UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the fiscal quarter ended March 31, 1997.
[ ] 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 0-14598
PLM TRANSPORTATION EQUIPMENT PARTNERS VIIB 1985
INCOME FUND (Exact name of registrant as specified
in its charter)
California 94-2946245
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Market, Steuart Street Tower,
Suite 800, San Francisco, CA 94105-1301
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code (415) 974-1399
---------------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS VIIB INCOME FUND
(A Limited Partnership)
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
----------------------------------------
<S> <C> <C>
Equipment held for operating leases, at cost $ 2,993,030 $ 3,550,990
Less accumulated depreciation (2,953,192 ) (3,427,418 )
---------------------------------------
Net equipment 39,838 123,572
Cash and cash equivalents 404,900 269,628
Accounts receivable, net of allowance for doubtful accounts of
$4,975 in 1997 and $5,082 in 1996 118,915 127,105
Prepaid insurance 2,028 2,714
---------------------------------------
Total assets $ 565,681 $ 523,019
=======================================
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Due to affiliates $ 4,641 $ 4,641
Accounts payable and accrued expenses 28,358 32,221
Lessee deposits and engine reserves 14,000 615
---------------------------------------
Total liabilities 46,999 37,477
Partners' capital (deficit):
Limited Partners (22,276 units) 611,545 578,736
General Partner (92,863 ) (93,194 )
---------------------------------------
Total partners' capital 518,682 485,542
---------------------------------------
Total liabilities and partners' capital $ 565,681 $ 523,019
=======================================
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS VIIB 1985 INCOME FUND
(A Limited Partnership)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the three months
ended March 31,
1997 1996
--------------------------------
<S> <C> <C>
Revenues:
Lease revenue $ 98,483 $ 106,074
Interest and other income 3,528 3,453
Gain on disposition of equipment 114,482 19,330
----------------------------------
Total revenues 216,493 128,857
Expenses:
Depreciation 23,510 54,769
Management fees to affiliate 13,922 11,513
(Recovery of) provision for bad debts (106 ) 17,821
Repairs and maintenance 16,249 22,263
Insurance expense 1,057 1,826
General and administrative
expenses to affiliates 4,364 26,546
Other general and administrative expenses 27,185 10,516
----------------------------------
Total expenses 86,181 145,254
Equity in net income of unconsolidated special purpose entity -- 9,331
----------------------------------
Net income (loss) $ 130,312 $ (7,066 )
==================================
Partners' share of net income (loss):
Limited Partners - 99% $ 129,009 $ (6,995 )
General Partner - 1% 1,303 (71 )
----------------------------------
Total $ 130,312 $ (7,066 )
==================================
Net income (loss) per weighted average Limited
Partnership Unit (22,276 units) $ 5.79 $ (0.31 )
==================================
Cash distributions $ 97,172 $ 99,046
==================================
Cash distribution per weighted average
Limited Partnership Unit $ 4.32 $ 4.40
==================================
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS VIIB INCOME FUND
(A Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the period from December 31, 1995 to March 31,
1997
<TABLE>
<CAPTION>
Limited General
Partners Partner Total
------------------------------------------------------------
<S> <C> <C> <C>
Partners' capital (deficit)
at December 31, 1995 $ 931,401 $ (89,632 ) $ 841,769
Net income 235,702 2,381 238,083
Quarterly cash distributions (390,367 ) (3,943 ) (394,310 )
Special distributions (198,000 ) (2,000 ) (200,000 )
-------------------------------------------------------------
Partners' capital (deficit)
at December 31, 1996 578,736 (93,194 ) 485,542
Net income 129,009 1,303 130,312
Quarterly cash distributions (96,200 ) (972 ) (97,172 )
-------------------------------------------------------------
Partners' capital (deficit)
at March 31, 1997 $ 611,545 $ (92,863 ) $ 518,682
=============================================================
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS VIIB 1985 INCOME FUND
(A Limited Partnership)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
For the three months ended
March 31,
1997 1996
-------------------------------------
<S> <C> <C>
Operating activities:
Net income (loss) $ 130,312 $ (7,066 )
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Gain on disposition of equipment (114,482 ) (19,330 )
Depreciation 23,510 54,769
Equity in net income from unconsolidated special purpose
entity -- (9,331 )
Changes in operating assets and liabilities:
Accounts receivable, net 8,190 42,674
Prepaid insurance 686 1,028
Accounts payable and accrued expenses (3,863 ) (2,695 )
Lessee deposits and engine reserves 13,385 (260 )
-------------------------------------
Net cash provided by operating activities 57,738 59,789
-------------------------------------
Investing activities:
Proceeds from disposition of equipment 174,706 34,213
Distributions from unconsolidated special purpose entity -- 18,398
-------------------------------------
Net cash provided by investing activities 174,706 52,611
-------------------------------------
Financing activities:
Cash distributions paid to Limited Partners (96,200 ) (98,056 )
Cash distributions paid to General Partner (972 ) (990 )
-------------------------------------
Net cash used in financing activities (97,172 ) (99,046 )
-------------------------------------
Net increase in cash and cash equivalents 135,272 13,354
Cash and cash equivalents at beginning of period 269,628 293,808
-------------------------------------
Cash and cash equivalents at end of period $ 404,900 $ 307,162
=====================================
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS VIIB 1985 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
March 31, 1997
1. Opinion of Management
In the opinion of the management of PLM Financial Services Inc., the
General Partner, the accompanying unaudited financial statements contain
all adjustments necessary, consisting primarily of normal recurring
accruals, to present fairly the Partnership's financial position as of
March 31, 1997 and December 31, 1996, the statements of operations and cash
flows for the three months ended March 31, 1997 and 1996, and the
statements of changes in partners' capital for the period from December 31,
1995 to March 31, 1997. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted
from the accompanying financial statements. For further information,
reference should be made to the financial statements and notes thereto
included in the Partnership's Annual Report on Form 10-K for the year ended
December 31, 1996, on file at the Securities and Exchange Commission.
2. Reclassifications
Certain amounts in the 1996 financial statements have been reclassified to
conform to the 1997 presentation.
3. Equipment
The components of owned equipment are as follows:
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
----------------------------------------
Equipment held for operating leases:
<S> <C> <C>
Trailers $ 2,910,211 $ 3,146,140
Marine containers 82,819 86,201
Rail equipment -- 318,649
----------------------------------------
2,993,030 3,550,990
Less accumulated depreciation (2,953,192 ) (3,427,418 )
----------------------------------------
Net equipment $ 39,838 $ 123,572
========================================
</TABLE>
All of the equipment owned by the Partnership was either on lease or operating
in PLM-affiliated short-term rental facilities at March 31, 1997 and
December 31, 1996.
During the three months ended March 31, 1997, the Partnership sold or disposed
of railcars, trailers and marine containers with an aggregate net book
value of $60,224 for proceeds of $174,706. During the three months ended
March 31, 1996, the Partnership sold or disposed of trailers and marine
containers with an aggregate net book value of $14,883 for aggregate
proceeds of $34,213.
4. Liquidation and special distributions
During the first quarter of 1995, the Partnership completed its 10th year
of operations. As originally anticipated by the General Partner, the
Partnership is being liquidated in an orderly manner in its 11th and 12th
years of operation. The General Partner is actively marketing the remaining
equipment portfolio with the intent of maximizing sale proceeds. As sale
proceeds are received the
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS VIIB 1985 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
March 31, 1997
4. Liquidation and special distributions (continued)
General Partner intends to periodicially declare special distributions to
distribute the sale proceeds to the partners. During the liquidation phase
of the Partnership the equipment will continue to be leased under operating
leases until sold. Operating cash flows, to the extent they exceed
Partnership expenses, will continue to be distributed on a quarterly basis
to partners. The amounts reflected for assets and liabilites of Partnership
have not been adjusted to reflect liquidation values. The equipment
portfolio continues to be carried at the lower of depreciated cost or fair
value less cost to dispose. Although the General Partner estimates that
there will be distributions after liquidation of assets and liabilities,
the amounts cannot be accurately determined prior to actual liquidation of
the equipment. Any excess proceeds over expected Partnership obligations
will be distributed to the Partners throughout the liquidation period. Upon
final liquidation, the Partnership will be dissolved.
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS VIIC 1985 INCOME FUND
(A Limited Partnership)
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
----------------------------------------
<S> <C> <C>
Equipment held for operating leases, at cost $ 3,832,106 $ 4,069,971
Less accumulated depreciation (3,688,771 ) (3,861,489 )
---------------------------------------
Net equipment 143,335 208,482
Cash and cash equivalents 343,774 416,360
Investments in unconsolidated special purpose entity 73,224 99,974
Accounts receivable, net of allowance for doubtful accounts of
$612 in 1997 and $633 in 1996 53,046 64,261
Prepaid insurance 2,707 3,713
---------------------------------------
Total assets $ 616,086 $ 792,790
=======================================
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Due to affiliates $ 7,026 $ 7,026
Accounts payable and accrued expenses 10,030 13,040
---------------------------------------
Total liabilities 17,056 20,066
Partners' capital (deficit):
Limited Partners (33,727 units) 741,543 913,500
General Partner (142,513 ) (140,776 )
---------------------------------------
Total partners' capital 599,030 772,724
---------------------------------------
Total liabilities and partners' capital $ 616,086 $ 792,790
=======================================
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS VIIC 1985 INCOME FUND
(A Limited Partnership)
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
For the three months
ended March 31,
1997 1996
-----------------------------------
<S> <C> <C>
Revenues:
Lease revenue $ 72,195 $ 109,192
Interest and other income 4,318 6,463
Gain on disposition of equipment 40,958 34,445
-------------------------------
Total revenues 117,471 150,100
Expenses:
Depreciation 55,082 66,504
Management fees to affiliate 21,079 15,298
(Recovery of) provision for bad debts (21 ) 406
Repairs and maintenance 14,825 23,711
Insurance expense 1,431 4,058
General and administrative expenses to affiliates 23,305 37,131
Other general and administrative expenses 12,760 15,283
-------------------------------
Total expenses 128,461 162,391
Equity in net income of unconsolidated special purpose entities 12,956 36,977
-------------------------------
Net income $ 1,966 $ 24,686
===============================
Partners' share of net income:
Limited Partners - 99% $ 1,946 $ 24,439
General Partner - 1% 20 247
-------------------------------
Total $ 1,966 $ 24,686
===============================
Net income per weighted average Limited Partnership
Unit (33,727 units) $ 0.06 $ 0.72
===============================
Cash distributions $ 75,660 $ 160,317
===============================
Cash distribution per weighted average
Limited Partnership Unit $ 2.22 $ 4.71
===============================
Special cash distributions $ 100,000 $ 100,000
===============================
Special cash distributions per weighted average
Limited Partnership Unit $ 2.94 $ 2.94
===============================
Total cash distributions per
Limited Partnership Unit $ 5.16 $ 7.65
===============================
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS VIIC INCOME FUND
(A Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the period from December 31, 1995 to March 31,
1997
<TABLE>
<CAPTION>
Limited General
Partners Partner Total
----------------------------------------------------------------
<S> <C> <C> <C>
Partners' capital (deficit)
at December 31, 1995 $ 1,758,377 $ (132,241 ) $ 1,626,136
Net income 594,935 6,009 600,944
Quarterly cash distributions (647,812 ) (6,544 ) (654,356 )
Special distributions (792,000 ) (8,000 ) (800,000 )
----------------------------------------------------------------
Partners' capital (deficit)
at December 31, 1996 913,500 (140,776 ) 772,724
Net income 1,946 20 1,966
Quarterly cash distributions (74,903 ) (757 ) (75,660 )
Special distributions (99,000 ) (1,000 ) (100,000 )
----------------------------------------------------------------
Partners' capital (deficit)
at March 31, 1997 $ 741,543 $ (142,513 ) $ 599,030
================================================================
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS VIIC 1985 INCOME FUND
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the three months
ended March 31,
1997 1996
--------------------------------------
<S> <C> <C>
Operating activities:
Net income $ 1,966 $ 24,686
Adjustment to reconcile net income
to net cash provided by operating activities:
Gain on disposition of equipment (40,958 ) (34,445 )
Depreciation 55,082 66,504
Equity in net income from unconsolidated special purpose
entities (12,956 ) (36,977 )
Changes in operating assets and liabilities
Accounts receivable, net 11,215 49,513
Prepaid insurance 1,006 2,042
Accounts payable and accrued expenses (3,010 ) (2,972 )
-------------------------------------
Net cash provided by operating activities 12,345 68,351
-------------------------------------
Investing activities:
Proceeds from disposition of equipment 51,023 61,147
Distributions from unconsolidated special purpose entities 39,706 92,536
-------------------------------------
Net cash provided by investing activities 90,729 153,683
-------------------------------------
Financing activities:
Cash distributions paid to Limited Partners (173,903 ) (257,714 )
Cash distributions paid to General Partner (1,757 ) (2,603 )
-------------------------------------
Net cash used in financing activities (175,660 ) (260,317 )
-------------------------------------
Net decrease in cash and cash equivalents (72,586 ) (38,283 )
Cash and cash equivalents at beginning of period 416,360 551,094
-------------------------------------
Cash and cash equivalents at end of period $ 343,774 $ 512,811
=====================================
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS VIIC 1985 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
March 31, 1997
1. Opinion of Management
In the opinion of the management of PLM Financial Services Inc., the
General Partner, the accompanying unaudited financial statements contain
all adjustments necessary, consisting primarily of normal recurring
accruals, to present fairly the Partnership's financial position as of
March 31, 1997 and December 31, 1996, the statements of income and cash
flows for the three months ended March 31, 1997 and 1996, and the
statements of changes in partners' capital for the period from December 31,
1995 to March 31, 1997. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted
from the accompanying financial statements. For further information,
reference should be made to the financial statements and notes thereto
included in the Partnership's Annual Report on Form 10-K for the year ended
December 31, 1996, on file at the Securities and Exchange Commission.
2. Reclassifications
Certain amounts in the 1996 financial statements have been reclassified to
conform to the 1997 presentation.
3. Equipment
The components of owned equipment are as follows:
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
-----------------------------------------
Equipment held for operating leases:
<S> <C> <C>
Trailers $ 3,632,382 $ 3,870,247
Marine containers 199,724 199,724
----------------------------------------
3,832,106 4,069,971
Less accumulated depreciation (3,688,771 ) (3,861,489 )
========================================
Net equipment $ 143,335 $ 208,482
========================================
</TABLE>
All of the equipment owned by the Partnership was either on lease or operating
in PLM-affiliated short-term rental facilities at March 31, 1997 and
December 31, 1996.
During the three months ended March 31, 1997, the Partnership sold or disposed
of trailers with a net book value of $10,065 for proceeds of $51,023.
During the three months ended March 31, 1996, the Partnership sold or
disposed of marine containers and trailers with a net book value of $26,702
for proceeds of $61,147.
4. Liquidation and special distributions
During the first quarter of 1995, the Partnership completed its 10th year
of operations. As originally anticipated by the General Partner, the
Partnership is being liquidated in an orderly manner in its 11th and 12th
years of operation. The General Partner is actively marketing the remaining
equipment portfolio with the intent of maximizing sale proceeds. As sale
proceeds are received the General Partner intends to periodicially declare
special distributions to distribute the sale proceeds to
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS VIIC 1985 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
March 31, 1997
4. Liquidation and special distributions (continued)
the partners. During the liquidation phase of the Partnership the equipment
will continue to be leased under operating leases until sold. Operating
cash flows, to the extent they exceed Partnership expenses, will continue
to be distributed on a quarterly basis to partners. The amounts reflected
for assets and liabilities of the Partnership have not been adjusted to
reflect liquidation values. The equipment portfolio continues to be carried
at the lower of depreciated cost or fair value less cost to dispose.
Although the General Partner estimates that there will be distributions
after liquidation of assets and liabilities, the amounts cannot be
accurately determined prior to actual liquidation of the equipment. Any
excess proceeds over expected Partnership obligations will be distributed
to the Partners throughout the liquidation period. Upon final liquidation,
the Partnership will be dissolved.
During the three months ended March 31, 1997, and 1996, the General Partner
paid special distributions of $2.94 per Limited Partnership Unit out of
proceeds from equipment liquidations. During the liquidation phase, 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 partners in the form of special
distributions. The sales and liquidations occur because of equipment
destructions, the determination by the General Partner that it is the
appropriate time to maximize the return on an asset through sale of that
asset, and, in some leases, the ability of the lessee to exercise purchase
options.
5. Investments in Unconsolidated Special Purpose Entites
The net investments in unconsolidated special purpose entity includes 80%
interests in a commuter aircraft at March 31, 1997.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(I) Results of Operations
Comparison of the Partnerships' Operating Results for the Three Months
Ended March 31, 1997 and 1996
TEP VIIB:
(A) Owned equipment operations
Lease revenues less direct expenses (defined as repairs and maintenance and
asset specific insurance expenses) on owned equipment decreased for the quarter
ended March 31, 1997 when compared to the same period of 1996. The following
table presents lease revenues less direct expenses by owned equipment type:
<TABLE>
<CAPTION>
For the three months
ended March 31,
1997 1996
---------------------------------
<S> <C> <C>
Trailers $ 76,569 $ 70,526
Railcar equipment 3,565 7,455
Marine containers 1,343 5,236
</TABLE>
Trailers: Trailer lease revenues and direct expenses were $93,461 and $16,892,
respectively, for the quarter ended March 31, 1997, compared to $93,308 and
$22,782, respectively, during the same period of 1996. The increase in
contribution was due to lower repair and maintenance expense for the three
months ended March 31, 1997 when compared to the same period of 1996;
Railcar equipment: Railcar lease revenues and direct expenses were $3,661 and
$96, respectively, for quarter ended March 31, 1997, compared to $7,500 and $45,
respectively, during the same period of 1996. The decrease in railcar
contribution resulted from the sale of all railcars during the first quarter of
1997;
Marine containers: Marine container lease revenues and direct expenses were
$1,361 and $18, respectively, for the quarter ended March 31, 1997, compared to
$5,266 and $30, respectively, during the same period of 1996. The number of
marine containers owned by the Partnership has been declining over the past
twelve months due to sales and dispositions. The result of this declining fleet
has been a decrease in marine container contribution.
(B) Indirect expenses related to owned equipment operations
Total indirect expenses of $69,175 for the quarter ended March 31, 1997,
decreased from $122,397 for the same period in 1996. The variances are explained
as follows:
(a) a $31,259 decrease in depreciation expenses reflecting the sale of equipment
during the first quarter of 1997 and during 1996;
(b) a $17,927 decrease in bad debt expense was due to the General Partner's
evaluation of the collectibility of trade receivables;
(c) a $5,513 decrease in general and administrative expenses was due to
decreased accounting costs and administrative costs associated with the
short-term rental facilities.
(C) For the quarter ended March 31, 1997, the Partnership realized a gain of
$114,482 on the sale or disposition of marine containers, railcars and trailers,
compared to the same period in 1996 when the Partnership realized a gain of
$19,330 on the sale or disposition of trailers and marine containers.
(D) Equity in net income of the unconsolidated special purpose entity
Equity in net income of unconsolidated special purpose entity was $9,331 for the
quarter ended March 31, 1996, and represents the Partnership's share of income
generated from the partnership investment in an entity which owns an aircraft,
accounted for under the equity method. This investment was sold in the third
quarter of 1996.
(E) Net income (loss)
The Partnership's net income of $130,312 in the first quarter of 1997 compared
to a net loss of $7,066 in the first quarter of 1996. The Partnership's ability
to operate or liquidate assets, secure leases, and re-lease those assets whose
leases expire during the duration of the Partnership is subject to many factors,
and the Partnership's performance in the first quarter of 1997 is not
necessarily indicative of future periods. In the first quarter of 1997, the
Partnership distributed $96,200 to the Limited Partners, or $4.32 per weighted
average Limited Partnership Unit.
TEP VIIC:
(A) Owned equipment operations
Lease revenues less direct expenses (defined as repairs and maintenance and
asset specific insurance expenses) on owned equipment decreased for the quarter
ended March 31, 1997 when compared to the same period of 1996. The following
table presents lease revenues less direct expenses by owned equipment type:
<TABLE>
<CAPTION>
For the three months
ended March 31,
1997 1996
---------------------------------
<S> <C> <C>
Trailers $ 55,187 $ 83,140
Marine containers 1,298 1,237
</TABLE>
Trailers: Trailer lease revenues and direct expenses were $70,855 and $15,668,
respectively, for the quarter ended March 31, 1997, compared to $107,892 and
$24,752, respectively during the same period during 1996. The decrease in
contribution was due to lower utilization of trailers and the disposition of
equipment during the first quarter of 1997 and during 1996;
Marine containers: Marine container lease revenues and direct expenses were
$1,340 and $42, respectively, for the quarter ended March 31, 1997, compared to
$1,300 and $63, respectively during the same period during 1996.
(B) Indirect expenses related to owned equipment operations
Total indirect expenses of $112,751 for the quarter ended March 31, 1997,
decreased from $137,576 for the same period in 1996. The variances are explained
as follows:
(a) a $16,349 decrease in the general and administrative expenses due to
decreased accounting costs and administrative costs associated with the
short-term rental facilities due to decreased volume of trailers operating in
these facilities;
(b) a $11,422 decrease in depreciation expenses reflecting the sale of certain
assets during the first quarter of 1997 and during 1996;
(c) a $5,781 increase in management fees due to higher levels of operating cash
flow during the comparable periods. Monthly management fees are calculated as
the greater of 10% of the Partnership's Operating Cash Flow, or 1/12 of 1/2% of
the Partnership's Capital Contributions as defined in the Limited Partnership
Agreement.
(C) For the quarter ended March 31, 1997, the Partnership realized a gain of
$40,958 on the sale or disposition of trailers, compared to the same period in
1996, when the Partnership realized a gain of $34,445 on the sale or disposition
of trailers and marine containers.
(D) Equity in net income of unconsolidated special purpose entities
Equity in net income of unconsolidated special purpose entities of $12,956 and
$36,977 for the quarter ended March 31, 1997 and March 31, 1996, respectively,
represents the Partnership's share of income generated from the partnership's
investment in entities which own aircraft, accounted for under the equity
method. The Partnership liquidated its 69% investment in an aircraft as a result
of the General Partner's sale of the asset during 1996. As of March 31, 1997,
the Partnership's remaining investment in unconsolidated purpose entity was the
80% interest in a commuter aircraft.
(E) Net income
The Partnership's net income decreased to $1,966 in the first quarter of
1997. from $24,686 in the first quarter of 1996. The Partnership's ability to
operate or liquidate assets, secure leases, and re-lease those assets whose
leases expire during the duration of the Partnership is subject to many factors,
and the Partnership's performance in the first quarter of 1997 is not
necessarily indicative of future periods. In the first quarter of 1997, the
Partnership distributed $173,903 to the Limited Partners, or $5.16 per weighted
average Limited Partnership Unit which included a special distribution of $2.94
per weighted average Limited Partnership Unit.
(II) Asset Sales
The General Partner is actively marketing the remaining equipment portfolio with
the intent of maximizing sale proceeds.
As discussed in note 4, the Partnerships have entered the portfolio liquidation
phase as of the third quarter of 1995. During the three months ended March 31,
1997, TEP VIIB sold or disposed of railcars, trailers and marine containers for
$174,706, and TEP VIIC sold or disposed of trailers and for $51,023.
(III) Market Values
As of March 31, 1997, the General Partner estimated the fair market value of
each Partnerships' equipment portfolio to be approximately: $0.7 million and
$1.6 million for TEP VIIB and TEP VIIC respectively.
(IV) Future outlook
Pursuant to the original operating plan, the Partnerships entered into their
liquidation phase during 1995 and the General Partner is actively pursuing the
sale of all of the Partnerships' equipment with the intention of winding up the
Partnerships and distributing all available cash to the Partners.
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None.
(b) Reports on Form 8-K
None.
<PAGE>
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PLM TRANSPORTATION EQUIPMENT
PARTNERS VIIB 1985 INCOME FUND
By: PLM Financial Services, Inc.
General Partner
Date: May 9, 1997 By: /s/ David J. Davis
------------------
David J. Davis
Vice President and
Corporate Controller
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 404,900
<SECURITIES> 0
<RECEIVABLES> 123,890
<ALLOWANCES> 4,975
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 2,993,030
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0
0
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</TABLE>
