UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
FORM 10-K
[x] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the fiscal year ended December 31, 1995.
[ ] 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 33-657
-----------------------
PLM Transportation Equipment Partners IXD 1986
Income Fund
(Exact name of registrant as specified in its charter)
California 94-2992021
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Market, Steuart Street Tower
Suite 900, San Francisco, CA 94105-1301
(Address of principal (Zip code)
executive offices)
Registrant's telephone number, including area code (415) 974-1399
-----------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ______
PART I
ITEM 1. BUSINESS
(A) Background
On October 5, 1985, PLM Financial Services, Inc. (FSI), a wholly-owned
subsidiary of PLM International, Inc. (PLM International), filed a registration
statement on Form S-1 with the Securities and Exchange Commission. The Form S-1
was filed with respect to a proposed offering of 160,000 limited partnership
units (Units) in an equipment leasing program, PLM Transportation Equipment
Partners IX 1986 Income Fund (Registrant). The Registrant's program consisted of
four California limited partnerships: PLM Transportation Equipment Partners IXA
1986 Income Fund, PLM Transportation Equipment Partners IXB 1986 Income Fund,
PLM Transportation Equipment Partners IXC 1986 Income Fund, and PLM
Transportation Equipment Partners IXD 1986 Income Fund (each individually, the
Partnership, together, the Partnerships). The Registrant's offering became
effective on January 7, 1986. The Registrant's Partnerships engage in the
business of owning and leasing a diversified portfolio of transportation
equipment to be operated or leased to a variety of corporate lessees. FSI is the
general partner (General Partner) of each of the Partnerships.
The Partnerships were formed to engage in the business of owning and
managing diversified pools of transportation equipment. The objectives of each
Partnership are to invest in equipment which will:
(i) generate cash distributions to investors on a quarterly basis;
(ii)maintain substantial residual value for continued operation and
ultimate sale;
(iii) provide certain federal income tax benefits, including investment tax
credits, to the extent available, in 1986 and tax deductions in excess of
Partnership income during early years which investors may use to offset taxable
income from other sources.
(iv)to endeavor to reduce certain of the risks of equipment ownership by
acquiring a diversified portfolio of varying equipment types.
The 1986 Tax Reform Act (the Act) substantially altered some of the
Partnership objectives. Specifically, the ability of investors in the
Partnership to use tax deductions in excess of Partnership income to offset
taxable income from other sources was not only limited in duration by the Act
(no offsets were allowed after 1990), but also limited to a declining percentage
that could be applied against other income beginning in 1987.
The Act also eliminated the investment tax credit.
(B) Management of Partnership Equipment
The Partnerships have entered into equipment management agreements with PLM
Investment Management, Inc. (IMI), a wholly-owned subsidiary of FSI, for the
management of the equipment. IMI has agreed to perform services necessary to
manage transportation equipment on behalf of the Partnerships and to perform or
contract for the performance of obligations of the lessor under the
Partnerships' leases. In consideration for its services and pursuant to the
Partnership Agreements, IMI is entitled to a monthly management fee. Management
fees are calculated as 10% of cash flow available for distribution and are
payable monthly (See Financial Statements, notes 1 and 2.)
TEP IXA
The offering of limited partnership units (the "Units") of PLM Transportation
Equipment Partners IXA 1986 Income Fund (TEP IXA or the Partnership) closed on
May 23, 1986, having sold 24,285 Units. FSI contributed $100 for its 1% general
partnership interest in TEP IXA.
As of December 31, 1995, TEP IXA owned the following equipment: 1 Metro III
commuter aircraft, 90 trailers, 125 marine containers, and 10 tank railcars.
During 1995, TEP IXA sold or disposed of one trailer and 10 marine containers.
Additionally, the Partnership entered into a sales-type lease related to a
commuter aircraft with a carrying value of $505,450 for a sales price equal to
the present value of the future lease payments ($1,090,000) less a $50,000
reserve for estimated future costs of sale. Gross lease payments of $234,000
will be received over a one-year period, commencing in June 1995, with an
additional balloon payment of $919,012 due at the end of the lease term. At
December 31, 1995, approximately 99% of the Partnership's trailer equipment was
being operated in rental yards owned and maintained by an affiliate of the
General Partner. Revenues collected under short-term rental agreements with the
rental yards' customers are distributed monthly to the owners of the related
equipment. Direct expenses associated with the equipment and an allocation of
other direct expenses of the rental yard operations are billed to the
Partnership. All equipment was either held in short-term rental facilities
operated by an affiliate or on lease as of December 31, 1995. Lessees of the TEP
IXA equipment portfolio include, but are not limited to Burlington Northern
Railroad Company and Trans Ocean Ltd.
TEP IXB
The offering of Units of PLM Transportation Equipment Partners IXB 1986 Income
Fund (TEP IXB or the Partnership) closed on September 29, 1986, having sold
17,460 Units. FSI contributed $100 for its 1% general partnership interest in
TEP IXB.
As of December 31, 1995, TEP IXB owned the following equipment: 1 Metro III
commuter aircraft (50% owned by TEP IXB and 50% owned by an affiliated
partnership), 41 refrigerated over-the-road trailers, 30 marine containers, 14
covered hopper railcars, and one sidelift. During 1995, TEP IXB sold or disposed
of 22 trailers and four marine containers. At December 31, 1995, all of the
partnership's trailer equipment was being operated in rental yards owned and
maintained by an affiliate of the General Partner. Revenues collected under
short-term rental agreements with the rental yards' customers are distributed
monthly to the owners of the related equipment. Direct expenses associated with
the equipment and an allocation of other direct expenses of the rental yard
operations are billed to the Partnership. With the exception of one trailer and
one sidelift, all equipment was either held in short-term rental facilities
operated by an affiliate or was on lease as of December 31, 1995. Lessees of the
TEP IXB equipment portfolio include but are not limited to Sky West Airlines,
Inc., Trans Ocean Ltd., and Burlington Northern Railroad Company.
TEP IXC
The offering of Units of PLM Transportation Equipment Partners IXC 1986 Income
Fund (TEP IXC or the Partnership) closed on December 22, 1986, having sold
16,914 Units. FSI contributed $100 for its 1% general partnership interest in
TEP IXC.
As of December 31, 1995, TEP IXC owned the following equipment: 1 Metro III
commuter aircraft (30% owned by TEP IXC and 70% owned by an affiliated
partnership), 149 trailers, six refrigerated marine containers, and five covered
hopper railcars. During 1995, TEP IXC sold or disposed of four trailers, five
railcars, and one marine container. At December 31, 1995, approximately 99% of
the Partnership's trailer equipment was being operated in rental yards owned and
maintained by an affiliate of the General Partner. Revenues collected under
short-term rental agreements with the rental yards' customers are distributed
monthly to the owners of the related equipment. Direct expenses associated with
the equipment and an allocation of other direct expenses of the rental yard
operations are billed to the Partnership. All equipment was either held in
short-term rental facilities operated by an affiliate or on lease as of December
31, 1995. The lessees of the TEP IXC equipment portfolio include but are not
limited to Pel Air, Continental Baking Co., Greenbrier Leasing Corporation, and
Trans Ocean Ltd.
TEP IXD
The offering of Units of PLM Transportation Equipment Partners IXD 1986 Income
Fund (TEP IXD or the Partnership) closed on March 30, 1987, having sold 9,529
Units. FSI contributed $100 for the 1% general partnership interest in TEP IXD.
As of December 31, 1995, TEP IXD owned the following equipment: 55 trailers
and 171 marine containers. During 1995, TEP IXD sold or disposed of 45 marine
containers and 30 trailers. At December 31, 1995, all of the Partnership's
trailer equipment was being operated in rental yards owned and maintained by an
affiliate of the General Partner. Revenues collected under short-term rental
agreements with the rental yards' customers are distributed monthly to the
owners of the related equipment. Direct expenses associated with the equipment
and an allocation of other direct expenses of the rental yard operations are
billed to the Partnership. All equipment in the TEP IXD portfolio was either
held in short-term rental facilities operated by an affiliate or on lease as of
December 31, 1995. Lessees of the TEP IXD equipment portfolio include but are
not limited to Trans Ocean Ltd.
(C) Competition
(1) Operating Leases vs. Full Payout Leases.
Generally, the equipment owned by the Partnerships is leased out on an operating
lease basis wherein the rents owed during the initial noncancelable term of the
lease are insufficient to recover the Partnerships' purchase price of the
equipment. The short to mid-term nature of operating leases generally commands a
higher rental rate than longer term, full payout leases and offers lessees
relative flexibility in their equipment commitment. In addition, the rental
obligation under the operating lease need not be capitalized on the lessee's
balance sheet.
The Partnerships encounter considerable competition from lessors utilizing
full payout leases on new equipment, i.e., leases which have terms equal to the
expected economic life of the equipment. Full payout leases are written for
longer terms and for lower rates than the Partnerships offer. While some lessees
prefer the flexibility offered by a shorter term operating lease, other lessees
prefer the rate advantages possible with a full payout lease. Competitors of the
Partnerships may write full payout leases at considerably lower rates, or larger
competitors with a lower cost of capital may offer operating leases at lower
rates, and as a result, the Partnerships may be at a competitive disadvantage.
(2) Manufacturers and Equipment Lessors
The Partnerships also compete with equipment manufacturers who offer operating
leases and full payout leases. Manufacturers may provide ancillary services
which the Partnerships cannot offer, such as specialized maintenance services
(including possible substitution of equipment), training, warranty services, and
trade-in privileges.
The Partnerships compete with many equipment lessors, including, among
others, ACF Industries, Inc. (Shippers Car Line Division), General Electric
Railcar Services Corporation, Greenbrier Leasing Company, Polaris Aircraft
Leasing Corp., and other limited partnerships which lease the same types of
equipment.
(D) Demand
The Partnerships invested in transportation-related capital equipment. With the
exception of aircraft leased to passenger air carriers, the Partnerships'
equipment is used primarily for the transport of materials. The following
describes the markets for the Partnerships' equipment:
(1) Commuter Aircraft
In recent years, growth in the commuter aircraft industry has outpaced that of
larger carriers. As larger operators have increasingly adopted a regional hub
concept, air traffic has grown among commuter/regional airlines providing feeder
service into these hubs. Many smaller communities served by 19-seat passenger
aircraft do not generate sufficient air traffic to justify the 29 to 100-seat
aircraft currently being acquired by larger operators. Recently, however, the
U.S. Federal Aviation Administration (FAA) implemented regulatory actions
requiring 19-seat passenger aircraft to come under the same operating rules as
commercial jets. These changes will significantly impact direct operating costs
for such smaller aircraft and will require the General Partner to remarket the
Partnerships' Metro IIIs into international markets not affected by these
regulations, a move it has already undertaken due to the higher lease rates
achievable in these markets. Further, the industry-wide trend toward larger
regional aircraft is expected to have a negative impact on demand for
19-passenger aircraft in the short term.
(2) Marine Containers
The container market ended 1994 with expectations that the strengthening market
experienced late in the year would continue into 1995. Such was not the case as
the usual seasonal slowdown during the post-Christmas time period extended
longer than expected, and utilization in 1995 did not achieve 1994 levels. While
per diem rates increased somewhat by summertime, they did not fully recover from
the 8-12% decrease experienced during the preceding two years. Aggressive
pricing by several major leasing companies attempting to capture greater market
share is expected to put further pressure on refrigerated container utilization
and per diem rates. In the secondary markets, there continues to be significant
increases in supply as primarily operators dispose of large numbers of older
equipment. Since the Partnerships own predominately older containers, they will
continue to be impacted by these industry trends.
During 1996, major leasing companies are expected to reduce purchases of
new equipment in response to soft market conditions. This anticipated reduction
in supply should lead to a strengthening in utilization and per diem rates later
in the year as demand catches up to supply.
(3) Railcars
Nearly all the major railroads reported substantial revenue increases during
1995. As additional industry consolidation is expected in 1996, these mergers
should produce further operating efficiencies leading to continued increases in
revenues and profits. Car loadings rose approximately 3% during 1995 with
chemicals, metals, and grain experiencing the largest gains. Car demand for
liquefied petroleum gas and liquid fertilizer service was also strong throughout
the year.
The Partnerships' fleet experienced almost 100% utilization during 1995.
The few cars out of service were undergoing scheduled maintenance or repair. The
General Partner believes rates are at the top of the cycle for all types of cars
owned by the Partnerships. With demand continuing high, rental rates for most
types of cars owned by the Partnerships are expected to remain relatively strong
during 1996.
On the supply side, industry experts predict approximately 55,000 new car
builds and 40,000 retirements for a net gain of about 1.2% in the total U.S.
fleet during 1996. While car builders are still busy, orders are not coming in
as rapidly as in the last two years, so it is likely additions will not
significantly outpace retirements this year.
(4) Over-the-Road Dry Trailers:
The over-the-road dry trailer market remained strong in 1995 due to record
freight movements and equipment utilization. The General Partner achieved
excellent utilization levels in 1995 averaging over 85%. Current levels show
some signs of softening demand in comparison to the record-setting levels of
1994, when users encountered up to 18 months of backlog for new equipment
delivery. While new production is expected to decline over the next few years,
this should not dramatically affect utilization levels, as plenty of older,
obsolete equipment needs to be retired.
The General Partner continues to transfer trailers with expiring lease
terms to the short-term trailer rental facilities operated by PLM Rental, Inc.
The General Partner believes the strong performance of units in these rental
facilities reflects the demand for short-term leases mentioned above and expects
this trend to continue as long as the current shortage of trailers exists.
(5) Over-the-Road Refrigerated Trailers:
After a record year in 1994, demand for refrigerated trailers softened in 1995.
This softened demand affected overall performance in 1995. Adverse weather
conditions reduced the volume of fresh fruit and produce available, so
refrigerated equipment operators focused on hauling generic freight, adding to
the dry freight market while reducing capacity and demand in
temperature-controlled markets.
Heavy consolidation in the trucking industry induced carriers to work off
excess equipment inventory from 1994 levels. However, inventory is expected to
return to more normal levels in 1996 and continue throughout the rest of the
decade, as excess capacity is retired, newer refrigeration technology standards
become more defined, and environmentally-damaging refrigerants are phased out of
service.
(E) Government Regulations
The use, maintenance, and ownership of equipment is regulated by federal, state,
local, and/or foreign governmental authorities. Such regulations may impose
restrictions and financial burdens on the Partnerships' ownership and operation
of equipment, which may affect the Partnerships' liquidity. Changes in
government regulations, industry standards, or deregulation may also affect the
ownership, operation, and resale of the equipment. Substantial portions of the
Partnerships' equipment portfolio are either registered or operated
internationally. Such equipment may be subject to adverse political, government,
or legal actions, including the risk of expropriation or loss arising from
hostilities. Certain of the Partnerships' equipment is subject to extensive
safety and operating regulations which may require the removal from service or
extensive modification, of such equipment to meet these regulations at
considerable cost to the Partnership. Such regulations include (but are not
limited to):
(1) the Montreal Protocol on Substances that Deplete the Ozone Layer
and the U.S. Clean Air Act Amendments of 1990 which call for the
control and eventual replacement of substances that have been
found to cause or contribute significantly to harmful effects on
the stratospheric ozone layer and which are used extensively as
refrigerants in refrigerated marine cargo containers,
over-the-road trailers, etc.;
(2) the U.S. Department of Transportation's Hazardous Materials
Regulations which regulate the classification of and packaging
requirements for hazardous materials and which apply particularly
to the Partnerships' tankcars.
ITEM 2. PROPERTIES
The Partnerships neither own nor lease any properties other than the equipment
they have purchased for leasing purposes. At December 31, 1995, each Partnership
owned a portfolio of transportation equipment as described in Part I, Item 1. It
is not contemplated that any more equipment will be acquired.
The Partnerships maintain their principal offices at One Market, Steuart
Street Tower, Suite 900, San Francisco, California 94105-1301. All office
facilities are provided by FSI without reimbursement by the Partnerships.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Partnerships' limited partners during
the fourth quarter of its fiscal year ended December 31, 1995.
PART II
ITEM 5. MARKET FOR THE PARTNERSHIPS' EQUITY AND RELATED UNITHOLDER MATTERS
Pursuant to the terms of the Partnerships' Agreements, the General Partner is
generally entitled to a 1% interest in the profits and losses and distributions
of each Partnership. The General Partner also is entitled to a special
allocation of net profit or gains from sale of each Partnerships' assets during
the liquidation phase in an amount equal to one ninety-ninth of the aggregate of
the capital contribution made by the Limited Partners. The General Partner is
the sole holder of such interests. Ownership of the remaining 99% interest in
the profits and losses and distributions of the respective Partnerships is
represented as follows as of December 31, 1995:
TEP IXA TEP IXB TEP IXC TEP IXD
Holders of Limited
Partnership Units 1,008 614 533 328
There are several secondary exchanges which may purchase or facilitate
transactions of limited partnership units. Secondary markets are characterized
as having few buyers for limited partnership interests and, therefore, generally
are viewed as inefficient vehicles for the sale of partnership units. There is
no public market for the Units and none is likely to develop. Moreover, the
Units are subject to substantial restriction on transferability.
ITEM 6. SELECTED FINANCIAL DATA
Table 5, below, lists selected financial data for the
respective Partnerships:
TABLE 5
For the years ended December 31,
TEP IXA 1995 1994 1993 1992 1991
-------
--------------------------------------------------------------------------------------
Operating results:
Total revenues $ 1,144,180 $ 752,029 $ 764,823 $ 1,041,370 $ 1,363,689
Gain (loss) on disposition
of equipment 555,733 59,957 (53,590) 11,253 (29,549)
Net income (loss) 473,623 (132,809) (179,977) 203,877 396,001
At year-end:
Total assets $ 2,044,123 $ 1,855,487 $ 2,568,780 $ 3,413,824 $ 3,994,907
Total liabilities 43,300 30,418 111,336 68,331 39,768
Cash distributions $ 297,869 $ 499,566 $ 708,072 $ 813,523 $ 1,007,443
Per limited partnership unit:
Net income (loss) $ 19.31 $ (5.41) $ (7.34) $ 8.31 $ 16.14
Cash distributions $ 12.14 $ 20.37 $ 28.87 $ 33.16 $ 41.07
TEP IXB
Operating results:
Total revenues $ 671,144 $ 962,681 $ 956,072 $ 1,024,899 $ 1,123,151
Gain on disposition
of equipment 113,206 132,025 30,646 -- 14,108
Net income 83,006 279,472 282,593 386,866 383,457
At year-end:
Total assets $ 1,158,613 $ 1,691,187 $ 2,275,596 $ 2,760,063 $ 3,159,146
Total liabilities 92,454 33,858 35,912 18,337 19,651
Cash distributions $ 674,176 $ 861,827 $ 784,635 $ 784,635 $ 724,935
Per limited partnership unit:
Net income $ 4.71 $ 15.85 $ 16.02 $ 21.94 $ 21.74
Cash distributions $ 38.23 $ 48.87 $ 44.49 $ 44.49 $ 41.10
For the years ended December 31,
TEP IXC 1995 1994 1993 1992 1991
-------
--------------------------------------------------------------------------------------
Operating results:
Total revenues $ 916,158 $ 970,110 $ 837,998 $ 959,605 $ 869,896
Gain (loss) on disposition
of equipment 229,599 2,561 14,139 (108,915) (22,314)
Net income (loss) 259,541 154,881 36,888 65,987 (132,285)
At year-end:
Total assets $ 1,189,380 $ 1,849,532 $ 2,057,830 $ 2,494,437 $ 3,112,094
Total liabilities 44,063 56,790 31,384 21,764 17,141
Cash distributions $ 906,966 $ 388,585 $ 483,115 $ 688,267 $ 277,542
Per limited partnership unit:
Net income (loss) $ 15.19 $ 9.07 $ 2.16 $ 3.86 $ (7.74)
Cash distributions $ 53.09 $ 22.74 $ 28.28 $ 40.29 $ 16.24
TEP IXD
Operating results:
Total revenues $ 374,362 $ 583,442 $ 743,878 $ 790,599 $ 642,579
Gain on disposition
of equipment 83,235 17,133 53,478 94,829 7,750
Net income $ 46,051 $ 193,690 $ 305,232 $ 269,939 $ 132,859
At year-end:
Total assets $ 575,694 $ 1,390,092 $ 1,600,584 $ 1,715,979 $ 2,112,364
Total liabilities 8,338 5,060 10,588 7,221 64,018
Cash distributions $ 863,727 $ 398,654 $ 423,994 $ 609,527 $ 281,837
Per limited partnership unit:
Net income $ 4.78 $ 20.12 $ 31.71 $ 28.04 $ 13.80
Cash distributions $ 89.74 $ 41.42 $ 44.05 $ 63.33 $ 29.28
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources
(A) Sources
The Partnerships' primary source of liquidity is operating cash flow. Proceeds
realized from the sale or disposal of equipment are generally distributed to the
partners. The Partnerships' original source of capital was proceeds from the
initial public offering of limited partnership units.
(B) Asset Sales
Equipment sales and dispositions prior to the Partnerships' planned liquidation
phase generally result from either the exercise by lessees of fair market value
purchase options provided for in certain leases, or the payment of stipulated
loss values on equipment lost or disposed of during the time it is subject to
lease agreements. Such disposal of equipment results unpredictably from the
wear, tear, and general risk of normal operations.
(C) Market Values
In March 1995, the Financial Accounting Standards Board (FASB) issued Statement
No. 121, "Accounting for the Impairment of Long-Lived Assets and Long-Lived
Assets to be Disposed Of" (SFAS 121). This standard is effective for years
beginning after December 15, 1995. The Partnership adopted SFAS 121 during 1995,
the effect of which was not material as the method previously employed by the
Partnership was consistent with SFAS 121. In accordance with SFAS 121, the
General Partner reviews the carrying value of its equipment portfolio at least
annually in relation to expected future market conditions for the purpose of
assessing recoverability of the recorded amounts. If projected future lease
revenue plus residual values are less than the carrying value of the equipment,
a loss on revaluation is recorded. No adjustments to reflect impairment of
individual equipment carrying values were required for the year ended December
31, 1995.
As of December 31, 1995, the General Partner estimated the current fair
market value of each Partnerships' equipment portfolio to be approximately :
$2.9 million, $1.6 million, $1.9 million and $0.92 million for TEP IXA, TEP IXB,
TEP IXC and TEP IXD, respectively.
(D) Government Regulations
The General Partner operates the Partnerships' equipment in accordance with
current regulations (see Item 1 (E) Government Regulations). However, the
continuing implementation of new or modified regulations by some of the
authorities mentioned previously, or others, may adversely affect the
Partnerships' ability to continue to own or operate equipment in their
portfolio. Additionally, regulatory systems vary from country to country, which
may increase the burden to the Partnerships of meeting regulatory compliance for
the same equipment operated between countries. These on-going changes in the
regulatory environment, both in the U.S. and internationally, cannot be
predicted with any certainty and thus preclude the General Partner from
accurately determining the impact of such changes on Partnership operations,
purchases and sales of equipment.
(E) Future Outlook
The General Partner intends to continue its strategy of closely matching the
level of cash distributions to that of net operating cash flows. However, as
stated above, the difficulty in predicting market conditions precludes the
General Partner from accurately determining the impact of this strategy on
liquidity. The Partnerships will enter into their respective liquidation phase
beginning in 1996 and will, pursuant to the original operating plan, continue to
market equipment for sale as current lease terms expire. The General Partner has
not planned any expenditures past January 1, 1996, nor is it aware of any
contingencies, that would require capital resources additional to those
discussed above.
(F) Results of Operations - Year to Year Detail Comparison
Comparison of the Registrant's Operating Results for the Years Ended December
31, 1995 and 1994
TEP IXA
(A) Revenues
(1) Lease revenue decreased to $547,246 in 1995 from $682,844 in 1994. The
following table lists lease revenues earned by equipment type:
For the year ended
December 31,
1995 1994
---------------------------------
Trailers $ 324,821 $ 438,918
Marine containers 118,625 130,722
Rail equipment 103,800 95,954
Aircraft -- 17,250
=================================
$ 547,246 $ 682,844
=================================
The decline was due primarily to the following:
(a) Trailer revenue decreased $114,097 from 1994 levels due to the decline
in utilization in the short-term rental facilities in 1995 compared to 1994
levels, and the sale or disposal of 12 trailers, one yardster and one forklift
in 1994. Additionally, one trailer was disposed of in 1995;
(b) Aircraft revenue decreased $17,250 due to the sale of a commuter
aircraft in the second quarter of 1995 which was structured as a sales-type
lease. The income from this lease financing is now reported as interest income;
(c) Marine container revenue decreased $12,097 due to the disposal of 10
marine containers in 1995 and 6 in 1994, and a decline in utilization from 1994
levels;
(d) Rail revenue increased $7,846 from 1994 levels due to a rental credit
which was given to a current lessee in the first quarter of 1994.
(2) Interest and other income increased to $41,201 in 1995 from $9,228 in 1994
due primarily to an increase of $31,000 in finance lease income as the
Partnership entered into a sales-type lease related to a commuter aircraft, and
secondarily to higher interest rates earned on invested cash.
(3) For the year ended December 31, 1995, the Partnership realized a gain of
$555,733 on the sale or disposition of one trailer, one commuter aircraft, and
10 marine containers, compared to the same period in 1994, where the Partnership
realized a gain of $59,957 on the sale or disposition of 12 trailers, one
yardster, one forklift, and six marine containers. The Partnership will receive
future lease payments totaling $234,000 with an additional balloon payment of
$919,012 at the end of the one-year lease term relating to the sales type lease
of the commuter aircraft.
(B) Expenses
Total expenses for the years ended December 31, 1995 and 1994, were $670,557 and
$884,838, respectively. The decrease in 1995 expenses was attributable primarily
to decreased bad debt expense and depreciation expense, offset by increases in
repairs and maintenance and general and administrative expense.
(1) Direct Operating Expenses (defined as repairs and maintenance and insurance)
increased to $192,738 in 1995 from $132,056 in 1994. This increase was due to
the refurbishment required on the Partnership's aircraft which came off-lease in
the beginning of 1995, partially offset by a decrease in repairs and maintenance
for trailers in the short-term rental facilities.
(2) Indirect Operating Expenses (defined as depreciation expense, management
fees, bad debt expense and general and administrative expenses) decreased to
$477,819 in 1995 from $752,782 in 1994. This change resulted from:
(a) a decrease of $167,819 in bad debt expense due to the change in
management's estimate of doubtful accounts in 1995;
(b) a decrease in depreciation expense of $124,901 from 1994 levels
resulting from the sale or disposal of one trailer, one commuter aircraft, and
10 marine containers in 1995;
(c) an increase in general and administrative expense of $18,010 from 1994
levels due primarily to higher administrative costs associated with the
short-term rental facilities in 1995 compared with 1994 levels due to a credit
of $16,000 which was received on the short-term rental facilities in 1994 due to
the closing one of the short-term rental facilities in 1994, no similar credit
was received in 1995 and an increase in audit fees.
(C) Net Income
As a result of all of the foregoing, net income for the year ended December 31,
1995, was $473,623 compared with a net loss of $132,809 for the year ended
December 31, 1994. In 1995, TEP IXA distributed $294,890 to the Limited
Partners, or $12.14 per Unit.
The Partnership's performance for the year ended December 31, 1995, is not
necessarily indicative of future periods.
TEP IXB
(A) Revenues
(1) Lease revenue decreased to $535,422 in 1995 from $813,960 in 1994. The
following table lists lease revenues earned by equipment type:
For the year ended
December 31,
1995 1994
---------------------------------
Trailers and tractors $ 224,499 $ 401,393
Aircraft 194,371 194,371
Rail equipment 81,637 178,641
Marine containers 34,915 39,555
=================================
$ 535,422 $ 813,960
=================================
The decline was due primarily to the following:
(a) Trailer and tractor revenue decreased $176,894 due to the sale of 22
trailers during 1995, and a slight decline in utilization in the short-term
rental facilities;
(b) Railcar revenue decreased $97,004 due to the sale of the letro porter
in the third quarter of 1994 and the off-lease status of the sidelift at the
beginning of 1995;
(c) Marine container revenue decreased $4,640 due to the disposal of four
containers in 1995.
(2) Interest and other income increased to $22,516 in 1995 from $16,696 in 1994
due primarily to higher interest rates and higher cash balances in interest
bearing accounts.
(3) For the year ended December 31, 1995, the Partnership realized a gain of
$113,206 on the sale of 22 trailers and the disposition of four marine
containers, compared to the same period in 1994, where the Partnership realized
a gain of $132,025 on the sale of 13 tractors, six trailers, and one letro
porter and the disposition of five marine containers.
(B) Expenses
Total expenses for the years ended December 31, 1995 and 1994 were $588,138 and
$683,209, respectively. The decrease in 1995 expenses was attributable primarily
to decreased depreciation expense, management fees to affiliates, and bad debt
expense, partially offset by increased repairs and maintenance and general and
administrative expenses.
(1) Direct Operating Expenses (defined as repairs and maintenance and insurance)
increased to $144,020 in 1995 from $127,540 in 1994. This change resulted
primarily from an increase in the number of trailers coming off term leases
requiring refurbishment prior to transitioning to the short-term rental
facilities operated by an affiliate of the General Partner, and repairs required
on several of the Partnership's railcars.
(2) Indirect Operating Expenses (defined as depreciation and amortization
expense, management fees, bad debt expense and general and administrative
expenses) decreased to $444,118 in 1995 from $555,669 in 1994. This change
resulted primarily from:
(a) a decrease in depreciation expense of $102,009 from 1994 levels
reflecting asset sales during 1995;
(b) a decrease in management fees to affiliate of $11,895 from 1994 levels
due to the lower levels of operating cash flow in 1995 compared to 1994.
Management fees are calculated monthly as the greater of 10% of the
Partnership's Operating Cash Flow, or 1/12 of 1/2% of the Partnership's Gross
Proceeds as defined in the Limited Partnership Agreement;
(c) a decrease of $7,575 in bad debt expense due to change in management's
estimate of doubtful accounts in 1995;
(d) an increase in general and administrative expenses of $9,928 from 1994
levels. This reflects the increased administrative costs associated with the
short-term rental facilities due to an increased volume of trailers operating in
the facilities in 1995 as compared to 1994, and increase in audit fee.
(C) Net Income
As a result of all of the foregoing, net income for the year ended December 31,
1995, was $83,006 compared with net income of $279,472 for the year ended
December 31, 1994. In 1995, TEP IXB distributed $667,434 to the Limited
Partners, or $38.23 per Unit.
The Partnership's performance for the year ended December 31, 1995, is not
necessarily indicative of future periods.
TEP IXC
(A) Revenues
(1) Lease revenue decreased to $667,893 in 1995 from $958,179 in 1994. The
following table lists lease revenues earned by equipment type:
For the year ended
December 31,
1995 1994
---------------------------------
Trailers and tractors $ 546,927 $ 767,520
Rail equipment 41,059 104,808
Aircraft 68,400 76,088
Marine containers 11,507 9,763
=================================
$ 667,893 $ 958,179
=================================
The decrease was due to the following:
(a) Trailer revenue decreased $220,593 in 1995 as compared to 1994 levels,
due primarily to lower utilization in the short-term rental facilities in 1995,
as compared to 1994, and the sale of four trailers in 1995;
(b) Rail revenue decreased $63,749 in 1995 compared to 1994. The decrease
was due to the sale of five twin stack railcars in the first quarter of 1995;
(c) Aircraft revenue decreased $7,688 in 1995 as compared to 1994 levels.
The decrease resulted from the terms of the original lease agreement which
called for a decrease in rate in 1995.
(2) Interest and other income increased to $18,666 in 1995 from $9,370 in 1994
due primarily to higher interest rates and higher cash balances in interest
bearing accounts.
(B) Expenses
Total expenses for the years ended December 31, 1995 and 1994 were $656,617 and
$815,229, respectively. The decrease in 1995 expenses was attributable primarily
to decreases in bad debt expenses, depreciation expense, general and
administrative expense, repairs and maintenance, and management fees to
affiliate.
(1) Direct Operating Expenses (defined as repairs and maintenance and insurance)
decreased to $162,539 in 1995 from $187,140 in 1994. This decrease was due to a
decrease in the number of trailers coming off term lease requiring refurbishment
prior to transitioning to the short-term rental facilities operated by an
affiliate of the General Partner.
(2) Indirect Operating Expenses (defined as depreciation expense, management
fees, bad debt expense and general and administrative expenses) increased to
$494,078 in 1995 from $628,089 in 1994. This change resulted primarily from:
(a) a decrease in bad debt expense of $46,501 due to change in management's
estimate of doubtful accounts in 1995;
(b) a decrease in depreciation expense of $45,141 from 1994 reflecting
asset sales during 1995 and 1994;
(c) a decrease in general and administrative expenses of $31,796 primarily
due to the decreased administrative costs associated with the short-term rental
facilities due to decline in utilization in the short-term rental facilities,
offset by an increase in audit fee;
(d) a decrease in management fees of $10,573 due to decreased levels of
operating cash flow during 1994. Management fees are calculated as the greater
of 10% of the Partnership's Operating Cash Flow, or 1/12 of 1/2% of the
Partnership's Gross Proceeds as defined in the Limited Partnership Agreement.
(3) During 1995, the Partnership realized a gain of $229,599 on the sale of four
trailers, five railcars, and the disposition of one marine container, compared
to the same period in 1994 when the Partnership realized a gain of $2,561 on the
sale of four trailers and the disposition of three marine containers.
(C) Net Income
As a result of all of the foregoing, net income for the year ended December 31,
1995 was $259,541 compared with net income of $154,881 for the year ended
December 31, 1994. In 1995, TEP IXC distributed $897,896 to the Limited
Partners, or $53.09 per Unit.
The Partnership's performance for the year ended December 31, 1995, is not
necessarily indicative of future periods.
TEP IXD
(A) Revenues
(1) Lease revenue decreased to $267,141 in 1995 from $545,035 in 1994. The
following table lists lease revenues earned by equipment type:
For the year ended
December 31,
1995 1994
---------------------------------
Trailers $ 188,529 $ 456,511
Marine containers 78,612 88,524
=================================
$ 267,141 $ 545,035
=================================
The decrease was due to the following:
(a) Trailer revenue decreased $267,982 in 1995 as compared to 1994 levels,
due to the sale of 30 trailers during 1995 and lower utilization in short-term
rental facilities operated by an affiliate of the General Partner;
(b) Marine container revenue decreased $9,912 in 1995 as compared to 1994
levels, primarily due to a decline in utilization levels in 1995 and the
disposal of 45 20-foot dry marine containers during 1995.
(2) Interest and other income increased to $23,986 in 1995 from $21,274 in 1994
due to an increase in interest rates and higher cash balances in interest
bearing accounts.
(3) Gain on disposition of equipment of $83,235 in 1995 resulted from the sale
or disposal of 45 marine containers and 30 trailers. The gain on disposition of
equipment in 1994 totaled $17,133 from the sale or disposal of 29 marine
containers and two trailers.
(B) Expenses
Total expenses for the years ended December 31, 1995 and 1994 were $328,311 and
$389,752, respectively. The decrease in 1995 expenses was attributable primarily
to decreased depreciation and management fees, offset slightly by an increase in
bad debt expense, repairs and maintenance, and general and administrative
expenses.
(1) Direct Operating Expenses (defined as repairs and maintenance and insurance)
increased to $60,337 in 1995 from $57,449 in 1994. This change resulted
primarily from the refurbishment of 30 trailers prior to being sold.
(2) Indirect Operating Expenses (defined as depreciation and amortization
expense, management fees, bad debt expense, and general and administrative
expenses) decreased to $267,974 in 1995 from $332,033 in 1994. This change
resulted from:
(a) a decrease in depreciation expense of $61,957 from 1994 levels
reflecting assets sales during 1995 and 1994;
(b) a decrease in management fees to affiliate of $13,499 from 1994 levels
due to the lower level of operating cash flow during 1995. Management fees are
calculated as the greater of 10% of the Partnership's operating cash flow, or
1/12 of 1/2% of the Partnership's Gross Proceeds as defined in the Limited
Partnership Agreement;
(c) an increase of $9,471 in bad debt expense due to change in management's
estimate of doubtful accounts in 1995.
(C) Net Income
As a result of all of the foregoing, net income for the year ended December 31,
1995 was $46,051 compared with net income of $193,690 for the year ended
December 31, 1994. In 1995, TEP IXD distributed $855,090 to the Limited
Partners, or $89.74 per Unit.
The Partnership's performance for the year ended December 31, 1995, is not
necessarily indicative of future periods.
Comparison of the Registrant's Operating Results for the Years Ended December
31, 1994 and 1993
TEP IXA
(A) Revenues
(1) Lease revenue decreased to $682,844 in 1994 from $810,530 in 1993. The
following table lists lease revenues earned by equipment type:
For the year ended
December 31,
1994 1993
---------------------------------
Trailers $ 438,918 $ 537,584
Marine containers 130,722 151,216
Rail equipment 95,954 121,730
Aircraft 17,250 --
=================================
$ 682,844 $ 810,530
=================================
The decline was due primarily to the following:
(a) Trailer revenue decreased $98,666 from 1993 levels due to the sale or
disposal of 12 trailers, one yardster and one forklift, offset, in part by an
increase in trailer revenues due to more trailers operating in short-term rental
facilities in 1994, as compared to 1993. Trailers operating in short-term rental
facilities generate higher per day revenue than term lease trailers;
(b) Rail revenue decreased $25,776 from 1993 levels due to lower re-leased
rate on the sidelift;
(c) Marine container revenue decreased $20,494 due to the disposal of three
20 foot reefers and three 20 foot folding-end flat marine containers in 1994,
and a decline in utilization from 1993 levels;
(d) Aircraft revenue increased $17,250 due to the re-lease of an aircraft
in December of 1994. This aircraft has been off-lease since the second quarter
of 1992.
(2) Interest and other income increased to $9,228 in 1994 from $7,883 in 1993
due primarily to higher interest rates earned on invested cash.
(3) For the year ended December 31, 1994, the Partnership realized a gain of
$59,957 on the sale or disposition of 12 trailers, one yardster, one forklift,
and six marine containers, compared to the same period in 1993, where the
Partnership realized a loss of $53,590 on the sale or disposition of 15 trailers
and four forklifts.
(B) Expenses
Total expenses for the years ended December 31, 1994 and 1993 were $884,838 and
$944,800, respectively. The decrease in 1994 expenses was attributable primarily
to decreased repairs and maintenance, general and administrative expenses,
depreciation expense, offset by increases in management fees to affiliate and
bad debt expense.
(1) Direct Operating Expenses (defined as repairs and maintenance and insurance)
decreased to $132,056 in 1994 from $151,214 in 1993. This decrease was due to
the repairs and maintenance required on the Partnership's off-lease aircraft
during 1993, partially offset by an increase in the number of trailers coming
off term lease in 1994, requiring refurbishment prior to transitioning into the
short-term rental facilities operated by an affiliate of the General Partner.
(2) Indirect Operating Expenses (defined as depreciation expense, management
fees, bad debt expense and general and administrative expenses) decreased to
$752,782 in 1994 from $780,186 in 1993. This change resulted from:
(a) a decrease in depreciation expense of $37,812 from 1993 levels
resulting from the sale or disposal of 12 trailers, one yardster, one forklift,
and six marine containers in 1994;
(b) a decrease in general and administrative expense of $22,312 from 1993
levels due primarily to lower administrative costs associated with the
Partnership, partially offset by increases in certain trailer expenses
associated with an increased number of the Partnership's trailers operating in
the rental facilities in 1994;
(c) an increase in management fees to affiliate of $20,011 from 1993 levels
due to changes in the level of operating cash flow between the two years.
Management fees are calculated monthly as the greater of 10% of Partnership's
Operating Cash Flow, or 1/12 of 1/2% of the Partnership's Gross Proceeds as
defined in the Limited Partnership Agreement;
(d) an increase of $12,709 in bad debt expense due to General Partner's
evaluation of the collectibility of trade receivables from trailer rental yard
lessees.
(3) Loss on revaluation of equipment in 1993 resulted from the Partnership
reducing the carrying value of a forklift to its current estimated net
realizable value. No loss on revaluation of equipment was required in 1994.
(C) Net Loss
As a result of all of the foregoing, net loss for the year ended December 31,
1994 was $132,809 compared with a net loss of $179,977 for the year ended
December 31, 1993. In 1994, TEP IXA distributed $494,570 to the Limited
Partners, or $20.37 per Unit.
The Partnership's performance for the year ended December 31, 1994, is not
necessarily indicative of future periods.
TEP IXB
(A) Revenues
(1) Lease revenue decreased to $813,960 in 1994 from $914,205 in 1993. The
following table lists lease revenues earned by equipment type:
For the year ended
December 31,
1994 1993
---------------------------------
Trailers and tractors $ 401,393 $ 468,153
Aircraft 194,371 194,371
Rail equipment 178,641 200,624
Marine containers 39,555 51,057
=================================
$ 813,960 $ 914,205
=================================
The decline was due primarily to the following:
(a) Trailer and tractor revenue decreased $66,760 due to the sale of 13
tractors, one over-the-road reefer and five meat trailers, partially offset by
an increase in trailer revenues as trailers completed the transition from term
leases to operation in the short-term rental facilities. Trailers operating in
short-term rental facilities generate higher per day revenue than term lease
trailers;
(b) Railcar revenue decreased $21,983 due to the sale of the letro porter,
offset, in part, by an increase in revenue due to the re-lease of 13 railcars
off-lease in 1993;
(c) Marine container revenue decreased $11,502 due to the disposal of four
20 foot reefers and one 40 foot folding-end flat marine containers in 1994 and
lower utilization in 1994 compared to 1993.
(2) Interest and other income increased to $16,696 in 1994 from $11,221 in 1993
due primarily to higher interest rates and higher cash balances in interest
bearing accounts.
(3) For the year ended December 31, 1994, the Partnership realized a gain of
$132,025 on the sale of 13 tractors, six trailers, and one letro porter and the
disposition of five marine containers, compared to the same period in 1993,
where the Partnership realized a gain of $30,646 on the disposal of four
trailers.
(B) Expenses
Total expenses for the years ended December 31, 1994 and 1993 were $683,209 and
$673,479, respectively. The increase in 1994 expenses was attributable primarily
to increased repairs and maintenance, and general and administrative expenses,
partially offset by decreased depreciation expense and management fees to
affiliates.
(1) Direct Operating Expenses (defined as repairs and maintenance and insurance)
increased to $127,540 in 1994 from $61,048 in 1993. This change resulted
primarily from an increase in the number of trailers coming off term leases
requiring refurbishment prior to transitioning to the short-term rental
facilities operated by an affiliate of the General Partner, and repairs required
on several of the Partnership's railcars.
(2) Indirect Operating Expenses (defined as depreciation and amortization
expense, management fees, bad debt expense and general and administrative
expenses) decreased to $555,669 in 1994 from $612,431 in 1993. This change
resulted primarily from:
(a) a decrease in depreciation expense of $82,420 from 1993 levels
reflecting asset sales during 1994;
(b) a decrease in management fees to affiliate of $22,789 from 1993 levels
due to the lower levels of operating cash flow in 1994 compared to 1993.
Management fees are calculated monthly as the greater of 10% of the
Partnership's Operating Cash Flow, or 1/12 of 1/2% of the Partnership's Gross
Proceeds as defined in the Limited Partnership Agreement;
(c) an increase in general and administrative expenses of $50,327 from 1993
levels. This reflects the increased administrative costs associated with the
short-term rental facilities due to an increased volume of trailers operating in
the facilities.
(C) Net Income
As a result of all of the foregoing, net income for the year ended December 31,
1994, was $279,472 compared with net income of $282,593 for the year ended
December 31, 1993. In 1994, TEP IXB distributed $853,209 to the Limited
Partners, or $48.87 per Unit.
The Partnership's performance for the year ended December 31, 1994, is not
necessarily indicative of future periods.
TEP IXC
(A) Revenues
(1) Lease revenue increased to $958,179 in 1994 from $817,898 in 1993. The
following table lists lease revenues earned by equipment type:
For the year ended December 31,
1994 1993
---------------------------------
Trailers and tractors $ 767,520 $ 662,276
Rail equipment 104,808 110,753
Aircraft 76,088 25,177
Marine containers 9,763 19,692
=================================
$ 958,179 $ 817,898
=================================
The increase was due to the following:
(a) Trailer revenue increased $105,244 in 1994 as compared to 1993 levels,
due primarily to more trailers operating in short-term rental facilities in
1994, as compared to 1993. Trailers operating in short-term facilities generate
higher per day revenue than term lease trailers;
(b) Aircraft revenue increased $50,911 in 1994 as compared to 1993 levels.
The increase resulted from a commuter aircraft which was off-lease for the first
eight months of 1993 compared to being on lease all of 1994;
(c) Marine container revenue decreased $9,929 in 1994 as compared to 1993
levels, due primarily to a decline in utilization levels in 1993;
(d) Rail revenue decreased $5,945 in 1994 compared to 1993. The decrease
was due to a rail car coming off-lease in April of 1993 and being off-lease the
entire 1994.
(2) Interest and other income increased to $9,370 in 1994 from $5,961 in 1993
due primarily to higher interest rates and higher cash balances in interest
bearing accounts.
(B) Expenses
Total expenses for the years ended December 31, 1994 and 1993 were $815,229 and
$801,110, respectively. The increase in 1994 expenses was attributable primarily
to increases in bad debt expenses, management fees to affiliate and general and
administrative expense, offset by, decreased depreciation expense, and repairs
and maintenance.
(1) Direct Operating Expenses (defined as repairs and maintenance and insurance)
decreased to $187,140 in 1994 from $206,521 in 1993. This decrease was due to
the repairs and maintenance required on the Partnership's off-lease aircraft
during 1993 and not required during 1994, partially offset by an increase in the
number of trailers coming off term lease requiring refurbishment prior to
transitioning to the short-term rental facilities operated by an affiliate of
the General Partner.
(2) Indirect Operating Expenses (defined as depreciation and amortization
expense, management fees, bad debt expense and general and administrative
expenses) increased to $628,089 in 1994 from $594,589 in 1993. This change
resulted primarily from:
(a) an increase in bad debt expense of $21,531 due to the General Partner's
evaluation of the collectability of receivables due from trailer lessees;
(b) an increase in management fees of $14,604 due to increased levels of
operating cash flow during 1994. Management fees are calculated as the greater
of 10% of the Partnership's Operating Cash Flow, or 1/12 of 1/2% of the
Partnership's Gross Proceeds as defined in the Limited Partnership Agreement;
(c) an increase in general and administrative expenses of $12,157 primarily
due to the increased administrative costs associated with the short-term rental
facilities resulting from the increased volume of trailers operating in these
facilities, partially offset by a reduction in transportation charges required
to position the aircraft for re-leasing;
(d) a decrease in depreciation expense of $14,792 from 1993 reflecting
asset sales during 1994 and 1993.
(3) During 1994, the Partnership realized a gain of $2,561 on the sale of four
trailers and the disposition of three marine containers, compared to the same
period in 1993 when the Partnership realized a gain of $14,139 on the sale or
disposal of two trailers and one marine container.
(C) Net Income
As a result of all of the foregoing, net income for the year ended December 31,
1994 was $154,881 compared with net income of $36,888 for the year ended
December 31, 1993. In 1994, TEP IXC distributed $384,699 to the Limited
Partners, or $22.74 per Unit.
The Partnership's performance for the year ended December 31, 1994, is not
necessarily indicative of future periods.
TEP IXD
(A) Revenues
(1) Lease revenue decreased to $545,035 in 1994 from $677,550 in 1993. The
following table lists lease revenues earned by equipment type:
For the year ended
December 31,
1994 1993
---------------------------------
Trailers $ 456,511 $ 532,280
Marine containers 88,524 145,270
=================================
$ 545,035 $ 677,550
=================================
The decrease was due to the following:
(a) Trailer revenue decreased $75,769 in 1994 as compared to 1993 levels,
due to the off-lease status of 24 trailers at the end of 1994, low utilization
in short-term rental facilities operated by an affiliate of the General Partner,
and the disposal of two trailers in 1994 and five trailers (of which 4 trailers
are in a sales-type lease) in 1993;
(b) Marine container revenue decreased $56,746 in 1994 as compared to 1993
levels, primarily due to a decline in utilization levels in 1994 and disposal of
29 20-foot dry marine containers during 1994.
(2) Interest and other income increased to $21,274 in 1994 from $12,850 in 1993.
Due to higher interest rates and higher cash balances in interest bearing
accounts.
(3) Gain on disposition of equipment of $17,133 in 1994 resulted from the sale
or disposal of 29 marine containers and two trailers. The gain on disposition of
equipment in 1993 totaled $53,478 from the sale of 38 marine containers and five
trailers.
(B) Expenses
Total expenses for the years ended December 31, 1994 and 1993 were $389,752 and
$438,646, respectively. The decrease in 1994 expenses was attributable primarily
to decreased depreciation, management fees and general and administrative
expenses, offset slightly by an increase in bad debt expense.
(1) Direct Operating Expenses (defined as repairs and maintenance and insurance)
decreased to $57,449 in 1994 from $61,392 in 1993. This change resulted
primarily from the smaller number of trailers operating in the short-term rental
facilities requiring repairs and maintenance as compared to the same period in
1993.
(2) Indirect Operating Expenses (defined as depreciation and amortization
expense, management fees, bad debt expense, and general and administrative
expenses) decreased to $332,303 in 1994 from $377,254 in 1993. This change
resulted from:
(a) a decrease of $21,204 in general and administrative expenses from 1993
levels resulting primarily from lower administrative costs associated with the
Partnership;
(b) a decrease in depreciation expense of $16,296 from 1993 levels
reflecting assets sales during 1994 and 1993;
(c) a decrease in management fees to affiliate of $14,383 from 1993 levels
due to the lower level of operating cash flow during 1994. Management fees are
calculated as the greater of 10% of the Partnership's operating cash flow, or
1/12 of 1/2% of the Partnership's Gross Proceeds as defined in the Limited
Partnership Agreement;
(d) an increase of $6,932 in bad debt expense due to the General Partner's
evaluation of the collectability of receivables due from rental yard trailer
lessees.
(C) Net Income
As a result of all of the foregoing, net income for the year ended December 31,
1994 was $193,690 compared with net income of $305,232 for the year ended
December 31, 1993. In 1994, TEP IXD distributed $394,668 to the Limited
Partners, or $41.42 per Unit.
The Partnership's performance for the year ended December 31, 1994, is not
necessarily indicative of future periods.
Geographic Information
The Partnerships operates their equipment in international markets. As such, the
Partnerships are exposed to a variety of currency, political, credit and
economic risks. Currency risks are at a minimum because all invoicing, with the
exception of a small number of railcars operating in Canada, is conducted in
U.S. dollars. Political risks are minimized generally through the avoidance of
operations in countries that do not have a stable judicial system and
established commercial business laws. Credit support strategies for lessees
range from letters of credit supported by U.S. banks to cash deposits. Although
these credit support mechanisms generally allow the Partnerships to maintain its
lease yield, there are risks associated with slow-to-respond judicial systems
when legal remedies are required to secure payment or repossess equipment.
Economic risks are inherent in all international markets and the General Partner
strive to minimize this risk with market analysis prior to committing equipment
to a particular geographic area. Refer to the notes to the Financial statements
for information on the revenues, income and assets in various geographic
regions.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements for the Partnerships are listed on the Index to
Financial Statements and Financial Statement Schedules included in Item 14 of
this Annual Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
As of the date of this Annual Report, the directors and executive officers of
PLM International (and key executive officers of its subsidiaries) are as
follows:
Name Age Position
- -------------------------------------- ------------------- -------------------------------------------------------
J. Alec Merriam 60 Director, Chairman of the Board, PLM International,
Inc.; Director, PLM Financial Services, Inc.
Allen V. Hirsch 42 Director, Vice Chairman of the Board, Executive Vice
President of PLM International, Inc.; Director and
President, PLM Financial Services, Inc.; President,
PLM Securities Corp., and PLM Transportation
Equipment Corporation.
Walter E. Hoadley 79 Director, PLM International, Inc.
Robert L. Pagel 59 Director, Chairman of the Executive Committee, PLM
International, Inc.; Director, PLM Financial
Services, Inc.
Harold R. Somerset 61 Director, PLM International, Inc.
Robert N. Tidball 57 Director, President and Chief Executive Officer, PLM
International, Inc.
J. Michael Allgood 47 Vice President and Chief Financial Officer, PLM
International, Inc. and PLM Financial Services, Inc.
Stephen M. Bess 49 President, PLM Investment Management, Inc.; Vice
President, PLM Financial Services, Inc.
David J. Davis 39 Vice President and Corporate Controller, PLM
International and PLM Financial Services, Inc.
Frank Diodati 41 President, PLM Railcar Management Services Canada
Limited.
Douglas P. Goodrich 49 Senior Vice President, PLM International; Senior Vice
President PLM Transportation Equipment Corporation;
President PLM Railcar Management Services, Inc.
Steven O. Layne 41 Vice President, PLM Transportation Equipment
Corporation.
Stephen Peary 47 Senior Vice President, General Counsel and Secretary,
PLM International, Inc.; Vice President, General
Counsel and Secretary, PLM Financial Services, Inc.,
PLM Investment Management, Inc., PLM Transportation
Equipment Corporation; Vice President, PLM
Securities, Corp.
Thomas L. Wilmore 53 Vice President, PLM Transportation Equipment
Corporation; Vice President, PLM Railcar Management
Services, Inc.
J. Alec Merriam was appointed Chairman of the Board of Directors of PLM
International in September 1990, having served as a director since February
1988. In October 1988 he became a member of the Executive Committee of the Board
of Directors of PLM International. From 1972 to 1988 Mr. Merriam was Executive
Vice President and Chief Financial Officer of Crowley Maritime Corporation, a
San Francisco area-based company engaged in maritime shipping and transportation
services. Previously, he was Chairman of the Board and Treasurer of LOA
Corporation of Omaha, Nebraska and served in various financial positions with
Northern Natural Gas Company, also of Omaha.
Allen V. Hirsch became Vice Chairman of the Board and a Director of PLM
International in April 1989. He is an Executive Vice President of PLM
International and President of PLM Securities Corp. Mr. Hirsch became the
President of PLM Financial Services, Inc. in January 1986 and President of PLM
Investment Management, Inc. and PLM Transportation Equipment Corporation in
August 1985, having served as a Vice President of PLM Financial Services, Inc.
and Senior Vice President of PLM Transportation Equipment Corporation beginning
in August 1984, and as a Vice President of PLM Transportation Equipment
Corporation beginning in July 1982 and of PLM Securities Corp. from July 1982 to
October 1, 1987. He joined PLM, Inc. in July 1981, as Assistant to the Chairman.
Prior to joining PLM, Inc., Mr. Hirsch was a Research Associate at the Harvard
Business School. From January 1977 through September 1978, Mr. Hirsch was a
consultant with the Booz, Allen and Hamilton Transportation Consulting Division,
leaving that employment to obtain his master's degree in business
administration.
Dr. Hoadley joined PLM International's Board of Directors and its Executive
Committee in September, 1989. He served as a Director of PLM, Inc. from November
1982 to June 1984 and PLM Companies, Inc. from October 1985 to February 1988.
Dr. Hoadley has been a Senior Research Fellow at the Hoover Institute since
1981. He was Executive Vice President and Chief Economist for the Bank of
America from 1968 to 1981 and Chairman of the Federal Reserve Bank of
Philadelphia from 1962 to 1966. Dr. Hoadley has also served as a Director of
Transcisco Industries, Inc. from February 1988 through August 1995.
Robert L. Pagel was appointed Chairman of the Executive Committee of the
Board of Directors of PLM International in September 1990, having served as a
director since February 1988. In October 1988 he became a member of the
Executive Committee of the Board of Directors of PLM International. From June
1990 to April 1991 Mr. Pagel was President and Co-Chief Executive Officer of The
Diana Corporation, a holding company traded on the New York Stock Exchange. He
is the former President and Chief Executive Officer of FanFair Corporation which
specializes in sports fans' gift shops. He previously served as President and
Chief Executive Officer of Super Sky International, Inc., a publicly traded
company, located in Mequon, Wisconsin, engaged in the manufacture of skylight
systems. He was formerly Chairman and Chief Executive Officer of Blunt, Ellis &
Loewi, Inc., a Milwaukee-based investment firm. Mr. Pagel retired from Blunt,
Ellis & Loewi in 1985 after a career spanning 20 years in all phases of the
brokerage and financial industries. Mr. Pagel has also served on the Board of
Governors of the Midwest Stock Exchange.
Harold R. Somerset was elected to the Board of Directors of PLM
International in July 1994. From February 1988 to December 1993, Mr. Somerset
was President and Chief Executive Officer of California & Hawaiian Sugar
Corporation (C&H), a recently-acquired subsidiary of Alexander & Baldwin, Inc.
Mr. Somerset joined C&H in 1984 as Executive Vice President and Chief Operating
Officer, having served on its Board of Directors since 1978, a position in which
he continues to serve. Between 1972 and 1984, Mr. Somerset served in various
capacities with Alexander & Baldwin, Inc., a publicly-held land and agriculture
company headquartered in Honolulu, Hawaii, including Executive Vice President -
Agricultures, Vice President, General Counsel and Secretary. In addition to a
law degree from Harvard Law School, Mr. Somerset also holds degrees in civil
engineering from the Rensselaer Polytechnic Institute and in marine engineering
from the U.S. Naval Academy. Mr. Somerset also serves on the Boards of Directors
for various other companies and organizations, including Longs Drug Stores,
Inc., a publicly-held company headquartered in Maryland.
Robert N. Tidball was appointed President and Chief Executive Officer of
PLM International in March 1989. At the time of his appointment, he was
Executive Vice President of PLM International. Mr. Tidball became a director of
PLM International in April, 1989 and a member of the Executive Committee of the
Board of Directors of PLM International in September 1990. Mr. Tidball was
elected President of PLM Railcar Management Services, Inc. in January 1986. Mr.
Tidball was Executive Vice President of Hunter Keith, Inc., a Minneapolis-based
investment banking firm, from March 1984 to January 1986. Prior to Hunter Keith,
Inc., he was Vice President, a General Manager and a Director of North American
Car Corporation, and a Director of the American Railcar Institute and the
Railway Supply Association.
J. Michael Allgood was appointed Vice President and Chief Financial Officer
of PLM International in October 1992. Between July 1991 and October 1992, Mr.
Allgood was a consultant to various private and public sector companies and
institutions specializing in financial operational systems development. In
October 1987, Mr. Allgood co-founded Electra Aviation Limited and its holding
company, Aviation Holdings Plc of London where he served as Chief Financial
Officer until July 1991. Between June 1981 and October 1987, Mr. Allgood served
as a First Vice President with American Express Bank, Ltd. In February 1978, Mr.
Allgood founded and until June 1981, served as a director of Trade Projects
International/Philadelphia Overseas Finance Company, a joint venture with
Philadelphia National Bank. From March 1975 to February 1978, Mr. Allgood served
in various capacities with Citibank, N.A.
Stephen M. Bess was appointed President of PLM Investment Management, Inc.
in August 1989, having served as Senior Vice President of PLM Investment
Management, Inc. beginning in February 1984 and as Corporate Controller of PLM
Financial Services, Inc. beginning in October 1983. Mr. Bess served as Corporate
Controller of PLM, Inc., beginning in December 1982. Mr. Bess was Vice
President-Controller of Trans Ocean Leasing Corporation, a container leasing
company, from November 1978 to November 1982, and Group Finance Manager with the
Field Operations Group of Memorex Corp., a manufacturer of computer peripheral
equipment, from October 1975 to November 1978.
David J. Davis was appointed Vice President and Controller of PLM
International in January 1994. From March 1993 through January 1994, Mr. Davis
was engaged as a consultant for various firms, including PLM. Prior to that Mr.
Davis was Chief Financial Officer of LB Credit Corporation in San Francisco from
July 1991 to March 1993. From April 1989 to May 1991, Mr. Davis was Vice
President and Controller for ITEL Containers International Corporation which was
located in San Francisco. Between May 1978 and April 1989, Mr. Davis held
various positions with Transamerica Leasing Inc., in New York, including that of
Assistant Controller for their rail leasing division.
Frank Diodati was appointed President of PLM Railcar Management Services
Canada Limited in 1986. Previously, Mr. Diodati was Manager of Marketing and
Sales for G.E. Railcar Services Canada Limited.
Douglas P. Goodrich was appointed Senior Vice President of PLM
International in March 1994. Mr. Goodrich has also served as Senior Vice
President of PLM Transportation Equipment Corporation since July 1989, and as
President of PLM Railcar Management Services, Inc. since September 1992 having
been a Senior Vice President since June 1987. Mr. Goodrich was an Executive Vice
President of G.I.C. Financial Services Corporation, a subsidiary of Guardian
Industries Corp. of Chicago, Illinois from December 1980 to September 1985.
Steven O. Layne was appointed Vice President, PLM Transportation Equipment
Corporation's Air Group in November 1992. Mr. Layne was its Vice President,
Commuter and Corporate Aircraft beginning in July 1990. Prior to joining PLM,
Mr. Layne was the Director, Commercial Marketing for Bromon Aircraft
Corporation, a joint venture of General Electric Corporation and the Government
Development Bank of Puerto Rico. Mr. Layne is a major in the United States Air
Force Reserves and senior pilot with 13 years of accumulated service.
Stephen Peary became Vice President, Secretary, and General Counsel of PLM
International in February 1988 and Senior Vice President in March 1994. Mr.
Peary was Assistant General Counsel of PLM Financial Services, Inc. from August
1987 through January 1988. Previously, Mr. Peary was engaged in the private
practice of law in San Francisco. Mr. Peary is a graduate of the University of
Illinois, Georgetown University Law Center, and Boston University (Masters of
Taxation Program).
Thomas L. Wilmore was appointed Vice President - Rail, PLM Transportation
Equipment Corporation, in March 1994 and has served as Vice President, Marketing
for PLM Railcar Management Services, Inc. since May 1988. Prior to joining PLM,
Mr. Wilmore was Assistant Vice President Regional Manager for MNC Leasing Corp.
in Towson, Maryland from February 1987 to April 1988. From July 1985 to February
1987, he was President and Co-Owner of Guardian Industries Corp., Chicago,
Illinois and between December 1980 and July 1985, Mr. Wilmore was an Executive
Vice President for its subsidiary, G.I.C. Financial Services Corporation. Mr.
Wilmore also served as Vice President of Sales for Gould Financial Services
located in Rolling Meadows, Illinois from June 1978 to December 1980.
The directors of the General Partner are elected for a one-year term or
until their successors are elected and qualified. There are no family
relationships between any director or any executive officer of the General
Partner.
ITEM 11. EXECUTIVE COMPENSATION
The Partnerships have no directors, officers, or employees. The Partnerships
have no pension, profit sharing, retirement, or similar benefit plans in effect
as of December 31, 1995.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Security Ownership of Certain Beneficial Owners
At December 31, 1995, no investor is known by the General Partner to
beneficially own more than 5% of the Units of TEP IXA, TEP IXB, TEP IXC
or TEP IXD.
(b) Security Ownership of Management
Neither the General Partner and its affiliates nor any officer or
director of the General Partner and its affiliates beneficially own any
Units of TEP IXA, TEP IXB, TEP IXC or TEP IXD.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
(a) Transactions with Management and Others.
During 1995, management fees paid or accrued to IMI were: $60,713,
$43,650, $45,353 and $24,250 for TEP IXA, TEP IXB, TEP IXC and TEP IXD,
respectively. During 1995, administrative services performed on behalf
of the Partnerships were reimbursed to FSI and its affiliates as
follows: $122,635, $96,118, $163,169 and $68,871 for TEP IXA, TEP IXB,
TEP IXC and TEP IXD, respectively.
(b) Certain Business Relationships
None.
(c) Indebtedness of Management
None.
(d) Transactions with Promoters
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. Financial Statements
The financial statements listed in the accompanying Index to
Financial Statements are filed as part of this Annual Report.
(b) Reports on Form 8-K
None.
(c) Exhibits
4. Limited Partnership Agreement of Partnership. Incorporated by
reference to the Partnership's Registration Statement on Form S-1
(Reg. No. 33-657) which became effective with the Securities and
Exchange Commission on January 7, 1986.
10. Management Agreement between Partnership and PLM Investment
Management, Inc. Incorporated by reference to the Partnership's
Registration Statement on Form S-1 (Reg. No. 33-657) which became
effective with the Securities and Exchange Commission on January
7, 1986.
24. Powers of Attorney.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Registrant has no directors or officers. The General Partner has signed on
behalf of the Registrant by duly authorized officers.
Date: March 27, 1996 PLM TRANSPORTATION EQUIPMENT PARTNERS IXA
1986 INCOME FUND
PARTNERSHIP
By: PLM Financial Services, Inc.
General Partner
By: *_______________________
Allen V. Hirsch
President
By: /s/ David J. Davis
-------------------------
David J. Davis
Vice President and
Corporate Controller
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below by the following directors of the Registrant's General
Partner on the dates indicated.
Name Capacity Date
*________________________
Allen V. Hirsch Director-FSI March 27, 1996
*________________________
J. Alec Merriam Director-FSI March 27, 1996
*________________________
Robert L. Pagel Director-FSI March 27, 1996
* Stephen Peary, by signing his name hereto, does sign this document on behalf
of the persons indicated above pursuant to powers-of-attorney duly executed by
such persons and filed with the Securities and Exchange Commission.
/s/ Stephen Peary
- -----------------------
Stephen Peary
Attorney-in-Fact
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Registrant has no directors or officers. The General Partner has signed on
behalf of the Registrant by duly authorized officers.
Date: March 27, 1996 PLM TRANSPORTATION EQUIPMENT PARTNERS IXB
1986 INCOME FUND PARTNERSHIP
By: PLM Financial Services, Inc.
General Partner
By: *_______________________
Allen V. Hirsch
President
By: /s/ David J. Davis
------------------------
David J. Davis
Vice President and
Corporate Controller
* Stephen Peary, by signing his name hereto, does sign this document on behalf
of the persons indicated above pursuant to powers of attorney duly executed by
such persons and filed with the Securities and Exchange Commission.
/s/ Stephen Peary
-----------------------
Stephen Peary
Attorney-in-Fact
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Registrant has no directors or officers. The General Partner has signed on
behalf of the Registrant by duly authorized officers.
Date: March 27, 1996 PLM TRANSPORTATION EQUIPMENT PARTNERS IXC
1986 INCOME FUND
PARTNERSHIP
By: PLM Financial Services, Inc.
General Partner
By: *_______________________
Allen V. Hirsch
President
By: /s/ David J. Davis
----------------------
David J. Davis
Vice President and
Corporate Controller
* Stephen Peary, by signing his name hereto, does sign this document on behalf
of the persons indicated above pursuant to powers of attorney duly executed by
such persons and filed with the Securities and Exchange Commission.
/s/ Stephen Peary
-----------------------
Stephen Peary
Attorney-in-Fact
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Registrant has no directors or officers. The General Partner has signed on
behalf of the Registrant by duly authorized officers.
Date: March 27, 1996 PLM TRANSPORTATION EQUIPMENT PARTNERS IXD
1986 INCOME FUND
PARTNERSHIP
By: PLM Financial Services, Inc.
General Partner
By: *_______________________
Allen V. Hirsch
President
By: /s/ David J. Davis
------------------------
David J. Davis
Vice President and
Corporate Controller
* Stephen Peary, by signing his name hereto, does sign this document on behalf
of the persons indicated above pursuant to powers of attorney duly executed by
such persons and filed with the Securities and Exchange Commission.
/s/ Stephen Peary
-----------------------
Stephen Peary
Attorney-in-Fact
PLM TRANSPORTATION EQUIPMENT PARTNERS IX 1986 INCOME FUND
(A Limited Partnership)
INDEX TO FINANCIAL STATEMENTS
(Item 14(a))
TEP IXA Page
Report of Independent Auditors 32
Balance sheets at December 31, 1995 and 1994 33
Statements of operations for the years
ended December 31, 1995, 1994, and 1993 34
Statements of changes in partners' capital for the years
ended December 31, 1995, 1994, and 1993 35
Statements of cash flows for the years
ended December 31, 1995, 1994, and 1993 36
Notes to financial statements 37-41
TEP IXB
Report of Independent Auditors 42
Balance sheets at December 31, 1995 and 1994 43
Statements of income for the years
ended December 31, 1995, 1994, and 1993 44
Statements of changes in partners' capital for the years
ended December 31, 1995, 1994, and 1993 45
Statements of cash flows for the years
ended December 31, 1995, 1994, and 1993 46
Notes to financial statements 47-50
PLM TRANSPORTATION EQUIPMENT PARTNERS IX 1986 INCOME FUND
(A Limited Partnership)
INDEX TO FINANCIAL STATEMENTS
(Item 14(a))
TEP IXC Page
Report of Independent Auditors 51
Balance sheets at December 31, 1995 and 1994 52
Statements of income for the years
ended December 31, 1995, 1994, and 1993 53
Statements of changes in partners' capital for the years
ended December 31, 1995, 1994, and 1993 54
Statements of cash flows for the years
ended December 31, 1995, 1994, and 1993 55
Notes to financial statements 56-60
TEP IXD
Report of Independent Auditors 61
Balance sheets at December 31, 1995 and 1994 62
Statements of income for the years
ended December 31, 1995, 1994, and 1993 63
Statements of changes in partners' capital for the years
ended December 31, 1995, 1994, and 1993 64
Statements of cash flows for the years
ended December 31, 1995, 1994, and 1993 65
Notes to financial statements 66-69
All other financial statement schedules have been omitted as the required
information is not pertinent or is not present in amounts sufficient to require
submission of the schedule, or because the information required is included in
the financial statements and notes thereto.
REPORT OF INDEPENDENT AUDITORS
The Partners
PLM Transportation Equipment Partners IXA 1986 Income Fund:
We have audited the financial statements of PLM Transportation Equipment
Partners IXA 1986 Income Fund as listed in the accompanying index. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
The Partnership will enter its 10th year of operation in 1996 and the
liquidation phase will begin. The General Partner will actively pursue the sale
of all of the Partnership's equipment with the intention of winding up the
Partnership and distributing all available cash to the Partners. Management's
plans in regard to this matter are also described in note 1.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of PLM Transportation Equipment
Partners IXA 1986 Income Fund as of December 31, 1995 and 1994 and the results
of its operations and its cash flows for each of the years in the three-year
period ended December 31, 1995 in conformity with generally accepted accounting
principles.
/S/ KPMG PEAT MARWICK LLP
SAN FRANCISCO, CALIFORNIA
March 27, 1996
PLM TRANSPORTATION EQUIPMENT PARTNERS IXA 1986 INCOME FUND
(A Limited Partnership)
BALANCE SHEETS
December 31,
ASSETS
1995 1994
--------------------------------------
Equipment held for operating leases, at cost $ 4,242,401 $ 7,462,921
Less accumulated depreciation (3,567,969) (5,944,395)
--------------------------------------
Net equipment 674,432 1,518,526
Cash and cash equivalents 251,709 298,718
Accounts receivable, net of allowance for doubtful accounts of
$57,022 in 1995 and $121,925 in 1994 107,933 34,620
Net investment in sales-type lease 1,003,564 --
Due from affiliates 2,941 --
Prepaid insurance 3,544 3,623
--------------------------------------
Total assets $ 2,044,123 $ 1,855,487
======================================
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Due to affiliates $ -- $ 2,732
Accounts payable 23,272 4,112
Prepaid deposits and reserves 20,028 23,574
--------------------------------------
Total liabilities 43,300 30,418
Partners' capital (deficit):
Limited Partners (24,285 units) 2,087,769 1,913,772
General Partner (86,946) (88,703)
--------------------------------------
Total partners' capital 2,000,823 1,825,069
--------------------------------------
Total liabilities and partners' capital $ 2,044,123 $ 1,855,487
======================================
See accompanying notes to financial
statements.
PLM TRANSPORTATION EQUIPMENT PARTNERS IXA 1986 INCOME FUND
(A Limited Partnership)
STATEMENTS OF OPERATIONS
For the years ended December 31,
1995 1994 1993
---------------------------------------------------
Revenues:
Lease revenue $ 547,246 $ 682,844 $ 810,530
Interest and other income 41,201 9,228 7,883
Gain (loss) on disposition of equipment 555,733 59,957 (53,590)
---------------------------------------------------
Total revenue 1,144,180 752,029 764,823
Expenses:
Depreciation 310,524 435,425 473,237
Management fees to affiliate 60,713 60,966 40,955
Repairs and maintenance 182,936 122,538 140,618
Insurance expense 9,802 9,518 10,596
General and administrative expenses
to affiliates 122,635 108,298 115,083
Other general and administrative expenses 48,850 45,177 60,704
Bad debt expense (64,903) 102,916 90,207
Loss on revaluation of equipment -- -- 13,400
---------------------------------------------------
Total expenses 670,557 884,838 944,800
---------------------------------------------------
Net income (loss) $ 473,623 $ (132,809) $ (179,977)
===================================================
Partners' share of net income (loss):
Limited Partners - 99% $ 468,887 $ (131,481) $ (178,177)
General Partner - 1% 4,736 (1,328) (1,800)
===================================================
Total $ 473,623 $ (132,809) $ (179,977)
===================================================
Net income (loss) per Limited Partnership
Unit (24,285 units) $ 19.31 $ (5.41) $ (7.34)
===================================================
Cash distributions $ 297,869 $ 499,566 $ 708,072
===================================================
Cash distributions per Limited
Partnership Unit $ 12.14 $ 20.37 $ 28.87
===================================================
See accompanying notes to financial
statements.
PLM TRANSPORTATION EQUIPMENT PARTNERS IXA 1986 INCOME FUND
(A Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the years ended December 31, 1995, 1994, and 1993
Limited General
Partners Partner Total
-----------------------------------------------------
Partners' capital (deficit)
at December 31, 1992 $ 3,418,991 $ (73,498) $ 3,345,493
Net loss (178,177) (1,800) (179,977)
Cash distributions (700,991) (7,081) (708,072)
-----------------------------------------------------
Partners' capital (deficit)
at December 31, 1993 2,539,823 (82,379) 2,457,444
Net loss (131,481) (1,328) (132,809)
Cash distributions (494,570) (4,996) (499,566)
-----------------------------------------------------
Partners' capital (deficit)
at December 31, 1994 1,913,772 (88,703) 1,825,069
Net income 468,887 4,736 473,623
Cash distributions (294,890) (2,979) (297,869)
-----------------------------------------------------
Partners' capital (deficit)
at December 31, 1995 $ 2,087,769 $ (86,946) $ 2,000,823
=====================================================
See accompanying notes to financial
statements.
PLM TRANSPORTATION EQUIPMENT PARTNERS IXA 1986 INCOME FUND
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
for the years ended December 31,
1995 1994 1993
---------------------------------------------------
Operating activities:
Net income (loss) $ 473,623 $ (132,809) $ (179,977)
Adjustments to reconcile net
income (loss) to net cash
provided by operating activities:
Loss on revaluation of equipment -- -- 13,400
Gain (loss) on disposition of
equipment (555,733) (59,957) 53,590
Depreciation 310,524 435,425 473,237
Changes in operating assets
and liabilities:
Accounts receivable, net (73,313) 57,790 51,550
Due from affiliates (2,941) 3,270 (3,270)
Prepaid insurance 79 2,684 (2,270)
Due to affiliates (2,732) 2,673 (32,085)
Accounts payable (30,840) (78,411) 80,837
Prepaid deposits and reserves (3,546) (5,239) (5,747)
----------------------------------------------------
Net cash provided by operating
activities 115,121 225,426 449,265
Investing activities:
Proceeds from disposition of
equipment 50,179 263,417 109,150
Payments received on sales-type lease 86,436 -- --
Payments for purchase of capital
improvements (876) (25,793) --
---------------------------------------------------
Net cash provided by investing
activities 135,739 237,624 109,150
Cash flows used in financing activities:
Cash distributions paid to partners (297,869) (499,566) (708,072)
---------------------------------------------------
Cash and cash equivalents:
Net decrease in cash and cash
equivalents (47,009) (36,516) (149,657)
Cash and cash equivalents at
beginning of year 298,718 335,234 484,891
---------------------------------------------------
Cash and cash equivalents at
end of year $ 251,709 $ 298,718 $ 335,234
===================================================
See accompanying notes to financial
statements.
PLM TRANSPORTATION EQUIPMENT PARTNERS IXA 1986 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
1. Basis of presentation
Organization
PLM Transportation Equipment Partners IXA 1986 Income Fund, a
California limited partnership (the Partnership) was formed on
September 20, 1985. The Partnership engages in the business of owning
and leasing transportation equipment. The Partnership commenced
significant operations in June 1986. PLM Financial Services, Inc. (FSI)
is the General Partner. FSI is a wholly-owned subsidiary of PLM
International, Inc. (PLM International) and manages the affairs of the
Partnership.
The net income (loss) and distributions of the Partnership are
allocated 99% to the Limited Partners and 1% to the General Partner.
The General Partner is entitled to an incentive fee equal to 15% of
"Surplus Distributions" as defined in the Partnership Agreement,
remaining after the Limited Partners have received a certain minimum
rate of return.
These financial statements have been prepared on the accrual basis
of accounting in accordance with generally accepted accounting
principles. This requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Operations
The equipment of the Partnership is managed, under a continuing
equipment management agreement, by PLM Investment Management, Inc.
(IMI), a wholly-owned subsidiary of FSI. IMI receives a monthly
management fee from the Partnership for managing the equipment (see
Note 2). FSI, in conjunction with its subsidiaries, syndicates investor
programs, sells transportation equipment to investor programs and third
parties, manages pools of transportation equipment under agreements
with the investor programs, and is a General Partner of other Limited
Partnerships.
The Partnership will enter into its liquidation phase beginning in
1996 and the General Partner is actively pursuing the sale of all of
the Partnership's equipment with the intention of winding up the
Partnership and distributing all available cash to the Partners.
Accounting for Leases
The Partnership's leasing operations generally consist of operating
leases. Under the operating lease method of accounting, the leased
asset is recorded at cost and depreciated over its estimated useful
life. Rental payments are recorded as revenue over the lease term.
Lease origination costs are capitalized and amortized over the term of
the lease.
Translation of Foreign Currency Transactions
The Partnership is a domestic partnership, however, a limited number of
the Partnership's transactions are denominated in a foreign currency.
The Partnership's asset and liability accounts denominated in a foreign
currency were translated into U.S. dollars at the rates in effect at
the balance sheet dates, and revenue and expense items were translated
at average rates during the year. Gains or losses resulting from
foreign currency transactions are included in the results of operations
and are not material.
PLM TRANSPORTATION EQUIPMENT PARTNERS IXA 1986 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
1. Basis of presentation (continued)
Depreciation
Depreciation is computed on the double declining balance method based
upon estimated useful lives of 15 years for rail equipment, 12 years
for trailers, marine containers and aircraft and 8 years for tractors.
The depreciation method changes to straight-line when annual
depreciation expense using the straight-line method exceeds that
calculated by the 200% declining balance method. Major expenditures
which are expected to extend the useful lives or reduce future
operating expenses of equipment are capitalized.
Transportation Equipment
In March 1995, the Financial Accounting Standards Board (FASB) issued
Statement No. 121, "Accounting for the Impairment of Long-Lived Assets
and Long-Lived Assets to be Disposed Of" (SFAS 121). This standard is
effective for years beginning after December 15, 1995. The Partnership
adopted SFAS 121 during 1995, the effect of which was not material as
the method previously employed by the Partnership was in close
proximity to SFAS 121. In accordance with FASB 121, the Partnership
reviews the carrying value of its equipment at least annually in
relation to expected future market conditions for the purpose of
assessing recoverability of the recorded amounts. If projected future
lease revenue plus residual values are less than the carrying value of
the equipment, a loss on revaluation is recorded. No adjustments to
reflect impairment of individual equipment carrying values were
required for the year ended December 31, 1995.
Equipment held for operating leases is stated at cost.
Repairs and Maintenance
Maintenance costs are usually the obligation of the lessee. If they are
not covered by the lessee they are charged against operations as
incurred.
Net Income (Loss) and Distribution per Limited Partnership Unit
Net income (loss) per Limited Partnership Unit is computed based on the
number of Limited Partnership Units outstanding during the period
(24,285 for 1995, 1994, and 1993).
Cash distributions are recorded when paid. Cash distributions to
investors in excess of net income are considered to represent a return
of capital on a Generally Accepted Accounting Principles (GAAP) basis.
Cash distributions to Limited Partners of $0, $494,570, and $700,991 in
1995, 1994, and 1993, respectively, were deemed to be a return of
capital.
Cash and Cash Equivalents
The Partnership considers highly liquid investments that are readily
convertible to known amounts of cash with original maturities of three
months or less as cash equivalents.
2. General Partner and Transactions with Affiliates
An officer of FSI contributed $100 of the Partnership's initial net
capital. Under the Equipment Management Agreement, IMI receives a
monthly management fee equal to the greater of 10% of the Partnership's
"operating cash flow" or 1/12 of 1/2% of the Partnership's "gross
proceeds" as defined in the Partnership Agreement. Management fees of
$5,059 were payable to IMI as of December 31, 1995 and 1994.
PLM TRANSPORTATION EQUIPMENT PARTNERS IXA 1986 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
2. General Partner and Transactions with Affiliates (continued)
The Partnership reimbursed FSI and its affiliates $122,635 for
administrative and other services performed on behalf of the
Partnership in 1995 ($108,298 in 1994 and $115,083 in 1993).
As of December 31, 1995, approximately 99% of the Partnership's
trailer equipment has been transferred into rental facilities operated
by an affiliate of the General Partner. Revenues collected under
short-term rental agreements with the rental facilities' customers are
distributed monthly to the owners of the related equipment. Direct
expenses associated with the equipment and an allocation of indirect
expense of rental facility operations are billed to the Partnership.
At December 31, 1995, $2,941 was due from FSI and its affiliates
($2,732 was due to FSI and its affiliates at December 31, 1994).
3. Equipment
The components of equipment at December 31, 1995 and 1994 are as
follows:
Equipment held for operating leases: 1995 1994
------------------------------------
Rail equipment $ 783,870 $ 783,870
Marine containers 1,420,872 1,526,759
Aircraft -- 3,076,382
Trailers 2,037,659 2,075,910
------------------------------------
4,242,401 7,462,921
Less accumulated depreciation (3,567,969) (5,944,395)
------------------------------------
Net equipment $ 674,432 $ 1,518,526
====================================
Revenues are earned by placing the equipment under operating
leases which are billed monthly or quarterly. Rents for all equipment
are based on a fixed operating lease amount with the exception of
marine containers and trailers in the rental facilities. The
Partnership's marine containers are leased to the operator of
utilization-type pools which includes equipment owned by unaffiliated
parties. In such instances, revenues received by the Partnership
consist of a specified percentage of lease revenues generated by
leasing the pooled equipment to sub-lessees, after deducting certain
direct operating expenses of the pooled equipment. All equipment was
either on lease or operating in PLM-affiliated short-term rental
facilities as of December 31, 1995. With the exception of the commuter
aircraft with a carrying value of $595,620, all equipment was either
operating in rental facilities or on lease as of December 31, 1994.
During 1995, the Partnership sold or disposed of one trailer and 10
marine containers. Additionally, the Partnership entered into a
sales-type lease related to a commuter aircraft with a carrying value
of $505,450 for a sales price equal to the present value of the future
lease payments ($1,090,000) less a $50,000 reserve for future costs of
sale. Gross lease payments of $234,000 will be received over a one-year
period, commencing in June 1995, with an additional balloon payment of
$919,012 due at the end of the lease term. The total net book value for
the disposed or sold equipment was $534,446 with a total sales price of
$1,140,179. During 1994, the Partnership disposed of or sold 12
trailers, one yardster, one forklift, and six marine containers with a
net book value of $203,460 for proceeds of $263,417.
All leases are being accounted for as operating leases except one
finance lease on a commuter aircraft. Future minimum rentals receivable
under non-cancelable leases at December 31, 1995 during each of the
next five years are approximately; $81,300 - 1996; $51,500 - 1997; $0 -
1998; and thereafter. Contingent rentals based upon utilization
amounted to $118,625 in 1995, $130,722 in 1994, and $151,216 in 1993.
PLM TRANSPORTATION EQUIPMENT PARTNERS IXA 1986 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
3. Equipment (continued)
The lessees accounting for 10% or more of the total revenues during
1995, 1994 and 1993 were Trans Ocean Ltd. (22% in 1995, 19% in 1994,
19% in 1993), Cheyenne Express, Inc. (12% in 1993), and Burlington
Northern Railroad (11% in 1994, 15% in 1993).
The Partnership owns certain equipment which is leased and
operated internationally. All leases relating to this equipment were
denominated in U.S. dollars.
The Partnership leases its aircraft, railcars and trailers to
lessees domiciled in two geographic regions: Australia and North
America. The marine containers are leased to lessees in different
regions who operate the marine containers worldwide. The tables below
set forth geographic information about the Partnership's equipment
grouped by domicile of the lessee as of and for the years ended
December 31, 1995, 1994, and 1993 (in thousands):
Revenues: Region 1995 1994 1993
----------------------------------------------
Marine containers Various $ 118,625 $ 130,722 $ 151,216
Railcars North America 103,800 95,954 120,436
Trailers North America 324,821 438,918 538,878
Aircraft North America -- 17,250 --
----------------------------------------------
Total revenues $ 547,246 $ 682,844 $ 810,530
==============================================
The following table sets forth indentifiable net income (loss)
information by equipment type by region (in thousands):
Net income (loss): Region 1995 1994 1993
-------------------------------------------------
Marine containers Various $ 46,547 $ 45,147 $ 53,505
Railcars North America 31,374 26,643 23,666
Trailers North America 88,902 7,024 165,357
Aircraft North America -- (161,162) (233,383)
Australia 378,782 -- --
-------------------------------------------------
Total identifiable net income (loss) 545,605 (82,348) 9,145
Administrative and other net loss (71,982) (50,461) (189,122)
=================================================
Total net income (loss) $ 473,623 $ (132,809) $ (179,977)
=================================================
The net book value of these assets at December 31, 1995, 1994, and 1993
are as follows (in thousands):
Region 1995 1994 1993
------------------------------------------------
Marine containers Various $ 190,132 $ 288,847 $ 390,233
Railcars North America 157,453 202,926 378,644
Trailers North America 326,847 431,133 622,015
Aircraft North America -- 595,620 740,667
------------------------------------------------
Total equipment $ 674,432 $ 1,518,526 $ 2,131,559
================================================
PLM TRANSPORTATION EQUIPMENT PARTNERS IXA 1986 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
4. Income Taxes
The Partnership is not subject to income taxes as any income or loss is
included in the tax returns of the individual Partners. Accordingly, no
provision for income taxes has been made in the accounts of the
Partnership.
As of December 31, 1995, there were temporary differences of
approximately $1,014,332 between the financial statement carrying
values of assets and liabilities and the federal income tax bases of
such assets and liabilities, principally due to differences in
depreciation methods, and equipment reserves.
5. Investment in Sales-type Lease
On May 30, 1995, the Partnership entered into a sales-type lease for
the purpose of selling a commuter aircraft. The lease is structured
with a one-year term commencing in June 1995. The lessee will make
monthly payments of $19,500. Gross lease payments of $234,000 will be
received over a one-year period, commencing in June 1995, with an
additional balloon payment of $919,012 due at the end of the lease
term.
The components of the net investment in sales-type lease at December
31, 1995 is as follows in thousands):
Total minimum lease payments $ 1,153,012
Less: Unearned income 149,448
----------------------
1,003,564
======================
6. Subsequent Event
On January 31,1996, the lessee under the sales-type lease of the Metro
III commuter aircraft exercised its option to buy the aircraft for $1
million.
REPORT OF INDEPENDENT AUDITORS
The Partners
PLM Transportation Equipment Partners IXB 1986 Income Fund:
We have audited the financial statements of PLM Transportation Equipment
Partners IXB 1986 Income Fund as listed in the accompanying index. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
The Partnership will enter its 10th year of operation in 1996 and the
liquidation phase will begin. The General Partner will actively pursue the sale
of all of the Partnership's equipment with the intention of winding up the
Partnership and distributing all available cash to the Partners. Management's
plans in regard to this matter are also described in note 1.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of PLM Transportation Equipment
Partners IXB 1986 Income Fund as of December 31, 1995 and 1994 and the results
of its operations and its cash flows for each of the years in the three-year
period ended December 31, 1995, in conformity with generally accepted accounting
principles.
/S/ KPMG PEAT MARWICK
SAN FRANCISCO, CALIFORNIA
March 27, 1996
PLM TRANSPORTATION EQUIPMENT PARTNERS IXB 1986 INCOME FUND
(A Limited Partnership)
BALANCE SHEETS
December 31,
ASSETS
1995 1994
--------------------------------------
Equipment held for operating leases, at cost $ 4,400,435 $ 5,309,856
Less accumulated depreciation (3,678,300) (4,180,140)
--------------------------------------
Net equipment 722,135 1,129,716
Cash and cash equivalents 351,363 492,060
Accounts receivable, net of allowance for doubtful accounts of
$29,460 in 1995 and $17,600 in 1994 82,668 66,451
Prepaid insurance 2,447 2,960
--------------------------------------
Total assets $ 1,158,613 $ 1,691,187
======================================
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Due to affiliates $ 3,637 $ 6,063
Accounts payable 72,569 11,411
Prepaid deposits 16,248 16,384
--------------------------------------
Total liabilities 92,454 33,858
Partners' capital (deficit):
Limited Partners (17,460 units) 1,132,364 1,717,622
General Partner (66,205) (60,293)
--------------------------------------
Total partners' capital 1,066,159 1,657,329
--------------------------------------
, $ 1,158,613 $ 1,691,187
======================================
See accompanying notes to financial
statements.
PLM TRANSPORTATION EQUIPMENT PARTNERS IXB 1986 INCOME FUND
(A Limited Partnership)
STATEMENTS OF INCOME
For the years ended December 31,
1995 1994 1993
------------------------------------------------
Revenues:
Lease revenue $ 535,422 $ 813,960 $ 914,205
Interest and other income 22,516 16,696 11,221
Gain on disposition of equipment 113,206 132,025 30,646
------------------------------------------------
Total revenues 671,144 962,681 956,072
Expenses:
Depreciation 260,055 362,064 444,484
Management fees to affiliate 43,650 55,545 78,334
Repairs and maintenance 137,343 120,082 53,245
Insurance expense 6,677 7,458 7,803
General and administrative expenses
to affiliates 96,118 87,839 28,817
Other general and administrative expenses 35,916 34,267 42,962
Bad debt expense 8,379 15,954 17,834
------------------------------------------------
Total expenses 588,138 683,209 673,479
------------------------------------------------
Net income $ 83,006 $ 279,472 $ 282,593
================================================
Partners' share of net income:
Limited Partners - 99% $ 82,176 $ 276,677 $ 279,767
General Partner - 1% 830 2,795 2,826
================================================
Total $ 83,006 $ 279,472 $ 282,593
================================================
Net income per Limited Partnership
Unit (17,460 units) $ 4.71 $ 15.85 $ 16.02
================================================
Cash distributions $ 674,176 $ 861,827 $ 784,635
================================================
Cash distributions per Limited
Partnership Unit $ 38.23 $ 48.87 $ 44.49
================================================
See accompanying notes to financial
statements.
PLM TRANSPORTATION EQUIPMENT PARTNERS IXB 1986 INCOME FUND
(A Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the years ended December 31, 1995, 1994, and 1993
Limited General
Partners Partner Total
------------------------------------------------------
Partners' capital (deficit)
at December 31, 1992 $ 2,791,176 $ (49,450) $ 2,741,726
Net income 279,767 2,826 282,593
Cash distributions (776,789) (7,846) (784,635)
------------------------------------------------------
Partners' capital (deficit)
at December 31, 1993 2,294,154 (54,470) 2,239,684
Net income 276,677 2,795 279,472
Cash distributions (853,209) (8,618) (861,827)
------------------------------------------------------
Partners' capital (deficit)
at December 31, 1994 1,717,622 (60,293) 1,657,329
Net income 82,176 830 83,006
Cash distributions (667,434) (6,742) (674,176)
------------------------------------------------------
Partners' capital (deficit)
at December 31, 1995 $ 1,132,364 $ (66,205) $ 1,066,159
======================================================
See accompanying notes to financial
statements.
PLM TRANSPORTATION EQUIPMENT PARTNERS IXB 1986 INCOME FUND
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
for the years ended December 31,
1995 1994 1993
-------------------------------------------------
Operating activities:
Net income $ 83,006 $ 279,472 $ 282,593
Adjustments to reconcile net
income to net cash provided
by operating activities:
Gain from disposition of
equipment (113,206) (132,025) (30,646)
Depreciation 260,055 362,064 444,484
Changes in operating assets
and liabilities:
Accounts receivable, net (16,217) 10,324 (53,350)
Prepaid insurance 513 2,339 (1,944)
Due to affiliates (2,426) (1,931) (7,214)
Accounts payable 61,158 482 7,800
Prepaid deposits (136) (605) 16,989
-------------------------------------------------
Net cash provided by operating
activities 272,747 520,120 658,712
-------------------------------------------------
Investing activities:
Proceeds from disposition of equipment 265,627 378,108 73,000
Payments for purchase of capital improvements (4,895) -- --
-------------------------------------------------
Net cash provided by investing activities 260,732 378,108 73,000
-------------------------------------------------
Cash flows used in financing activities:
Cash distributions paid to partners (674,176) (861,827) (784,635)
-------------------------------------------------
Cash and cash equivalents:
Net increase (decrease) in cash and
cash equivalents (140,697) 36,401 (52,923)
Cash and cash equivalents at
beginning of year 492,060 455,659 508,582
-------------------------------------------------
Cash and cash equivalents at
end of year $ 351,363 $ 492,060 $ 455,659
=================================================
See accompanying notes to financial
statements.
PLM TRANSPORTATION EQUIPMENT PARTNERS IXB 1986 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
1. Basis of Presentation
Organization
PLM Transportation Equipment Partners IXB 1986 Income Fund, a
California limited partnership (the Partnership) was formed on
September 20, 1985. The Partnership engages in the business of owning
and leasing transportation equipment. The Partnership commenced
significant operations in October, 1986. PLM Financial Services, Inc.
(FSI) is the General Partner. FSI is a wholly-owned subsidiary of PLM
International, Inc. (PLM International) and manages the affairs of the
Partnership.
The net income (loss) and distributions of the Partnership are
allocated 99% to the Limited Partners and 1% to the General Partner.
The General Partner is entitled to an incentive fee equal to 15% of
"Surplus Distributions" as defined in the Partnership Agreement
remaining after the Limited Partners have received a certain minimum
rate of return.
These financial statements have been prepared on the accrual basis
of accounting in accordance with generally accepted accounting
principles. This requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Operations
The equipment of the Partnership is managed, under a continuing
equipment management agreement, by PLM Investment Management, Inc.
(IMI), a wholly-owned subsidiary of FSI. IMI receives a monthly
management fee from the Partnership for managing the equipment (see
Note 2). FSI, in conjunction with its subsidiaries, syndicates investor
programs, sells transportation equipment to investors programs and
third parties, manages pools of transportation equipment under
agreements with the investor programs, and is a General Partner of
other Limited Partnerships.
The Partnership will enter its 10th year of operation in 1996 and
the liquidation phase will begin. The General Partner will actively
pursue the sale of all of the Partnership's equipment with the
intention of winding up the Partnership and distributing all available
cash to the Partners.
Accounting for Leases
The Partnership's leasing operations generally consist of operating
leases. Under the operating lease method of accounting, the leased
asset is recorded at cost and depreciated over its estimated useful
life. Rental payments are recorded as revenue over the lease term.
Lease origination costs are capitalized and amortized over the term of
the lease.
Translation of Foreign Currency Transactions
The Partnership is a domestic partnership, however, a limited number of
the Partnership's transactions are denominated in a foreign currency.
The Partnership's asset and liability accounts denominated in a foreign
currency were translated into U.S. dollars at the rates in effect at
the balance sheet dates, and revenue and expense items were translated
at average rates during the year. Gains or losses resulting from
foreign currency transactions are included in the results of operations
and are not material.
PLM TRANSPORTATION EQUIPMENT PARTNERS IXB 1986 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
1. Basis of Presentation (continued)
Depreciation
Depreciation is computed on the double declining balance method based
upon estimated useful lives of 15 years for rail equipment, 12 years
for trailers, marine containers, and aircraft and 8 years for tractors.
The depreciation method changes to straight-line when annual
depreciation expense using the straight line method exceeds that
calculated by the 200% declining balance method.Major expenditures
which are expected to extend the useful lives or reduce future
operating expenses of equipment are capitalized.
Transportation Equipment
In March 1995, the Financial Accounting Standards Board (FASB) issued
Statement No. 121, "Accounting for the Impairment of Long-Lived Assets
and Long-Lived Assets to be Disposed Of" (SFAS 121). This standard is
effective for years beginning after December 15, 1995. The Partnership
adopted SFAS 121 during 1995, the effect of which was not material as
the method previously employed by the Partnership was consistent with
SFAS 121. In accordance with SFAS 121, the General Partner reviews the
carrying value of its equipment portfolio at least annually in relation
to expected future market conditions for the purpose of assessing
recoverability of the recorded amounts. If projected future lease
revenue plus residual values are less than the carrying value of the
equipment, a loss on revaluation is recorded. No adjustments to reflect
impairment of individual equipment carrying values were required for
the year ended December 31, 1995.
Equipment held for operating leases is stated at cost.
Repairs and Maintenance
Maintenance costs are usually the obligation of the lessee. If they are
not covered by the lessee they are charged against operations as
incurred.
Net Income (Loss) and Distributions per Limited Partnership Unit
Net income (loss) per Limited Partnership Unit is computed based on the
number of Limited Partnership Units outstanding during the period
(17,460 for 1994, 1993, and 1992).
Cash distributions are recorded when paid. Cash distributions to
investors in excess of net income are considered to represent a return
of capital on a Generally Accepted Accounting Principles (GAAP) basis.
Cash distributions to Limited Partners of $585,258, $576,532 and
$497,022 in 1995, 1994, and 1993, respectively, were deemed to be a
return of capital.
Cash and Cash Equivalents
The Partnership considers highly liquid investments that are readily
convertible to known amounts of cash with original maturities of three
months or less as cash equivalents.
2. General Partner and Transactions with Affiliates
An officer of FSI contributed $100 of the Partnership's initial net
capital. Under the Equipment Management Agreement, IMI receives a
monthly management fee equal to the greater of 10% of the Partnership's
"operating cash flow" or 1/12 of 1/2% of the Partnership's "gross
proceeds" as defined in the Partnership Agreement. Management fees of
$3,638 were payable to IMI as of December 31, 1995 and 1994.
PLM TRANSPORTATION EQUIPMENT PARTNERS IXB 1986 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
2. General Partner and Transactions with Affiliates (continued)
The Partnership reimbursed FSI and its affiliates $96,118 for
administrative and other services performed on behalf of the
Partnership in 1995 ($87,839 in 1994 and $28,817 in 1993).
As of December 31, 1995, approximately 99% of the Partnership's
trailer equipment has been transferred into rental facilities operated
by an affiliate of the General Partner. Revenues collected under
short-term rental agreements with the rental facilities' customers are
distributed monthly to the owners of the related equipment. Direct
expenses associated with the equipment and an allocation of indirect
expenses of rental facility operations are billed to the Partnership.
At December 31, 1995, $3,637 was due to FSI and affiliates ($6,063
at December 31, 1994).
3. Equipment
The components of equipment at December 31, 1995 and 1994 are as
follows:
Equipment held for operating leases: 1995 1994
------------------------------------
Rail equipment $ 867,300 $ 867,300
Marine containers 413,633 483,606
Aircraft 1,492,368 1,492,368
Trailers and tractors 1,627,134 2,466,582
------------------------------------
4,400,435 5,309,856
Less accumulated depreciation (3,678,300) (4,180,140)
------------------------------------
Net equipment $ 722,135 $ 1,129,716
====================================
Revenues are earned by placing the equipment under operating
leases and are billed monthly or quarterly. Rents for all equipment are
based on a fixed operating lease amount with the exception of marine
containers and trailers in the rental facilities. The Partnership's
marine containers are leased to the operator of utilization-type pools
which include equipment owned by unaffiliated parties. In such
instances revenues received by the Partnership consist of a specified
percentage of lease revenues generated by leasing the pooled equipment
to sub-lessees, after deducting certain direct operating expenses of
the pooled equipment. With the exception of one trailer and one
sidelift with a carrying value of $79,024, all equipment was either on
lease or operating in PLM-affiliated short-term rental facilities as of
December 31, 1995. With the exception of 19 trailers with a carrying
value of $152,349, all equipment was either operating in rental
facilities or on lease as of December 31, 1994. During 1995, the
Partnership sold or disposed of 22 trailers and four marine containers
with a net book value of $152,421 for proceeds of $265,627. During
1994, the Partnership sold or disposed of 13 tractors, six trailers,
five marine containers, and one letro porter with a book value of
$246,083 for proceeds of $378,108.
The leases are being accounted for as operating leases. Future
minimum rentals receivable under non-cancelable leases at December 31,
1995, during each of the next five years are approximately $87,480 -
1996; $38,280 - 1997; $36,720 - 1998; $0 - 1999; and thereafter.
Contingent rentals based upon utilization amounted to $34,915 in 1995,
$39,555 in 1994, and $51,057 in 1993.
The lessees accounting for 10% or more of the total revenues
during 1995, 1994 and 1993 were Skywest Airlines, Inc. (36% in 1995,
24% in 1994 and 21% in 1993), Coors Transportation Company, Inc. (17%
in 1993), Van Wyk, Inc. (10% in 1994 and 15% in 1993), Burlington
Northern Railroad Company (15% in 1993), and M&H Food Cos. (13% in 1994
and 12% in 1993).
PLM TRANSPORTATION EQUIPMENT PARTNERS IXB 1986 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
3. Equipment (continued)
The Partnership owns certain equipment which is leased and
operated internationally. All leases relating to this equipment were
denominated in U.S. dollars.
The Partnership leases its aircraft, railcars and trailers to
lessees domiciled in one geographic region: North America. The marine
containers are leased to lessees in different regions who operate the
marine containers worldwide. The tables below set forth geographic
information about the Partnership's equipment grouped by domicile of
the lessee as of and for the years ended December 31, 1995, 1994, and
1993 (in thousands):
Revenues: Region 1995 1994 1993
-----------------------------------------------
Marine containers Various $ 34,915 $ 39,555 $ 51,057
Railcars North America 86,537 178,641 133,425
Trailers and tractors North America 219,599 401,393 535,352
Aircraft North America 194,371 194,371 194,371
-----------------------------------------------
Total revenues $ 535,422 $ 813,960 $ 914,205
===============================================
The following table sets forth identifiable income (loss)
information by equipment type by region (in thousands):
Net income (loss): Region 1995 1994 1993
----------------------------------------------
Marine containers Various $ 15,334 $ 11,418 $ 13,922
Railcars North America 52,837 4,195 9,904
Trailers and tractors North America 37,330 234,189 234,660
Aircraft North America 32,094 96,818 82,500
----------------------------------------------
Total identifiable net income 137,595 346,620 340,986
Administrative and other netloss (54,589) (67,148) (58,393)
----------------------------------------------
Total net income $ 83,006 $ 279,472 $ 282,593
==============================================
The net book value of these assets at December 31, 1995, 1994, and
1993 are as follows (in thousands):
Region 1995 1994 1993
---------------------------------------------------
Marine containers Various $ 61,730 $ 99,241 $ 149,909
Railcars North America 203,008 519,513 463,883
Trailers and tractors North America 235,269 205,536 735,347
Aircraft North America 222,128 305,426 388,724
---------------------------------------------------
Total equipment $ 722,135 $ 1,129,716 $ 1,737,863
===================================================
4. Income Taxes
The Partnership is not subject to income taxes as any income or loss is
included in the tax returns of the individual Partners. Accordingly, no
provision for income taxes has been made in the accounts of the
Partnership.
As of December 31, 1995, there were temporary differences of
approximately $386,004 between the financial statement carrying values
of assets and liabilities and the federal income tax bases of such
assets and liabilities, principally due to differences in depreciation
methods, and equipment reserves.
REPORT OF INDEPENDENT AUDITORS
The Partners
PLM Transportation Equipment Partners IXC 1986 Income Fund:
We have audited the financial statements of PLM Transportation Equipment
Partners IXC 1986 Income Fund as listed in the accompanying index. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
The Partnership will enter its 10th year of operation in 1996 and the
liquidation phase will begin. The General Partner will actively pursue the sale
of all of the Partnership's equipment with the intention of winding up the
Partnership and distributing all available cash to the Partners. Management's
plans in regard to this matter are also described in note 1.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of PLM Transportation Equipment
Partners IXC 1986 Income Fund as of December 31, 1995 and 1994 and the results
of its operations and its cash flows for each of the years in the three-year
period ended December 31, 1995, in conformity with generally accepted accounting
principles.
/S/ KPMG PEAT MARWICK LLP
SAN FRANCISCO, CALIFORNIA
March 27, 1996
PLM TRANSPORTATION EQUIPMENT PARTNERS IXC 1986 INCOME FUND
(A Limited Partnership)
BALANCE SHEETS
December 31,
ASSETS
1995 1994
--------------------------------------
Equipment held for operating leases, at cost $ 4,920,653 $ 5,082,353
Less accumulated depreciation (4,119,232) (3,980,922)
--------------------------------------
801,421 1,101,431
Equipment held for sale -- 273,785
--------------------------------------
Net equipment 801,421 1,375,216
Cash and cash equivalents 248,504 312,230
Restricted cash 6,600 6,600
Accounts receivable, net of allowance for doubtful accounts of
$9,684 in 1995 and $31,642 in 1994 110,417 106,868
Prepaid expenses and other assets 22,438 28,583
Due from affiliates -- 20,035
--------------------------------------
Total assets $ 1,189,380 $ 1,849,532
======================================
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Due to affiliates $ 3,523 $ --
Accounts payable 13,385 8,178
Prepaid deposits and reserves 27,155 48,612
--------------------------------------
Total liabilities 44,063 56,790
Partners' capital (deficit):
Limited Partners (16,914 units) 1,208,326 1,849,276
General Partner (63,009) (56,534)
--------------------------------------
Total partners' capital 1,145,317 1,792,742
--------------------------------------
Total liabilities and partners' capital $ 1,189,380 $ 1,849,532
======================================
See accompanying notes to financial
statements.
PLM TRANSPORTATION EQUIPMENT PARTNERS IXC 1986 INCOME FUND
(A Limited Partnership)
STATEMENTS OF INCOME
For the years ended December 31,
1995 1994 1993
-----------------------------------------------
Revenues:
Lease revenue $ 667,893 $ 958,179 $ 817,898
Interest and other income 18,666 9,370 5,961
Gain on disposition of equipment 229,599 2,561 14,139
-----------------------------------------------
Total revenues 916,158 970,110 837,998
Expenses:
Depreciation 278,415 323,556 338,348
Management fees to affiliate 45,353 55,926 41,322
Repairs and maintenance 155,402 178,720 198,812
Insurance expense 7,137 8,420 7,709
General and administrative expenses
to affiliates 163,169 183,308 129,868
Other general and administrative expenses 21,987 33,644 74,927
Bad debt expense (14,846) 31,655 10,124
-----------------------------------------------
Total expenses 656,617 815,229 801,110
-----------------------------------------------
Net income $ 259,541 $ 154,881 $ 36,888
===============================================
Partners' share of net income:
Limited Partners - 99% $ 256,946 $ 153,332 $ 36,519
General Partner - 1% 2,595 1,549 369
===============================================
Total $ 259,541 $ 154,881 $ 36,888
===============================================
Net income per Limited Partnership
Unit (16,914 units) $ 15.19 $ 9.07 $ 2.16
===============================================
Cash distributions $ 906,966 $ 388,585 $ 483,115
===============================================
Cash distributions per Limited
Partnership Unit $ 53.09 $ 22.74 $ 28.28
===============================================
See accompanying notes to financial
statements.
PLM TRANSPORTATION EQUIPMENT PARTNERS IXC 1986 INCOME FUND
(A Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the years ended December 31, 1995, 1994, and 1993
Limited General
Partners Partner Total
------------------------------------------------------
Partners' capital (deficit)
at December 31, 1992 $ 2,522,408 $ (49,735) $ 2,472,673
Net income 36,519 369 36,888
Cash distributions (478,284) (4,831) (483,115)
------------------------------------------------------
Partners' capital (deficit)
at December 31, 1993 2,080,643 (54,197) 2,026,446
Net income 153,332 1,549 154,881
Cash distributions (384,699) (3,886) (388,585)
------------------------------------------------------
Partners' capital (deficit)
at December 31, 1994 1,849,276 (56,534) 1,792,742
Net income 256,946 2,595 259,541
Cash distributions (897,896) (9,070) (906,966)
------------------------------------------------------
Partners' capital (deficit)
at December 31, 1995 $ 1,208,326 $ (63,009) $ 1,145,317
======================================================
See accompanying notes to financial
statements.
PLM TRANSPORTATION EQUIPMENT PARTNERS IXC 1986 INCOME FUND
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
for the years ended December 31,
1995 1994 1993
-------------------------------------------------
Operating activities:
Net income $ 259,541 $ 154,881 $ 36,888
Adjustments to reconcile net
income to net cash provided
by operating activities:
(Gain) loss from disposition of
equipment (229,599) (2,561) (14,139)
Depreciation 278,415 323,556 338,348
Changes in operating assets
and liabilities:
Restricted cash -- -- (6,600)
Accounts receivable, net (3,549) 26,472 (60,502)
Prepaid expenses and other
assets 6,145 2,465 (15,748)
Due from affiliates 20,035 (13,519) (6,516)
Due to affiliates 3,523 -- (13,183)
Accounts payable 5,207 (14,091) 21,129
Prepaid deposits and reserves (21,457) 44,005 1,674
-------------------------------------------------
Net cash provided by operating
activities 318,261 521,208 281,351
-------------------------------------------------
Investing activities:
Proceeds from disposition of
equipment 527,216 46,001 44,882
Payments for purchase of capital
improvements (2,237) (3,925) --
-------------------------------------------------
Net cash provided by investing
activities 524,979 42,076 44,882
Cash flows in financing activities:
Cash distributions paid to partners (906,966) (388,585) (483,115)
-------------------------------------------------
Cash and cash equivalents:
Net increase (decrease) in cash
and cash equivalents (63,726) 174,699 (156,882)
Cash and cash equivalents at
beginning of year 312,230 137,531 294,413
-------------------------------------------------
Cash and cash equivalents at
end of year $ 248,504 $ 312,230 $ 137,531
=================================================
See accompanying notes to financial
statements.
PLM TRANSPORTATION EQUIPMENT PARTNERS IXC 1986 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
1. Basis of Presentation
Organization
PLM Transportation Equipment Partners IXC 1986 Income Fund, a
California limited partnership (the Partnership), was formed on
September 20, 1985. The Partnership engages in the business of owning
and leasing transportation equipment. The Partnership commenced
significant operations in December 1986. PLM Financial Services, Inc.
(FSI) is the General Partner. FSI is a wholly-owned subsidiary of PLM
International, Inc. (PLM International) and manages the affairs of the
Partnership.
The net income (loss) and distributions of the Partnership are
allocated 99% to the Limited Partners and 1% to the General Partner.
The General Partner is entitled to an incentive fee equal to 15% of
"Surplus Distributions" as defined in the Partnership Agreement
remaining after the Limited Partners have received a certain minimum
rate of return.
These financial statements have been prepared on the accrual basis
of accounting in accordance with generally accepted accounting
principles. This requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Operations
The equipment of the Partnership is managed, under a continuing
equipment management agreement, by PLM Investment Management, Inc.
(IMI), a wholly-owned subsidiary of FSI. IMI receives a monthly
management fee from the Partnership for managing the equipment (see
Note 2). FSI, in conjunction with its subsidiaries, syndicates investor
programs, sells transportation equipment to investor programs and third
parties, manages pools of transportation equipment under agreements
with the investor programs, and is a General Partner of other Limited
Partnerships.
The Partnership will enter its 10th year of operation in 1996 and
the liquidation phase will begin. The General Partner will actively
pursue the sale of all of the Partnership's equipment with the
intention of winding up the Partnership and distributing all available
cash to the Partners.
Accounting for Leases
The Partnership's leasing operations generally consist of operating
leases. Under the operating lease method of accounting, the leased
asset is recorded at cost and depreciated over its estimated useful
life. Rental payments are recorded as revenue over the lease term.
Lease origination costs are capitalized and amortized over the term of
the lease.
Translation of Foreign Currency Transactions
The Partnership is a domestic partnership, however, a limited number of
the Partnership's transactions are denominated in a foreign currency.
The Partnership's asset and liability accounts denominated in a foreign
currency were translated into U.S. dollars at the rates in effect at
the balance sheet dates, and revenue and expense items were translated
at average rates during the year. Gains or losses resulting from
foreign currency transactions are included in the results of operations
and are not material.
PLM TRANSPORTATION EQUIPMENT PARTNERS IXC 1986 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
1. Basis of Presentation (continued)
Depreciation
Depreciation is computed on the double declining balance method based
upon estimated useful lives of 15 years for rail equipment, 12 years
for trailers, marine containers, and aircraft, and 8 years for
tractors. The depreciation method changes to straight line when annual
depreciation expense using the straight-line method exceeds that
calculated by the 200% declining balance method. Major expenditures
which are expected to extend the useful lives or reduce future
operating expenses of equipment are capitalized.
Transportation Equipment
In March 1995, the Financial Accounting Standards Board (FASB) issued
Statement No. 121, "Accounting for the Impairment of Long-Lived Assets
and Long-Lived Assets to be Disposed Of" (SFAS 121). This standard is
effective for years beginning after December 15, 1995. The Partnership
adopted SFAS 121 during 1995, the effect of which was not material as
the method previously employed by the Partnership was consistent with
SFAS 121. In accordance with SFAS 121, the General Partner reviews the
carrying value of its equipment portfolio at least annually in relation
to expected future market conditions for the purpose of assessing
recoverability of the recorded amounts. If projected future lease
revenue plus residual values are less than the carrying value of the
equipment, a loss on revaluation is recorded. No adjustments to reflect
impairment of individual equipment carrying values were required for
the year ended December 31, 1995.
Equipment held for operating leases is stated at cost. Equipment
held for sale is stated at the lower of the equipment's depreciated
cost or estimated net realizable value and is subject to a pending
contract for sale.
Repairs and Maintenance
Maintenance costs are usually the obligation of the lessee. If they are
not covered by the lessee they are charged against operations as
incurred.
Net Income (Loss) and Distributions per Limited Partnership Unit
Net income (loss) per Limited Partnership Unit is computed based on the
number of Limited Partnership Units outstanding during the period
(16,914 for 1994, 1993, and 1992).
Cash distributions are recorded when paid. Cash distributions to
investors in excess of net income are considered to represent a return
of capital on a Generally Accepted Accounting Principles (GAAP) basis.
Cash distributions to Limited Partners of $640,950, $231,367 and
$441,765 in 1995, 1994, and 1993, respectively, were deemed to be a
return of capital.
Cash and Cash Equivalents
The Partnership considers highly liquid investments that are readily
convertible to known amounts of cash with original maturities of three
months or less as cash equivalents for the purposes of this
presentation. Lessee security deposits held by the Partnership are
considered restricted cash.
2. General Partner and Transactions with Affiliates
An officer of FSI contributed $100 of the Partnership's initial net
capital. Under the Equipment Management Agreement, IMI receives a
monthly management fee equal to the greater of 10% of the Partnership's
"operating cash flow" or 1/12 of 1/2% of the Partnership's "gross
proceeds"
PLM TRANSPORTATION EQUIPMENT PARTNERS IXC 1986 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
2. General Partner and Transactions with Affiliates (continued)
as defined in the Partnership Agreement. Management fees of $3,523 were
payable to IMI as of December 31, 1995 and 1994.
The Partnership reimbursed FSI and its affiliates $163,169 for
administrative and other services performed on behalf of the
Partnership in 1995 ($183,308 in 1994 and $129,868 in 1993).
As of December 31, 1995, approximately 99% of the Partnership's
trailer equipment has been transferred into rental facilities operated
by an affiliate of the General Partner. Revenues collected under
short-term rental agreements with the rental facilities' customers are
distributed monthly to the owners of the related equipment. Direct
expenses associated with the equipment and an allocation of indirect
expenses of the rental facility operations are billed to the
Partnership.
At December 31, 1995, $3,523 was due to FSI and its affiliates
($20,035 was due from FSI and its affiliates at December 31, 1994).
3. Equipment
The components of equipment at December 31, 1995 and 1994 are as
follows:
Equipment held for operating leases: 1995 1994
------------------------------------
Rail equipment $ 178,501 $ 178,501
Marine containers 137,548 160,473
Aircraft 913,188 913,188
Trailers and tractors 3,691,416 3,830,191
------------------------------------
4,920,653 5,082,353
Less accumulated depreciation (4,119,232) (3,980,922)
------------------------------------
801,421 1,101,431
Equipment held for sale -- 273,785
------------------------------------
Net equipment $ 801,421 $ 1,375,216
====================================
Revenues are earned by placing the equipment under operating
leases and are billed monthly or quarterly. Rents for all equipment are
based on a fixed operating lease amount with the exception of marine
containers and trailers in the rental facilities. The Partnership's
marine containers are leased to the operator of utilization-type pools
which include equipment owned by unaffiliated parties. In such
instances revenues received by the Partnership consist of a specified
percentage of lease revenues generated by leasing the pooled equipment
to sub-lessees, after deducting certain direct operating expenses of
the pooled equipment. All equipment was either on lease or operating in
PLM-affiliated short-term rental facilities as of December 31, 1995.
With the exception of three railcars and three trailers, with a net
book value of $189,876, all equipment was either operating in rental
facilities or on lease as of December 31, 1994. During 1995, the
Partnership sold or disposed of four trailers, one marine container,
and five twin stack railcars with a net book value of $297,617 for
proceeds of $527,216. During 1994, the Partnership sold or disposed of
four trailers and three marine containers with a net book value of
$43,440 for proceeds of $46,001.
All leases are being accounted for as operating leases. Future
minimum rentals receivable under non-cancelable leases at December 31,
1995 during each of the next five years are approximately $99,600
-1996; $7,800 - 1997; $0 - 1998; and thereafter. Contingent rentals
based upon utilization amounted to $11,507 in 1995, $9,763 in 1994, and
$19,692 in 1993.
PLM TRANSPORTATION EQUIPMENT PARTNERS IXC 1986 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
3. Equipment (continued)
There were no lessees who accounted for 10% or more of total
revenues during 1995,1994 and 1993.
The Partnership owns certain equipment which is leased and
operated internationally. All leases relating to this equipment were
denominated in U.S. dollars.
The Partnership leases its aircraft, railcars and trailers to
lessees domiciled in two geographic region: Australia and North
America. The marine containers are leased to lessees in different
regions who operate the marine containers worldwide. The tables below
set forth geographic information about the Partnership's equipment
grouped by domicile of the lessee as of and for the years ended
December 31, 1995, 1994, and 1993 (in thousands):
Revenues: Region 1995 1994 1993
----------------------------------------------
Marine containers Various $ 11,507 $ 9,763 $ 19,692
Railcars North America 41,059 104,808 110,753
Trailers and tractors North America 546,927 767,520 662,276
Aircraft Australia 68,400 76,088 25,177
----------------------------------------------
Total revenues $ 667,893 $ 958,179 $ 817,898
==============================================
The following table sets forth identifiable income (loss)
information by equipment type by region (in thousands):
Net income (loss): Region 1995 1994 1993
----------------------------------------------
Marine containers Various $ 2,628 $ 1,916 $ 10,926
Railcars North America 269,662 44,848 34,075
Trailers and tractors North America 24,310 178,412 200,173
Aircraft Australia 11,683 18,995 (81,673)
----------------------------------------------
Total identifiable net income 308,283 244,171 163,501
Administrative and other net loss (48,742) (89,290) (126,613)
----------------------------------------------
Total net income $ 259,541 $ 154,881 $ 36,888
==============================================
The net book value of these assets at December 31, 1995, 1994, and
1993 are as follows (in thousands):
Region 1995 1994 1993
--------------------------------------------------
Marine containers Various $ 22,393 $ 35,083 $ 62,913
Railcars North America 48,059 56,181 380,730
Trailers and tractors North America 582,305 810,532 1,044,038
Aircraft North America 148,664 199,635 250,606
--------------------------------------------------
Total equipment held for operating
leases 801,421 1,101,431 1,738,287
Railcars held for sale: North America 273,785
--------------------------------------------------
Total equipment $ 801,421 $ 1,375,216 $ 1,738,287
==================================================
PLM TRANSPORTATION EQUIPMENT PARTNERS IXC 1986 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
4. Income Taxes
The Partnership is not subject to income taxes as any income or loss is
included in the tax returns of the individual Partners. Accordingly, no
provision for income taxes has been made in the accounts of the
Partnership.
As of December 31, 1995, there were temporary differences of
approximately $271,713 between the financial statement carrying values
of assets and liabilities and the federal income tax bases of such
assets and liabilities, principally due to differences in depreciation
methods, and equipment reserves.
REPORT OF INDEPENDENT AUDITORS
The Partners
PLM Transportation Equipment Partners IXD 1986 Income Fund:
We have audited the financial statements of PLM Transportation Equipment
Partners IXD 1986 Income Fund as listed in the accompanying index. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
The Partnership will enter its 10th year of operation in 1996 and the
liquidation phase will begin. The General Partner will actively pursue the sale
of all of the Partnership's equipment with the intention of winding up the
Partnership and distributing all available cash to the Partners. Management's
plans in regard to this matter are also described in note 1.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of PLM Transportation Equipment
Partners IXD 1986 Income Fund as of December 31, 1995 and 1994 and the results
of its operations and its cash flows for each of the years in the three-year
period ended December 31, 1995 in conformity with generally accepted accounting
principles.
/S/ KPMG PEAT MARWICK LLP
SAN FRANCISCO, CALIFORNIA
March 27, 1996
PLM TRANSPORTATION EQUIPMENT PARTNERS IXD 1986 INCOME FUND
(A Limited Partnership)
BALANCE SHEETS
December 31,
ASSETS
1995 1994
--------------------------------------
Equipment held for operating leases, at cost $ 1,716,659 $ 3,041,954
Less accumulated depreciation (1,405,716) (2,332,144)
--------------------------------------
Net equipment 310,943 709,810
Cash and cash equivalents 191,840 524,782
Accounts receivable, net of allowance for doubtful accounts
of $33,793 in 1995 and $6,481 in 1994 48,723 116,088
Due from affiliates 7,639 1,744
Prepaid insurance and other assets 16,549 37,668
--------------------------------------
Total assets $ 575,694 $ 1,390,092
======================================
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable 8,338 5,060
--------------------------------------
Total liabilities 8,338 5,060
Partners' capital (deficit):
Limited Partners (9,529 units) 603,509 1,413,009
General Partner (36,153) (27,977)
--------------------------------------
Total partners' capital 567,356 1,385,032
--------------------------------------
Total liabilities and partners' capital $ 575,694 $ 1,390,092
======================================
See accompanying notes to financial
statements.
PLM TRANSPORTATION EQUIPMENT PARTNERS IXD 1986 INCOME FUND
(A Limited Partnership)
STATEMENTS OF INCOME
For the years ended December 31,
1995 1994 1993
-----------------------------------------------
Revenues:
Lease revenue $ 267,141 $ 545,035 $ 677,550
Interest and other income 23,986 21,274 12,850
Gain on disposition of equipment 83,235 17,133 53,478
-----------------------------------------------
Total revenues 374,362 583,442 743,878
Expenses:
Depreciation 110,170 172,127 188,423
Management fees to affiliate 24,250 37,749 52,132
Repairs and maintenance 57,161 53,741 57,442
Insurance expense 3,176 3,708 3,950
General and administrative expenses
to affiliates 68,871 83,259 88,460
Other general and administrative expenses 35,806 19,762 35,765
Bad debt expense 28,877 19,406 12,474
-----------------------------------------------
Total expenses 328,311 389,752 438,646
-----------------------------------------------
Net income $ 46,051 $ 193,690 $ 305,232
===============================================
Partners' share of net income:
Limited Partners - 99% $ 45,590 $ 191,753 $ 302,180
General Partner - 1% 461 1,937 3,052
===============================================
Total $ 46,051 $ 193,690 $ 305,232
===============================================
Net income per Limited Partnership
Unit (9,529 units) $ 4.78 $ 20.12 $ 31.71
===============================================
Cash distributions $ 863,727 $ 398,654 $ 423,994
===============================================
Cash distributions per Limited
Partnership Unit $ 89.74 $ 41.42 $ 44.05
===============================================
See accompanying notes to financial
statements.
PLM TRANSPORTATION EQUIPMENT PARTNERS IXD 1986 INCOME FUND
(A Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the years ended December 31, 1995, 1994, and 1993
Limited General
Partners Partner Total
------------------------------------------------------
Partners' capital (deficit)
at December 31, 1992 $ 1,733,498 $ (24,740) $ 1,708,758
Net income 302,180 3,052 305,232
Cash distributions (419,754) (4,240) (423,994)
------------------------------------------------------
Partners' capital (deficit)
at December 31, 1993 1,615,924 (25,928) 1,589,996
Net income 191,753 1,937 193,690
Cash distributions (394,668) (3,986) (398,654)
------------------------------------------------------
Partners' capital (deficit)
at December 31, 1994 1,413,009 (27,977) 1,385,032
Net income 45,590 461 46,051
Cash distributions (855,090) (8,637) (863,727)
------------------------------------------------------
Partners' capital (deficit)
at December 31, 1995 $ 603,509 $ (36,153) $ 567,356
======================================================
See accompanying notes to financial
statements.
PLM TRANSPORTATION EQUIPMENT PARTNERS IXD 1986 INCOME FUND
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
for the years ended December 31,
1995 1994 1993
-------------------------------------------------
Operating activities:
Net income $ 46,051 $ 193,690 $ 305,232
Adjustments to reconcile net
income to net cash provided
by operating activities:
Gain on disposition of equipment (83,235) (17,133) (53,478)
Depreciation and amortization 110,170 172,127 188,423
Changes in operating assets
and liabilities:
Restricted cash -- --
Accounts receivable, net 67,365 (17,359) (20,416)
Due from affiliates (5,895) 3,663 (5,407)
Prepaid insurance and other
assets 21,119 18,595 13,094
Prepaid deposits and engine
reserves -- --
Due to affiliates -- (6,231)
Accounts payable 3,278 (5,528) 9,598
-------------------------------------------------
Net cash provided by operating
activities 158,853 348,055 430,815
Investing activities:
Proceeds from disposition of
equipment 371,932 47,315 54,879
Payments for capital improvements -- -- (1,734)
-------------------------------------------------
Net cash provided by investing
activities 371,932 47,315 53,145
Cash flows in financing activities:
Cash distributions paid to partners (863,727) (398,654) (423,994)
-------------------------------------------------
Cash and cash equivalents:
Net (decrease) increase in cash and
cash equivalents (332,942) (3,284) 59,966
Cash and cash equivalents at
beginning of year 524,782 528,066 468,100
-------------------------------------------------
Cash and cash equivalents at
end of year $ 191,840 $ 524,782 $ 528,066
=================================================
See accompanying notes to financial
statements.
PLM TRANSPORTATION EQUIPMENT PARTNERS IXD 1986 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
1. Basis of Presentation
Organization
PLM Transportation Equipment Partners IXD 1986 Income Fund, a
California limited partnership (the Partnership) was formed on
September 20, 1985. The Partnership is engaged in the business of
owning and leasing transportation equipment. The Partnership commenced
significant operations in March 1987. PLM Financial Services, Inc.
(FSI) is the General Partner. FSI is a wholly-owned subsidiary of PLM
International, Inc. (PLM International) and manages the affairs of the
Partnership.
The net income (loss) and distributions of the Partnership are
allocated 99% to the Limited Partners and 1% to the General Partner.
The General Partner is entitled to an incentive fee equal to 15% of
"Surplus Distributions" as defined in the Partnership Agreement
remaining after the Limited Partners have received a certain minimum
rate of return.
These financial statements have been prepared on the accrual basis
of accounting in accordance with generally accepted accounting
principles. This requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Operations
The equipment of the Partnership is managed, under a continuing
equipment management agreement, by PLM Investment Management, Inc.
(IMI), a wholly-owned subsidiary of FSI. IMI receives a
monthlymanagement fee payable monthly from the Partnership for managing
the equipment (see Note 2). FSI, in conjunction with its subsidiaries,
syndicates investor programs, sells transportation equipment to
investor programs, manages pools of transportation equipment under
agreements with these programs, and is a General Partner of other
Limited Partnerships.
The Partnership will enter its 10th year of operation in 1996 and
the liquidation phase will begin. The General Partner will actively
pursue the sale of all of the Partnership's equipment with the
intention of winding up the Partnership and distributing all available
cash to the Partners.
Accounting for Leases
The Partnership's leasing operations generally consist of operating
leases. Under the operating lease method of accounting, the leased
asset is recorded at cost and depreciated over its estimated useful
life. Rental payments are recorded as revenue over the lease term.
Lease origination costs are capitalized and amortized over the term of
the lease.
Translation of Foreign Currency Transactions
The Partnership is a domestic partnership, however, a limited number of
the Partnership's transactions are denominated in a foreign currency.
The Partnership's asset and liability accounts denominated in a foreign
currency were translated into U.S. dollars at the rates in effect at
the balance sheet dates, and revenue and expense items were translated
at average rates during the year. Gains or losses resulting from
foreign currency transactions are included in the results of operations
and are not material.
PLM TRANSPORTATION EQUIPMENT PARTNERS IXD 1986 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
1. Basis of Presentation (continued)
Depreciation
Depreciation is computed on the double declining balance method based
upon estimated useful lives of 12 years for trailers, marine
containers, and aircraft, and 8 years for tractors. The depreciation
method changes to straight line when annual depreciation expense using
the straight line method exceeds that calculated by the 200% declining
balance method. Major expenditures which are expected to extend the
useful lives or reduce future operating expenses of equipment are
capitalized.
Transportation Equipment
In March 1995, the Financial Accounting Standards Board (FASB) issued
Statement No. 121, "Accounting for the Impairment of Long-Lived Assets
and Long-Lived Assets to be Disposed Of" (SFAS 121). This standard is
effective for years beginning after December 15, 1995. The Partnership
adopted SFAS 121 during 1995, the effect of which was not material as
the method previously employed by the Partnership was consistent with
SFAS 121. In accordance with SFAS 121, the General Partner reviews the
carrying value of its equipment portfolio at least annually in relation
to expected future market conditions for the purpose of assessing
recoverability of the recorded amounts. If projected future lease
revenue plus residual values are less than the carrying value of the
equipment, a loss on revaluation is recorded. No adjustments to reflect
impairment of individual equipment carrying values were required for
the year ended December 31, 1995.
Equipment held for operating leases is stated at cost.
Repairs and Maintenance
Maintenance costs are usually the obligation of the lessee. If they are
not covered by the lessee they are charged against operations as
incurred. To meet the maintenance obligations of certain aircraft
engines, escrow accounts are prefunded by the lessees. Such prefunded
amounts are included in the balance sheet as restricted cash and engine
reserves.
Net Income (Loss) and Distributions per Limited Partnership Unit
Net income (loss) per Limited Partnership Unit is computed based on the
number of Limited Partnership Units outstanding during the period
(9,529 for 1994, 1993 and 1992).
Cash distributions are recorded when paid. Cash distributions to
investors in excess of net income are considered to represent a return
of capital on a Generally Accepted Accounting Principles (GAAP) basis.
Cash distributions to Limited Partners of $809,500, $202,915, and
$117,574 in 1994, 1993 and 1992, respectively, were deemed to be a
return of capital.
Cash and Cash Equivalents
The Partnership considers highly liquid investments that are readily
convertible to known amounts of cash with original maturities of three
months or less as cash equivalents for the purposes of this
presentation.
PLM TRANSPORTATION EQUIPMENT PARTNERS IXD 1986 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
2. General Partner and Transactions with Affiliates
An officer of FSI contributed $100 of the Partnership's initial net
capital. Under the Equipment Management Agreement, IMI receives a
monthlymanagement fee equal to the greater of 10% of the Partnership's
"operating cash flow" or 1/12 of 1/2% of the Partnership's "gross
proceeds" as defined in the Partnership Agreement. Management fees of
$1,985 and $3,607 were payable to IMI as of December 31, 1995 and 1994,
respectively.
The Partnership reimbursed FSI and its affiliates $68,871 for
administrative and other services performed on behalf of the
Partnership in 1995 ($83,259 in 1994 and $88,460 in 1993).
As of December 31, 1995, all of the Partnership's trailer
equipment has been transferred into rental facilities operated by an
affiliate of the General Partner. Revenues collected under short-term
rental agreements with the rental facilities' customers are distributed
monthly to the owners of the related equipment. Direct expenses
associated with the equipment and an allocation of indirect expenses of
rental facility operations are billed to the Partnership.
At December 31, 1995, $7,639 was due from FSI and its affiliates
($1,744 at December 31, 1994).
3. Equipment
The components of equipment at December 31, 1995 and 1994 are as
follows:
Equipment held for operating leases: 1995 1994
------------------------------------
Marine containers $ 330,886 $ 417,961
Trailers 1,385,773 2,623,993
------------------------------------
1,716,659 3,041,954
Less accumulated depreciation (1,405,716) (2,332,144)
------------------------------------
Net equipment $ 310,943 $ 709,810
====================================
Revenues are earned by placing the equipment under operating leases
and are billed monthly or quarterly. Rents for all equipment are based
on a fixed operating lease amount with the exception of marine
containers and certain trailers. The Partnership's marine containers
are leased to the operator of utilization-type pools which include
equipment owned by unaffiliated parties. In such instances revenues
received by the Partnership consist of a specified percentage of lease
revenues generated by leasing the pooled equipment to sub-lessees,
after deducting certain direct operating expenses of the pooled
equipment. All equipment was either on lease or operating in
PLM-affiliated short-term rental facilities as of December 31, 1995.
With the exception of 24 trailers with a carrying value of $224,848,
all equipment was either operating in rental facilities or on lease as
of December 31, 1994. During 1995, the Partnership sold or disposed of
45 marine containers and 30 trailers with a net book value of $288,697
for the proceeds of $371,932. During 1994, the Partnership sold or
disposed of 29 marine containers and two trailers with a net book value
of $30,182 for the proceeds of $47,315.
Future minimum rentals receivable under this non-cancelable
sales-type lease at December 31, 1995 during each of the next five
years are approximately $0 - 1996; and thereafter. Contingent rentals
based upon utilization amounted to $78,612 in 1995; $88,524 in 1994;
and $145,270 in 1993.
The lessees accounting for 10% or more of the total revenues during
1995, 1994, and 1993 were Trans Ocean Ltd. (16% in 1995, 16% in 1994,
and 21% in 1993), and Van Wyk, Inc. ( 28% in 1994, and 24% in 1993).
PLM TRANSPORTATION EQUIPMENT PARTNERS IXD 1986 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
3. Equipment (continued)
The Partnership owns certain equipment which is leased and
operated internationally. All leases relating to this equipment were
denominated in U.S. dollars.
The Partnership leases its trailers to lessees domiciled in one
geographic region: North America. The marine containers are leased to
lessees in different regions who operate the marine containers
worldwide. The tables below set forth geographic information about the
Partnership's equipment grouped by domicile of the lessee as of and for
the years ended December 31, 1995, 1994, and 1993 (in thousands):
Revenues: Region 1995 1994 1993
----------------------------------------------
Marine containers Various $ 78,612 $ 88,524 $ 145,270
Trailers North America 188,529 456,511 532,280
----------------------------------------------
Total revenues $ 267,141 $ 545,035 $ 677,550
==============================================
The following table sets forth identifiable income (loss)
information by equipment type by region (in thousands):
Income (loss): Region 1995 1994 1993
----------------------------------------------
Marine containers International $ 98,892 $ 75,957 $ 137,332
Trailers North America (8,064) 164,251 209,262
----------------------------------------------
Total identifiable income (loss) 90,828 240,208 305,232
Administrative and other income
(loss) (44,777) (46,518) (41,362)
----------------------------------------------
Total income (loss) $ 46,051 $ 193,690 $ 305,232
==============================================
The net book value of these assets at December 31, 1995, 1994, and
1993 are as follows (in thousands):
Region 1995 1994 1993
----------------------------------------------
Marine containers International $ 64,062 $ 104,579 $ 145,535
Trailers North America 246,881 605,231 766,584
----------------------------------------------
Total equipment $ 310,943 $ 709,810 $ 912,119
==============================================
4. Income Taxes
The Partnership is not subject to income taxes as any income or loss is
included in the tax returns of the individual Partners. Accordingly, no
provision for income taxes has been made in the accounts of the
Partnership.
As of December 31, 1995, there were temporary differences of
approximately $295,089 between the financial statement carrying values
of assets and liabilities and the federal income tax bases of such
assets and liabilities, principally due to differences in depreciation
methods.
PLM TRANSPORTATION EQUIPMENT PARTNERS IX
1986 INCOME FUND
INDEX OF EXHIBITS
Exhibit Page
4. Limited Partnership Agreement of Registrant. *
10. Management Agreement between each Registrant and *
PLM Investment Management, Inc.
24. Powers of Attorney
* Incorporated by reference. See page 25 of this report.