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, 2002
[x] 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 0-18789
-----------------------
PLM EQUIPMENT GROWTH FUND IV
(Exact name of registrant as specified in its charter)
California 94-3090127
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
120 Montgomery Street,
Suite 1350, San Francisco, CA 94104
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: (415) 445-3201
-----------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
PLM EQUIPMENT GROWTH FUND IV
(A Limited Partnership)
CONDENSED BALANCE SHEETS
(in thousands of dollars, except unit amounts)
(unaudited)
March 31, December 31,
2002 2001
------------------------------------
ASSETS
Equipment held for operating leases, at cost $ 12,388 $ 15,811
Less accumulated depreciation (9,070) (11,918)
------------------------------------
Net equipment 3,318 3,893
Cash and cash equivalents 6,144 8,879
Accounts receivable, less allowance for doubtful
accounts of $48 in 2002 and $45 in 2001 84 82
Investment in an unconsolidated special-purpose entity 1,141 1,197
Prepaid expenses and other assets 64 21
------------------------------------
Total assets $ 10,751 $ 14,072
====================================
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and accrued expenses $ 53 $ 293
Due to affiliates 164 168
------------------------------------
Total liabilities 217 461
------------------------------------
Partners' capital:
Limited partners (8,628,420 limited partnership units
as of March 31, 2002 and December 31, 2001) 10,534 13,611
General Partner -- --
------------------------------------
Total partners' capital 10,534 13,611
------------------------------------
Total liabilities and partners' capital $ 10,751 $ 14,072
====================================
See accompanying notes to unaudited condensed financial statements.
PLM EQUIPMENT GROWTH FUND IV
(A Limited Partnership)
CONDENSED STATEMENTS OF INCOME
(in thousands of dollars, except weighted-average unit amounts)
(unaudited)
For the Three Months
Ended March 31,
2002 2001
---------------------------
REVENUES
Lease revenue $ 619 $ 908
Interest and other income 32 66
Net gain on disposition of equipment 590 3,429
---------------------------
Total revenues 1,241 4,403
---------------------------
EXPENSES
Depreciation 82 301
Repairs and maintenance 131 166
Insurance expenses 20 69
Management fees to affiliate 44 47
General and administrative expenses to affiliates 31 123
Other general and administrative expenses 46 225
Provision for bad debt expense 3 30
---------------------------
Total expenses 357 961
---------------------------
Equity in net income of unconsolidated special-
purpose entities 35 70
---------------------------
Net income $ 919 $ 3,512
===========================
PARTNERS' SHARE OF NET INCOME
Limited partners $ 719 $ 3,468
General Partner 200 44
---------------------------
Total $ 919 $ 3,512
===========================
Limited partners' net income per weighted-average
limited partnership unit $ 0.08 $ 0.40
===========================
Cash distribution $ 3,996 $ 862
===========================
Cash distribution per weighted-average limited partnership unit $ 0.44 $ 0.09
===========================
See accompanying notes to unaudited condensed financial statements.
PLM EQUIPMENT GROWTH FUND IV
(A Limited Partnership)
CONDENSED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the period from December 31, 2000 to March 31, 2002
(in thousands of dollars)
(unaudited)
Limited General
Partners Partner Total
-------------------------------------------------
Partners' capital as of December 31, 2000 $ 12,134 $ -- $ 12,134
Net income 3,157 90 3,247
Cash distribution (1,680) (90) (1,770)
-------------------------------------------------
Partners' capital as of December 31, 2001 13,611 -- 13,611
Net income 719 200 919
Cash distribution (3,796) (200) (3,996)
-------------------------------------------------
Partners' capital as of March 31, 2002 $ 10,534 $ -- $ 10,534
=================================================
See accompanying notes to unaudited condensed financial statements.
PLM EQUIPMENT GROWTH FUND IV
(A Limited Partnership)
CONDENSED STATEMENTS OF CASH FLOWS
(in thousands of dollars)
(unaudited)
For the Three Months
Ended March 31,
2002 2001
----------------------------
OPERATING ACTIVITIES
Net income $ 919 $ 3,512
Adjustments to reconcile net income
to net cash provided by (used in) operating activities:
Depreciation 82 301
Net gain on disposition of equipment (590) (3,429)
Equity in net income of unconsolidated special-purpose
entities (35) (70)
Changes in operating assets and liabilities:
Restricted cash -- 125
Accounts receivable, net (2) (443)
Prepaid expenses and other assets (43) (23)
Accounts payable and accrued expenses (240) (226)
Due to affiliates (4) 17
----------------------------
Net cash provided by (used in) operating activities 87 (236)
----------------------------
INVESTING ACTIVITIES
Proceeds from disposition of equipment 1,083 5,267
Distribution from unconsolidated special-purpose entity 91 145
----------------------------
Net cash provided by investing activities 1,174 5,412
----------------------------
FINANCING ACTIVITIES
Cash distribution paid to limited partners (3,796) (818)
Cash distribution paid to General Partner (200) (44)
----------------------------
Net cash used in financing activities (3,996) (862)
----------------------------
Net (decrease) increase in cash and cash equivalents (2,735) 4,314
Cash and cash equivalents at beginning of period 8,879 2,742
----------------------------
Cash and cash equivalents at end of period $ 6,144 $ 7,056
============================
See accompanying notes to unaudited condensed financial statements.
PLM EQUIPMENT GROWTH FUND IV
(A Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(unaudited)
1. OPINION OF MANAGEMENT
In the opinion of the management of PLM Financial Services, Inc. (FSI or the
General Partner), the accompanying unaudited condensed financial statements
contain all adjustments necessary, consisting primarily of normal recurring
accruals, to present fairly the unaudited condensed financial position of PLM
Equipment Growth Fund IV (the Partnership) as of March 31, 2002 and December 31,
2001, the unaudited condensed statements of income for the three months ended
March 31, 2002 and 2001, the unaudited condensed statements of changes in
partners' capital for the period from December 31, 2000 to March 31, 2002, and
the unaudited condensed statements of cash flows for the three months ended
March 31, 2002 and 2001. Certain information and note disclosures normally
included in financial statements prepared in accordance with accounting
principles generally accepted in the United States of America have been
condensed or omitted from the accompanying condensed 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, 2001, on file at the Securities and Exchange Commission.
2. SCHEDULE OF PARTNERSHIP PHASES
The Partnership, in accordance with its limited partnership agreement, entered
its liquidation phase on January 1, 1999, and has commenced an orderly
liquidation of the Partnership's assets. The Partnership will terminate on
December 31, 2009, unless terminated earlier upon sale of all equipment or by
certain other events. During the liquidation phase, the Partnership may not
reinvest cash flows and proceeds from asset dispositions into additional
equipment. All future cash flows and surplus funds after payment of operating
expenses, if any, are to be used for cash distributions to the partners, except
to the extent used to maintain reasonable working reserves. During the
liquidation phase, the Partnership's assets will continue to be recorded at the
lower of carrying amount or fair value less cost to sell.
3. RECLASSIFICATION
Certain amounts in the 2001 financial statements have been reclassified to
conform to the 2002 presentations.
4. CASH DISTRIBUTIONS
Cash distributions are recorded when paid and may include amounts in excess of
net income that are considered a return of capital. For the three months ended
March 31, 2002 and 2001, cash distributions totaled $4.0 million and $0.9
million, respectively. Cash distributions of $3.1 million to the limited
partners for the three months ended March 31, 2002 were deemed to be a return of
capital. None of the cash distributions to the limited partners for the three
months ended March 31, 2001 were deemed to be a return of capital.
5. TRANSACTIONS WITH GENERAL PARTNER AND AFFILIATES
The balance due to affiliates as of March 31, 2002 and December 31, 2001
includes $17,000 and $21,000, respectively, due to FSI and its affiliates for
management fees and $0.1 million due to an affiliated unconsolidated
special-purpose entity (USPE).
PLM EQUIPMENT GROWTH FUND IV
(A Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(unaudited)
5. TRANSACTIONS WITH GENERAL PARTNER AND AFFILIATES (continued)
The Partnership's proportional share of the expenses incurred by the USPE during
2002 and 2001 is listed in the following table (in thousands of dollars):
For the Three Months
Ended March 31,
2002 2001
--------------------------
Management fees $ 2 $ 4
Data processing and administrative
expenses 1 --
These affiliate expenses reduced the Partnership's proportional share of the
equity interest in income in the USPE.
6. EQUIPMENT
Owned equipment held for operating leases is stated at cost. The components of
owned equipment were as follows (in thousands of dollars):
March 31, December 31,
2002 2001
----------------------------------------
Railcars $ 11,041 $ 13,239
Marine containers 1,347 2,572
----------------------------------------
12,388 15,811
Less accumulated depreciation (9,070) (11,918)
----------------------------------------
Net equipment $ 3,318 $ 3,893
========================================
As of March 31, 2002, all equipment was on lease except for 78 railcars and 7
marine containers with an aggregate net book value of $0.6 million. As of
December 31, 2001, all equipment was on lease except for 47 railcars with a net
book value of $0.3 million.
During the three months ended March 31, 2002, the Partnership disposed of marine
containers and railcars with an aggregate net book value of $0.5 million, for
proceeds of $1.1 million. During the three months ended March 31, 2001, the
Partnership disposed of aircraft and marine containers with an aggregate net
book value of $1.8 million for proceeds of $5.3 million.
PLM EQUIPMENT GROWTH FUND IV
(A Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(unaudited)
7. INVESTMENT IN AN UNCONSOLIDATED SPECIAL-PURPOSE ENTITY
The Partnership's net investment in an USPE consisted of a 35% interest in a
trust owning two stage III commercial aircraft on a direct finance lease and
related assets and liabilities; such investment totaled $1.1 million and $1.2
million as of March 31, 2002 and December 31, 2001, respectively. This is a
single purpose entity that does not have any debt or other financial
encumbrances.
As of March 31, 2002 and December 31, 2001, the jointly owned equipment in the
Partnership's USPE portfolio was on lease.
8. OPERATING SEGMENTS
The Partnership operates or operated in four different segments: aircraft
leasing, railcar leasing, marine container leasing, and marine vessel leasing.
Each equipment leasing segment engages in short-term to mid-term operating
leases to a variety of customers. The following tables present a summary of the
operating segments (in thousands of dollars):
Marine
For the three months ended Aircraft Railcar Container
March 31, 2002 Leasing Leasing Leasing Other(1) Total
-------------- ------- ------- ------- ----- -----
REVENUES
Lease revenue $ -- $ 613 $ 6 $ -- $ 619
Interest income and other -- -- -- 32 32
Gain on disposition of equipment -- 509 81 -- 590
----------------------------------------------------
Total revenues -- 1,122 87 32 1,241
----------------------------------------------------
COSTS AND EXPENSES
Operations support -- 135 -- 16 151
Depreciation -- 64 18 -- 82
Management fees to affiliates -- 44 -- -- 44
General and administrative expenses -- 34 -- 43 77
Provision for bad debts -- 3 -- -- 3
----------------------------------------------------
Total costs and expenses -- 280 18 59 357
----------------------------------------------------
Equity in net income of USPE 35 -- -- -- 35
----------------------------------------------------
Net income (loss) $ 35 $ 842 $ 69 $ (27) $ 919
====================================================
Total assets as of March 31, 2002 $ 1,141 $ 3,370 $ 32 $ 6,208 $ 10,751
====================================================
(1) Includes certain assets not identifiable to a specific segment such as cash
and prepaid expenses. Also includes interest income and costs not
identifiable to a particular segment, such as certain general and
administrative and operations support expenses.
PLM EQUIPMENT GROWTH FUND IV
(A Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(unaudited)
8. OPERATING SEGMENTS (continued)
Marine Marine
For the three months ended Aircraft Railcar Container Vessel
March 31, 2001 Leasing Leasing Leasing Leasing Other(1) Total
-------------- ------- ------- ------- ------- ----- -----
REVENUES
Lease revenue $ 185 $ 711 $ 12 $ -- $ -- $ 908
Interest income and other 6 -- -- -- 60 66
Gain on disposition of equipment 3,360 -- 67 -- 2 3,429
--------------------------------------------------------------
Total revenues 3,551 711 79 -- 62 4,403
--------------------------------------------------------------
COSTS AND EXPENSES
Operations support 13 135 -- 27 60 235
Depreciation 145 90 66 -- -- 301
Management fees to affiliates 3 44 -- -- -- 47
General and administrative expenses 107 21 -- -- 220 348
Provision for bad debts -- 30 -- -- -- 30
--------------------------------------------------------------
Total costs and expenses 268 320 66 27 280 961
--------------------------------------------------------------
Equity in net income (loss) of USPEs 104 -- -- (34 ) -- 70
--------------------------------------------------------------
Net income (loss) $ 3,387 $ 391 $ 13 $ (61 ) $ (218 )$ 3,512
==============================================================
(1) Includes certain interest income and costs not identifiable to a particular
segment, such as certain general and administrative and operations support
expenses.
9. NET INCOME PER WEIGHTED-AVERAGE PARTNERSHIP UNIT
Net income per weighted-average Partnership unit was computed by dividing net
income attributable to limited partners by the weighted-average number of
Partnership units deemed outstanding during the period. The weighted-average
number of Partnership units deemed outstanding during the three months ended
March 31, 2002 and 2001 was 8,628,420.
10. CONTINGENCIES
The Partnership, together with affiliates, has initiated litigation in various
official forums in the United States and India against a defaulting Indian
airline lessee to repossess Partnership property and to recover damages for
failure to pay rent and failure to maintain such property in accordance with
relevant lease contracts. The Partnership has repossessed all of its property
previously leased to such airline, and the airline has ceased operations. In
response to the Partnership's collection efforts, the airline filed
counterclaims against the Partnership in excess of the Partnership's claims
against the airline. The General Partner believes that the airline's
counterclaims are completely without merit, and the General Partner will defend
against such counterclaims.
The General Partner has decided to minimize its collection efforts from the
Indian lessee in order to save the Partnership from additional expenses of
trying to collect from a lessee that has no apparent ability to pay.
The Partnership is involved as plaintiff or defendant in various other legal
actions incidental to its business. The General Partner does not believe that
any of these actions will be material to the financial condition or results of
operations of the Partnership.
PLM EQUIPMENT GROWTH FUND IV
(A Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(unaudited)
11. LIQUIDATION AND SPECIAL DISTRIBUTIONS
On January 1, 1999, the General Partner began the liquidation phase of the
Partnership and commenced an orderly liquidation of the Partnership assets. The
General Partner is actively marketing the remaining equipment portfolio with the
intent of maximizing sale proceeds. During the liquidation phase of the
Partnership the equipment will continue to be leased under operating and finance
leases until sold. 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. Upon final
liquidation, the Partnership will be dissolved.
The Partnership is not permitted to reinvest proceeds from disposition of
equipment. These proceeds, in excess of operational cash requirements, are
periodically paid out to limited partners in the form of special distributions.
No special distributions were paid in the first quarter of 2002 or 2001. The
sales and liquidations occur because equipment is damaged, 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.
(This space intentionally left blank)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
(I) RESULTS OF OPERATIONS
Comparison of the PLM Equipment Growth Fund IV's (the Partnership's) Operating
Results for the Three Months Ended March 31, 2002 and 2001
(A) Owned Equipment Operations
Lease revenues less direct expenses (defined as repairs and maintenance and
asset-specific insurance expenses) on owned equipment decreased during the three
months ended March 31, 2002 compared to the same period of 2001. Gains or losses
from the sale of equipment, and interest and other income and certain expenses
such as management fees to affiliate, depreciation and general and
administrative expenses relating to the operating segments (see Note 8 to the
unaudited condensed financial statements), are not included in the owned
equipment operation discussion because they are indirect in nature and not a
result of operations but the result of owning a portfolio of equipment. The
following table presents lease revenues less direct expenses by segment (in
thousands of dollars):
For the Three Months
Ended March 31,
2002 2001
---------------------------
Railcars $ 478 $ 576
Marine containers 6 12
Aircraft -- 172
Railcars: Railcar lease revenues and direct expenses were $0.6 million and $0.1
million, respectively, for the first quarter of 2002, compared to $0.7 million
and $0.1 million, respectively, during the same period of 2001. Railcar lease
revenue decreased in the first quarter of 2002 compared to the same quarter of
2001 due to the disposition of railcars during 2002 and 2001.
Marine containers: Marine container lease revenues and direct expenses were
$6,000 and $-0-, respectively, for the first quarter of 2002, compared to
$12,000 and $-0-, respectively, during the same period of 2001. Lease revenues
decreased $6,000 due to the disposition of marine containers during 2002 and
2001.
Aircraft: Aircraft lease revenues and direct expenses were $0.2 million and
$13,000, respectively, for the first quarter of 2001. Aircraft contribution
decreased $0.2 million during the three months ended March 31, 2002 due to the
sale of the Partnership's wholly-owned aircraft during 2001.
(B) Indirect Expenses Related to Owned Equipment Operations
Total indirect expenses of $0.2 million for the first quarter of 2002 decreased
from $0.7 million for the same period in 2001. Significant variances are
explained as follows:
(i) A $0.3 million decrease in administrative expenses from 2001 levels
resulted from a decrease of $0.1 million due to lower professional costs and a
decrease of $0.1 million resulting from lower allocations by the General Partner
for office services and data processing services; and
(ii) A $0.2 million decrease in depreciation expenses from 2001 levels
resulted from to the disposition of certain assets during 2002 and 2001.
(C) Net Gain on Disposition of Owned Equipment
The net gain on the disposition of owned equipment for the first quarter in 2002
totaled $0.6 million, and resulted from the sale of marine containers and
railcars with an aggregate net book value of $0.5 million, for proceeds of $1.1
million. The net gain on disposition of owned equipment for the first quarter of
2001 totaled $3.4 million, and resulted from the sale or disposal of aircraft
and marine containers, with an aggregate net book value of $1.8 million, for
proceeds of $5.3 million.
(D) Equity in Net Income of Unconsolidated Special-Purpose Entities (USPEs)
Equity in net income of USPEs represents the Partnership's share of the net
income generated from the operation of jointly owned assets accounted for under
the equity method of accounting. These entities are single purpose and have no
debt or other financial encumbrances. The following table presents equity in net
income (loss) by equipment type (in thousands of dollars):
For the Three Months
Ended March 31,
2002 2001
---------------------------
Aircraft $ 35 $ 104
Marine vessel -- (34)
---------------------------
Equity in net income of USPEs $ 35 $ 70
===========================
Aircraft: As of March 31, 2002 and 2001, the Partnership had an interest in a
trust that owns two commercial aircraft on direct finance lease. Aircraft
revenues and expenses were $48,000 and $14,000, respectively, for the first
quarter of 2002, compared to $0.1 million and $15,000, respectively, during the
same period in 2001. Revenues decreased due to the leases for the aircraft in
the trust being renegotiated at a lower rate.
Marine vessel: As of March 31, 2002 and 2001, the Partnership had no remaining
interests in entities that owned marine vessels. During the three months ended
March 31, 2001, the entity that owned a marine vessel incurred higher direct
expenses caused by actual operating expenses in 2000 being higher than had been
previously reported. A similar event did not occur during the same period of
2002.
(E) Net Income
As a result of the foregoing, the Partnership's net income was $0.9 million for
the first quarter of 2002, compared to net income of $3.5 million during the
same period of 2001. The Partnership's ability to operate and liquidate assets,
secure leases, and re-lease those assets whose leases expire is subject to many
factors. Therefore, the Partnership's performance in the quarter ended March 31,
2002 is not necessarily indicative of future periods. In the first quarter of
2002, the Partnership distributed $3.8 million to the limited partners, or $0.44
per weighted-average limited partnership unit.
(II) CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires the General Partner
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting period. On a regular basis, the General Partner reviews
these estimates including those related to asset lives and depreciation methods,
impairment of long-lived assets, allowance for doubtful accounts, and
contingencies and litigation. These estimates are based on the General Partner's
historical experience and on various other assumptions believed to be reasonable
under the circumstances. Actual results may differ from these estimates under
different assumptions or conditions. The General Partner believes, however, that
the estimates, including those for the above-listed items, are reasonable and
that actual results will not vary significantly from the estimated amounts.
The General Partner believes the following critical accounting policies affect
the more significant judgments and estimates used in the preparation of the
Partnership's financial statements:
Asset lives and depreciation methods: The Partnership's primary business
involves the purchase and subsequent lease of long-lived transportation and
related equipment. The General Partner has chosen asset lives that it believes
correspond to the economic life of the related asset. The General Partner has
chosen a deprecation method that it believes matches the benefit to the
Partnership from the asset with the associated costs. These judgments have been
made based on the General Partner's expertise in each equipment segment that the
Partnership operates. If the asset life and depreciation method chosen does not
reduce the book value of the asset to at least the potential future cash flows
from the asset to the Partnership, the Partnership would be required to record a
loss on revaluation. Likewise, if the net book value of the asset was reduced by
an amount greater than the economic value has deteriorated, the Partnership may
record a gain on sale upon final disposition of the asset.
Impairment of long-lived assets: On a regular basis, the General Partner reviews
the carrying value of its equipment and investment in an USPE to determine if
the carrying value of the assets may not be recoverable in consideration of the
current economic conditions. This requires the General Partner to make estimates
related to future cash flows from each asset as well as the determination if the
deterioration is temporary or permanent. If these estimates or the related
assumptions change in the future, the Partnership may be required to record
additional impairment charges.
Allowance for doubtful accounts: The Partnership maintains allowances for
doubtful accounts for estimated losses resulting from the inability of the
lessees to make the lease payments. These estimates are primarily based on the
amount of time that has lapsed since the related payments were due as well as
specific knowledge related to the ability of the lessees to make the required
payments. If the financial condition of the Partnership's lessees were to
deteriorate, additional allowances could be required that would reduce income.
Conversely, if the financial condition of the lessees were to improve or if
legal remedies to collect past due amounts were successful, the allowance for
doubtful accounts may need to be reduced and income would be increased.
Contingencies and litigation: The Partnership is subject to legal proceedings
involving ordinary and routine claims related to its business. The ultimate
legal and financial liability with respect to such matters cannot be estimated
with certainty and requires the use of estimates in recording liabilities for
potential litigation settlements. Estimates for losses from litigation are made
after consultation with outside counsel. If estimates of potential losses
increase or the related facts and circumstances change in the future, the
Partnership may be required to record additional litigation expense.
(III) FINANCIAL CONDITION -- CAPITAL RESOURCES AND LIQUIDITY
For the three months ended March 31, 2002, the Partnership generated $0.2
million in operating cash (net cash provided by operating activities plus
non-liquidating cash distributions from an USPE) to meet its operating
obligations, maintain working capital reserves and make distributions (total for
the three months ended March 31, 2002 of $4.0 million) to the partners, and used
undistributed available cash from prior periods and proceeds from equipment
dispositions of approximately $3.8 million.
During the three months ended March 31, 2002, the Partnership disposed of owned
equipment for aggregate proceeds of $1.1 million.
Investment in USPE decreased $0.1 million due to cash distributions of $0.1
million to the Partnership from the USPE offset in part, by $35,000 of income
that was recorded by the Partnership from the USPE during the three months ended
March 31, 2002.
Accounts payable decreased $0.2 million during the three months ended March 31,
2002 due to the payment of an aircraft repair that had been accrued as of
December 31, 2001.
The General Partner has not planned any expenditures, nor is it aware of any
contingencies that would cause the Partnership to require any additional
capital.
The Partnership is in its active liquidation phase. As a result, the size of the
Partnership's remaining equipment portfolio and, in turn, the amount of net cash
flows from operations will continue to become progressively smaller as assets
are sold. Although distribution levels may be reduced, significant asset sales
may result in potential special distributions to the partners.
The amounts reflected for assets and liabilities of the Partnership have not
been adjusted to reflect liquidation values. The equipment portfolio that is
actively being marketed for sale by the General Partner continues to be carried
at the lower of depreciated cost or fair value less cost of disposal. Although
the General Partner estimates that there will be distributions to the partners
after final disposal of assets and settlement of liabilities, the amounts cannot
be accurately determined prior to actual disposal of the equipment.
(IV) OUTLOOK FOR THE FUTURE
The Partnership is in its active liquidation phase. 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. Sale decisions may cause the operating performance of the
Partnership to decline over the remainder of its life. The liquidation phase
will end on December 31, 2009, unless the Partnership is terminated earlier upon
sale of all of the equipment or by certain other events.
Several factors may affect the Partnership's operating performance during the
remainder of 2002 and beyond, including changes in the markets for the
Partnership's equipment and changes in the regulatory environment in which that
equipment operates.
Liquidation of the Partnership's equipment and its investment in a USPE will
cause a reduction in the size of the equipment portfolio and may result in a
reduction of contribution to the Partnership Other factors affecting the
Partnership's contribution during the remainder of 2002 and beyond include:
(1) The cost of new marine containers have been at historic lows for the past
several years which has caused downward pressure on per diem lease rates for
this type of equipment. The Partnership's fleet of marine containers is in
excess of twelve years of age and is generally no longer suitable for use in
international commerce either due to its specific physical condition, or lessees
preferences for newer equipment;
(2) Railcar loadings in North America for the first quarter of 2002 were below
those of 2001. This decrease has led to lower utilization and lower contribution
to the Partnership as existing leases expire and renewal leases are negotiated;
The ability of the Partnership to realize acceptable lease rates on its
equipment in the different equipment markets is contingent on many factors, such
as specific market conditions and economic activity, technological obsolescence,
and government or other regulations. The unpredictability of some of these
factors, or of their occurrence, makes it difficult for the General Partner to
clearly define trends or influences that may impact the performance of the
Partnership's equipment. The General Partner continually monitors both the
equipment markets and the performance of the Partnership's equipment in these
markets. The General Partner may decide to reduce the Partnership's exposure to
equipment markets in which it determines that it cannot operate equipment and
achieve acceptable rates of return.
The Partnership intends to use cash flow from operations and proceeds from
disposition of equipment to satisfy its operating requirements, maintain working
capital reserves, and pay cash distributions to the partners.
(V) FORWARD-LOOKING INFORMATION
Except for the historical information contained herein, this Form 10-Q contains
forward-looking statements that contain risks and uncertainties, such as
statements of the Partnership's plans, objectives, expectations, and intentions.
The cautionary statements made in this Form 10-Q should be read as being
applicable to all related forward-looking statements wherever they appear in
this Form 10-Q. The Partnership's actual results could differ materially from
those discussed here.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Partnership's primary market risk exposure is that of currency devaluation
risk. During the first quarter of 2002, 81% of the Partnership's total lease
revenues from wholly- and partially-owned equipment came from non-United States
domiciled lessees. Most of the leases require payment in United States (US)
currency. If these lessees' currency devalues against the US dollar, the lessees
could encounter difficulty in making the US dollar denominated lease payments.
(This space intentionally left blank)
PART II -- OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None.
(b) Reports on Form 8-K
None.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PLM EQUIPMENT GROWTH FUND IV
By: PLM Financial Services, Inc.
General Partner
Date: May 13, 2002 By: /s/ Stephen M. Bess
-----------------------------------
Stephen M. Bess
President and Current Chief Accounting Officer