10-Q 1 doc1.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ___________________ FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL QUARTER ENDED SEPTEMBER 30, 2002 [ ] 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 1-10813 _______________________ PLM EQUIPMENT GROWTH FUND III (Exact name of registrant as specified in its charter)

Registrant's telephone number, including area code: (727) 803-8200 _______________________ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes X No ______ ---- PLM EQUIPMENT GROWTH FUND III (A LIMITED PARTNERSHIP) CONDENSED BALANCE SHEETS (in thousands of dollars, except unit amounts) (unaudited)

See accompanying notes to unaudited condensed financial statements. PLM EQUIPMENT GROWTH FUND III (A LIMITED PARTNERSHIP) CONDENSED STATEMENTS OF INCOME (in thousands of dollars, except weighted-average unit amounts) (unaudited)

See accompanying notes to unaudited condensed financial statements. PLM EQUIPMENT GROWTH FUND III (A LIMITED PARTNERSHIP) CONDENSED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL FOR THE PERIOD FROM DECEMBER 31, 2000 TO SEPTEMBER 30, 2002 (in thousands of dollars) (unaudited)

See accompanying notes to unaudited condensed financial statements.

See accompanying notes to unaudited condensed financial statements. PLM EQUIPMENT GROWTH FUND III (A LIMITED PARTNERSHIP) NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) 1. Opinion of Management ----------------------- In the opinion of the management of PLM Financial Services, Inc. (FSI or the General Partner), the accompanying unaudited condensed financial statements contain all adjustments necessary, consisting primarily of normal recurring accruals, to present fairly the unaudited condensed financial position of PLM Equipment Growth Fund III (the Partnership) as of September 30, 2002 and December 31, 2001, the unaudited condensed statements of income for the three and nine months ended September 30, 2002 and 2001, the unaudited condensed statements of changes in partners' capital for the period from December 31, 2000 to September 30, 2002, and the unaudited condensed statements of cash flows for the nine months ended September 30, 2002 and 2001. Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted from the accompanying condensed financial statements. For further information, reference should be made to the financial statements and notes thereto included in the Partnership's Annual Report on Form 10-K for the year ended December 31, 2001, on file at the Securities and Exchange Commission. 2. Schedule of Partnership Phases --------------------------------- The Partnership, in accordance with its limited partnership agreement, entered its liquidation phase on January 1, 2000 and has commenced an orderly liquidation of the Partnership's assets. The General Partner filed a certificate of dissolution on behalf of the Partnership with the Secretary of State for the State of California on December 31, 2000, and following completion of the liquidation of the Partnership, will file a certificate of cancellation. The General Partner may no longer reinvest cash flows and surplus funds in equipment. All future cash flows and surplus funds, if any, are to be used for distributions to partners, except to the extent used to maintain reasonable reserves. During the liquidation phase, the Partnership's assets will continue to be reported at the lower of carrying amount or fair value less cost to sell. 3. Cash Distributions ------------------- Cash distributions are recorded when paid and may include amounts in excess of net income that are considered to represent a return of capital. For the three and nine months ended September 30, 2002, cash distributions totaled $0 and $5.0 million, respectively. Cash distributions to the limited partners of $4.1 million for the nine months ended September 30, 2002 were deemed to be a return of capital. For the three and nine months ended September 30, 2001, cash distributions were $-0- and $0.6 million, respectively. None of the cash distributions in the nine months ended September 30, 2001 were considered a return of capital. 4. Transactions with General Partner and Affiliates ----------------------------------------------------- The balance due to affiliates as of September 30, 2002 and December 31, 2001 of $0.1 million is a payable to FSI and its affiliate for management fees. PLM EQUIPMENT GROWTH FUND III (A LIMITED PARTNERSHIP) NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) 5. Equipment --------- Owned equipment held for operating leases is stated at cost. The components of owned equipment were as follows (in thousands of dollars):

As of September 30, 2002, all equipment in the Partnership portfolio was on lease except for six containers and 175 railcars. As of December 31, 2001, all equipment in the Partnership portfolio was on lease except for 100 railcars. The net book value of the equipment off lease was $0.3 million as of September 30, 2002 and December 31, 2001. Capital improvements to the Partnership's equipment of $21,000 and $0.1 million were made during the nine months ended September 30, 2002 and 2001, respectively. During the nine months ended September 30, 2002, the Partnership disposed of marine containers, trailers, and railcars, with an aggregate net book value of $0.4 million for aggregate proceeds of $0.7 million. During the nine months ended September 30, 2001, the Partnership disposed of aircraft, marine containers, trailers, and railcars, with an aggregate net book value of $1.6 million, for proceeds of $5.6 million. (This space intentionally left blank) PLM EQUIPMENT GROWTH FUND III (A LIMITED PARTNERSHIP) NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) 6. Operating Segments ------------------- The Partnership operates or operated primarily in four different segments: aircraft leasing, railcar leasing, marine container leasing, and trailer leasing. Each equipment-leasing segment engages in short-term and mid-term operating leases to a variety of customers. The following tables present a summary of the operating segments (in thousands of dollars):

_________________________ 1 Includes certain assets not identifiable to a particular segment, such as cash and prepaid expenses. Also includes interest income and costs not identifiable to a particular segment such as certain operations support and general and administrative expenses and costs related to sold aircraft and marine vessels that were wholly owned. 2 Includes certain interest income and costs not identifiable to a particular segment such as certain operations support and general and administrative expenses. PLM EQUIPMENT GROWTH FUND III (A LIMITED PARTNERSHIP) NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) 6. Operating Segments (continued) -------------------

7. Net Income Per Weighted-Average Depositary Unit ---------------------------------------------------- Net income per weighted-average depositary unit was computed by dividing net income attributable to the limited partners by the weighted-average number of depositary units deemed outstanding during the period. The weighted-average number of depositary units deemed outstanding during the three and nine months ended September 30, 2002 and 2001 was 9,871,210. _________________________ 1 Includes interest income and costs not identifiable to a particular segment such as certain operations support and general and administrative expenses and costs related to sold aircraft and marine vessels that were wholly owned. 2 Includes certain interest income and costs not identifiable to a particular segment such as certain operations support and general and administrative expenses. Also includes the equity in the loss of an entity that owned a marine vessel. PLM EQUIPMENT GROWTH FUND III (A LIMITED PARTNERSHIP) NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) 8. Liquidation ----------- On January 1, 2000, the General Partner began the liquidation phase of the Partnership and commenced an orderly liquidation of the Partnership assets. The General Partner is marketing the remaining equipment portfolio with the intent of maximizing sale proceeds. During the liquidation phase of the Partnership, the equipment will continue to be leased under operating leases until sold. The amounts reflected for assets and liabilities of the Partnership have not been adjusted to reflect liquidation values. The equipment portfolio continues to be carried at the lower of depreciated cost or fair value less cost to dispose. Although the General Partner estimates that there will be distributions after liquidation of assets and liabilities, the amounts cannot be accurately determined prior to actual liquidation of the equipment. Upon final liquidation, the Partnership will be dissolved. (this space intentionally left blank) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND --------------------------------------------------------------- RESULTS OF OPERATIONS ----------------------- (I) RESULTS OF OPERATIONS Comparison of PLM Equipment Growth Fund III's (the Partnership's) Operating -------------------------------------------------------------------------------- Results for the Three Months Ended September 30, 2002 and 2001 ------------------------------------------------------------------------ (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 three months ended September 30, 2002 compared to the same period of 2001. Gains or losses from the sale of equipment, interest and other income, and certain expenses such as depreciation and general and administrative expenses relating to the operating segments (see Note 6 to the unaudited condensed financial statements), are not included in the owned equipment operation discussion because these expenses are indirect in nature, 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):

Railcars: Railcar lease revenues and direct expenses were $1.3 million and $0.4 million, respectively, for the quarter ended September 30, 2002 compared to $1.6 million and $0.4 million for the quarter ended September 30, 2001. The reduction in lease revenue in 2002 compared to 2001 was due to the disposition of railcars over the past year. Direct expenses increased $0.1 million in 2002 compared to 2001 due to increased repair and maintenance costs. Trailers: Trailer lease revenues and direct expenses were $0.1 million and $0.1 million, respectively, for the quarters ended September 30, 2002 and 2001. (B) Interest and Other Income Interest and other income decreased $38,000 in the quarter ended September 30, 2002 compared to the same quarter of 2001 due to a reduction in the average cash balances in the Partnership. (C) Indirect Expenses Related to Owned Equipment Operations Total indirect expenses of $0.8 million for the quarter ended September 30, 2002 increased from $0.7 million for the same period of 2001. Significant variances are explained as follows: (i) A $0.2 million increase in general and administrative expenses was due to increased professional service costs. (ii) A $0.1 million decrease in depreciation expenses from 2001 levels reflects the effect of asset dispositions in 2002 and 2001 (D) Gain on Disposition of Owned Equipment The gain on the disposition of owned equipment for the third quarter of 2002 was $0.1 million, resulting from the disposition of marine containers and railcars, with an aggregate net book value of $7,000 for proceeds of $0.1 million. The gain on the disposition of owned equipment for the third quarter of 2001 was $31,000, resulting from the disposition of marine containers, trailers, and railcars, with an aggregate net book value of $19,000 for proceeds of $0.1 million (E) Net Income As a result of the foregoing, the Partnership had net income of $0.1 million in the third quarter of 2002 compared to net income of $0.6 million in the third quarter of 2001. The Partnership's ability to operate and liquidate assets, secure leases, and re-lease those assets whose leases expire is subject to many factors. Therefore, the Partnership's performance in the three months ended September 30, 2002 is not necessarily indicative of future periods. Comparison of the Partnership's Operating Results for the Nine Months Ended -------------------------------------------------------------------------------- September 30, 2002 and 2001 ------------------------------- (A) Owned Equipment Operations Lease revenues less direct expenses on owned equipment decreased during the nine months ended September 30, 2002 compared to the same period of 2001. The following table presents lease revenues less direct expenses by segment (in thousands of dollars):

Railcars: Railcar lease revenues and direct expenses were $4.1 million and $1.4 million, respectively, for the nine months ended September 30, 2002 compared to $4.9 million and $1.4 million for the same period of 2001. The reduction in lease revenue in 2002 compared to 2001 was due to the disposition of railcars over the past year. Trailers: Trailer lease revenues and direct expenses were $0.3 million and $0.2 million, respectively, for the nine months ended September 30, 2002 and 2001. Aircraft: Aircraft lease revenues and direct expenses were $0.2 million and $0.1 million, respectively, during the nine months ended September 30, 2001. There were no aircraft lease revenues and expenses in the nine months ended September 30, 2002 as the Partnership sold its wholly owned aircraft in 2001. (B) Interest and Other Income Interest and other income decreased $0.1 million in the nine months ended September 30, 2002 compared to the same period of 2001 due to a reduction in the average cash balance in the Partnership. (C) Indirect Expenses Related to Owned Equipment Operations Total indirect expenses of $2.4 million for the quarter ended September 30, 2002 decreased from $3.0 million for the same period of 2001. Significant variances are explained as follows: (i) A decrease of $0.4 million in depreciation expense in the nine months ended September 30, 2002 compared to the same period in 2001 reflects the disposition of Partnership assets during 2002 and 2001. (ii) A $0.2 million decrease in general and administrative expenses during the nine months ended September 30, 2002 resulted from the reduction in the size of the Partnership's equipment portfolio over the last twelve months. (D) Gain on Disposition of Owned Equipment The gain on the disposition of owned equipment for the nine months ended September 30, 2002 was $0.3 million, resulting from the disposition of marine containers, railcars and trailers, with an aggregate net book value of $0.4 million for proceeds of $0.7 million. The gain on the disposition of equipment was $4.0 million for the nine months ended September 30, 2001, resulting from the disposition of aircraft, marine containers, trailers, and railcars with an aggregate net book value of $1.6 million, for aggregate proceeds of $5.6 million. (E) Equity in Net Income (Loss) of an Unconsolidated Special-Purpose Entity (USPE) Equity in net income (loss) of an USPE represents the Partnership's share of the net income or loss generated from the operation of jointly owned assets accounted for under the equity method of accounting. This entity was a single purpose entity that had no debt. Net income generated from the operation of jointly owned assets was $40,000 in the nine months ended September 30, 2002 compared to a loss of $10,000 in the same period of 2001. As of September 30, 2002 and 2001, the Partnership had no remaining interest in entities that jointly owned equipment. The Partnership's share of revenues and expenses in jointly owned equipment was $40,000 and $0 in the nine months ended September 30, 2002, respectively, compared to $6,000 and $16,000, respectively, for the same period of 2001. The revenue in 2002 primarily related to insurance proceeds from a marine vessel in which the Partnership previously had an interest. (F) Net Income As a result of the foregoing, the Partnership had net income of $0.9 million in the nine months ended September 30, 2002 compared to net income of $4.9 million in the same period of 2001. The Partnership's ability to operate and liquidate assets, secure leases, and re-lease those assets whose leases expire is subject to many factors. Therefore, the Partnership's performance in the nine months ended September 30, 2002 is not necessarily indicative of future periods. In the nine months ended September 30, 2002, the Partnership distributed $4.7 million to the limited partners or $0.48 per depositary unit. (II) CRITICAL ACCOUNTING POLICIES AND ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the General Partner to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On a regular basis, the General Partner reviews these estimates including those related to asset lives and depreciation methods, impairment of long-lived assets, allowance for doubtful accounts, and contingencies and litigation. These estimates are based on our 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 signifigant judgments and estimates used in the preparation of our 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 to determine if the carrying value of the assets 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. Contingencies and litigation: The Partnership is subject to legal proceedings involving ordinary and routine claims related to its business. The ultimate legal and financial liability with respect to such matters cannot be estimated with certainty and requires the use of estimates in recording liabilities for potential litigation settlements. Estimates for losses from litigation are made after consultation with outside counsel. If estimates of potential losses increase or the related facts and circumstances change in the future, the Partnership may be required to record additional litigation expense. (III) FINANCIAL CONDITION -- CAPITAL RESOURCES, LIQUIDITY, AND DISTRIBUTIONS For the nine months ended September 30, 2002, the Partnership generated $1.5 million in operating cash (net cash provided by operating activities plus non-liquidating distributions from an USPE) to meet its operating obligations and fund distributions (a total of $5.0 million for the nine months ended September 30, 2002) but also used undistributed available cash from prior periods and proceeds from equipment dispositions of $3.5 million. During the nine months ended September 30, 2002, the Partnership sold equipment and received aggregate proceeds of $0.7 million. During the nine months ended September 30, 2002, accounts receivable decreased $0.1 million due the decrease in the size of the Partnership's equipment portfolio. During the nine months ended September 30, 2002, accounts payable and accrued expenses decreased $0.2 million due to the payment of $0.2 million for an aircraft repair that was accrued for as of December 31, 2001. The General Partner has not planned any expenditures, nor is it aware of any contingencies that would cause the Partnership to require any additional capital. The Partnership is in its active liquidation phase. As a result, the size of the Partnership's remaining equipment portfolio and, in turn, the amount of net cash flows from operations will continue to become progressively smaller as assets are sold. 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 partners after final disposal of assets and settlement of liabilities, the amounts cannot be accurately determined prior to actual disposal of the equipment. (IV) OUTLOOK FOR THE FUTURE The Partnership entered its liquidation phase on January 1, 2000. The General Partner is seeking to selectively re-lease or sell assets as the existing leases expire. Sale decisions may cause the operating performance of the Partnership to decline over the remainder of its life. The General Partner filed a certificate of dissolution on behalf of the Partnership with the Secretary of State for the State of California in December 2000, and following completion of the liquidation of the Partnership, the General Partner will file a certificate of cancellation. The Partnership has received an offer for the Partnership railcar portfolio, which represents 76% of the Partnership's equipment net book value. The offer is in excess of the carrying value of the equipment. Due diligence is being performed on the railcar portfolio by the offering entity. At this time, no assurances can be made that the offer will be consummated. Several factors may affect the Partnership's operating performance in the remainder of 2002 and beyond, including changes in the markets for the Partnership's equipment and changes in the regulatory environment in which that equipment operates. Liquidation of the Partnership's equipment 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 twelve years of age and is no longer suitable for use in international commerce either due to its 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. Through the first nine months of 2002, U.S. and Canadian freight carloads decreased 1% and 3% respectively, compared to the same period of 2001. There has been, however, some recent increase in some of the commodities, which drive demand for those types of railcars most prevalent in the partnership's fleet. It will be some time, however, before this translates into new leasing demand by shippers since most shippers have idle cars in their fleets. 3. Utilization of intermodal trailers owned by the Partnership decreased 15% in the nine months ended September 30, 2002 compared to the nine months ended September 30, 2001. The decline was similar to the decline in industry wide utilization. As the Partnership's trailers are smaller than many shippers prefer, the General Partner expects continued declines in utilization over the next few years. Additionally, one of the major shippers that leased the Partnership's trailers has entered bankruptcy. While the Partnership did not have any outstanding receivables from the company, its bankruptcy may cause a further decline in performance of the trailer fleet in the future. The ability of the Partnership to realize acceptable lease rates on its equipment in the different equipment markets is contingent on many factors, such as specific market conditions and economic activity, technological obsolescence, and government or other regulations. The unpredictability of these factors, or of their occurrence, makes it difficult for the General Partner to clearly define trends or influences that may impact the performance of the Partnership's equipment. The General Partner continually monitors both the equipment markets and the performance of the Partnership's equipment in these markets. The General Partner may decide to reduce the Partnership's exposure to those equipment markets in which it determines that it cannot operate equipment and achieve acceptable rates of return. The Partnership intends to use cash flow from operations and proceeds from disposition of equipment to satisfy its operating requirements, maintain working capital reserves, and pay cash distributions to the unitholders. (V) FORWARD-LOOKING INFORMATION Except for the historical information contained herein, this Form 10-Q 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-Q should be read as being applicable to all related forward-looking statements wherever they appear in this Form 10-Q. The Partnership's actual results could differ materially from those discussed here. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK ---------------------------------------------------------------- The Partnership's primary market risk exposure is currency devaluation risk. During the nine months ended September 30, 2002, 67% of the Partnership's total lease revenues equipment came from non-United States domiciled lessees. Most of the Partnership's leases require payment in United States (U.S) currency. If these lessees' currency devalues against the U.S. dollar, the lessees could potentially encounter difficulty in making the U.S. dollar denominated lease payments. ITEM 4. CONTROLS AND PROCEDURES ------------------------- Within the 90-day period prior to the filing of this report, evaluations were carried out under the supervision and with the participation of the General Partner's management, including its President and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-14(c) under the Securities Exchange Act of 1934). Based upon those evaluations, the President and Chief Financial Officer concluded that the design and operation of these disclosure controls and procedures were effective. No significant changes have been made in the Partnership's internal controls or in other factors that could significantly affect these controls subsequent to the date of the evaluations. PART II OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K ------------------------------------- (a) Exhibits -------- None. (b) Reports on Form 8-K ---------------------- None. (This space intentionally left blank) CONTROL CERTIFICATION ---------------------- I, James A. Coyne, certify that: 1. I have reviewed this quarterly report on Form 10-Q of PLM Equipment Growth Fund III. 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant is made known to us by others, particularly during the period in which this quarterly report is prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and board of Managers: a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November 11, 2002 By: /s/ James A. Coyne --------------------- James A. Coyne President (Principal Executive Officer) ------ CONTROL CERTIFICATION ---------------------- I, Richard K Brock, certify that: 5. I have reviewed this quarterly report on Form 10-Q of PLM Equipment Growth Fund III. 6. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 7. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 8. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: d) designed such disclosure controls and procedures to ensure that material information relating to the registrant is made known to us by others, particularly during the period in which this quarterly report is prepared; e) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and f) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and board of Managers: a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November 11, 2002 By: /s/ Richard K Brock ---------------------- Richard K Brock Chief Financial Officer (Principal Financial Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PLM EQUIPMENT GROWTH FUND III By: PLM Financial Services, Inc. General Partner Date: November 11, 2002 By: /s/ Richard K Brock ---------------------- Richard K Brock Chief Financial Officer CERTIFICATION The undersigned hereby certifies, in their capacity as an officer of the General Partner of PLM Equipment Growth Fund III (the Partnership), that the Quarterly Report of the Partnership on Form 10-Q for the period ended September 30, 2002, fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that the information contained in such report fairly presents, in all material respects, the financial condition of the Partnership at the end of such period and the results of operations of the Partnership for such period. PLM EQUIPMENT GROWTH FUND III By: PLM Financial Services, Inc. General Partner Date: November 11, 2002 By: /s/ James A. Coyne --------------------- James A. Coyne President Date: November 11, 2002 By: /s/ Richard K Brock ---------------------- Richard K Brock Chief Financial Officer

PLM EQUIPMENT GROWTH FUND III 10-Q