EAST WEST 925
(A Tenancy-In-Common)
Financial Statements
INDEPENDENT AUDITORS' REPORT
The Owners
East West 925
We have audited the accompanying balance sheet of the East West 925 as of March
31, 2000 and the related statement of income and changes in owners' equity, and
cash flows for the three months then ended. These financial statements are the
responsibility of the owner's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. 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 audit provides a
reasonable basis for our opinion.
As described in Note 1 to the financial statements, the East West 925 was
terminated on March 31, 2000, as the aircraft equipment in the Tenancy-in-Common
had been sold.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the East West 925 as of March
31, 2000, and the results of its operations and its cash flows for the three
months then ended in conformity with accounting principles generally accepted in
the United States of America. The accompanying 1999 and 1998 financial
statements were not audited by us, and accordingly, we express no opinion or any
other form of assurance on them.
SAN FRANCISCO, CALIFORNIA
March 2, 2001
EAST WEST 925
(A Tenancy-In-Common)
Balance Sheets
(in thousand of dollars)
March 31, December 31,
2000 1999
(unaudited)
--------------------------------------
ASSETS
Aircraft equipment held for lease, at cost $ -- $ 16,130
Less accumulated depreciation -- (15,302)
-------------------------------------
Net equipment -- 828
Accounts receivable, less allowance for
doubtful accounts of $0 in 2000 and $1,171 in 1999 -- --
Prepaid expenses -- 2
-------------------------------------------------------------------------------------------------------------
Total assets $ -- $ 830
=====================================
LIABILITIES AND OWNERS' EQUITY
Liabilities:
Accounts payable and accrued expenses $ -- $ 91
------------------------------------------------------------------------------------------------------------
Total liabilities -- 91
Owners' equity -- 739
------------------------------------------------------------------------------------------------------------
Total liabilities and owner's equity $ -- $ 830
====================================
See accompanying notes to financial statements.
EAST WEST 925
(A TENANCY-IN-COMMON)
STATEMENTS OF OPERATIONS
FOR THE PERIOD FROM JANUARY 1, 2000 THROUGH MARCH 31, 2000 (DISSOLUTION)
AND THE YEARS ENDED DECEMBER 31, 1999 AND 1998
(in thousands of dollars)
2000 1999 1998
(unaudited) (unaudited)
--------------------------------------------------------
Revenues
Interest and other income $ 1 $ 200 $ --
Net gain on disposition of equipment 2,861 -- --
-------------------------------------------------------
Total revenues 2,862 200 --
-------------------------------------------------------
Expenses
Depreciation expense 150 903 903
Repairs and maintenance 65 131 2,032
Insurance expense 9 21 26
Administrative expenses to affiliates 4 12 23
Administrative expenses and other 29 105 (58)
Recovery of bad debts -- (76) --
-------------------------------------------------------
Total expenses 257 1,096 2,926
-------------------------------------------------------
Net income (loss) $ 2,605 $ (896) $ (2,926)
=======================================================
See accompanying notes to financial statements.
EAST WEST 925
(A TENANCY-IN-COMMON)
STATEMENTS OF CHANGES IN OWNERS' EQUITY
FOR THE PERIOD FROM JANUARY 1, 2000 THROUGH MARCH 31, 2000 (DISSOLUTION) AND
THE YEARS ENDED DECEMBER 31, 1999 AND 1998
(in thousands of dollars)
Owners' equity at December 31, 1997 (unaudited) $ 2,476
Net loss (2,926)
Additional capital contribution 1,442
----------------
Owners' equity at December 31, 1998 (unaudited) 992
Net loss (896)
Additional capital contribution 643
----------------
Owners' equity at December 31, 1999 (unaudited) 739
Net income 2,605
Dividends paid (3,344)
----------------
Owners' equity at March 31, 2000 $ --
================
See accompanying notes to financial statements.
EAST WEST 925
(A TENANCY-IN-COMMON)
STATEMENTS OF CASH FLOWS
FOR THE PERIOD FROM JANUARY 1, 2000 THROUGH MARCH 31, 2000 (DISSOLUTION) AND
THE YEARS ENDED DECEMBER 31, 1999 AND 1998
(in thousands of dollars)
2000 1999 1998
(unaudited) (unaudited)
-----------------------------------------------------------
OPERATING ACTIVITIES
Net income (loss) $ 2,605 $ (896) $ (2,926)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation 150 903 903
Net gain on disposition of equipment (2,861) -- --
Changes in operating assets and liabilities:
Prepaid expenses 2 -- 1
Accounts payable and accrued expenses (91) (650) 580
-------------------------------------------------------------------------------------------------------------------------------
Net cash used in operating activities (195) (643) (1,442)
-------------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Proceeds from disposition of aircraft 3,539 -- --
-------------------------------------------------------------------------------------------------------------------------------
Net cash provided by investing activities 3,539 -- --
-------------------------------------------------------
FINANCING ACTIVITIES
Additional capital contribution -- 643 1,442
Dividends paid (3,344) -- --
-------------------------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by financing activities (3,344) 643 1,442
-------------------------------------------------------
Net increase in cash and cash equivalents -- -- --
Cash and cash equivalents at beginning of year -- -- --
-------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ -- $ -- $ --
=======================================================
See accompanying notes to financial statements.
EAST WEST 925
(A TENANCY-IN-COMMON)
NOTES TO FINANCIAL STATEMENTS
March 31, 2000
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
In December 1988, a Tenancy-In-Common Agreement was entered into
between PLM Equipment Growth Fund (EGF), a California limited
partnership and PLM, Equipment Growth Fund II (EGFII), a California
limited partnership (collectively the Partnerships). The
tenancy-in-common (TIC) was entered into for the purpose of purchasing
a Boeing 737 aircraft. The TIC was owned 50% by EGF and 50% by EGFII.
PLM Financial Services Inc., (FSI) was the General Partner of the
Partnerships owning the TIC. FSI is a wholly-owned subsidiary of PLM
International, Inc.
The aircraft was purchased in December 1988 for $15.3 million. A
five-year lease with East West Travel Trade Links was signed upon the
acquisition of the aircraft. In March 2000, the aircraft was sold for
proceeds of $3.8 million resulting in a gain of $2.9 million. The TIC
was liquidated on March 31, 2000, as the aircraft in the TIC was sold.
These accompanying financial statements have been prepared on the
accrual basis of accounting in accordance with accounting principles
generally accepted in the United States of America. This requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, 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 aircraft in the TIC was managed under a continuing management
agreement by PLM Investment Management, Inc. (IMI), a wholly-owned
subsidiary of FSI. IMI received a monthly management fee from the
Partnerships for managing the aircraft (Note 2). FSI, in conjunction
with its subsidiaries, 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
in limited partnerships.
ACCOUNTING FOR LEASES
The aircraft under the TIC was leased under an operating lease. Under
the operating lease method of accounting, the leased asset was
recorded at cost and depreciated over its estimated useful life.
Rental payments were recorded as revenue over the lease term in
accordance with Financial Accounting Standards Board Statement No. 13
"Accounting for Leases".
DEPRECIATION
Depreciation of aircraft equipment was computed on the double
declining balance method, taking a full month's depreciation in the
month of acquisition, based upon an estimated useful life of 12 years.
Acquisition fees of $0.7 million, which were paid to FSI, were
capitalized as part of the cost of the equipment and depreciated over
the life of the aircraft. Major expenditures that were expected to
extend the equipment's useful life or reduce future equipment
operating expenses were capitalized and amortized over the estimated
remaining life of the equipment.
EAST WEST 925
(A TENANCY-IN-COMMON)
NOTES TO FINANCIAL STATEMENTS
March 31, 2000
1. Summary of Significant Accounting Policies (continued)
AIRCRAFT
In accordance with the Financial Accounting Standards Board Statement
No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of", FSI reviewed the carrying value
of the equipment under the TIC at least quarterly, and whenever
circumstances indicated that the carrying value of an asset may not be
recoverable in relation to expected future market conditions for the
purpose of assessing recoverability of the recorded amounts. If
projected undiscounted future cash flows and fair value were less than
the carrying value of the equipment, a loss on revaluation would have
been recorded. No reductions to the carrying value of equipment were
required during the period from January 1, 2000 through March 31,
2000, (dissolution) and the years ended December 31, 1999 and 1998.
REPAIRS AND MAINTENANCE
Repair and maintenance cost to aircraft were usually the obligation of
the lessee. To meet the maintenance requirements of certain aircraft
airframes and engines, reserve accounts were funded monthly by the
lessee based on engine hours.
NET INCOME (LOSS) AND DISTRIBUTION TO OWNERS
The net income (loss) and distributions of the TIC were allocated to
the owners based on their percentage ownership in the TIC
COMPREHENSIVE INCOME (LOSS)
The TIC's net income (loss) was equal to comprehensive income (loss)
for the period from January 1, 2000 through March 31, 2000
(dissolution) and the years ended December 31, 1999 and 1998.
2. GENERAL PARTNER AND TRANSACTIONS WITH AFFILIATES
Under the equipment management agreement, IMI received a monthly
management fee equal to (i) a) 10% of the amount of Cash Flows from
operations or b) 1/12 of 1/2% of the book value of the equipment
portfolio, subject to a reduction in certain events, as described in
the limited partnership agreement for PLM Equipment Growth Fund and
(ii) 5% of gross revenues for PLM Equipment Growth Fund II.
EAST WEST 925
(A TENANCY-IN-COMMON)
NOTES TO FINANCIAL STATEMENTS
March 31, 2000
2. GENERAL PARTNER AND TRANSACTIONS WITH AFFILIATES (CONTINUED)
FSI and its affiliates were reimbursed $4,000, $12,000, and $23,000 by
the TIC for administrative services performed on behalf of the TIC
during the period from January 1, 2000 through March 31, 2000
(dissolution) and the years ended December 31, 1999 and 1998,
respectively.
3. EQUIPMENT
The component of owned equipment were as follows (in thousands of
dollars):
Equipment Held for Operating Leases: March 31, December 31,
2000 1999 (unaudited)
------------------------------------
Aircraft $ -- $ 16,130
Less accumulated depreciation -- (15,302)
------------------------------------
Net equipment $ -- $ 828
====================================
A five-year lease with East West Airlines was signed upon the
acquisition of the aircraft in 1988. No lease revenue was earned on
this aircraft for the three months ended March 31, 2000, and for the
years ended December 31, 1999 and 1998.
In March 2000, the aircraft was sold for proceeds of $3.8 million,
which resulted in a gain of $2.9 million.
4. GEOGRAPHIC INFORMATION
The aircraft was off-lease in 1998, 1999, and from the period ended
January 1, 2000 through March 31, 2000 (dissolution). The plane was
stored in Malaysia prior to its sale.
5. INCOME TAXES
The TIC was not subject to income taxes, as any income or loss is
included in the tax returns of the individual partners owning the
Partnerships. Accordingly, no provision for income taxes was made in
the financial statements of the TIC.
As of March 31, 2000, there were no temporary differences between the
financial statements carrying value of assets and the income tax
basis.
6. CONCENTRATION OF RISK
Financial instruments, which potentially subjected the TIC to
concentrations of credit risk consisted principally of lease
receivables. This aircraft in the TIC was off-lease during all of 1998
up until the sale in March 2000. All the revenues earned in the three
months ended March 31, 2000 were from the gain on sale of the aircraft
to Aegro Capital.