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 June 30, 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 0-14599
PLM TRANSPORTATION EQUIPMENT PARTNERS VIIC 1985
INCOME FUND (Exact name of registrant as specified
in its charter)
California 94-2946248
(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
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
----------------------------------------
Assets:
<S> <C> <C>
Equipment held for operating lease, at cost $ 2,251,186 $ 3,550,990
Less accumulated depreciation (2,237,991 ) (3,427,418)
---------------------------------------
Net equipment 13,195 123,572
Cash and cash equivalents 293,238 269,628
Accounts receivable, net of allowance for doubtful accounts of
$5,102 in 1997 and $5,082 in 1996 134,090 127,105
Prepaid insurance 1,044 2,714
---------------------------------------
Total assets $ 441,567 $ 523,019
=======================================
Liabilities and partners' capital:
Liabilities:
Accounts payable and accrued expenses $ 36,752 $ 32,221
Due to affiliate 4,641 4,641
Lessee deposits and engine reserves 9,500 615
---------------------------------------
Total liabilities 50,893 37,477
---------------------------------------
Partners' capital (deficit):
Limited partners (22,276 units) 484,817 578,736
General Partner (94,143 ) (93,194 )
---------------------------------------
Total partners' capital 390,674 485,542
---------------------------------------
Total liabilities and partners' capital $ 441,567 $ 523,019
=======================================
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS VIIB 1985 INCOME FUND
(A Limited Partnership)
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended June 30, Ended June 30,
1997 1996 1997 1996
----------------------------------------------------------------
Revenues:
<S> <C> <C> <C> <C>
Lease revenue $ 84,522 $ 88,840 $ 183,005 $ 194,914
Interest income 4,101 2,635 7,629 6,088
Net gain on disposition of equipment 111,226 10,304 225,708 29,634
----------------------------------------------------------------
Total revenues 199,849 101,779 416,342 230,636
----------------------------------------------------------------
Expenses:
Depreciation 14,551 53,112 38,061 107,881
Repairs and maintenance 28,739 22,939 44,989 45,201
Management fees to affiliate 13,922 13,922 27,845 25,436
Provision for (recovery of ) bad debt 6,336 (24,677 ) 6,230 (6,856 )
General and administrative
expenses to affiliates 18,896 21,889 35,379 48,436
Other general and administrative expenses 20,402 14,641 36,525 26,983
----------------------------------------------------------------
Total expenses 102,846 101,826 189,029 247,081
----------------------------------------------------------------
Equity in net income of unconsolidated
special-purpose entity -- 10,045 -- 19,376
----------------------------------------------------------------
Net income $ 97,003 $ 9,998 $ 227,313 $ 2,931
================================================================
Partners' share of net income:
Limited partners - 99% $ 96,033 $ 9,898 $ 225,040 $ 2,902
General Partner - 1% 970 100 2,273 29
----------------------------------------------------------------
Total $ 97,003 $ 9,998 $ 227,313 $ 2,931
================================================================
Net income per weighted-average limited
partnership unit (22,276 units) $ 4.31 $ 0.44 $ 10.10 $ 0.13
================================================================
Cash distributions $ -- $ 99,046 $ 97,172 $ 198,092
================================================================
Cash distribution per weighted-average
limited partnership unit $ -- $ 4.40 $ 4.32 $ 8.80
================================================================
Special cash distributions $ 225,009 $ 100,000 $ 225,009 $ 100,000
================================================================
Special cash distributions per weighted-average
limited partnership unit $ 10.00 $ 4.44 $ 10.00 $ 4.44
================================================================
Total cash distributions per weighted-average
limited partnership unit $ 10.00 $ 8.84 $ 14.32 $ 13.24
================================================================
</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 June 30,
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
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 225,040 2,273 227,313
Cash distributions (96,200 ) (972 ) (97,172 )
Special distributions (222,759 ) (2,250 ) (225,009 )
--------------------------------------------------------------
Partners' capital (deficit) at June 30, 1997 $ 484,817 $ (94,143 ) $ 390,674
==============================================================
</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 Six Months
ended June 30,
1997 1996
-------------------------------------
<S> <C> <C>
Operating activities:
Net income $ 227,313 $ 2,931
Adjustments to reconcile net income
to net cash provided by operating activities:
Net gain on disposition of equipment (225,708 ) (29,634 )
Depreciation 38,061 107,881
Equity in net income from unconsolidated special-purpose
entity -- (19,376 )
Changes in operating assets and liabilities:
Accounts receivable, net (6,985 ) 28,801
Prepaid insurance 1,670 2,010
Accounts payable and accrued expenses 4,531 (2,768 )
Lessee deposits and engine reserves 8,885 (260 )
-------------------------------------
Net cash provided by operating activities 47,767 89,585
-------------------------------------
Investing activities:
Distributions from unconsolidated special-purpose entity -- 51,539
Proceeds from disposition of equipment 298,024 48,577
-------------------------------------
Net cash provided by investing activities 298,024 100,116
-------------------------------------
Financing activities:
Cash distributions paid to limited partners (318,959 ) (295,111 )
Cash distributions paid to General Partner (3,222 ) (2,981 )
-------------------------------------
Net cash used in financing activities (322,181 ) (298,092 )
-------------------------------------
Net increase (decrease) in cash and cash equivalents 23,610 (108,391 )
Cash and cash equivalents at beginning of period 269,628 293,808
-------------------------------------
Cash and cash equivalents at end of period $ 293,238 $ 185,417
=====================================
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS VIIB 1985 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
June 30, 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 financial position of PLM Transportation
Equipment Partners VIIB 1985 Income Fund (the Partnership) as of June 30,
1997 and December 31, 1996, the statements of income for the three and six
months ended June 30, 1997 and 1996, the statements of changes in partners'
capital for the period from December 31, 1995 to June 30, 1997, and the
statements of cash flows for the six months ended June 30, 1997 and 1996.
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>
June 30, December 31,
1997 1996
--------------------------------------
<S> <C> <C>
Equipment held for operating lease:
Trailers $ 2,175,130 $ 3,146,140
Marine containers 76,056 86,201
Rail equipment -- 318,649
--------------------------------------
2,251,186 3,550,990
Less accumulated depreciation (2,237,991 ) (3,427,418 )
--------------------------------------
Net equipment $ 13,195 $ 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 June 30, 1997 and
December 31, 1996.
During the six months ended June 30, 1997, the Partnership sold or disposed of
railcars, trailers and marine containers with an aggregate net book value
of $72,316 for proceeds of $298,024. During the six months ended June 30,
1996, the Partnership sold or disposed of trailers and marine containers
with an aggregate net book value of $18,943 for aggregate proceeds of
$48,577.
4. Liquidation and Special Distributions
The Partnership is in its liquidation phase. 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
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS VIIB 1985 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
June 30, 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 the partners. The
amounts reflected for assets and liabilities of Partership 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 six months ended June 30, 1997 and 1996, the General Partner
paid special distributions of $10.00 and $4.44, respectively, per
weighted-average limited partnership unit which were the result of proceeds
from the sale of equipment. 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 the sale of that asset, and, in
some leases, the ability of the lessee to exercise purchase options.
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS VIIC 1985 INCOME FUND
(A Limited Partnership)
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
---------------------------------------
Assets:
<S> <C> <C>
Equipment held for operating lease, at cost $ 2,327,317 $ 4,069,971
Less accumulated depreciation (2,272,778 ) (3,861,489 )
---------------------------------------
Net equipment 54,539 208,482
Cash and cash equivalents 476,043 416,360
Investments in unconsolidated special-purpose entity 45,984 99,974
Accounts receivable, net of allowance for doubtful accounts of
$4,945 in 1997 and $633 in 1996 45,343 64,261
Prepaid insurance 1,346 3,713
---------------------------------------
Total assets $ 623,255 $ 792,790
=======================================
Liabilities and partners' capital:
Liabilities:
Accounts payable and accrued expenses $ 8,717 $ 13,040
Due to affiliate 7,026 7,026
---------------------------------------
Total liabilities 15,743 20,066
---------------------------------------
Partners' capital (deficit):
Limited partners (33,727 units) 749,940 913,500
General Partner (142,428 ) (140,776 )
---------------------------------------
Total partners' capital 607,512 772,724
---------------------------------------
Total liabilities and partners' capital $ 623,255 $ 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 For the six months
ended June 30, ended June 30,
1997 1996 1997 1996
-------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues:
Lease revenue $ 54,668 $ 110,557 $ 126,863 219,749
Interest income 4,846 4,359 9,164 10,822
Net gain on disposition of equipment 211,449 20,189 252,407 54,634
-------------------------------------------------------------
Total revenues 270,963 135,105 388,434 285,205
-------------------------------------------------------------
Expenses:
Depreciation 35,994 62,867 91,076 129,371
Repairs and maintenance 14,160 23,225 28,986 46,936
Management fees to affiliate 21,079 22,525 42,159 37,823
General and administrative
expenses to affiliates 14,743 29,951 38,049 67,082
Other general and administrative expenses 18,322 17,069 32,492 36,816
-------------------------------------------------------------
Total expenses 104,298 155,637 232,762 318,028
-------------------------------------------------------------
Equity in net income of unconsolidated
special-purpose entities 12,154 33,867 25,110 70,844
-------------------------------------------------------------
Net income $ 178,819 $ 13,335 $ 180,782 38,021
=============================================================
Partners' share of net income:
Limited partners - 99% $ 177,031 $ 13,202 $ 178,974 37,641
General Partner - 1% 1,788 133 1,808 380
=============================================================
Total $ 178,819 $ 13,335 $ 180,782 38,021
=============================================================
Net income per weighted-average limited
partnership unit (33,727 units) $ 5.25 $ 0.39 $ 5.31 1.12
=============================================================
Cash distributions $ -- $ 159,314 $ 75,660 319,631
=============================================================
Cash distribution per weighted-average
limited partnership unit $ -- $ 4.68 $ 2.22 9.38
=============================================================
Special cash distributions $ 170,334 $ 250,000 $ 270,334 350,000
=============================================================
Special cash distributions per weighted-average
limited partnership unit $ 5.00 $ 7.34 $ 7.94 10.27
=============================================================
Total cash distributions per weighted-average
limited partnership units $ 5.00 $ 12.02 $ 10.16 19.65
=============================================================
</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 June 30,
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
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 178,974 1,808 180,782
Cash distributions (74,903 ) (757 ) (75,660 )
Special distributions (267,631 ) (2,703 ) (270,334 )
----------------------------------------------------------------
Partners' capital (deficit) at June 30, 1997 $ 749,940 $ (142,428 ) $ 607,512
================================================================
</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 Six Months
Ended June 30,
1997 1996
--------------------------------------
Operating activities:
<S> <C> <C>
Net income $ 180,782 $ 38,021
Adjustments to reconcile net income
to net cash provided by operating activities:
Net gain on disposition of equipment (252,407 ) (54,634 )
Depreciation 91,076 129,371
Equity in net income from unconsolidated special-purpose
entities (25,110 ) (70,844 )
Changes in operating assets and liabilities:
Accounts receivable, net 18,918 55,484
Prepaid insurance 2,367 3,925
Accounts payable and accrued expenses (4,323 ) (6,105 )
-------------------------------------
Net cash provided by operating activities 11,303 95,218
-------------------------------------
Investing activities:
Payment for capitalized repairs (1,435 ) --
Distributions from unconsolidated special-purpose entities 79,100 184,540
Proceeds from disposition of equipment 316,709 101,238
-------------------------------------
Net cash provided by investing activities 394,374 285,778
-------------------------------------
Financing activities:
Cash distributions paid to limited partners (342,534 ) (662,935 )
Cash distributions paid to General Partner (3,460 ) (6,696 )
-------------------------------------
Net cash used in financing activities (345,994 ) (669,631 )
-------------------------------------
Net increase (decrease) in cash and cash equivalents 59,683 (288,635 )
Cash and cash equivalents at beginning of period 416,360 551,094
-------------------------------------
Cash and cash equivalents at end of period $ 476,043 $ 262,459
=====================================
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS VIIC 1985 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
June 30, 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 financial position of PLM Transportation
Equipment Partners VIIC 1985 Income Fund (the Partnership) as of June 30,
1997 and December 31, 1996, the statements of income for the three and six
months ended June 30, 1997 and 1996, the statements of changes in partners'
capital for the period from December 31, 1995 to June 30, 1997, and the
statements of cash flows for the six months ended June 30, 1997 and 1996.
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>
June 30, December 31,
1997 1996
---------------------------------------
Equipment held for operating lease:
<S> <C> <C>
Trailers $ 2,176,082 $ 3,870,247
Marine containers 151,235 199,724
---------------------------------------
2,327,317 4,069,971
Less accumulated depreciation (2,272,778 ) (3,861,489 )
=======================================
Net equipment $ 54,539 $ 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 June 30, 1997 and
December 31, 1996.
During the six months ended June 30, 1997, the Partnership sold or disposed of
marine containers and trailers with a net book value of $64,302 for
proceeds of $316,709. During the six months ended June 30, 1996, the
Partnership sold or disposed of marine containers and trailers with a net
book value of $46,604 for proceeds of $101,238.
4. Liquidation and Special Distributions
The Partnership is in its liquidation phase. 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
<PAGE>
PLM TRANSPORTATION EQUIPMENT PARTNERS VIIC 1985 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
June 30, 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 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 throughout the liquidation period. Upon
final liquidation, the Partnership will be dissolved.
During the six months ended June 30, 1997, and 1996, the General Partner
paid special distributions of $7.94 and $10.27, respectively, per
weighted-average limited partnership unit which were the result of proceeds
from the sale of equipment. 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 Entity
The net investment in an unconsolidated special-purpose entity included a
80% interest in a commuter aircraft at June 30, 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 June 30, 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 June 30, 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 June 30,
1997 1996
---------------------------------
<S> <C> <C>
Trailers $ 52,697 $ 55,587
Marine containers 2,372 2,540
Railcar equipment 30 7,181
</TABLE>
Trailers: Trailer lease revenues and direct expenses were $82,045 and $29,348,
respectively, for the quarter ended June 30, 1997, compared to $78,770 and
$23,183, respectively, during the same period of 1996. The decrease in
contribution was due to higher repairs and maintenance expense for the three
months ended June 30, 1997 when compared to the same period of 1996.
Marine containers: Marine container lease revenues and direct expenses were
$2,388 and $16, respectively, for the quarter ended June 30, 1997, compared to
$2,570 and $30, respectively, during the same period of 1996. The number of
marine containers owned by the Partnership declined over the past twelve months
due to sales and dispositions. In addition, the marine container fleet
experienced lower utilization, resulting in a decrease in marine container
contribution.
Railcar equipment: Railcar lease revenues and direct expenses were $89 and $59,
respectively, for quarter ended June 30, 1997, compared to $7,500 and $319,
respectively, during the same period of 1996. The decrease in railcar
contribution resulted from the sale of all the Partnership's railcars during the
first quarter of 1997.
(B) Indirect Expenses Related to Owned Equipment Operations
Total indirect expenses of $73,423 for the quarter ended June 30, 1997,
decreased from $78,294 for the same period in 1996. The variances are explained
as follows:
(1) a $38,561 decrease in depreciation expense reflecting the sale of equipment
during 1997 and 1996.
(2) a $31,013 increase in bad debt expense was due to the General Partner's
evaluation of the collectibility of trade receivables.
(3) a $2,677 increase in general and administrative expenses was due to
increased license fee due to renewal of trailers licenses, partially offset by
decreased administrative costs associated with the short-term rental facilities.
<PAGE>
(C) Net Gain on Disposition of Owned Equipment
For the quarter ended June 30, 1997, the Partnership realized a gain of $111,226
on the sale or disposition of marine containers and trailers, compared to the
same period in 1996 when the Partnership realized a gain of $10,304 on the sale
or disposition of trailers and a marine container.
(D) Equity in Net Income of Unconsolidated Special-Purpose Entity
Equity in the net income of the unconsolidated special-purpose entity was
$10,045 for the quarter ended June 30, 1996, and represents the Partnership's
share of income generated from the partnership's investment in an entity which
owned an aircraft, accounted for under the equity method. This investment was
sold in the third quarter of 1996.
(E) Net Income
The Partnership's net income of $97,003 in the second quarter of 1997 increased
from $9,998 in the second 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 second quarter of 1997 is not necessarily
indicative of future periods. In the second quarter of 1997, the Partnership
made a special distribution of $222,759 to the limited partners, or $10.00 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 June 30, 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 June 30,
1997 1996
---------------------------------
<S> <C> <C>
Trailers $ 37,189 $ 84,541
Marine containers 2,508 1,876
</TABLE>
Trailers: Trailer lease revenues and direct expenses were $52,122 and $14,933,
respectively, for the quarter ended June 30, 1997, compared to $108,630 and
$24,089, respectively during the same period during 1996. The decrease in
contribution was due to lower utilization of trailers and the disposition of
equipment during 1997 and 1996.
Marine containers: Marine container lease revenues and direct expenses were
$2,546 and $38, respectively, for the quarter ended June 30, 1997, compared to
$1,927 and $51, respectively during the same period during 1996.
(B) Indirect Expenses Related to Owned Equipment Operations
Total indirect expenses of $89,327 for the quarter ended June 30, 1997,
decreased from $131,497 for the same period in 1996. The variances are explained
as follows:
(1) a $26,873 decrease in depreciation expenses reflecting the sale of equipment
during 1997 and 1996.
(2) a $14,639 decrease in the general and administrative expenses due to
decreased administrative costs associated with the short-term rental facilities
due to sale of equipment.
(C) Net Gain on Disposition of Owned Equipment
For the quarter ended June 30, 1997, the Partnership realized a gain of $211,449
on the sale or disposition of trailers and marine containers, compared to the
same period in 1996, when the Partnership realized a gain of $20,189 on the sale
or disposition of trailers.
(D) Equity in Net Income of Unconsolidated Special-Purpose Entities
Equity in net income of unconsolidated special-purpose entities of $12,154 and
$33,867 for the quarter ended June 30, 1997 and June 30, 1996, respectively,
represents the Partnership's share of income generated from the partnership
investment in entities which own aircraft, accounted for under the equity
method. The decrease is due to the Partnership liquidating its 69% investment in
an aircraft as a result of the General Partner's sale of the asset during 1996.
(E) Net Income
The Partnership's net income increased to $178,819 in the second quarter of
1997, from $13,335 in the second 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 second quarter of 1997 is not
necessarily indicative of future periods. In the second quarter of 1997, the
Partnership made a special distribution of $168,631 to the limited partners, or
$5.00 per weighted-average limited partnership unit.
Comparison of the Partnerships' Operating Results for the Six Months Ended June
30, 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 during the first
six months of 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 six months
ended June 30,
1997 1996
---------------------------------
<S> <C> <C>
Trailers $ 129,266 $ 126,112
Marine containers 3,716 7,777
Railcar equipment 3,595 14,636
</TABLE>
Trailers: Trailer lease revenues and direct expenses were $175,505 and $46,239,
respectively, for the six months ended June 30, 1997, compared to $172,077 and
$45,965, respectively, during the same period of 1996. The increase of net
contribution was due to higher lease rates of trailers in the short-term rental
facilities in the first six months of 1997 when compared to the same period of
1996. The increase was partially offset by the disposition of trailers and lower
utilization.
Marine containers: Marine container lease revenues and direct expenses were
$3,750 and $34, respectively, for the six months ended 1997, compared to $7,837
and $60, respectively, during the same period of 1996. The number of marine
containers owned by the Partnership declined over the past twelve months due to
sales and dispositions. In addition, the marine container fleet experienced
lower utilization, resulting in a decrease in marine container contribution.
Railcar equipment: Railcar lease revenues and direct expenses were $3,750 and
$155, respectively, for the six months ended June 30, 1997, compared to $15,000
and $364, respectively, during the same period of 1996. The decrease in railcar
contribution resulted from the sale of all the Partnership's railcars during the
first quarter of 1997.
(B) Indirect Expenses Related to Owned Equipment Operations
Total indirect expenses of $142,601 for the six months ended June 30, 1997,
decreased from $200,692 for the same period in 1996. The variances are explained
as follows:
(1) a $69,820 decrease in depreciation expense from 1996 levels reflecting the
sale of equipment during 1997 and 1996.
(2) a decrease of general and administrative expenses of $3,766 from 1996 levels
was due to decreased administrative costs associated with the short-term rental
facilities, partially offset by increased license fee due to renewal of trailers
licenses.
(3) an increase of bad debt expense of $13,086 was due to the General Partner's
evaluation of the collectibility of trade receivables.
(C) Net Gain on Disposition of Owned Equipment
For the six months ended June 30, 1997, the Partnership realized a gain of
$225,708 on the sale or disposition of railcars, marine containers and trailers,
compared to the same period in 1996 where the Partnership realized a gain of
$29,634 on the sale or disposition of marine containers and trailers.
(D) Equity in Net Income of Unconsolidated Special-Purpose Entity
Equity in the net income of the unconsolidated special-purpose entity was
$19,376 for the six months ended June 30, 1996, and represents the Partnership's
share of income generated from the partnership's investment in an entity which
owned an aircraft, accounted for under the equity method. This investment was
sold in the third quarter of 1996.
(E) Net Income
The Partnership's net income of $227,313 in the six months ended June 30, 1997,
increased from $2,931 in the first six months 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 six months of 1997 is not
necessarily indicative of future periods. For the six months ended June 30,
1997, the Partnership distributed $318,959 to the limited partners, or $14.32
per weighted-average limited partnership unit which included a special
distribution of $10.00 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 during the first
six months of 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 six months
ended June 30,
1997 1996
---------------------------------
<S> <C> <C>
Trailers $ 92,375 $ 167,681
Marine containers 3,806 3,114
</TABLE>
Trailers: Trailer lease revenues and direct expenses were $122,977 and $30,602,
respectively, for the six months ended 1997, compared to $216,522 and $48,841,
respectively during the same quarter of 1996. The decrease in net contribution
was due to lower utilization of trailers in the short-term rental facilities in
the first six months of 1997 when compared to the same period of 1996, and the
disposition of trailers.
Marine containers: Marine container lease revenues and direct expenses were
$3,886 and $80, respectively, for the six months ended 1997, compared to $3,227
and $113, respectively during the same period of 1996.
(B) Indirect Expenses Related to Owned Equipment Operations
Total indirect expenses of $202,080 for the six months ended June 30, 1997,
decreased from $269,073 for the same period in 1996. The variances are explained
as follows:
(1) a $38,295 decrease in depreciation and amortization expenses from 1996
levels reflecting the sale of equipment during 1997 and 1996.
(2) a $33,395 decrease in the general and administrative expenses from 1996
levels was due to decreased administrative costs associated with the short-term
rental facilities.
(3) a $4,336 increase in management fee 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) Net Gain on Disposition of Owned Equipment
For the six months ended June 30, 1997, the Partnership realized a gain of
$252,407 on the sale or disposition of trailers and marine containers, compared
to the same period in 1996, where the Partnership realized a gain of $54,634 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 $25,110 and
$70,844 for the six months ended June 30, 1997 and June 30, 1996, respectively,
represents the Partnership's share of income generated from the partnership
investment in entities which own aircraft, accounted for under the equity
method. The decrease is due to the Partnership liquidating its 69% investment in
an aircraft as a result of the General Partner's sale of the asset during 1996.
(E) Net Income
The Partnership's net income increased to $180,782 for the six months ended June
30, 1997, from $38,021 in the same period in 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 six months ended June 30, 1997 is not
necessarily indicative of future periods. For the six months ended June 30,
1997, the Partnership distributed $342,534 to the limited partners, or $10.16
per weighted-average limited partnership unit which included a special
distribution of $7.94 per weighted-average limited partnership unit.
<PAGE>
(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
entered the liquidation phase in 1995. During the six months ended June 30,
1997, TEP VIIB sold or disposed of railcars, trailers and marine containers for
$298,024, and TEP VIIC sold or disposed of trailers and marine containers for
$316,709.
(III) MARKET VALUES
As of June 30, 1997, the General Partner estimated the fair market value of each
Partnerships' equipment portfolio to be approximately: $0.5 million and $1.2
million for TEP VIIB and TEP VIIC respectively.
(IV) OUTLOOK FOR THE FUTURE
Pursuant to the original operating plan, the Partnerships entered into their
liquidation phase in 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.
(V) FORWARD LOOKING INFORMATION
Except for historical information contained herein, the discussion in 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.
<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 VIIC 1985 INCOME FUND
By: PLM Financial Services, Inc.
General Partner
Date: August 7, 1997 By: /s/ Richard Brock
-----------------
Richard Brock
Vice President and
Corporate Controller
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 476,043
<SECURITIES> 0
<RECEIVABLES> 50,288
<ALLOWANCES> 4,945
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 2,327,317
<DEPRECIATION> 2,272,778
<TOTAL-ASSETS> 623,255
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 607,512
<TOTAL-LIABILITY-AND-EQUITY> 623,255
<SALES> 0
<TOTAL-REVENUES> 388,434
<CGS> 0
<TOTAL-COSTS> 232,762
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 180,782
<INCOME-TAX> 0
<INCOME-CONTINUING> 180,782
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 180,782
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
