indirect expenses of $5.0 million for the quarter ended June 30, 1997
increased from $1.9 million for the same period in 1996. The variances are
explained as follows:
(1) A $2.5 million increase in depreciation and amortization expenses from
1996 levels reflects the purchase of assets during 1997 and 1996.
(2) A $0.4 million increase in interest expense was due to the Company's
incurring of debt in 1997 for the purchase of equipment.
(3) A $0.1 million increase in administrative expenses from 1996 levels
resulted from increased administrative costs associated with the short-term
rental facilities due to additional trailers operating in the facilities in the
second quarter of 1997, compared to the same period in 1996.
(4) A $0.1 million increase in management fees to affiliate reflects the
higher levels of lease revenues in 1997, compared to 1996, due to the additional
purchase of equipment throughout 1996 and the beginning of 1997.
(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 are presented as follows (in thousands).
<TABLE>
<CAPTION>
For the Three Months
Ended June 30,
1997 1996
<S> <C> <C>
Aircraft $ 445 $ 151
Marine vessel (158 ) (169 )
Mobile offshore drilling unit (209 ) -
</TABLE>
Aircraft: As of June 30, 1997, the Company owned an interest in a trust that
owns six commercial aircraft, an interest in another trust that owns four
commercial aircraft, and an interest in two trusts that own three commercial
aircraft, two aircraft engines, and a portfolio of aircraft rotables. As of June
30, 1996, the Company owned an interest in a trust that owns seven commercial
aircraft, an interest in another trust that owns five commercial aircraft, and
an interest in two trusts that own three commercial aircraft, two aircraft
engines, and a portfolio of aircraft rotables. Aircraft revenues and expenses
were $1.5 million and $1.0 million, respectively, for the second quarter of
1997, compared to $1.6 million and $1.4 million, respectively, during the same
quarter in 1996. Expenses decreased due to the use of the double-declining
balance depreciation method, which results in greater depreciation in the early
years an asset is owned.
Marine vessel: As of June 30, 1997 and 1996, the Company had an interest in an
entity that owns a marine vessel. Marine vessel revenues and expenses were $0.3
million and $0.5 million, respectively, for the second quarter of 1996 and 1997.
Mobile offshore drilling unit: As of June 30, 1997, the Company had an interest
in an entity that owns a mobile offshore drilling unit (rig) purchased during
the fourth quarter of 1996. The Company's interest in this investment increased
in the first quarter of 1997 from 35% to 61%. During the second quarter of 1997,
revenues of $0.6 million were offset by depreciation and administrative expenses
of $0.8 million.
<PAGE>
(E) Net (Loss) Income
As a result of the foregoing, the Company's had a net loss of $1.3 million for
the second quarter of 1997, compared to net income of $0.1 million during the
same period of 1996. The Company's ability to operate and liquidate assets,
secure leases, and re-lease those assets whose leases expire is subject to many
factors, and the Company's performance in the second quarter of 1997 is not
necessarily indicative of future periods. In the second quarter of 1997, the
Company distributed $2.5 million to Class A members, or $0.50 per
weighted-average Class A unit.
Comparison of the Company's Operating Results for the Six Months Ended
June 30, 1997 and 1996
(A) Owned Equipment Operations
Lease revenues less direct expenses (defined as repair and maintenance, marine
equipment operating, and asset-specific insurance expenses) on owned equipment
increased during the six months ended June 30, 1997, compared to the same period
of 1996. The following table presents lease revenues less direct expenses by
owned equipment type (in thousands):
<TABLE>
<CAPTION>
For the Six Months
Ended June 30,
1997 1996
<S> <C> <C>
Aircraft $ 2,500 $ 471
Trailers 1,492 704
Rail equipment 1,397 1,291
Mobile offshore drilling unit 554 --
Marine vessel 518 685
</TABLE>
Aircraft: Aircraft lease revenues and direct expenses were $2.5 million and
$19,000, respectively, during the six months ended June 30, 1997, compared to
$0.5 million and $9,000, respectively, during the same period of 1996. Aircraft
contribution increased due to the purchase of four 737-200A Stage II commercial
aircraft at the end of the third quarter of 1996. These aircraft were on lease
for the entire six months of 1997.
Trailers: Trailer revenues and direct expenses were $1.7 million and $0.2
million, respectively, for the six months of 1997, compared to $0.7 million and
$46,000, respectively, during the same period in 1996. Trailer contribution
increased due to the purchase of additional trailers throughout 1996. These
trailers were operating in the short-term rental facilities for the entire six
months of 1997.
Rail equipment: Railcar lease revenues and direct expenses were $1.6 million and
$0.2 million, respectively, for the six months ended June 30, 1997, compared to
$1.6 million and $0.3 million, respectively, during the same period of 1996.
Lease revenues remained relatively stable in the six months of 1997, compared to
the same period of 1996. Expenses decreased due to lower running repairs in the
six months ended June 30, 1997, compared to the same period of 1996. Although
the Company purchased additional railcars in the last two months of 1996, these
railcars were off lease in the first six months of 1997 and did not impact the
contribution for the first six months of 1997.
Mobile offshore drilling unit (rig): Revenues were $0.6 million in the six
months ended June 30, 1997. This rig was purchased near the end of the first
quarter of 1997.
Marine vessel: Marine vessel lease revenues and direct expenses were $1.2
million and $0.7 million, respectively, for the six months ended June 30, 1997,
compared to $1.5 million and $0.8 million, respectively, during the same period
of 1996. Marine vessel contribution decreased due to lower re-lease rates as a
result of a softer bulk carrier vessel market. The decrease in direct expenses
were due to the lower marine operating expenses in the six months ended June 30,
1997, compared to the same period in 1996.
(B) Interest and Other Income
Interest and other income decreased $0.5 million due to lower cash balances
available for investment in the six months ended June 30, 1997, compared to the
same period of 1996.
(C) Indirect Expenses Related to Owned Equipment Operations
Total indirect expenses of $9.4 million for the six months ended June 30,
1997 increased from $3.7 million for the same period of 1996. The variances
are explained as follows:
(1) A $4.5 million increase in depreciation and amortization expenses from
1996 levels reflects the purchase of assets during 1997 and 1996.
(2) A $0.5 million increase in administrative expenses from 1996 levels
resulted from increased administrative costs associated with the short-term
rental facilities due to additional trailers operating in the facilities in the
first six months of 1997, compared to the same period of 1996.
(3) A $0.5 million increase in interest expense was due to the Company's
incurring of debt in 1997 to purchase equipment.
(4) A $0.2 million increase in management fees to affiliate reflects the
higher levels of lease revenues in 1997, compared to 1996, due to the additional
purchase of equipment throughout 1996 and the beginning of 1997.
(D) Net Gain on Disposition of Owned Equipment
Net gain on the disposition of equipment for the six months ended June 30, 1997
totaled $4,000, and resulted from the sale of trailers with a net book value of
$22,000, for proceeds of $26,000. There were no sales or disposals of equipment
in the first six months of 1996.
(E) 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 are presented as follows (in thousands).
<TABLE>
<CAPTION>
For the Six Months
Ended June 30,
1997 1996
<S> <C> <C>
Aircraft $ 892 $ 120
Marine vessel (204 ) (185 )
Mobile offshore drilling unit (473 ) -
</TABLE>
Aircraft: As of June 30, 1997, the Company owned an interest in a trust that
owns six commercial aircraft, an interest in another trust that owns four
commercial aircraft, and an interest in two trusts that own three commercial
aircraft, two aircraft engines, and a portfolio of aircraft rotables. As of June
30, 1996, the Company owned an interest in a trust that owns seven commercial
aircraft, an interest in another trust that owns five commercial aircraft, and
an interest in two trusts that own three commercial aircraft, two aircraft
engines, and a portfolio of aircraft rotables. Aircraft revenues and expenses
were $3.0 million and $2.1 million, respectively, for the six months ended June
30, 1997, compared to $2.7 million and $2.6 million, respectively, during the
same period in 1996. The primary reason revenues increased was because of the
purchase of an interest in a trust that owns commercial aircraft at the end of
the first quarter of 1996. This investment was on lease for the entire six
months of 1997, compared to only a quarter in the same period in 1996. Expenses
decreased due to the use of the double-declining balance depreciation method,
which results in greater depreciation in the early years an asset is owned.
Marine vessel: As of June 30, 1997 and 1996, the Company had an interest in an
entity that owns a marine vessel. Marine vessel revenues and expenses were $0.6
million and $0.8 million, respectively, for the six months ended June 30, 1997,
compared to $0.3 million and $0.5 million, respectively, during the same period
in 1996. The primary reason revenues increased was because of the purchase of a
50% interest in a marine vessel during the later half of the first quarter of
1996. Revenues and expenses during 1997 represent a full six months, when
compared to 1996 in which revenues and expenses were for only four months.
Mobile offshore drilling unit: As of June 30, 1997, the Company had an interest
in an entity that owns a mobile offshore drilling unit (rig) purchased during
the fourth quarter of 1996. The Company's interest in this investment increased
in the first quarter of 1997 from 35% to 61%. During the six months ended June
30, 1997, revenues of $0.9 million were offset by depreciation and
administrative expenses of $1.4 million.
(F) Net (Loss) Income
As a result of the foregoing, the Company's had a net loss of $2.5 million for
the six months of 1997, compared to net income of $0.1 million during the same
period of 1996. The Company's ability to operate and liquidate assets, secure
leases, and re-lease those assets whose leases expire is subject to many
factors, and the Company's performance in the six months ended June 30, 1997 is
not necessarily indicative of future periods. In the six months ended June 30,
1997, the Company distributed $5.0 million to the Class A members, or $1.00 per
weighted-average Class A unit.
(II) FINANCIAL CONDITION -- CAPITAL RESOURCES AND LIQUIDITY
The Company's initial contributed capital was composed of the proceeds from its
initial offering, and was supplemented by permanent debt in the amount of $25.0
million. The Company intends to rely on operating cash flow to meet its
operating obligations, maintain working capital reserves, make cash
distributions to Class A and B unitholders, and grow the Company's equipment
portfolio through reinvestment of any remaining surplus cash available in
additional equipment.
The Manager had entered into a short-term joint $50.0 million credit facility.
As of August 12, 1997, PLM Equipment Growth Fund VI had $10.0 million in
outstanding borrowings; American Finance Group, Inc., a wholly-owned subsidiary
of PLM International, Inc., had $13.9 million in outstanding borrowings; and TEC
Acquisub, Inc. had $7.2 million in outstanding borrowings. Neither the Company,
PLM Equipment Growth Fund V, PLM Equipment Growth Fund IV, nor PLM Equipment
Growth & Income Fund VII had any outstanding borrowings. The Company's senior
note agreement limits the borrowings available to the Company under this
short-term credit facility to the lesser of $10.0 million or 50% of the
outstanding senior note balance.
For the six months ended June 30, 1997, the Company generated sufficient
operating cash flow to meet its operating obligations and pay distributions to
Class A and B unitholders.
(III) OUTLOOK FOR THE FUTURE
Several factors may affect the Company's operating performance in 1997 and
beyond, including changes in the markets for the Company's equipment and changes
in the regulatory environment in which the equipment operates.
The Company intends to use excess cash flow, after payment of expenses, the
maintenance of working capital reserves, and cash distributions, to acquire
additional equipment during the first six years of the Company's operations. The
Manager believes these acquisitions may cause the Company to generate additional
earnings and cash flow for the Company.
The Company relies on operating cash flow to meet its operating obligations,
maintain working capital reserves, make cash distributions to Class A and B
unitholders, and grow the Company's equipment portfolio through reinvestment of
any remaining surplus cash available in additional equipment.
<PAGE>
(IV) FORWARD LOOKING INFORMATION
Except for historical information contained herein, the discussion in this Form
10-Q contains forward-looking statements that involve risks and uncertainties,
such as statements of the Company's plans, objectives, expectations, and
intentions. The cautionary statements made in this Form 10-Q should be read as
being applicable to all related forward-looking statements wherever they appear
in this Form 10-Q. The Company's actual results could differ materially from
those discussed here.
(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.
PROFESSIONAL LEASE MANAGEMENT
INCOME FUND I, L.L.C.
By: PLM Financial Services, Inc.
Manager
Date: August 12, 1997 By: /s/ Richard Brock
------------------
Richard Brock
Vice President and
Corporate Controller
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