PLM EQUIPMENT GROWTH FUND IV - 10-K Annual Report

Back to GetFilings.com

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
FORM 10-K

[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the fiscal year ended December 31, 2001.

[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 ______

Aggregate market value of voting stock: N/A

An index of exhibits filed with this Form 10-K is located on page 22.

Total number of pages in this report: 65.

PART I

ITEM 1. BUSINESS

(A) Background

In March 1989, PLM Financial Services, Inc. (FSI or the General Partner), a
wholly owned subsidiary of PLM International, Inc. (PLM International or PLMI),
filed a Registration Statement on Form S-1 with the Securities and Exchange
Commission with respect to a proposed offering of 8,750,000 limited partnership
units (including 1,250,000 option units) (the units) in PLM Equipment Growth
Fund IV, a California limited partnership (the Partnership, the Registrant, or
EGF IV). The Partnership's offering became effective on May 23, 1989. FSI, as
General Partner, owns a 5% interest in the Partnership. The Partnership engages
in the business of investing in a diversified equipment portfolio consisting
primarily of used, long-lived, low-obsolescence capital equipment that is easily
transportable by and among prospective users.

The Partnership's primary objectives are:

(1) to maintain a diversified portfolio of long-lived, low-obsolescence,
high residual-value equipment with the net proceeds of the initial partnership
offering, supplemented by debt financing and reinvestment of cash generated by
operations. All transactions of over $1.0 million must be approved by the PLM
International Credit Review Committee (the Committee), which is made up of
members of PLM International Senior Management. In determining a lessee's
creditworthiness, the Committee will consider, among other factors, its
financial statements, internal and external credit ratings, and letters of
credit;

(2) to generate sufficient net operating cash flow from lease operations to
meet liquidity requirements and to generate cash distributions to the limited
partners until such time as the General Partner commences the orderly
liquidation of the Partnership assets or unless the Partnership is terminated
earlier upon sale of all Partnership property or by certain other events;

(3) to selectively sell equipment when the General Partner believes that,
due to market conditions, market prices for equipment exceed inherent equipment
values or that expected future benefits from continued ownership of a particular
asset will have an adverse affect on the Partnership. As the Partnership is in
the liquidation phase, proceeds from these sales, together with excess net
operating cash flows from operations (net cash provided by operating activities
plus distributions from unconsolidated special-purpose entities (USPEs)), are
used to pay distributions to the partners; and

(4) to preserve and protect the value of the portfolio through quality
management, maintaining the portfolio's diversity, and constantly monitoring
equipment markets.

The offering of the units of the Partnership closed on March 28, 1990. As of
December 31, 2001, there were 8,628,420 limited partnership units outstanding.
The General Partner contributed $100 for its 5% general partner interest in the
Partnership.

The Partnership has entered its liquidation phase and the General Partner is
actively pursuing the sale of all of the Partnership's equipment with the
intention of winding up the Partnership and distributing all available cash to
the Partners. 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.

Table 1, below, lists the equipment and the original cost of equipment in the
Partnership's portfolio and the Partnership's proportional share of equipment
owned by an unconsolidated special-purpose entity, as of December 31, 2001 (in
thousands of dollars):

TABLE 1

Units Type Manufacturer Cost
- ---------------------------------------------------------------------------------------------------------------------

Owned equipment held for operating leases:

273 Pressurized tank railcars Various $ 8,244
98 Woodchip gondola railcars General Electric 2,341
110 Bulkhead flat railcars Marine Industries Ltd. 2,153
24 Nonpressurized tank railcars Various 501
81 Refrigerated marine containers Various 2,158
119 Various marine containers Various 414

-----------
Total owned equipment held for operating leases $ 15,811 (1)
===========

Equipment owned by an unconsolidated special-purpose entity:

0.35 Equipment on direct finance lease:
Two DC-9 stage III commercial aircraft McDonnell-Douglas $ 4,025 (1,2)

(1) Includes equipment and investments purchased with the proceeds from capital
contributions, undistributed cash flow from operations, and Partnership
borrowings. Includes costs capitalized subsequent to the date of
acquisition and equipment acquisition fees paid to PLM Transportation
Equipment Corporation, a wholly owned subsidiary of FSI. All equipment was
used equipment at the time of purchase.

(2) Jointly Owned: EGF IV and two affiliated partnerships.

Rents for railcars are based on fixed rate with terms of one to six years. The
Partnership's marine containers are leased to operators of utilization-type
leasing pools, which include equipment owned by unaffiliated parties. In such
instances, revenues received by the Partnership consist of a specified
percentage of revenues generated by leasing the pooled equipment to sublessees,
after deducting certain direct operating expenses of the pooled equipment.

The lessees of the equipment include, but are not limited to: Aero California
Airline, Canadian Pacific Railways, and Trans Ocean LTD.

(B) Management of Partnership Equipment

The Partnership has entered into an equipment management agreement with PLM
Investment Management, Inc. (IMI), a wholly owned subsidiary of FSI, for the
management of the Partnership's equipment. The Partnership's management
agreement with IMI is to co-terminate with the dissolution of the Partnership,
unless the limited partners vote to terminate the agreement prior to that date
or at the discretion of the General Partner. IMI has agreed to perform all
services necessary to manage the equipment on behalf of the Partnership and to
perform or contract for the performance of all obligations of the lessor under
the Partnership's leases. In consideration for its services and pursuant to the
partnership agreement, IMI is entitled to a monthly management fee (see Notes 1
and 2 to the audited financial statements).

(This space intentionally left blank)

(C) Competition

(1) Operating Leases versus Full Payout Leases

Generally, the equipment owned by or invested in the Partnership is leased out
on an operating lease basis wherein the rents received during the initial
noncancelable term of the lease are insufficient to recover the Partnership's
purchase price of the equipment. The short- to mid-term nature of operating
leases generally commands a higher rental rate than the longer-term, full payout
leases and offers lessees relative flexibility in their equipment commitment. In
addition, the rental obligation under an operating lease need not be capitalized
on the lessee's balance sheet.

The Partnership encounters considerable competition from lessors that utilize
full payout leases on new equipment, i.e. leases that have terms equal to the
expected economic life of the equipment. While some lessees prefer the
flexibility offered by a shorter-term operating lease, other lessees prefer the
rate advantages possible with a full payout lease. Competitors may write full
payout leases at considerably lower rates and for longer terms than the
Partnership offers, or larger competitors with a lower cost of capital may offer
operating leases at lower rates, which may put the Partnership at a competitive
disadvantage.

(2) Manufacturers and Equipment Lessors

The Partnership competes with equipment manufacturers who offer operating leases
and full payout leases. Manufacturers may provide ancillary services that the
Partnership cannot offer, such as specialized maintenance services (including
possible substitution of equipment), training, warranty services, and trade-in
privileges.

The Partnership also competes with many equipment lessors, including ACF
Industries, Inc. (Shippers Car Line Division), General Electric Railcar Services
Corporation, General Electric Capital Aviation Services Corporation, and other
investments programs that lease the same types of equipment.

(D) Demand

The Partnership currently operates in three primary operating segments: railcar
leasing, marine container leasing, and aircraft leasing. Each equipment leasing
segment engages in short-term to mid-term operating leases to a variety of
customers except for the Partnership's investment in two aircraft on a direct
finance lease. The Partnership's equipment and investments are primarily used to
transport materials and commodities, except for aircraft leased to passenger air
carriers.

The following section describes the international and national markets in which
the Partnership's capital equipment operates:

(1) Railcars

(a) Pressurized Tank Railcars

Pressurized tank railcars are used to transport liquefied petroleum gas (natural
gas) and anhydrous ammonia (fertilizer). The United States ("US") markets for
natural gas are industrial applications, residential use, electrical generation,
commercial applications, and transportation. Natural gas consumption is expected
to grow over the next few years as most new electricity generation capacity
planned for is expected to be natural gas fired. Within the fertilizer industry,
demand is a function of several factors, including the level of grain prices,
status of government farm subsidy programs, amount of farming acreage and mix of
crops planted, weather patterns, farming practices, and the value of the US
dollar. Population growth and dietary trends also play an indirect role.

On an industry-wide basis, North American carloadings of the commodity group
that includes petroleum and chemicals decreased over 5% in 2001 compared to
2000. Even with this decrease in industry-wide demand, the utilization of this
type of railcar within the Partnership continued to be in the 98% range through
2001.

(b) Woodchip Gondolas Railcars

These railcars are used to transport woodchips from sawmills to pulp mills,
where the woodchips are converted into pulp. Thus, demand for woodchip cars is
directly related to demand for paper, paper products, particleboard, and
plywood. In Canada, where the Partnership's woodchip railcars operate, 2001
carloadings of forest products decreased approximately 5% when compared to 2000
levels. Utilization of the Partnership's woodchip gondolas railcars decreased
from 73% at the beginning of 2001 to 59% at year-end.

(c) Bulkhead Flat Railcars

Bulkhead flatcars are used to transport pulpwood from sawmills to pulp mills.
High-grade pulpwood is used to make paper, while low-grade pulpwood is used to
make particleboard and plywood. In Canada, where the Partnership's bulkhead
flatcars operate, 2001 carloadings of forest products increased by approximately
1% over 2000 levels. Utilization of the Partnership's bulkhead flat railcars
remain at 100%.

(d) Nonpressurized, General Purpose Tank Railcars

These cars are used to transport bulk liquid commodities and chemicals not
requiring pressurization, such as certain petroleum products, liquefied asphalt,
lubricating oils, molten sulfur, vegetable oils, and corn syrup. The overall
health of the market for these types of commodities is closely tied to both the
US and global economies, as reflected in movements in the Gross Domestic
Product, personal consumption expenditures, retail sales, and currency exchange
rates. The manufacturing, automobile, and housing sectors are the largest
consumers of chemicals. Within North America, 2001 carloadings of the commodity
group that includes chemicals and petroleum products fell over 5% from 2000
levels. Utilization of the Partnership's nonpressurized tank cars decreased from
90% at the beginning of 2001 to 85% at year-end.

(2) Marine Containers

The Partnership's fleet of both standard dry and specialized containers is in
excess of 12 years of age, and is generally no longer suitable for use in
international commerce, either due to its specific physical condition, or the
lessees' preferences for newer equipment. As individual containers are returned
from their specific lessees, they are being marketed for sale on an "as is,
where is" basis. The market for such sales, although highly dependent upon the
specific location and type of container, has softened somewhat in the last year
primarily due to the worldwide recession. In addition to this overall softness
in residual values, the Partnership has continued to experience reduced residual
values on the sale of refrigerated containers, due primarily to technological
obsolescence associated with this equipment's refrigeration machinery.

(3) Commercial Aircraft

Prior to September 11, 2001, Boeing and Airbus Industries predicted that the
rate of growth in the demand for air transportation services would be relatively
robust for the next 20 years. Boeing's prediction was that the demand for
passenger services would grow at an average rate of about 5% per year and the
demand for cargo traffic would grow at about 6% per year during such period.
Airbus' numbers were largely the same at 5% and 6%, respectively. Neither
manufacturer has released new long-term predictions; however, both have
confirmed lower production rates as well as substantial reductions in their work
forces. Both manufacturers experienced significant reductions in the numbers of
new orders for the year 2001 (through the end of November), with Boeing
reporting 294 (as compared to 611 the previous year) and Airbus reporting 352
(as compared to 520 for the previous year.)

Current Market: It is to be noted that, even prior to the events on September
11, 2001, the worldwide airline industry experienced negative traffic growth,
which in itself is unprecedented in peace time (it also happened during and
after the Gulf War). The tragic events of September 11, 2001 have resulted in an
unprecedented market situation for used commercial aircraft. The major carriers
in the United States have grounded (or are in the process of grounding)
approximately 20% of their fleets, causing the imbalance between supply and
demand for aircraft seats to be exacerbated. In short, the market for used
commercial aircraft is more negatively impacted than ever and is in un-chartered
territory. The portfolio in the Partnership has been severely impacted.

The Partnership owns 35% of two DC-9 aircraft, which are on lease. These leases
have been re-negotiated and the resulting incoming cash flow will be severely
reduced.

(E) Government Regulations

The use, maintenance, and ownership of equipment are regulated by federal,
state, local, or foreign governmental authorities. Such regulations may impose
restrictions and financial burdens on the Partnership's ownership and operation
of equipment. Changes in government regulations, industry standards, or
deregulation may also affect the ownership, operation, and resale of the
equipment. Substantial portions of the Partnership's equipment portfolio are
either registered or operated internationally. Such equipment may be subject to
adverse political, government, or legal actions, including the risk of
expropriation or loss arising from hostilities. Certain of the Partnership's
equipment is subject to extensive safety and operating regulations, which may
require its removal from service or extensive modification of such equipment to
meet these regulations, at considerable cost to the Partnership. Such
regulations include but are not limited to:

(1) the Montreal Protocol on Substances that Deplete the Ozone Layer and
the US Clean Air Act Amendments of 1990, which call for the control and
eventual replacement of substances that have been found to cause or
contribute significantly to harmful effects on the stratospheric ozone
layer and that are used extensively as refrigerants in refrigerated marine
cargo containers; and

(2) the US Department of Transportation's Hazardous Materials Regulations
regulates the classification and packaging requirements of hazardous
materials which apply particularly to the Partnership's tank railcars. The
Federal Railroad Administration has mandated that effective July 1, 2000
all tank railcars must be re-qualified every ten years from the last test
date stenciled on each railcar to insure tank shell integrity. Tank shell
thickness, weld seams, and weld attachments must be inspected and repaired
if necessary to re-qualify the tank railcar for service. The average cost
of this inspection is $3,600 for jacketed tank railcars and $1,800 for
non-jacketed tank railcars, not including any necessary repairs. This
inspection is to be performed at the next scheduled tank test and every ten
years thereafter. The Partnership currently owns 241 jacketed tank railcars
and 54 non-jacketed tank railcars that will need re-qualification. To date,
a total of 40 tank railcars have been inspected with no significant
defects.

As of December 31, 2001, the Partnership was in compliance with the above
government regulations. Typically, costs related to extensive equipment
modifications to meet government regulations are passed on to the lessee of that
equipment.

ITEM 2. PROPERTIES

The Partnership neither owns nor leases any properties other than the equipment
it has purchased and its interest in an entity that owns equipment for leasing
purposes. As of December 31, 2001, the Partnership owned a portfolio of
transportation and related equipment and an investment in equipment owned by an
unconsolidated special-purpose entity (USPE) as described in Item I, Table 1.
The Partnership acquired equipment with the proceeds of the Partnership offering
of $174.8 million through the first half of 1990, proceeds from the debt
financing of $33.0 million, and by reinvesting a portion of its operating cash
flow in additional equipment.

The Partnership maintains its principal office at 120 Montgomery Street, Suite
1350, San Francisco, California 94104. All office facilities are provided by FSI
without reimbursement by the Partnership.

ITEM 3. LEGAL PROCEEDINGS

Two class action lawsuits which were filed against PLM International and various
of its wholly owned subsidiaries in January 1997 in the United States District
Court for the Southern District of Alabama, Southern Division (the court), Civil
Action No. 97-0177-BH-C (the Koch action), and June 1997 in the San Francisco
Superior Court, San Francisco, California, Case No. 987062 (the Romei action),
were fully resolved during the fourth quarter of 2001.

The named plaintiffs were individuals who invested in the Partnership (Fund IV),
PLM Equipment Growth Fund V (Fund V), PLM Equipment Growth Fund VI (Fund VI),
and PLM Equipment Growth & Income Fund VII (Fund VII and collectively, the
Funds), each a California limited partnership for which PLMI's wholly owned
subsidiary, FSI, acts as the General Partner. The complaints asserted causes of
action against all defendants for fraud and deceit, suppression, negligent
misrepresentation, negligent and intentional breaches of fiduciary duty, unjust
enrichment, conversion, conspiracy, unfair and deceptive practices, and
violations of state securities law. Plaintiffs alleged that each defendant owed
plaintiffs and the class certain duties due to their status as fiduciaries,
financial advisors, agents, and control persons. Based on these duties,
plaintiffs asserted liability against defendants for improper sales and
marketing practices, mismanagement of the Funds, and concealing such
mismanagement from investors in the Funds. Plaintiffs sought unspecified
compensatory damages, as well as punitive damages.

In February 1999, the parties to the Koch and Romei actions agreed to monetary
and equitable settlements of the lawsuits, with no admission of liability by any
defendant, and filed a Stipulation of Settlement with the court. The court
preliminarily approved the settlement in August 2000, and information regarding
the settlement was sent to class members in September 2000. A final fairness
hearing was held on November 29, 2000, and on April 25, 2001, the federal
magistrate judge assigned to the case entered a Report and Recommendation
recommending final approval of the monetary and equitable settlements to the
federal district court judge. On July 24, 2001, the federal district court judge
adopted the Report and Recommendation, and entered a final judgment approving
the settlements. No appeal has been filed and the time for filing an appeal has
expired.

The monetary settlement provides for a settlement and release of all claims
against defendants in exchange for payment for the benefit of the class of up to
$6.6 million, consisting of $0.3 million deposited by PLMI and the remainder
funded by an insurance policy. The final settlement amount of $4.9 million (of
which PLMI's share was approximately $0.3 million) was accrued in 1999, paid out
in the fourth quarter of 2001 and was determined based upon the number of claims
filed by class members, the amount of attorneys' fees awarded by the court to
plaintiffs' attorneys, and the amount of the administrative costs incurred in
connection with the settlement.

The equitable settlement provides, among other things, for: (a) the extension
(until January 1, 2007) of the date by which FSI must complete liquidation of
the Funds' equipment, except for Fund IV; (b) the extension (until December 31,
2004) of the period during which FSI can reinvest the Funds' funds in additional
equipment, except for Fund IV; (c) an increase of up to 20% in the amount of
front-end fees (including acquisition and lease negotiation fees) that FSI is
entitled to earn in excess of the compensatory limitations set forth in the
North American Securities Administrator's Association's Statement of Policy;
except for Fund IV; (d) a one-time purchase by each of Funds V, VI and VII of up
to 10% of that partnership's outstanding units for 80% of net asset value per
unit as of September 30, 2000; and (e) the deferral of a portion of the
management fees paid, except for Fund IV, to an affiliate of FSI until, if ever,
certain performance thresholds have been met by the Funds. The equitable
settlement also provides for payment of additional attorneys' fees to the
plaintiffs' attorneys from Fund funds in the event, if ever, that certain
performance thresholds have been met by the Funds. Following a vote of limited
partners resulting in less than 50% of the limited partners of each of Funds V,
VI, and VII voting against such amendments and after final approval of the
settlement, each of the Funds' limited partnership agreements was amended to
reflect these changes. During the fourth quarter of 2001, the respective Funds
purchased limited partnership units from those equitable class members who
submitted timely requests for purchase.

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 lessees 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.

During 2001, the General Partner decided to minimize its collection efforts from
the India 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. Management does not believe that any of
these actions will be material to the financial condition or results of
operations of the Partnership.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of the Partnership's limited partners during
the fourth quarter of its fiscal year ended December 31, 2001.

(This space intentionally left blank)

PART II

ITEM 5. MARKET FOR THE PARTNERSHIP'S EQUITY AND RELATED UNITHOLDER MATTERS

Pursuant to the terms of the partnership agreement, the General Partner is
generally entitled to a 5% interest in the profits, losses and distributions of
the Partnership. The General Partner is the sole holder of such interest.
Special allocations of income are made to the General Partner equal to the
deficit balance, if any, in the capital account of the General Partner. The
General Partner's annual allocation of net income will generally be equal to the
General Partner's cash distributions paid during the current year. The remaining
interests in the profits, losses and distributions of the Partnership are owned,
as of December 31, 2001, by 9,305 holders of units in the Partnership.

There are several secondary markets that will facilitate sales and purchases of
units. Secondary markets are characterized as having few buyers for limited
partnership interests and, therefore are viewed as inefficient vehicles for the
sale of units. Presently, there is no public market for the units and none is
likely to develop.

To prevent the units from being considered publicly traded and thereby to avoid
taxation of the Partnership as an association treated as a corporation under the
Internal Revenue Code, the units will not be transferable without the consent of
the General Partner, which may be withheld at its absolute discretion. The
General Partner intends to monitor transfers of units in an effort to ensure
that they do not exceed the percentage or number permitted by certain safe
harbors promulgated by the Internal Revenue Service. A transfer may be
prohibited if the intended transferee is not an US citizen or if the transfer
would cause any portion of the units of a "Qualified Plan" as defined by the
Employee Retirement Income Security Act of 1974 and Independent Retirement
Accounts to exceed the limit allowable. The Partnership may redeem a certain
number of units each year. As of December 31, 2001, the Partnership had
purchased a cumulative total of 121,580 units at a cost of $1.6 million. The
General Partner does not intend to purchase any additional units on behalf of
the Partnership in the future.

(This space intentionally left blank)

ITEM 6. SELECTED FINANCIAL DATA

Table 2, below, lists selected financial data for the Partnership:

TABLE 2

For the Years Ended December 31,
(In thousands of dollars, except weighted-average unit amounts)

2001 2000 1999 1998 1997
---------------------------------------------------------------------------

Operating results:

Total revenues $ 6,816 $ 4,847 $ 14,651 $ 10,768 $ 16,378
Net gain (loss) on disposition of
equipment 3,547 303 6,357 (464) 2,830
Loss on revaluation of equipment -- 106 -- -- --
Equity in net income (loss) of uncon-
solidated special-purpose entities (1,049) 673 2,224 348 2,952
Net income (loss) 3,247 897 6,408 (1,127) 2,098

At year-end:
Total assets $ 14,072 $ 12,863 $ 20,185 $ 31,250 $ 46,089
Total liabilities 461 729 843 14,683 24,862
Notes payable -- -- -- 12,750 21,000

Cash distribution $ 1,770 $ 3,564 $ 3,633 $ 3,533 $ 5,780
Special cash distribution -- 4,541 -- -- --

-------------------------------------------------------------------------
Total cash distribution $ 1,770 $ 8,105 $ 3,633 $ 3,533 $ 5,780
=========================================================================

Total cash distribution representing a
return of capital to the limited
partners $ -- $ 7,208 $ -- $ 3,351 $ 3,682

Per weighted-average limited partnership unit:

Net income (loss) $ 0.37 1 $ 0.06 1 $ 0.72 1 $ (0.15 )1 $ 0.21 (1)

Cash distribution $ 0.19 $ 0.39 $ 0.40 $ 0.39 $ 0.64
Special cash distribution -- 0.50 -- -- --

-------------------------------------------------------------------------
Total cash distribution $ 0.19 $ 0.89 $ 0.40 $ 0.39 $ 0.64
=========================================================================

Total cash distribution representing a
return of capital to the limited
partners $ -- $ 0.84 $ -- $ 0.39 $ 0.43

1 After the increase of income necessary to cause the General Partner's
capital account to equal zero of $0.1 million ($0.01 per weighted-average
limited partnership unit) in 2001, and after the reduction of income
necessary to cause the General Partner's capital account to equal zero of
$0.4 million ($0.04 per weighted-average limited partnership unit) in 2000,
$0.1 million ($0.02 per weighted-average limited partnership unit) in 1999,
$0.2 million ($0.03 per weighted-average limited partnership unit) in 1998,
and $0.2 million ($0.02 per weighted-average limited partnership unit) in
1997 representing allocations to the General Partner (see Note 1 to the
financial statements).

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

(A) Introduction

Management's discussion and analysis of financial condition and results of
operations relates to the financial statements of PLM Equipment Growth Fund IV
(the Partnership). The following discussion and analysis of operations focuses
on the performance of the Partnership's equipment in the various segments in
which it operates and its effect on the Partnership's overall financial
condition.

(B) Results of Operations - Factors Affecting Performance

(1) Re-leasing Activity and Repricing Exposure to Current Economic Conditions

The exposure of the Partnership's equipment portfolio to repricing risk occurs
whenever the leases for the equipment expire or are otherwise terminated and the
equipment must be remarketed. Major factors influencing the current market rate
for the Partnership's equipment include supply and demand for similar or
comparable types of transport capacity, desirability of the equipment in the
leasing market, market conditions for the particular industry segment in which
the equipment is to be leased, overall economic conditions, and various
regulations concerning the use of the equipment. Equipment that is idle or out
of service between the expiration of one lease and the assumption of a
subsequent lease can result in a reduction of contribution to the Partnership.
The Partnership experienced re-leasing or repricing activity in 2001 for its
marine container, railcar, and aircraft portfolios:

(a) The Partnership's remaining marine container portfolio operates in
utilization-based leasing pools and, as such, is exposed to considerable
repricing activity. The Partnership's marine container contributions declined
from 2000 to 2001 due to equipment sales.

(b) Railcars: The Partnership's railcar portfolio contributions declined
from 2000 to 2001, due to lower lease revenues earned on railcars whose lease
expired during 2001.

(c) Aircraft: The Partnership's investment in a trust owning two aircraft
on a direct finance lease will also see a decrease in revenues during 2002 due
to the lease being renegotiated in 2001 at a much lower rate than was previously
in place.

(2) Equipment Liquidations

Liquidation of Partnership equipment and of investments in unconsolidated
special-purpose entities (USPEs) represents a reduction in the size of the
equipment portfolio, and may result in reduction of contributions to the
Partnership. During 2001, the Partnership disposed of aircraft, marine
containers, and railcars for proceeds of $5.5 million.

(3) Equipment Valuation

In accordance with Financial Accounting Standards Board (FASB) Statement of
Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" (SFAS No. 121),
the General Partner reviews the carrying values of the Partnership's equipment
portfolio at least quarterly and whenever circumstances indicate that the
carrying value of an asset may not be recoverable due to expected future market
conditions. If the projected undiscounted cash flows and the fair market value
of the equipment are less than the carrying value of the equipment, a loss on
revaluation is recorded. During 2001, a USPE trust owning two Stage III
commercial aircraft on a direct finance lease reduced its net investment in the
finance lease receivable due to a series of lease amendments. The Partnership's
proportionate share of this writedown, which is included in equity in net income
(loss) of the USPE in the accompanying statement of income, was $1.4 million. A
$0.1 million loss on revaluation to the carrying value of owned equipment was
recorded during 2000. No reduction to the equipment carrying values was required
in the year ended December 31, 1999.

In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" (SFAS No. 144), which replaces SFAS No. 121. SFAS
No. 144 provides updated guidance concerning the recognition and measurement of
an impairment loss for certain types of long-lived assets, expands the scope of
a discontinued operation to include a component of an entity and eliminates the
current exemption to consolidation when control over a subsidiary is likely to
be temporary. SFAS No. 144 is effective for fiscal years beginning after
December 15, 2001.

The Partnership will apply the new rules on accounting for the impairment or
disposal of long-lived assets beginning in the first quarter of 2002, and they
are not anticipated to have an impact on the Partnership's earnings or financial
position.

(C) Financial Condition -- Capital Resources and Liquidity

The General Partner purchased the Partnership's initial equipment portfolio with
capital raised from its initial equity offering and permanent debt financing. No
further capital contributions from the limited partners are permitted under the
terms of the Partnership's limited partnership agreement. As of December 31,
2001, the Partnership had no outstanding indebtedness. The Partnership relies on
operating cash flow and proceeds from sale of equipment to meet its operating
obligations and make cash distributions to the limited partners.

For the year ended December 31, 2001, the Partnership generated $2.5 million in
operating cash (net cash provided by operating activities plus non-liquidating
distributions from USPEs) to meet its operating obligations and make
distributions (total of $1.8 million in 2001) to the partners.

During the year ended December 31, 2001, the Partnership disposed of aircraft,
marine containers, and railcars for aggregate proceeds of $5.5 million,
including $0.1 million of unused marine container repair reserves.

Accounts receivable decreased $0.1 million during the year ended December 31,
2001 due to the timing of cash receipts.

Investment in an unconsolidated special-purpose entity (USPE) decreased $1.9
million. The decrease was due to a $0.9 million distribution to the Partnership
and by a net loss of $1.0 million from the USPE during 2001.

Accounts payable and accrued expenses increased $0.1 million due to the due to
the timing of payments to vendors.

Lessee deposits and reserve for repairs decreased $0.4 million during the year
ended 2001. A decrease of $0.2 million was due to the reclassification of a $0.1
million lessee deposit and $0.1 million in unused marine container repair
reserves to equipment sales proceeds resulting from the sale of an aircraft and
certain marine containers. An additional reclassification of $0.1 million in
marine container repair reserves to other income resulted from the determination
that repairs would no longer be made to these marine containers. Lessee deposits
decreased $0.1 million due to the timing of payments to certain lessees.

Pursuant to the terms of the limited partnership agreement, beginning January 1,
1993, if the number of units made available for purchase by limited partners in
any calendar year exceeds the number that can be purchased with reinvestment
plan proceeds during any calendar year, then the Partnership may redeem up to 2%
of the outstanding units each year, subject to certain terms and conditions. The
purchase price to be offered for such units is to be equal to 110% of the
unrecovered principal attributed to the units. Unrecovered principal is defined
as the excess of the capital contribution attributable to a unit over the
distributions from any source paid with respect to that unit. The Partnership
does not intend to purchase any units in the future.

The General Partner has not planned any expenditures, nor is it aware of any
contingencies that would cause it to require any additional capital to that
mentioned above.

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. Significant asset sales may result in 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
Partnership after final disposal of assets and settlement of liabilities, the
amounts cannot be accurately determined prior to actual disposal of the
equipment.

(D) 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 including intangibles, allowance for doubtful
accounts, reserves related to legally mandated equipment repairs 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, investment in a USPE, and intangible assets
to determine if the carrying value of the asset may not be recoverable in
consideration of 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.

Reserves for repairs: The Partnership accrues for legally required repairs to
equipment such as dry docking for marine vessels and engine overhauls to
aircraft engines over the period prior to the required repairs. The amount that
is reserved for is based on the General Partner's expertise in each equipment
segment, the past history of such costs for that specific piece of equipment,
and discussions with independent, third party equipment brokers. If the amount
reserved for is not adequate to cover the cost of such repairs or if the repairs
must be performed earlier than the General Partner estimated, the Partnership
would incur additional repair and maintenance or equipment operating expenses.

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.

(E) Results of Operations - Year-to-Year Detailed Comparison

(1) Comparison of Partnership's Operating Results for the Years Ended December
31, 2001 and 2000

(a) Owned Equipment Operations

Lease revenues less direct expenses (defined as repairs and maintenance,
equipment operating and asset-specific insurance expenses) on owned equipment
decreased during the year ended December 31, 2001 compared to the same period of
2000. Gains or losses from the sale of equipment, and interest and other income
and certain expenses such as depreciation and general and administrative
expenses relating to the operating segments (see Note 5 to the audited 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 Years
Ended December 31,
2001 2000
----------------------------

Railcars $ 2,001 $ 2,202
Marine containers 33 72
Aircraft 23 648
Trailers -- 428
Other (27) --

Railcars: Railcar lease revenues and direct expenses were $2.6 million and $0.6
million, respectively, for 2001, compared to $2.9 million and $0.7 million,
respectively, during 2000. Lease revenues decreased $0.2 million due to lower
re-lease rates earned on railcars whose leases expired during 2001 and decreased
$0.1 million due to the increase in the number of railcars off-lease during 2001
compared to 2000. Direct expenses decreased $0.1 million due to fewer repairs
during the year of 2001 compared to 2000.

Marine containers: Marine container lease revenues and direct expenses were
$33,000 and $-0-, respectively, for the year ended December 31, 2001, compared
to $0.1 million and $6,000, respectively, during 2000. The decrease in marine
container contribution in the year ended December 31, 2001 compared to the same
period of 2000 was due to the sale of marine containers in 2001 and 2000.

Aircraft: Aircraft lease revenues and direct expenses were $0.2 million and $0.2
million, respectively, for 2001, compared to $0.8 million and $0.1 million,
respectively, during 2000. The decrease in aircraft contribution in 2001 was due
to the sale of the Partnership's aircraft in 2001 and 2000.

Trailers: Trailer lease revenues and direct expenses were $-0- for the year
ended December 31, 2001, compared to $0.6 million and $0.2 million,
respectively, during 2000. The decrease in trailer contribution in 2001 was due
to the sale of all of the Partnership's trailers in 2000.

(b) Indirect Expenses Related to Owned Equipment Operations

Total indirect expenses of $1.6 million for the year ended December 31, 2001
decreased from $3.5 million for the same period in 2000. Significant variances
are explained as follows:

(i) A $1.7 million decrease in depreciation expense from 2000 levels
resulted from a $1.5 million decrease due to the sale of certain assets during
2001 and 2000 and a $0.1 million decrease resulting from the use of the
double-declining balance depreciation method which results in greater
depreciation the first years an asset is owned.

(ii)A decrease of $0.3 million in general and administrative expenses was
due to lower costs of $0.2 million resulting from the sale of all the
Partnership's trailers during 2000 and lower administrative costs of $0.1
million due to the reduction of the size of the Partnership's equipment
portfolio.

(iii)Loss on revaluation of equipment decreased $0.1 million during 2001
compared to the same period in 2000. During 2000, the Partnership reduced the
carrying value of its trailers to their estimated net realizable value. No
revaluation of owned equipment was required during 2001.

(iv)A $0.1 million decrease in management fees to affiliate resulted from
the lower levels of lease revenues on owned equipment during 2001, compared to
2000.

(v) The $0.2 million increase in the bad debt expenses was due to the
collection of $0.2 million receivable in 2000 that had previously been reserved
for as bad debts. A similar recovery did not occur in 2001.

(c) Net Gain on Disposition of Owned Equipment

The net gain on disposition of equipment for the year ended December 31, 2001
totaled $3.5 million, which resulted from the sale of aircraft, marine
containers, and railcars with an aggregate net book value of $1.9 million, for
proceeds of $5.5 million. Included in the gain on sale are unused marine
container repair reserves of $0.1 million. The net gain on disposition of
equipment in 2000 totaled $0.3 million, which resulted from the sale of
railcars, trailers and marine containers with an aggregate net book value of
$1.6 million, for proceeds of $1.9 million.

(d) Equity in Net Income (Loss) of Unconsolidated Special-Purpose Entities
(USPEs)

Equity in net income (loss) of USPEs represent the Partnership's share of the
net income (loss) 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 Years
Ended December 31,
2001 2000
----------------------------

Aircraft $ (1,014) $ 538
Marine vessel (35) 135
----------------------------
Equity in net income (loss) of USPEs $ (1,049) $ 673
============================

Aircraft: As of December 31, 2001 and 2000, the Partnership had an interest in a
trust that owns two commercial aircraft on direct finance lease. Aircraft
revenues and expenses were $0.5 million and $1.5 million, respectively, for the
year ended December 31, 2001, compared to $0.5 million and $(3,000),
respectively, during the same period in 2000. The increase in expenses of $1.4
million during 2001 was due to the reduction of the carrying value of the trust
owning two aircraft to their estimated net realizable value. A similar event did
not occur during 2000.

Marine vessel: As of December 31, 2001 and 2000, the Partnership had no
remaining interests in entities that owned marine vessels. Marine vessel
revenues and expenses were $-0- and $35,000, respectively, for the year ended
December 31, 2001 compared to $0.1 million and ($17,000), respectively, during
2000. Revenues decreased $0.1 million during the year ended December 31, 2001
due to the sale of the marine vessel entity in which the Partnership owned an
interest during 1999 from which the Partnership received $0.1 million for an
insurance claim during the year ended 2000. A similar event did not occur during
the same period of 2001. Expenses increased $52,000 in 2001 due to payment of
additional marine vessel operating expenses.

(e) Net Income

As a result of the foregoing, the Partnership's net income was $3.2 million for
the year ended December 31, 2001, compared to net income of $0.9 million during
2000. The Partnership's ability to operate and liquidate assets, secure leases,
and re-lease those assets whose leases expire is subject to many factors, and
the Partnership's performance in the year ended December 31, 2001 is not
necessarily indicative of future periods. In the year ended December 31, 2001,
the Partnership distributed $1.7 million to the limited partners, or $0.19 per
weighted-average limited partnership unit.

(2) Comparison of Partnership's Operating Results for the Years Ended December
31, 2000 and 1999

(a) Owned Equipment Operations

Lease revenues less direct expenses (defined as repair and maintenance,
equipment operating, and asset-specific insurance expenses) on owned equipment
decreased during the year ended December 31, 2000, compared to the same period
of 1999. The following table presents lease revenues less direct expenses by
segment (in thousands of dollars):

For the Years Ended
December 31,
2000 1999
---------------------------

Railcars $ 2,202 $ 2,448
Aircraft 648 1,061
Trailers 428 786
Marine containers 72 138
Marine vessel -- (81)

Railcars: Railcar lease revenues and direct expenses were $2.9 million and $0.7
million, respectively, in 2000, compared to $3.1 million and $0.7 million,
respectively, during 1999. The decrease in railcar contribution in 2000 was due
to the sale of railcars during 2000 and 1999.

Aircraft: Aircraft lease revenues and direct expenses were $0.8 million and $0.1
million, respectively, for 2000, compared to $2.6 million and $1.5 million,
respectively, during 1999. The decrease in aircraft contribution in 2000 was due
to the sale of aircraft during 1999.

Trailers: Trailer lease revenues and direct expenses were $0.6 million and $0.2
million, respectively, for 2000, compared to $1.1 million and $0.3 million,
respectively, during 1999. The decrease in trailer contribution in 2000 was due
to the sale of all of the Partnership's trailers during 2000.

Marine containers: Marine container lease revenues and direct expenses were $0.1
million and $6,000, respectively, in 2000, compared to $0.1 million and $5,000,
respectively, during 1999. The decrease in marine containers contribution in
2000 was due to the sale of marine containers during 1999 and 2000.

Marine vessel: Marine vessel lease revenues and direct expenses were zero in
2000, compared to $1.1 million and $1.1 million, respectively, in 1999. The
decrease in lease revenues and direct expenses in 2000, compared to 1999, was
due to the sale of the remaining marine vessel during the fourth quarter of
1999.

(b) Indirect Expenses Related to Owned Equipment Operations

Total indirect expenses of $3.5 million for the year ended December 31, 2000,
decreased from $6.7 million during 1999. The significant variances are explained
as follows:

(i) A $2.0 million decrease in depreciation and amortization expenses from
1999 levels resulted from the sale of certain assets during 2000 and 1999.

(ii)A $1.0 million decrease in interest expense was due to the repayment of
the Partnership's debt in 1999.

(iii) A $0.2 million decrease in general and administrative expenses from
1999 levels was due to the reduction of the size of the Partnership's equipment
portfolio.

(iv)A $0.2 million decrease in management fees to affiliate resulted from
the lower levels of lease revenues on owned equipment during 2000, compared to
1999.

(v) A $0.1 million increase in bad debt expenses in 2000 compared to 1999
was due to fewer recoveries of doubtful accounts in 2000 compared to 1999.
During 2000, $0.2 million was collected from unpaid invoices that had previously
been reserved for as bad debts compared to the collection of $0.3 million in
1999.

(vi)An increase of $0.1 million in revaluation of equipment was due to the
loss on revaluation of trailer equipment in 2000. No revaluation of equipment
was required during 1999.

(c) Net Gain on Disposition of Owned Equipment

The net gain on disposition of equipment in 2000 totaled $0.3 million, which
resulted from the sale of railcars, trailers and marine containers with an
aggregate net book value of $1.6 million, for proceeds of $1.9 million. The net
gain on disposition of equipment in 1999 totaled $6.4 million that resulted from
the sale of a marine vessel, aircraft, railcars, trailers and marine containers
with an aggregate net book value of $8.8 million, for proceeds of $15.2 million

(d) Equity in Net Income of Unconsolidated Special Purpose Entities (USPEs)

Equity in net income (loss) of USPEs represent the Partnership's share of the
net income (loss) generated from the operation of jointly owned assets accounted
for under the equity method of accounting. These entities were single purpose
and had no debt or other financial encumbrances. The following table presents
equity in net income (loss) by equipment type (in thousands of dollars):

For the Years Ended
December 31,
2000 1999
---------------------------

Aircraft $ 538 $ 470
Marine vessels 135 1,754
---------------------------
Equity in Net Income of USPEs $ 673 $ 2,224
===========================

Aircraft: As of December 31, 2000 and 1999, the Partnership had an interest in a
trust that owns two commercial aircraft on direct finance lease. Aircraft
revenues and expenses were $0.5 million and a credit of $3,000, respectively,
for 2000, compared to $0.6 million and $0.1 million, respectively, during 1999.
The aircraft revenues decreased $0.1 million due to decreasing finance lease
receivable based on lease payments schedules. The Partnership's share of
expenses decreased $0.1 million due to the increase in bad debt expense to
reflect the General Partner's evaluation of the collectibility of receivables
due from the aircraft's lessee.

Marine vessel: As of December 31, 2000, the Partnership had no remaining
interests in entities that owned marine vessels. During 2000, marine vessel
revenues of $0.1 million resulted from an insurance settlement. During 1999,
lease revenues of $1.1 million and the gain of $1.9 million from the sale of the
Partnership's interest in an entity that owned a marine vessel were offset by
depreciation, direct and administrative expenses of $1.2 million. The decrease
in income from an entity that owned marine vessels was due to the sale of the
Partnership's interest in an entity that owned a marine vessel during 1999.

(e) Net Income

As a result of the foregoing, the Partnership's net income was $0.9 million for
the year ended December 31, 2000, compared to $6.4 million during 1999. The
Partnership's ability to operate and liquidate assets, secure leases, and
re-lease those assets whose leases expire is subject to many factors, and the
Partnership's performance in the year ended December 31, 2000 is not necessarily
indicative of future periods. In the year ended December 31, 2000, the
Partnership distributed $7.7 million to the limited partners, or $0.89 per
weighted-average limited partnership unit.

(F) Geographic Information

Certain of the Partnership's equipment operate in international markets.
Although these operations expose the Partnership to certain currency, political,
credit, and economic risks, the General Partner believes these risks are minimal
or has implemented strategies to control the risks. Currency risks are at a
minimum because all invoicing, with the exception of a small number of railcars
operating in Canada, is conducted in United States (US) dollars. Political risks
are minimized generally through the avoidance of operations in countries that do
not have a stable judicial system and established commercial business laws.
Credit support strategies for lessees range from letters of credit supported by
US banks to cash deposits. Although these credit support mechanisms generally
allow the Partnership to maintain its lease yield, there are risks associated
with slow-to-respond judicial systems when legal remedies are required to secure
payment or repossess equipment. Economic risks are inherent in all international
markets, and the General Partner strives to minimize this risk with market
analysis prior to committing equipment to a particular geographic area. Refer to
Note 6 to the audited financial statements for information on the revenues, net
income (loss), and net book value of equipment in various geographic regions.

Revenues and net operating income (loss) by geographic region are impacted by
the time period the asset is owned and the useful life ascribed to the asset for
depreciation purposes. Net income (loss) from equipment is significantly
impacted by depreciation charges, which are greatest in the early years of
ownership due to the use of the double-declining balance method of depreciation.
The relationships of geographic revenues, net income (loss), and net book value
of equipment are expected to significantly change in the future as assets come
off lease and decisions are made to either redeploy the assets in the most
advantageous geographic location, or sell the assets.

The Partnership's owned equipment on lease to US domiciled lessees consists of
railcars. During 2001, US lease revenues accounted for 28% of the total lease
revenues from owned equipment. US operations resulted in net income of $0.3
million.

The Partnership's owned equipment on lease to Canadian-domiciled lessees
consists of railcars. During 2001, Canadian lease revenues accounted for 71% of
the total lease revenues from owned equipment. Canadian operations generated net
income of $2.5 million including a gain of $1.7 million from the sale of an
aircraft.

The Partnership's owned equipment located in South Asia consisted of an
aircraft. No lease revenues were reported in this region while this region
reported net income of $1.6 million. The net income of $1.6 million was due to a
gain from the sale of a commercial aircraft.

The Partnership's ownership share in a USPE on lease to a Mexican-domiciled
lessee consisted of two aircraft on a direct finance lease. No lease revenues
were reported in this region while this region reported net loss of $1.0
million. The primary reason for the net loss was due to the $1.4 million loss
recorded on the revaluation of the direct finance lease to it's estimated
realizable value.

The Partnership's owned equipment on lease to lessees in the rest of the world
consists of marine containers. During 2001, lease revenues for these lessees
accounted for 1% of the total lease revenues from owned equipment. Net income
from this region was $0.1 million.

(G) Inflation

Inflation had no significant impact on the Partnership's operations during 2001,
2000, or 1999.

(H) Forward-Looking Information

Except for historical information contained herein, the discussion in this Form
10-K contains forward-looking statements that involve risks and uncertainties,
such as statements of the Partnership's plans, objectives, expectations, and
intentions. The cautionary statements made in this Form 10-K should be read as
being applicable to all related forward-looking statements wherever they appear
in this Form 10-K. The Partnership's actual results could differ materially from
those discussed here.

(I) Outlook for the Future

Since the Partnership is in its active liquidation phase, the General Partner
will be seeking to selectively re-lease or sell assets as the existing leases
expire. Sale decisions will cause the operating performance of the Partnership
to decline over the remainder of its life. Throughout the remaining life of the
Partnership, the Partnership may periodically make special distributions to the
partners as asset sales are completed.

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 in the year 2002 include:

1. The Partnership's fleet of marine containers is in excess of 12 years of age
and is no longer suitable for use in international commerce either due to their
specific physical condition, or lessee's preferences for newer equipment. Demand
for the Partnership's marine containers will continue to be weak due to their
age.

2. Railcar loadings in North America have weakened over the past year. During
2001, utilization and lease rates decreased. Railcar contribution may decrease
in 2002 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 General Partner continually monitors
both the equipment markets and the performance of the Partnership's equipment in
these markets. The General Partner may make an evaluation to reduce the
Partnership's exposure to equipment markets in which it determines that it
cannot operate equipment and achieve acceptable rates of return.

Several other factors may affect the Partnership's operating performance in the
year 2002, including changes in the markets for the Partnership's equipment and
changes in the regulatory environment in which that equipment operates.

(1) Repricing Risk

Certain of the Partnership's marine containers and railcars will be remarketed
in 2002 as existing leases expire, exposing the Partnership to repricing
risk/opportunity. Additionally, the Partnership entered its liquidation phase on
January 1, 1999 and has commenced an orderly liquidation of the Partnership's
assets. The General Partner intends to re-lease or sell equipment at prevailing
market rates; however, the General Partner cannot predict these future rates
with any certainty at this time, and cannot accurately assess the effect of such
activity on future Partnership performance.

(2) Impact of Government Regulations on Future Operations

The General Partner operates the Partnership's equipment in accordance with
current applicable regulations (see Item 1, Section E, Government Regulations).
However, the continuing implementation of new or modified regulations by some of
the authorities mentioned previously, or others, may adversely affect the
Partnership's ability to continue to own or operate equipment in its portfolio.
Additionally, regulatory systems vary from country to country, which may
increase the burden to the Partnership of meeting regulatory compliance for the
same equipment operated between countries. Ongoing changes in the regulatory
environment, both in the US and internationally, cannot be predicted with any
accuracy and preclude the General Partner from determining the impact of such
changes on Partnership operations, or sale of equipment.

The US Department of Transportation's Hazardous Materials Regulations regulates
the classification and packaging requirements of hazardous materials and apply
particularly to the Partnership's tank railcars. The Federal Railroad
Administration has mandated that effective July 1, 2000 all tank railcars must
be re-qualified every ten years from the last test date stenciled on each
railcar to insure tank shell integrity. Tank shell thickness, weld seams, and
weld attachments must be inspected and repaired if necessary to re-qualify the
tank railcar for service. The average cost of this inspection is $3,600 for
jacketed tank railcars and $1,800 for non-jacketed tank railcars, not including
any necessary repairs. This inspection is to be performed at the next scheduled
tank test and every ten years thereafter. The Partnership currently owns 241
jacketed tank railcars and 54 non-jacketed tank railcars that will need
re-qualification. To date, a total of 40 tank railcars have been inspected with
no significant defects.

(3) Distributions

During the active liquidation phase, the Partnership will use operating cash
flow and proceeds from the sale of equipment to meet its operating obligations
and to the extent available, make distributions to the partners. In the long
term, changing market conditions and used equipment values preclude the General
Partner from accurately determining the impact of future re-leasing activity and
equipment sales on Partnership performance and liquidity.

(4) Liquidation

Liquidation of the Partnership's equipment represents a reduction in the size of
the equipment portfolio and may result in a reduction on contribution to the
Partnership.

Since the Partnership has entered the active liquidation phase, 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. Significant asset sales may result in special distributions to
unitholders.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Partnership's primary market risk exposure is that of currency devaluation
risk. During 2001, 72% of the Partnership's total lease revenues from wholly-
and jointly owned equipment came from non-US domiciled lessees. Most of the
leases require payment in US currency. If these lessees' currency devalues
against the US dollar, the lessees could potentially encounter difficulty in
making the US dollar denominated lease payment.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements for the Partnership are listed in the Index to
Financial Statements included in Item 14(a) of this Annual Report on Form 10-K.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

(A) Disagreements with Accountants on Accounting and Financial Disclosures

None

(B) Changes in Accountants

In September 2001, the General Partner announced that the Partnership
had engaged Deloitte & Touche LLP as the Partnership's auditors and
had dismissed KPMG LLP. KPMG LLP issued unqualified opinions on the
1999 and 2000 financial statements. During 1999, 2000 and the
subsequent interim period preceding such dismissal, there were no
disagreements with KPMG LLP on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or
procedure.

(This space intentionally left blank)

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF PLM FINANCIAL SERVICES, INC.

As of the date of this annual report, the directors and executive officers of
PLM Financial Services, Inc. (and key executive officers of its subsidiaries)
are as follows:

Name Age Position
- ---------------------------------------- ------- ------------------------------------------------------------------

Gary D. Engle 52 Director, PLM Financial Services, Inc., PLM Investment
Management Inc., and PLM Transportation Equipment Corp.

James A. Coyne 41 Director and Secretary, PLM Financial Services Inc., PLM
Investment Management, Inc., and PLM Transportation Equipment
Corp.

Stephen M. Bess 55 President and Director, PLM Financial Services, Inc., PLM
Investment Management Inc., and PLM Transportation Equipment
Corp.

Gary D. Engle was appointed a Director of PLM Financial Services, Inc. in
January 2002. He was appointed a director of PLM International, Inc. in February
2001. He is a director and President of MILPI. Since November 1997, Mr. Engle
has been Chairman and Chief Executive Officer of Semele Group Inc. ("Semele"), a
publicly traded company. Mr. Engle is President and Chief Executive Officer of
Equis Financial Group (EFG), which he joined in 1990 as Executive Vice
President. Mr. Engle purchased a controlling interest in EFG in December 1994.
He is also President of AFG Realty, Inc.

James A. Coyne was appointed a Director and Secretary of PLM Financial Services
Inc. in April 2001. He was appointed a director of PLM International, Inc in
February 2001. He is a director, Vice President and Secretary of MILPI. Mr.
Coyne has been a director, President and Chief Operating Officer of Semele since
1997. Mr. Coyne is Executive Vice President of Equis Corporation, the general
partner of EFG. Mr. Coyne joined EFG in 1989, remained until 1993, and rejoined
in November 1994.

Stephen M. Bess was appointed a Director of PLM Financial Services, Inc. in July
1997. Mr. Bess was appointed President of PLM Financial Services, Inc. in
October 2000. He was appointed President and Chief Executive Officer of PLM
International, Inc. in October 2000. Mr. Bess was appointed President of PLM
Investment Management, Inc. in August 1989, having served as Senior Vice
President of PLM Investment Management, Inc. beginning in February 1984 and as
Corporate Controller of PLM Financial Services, Inc. beginning in October 1983.
He served as Corporate Controller of PLM, Inc. beginning in December 1982. Mr.
Bess was Vice President-Controller of Trans Ocean Leasing Corporation, a
container leasing company, from November 1978 to November 1982, and Group
Finance Manager with the Field Operations Group of Memorex Corporation, a
manufacturer of computer peripheral equipment, from October 1975 to November
1978.

The directors of PLM Financial Services, Inc. are elected for a one-year term or
until their successors are elected and qualified. No family relationships exist
between any director or executive officer of PLM Financial Services, Inc., PLM
Transportation Equipment Corp., or PLM Investment Management, Inc.

ITEM 11. EXECUTIVE COMPENSATION

The Partnership has no directors, officers, or employees. The Partnership has no
pension, profit sharing, retirement, or similar benefit plan in effect as of
December 31, 2001.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

(A) Security Ownership of Certain Beneficial Owners

The General Partner is generally entitled to a 5% interest in the
profits and losses and distributions of the Partnership subject to
certain allocations of income. As of December 31, 2001, no investor
was known by the General Partner to beneficially own more than 5% of
the limited partnership units.

(B) Security Ownership of Management

Neither the General Partner and its affiliates nor any executive
officer or director of the General Partner and its affiliates own any
limited partnership units of the Partnership as of December 31, 2001.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Transactions with Management and Others

During 2001, the Partnership paid or accrued the following fees to FSI or
its affiliates:. management fees, $0.2 million; and administrative and data
processing services performed on behalf of the Partnership, $0.2 million.

During 2001, the Partnership's proportional share of ownership in USPEs
paid or accrued management fees of $15,000 to FSI or its affiliates.

(This space intentionally left blank)

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(A) 1. Financial Statements

The financial statements listed in the accompanying Index to
Financial Statements are filed as part of this Annual Report on
Form 10-K.

2. Financial Statements required under Regulation S-X Rule 3-09

The following financial statements are filed as Exhibits of this
Annual Report on Form 10-K:

a. Aero California Trust
b. Montgomery Partnership

(B) Financial Statement Schedules

Schedule II Valuation and Qualifying Accounts

All other financial statement schedules have been omitted, as the
required information is not pertinent to the registrant or is not
material, or because the information required is included in the
financial statements and notes thereto.

(C) Reports on Form 8-K

None.

(D) Exhibits

4. Limited Partnership Agreement of Registrant, incorporated by
reference to the Partnership's Registration Statement on Form
S-1 (Reg. No. 33-27746), which became effective with the
Securities and Exchange Commission on May 23, 1989.

10.1 Management Agreement between Partnership and PLM Investment
Management, Inc., incorporated by reference to the
Partnership's Registration Statement on Form S-1 (Reg. No.
33-27746), which became effective with the Securities and
Exchange Commission on May 23, 1989.

Financial Statements required under Regulation S-X Rule 3-09:

99.1 Aero California Trust.

99.2 Montgomery Partnership.

(This space intentionally left blank)

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Partnership has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.

The Partnership has no directors or officers. The General Partner has signed on
behalf of the Partnership by duly authorized officers.

Date: March 25, 2002 PLM EQUIPMENT GROWTH FUND IV
PARTNERSHIP

By: PLM Financial Services, Inc.
General Partner

By: /s/ Stephen M. Bess
-----------------------------------
Stephen M. Bess
President and Current Chief Accounting
Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following directors of the Partnership's General
Partner on the dates indicated.

Name Capacity Date

/s/ Gary D. Engle
- ----------------------------
Gary D. Engle Director, FSI March 25, 2002

/s/ James A. Coyne
- ----------------------------
James A. Coyne Director, FSI March 25, 2002

/s/ Stephen M. Bess
- ----------------------------
Stephen M. Bess Director, FSI March 25, 2002

PLM EQUIPMENT GROWTH FUND IV
(A Limited Partnership)
INDEX TO FINANCIAL STATEMENTS

(Item 14(a))

Page

Independent auditors' reports 25-26

Balance sheets as of December 31, 2001 and 2000 27

Statements of income for the years ended
December 31, 2001, 2000, and 1999 28

Statements of changes in partners' capital for the years
ended December 31, 2001, 2000, and 1999 29

Statements of cash flows for the years ended
December 31, 2001, 2000, and 1999 30

Notes to financial statements 31-42

Independent auditors' reports on financial statement schedule 43-44

Schedule II Valuation and Qualifying Accounts 45

INDEPENDENT AUDITORS' REPORT

The Partners
PLM Equipment Growth Fund IV:

We have audited the accompanying balance sheet of PLM Equipment Growth Fund IV
(the "Partnership") as of December 31, 2001, and the related statements of
income, changes in partners' capital, and cash flows for the year then ended.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

We have 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.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Partnership as of December 31, 2001, and
the results of its operations and its cash flows for the year then ended in
conformity with accounting principles generally accepted in the United States of
America.

As described in Note 1 to the financial statements, the Partnership, in
accordance with the limited partnership agreement, entered its liquidation phase
on January 1, 1999 and has commenced an orderly liquidation of the Partnership
assets. The Partnership will terminate on December 31, 2009, unless terminated
earlier upon sale of all equipment or by certain other events. The General
Partner anticipates that the liquidation of Partnership assets will be completed
by the end of the year 2006.

/s/ Deloitte & Touche LLP

Certified Public Accountants

Tampa, Florida
March 8, 2002

INDEPENDENT AUDITORS' REPORT

The Partners
PLM Equipment Growth Fund IV:

We have audited the accompanying balance sheet of PLM Equipment Growth Fund IV
("the Partnership") as of December 31, 2000 and the related statements of
income, changes in partners' capital and cash flows for each of the years in the
two-year period ended December 31, 2000. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance with 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 audits provide a
reasonable basis for our opinion.

As described in Note 1 to the financial statements, PLM Equipment Growth Fund
IV, in accordance with the limited partnership agreement, entered its
liquidation phase on January 1, 1999 and has commenced an orderly liquidation of
the Partnership assets. The Partnership will terminate on December 31, 2009,
unless terminated earlier upon sale of all equipment or by certain other events.
The General Partner anticipates that the liquidation of Partnership assets will
be completed by the end of the year 2006.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of PLM Equipment Growth Fund IV as
of December 31, 2000 and the results of its operations and its cash flows for
each of the years in the two-year period ended December 31, 2000, in conformity
with accounting principles generally accepted in the United States of America.

/s/ KPMG LLP

SAN FRANCISCO, CALIFORNIA
March 2, 2001

PLM EQUIPMENT GROWTH FUND IV
(A Limited Partnership)
BALANCE SHEETS
December 31,
(in thousands of dollars, except unit amounts)

2001 2000
---------------------------------
ASSETS

Equipment held for operating leases, at cost $ 15,811 $ 18,003
Less accumulated depreciation (11,918) (13,436)
---------------------------------
3,893 4,567
Equipment held for sale -- 1,931
---------------------------------
Net equipment 3,893 6,498

Cash and cash equivalents 8,879 2,742
Restricted cash -- 272
Accounts receivable, less allowance for doubtful
accounts of $45 in 2001 and $5 in 2000 82 171
Investment in unconsolidated special-purpose entity 1,197 3,143
Prepaid expenses and other assets 21 37
---------------------------------

Total assets $ 14,072 $ 12,863
=================================

LIABILITIES AND PARTNERS' CAPITAL

Liabilities
Accounts payable and accrued expenses $ 289 $ 186
Due to affiliates 168 174
Lessee deposits and reserve for repairs 4 369
---------------------------------
Total liabilities 461 729
---------------------------------

Commitments and contingencies

Partners' capital
Limited partners (8,628,420 limited partnership units
as of December 31, 2001 and 2000) 13,611 12,134
General Partner -- --
---------------------------------
Total partners' capital 13,611 12,134
---------------------------------

Total liabilities and partners' capital $ 14,072 $ 12,863
=================================

See accompanying notes to financial statements.

PLM EQUIPMENT GROWTH FUND IV
(A Limited Partnership)
STATEMENTS OF INCOME
For the Years Ended December 31,
(in thousands of dollars except weighted-average unit amounts)

2001 2000 1999
-------------------------------------------
REVENUES

Lease revenue $ 2,837 $ 4,385 $ 8,054
Interest and other income 432 159 240
Net gain on disposition of equipment 3,547 303 6,357
-------------------------------------------
Total revenues 6,816 4,847 14,651
-------------------------------------------

EXPENSES

Depreciation and amortization 663 2,320 4,291
Repairs and maintenance 753 982 2,838
Equipment operating expenses 28 34 797
Insurance expenses 135 85 102
Management fees to affiliate 187 274 475
Interest expense -- -- 1,016
General and administrative expenses to affiliates 241 395 530
Other general and administrative expenses 472 609 691
Provision for (recovery of) bad debts 41 (182) (273)
Loss on revaluation of equipment -- 106 --
-------------------------------------------
Total expenses 2,520 4,623 10,467
-------------------------------------------

Equity in net income (loss) of unconsolidated
special-purpose entities (1,049) 673 2,224
-------------------------------------------

Net income $ 3,247 $ 897 $ 6,408
===========================================

PARTNERS' SHARE OF NET INCOME

Limited partners $ 3,157 $ 492 $ 6,226
General Partner 90 405 182
-------------------------------------------

Total $ 3,247 $ 897 $ 6,408
===========================================

Limited partners' net income per weighted-average
partnership unit $ 0.37 $ 0.06 $ 0.72
===========================================

Cash distribution $ 1,770 $ 3,564 $ 3,633
Special cash distribution -- 4,541 --
-------------------------------------------
Total distribution $ 1,770 $ 8,105 $ 3,633
===========================================

Per weighted-average partnership unit:
Cash distribution $ 0.19 $ 0.39 $ 0.40
Special cash distribution -- 0.50 --
-------------------------------------------
Total distribution per weighted-average partnership unit $ 0.19 $ 0.89 $ 0.40
===========================================

See accompanying notes to financial statements.

PLM EQUIPMENT GROWTH FUND IV
(A Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the years ended December 31, 2001, 2000, and 1999
(in thousands of dollars)

Limited General
Partners Partner Total
-------------------------------------------------

Partners' capital as of December 31, 1998 $ 16,567 $ -- $ 16,567
Net income 6,226 182 6,408

Cash distribution (3,451) (182) (3,633)
-------------------------------------------------

Partners' capital as of December 31, 1999 19,342 -- 19,342

Net income 492 405 897

Cash distribution (3,386) (178) (3,564)

Special cash distribution (4,314) (227) (4,541)

-------------------------------------------------
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

See accompanying notes to financial statements.

PLM EQUIPMENT GROWTH FUND IV
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
For the Years Ended December 31,
(in thousands of dollars)

2001 2000 1999
--------------------------------------------
OPERATING ACTIVITIES

Net income $ 3,247 $ 897 $ 6,408
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 663 2,320 4,291
Net gain on disposition of equipment (3,547) (303) (6,357)
Loss on revaluation of equipment -- 106 --
Equity in net (income) loss of unconsolidated special-
purpose entities 1,049 (673) (2,224)
Changes in operating assets and liabilities:
Restricted cash 272 (125) --
Accounts receivable, net 90 269 458
Prepaid expenses and other assets 16 11 2
Accounts payable and accrued expenses 103 (106) (271)
Due to affiliates (6) (37) (33)
Lessee deposits and reserve for repairs (305) 29 (786)
--------------------------------------------
Net cash provided by operating activities 1,582 2,388 1,488
--------------------------------------------

INVESTING ACTIVITIES
Purchase of capital repairs (1) (7) (9)
Proceeds from disposition of equipment 5,429 1,934 15,165
Distribution from liquidation of unconsolidated
special-purpose entities -- -- 3,807
Distribution from unconsolidated special-purpose entities 897 945 741
--------------------------------------------
Net cash provided by investing activities 6,325 2,872 19,704
--------------------------------------------

FINANCING ACTIVITIES
Payment of notes payable -- -- (12,750)
Cash distribution paid to limited partners (1,680) (7,700) (3,451)
Cash distribution paid to General Partner (90) (405) (182)
--------------------------------------------
Net cash used in financing activities (1,770) (8,105) (16,383)
--------------------------------------------

Net increase (decrease) in cash and cash equivalents 6,137 (2,845) 4,809

Cash and cash equivalents at beginning of year 2,742 5,587 778
--------------------------------------------

Cash and cash equivalents at end of year $ 8,879 $ 2,742 $ 5,587
============================================

Supplemental information
Interest paid $ -- $ -- $ 1,016
============================================

See accompanying notes to financial statements.

PLM EQUIPMENT GROWTH FUND IV
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

ORGANIZATION

PLM Equipment Growth Fund IV, a California limited partnership (the
Partnership), was formed on March 25, 1989. The Partnership engages primarily in
the business of owning, leasing or otherwise investing in predominately used
transportation and related equipment. The Partnership commenced significant
operations in September 1989. PLM Financial Services, Inc. (FSI) is the General
Partner of the Partnership. FSI is a wholly owned subsidiary of PLM
International, Inc. (PLM International or PLMI).

On January 1, 1999, the General Partner began the liquidation phase of the
Partnership with the intent to commence an orderly liquidation of the
Partnership assets. The General Partner anticipates that the liquidation of
Partnership assets will be completed by the end of the year 2006 (see Note 10).
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 General Partner is prohibited to reinvest cash flows and surplus
funds 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.

FSI manages the affairs of the Partnership. The cash distributions of the
Partnership are generally allocated 95% to the limited partners and 5% to the
General Partner (see Net Income and Distribution per Limited Partnership Unit,
below). Net income is allocated to the General Partner to the extent necessary
to cause the General Partner's capital account to equal zero. The General
Partner is also entitled to a subordinated incentive fee equal to 7.5% of
surplus distributions, as defined in the limited partnership agreement,
remaining after the limited partners have received a certain minimum rate of
return on, and a return of, their invested capital. The General Partner does not
anticipate that this fee will be earned.

ESTIMATES

The 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 equipment of the Partnership is managed, under a continuing management
agreement, by PLM Investment Management, Inc. (IMI), a wholly owned subsidiary
of FSI. IMI receives a monthly management fee from the Partnership for managing
the equipment (see Note 2). FSI, in conjunction with its subsidiaries, sells
equipment to investor programs and third parties, manages pools of equipment
under agreements with the investor programs, and is a general partner of other
programs.

ACCOUNTING FOR LEASES

The Partnership's leasing operations generally consist of operating leases.
Under the operating lease method of accounting, the leased asset is recorded at
cost and depreciated over its estimated useful life. Rental payments are
recorded as revenue over the lease term as earned in accordance with Statement
of Financial Accounting Standards (SFAS) No. 13, "Accounting for Leases" (SFAS
No. 13). Lease origination costs are capitalized and amortized over the term of
the lease. Periodically, the Partnership leases equipment with lease terms that
qualify for direct finance lease classification, as required by SFAS No. 13.

PLM EQUIPMENT GROWTH FUND IV
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION (continued)

DEPRECIATION AND AMORTIZATION

Depreciation of transportation equipment held for operating leases is computed
on the double-declining balance method, taking a full month's depreciation in
the month of acquisition, based upon estimated useful lives of 15 years for
railcars and 12 years for most other types of equipment. The depreciation method
changes to straight-line when the annual depreciation expense using the
straight-line method exceeds that calculated by the double-declining balance
method. Acquisition fees have been capitalized as part of the cost of the
equipment. Major expenditures that are expected to extend the useful lives or
reduce future operating expenses of equipment are capitalized and amortized over
the estimated remaining life of the equipment. Debt placement fees and issuance
costs were amortized over the term of the related loan.

TRANSPORTATION EQUIPMENT

Equipment held for operating leases is stated at cost less any reductions to the
carrying value as required by SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of" (SFAS No. 121).
Equipment held for sale is stated at the lower of the equipment's depreciated
cost or fair value, less cost to sell, and is subject to a pending contract for
sale.

In accordance with SFAS No. 121, the General Partner reviews the carrying values
of the Partnership's equipment portfolio at least quarterly and whenever
circumstances indicate that the carrying value of an asset may not be
recoverable due to expected future market conditions. If the projected
undiscounted cash flows and the fair market value of the equipment are less than
the carrying value of the equipment, a loss on revaluation is recorded. During
2001, a unconsolidated special-purpose entity (USPE) trust owning two Stage III
commercial aircraft on a direct finance lease reduced its net investment in the
finance lease receivable due to a series of lease amendments. The Partnership's
proportionate share of this writedown, which is included in equity in net income
(loss) of the USPE in the accompanying statement of income, was $1.4 million. A
$0.1 million loss on revaluation to the carrying value of owned equipment was
recorded during 2000. No revaluations to owned equipment were required in 2001
and 1999 or to partially owned equipment in 2000 and 1999.

In October 2001, the Financial Accounting Standards Board issued SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets" (SFAS No. 144),
which replaces SFAS No. 121. SFAS No. 144 provides updated guidance concerning
the recognition and measurement of an impairment loss for certain types of
long-lived assets, expands the scope of a discontinued operation to include a
component of an entity, and eliminates the current exemption to consolidation
when control over a subsidiary is likely to be temporary. SFAS No. 144 is
effective for fiscal years beginning after December 15, 2001.

The Partnership will apply the new rules on accounting for the impairment or
disposal of long-lived assets beginning in the first quarter of 2002, and they
are not anticipated to have an impact on the Partnership's earnings or financial
position.

INVESTMENT IN A UNCONSOLIDATED SPECIAL-PURPOSE ENTITY

The Partnership has an interest in a USPE that owns transportation equipment.
This is a single purpose entity that does not have any debt or other financial
encumbrances and is accounted for using the equity method.

The Partnership's investment in a USPE includes acquisition and lease
negotiation fees paid by the Partnership to PLM Worldwide Management Services
(WMS), a wholly owned subsidiary of PLM International. The Partnership's
interest in the USPE is managed by IMI. The Partnership's equity interest in the
net income (loss) of the USPE is reflected net of management fees paid or
payable to IMI and the amortization of acquisition and lease negotiation fees
paid to WMS.

PLM EQUIPMENT GROWTH FUND IV
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION (continued)

REPAIRS AND MAINTENANCE

Repairs and maintenance costs related to railcars are usually the obligation of
the Partnership. Maintenance costs of marine containers are the obligation of
the lessee. If the repair is not covered by the lessee, it is generally charged
against operations as incurred. To meet the repair requirements of certain
marine containers, reserve accounts were prefunded by the lessee. If an asset is
sold and there is a balance in the reserve account for repairs to that asset,
the balance in the reserve account is reclassified as additional sales proceeds.
During 2001, the General Partner determined that there would be no future
repairs made to certain marine containers and reclassified the remaining balance
of $0.1 million in marine container repair reserves to interest and other
income.

NET INCOME AND DISTRIBUTION PER LIMITED PARTNERSHIP UNIT

Cash distributions are allocated 95% to the limited partners and 5% to the
General Partner and may include amounts in excess of net income. Special
allocations of income are made to the General Partner equal to the deficit
balance, if any, in the capital account of the General Partner. The limited
partners' net income is allocated among the limited partners based on the number
of limited partnership units owned by each limited partner and on the number of
days of the year each limited partner is in the Partnership.

Cash distributions are recorded when paid. Cash distributions of $4.0 million
for 2001 and $0.9 million for 2000 and 1999, relating to the fourth quarter of
that year, were paid during the first quarter of 2002, 2001, and 2000,
respectively.

Cash distributions to investors in excess of net income are considered a return
of capital. Cash distributions to the limited partners of $7.2 million in 2000
were deemed to be a return of capital. None of the cash distributions during
2001 and 1999 were deemed a return of capital.

The Partnership made a special distribution of $4.3 million to the limited
partners during 2000. No special distributions were made during 2001 or 1999.

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 years ended December
31, 2001, 2000, and 1999 was 8,628,420.

CASH AND CASH EQUIVALENTS

The Partnership considers highly liquid investments that are readily convertible
to known amounts of cash with original maturities of three months or less as
cash equivalents. The carrying amount of cash and cash equivalents approximates
fair market value due to the short-term nature of the investments.

COMPREHENSIVE INCOME

The Partnership's comprehensive income is equal to net income for the years
ended December 31, 2001, 2000, and 1999.

PLM EQUIPMENT GROWTH FUND IV
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION (continued)

RESTRICTED CASH

As of December 31, 2000, restricted cash represented lessee security deposits
held by the Partnership. There was no restricted cash as of December 31, 2001.

2. GENERAL PARTNER AND TRANSACTIONS WITH AFFILIATES

An officer of FSI contributed $100 of the Partnership's initial capital. Under
the equipment management agreement, IMI, subject to certain reductions, receives
a monthly management fee attributable to either owned equipment or interests in
equipment owned by a USPE equal to the lesser of (a) the fees that would be
charged by an independent third party for similar services for similar equipment
or (b) the sum of (i) 5% of the gross lease revenues attributable to equipment
that is subject to operating leases, (ii) 2% of the gross lease revenues
attributable to equipment that is subject to full payout net leases, and (iii)
7% of the gross lease revenues attributable to equipment for which IMI provides
both management and additional services relating to the continued and active
operation of program equipment, such as on-going marketing and re-leasing of
equipment, hiring or arranging for the hiring of crew or operating personnel for
equipment, and similar services. The Partnership reimbursed FSI and its
affiliates $0.2 million, $0.4 million, and $0.5 million during 2001, 2000, and
1999, respectively, for data processing expenses and administrative services
performed on behalf of the Partnership.

The Partnership's proportional share of USPEs management fees to affiliate were
$15,000, $17,000, and $0.1 million during 2001, 2000, and 1999, respectively,
and the Partnership's proportional share of administrative and data processing
expenses to affiliate were $-0-, $5,000, and $11,000 during 2001, 2000, and
1999, respectively. Both of these affiliate expenses reduced the Partnership's
proportional share of the equity interest in income in USPEs.

The Partnership had an interest in certain equipment in conjunction with
affiliated programs during 2001, 2000, and 1999 (see Note 4).

The balance due to affiliates as of December 31, 2001 and 2000 includes $21,000
and $27,000, respectively, due to FSI and its affiliates for management fees and
$0.1 million due to an affiliated USPE.

3. EQUIPMENT

The components of owned equipment as of December 31 are as follows (in thousands
of dollars):

2001 2000
----------------------------------

Equipment held for operating leases
Railcars $ 13,239 $ 13,336
Marine containers 2,572 4,667
----------------------------------
15,811 18,003
Less accumulated depreciation (11,918) (13,436)
----------------------------------
3,893 4,567
Equipment held for sale -- 1,931
----------------------------------
Net equipment $ 3,893 $ 6,498
==================================

Revenues are earned under operating leases. The Partnership's marine containers
are leased to operators of utilization-type leasing pools that include equipment
owned by unaffiliated parties. In such instances, revenues received by the
Partnership consist of a specified percentage of revenues generated by leasing
the equipment to sub lessees, after deducting certain direct operating expenses
of the pooled equipment. Rents for railcars are based on a fixed rate.

PLM EQUIPMENT GROWTH FUND IV
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS

3. EQUIPMENT (continued)

As of December 31, 2001, all equipment was on lease except for 47 railcars with
a net book value of $0.3 million. As of December 31, 2000, all owned equipment
in the Partnership portfolio was on lease except for an aircraft and 34 railcars
with a net book value of $0.7 million.

As of December 31, 2000, a Boeing 737-200 stage II commercial aircraft and Dash
8-300 commuter aircraft, subject to pending contract for sale, were held for
sale at the lower of the equipment's depreciated cost or fair value, less cost
to sell. No equipment was held for sale as of December 31, 2001.

During 2001, the Partnership disposed of aircraft, marine containers, and
railcars with an aggregate net book value of $1.9 million, for proceeds of $5.5
million. Included in the gain on sale are unused marine container repair
reserves of $0.1 million. The aircraft were reported as equipment held for sale
as of December 31, 2000. During 2000, the Partnership disposed of marine
containers, railcars, and trailers, with an aggregate net book value of $1.6
million, for proceeds of $1.9 million.

All owned equipment on lease is being accounted for as operating leases. Future
minimum rentals receivable under noncancelable operating leases, as of December
31, 2001, for owned equipment during each of the next five years, are
approximately $1.5 million in 2002; $0.6 million in 2003; $0.2 million in 2004;
$0.1 million in 2005; and $11,000 in 2006. Per diem and short-term rentals
consisting of utilization rate lease payments included in revenue amounted to
approximately $33,000, $0.7 million, and $1.2 million in 2001, 2000, and 1999,
respectively.

4. INVESTMENT IN UNCONSOLIDATED SPECIAL-PURPOSE ENTITIES

The Partnership's net investment in a USPE consisted of a 35% interest in a
trust owning two Stage III commercial aircraft on a direct finance lease (the
"Trust") totaling $1.2 million and $3.1 million as of December 31, 2001 and
2000, respectively. This is a single purpose entity that does not have any debt.

As of December 31, 2001 and 2000, the jointly owned equipment in the
Partnership's USPE portfolio was on lease.

During 2001, the Trust reduced its net investment in the finance lease
receivable due to a series of lease amendments. The Partnership's proportionate
share of this writedown, which is included in equity in net income (loss) of the
USPE in the accompanying statement of income, was $1.4 million.

The following summarizes the financial information for the special-purpose
entities and the Partnership's interests therein as of and for the years ended
December 31, (in thousands of dollars):

2001 2000 1999
---------- ---------- ---------
Net Net Net
Total Interest of Total Interest of Total Interest of
USPE Partnership USPE Partnership USPEs Partnership
------------------------- ------------------------- ---------------------------

Net investments $ 3,420 $ 1,197 $ 8,981 $ 3,143 $ 9,489 $ 3,415
Lease revenues -- -- (3) -- 2,106 1,053
Net income (loss) (2,967) (1,049) 1,838 673 4,881 2,224

PLM EQUIPMENT GROWTH FUND IV
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS

5. OPERATING SEGMENTS

The Partnership operates or operated in five primary operating segments:
aircraft leasing, marine container leasing, marine vessel leasing, trailer
leasing, and railcar leasing. Each equipment leasing segment engages in
short-term to mid-term operating leases to a variety of customers.

The General Partner evaluates the performance of each segment based on profit or
loss from operations before allocation of certain general and administrative
expenses, interest expense and certain other expenses. The segments are managed
separately due to different business strategies for each operation.

The following tables present a summary of the operating segments (in thousands
of dollars):

Marine Marine
Aircraft Container Vessel Railcar
For the Year Ended December 31, 2001 Leasing Leasing Leasing Leasing Other (1) Total
------------------------------------ ------- ------- ------- ------- ----- -----

Revenues

Lease revenue $ 185 $ 33 $ -- $ 2,619 $ -- $ 2,837
Interest and other income 39 126 -- 4 263 432
Gain (loss) on disposition of 3,350 207 -- (13) 3 3,547
equipment
--------------------------------------------------------------
Total revenues 3,574 366 -- 2,610 266 6,816
--------------------------------------------------------------

Costs and expenses
Operations support 162 -- 27 618 109 916
Depreciation and amortization 145 198 -- 320 -- 663
Management fees to affiliate 2 2 -- 183 -- 187
General and administrative expenses 130 -- -- 100 483 713
Provision for (recovery of) bad -- -- -- 42 (1) 41
debts
--------------------------------------------------------------
Total costs and expenses 439 200 27 1,263 591 2,520
--------------------------------------------------------------
Equity in net loss of USPE (1,014) -- (35) -- -- (1,049)
--------------------------------------------------------------
Net income (loss) $ 2,121 $ 166 $ (62) $ 1,347 $ (325) $ 3,247
==============================================================

Total assets as of December 31, 2001 $ 1,197 $ 84 $ -- $ 3,891 $ 8,900 $ 14,072
==============================================================

(1) Includes certain assets not identifiable to a specific segment such as cash
and prepaid expenses. Also includes net gain from trailer sales and the
recovery of certain bad debts, certain interest income and costs not
identifiable to a particular segment such as interest and amortization
expense and certain operations support and general and administrative
expenses.

(This space intentionally left blank)

PLM EQUIPMENT GROWTH FUND IV
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS

5. OPERATING SEGMENTS (continued)

Marine
Aircraft Container Trailer Railcar
For the Year Ended December 31, 2000 Leasing Leasing Leasing Leasing All Other (2) Total
------------------------------------ ------- ------- ------- ------- --------- -----

REVENUES

Lease revenue $ 784 $ 78 $ 635 $ 2,888 $ -- $ 4,385
Interest and other income 3 -- -- -- 156 159
Gain (loss) on disposition of -- 229 87 (13) -- 303
equipment
--------------------------------------------------------------
Total revenues 787 307 722 2,875 156 4,847
--------------------------------------------------------------

COSTS AND EXPENSES
Operations support 136 6 207 686 66 1,101
Depreciation and amortization 1,343 364 186 427 -- 2,320
Management fees to affiliate 16 4 49 205 -- 274
General and administrative expenses 138 1 165 133 567 1,004
Recovery of bad debts (9) -- (143) (30) -- (182)
Loss on revaluation of equipment -- -- 106 -- -- 106
--------------------------------------------------------------
Total costs and expenses 1,624 375 570 1,421 633 4,623
--------------------------------------------------------------
Equity in net income of USPEs 538 -- -- -- 135 673
--------------------------------------------------------------
Net income (loss) $ (299) $ (68) $ 152 $ 1,454 $ (342) $ 897
==============================================================

Total assets as of December 31, 2000 $ 5,356 $ 421 $ -- $ 4,302 $ 2,784 $ 12,863
==============================================================

Marine Marine
Aircraft Container Vessel Trailer Railcar
For the Year Ended December 31, 1999 Leasing Leasing Leasing Leasing Leasing All Other (2) Total
------------------------------------ ------- ------- ------- ------- ------- --------- -----

REVENUES

Lease revenue $ 2,590 $ 143 $ 1,067 $ 1,122 $ 3,132 $ -- $ 8,054
Interest and other income 37 -- -- -- 26 177 240
Gain (loss) on disposition of 6,312 167 167 (159) (130) -- 6,357
equipment
-------------------------------------------------------------------------
Total revenues 8,939 310 1,234 963 3,028 177 14,651
-------------------------------------------------------------------------

COSTS AND EXPENSES
Operations support 1,529 5 1,148 336 684 35 3,737
Depreciation and amortization 2,409 565 296 326 636 59 4,291
Interest expense -- -- -- -- -- 1,016 1,016
Management fees to affiliate 104 7 53 89 222 -- 475
General and administrative expenses 253 7 88 282 113 478 1,221
(Recovery of) provision for bad (278) -- -- 1 4 -- (273)
debts
-------------------------------------------------------------------------
Total costs and expenses 4,017 584 1,585 1,034 1,659 1,588 10,467
-------------------------------------------------------------------------
Equity in net income of USPEs 470 -- 1,754 -- -- -- 2,224
-------------------------------------------------------------------------
Net income (loss) $ 5,392 $ (274) $ 1,403 $ (71) $ 1,369 $ (1,411) $ 6,408
=========================================================================

(2) Includes certain assets not identifiable to a specific segment such as cash
and prepaid expenses. Also includes certain interest income and costs not
identifiable to a particular segment such as interest and amortization
expense and certain operations support and general and administrative
expenses.

PLM EQUIPMENT GROWTH FUND IV
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS

6. GEOGRAPHIC INFORMATION

The Partnership owns certain equipment that is leased and operated
internationally. A limited number of the Partnership's transactions are
denominated in a foreign currency. Gains or losses resulting from foreign
currency transactions are included in the results of operations and are not
material.

The Partnership leases or leased its aircraft, railcars, and trailers to lessees
domiciled in four geographic regions: the United States, Canada, South America,
and Mexico. Marine vessels and marine containers are leased to multiple lessees
in different regions that operate the marine vessels and marine containers
worldwide.

The table below sets forth lease revenues by geographic region for the
Partnership's owned equipment and investments in USPEs, grouped by domicile of
the lessee as of and for the years ended December 31 (in thousands of dollars):

Region Owned Equipment Investments in USPEs
- ---------------------------- --------------------------------------- --------------------------------------
2001 2000 1999 2001 2000 1999
--------------------------------------- --------------------------------------

Canada $ 2,002 $ 3,394 $ 2,298 $ -- $ -- $ --
United States 802 913 3,683 -- -- --
South America -- -- 863 -- -- --
Rest of the world 33 78 1,210 -- -- 1,053
--------------------------------------- --------------------------------------
Lease revenues $ 2,837 $ 4,385 $ 8,054 $ -- $ -- $ 1,053
======================================= ======================================

The following table sets forth net income (loss) information by region for the
owned equipment and investments in USPEs for the years ended December 31 (in
thousands of dollars):

Region Owned Equipment Investments in USPEs
- ---------------------------------- -------------------------------------- -------------------------------------
2001 2000 1999 2001 2000 1999
-------------------------------------- -------------------------------------

Canada $ 2,533 $ 1,267 $ 1,129 $ -- $ -- $ --
United States 339 (498) 2,584 -- -- --
South Asia 1,614 -- (502) -- -- --
South America -- -- 3,009 -- -- --
Mexico -- -- -- (1,014) 538 470
Rest of the world 139 (68) (625) (35) 135 1,754
------------------------------------ -------------------------------------
Regional net income 4,625 701 5,595 (1,049) 673 2,224
Administrative and other (329) (477) (1,411) -- -- --
-------------------------------------- -------------------------------------
Net income (loss) $ 4,296 $ 224 $ 4,184 $ (1,049) $ 673 $ 2,224
====================================== =====================================

The net book value of these assets as of December 31 are as follows (in
thousands of dollars):

Region Owned Equipment Investments in USPEs
------------------------------ ------------------------- ---------------------------

2001 2000 2001 2000
------------------------- ------------------------

Canada $ 2,868 $ 4,176 $ -- $ --
United States 955 1,555 -- --
South Asia -- 378 -- --
Mexico -- -- 1,197 3,143
Rest of the world 70 389 -- --
------------------------- ------------------------
Total net book value $ 3,893 $ 6,498 $ 1,197 $ 3,143
========================= ========================

PLM EQUIPMENT GROWTH FUND IV
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS

7. CONCENTRATIONS OF CREDIT RISK

No single lessee accounted for more than 10% of the consolidated revenues for
the year ended December 31, 2001. In 2001, however, the Partnership sold two
aircraft. The following is a list of the buyers and the percentage of the gain
from the sale of the total consolidated revenues: Aergo Capital Limited (24%)
and Cypress Equipment Fund III, LLC (22%). Time Air, Inc. accounted for 14% of
the consolidated revenues for the year ended December 31, 2000. No other lessee
accounted for more than 10% of consolidated lease revenues in 2000. No single
lessee accounted for more than 10% of the consolidated revenues for the year
ended December 31, 1999. In 1999, however, the Partnership sold three aircraft
and a marine vessel that the Partnership owned an interest in. The following is
a list of the buyers and the percentage of the gain from the sale of the total
consolidated revenues: Aircraft Lease Finance IV, Inc. (14%), Fuerza Aerea Del
Peru (11%), Triton Aviation Services (10%), and Lisa Navigation Company LLC
(10%).

As of December 31, 2001 and 2000, the General Partner believes the Partnership
had no other significant concentrations of credit risk that could have a
material adverse effect on the Partnership.

8. INCOME TAXES

The Partnership is not subject to income taxes, as any income or loss is
included in the tax returns of the individual partners. Accordingly, no
provision for income taxes has been made in the financial statements of the
Partnership.

As of December 31, 2001, the financial statement carrying amount of assets and
liabilities was approximately $19.8 million lower than the federal income tax
basis of such assets and liabilities, primarily due to differences in
depreciation methods, equipment reserves, provisions for bad debts, lessees'
prepaid deposits, and the tax treatment of underwriting commissions and
syndication costs.

9. CONTINGENCIES

Two class action lawsuits which were filed against PLM International and various
of its wholly owned subsidiaries in January 1997 in the United States District
Court for the Southern District of Alabama, Southern Division (the court), Civil
Action No. 97-0177-BH-C (the Koch action), and June 1997 in the San Francisco
Superior Court, San Francisco, California, Case No. 987062 (the Romei action),
were fully resolved during the fourth quarter of 2001.

The named plaintiffs were individuals who invested in the Partnership (Fund IV),
PLM Equipment Growth Fund V (Fund V), PLM Equipment Growth Fund VI (Fund VI),
and PLM Equipment Growth & Income Fund VII (Fund VII and collectively, the
Funds), each a California limited partnership for which PLMI's wholly owned
subsidiary, FSI, acts as the General Partner. The complaints asserted causes of
action against all defendants for fraud and deceit, suppression, negligent
misrepresentation, negligent and intentional breaches of fiduciary duty, unjust
enrichment, conversion, conspiracy, unfair and deceptive practices and
violations of state securities law. Plaintiffs alleged that each defendant owed
plaintiffs and the class certain duties due to their status as fiduciaries,
financial advisors, agents, and control persons. Based on these duties,
plaintiffs asserted liability against defendants for improper sales and
marketing practices, mismanagement of the Funds, and concealing such
mismanagement from investors in the Funds. Plaintiffs sought unspecified
compensatory damages, as well as punitive damages.

In February 1999 the parties to the Koch and Romei actions agreed to monetary
and equitable settlements of the lawsuits, with no admission of liability by any
defendant, and filed a Stipulation of Settlement with the court. The court
preliminarily approved the settlement in August 2000, and information regarding
the settlement was sent to class members in September 2000. A final fairness
hearing was held on November 29, 2000, and on April 25, 2001, the federal
magistrate judge assigned to the case entered a Report and Recommendation
recommending final approval of the monetary and

PLM EQUIPMENT GROWTH FUND IV
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS

9. CONTINGENCIES (continued)

equitable settlements to the federal district court judge. On July 24, 2001, the
federal district court judge adopted the Report and Recommendation, and entered
a final judgment approving the settlements. No appeal has been filed and the
time for filing an appeal has expired.

The monetary settlement provides for a settlement and release of all claims
against defendants in exchange for payment for the benefit of the class of up to
$6.6 million, consisting of $0.3 million deposited by PLMI and the remainder
funded by an insurance policy. The final settlement amount of $4.9 million (of
which PLMI's share was approximately $0.3 million) was accrued in 1999, paid out
in the fourth quarter of 2001 and was determined based upon the number of claims
filed by class members, the amount of attorneys' fees awarded by the court to
plaintiffs' attorneys, and the amount of the administrative costs incurred in
connection with the settlement.

The equitable settlement provides, among other things, for: (a) the extension
(until January 1, 2007) of the date by which FSI must complete liquidation of
the Funds' equipment, except for Fund IV; (b) the extension (until December 31,
2004) of the period during which FSI can reinvest the Funds' funds in additional
equipment, except for Fund IV; (c) an increase of up to 20% in the amount of
front-end fees (including acquisition and lease negotiation fees) that FSI is
entitled to earn in excess of the compensatory limitations set forth in the
North American Securities Administrator's Association's Statement of Policy;
except for Fund IV; (d) a one-time purchase by each of Funds V, VI, and VII of
up to 10% of that partnership's outstanding units for 80% of net asset value per
unit as of September 30, 2000; and (e) the deferral of a portion of the
management fees paid, except for Fund IV, to an affiliate of FSI until, if ever,
certain performance thresholds have been met by the Funds. The equitable
settlement also provides for payment of additional attorneys' fees to the
plaintiffs' attorneys from Fund funds in the event, if ever, that certain
performance thresholds have been met by the Funds. Following a vote of limited
partners resulting in less than 50% of the limited partners of each of Funds V,
VI, and VII voting against such amendments and after final approval of the
settlement, each of the Funds' limited partnership agreements was amended to
reflect these changes. During the fourth quarter of 2001 the respective Funds
purchased limited partnership units from those equitable class members who
submitted timely requests for purchase.

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.

During 2001, the General Partner decided to minimize its collection efforts from
the India 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. Management 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 FINANCIAL STATEMENTS

10. LIQUIDATION AND SPECIAL DISTRIBUTIONS

On January 1, 1999, the General Partner began the liquidation phase of the
Partnership with the intent to commence an orderly liquidation of the
Partnership assets. 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 periodically 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, may continue to be distributed from time to
time to the 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. Upon final liquidation, the Partnership will be dissolved.

Special distributions totaling $4.5 million ($0.50 per weighted-average
partnership unit) were paid in 2000. No special distributions were paid in 2001
or 1999. 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 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.

11. QUARTERLY RESULTS OF OPERATIONS (unaudited)

The following is a summary of the quarterly results of operations for the year
ended December 31, 2001 (in thousands of dollars, except per share amounts):

March June September December
31, 30, 30, 31, Total
------------------------------------------------------------------------------------------

Operating results:

Total revenues $ 4,403 $ 781 $ 722 $ 910 $ 6,816
Net income (loss) 3,512 418 162 (845) 3,247

Per weighted-average limited partnership unit:

Net income (loss) $ 0.40 $ 0.04 $ 0.02 $ (0.09) $ 0.37

The following is a list of the major events that affected the Partnership's
performance during 2001:

(i) In the first quarter of 2001, the Partnership sold aircraft and marine
containers for a total gain of $3.4 million;

(ii)In the second quarter of 2001, lease revenues decreased $0.3 million
and expenses decreased $0.5 million due to equipment sales;

(iii)In the third quarter of 2001, the Partnership incurred $0.2 million in
higher repair expenses; and

(iv)In the fourth quarter of 2001, the Partnership recorded a $1.4 million
loss on revaluation on the trust that owned two commercial aircraft on a direct
finance lease.

PLM EQUIPMENT GROWTH FUND IV
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS

11. QUARTERLY RESULTS OF OPERATIONS (unaudited) (continued)

The following is a summary of the quarterly results of operations for the year
ended December 31, 2000 (in thousands of dollars, except per share amounts):

March June September December
31, 30, 30, 31, Total
------------------------------------------------------------------------------------------

Operating results:

Total revenues $ 1,313 $ 1,238 $ 1,292 $ 1,004 $ 4,847
Net income 518 166 85 128 897

Per weighted-average limited partnership unit:

Net income $ 0.03 $ 0.01 $ 0.01 $ 0.01 $ 0.06

The following is a list of the major events that affected the Partnership's
performance during 2000:

(i) In the first quarter of 2001, the Partnership sold marine containers,
railcars, and trailers for a total gain of $0.1 million;

(ii)In the second quarter of 2000, net income decreased $0.1 million due to
equipment sales;

(iii)In the third quarter of 2000, the Partnership sold trailers and
railcars for a total gain of $0.2 million, recorded a loss on revaluation of
trailers for $0.1 million; and

(iv)In the fourth quarter of 2000, the Partnership revenues decreased $0.2
million due to equipment sales during the third quarter 2000.

(This space intentionally left blank)

INDEPENDENT AUDITORS' REPORT

The Partners
PLM Equipment Growth Fund IV:

We have audited the financial statements of PLM Equipment Growth Fund IV (the
"Partnership") as of December 31, 2001, and for the year then ended, and have
issued our report thereon dated March 8, 2002; such report is included elsewhere
in this Form 10-K. Our audit also included the financial statement schedule of
PLM Equipment Growth Fund IV, listed in Item 14. This financial statement
schedule is the responsibility of the Partnership's management. Our
responsibility is to express an opinion based on our audit. In our opinion, such
financial statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.

/s/ Deloitte & Touche LLP

Certified Public Accountants

Tampa, Florida
March 8, 2002

INDEPENDENT AUDITORS' REPORT

The Partners
PLM Equipment Growth Fund IV:

Under date of March 2, 2001, we reported on the balance sheet of PLM Equipment
Growth Fund IV as of December 31, 2000, and the related statements of income,
changes in partners' capital, and cash flows for each of the years in the
two-year period ended December 31, 2000, as contained in the 2001 annual report
to the partners. These financial statements and our report thereon are included
in the annual report on Form 10-K for the year ended December 31, 2001. In
connection with our audits of the aforementioned financial statements, we also
audited the related financial statement schedule for each of the years in the
two-year ended December 31, 2000. This financial statement schedule is the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on this financial statement schedule based on our audits.

In our opinion, such financial statement schedule, when considered in relation
to the basic financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein for each of the years in
the two-year period ended December 31, 2000.

/s/ KPMG LLP

SAN FRANCISCO, CALIFORNIA
March 2, 2001

SCHEDULE II

PLM EQUIPMENT GROWTH FUND IV
(A Limited Partnership)
Valuation and Qualifying Accounts

Years Ended December 31, 2001, 2000, and 1999
(in thousands of dollars)

Additions
Balance at Charged to Balance at
Beginning of Cost and Close of
Year Expense Deductions Year
---------------- ---------------- -------------- -------------

Year Ended December 31, 2001
Allowance for Doubtful Accounts $ 5 $ 41 $ (1) $ 45
======================================================================

Year Ended December 31, 2000
Allowance for Doubtful Accounts $ 2,843 $ -- $ (2,838) $ 5
======================================================================

Year Ended December 31, 1999
Allowance for Doubtful Accounts $ 3,126 $ 5 $ (288) $ 2,843
======================================================================

PLM EQUIPMENT GROWTH FUND IV

INDEX OF EXHIBITS

Exhibit Page

4. Limited Partnership Agreement of Registrant *

10.1 Management Agreement between Registrant and *
PLM Investment Management, Inc.

Financial Statements required under Regulation S-X Rule 3-09:

99.1 Aero California Trust. 47-56

99.2 Montgomery Partnership. 57-65

* Incorporated by reference. See page 22 of this report.