UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------- FORM 10-Q [x] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal quarter ended March 31, 1996. [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission file number 33-657 ----------------------- 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 ______ PLM TRANSPORTATION EQUIPMENT PARTNERS IXA 1986 INCOME FUND (A Limited Partnership) BALANCE SHEETS ASSETS March 31, December 31, 1996 1995 ---------------------------------------- Equipment held for operating leases, at cost $ 4,237,326 $ 4,242,401 Less accumulated depreciation (3,616,760) (3,567,969) ---------------------------------------- Net equipment 620,566 674,432 Cash and cash equivalents 230,787 251,709 Accounts receivable, net of allowance for doubtful accounts of $57,376 in 1996 and $57,022 in 1995 80,558 107,933 Net investment in sales-type lease -- 1,003,564 Due from affiliates 2,941 2,941 Prepaid insurance 2,160 3,544 ---------------------------------------- Total assets $ 937,012 $ 2,044,123 ======================================== LIABILITIES AND PARTNERS' CAPITAL Liabilities: Accounts payable $ 9,969 $ 23,272 Prepaid deposits 1,756 20,028 ---------------------------------------- Total liabilities 11,725 43,300 Partners' capital (deficit): Limited Partners (24,285 units) 1,022,989 2,087,769 General Partner (97,702) (86,946) ---------------------------------------- Total partners' capital 925,287 2,000,823 ---------------------------------------- Total liabilities and partners' capital $ 937,012 $ 2,044,123 ======================================== See accompanying notes to financial statements. PLM TRANSPORTATION EQUIPMENT PARTNERS IXA 1986 INCOME FUND (A Limited Partnership) STATEMENTS OF OPERATIONS Three Months Ended March 31, 1996 1995 ------------------------------ Revenues: Lease revenue $ 111,137 $ 120,093 Interest and other income 10,965 4,074 Gain on disposition of equipment 2,669 9,545 -------------------------------- Total revenues 124,771 133,712 Expenses: Depreciation 53,234 101,860 Management fees to affiliate 16,026 15,178 Repairs and maintenance 11,994 81,511 General and administrative expenses to affiliates 23,657 30,679 Other general and administrative expenses 20,931 11,983 -------------------------------- Total expenses 125,842 241,211 -------------------------------- Net loss $ (1,071) $ (107,499) ================================ Partners' share of net loss Limited Partners - 99% $ (1,060) $ (106,424) General Partner - 1% (11) (1,075) -------------------------------- Total $ (1,071) $ (107,499) ================================ Net loss per Limited Partnership Unit - 24,285 units $ (0.04) $ (4.38) ================================ Cash distributions $ 74,465 $ 74,476 ================================ Cash distributions per Limited Partnership Unit $ 3.04 $ 3.04 ================================ Special cash distributions $ 1,000,000 $ -- ================================ Special cash distributions per Limited Partnership Unit $ 40.77 $ -- ================================ Total cash distribution per Limited Partnership Unit $ 43.81 $ 3.04 ================================ 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 period from December 31, 1994 to March 31, 1996 Limited General Partners Partners Total ----------------------------------------------------- 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 Net loss (1,060) (11) (1,071) Quarterly cash distributions (73,720) (745) (74,465) Special distributions (990,000) (10,000) (1,000,00) -------------------------------------------------------- Partners' capital (deficit) at March 31, 1996 $ 1,022,989 (97,702) 925,287 ======================================================== See accompanying notes to financial statements. PLM TRANSPORTATION EQUIPMENT PARTNERS IXA 1986 INCOME FUND (A Limited Partnership) STATEMENTS OF CASH FLOWS For the three months ended March 31, 1996 1995 ---------------------------------- Operating activities: Net loss $ (1,071) $ (107,499) Adjustments to reconcile net loss to net cash provided by operating activities: Gain on disposition of equipment (2,669) (9,545) Depreciation 53,234 101,860 Changes in operating assets and liabilities Accounts receivable, net 27,375 12,052 Due to/from affiliates -- (9,860) Prepaid insurance 1,384 746 Accounts payable (13,303) 515 Prepaid deposits (18,272) 3,501 ----------------------------------- Cash provided by (used in ) operating activities 46,678 (8,230) ----------------------------------- Investing activities: Proceeds from disposition of equipment 3,301 26,353 Payments received on sales-type lease 1,003,564 -- Payments for purchase of capital improvements -- (876) ----------------------------------- Cash provided by investing activities 1,006,865 25,477 ----------------------------------- Cash flows used in financing activities: Cash distributions paid to partners (1,074,465) (74,476) ----------------------------------- Cash and cash equivalents: Net decrease in cash and cash equivalents (20,922) (57,229) Cash and cash equivalents at beginning of period 251,709 298,718 ----------------------------------- Cash and cash equivalents at end of period $ 230,787 $ 241,489 =================================== See accompanying notes to financial statements. PLM TRANSPORTATION EQUIPMENT PARTNERS IXA 1986 INCOME FUND (A Limited Partnership) NOTES TO FINANCIAL STATEMENTS March 31, 1996 1. Opinion of Management In the opinion of the management of PLM Financial Services, Inc., the General Partner, the accompanying unaudited financial statements contain all adjustments necessary, consisting only of normal recurring accruals, to present fairly the Partnership's financial position as of March 31, 1996, the statements of operations and cash flows for the three months ended March 31, 1996 and 1995, the statements of changes in partners' capital for the period from December 31, 1994 to March 31, 1996. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted from the accompanying financial statements. For further information, reference should be made to the financial statements and notes thereto included in the Partnership's Annual Report on Form 10-K for the year ended December 31, 1995, on file at the Securities and Exchange Commission. 2. Equipment Equipment held for operating leases is stated at cost. The components of equipment are as follows: March 31, December 31, 1996 1995 ------------------------------------- Rail equipment $ 783,870 $ 783,870 Marine containers 1,415,797 1,420,872 Trailers 2,037,659 2,037,659 ------------------------------------- 4,237,326 4,242,401 Less accumulated depreciation (3,616,760) (3,567,969) ------------------------------------- Net equipment $ 620,566 $ 674,432 ===================================== All equipment was either on lease or operating in PLM affiliated short-term rental facilities except one hand forklift with a net carrying value of $48,352 as of March 31, 1996. All equipment was either on lease or operating in PLM-affiliated short-term rental facilities as of December 31, 1995. During the three months ended March 31, 1996, the Partnership sold or disposed of one marine container with an aggregate book value of $633 for proceeds of $673. In addition, additional proceeds of $2,629 was received for the commuter aircraft which was under sales-type lease. During the three months ended March 31, 1995, the Partnership sold or disposed of one trailer, and two marine containers with an aggregate book value of $16,808 for proceeds of $26,353. 3. Liquidation and special distributions During the first quarter of 1996, the Partnership completed its 10th year of operations. As originally anticipated by the General Partner, the Partnership will be liquidated in an orderly manner in its 11th and 12th years of operation. The General Partner is actively marketing the remaining equipment portfolio with the intent of maximizing sale proceeds. As sale proceeds are received the General Partner intends to periodicially declare special distributions to distribute the sale proceeds to the partners. During the liquidation phase of the Partnership the equipment will continue to be leased under operating leases until sold. Operating cash flows, to the extent they exceed Partnership expenses, will continue to be distributed on a quarterly basis to partners. The amounts reflected for assets and liabilities of the Partnership have not been adjusted to reflect liquidation values. The equipment portfolio continues to be carried at the lower of depreciated cost or fair value less cost to dispose. Although the General Partner estimates that there will be distributions after liquidation of assets and liabilities, the amounts cannot be accurately determined prior to actual liquidation of the equipment. Any excess proceeds over expected PLM TRANSPORTATION EQUIPMENT PARTNERS IXA 1986 INCOME FUND (A Limited Partnership) NOTES TO FINANCIAL STATEMENTS March 31, 1996 3. Liquidation and special distributions (continued) Partnership obligations will be distributed to the Partners throughout the liquidation period. Upon final liquidation, the Partnership will be dissolved. During the three months ended March 31, 1996, the General Partner paid special distributions of $40.77 per Limited Partnership Unit which were the result of proceeds from the sale of the commuter aircraft. No special distributions was paid during the three months ended March 31, 1995. The Partnership is not permitted to reinvest proceeds from sales or liquidations of equipment. These proceeds, in excess of operational cash requirements, are periodically paid out to limited partners in the form of special distributions. The sales and liquidations occur because of equipment destructions, the determination by the General Partner that it is the appropriate time to maximize the return on an asset through sale of that asset, and, in some leases, the ability of the lessee to exercise purchase options. 4. 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 was structured with a one year term commencing June 1995. The lessee was to make monthly payments of $19,500. Gross lease payments of $234,000 were to 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. During the first quarter of 1996, the lessee exercised its option to buy the aircraft for approximately $1 million. PLM TRANSPORTATION EQUIPMENT PARTNERS IXB 1986 INCOME FUND (A Limited Partnership) BALANCE SHEETS ASSETS March 31, December 31, 1996 1995 -------------------------------------- Equipment held for operating leases, at cost $ 2,742,323 $ 2,908,067 Less accumulated depreciation (2,304,426) (2,408,060) -------------------------------------- Net equipment 437,897 500,007 Cash and cash equivalents 331,957 351,363 Investment in unconsolidated special purpose entity 201,303 222,128 Accounts receivable, net of allowance for doubtful accounts of $24,838 in 1996 and $29,460 in 1995 72,373 82,668 Prepaid insurance 1,491 2,447 -------------------------------------- Total assets $ 1,045,021 $ 1,158,613 ====================================== LIABILITIES AND PARTNERS' CAPITAL Liabilities: Due to affiliates $ 3,637 $ 3,637 Accounts payable and other liabilities 69,660 72,569 Prepaid deposits 23,142 16,248 -------------------------------------- Total liabilities 96,439 92,454 Partners' capital (deficit): Limited Partners (17,460 units) 1,015,963 1,132,364 General Partner (67,381) (66,205) --------------- --------------- Total partners' capital 948,582 1,066,159 -------------------------------------- Total liabilities and partners' capital $ 1,045,021 $ 1,158,613 ====================================== See accompanying notes to financial statements. PLM TRANSPORTATION EQUIPMENT PARTNERS IXB 1986 INCOME FUND (A Limited Partnership) STATEMENTS OF OPERATIONS Three Months Ended March 31, 1996 1995 ------------------------------ Revenues: Lease revenue $ 77,492 $ 145,558 Interest and other income 4,095 6,291 Gain on disposition of equipment 11,851 17,544 ------------------------------ Total revenues 93,438 169,393 Expenses: Depreciation 38,369 71,098 Management fees to affiliate 10,913 10,913 Repairs and maintenance 9,218 17,006 General and administrative expenses to affiliates 19,388 29,293 Other general and administrative expenses 10,509 42,442 ------------------------------ Total expenses 88,397 170,752 Equity in net loss of unconsolidated special purpose entity (20,867) -- ------------------------------ Net loss $ (15,826) $ (1,359) ============================== Partners' share of net loss Limited Partners - 99% $ (15,668) $ (1,345) General Partner - 1% (158) (14) ------------------------------ Total $ (15,826) $ (1,359) ============================== Net loss per Limited Partnership Unit - 17,460 units $ (0.90) $ (0.08) ============================== Cash distributions $ 101,751 $ 135,525 ============================== Cash distributions per Limited Partnership Unit $ 5.77 $ 7.68 ============================== Special distributions $ -- $ 100,000 ============================== Special distributions per Limited Partnership Unit $ -- $ 5.67 ============================== Total distributions per Limited Partnership Unit $ 5.77 $ 13.35 ============================== 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 period from December 31, 1994 to March 31, 1996 Limited General Partners Partners Total ----------------------------------------------------- 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 Net loss (15,668) (158) (15,826) Cash distributions (100,733) (1,018) (101,751) ----------------------------------------------------- Partners' capital (deficit) at March 31, 1996 $ 1,015,963 (67,381) 948,582 ===================================================== See accompanying notes to financial statements. PLM TRANSPORTATION EQUIPMENT PARTNERS IXB 1986 INCOME FUND (A Limited Partnership) STATEMENTS OF CASH FLOWS For the three months ended March 31, 1996 1995 --------------------------------- Operating activities: Net loss $ (15,826) $ (1,359) Adjustments to reconcile net loss to net cash provided by operating activities: Gain on disposition of equipment (11,851) (17,544) Depreciation 38,369 71,098 Cash distributions from unconsolidated special purpose entity in excess of income accrued 20,825 -- Changes in operating assets and liabilities: Accounts receivable, net 10,295 23,643 Prepaid insurance 956 663 Due to affiliates -- (3,825) Accounts payable (2,909) (7,096) Prepaid deposits 6,894 609 --------------------------------- Cash provided by operating activities 46,753 66,189 --------------------------------- Investing activities: Proceeds from disposition of equipment 35,592 28,941 --------------------------------- Cash provided by investing activities 35,592 28,941 Cash flows used in financing activities: Cash distributions paid to partners (101,751) (235,525) --------------------------------- Cash and cash equivalents: Net decrease in cash and cash equivalents (19,406) (140,395) Cash and cash equivalents at beginning of period 351,363 492,060 --------------------------------- Cash and cash equivalents at end of period $ 331,957 $ 351,665 ================================= See accompanying notes to financial statements. PLM TRANSPORTATION EQUIPMENT PARTNERS IXB 1986 INCOME FUND (A Limited Partnership) NOTES TO FINANCIAL STATEMENTS March 31, 1996 1. Opinion of Management In the opinion of the management of PLM Financial Services, Inc., the General Partner, the accompanying unaudited financial statements contain all adjustments necessary, consisting only of normal recurring accruals, to present fairly the Partnership's financial position as of March 31, 1996, the statements of operations and cash flows for the three months ended March 31, 1996 and 1995, the statements of changes in partners' capital for the period from December 31, 1994 to March 31, 1996. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted from the accompanying financial statements. For further information, reference should be made to the financial statements and notes thereto included in the Partnership's Annual Report on Form 10-K for the year ended December 31, 1995, on file at the Securities and Exchange Commission. 2. Equipment Owned equipment held for operating leases is stated at cost. The components of owned equipment are as follows: March 31, December 31, 1996 1995 ----------------------------------- Rail equipment $ 867,300 $ 867,300 Marine containers 367,784 413,633 Trailers and tractors 1,507,239 1,627,134 ----------------------------------- 2,742,323 2,908,067 Less accumulated depreciation (2,304,426) (2,408,060) ----------------------------------- Net equipment $ 437,897 $ 500,007 =================================== With the exception of one sidelift with an aggregate net carrying value of $66,340, all equipment was either on lease or operating in PLM affiliated short-term rental facilities as of March 31, 1996. With the exception of one trailer and one sidelift with a carrying value of $79,024, all equipment was on lease or operating in PLM affiliated short-term rental facilities as of December 31, 1995. During the three months ended March 31, 1996, the Partnership sold or disposed of three trailers and two marine containers with an aggregate net book value of $23,741 for proceeds of $35,592. During the three months ended March 31, 1995, the Partnership sold or disposed of one trailer and one marine container with an aggregate net book value of $11,397 for proceeds of $28,941. 3. Liquidation and special distributions During the first quarter of 1996, the Partnership completed its 10th year of operations. As originally anticipated by the General Partner, the Partnership will be liquidated in an orderly manner in its 11th and 12th years of operation. The General Partner is actively marketing the remaining equipment portfolio with the intent of maximizing sale proceeds. As sale proceeds are received the General Partner intends to periodicially declare special distributions to distribute the sale proceeds to the partners. During the liquidation phase of the Partnership the equipment will continue to be leased under operating leases until sold. Operating cash flows, to the extent they exceed Partnership expenses, will continue to be distributed on a quarterly basis to partners. The amounts reflected for assets and liabilities of the Partnership have not been adjusted to reflect liquidation values. The equipment portfolio continues to be PLM TRANSPORTATION EQUIPMENT PARTNERS IXB 1986 INCOME FUND (A Limited Partnership) NOTES TO FINANCIAL STATEMENTS March 31, 1996 3. Liquidation and special distributions (continued) carried at the lower of depreciated cost or fair value less cost to dispose. Although the General Partner estimates that there will be distributions after liquidation of assets and liabilities, the amounts cannot be accurately determined prior to actual liquidation of the equipment. Any excess proceeds over expected Partnership obligations will be distributed to the Partners throughout the liquidation period. Upon final liquidation, the Partnership will be dissolved. During the three months ended March 31, 1995, the General Partner paid special distributions of $5.67 per Limited Partnership Unit which were the result of proceeds from equipment liquidations. The Partnership is not permitted to reinvest proceeds from sales or liquidations of equipment. These proceeds, in excess of operational cash requirements, are periodically paid out to limited partners in the form of special distributions. The sales and liquidations occur because of equipment destructions, the determination by the General Partner that it is the appropriate time to maximize the return on an asset through sale of that asset, and, in some leases, the ability of the lessee to exercise purchase options. 4. Investment in Unconsolidated Special Purpose Entity Prior to 1996, the Partnership accounted for operating activities associated with joint ownership of rental equipment as undivided interests, including its proportionate share of each asset with similar wholly-owned assets in its financial statements. Under generally accepted accounting principles, the effects of such activities, if material, should be reported using the equity method of accounting. Therefore, effective January 1, 1996, the Partnership adopted the equity method to account for its investment in such jointly-held assets. The principle differences between the previous accounting method and the equity method relates to the presentation of activities relating to these assets in the statement of operations. Whereas, under equity accounting the Partnership's proportionate share is presented as a single net amount, "equity in net income (loss) of unconsolidated special purpose entities", under the previous method, the Partnership's statement of operations reflected its proportionate share of each individual item of revenue and expense. Accordingly, the effect of adopting the equity method of accounting has no cumulative effect on previously reported partner's capital or on the Partnership's net income (loss) for the period of adoption. Because the effects on previously issued financial statements of applying the equity method of accounting to investments in jointly-owned assets are not considered to be material to such financial statements taken as a whole, previously issued financial statements have not been restated. However, certain items have been reclassified in the previously issued balance sheet to conform to the current period presentation. The net investment in unconsolidated special purpose entity includes a 50% interest in a commuter aircraft. PLM TRANSPORTATION EQUIPMENT PARTNERS IXC 1986 INCOME FUND (A Limited Partnership) BALANCE SHEETS ASSETS March 31, December 31, 1996 1995 ---------------------------------------- Equipment held for operating leases, at cost $ 3,984,540 $ 4,007,465 Less accumulated depreciation (3,389,289) (3,354,708) ---------------------------------------- Net equipment 595,251 652,757 Cash and cash equivalents 184,970 248,504 Investment in unconsolidated special purpose entity 145,284 133,363 Accounts receivable, net of allowance for doubtful accounts of $5,451 in 1996 and $9,684 in 1995 64,300 104,717 Prepaid insurance and other assets 32,773 22,438 ---------------------------------------- Total assets $ 1,022,578 $ 1,161,779 ======================================== LIABILITIES AND PARTNERS' CAPITAL Liabilities: Due to affiliates $ 3,523 $ 3,523 Accounts payable 10,680 12,939 --------------------------------------- Total liabilities 14,203 16,462 Partners' capital (deficit): Limited Partners (16,914 units) 1,072,754 1,208,326 General Partner (64,379) (63,009) -------------- --------------- Total partners' capital 1,008,375 1,145,317 --------------------------------------- Total liabilities and partners' capital $ 1,022,578 $ 1,161,779 ======================================= See accompanying notes to financial statements. PLM TRANSPORTATION EQUIPMENT PARTNERS IXC 1986 INCOME FUND (A Limited Partnership) STATEMENTS OF OPERATIONS Three Months Ended March 31, 1996 1995 ------------------------------ Revenues: Lease revenue $ 106,638 $ 190,510 Interest and other income 2,915 6,541 Gain on disposition of equipment 1,688 236,072 ------------------------------ Total revenues 111,241 433,123 Expenses: Depreciation 53,986 75,473 Management fees to affiliate 11,434 13,649 Repairs and maintenance 33,878 48,958 General and administrative expenses to affiliates 31,942 48,283 Other general and administrative expenses 5,620 8,542 ------------------------------ Total expenses 136,860 194,905 Equity in net loss of unconsolidated special purpose entity (12,550) -- ------------------------------ Net income (loss) $ (38,169) $ 238,218 ============================== Partners' share of net income (loss): Limited Partners - 99% $ (37,787) $ 235,836 General Partner - 1% (382) 2,382 ------------------------------ Total $ (38,169) $ 238,218 ============================== Net income (loss) per Limited Partnership Unit (16,914 units) $ (2.23) $ 13.94 ============================== Cash distributions $ 98,773 $ 105,023 ============================== Cash distributions per Limited Partnership Unit $ 5.78 $ 6.15 ============================== Special distributions $ - $ 50,000 ============================== Special distributions per Limited Partnership Unit $ -- $ 2.93 ============================== Total distributions per Limited Partnership Unit $ 5.78 $ 9.08 ============================== 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 period from December 31, 1994 to March 31, 1996 Limited General Partners Partners Total ------------------------------------------------------- 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 Net loss (37,787) (382) (38,169) Cash distributions (97,785) (988) (98,773) ------------------------------------------------------- Partners' capital (deficit) at March 31, 1996 $ 1,072,754 (64,379) 1,008,375 ======================================================= See accompanying notes to financial statements. PLM TRANSPORTATION EQUIPMENT PARTNERS IXC 1986 INCOME FUND (A Limited Partnership) STATEMENTS OF CASH FLOWS For the three months ended March 31, 1996 1995 --------------------------------- Operating activities: Net (loss) income $ (38,169) $ 238,218 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Gain on disposition of equipment (1,688) (236,072) Depreciation 53,986 75,473 Loss from unconsolidated special purpose entity in excess of cash distributions (11,921) -- Change in operating assets and liabilities Accounts receivable, net 40,417 53,523 Due from affiliates -- 260 Prepaid deposits and reserves -- (25,207) Prepaid expenses and other assets (10,335) 2,087 Accounts payable and other liabilities (2,259) 8,457 --------------------------------- Cash provided by operating activities 30,031 116,739 --------------------------------- Investing activities: Proceeds from disposition of equipment 5,208 503,260 --------------------------------- Cash provided by investing activities 5,208 503,260 --------------------------------- Cash flows used in financing activities: Cash distributions paid to partners (98,773) (155,023) --------------------------------- Cash and cash equivalents: Net (decrease) increase in cash and cash equivalents (63,534) 464,976 Cash and cash equivalents at beginning of period 248,504 312,230 --------------------------------- Cash and cash equivalents at end of period $ 184,970 $ 777,206 ================================= See accompanying notes to financial statements. PLM TRANSPORTATION EQUIPMENT PARTNERS IXC 1986 INCOME FUND (A Limited Partnership) NOTES TO FINANCIAL STATEMENTS March 31, 1996 1. Opinion of Management In the opinion of the management of PLM Financial Services, Inc., the General Partner, the accompanying unaudited financial statements contain all adjustments necessary, consisting only of normal recurring accruals, to present fairly the Partnership's financial position as of March 31, 1996, the statements of operations and cash flows for the three months ended March 31, 1996 and 1995, the statements of changes in partners' capital for the period from December 31, 1994 to March 31, 1996. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted from the accompanying financial statements. For further information, reference should be made to the financial statements and notes thereto included in the Partnership's Annual Report on Form 10-K for the year ended December 31, 1995, on file at the Securities and Exchange Commission. 2. Equipment Equipment held for operating leases is stated at cost. The components of owned equipment are as follows: March 31, December 31, 1996 1995 ------------------------------------- Rail equipment $ 178,501 $ 178,501 Marine containers 114,623 137,548 Trailers and tractors 3,691,416 3,691,416 ------------------------------------- 3,984,540 4,007,465 Less accumulated depreciation (3,389,289) (3,354,708) ------------------------------------- Net equipment $ 595,251 $ 652,757 ===================================== All of the equipment was either on lease or operating in PLM-affiliated short-term rental facilities as of March 31, 1996. With the exception of two trailers with a carrying value of $16,119, all of the equipment was either on lease or operating in PLM affiliated short-term rental facilities as of December 31, 1995. During the three months ended March 31, 1996, the Partnership sold or disposed of one marine container with net book value of $3,520 for proceeds of $5,208. During the three months ended March 31, 1995, the Partnership sold or disposed of five twin stack railcars with a net book value of $267,188 for proceeds of $503,260. 3. Liquidation and special distributions During the first quarter of 1996, the Partnership completed its 10th year of operations. As originally anticipated by the General Partner, the Partnership will be liquidated in an orderly manner in its 11th and 12th years of operation. The General Partner is actively marketing the remaining equipment portfolio with the intent of maximizing sale proceeds. As sale proceeds are received the General Partner intends to periodicially declare special distributions to distribute the sale proceeds to the partners. During the PLM TRANSPORTATION EQUIPMENT PARTNERS IXC 1986 INCOME FUND (A Limited Partnership) NOTES TO FINANCIAL STATEMENTS March 31, 1996 3. Liquidation and special distributions (continued) liquidation phase of the Partnership the equipment will continue to be leased under operating leases until sold. Operating cash flows, to the extent they exceed Partnership expenses, will continue to be distributed on a quarterly basis to partners. The amounts reflected for assets and liabilities of the Partnership have not been adjusted to reflect liquidation values. The equipment portfolio continues to be carried at the lower of depreciated cost or fair value less cost to dispose. Although the General Partner estimates that there will be distributions after liquidation of assets and liabilities, the amounts cannot be accurately determined prior to actual liquidation of the equipment. Any excess proceeds over expected Partnership obligations will be distributed to the Partners throughout the liquidation period. Upon final liquidation, the Partnership will be dissolved. During the three months ended March 31, 1995, the General Partner paid special distributions of $2.93 per Limited Partnership Unit which were the result of proceeds from equipment liquidations. The Partnership is not permitted to reinvest proceeds from sales or liquidations of equipment. These proceeds, in excess of operational cash requirements, are periodically paid out to limited partners in the form of special distributions. The sales and liquidations occur because of equipment destructions, the determination by the General Partner that it is the appropriate time to maximize the return on an asset through sale of that asset, and, in some leases, the ability of the lessee to exercise purchase options. 4. Investment in Unconsolidated Special Purpose Entity Prior to 1996, the Partnership accounted for operating activities associated with joint ownership of rental equipment as undivided interests, including its proportionate share of each asset with similar wholly-owned assets in its financial statements. Under generally accepted accounting principles, the effects of such activities, if material, should be reported using the equity method of accounting. Therefore, effective January 1, 1996, the Partnership adopted the equity method to account for its investment in such jointly-held assets. The principle differences between the previous accounting method and the equity method relates to the presentation of activities relating to these assets in the statement of operations. Whereas, under equity accounting the Partnership's proportionate share is presented as a single net amount, "equity in net income (loss) of unconsolidated special purpose entities", under the previous method, the Partnership's statement of operations reflected its proportionate share of each individual item of revenue and expense. Accordingly, the effect of adopting the equity method of accounting has no cumulative effect on previously reported partner's capital or on the Partnership's net income (loss) for the period of adoption. Because the effects on previously issued financial statements of applying the equity method of accounting to investments in jointly-owned assets are not considered to be material to such financial statements taken as a whole, previously issued financial statements have not been restated. However, certain items have been reclassified in the previously issued balance sheet to conform to the current period presentation. The net investment in unconsolidated special purpose entity includes a 30% interest in a commuter aircraft. At March 31, 1996, the jointly owned commuter aircraft was subject to a pending sale contract and considered held for sale. The Partnership's $135,922 investment in this asset is reported in "investment in unconsolidated special purpose entity". PLM TRANSPORTATION EQUIPMENT PARTNERS IXC 1986 INCOME FUND (A Limited Partnership) NOTES TO FINANCIAL STATEMENTS March 31, 1996 5. Subsequent Event The jointly owned commuter aircraft was sold on April 30, 1996 for proceeds of $270,538. The Partnership's investment in this asset was $135,922. PLM TRANSPORTATION EQUIPMENT PARTNERS IXD 1986 INCOME FUND (A Limited Partnership) BALANCE SHEETS ASSETS March 31, December 31, 1996 1995 ---------------------------------------- Equipment held for operating leases, at cost $ 1,693,439 $ 1,716,659 Less accumulated depreciation (1,410,335) (1,405,716) ---------------------------------------- Net equipment 283,104 310,943 Cash and cash equivalents 175,231 191,840 Accounts receivable, net of allowance for doubtful accounts of $31,299 in 1996 and $33,793 in 1995 54,943 48,723 Due from affiliates 7,639 7,639 Prepaid insurance and other assets 1,738 16,549 ---------------------------------------- Total assets $ 522,655 $ 575,694 ======================================== LIABILITIES AND PARTNERS' CAPITAL Liabilities: Accounts payable and other liabilities $ 8,818 $ 8,338 Partners' capital (deficit): Limited Partners (9,529 units) 550,525 603,509 General Partner (36,688) (36,153) ---------------------------------------- Total partners' capital 513,837 567,356 ---------------------------------------- Total liabilities and partners' capital $ 522,655 $ 575,694 ======================================== See accompanying notes to financial statements. PLM TRANSPORTATION EQUIPMENT PARTNERS IXD 1986 INCOME FUND (A Limited Partnership) STATEMENTS OF OPERATIONS Three Months Ended March 31, 1996 1995 ------------------------------ Revenues: Lease revenue $ 55,242 $ 79,538 Interest and other income 2,566 8,651 (Loss) gain on disposition of equipment (997) 15,453 ------------------------------ Total revenues 56,811 103,642 Expenses: Depreciation 23,563 35,953 Management fees to affiliate 5,956 6,383 Repairs and maintenance 11,225 21,879 Provision for (recovery of) bad debts (3,328) 37,070 General and administrative expenses to affiliates 15,417 22,611 Other general and administrative expenses 9,252 22,664 ------------------------------ Total expenses 62,085 146,560 ------------------------------ Net loss $ (5,274) $ (42,918) ============================== Partners' share of net loss: Limited Partners - 99% $ (5,221) $ (42,489) General Partner - 1% (53) (429) ----------------------------- Total $ (5,274) $ (42,918) ============================== Net loss per Limited Partnership Unit (9,529 units) $ (0.55) $ (4.46) ============================== Cash distributions $ 48,245 $ 83,618 ============================== Cash distributions per Limited Partnership Unit $ 5.01 $ 8.69 ============================== Special distributions $ -- $ 200,000 ============================== Special distributions per Limited Partnership Unit $ -- $ 20.78 ============================== Total distributions per Limited Partnership Unit $ 5.01 $ 29.47 ============================== 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 period from December 31, 1994 to March 31, 1996 Limited General Partners Partners Total ------------------------------------------------------- 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 Net loss (5,221) (53) (5,274) Cash distributions (47,763) (482) (48,245) ------------------------------------------------------- Partners' capital (deficit) at March 31, 1996 $ 550,525 (36,688) 513,837 ======================================================= See accompanying notes to financial statements. PLM TRANSPORTATION EQUIPMENT PARTNERS IXD 1986 INCOME FUND (A Limited Partnership) STATEMENTS OF CASH FLOWS For the three months ended March 31, 1996 1995 --------------------------------- Operating activities: Net loss $ (5,274) $ (42,918) Adjustments to reconcile net loss to net cash provided by operating activities: Loss (gain) on disposition of equipment 997 (15,453) Depreciation 23,563 35,953 Changes in operating assets and liabilities Accounts receivable, net (6,220) 67,382 Due from affiliate -- (5,895) Prepaid insurance and other assets 14,811 5,330 Accounts payable and other liabilities 480 17,636 --------------------------------- Cash provided by operating activities 28,357 62,035 --------------------------------- Investing activities: Proceeds form disposition of equipment 3,279 243,414 --------------------------------- Cash provided by investing activities 3,279 243,414 --------------------------------- Cash flows used in financing activities: Cash distributions paid to partners (48,245) (283,618) --------------------------------- Cash and cash equivalents: Net (decrease) increase in cash and cash equivalents (16,609) 21,831 Cash and cash equivalents at beginning of period 191,840 524,782 --------------------------------- Cash and cash equivalents at end of period $ 175,231 $ 546,613 ================================= See accompanying notes to financial statements. PLM TRANSPORTATION EQUIPMENT PARTNERS IXD 1986 INCOME FUND (A Limited Partnership) NOTES TO FINANCIAL STATEMENTS March 31, 1996 1. Opinion of Management In the opinion of the management of PLM Financial Services, Inc., the General Partner, the accompanying unaudited financial statements contain all adjustments necessary, consisting only of normal recurring accruals, to present fairly the Partnership's financial position as of March 31, 1996, and the statements of operations and cash flows for the three months ended March 31, 1996 and 1995, the statements of changes in partners' capital for the period from December 31, 1994 to March 31, 1996. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted from the accompanying financial statements. For further information, reference should be made to the financial statements and notes thereto included in the Partnership's Annual Report on Form 10-K for the year ended December 31, 1995, on file at the Securities and Exchange Commission. 2. Equipment Equipment held for operating leases is stated at cost. The components of equipment are as follows: March 31, December 31, 1996 1995 ------------------------------------- Marine containers $ 307,666 $ 330,886 Trailers 1,385,773 1,385,773 ------------------------------------- 1,693,439 1,716,659 Less accumulated depreciation (1,410,335) (1,405,716) ------------------------------------- Net equipment $ 283,104 $ 310,943 ===================================== All equipment owned by the Partnership was either on lease or operating in PLM-affiliated short-term rental facilities as of March 31, 1996. All of the equipment was either on lease or operating in PLM affiliated short-term rental facilities as of December 31, 1995. During the three months ended March 31, 1996, the Partnership sold or disposed of 12 marine containers with an aggregate net book value of $4,276 for proceeds of $3,279. During the three months ended March 31, 1995, the Partnership sold or disposed of 24 trailers and eight marine containers and one trailer with an aggregate net book value of $227,961 for proceeds of $243,414. 3. Liquidation and special distributions During the first quarter of 1996, the Partnership completed its 10th year of operations. As originally anticipated by the General Partner, the Partnership will be liquidated in an orderly manner in its 11th and 12th years of operation. The General Partner is actively marketing the remaining equipment portfolio with the intent of maximizing sale proceeds. As sale proceeds are received the General Partner intends to periodicially declare special distributions to distribute the sale proceeds to the partners. During the liquidation phase of the Partnership the equipment will continue to be leased under operating leases until sold. Operating cash flows, to the extent they exceed Partnership expenses, will continue to be distributed on a quarterly basis to partners. The amounts reflected for assets and liabilities of the Partnership have not been adjusted to reflect liquidation values. The equipment portfolio continues to be carried at the lower of depreciated cost or fair value less cost to dispose. Although the General Partner PLM TRANSPORTATION EQUIPMENT PARTNERS IXD 1986 INCOME FUND (A Limited Partnership) NOTES TO FINANCIAL STATEMENTS March 31, 1996 3. Liquidation and special distributions (continued) estimates that there will be distributions after liquidation of assets and liabilities, the amounts cannot be accurately determined prior to actual liquidation of the equipment. Any excess proceeds over expected Partnership obligations will be distributed to the Partners throughout the liquidation period. Upon final liquidation, the Partnership will be dissolved. During the three months ended March 31, 1995, the General Partner paid special distributions of $20.78 per Limited Partnership Unit which were the result of proceeds from equipment liquidations. The Partnership is not permitted to reinvest proceeds from sales or liquidations of equipment. These proceeds, in excess of operational cash requirements, are periodically paid out to limited partners in the form of special distributions. The sales and liquidations occur because of equipment destructions, the determination by the General Partner that it is the appropriate time to maximize the return on an asset through sale of that asset, and, in some leases, the ability of the lessee to exercise purchase options. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (I) Results of operations Comparison of the Partnership's Operating Results for the Three Months Ended March 31, 1996 and 1995 TEP IXA (A) Revenues Total revenues of $124,771 for the quarter ended March 31, 1996, decreased from $133,712 for the same period in 1995, due primarily to lower lease revenues and lower gain on disposition on equipment in the first quarter of 1996, compared to the same period in 1995, partially offset by higher interest and other income. (1) Lease revenue decreased to $111,137 in the first quarter 1996, from $120,093 in the same period of 1995. The following table lists lease revenues earned by equipment type: For the three months ended March 31, 1996 1995 ------------------------------- Trailers $ 55,317 $ 70,855 Rail equipment 25,950 25,950 Marine containers 29,870 23,288 ------------------------------- $ 111,137 $ 120,093 =============================== The decline was due primarily to the following: (a) Trailer revenue decreased $15,538 due primarily to a decline in utilization in the short-term rental facilities in 1996, compared to 1995 levels. (2) For the quarter ended March 31, 1996, the Partnership realized a total gain of $2,669 which included a gain of $40 on the disposition of one marine container and additional gain of $2,629 from the commuter aircraft which was under a sales-type lease, compared to the same period in 1995, where the Partnership realized a gain of $9,545 on the sale or disposition of one trailer and two marine containers. (B) Expenses Total expenses of $125,842 for the quarter ended March 31, 1996, decreased from $241,211 for the same period in 1995. The decrease in 1996 expenses was attributable to decreases in repairs and maintenance, and depreciation expense, offset partially by an increase in general and administrative expenses. (1) Direct operating expenses (defined as repairs and maintenance) decreased to $11,994 in 1996, from $81,511 in 1995, due primarily to a decrease of aircraft repairs and maintenance due to the sale of the Partnership's commuter aircraft during the second quarter of 1995. (2) Indirect operating expenses (defined as depreciation expense, management fees, and general and administrative expenses) decreased to $113,848 in the first quarter 1996, from $159,700 in the same period in 1995. This change resulted primarily from: (a) a decrease in depreciation expense of $48,626 from 1995 levels reflecting asset sales or dispositions during 1996 and 1995; (C) Net Loss The Partnership incurred a net loss of $1,071 in the first quarter 1996, versus a net loss of $107,499 in the same period in 1995. The Partnership's ability to operate or liquidate assets, secure leases, and re-lease those assets whose leases expire during the duration of the Partnership is subject to many factors, and the Partnership's performance in the first quarter 1996, is not necessarily indicative of future periods. In the first quarter 1996, the Partnership distributed $1,063,720 to the Limited Partners, or approximately $43.81 per unit which included a special distribution of $40.77 per unit resulting from the exercise of a purchase option for a lessee of a commuter aircraft. TEP IXB (A) Revenues Total revenues of $93,438 for the quarter ended March 31, 1996, decreased from $169,393 for the same period in 1995 due primarily to lower lease revenues and a lower gain from the sale of equipment in the first quarter of 1996, compared to the same period in 1995. (1) Lease revenue decreased to $77,492 in the first quarter 1996, from $145,558 in the same period in 1995. The following table lists lease revenues earned for own equipment types: For the three months ended March 31, 1996 1995 ------------------------------- Aircraft $ -- $ 48,593 Trailers and tractors 48,721 72,503 Rail equipment 21,870 16,027 Marine containers 6,901 8,435 ------------------------------- $ 77,492 $ 145,558 =============================== Although, net income was not affected by the change in accounting for investment in unconsolidated special purpose entity, lease revenues attributable to the unconsolidated special purpose entity decrease $48,593 in the first quarter of 1996. (refer to the "Equity in net income of the unconsolidated special purpose entity" section below). The decline of revenue of owned equipment was due primarily to the following: (a) Aircraft revenue decreased $48,593 due to the off-lease status of the aircraft throughout the first quarter of 1996. (b) Trailer and tractor revenue decreased $23,782 due to disposition or sale of 21 trailers during the last three quarters of 1995, and three trailers in the first quarter of 1996, and a decline in utilization in the short-term rental facilities in 1996 compared to 1995 levels; (2) For the quarter ended March 31, 1996, the Partnership realized a gain of $11,851 on the sale or disposition of three trailers and two marine containers, compared to the same period in 1995, where the Partnership realized a gain of $17,544 on the sale or disposal of one trailer and one marine container. (B) Expenses Total expenses of $88,397 for the quarter ended March 31, 1996, decreased from $170,752 for the same period in 1995. Although net income was not affected as a result of the change in accounting for investment in unconsolidated special purpose entity, expenses attributable to the unconsolidated special purpose entity totaled $20,867 in the first quarter of 1996, all relating to jointly-owned assets (refer to the "Equity in net income of the unconsolidated special purpose entity" section below). The remaining decreases in 1996 expenses are explained below: (1) Direct operating expenses (defined as repairs and maintenance) decreased to $9,218 in the first quarter 1996, from $17,006 in the same period in 1995. This decrease was attributable to the sale of 22 trailers in 1995 and three trailers in 1996. (2) Indirect operating expenses (defined as depreciation expense, management fees, general and administrative expenses) decreased to $79,179 in the first quarter of 1996, from $153,746 in the same period in 1995. The change related to owned equipment resulted primarily from: (a) a decrease in depreciation expense of $32,729 from 1995 levels reflecting assets sales or dispositions during 1996 and 1995; (b) a decrease of $41,838 in general and administrative expenses from 1995 levels due to $9,500 of collection costs related to one trailer lessee being paid in the first quarter of 1995, and no similar costs occured in the first quarter of 1996. In addition, there were decreases in indirect costs associated with the short-term rental facilites due to decreased volume of trailers operating in the facilites in the first quarter of 1996 as compared to the first quarter of 1995, and lower accounting costs, offset by an increase in audit fees. (C) Equity in net loss of the unconsolidated special purpose entity represents the net loss generated from a jointly owned asset now accounted for under the entity method. At March 31, 1996, the Partnership had a 50% interest in a commuter aircraft which was accounted for under the equity method. The aircraft was off-lease throughout the first quarter of 1996 and the depreciation expense was $20,824 for the first quarter ended March 31, 1996. (D) Net Loss The Partnership incurred a net loss of $15,826 in the first quarter 1996, compared to a net loss of $1,359 in the same period in 1995. The Partnership's ability to operate or liquidate assets, secure leases, and re-lease those assets whose leases expire during the duration of the Partnership is subject to many factors, and the Partnership's performance in the first quarter 1996, is not necessarily indicative of future periods. In the first quarter 1996, the Partnership distributed $100,733 to the Limited Partners, or approximately $5.77 per unit. TEP IXC (A) Revenues Total revenues for the quarter ended March 31, 1996, decreased to $111,241 from $433,123 for the same period in 1995, due primarily to lower gain on disposition of equipment, lower lease revenues and lower interest and other income. (1) Lease revenue decreased to $106,638 in the first quarter 1996, from $190,510 in the same period in 1995. The following table lists lease revenues earned for own equipment types: For the three months ended March 31, 1996 1995 ------------------------------- Trailers and tractors $ 97,171 $ 153,328 Aircraft -- 17,100 Rail equipment 7,800 16,934 Marine containers 1,667 3,148 ------------------------------- $ 106,638 $ 190,510 =============================== Although, net income was not affected by the change in accounting for investments in unconsolidated special purpose entity, lease revenues attributable to the unconsolidated special purpose entity totaled $17,100 in the first quarter of 1996 which represented revenue for jointly-owned assets (refer to the "Equity in net income of the unconsolidated special purpose entity" section below). The decline in revenue of owned equipment was due primarily to the following: (a) Trailer revenue decreased $56,157 in 1996, as compared to 1995 levels due to lower utilization in the short-term rental facilities in 1996 compared to 1995 , and the sale of four trailers during the last three quarters of 1995; (b) Rail revenue decreased $9,134 in 1996, as compared to 1995 levels due to the sale of five twin stack railcars in the first quarter of 1995. (2) For the quarter ended March 31, 1996, the Partnership realized a gain of $1,688 on the disposal of one marine container compared to the same period in 1995, where the Partnership realized a gain of $236,072 on the sale of five twin stack railcars. (B) Expenses Total expenses of $136,860 for the quarter ended March 31, 1996, decreased from $194,905 for the same period in 1995. Although net income was not affected as a result of the change in accounting for investment in unconsolidated special purpose entity, expenses attributable to the unconsolidated special purpose entity totaled $62,628 in the first quarter of 1996, all relating to jointly-owned assets (refer to the "Equity in net income of the unconsolidated special purpose entity" section below). The remaining decreases in 1996 expenses are explained below: (1) Direct operating expenses (defined as repairs and maintenance) decreased to $33,878 in the first quarter 1996, from $48,958 in the same period in 1995. This decrease was attributable to lower maintenance expense incurred on the decreased number of trailers in the short-term rental facilities as compared to the same period in 1995. (2) Indirect operating expenses (defined as depreciation expense, management fees, and all general and administrative expenses) decreased to $102,982 in the first quarter 1996, from $145,947 in the same period in 1995. The change related to own equipment resulted primarily from: (a) a decrease in depreciation expense of $21,487 from 1995 levels reflecting asset sales during 1995 and 1996; (b) a decrease in general and administrative expenses of $19,263 due to lower indirect costs associated with the short-term rental facilites due to decreased volume of trailers operating in the facilites in the first quarter of 1996 as compared to the first quarter of 1995, and lower accounting costs, offset by an increase in audit fees; (c) a decrease in management fees to affiliate of $2,215 from 1995 levels due to lower levels of operating cash flow during the comparable periods. Management fees are calculated as the greater of 10% of the Partnership's Operating Cash Flow, or 1/2 of 1/2% of the Partnership's Capital Contributions as defined in the Limited Partnership Agreement; (C) Equity in net loss of the unconsolidated special purpose entity represents the net loss generated from a jointly owned asset now accounted for under the equity method. At March 31, 1996, the Partnership had a 30% interest in a commuter aircraft. The aircraft revenue was $17,100, repairs and maintenance expense of $16,882, and the depreciation expense was $12,743, resulting in a net loss of $12,550 for the first quarter ended March 31, 1996. (D) Net Income (Loss) The Partnership incurred a net loss of $38,169 in the first quarter 1996, compared to a net income of $238,218 in the same period in 1995. The Partnership's ability to operate or liquidate assets, secure leases, and re-lease those assets whose leases expire during the duration of the Partnership is subject to many factors, and the Partnership's performance in the first quarter 1996, is not necessarily indicative of future periods. In the first quarter 1996, the Partnership distributed $97,785 to the Limited Partners, or approximately $5.78 per unit. TEP IXD (A) Revenues Total revenues of $56,811 for the quarter ended March 31, 1996, decreased from $103,642 for the same period in 1995, due primarily to lower lease revenues, a loss on sale of equipment for the first quarter of 1996, compared to a gain on disposition of equipment in the same period in 1995, and lower interest and other income in the first quarter of 1996 as compared to the same period in 1995. (1) Lease revenues decreased to $55,242 in the first quarter 1996, from $79,538 in the same period in 1995. The following table lists lease revenue earned by equipment type: For the three months ended March 31, 1996 1995 ------------------------------- Trailers $ 35,873 $ 57,210 Marine containers 19,369 22,328 ------------------------------- $ 55,242 $ 79,538 =============================== The decline was due primarily to the following: (a) Trailer revenue decreased $21,337 due primarily 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 $2,959 primarily due to the disposal of 45 marine containers in 1995 and 12 in 1996. (2) For the quarter ended March 31, 1996, the Partnership realized a loss of $997 on the disposal of 12 marine containers, where the Partnership realized a gain of $15,453 on the sale or disposal of 24 trailers and eight marine containers in the quarter ended March 31, 1995. (B) Expenses Total expenses of $62,085 for the quarter ended March 31, 1996, decreased from $146,560 for the same period in 1995. The decrease in 1996 expenses was attributable primarily to decreases in bad debt expense, general and administrative expense, depreciation expense, and repair and maintenance. (1) Direct operating expenses (defined as repairs and maintenance) decreased to $11,225 in the first quarter 1996, from $21,879 in the same period in 1995. This change resulted primarily from the refurbishment of 30 trailers in the first quarter of 1995 prior to being sold. (2) Indirect operating expenses (defined as depreciation expense, management fees, bad debt expense, and general and administrative expenses) decreased to $50,860 in the first quarter 1996, from $124,681 in the same period in 1995. This change resulted primarily from: (a) a decrease of $40,398 in bad debt expense due to the General Partner's evaluation of the collectibility of trade receivables from trailer rental yard lessees. (b) a decrease in administrative expense of $20,606 due to $15,000 of collection costs related to one trailer lessee that was paid in the first quarter of 1995, with no similar costs occured in the first quarter of 1996. In addition, a decrease in cost resulted from lower indirect costs associated with the short-term rental facilites due to decreased volume of trailers operating in the facilites in the first quarter of 1996 as compared to the first quarter of 1995, and lower accounting costs, offset by an increase in audit fees; (c) a decrease in depreciation expense of $12,390 from 1995 levels, reflecting asset sales or dispositions during 1996; (C) Net Loss The Partnership incurred a net loss of $5,274 in the first quarter 1996, compared to a net loss of $42,918 in the same period in 1995. The Partnership's ability to operate or liquidate assets, secure leases, and re-lease those assets whose leases expire during the duration of the Partnership is subject to many factors, and the Partnership's performance in the first quarter 1996, is not necessarily indicative of future periods. In the first quarter 1996, the Partnership distributed $47,763 to the Limited Partners, or approximately $5.01 per unit. (II) Asset Sales Equipment sales and dispositions result from General Partner decisions on liquidations, 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. During the three months ended March 31, 1996, one marine container owned by TEP IXA was sold for a total of $673. In addition, the lessee under the sales-type lease of the Metro III commuter aircraft exercised its option to buy the aircraft and the Partnership receive a proceeds totaling $1 million. Three trailers and two marine containers owned by TEP IXB were sold for a total of $35,593; one marine container owned by TEP IXC were sold for $5,207; and 12 marine containers owned by TEP IXD were sold or disposed of for $3,279. As discussed in note 3, the General Partner is actively marketing the remaining equipment portfolio with the intent of maximizing sale proceeds. (III) Market Values 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 three months ended March 31, 1996. As of March 31, 1996, the General Partner estimated the current fair market value of each Partnerships' equipment portfolio to be approximately : $1.7 million, $1.5 million, $1.9 million and $0.90 million for TEP IXA, TEP IXB, TEP IXC and TEP IXD, respectively. (IV) Trends Inflation and changing prices did not materially impact the Partnerships' revenues or expenses during the reported periods. PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits None. (b) Reports on Form 8-K None. Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PLM TRANSPORTATION EQUIPMENT PARTNERS IXD 1986 INCOME FUND By: PLM Financial Services, Inc. General Partner Date: May 14, 1996 By: /s/ David J. Davis ------------------- David J. Davis Vice President and Corporate Controller