================================================================================
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 quarterly period ended September 30, 1996
Commission file number 0-14460
INTEGRATED RESOURCES AMERICAN LEASING INVESTORS VII-B,
A California Limited Partnership
(Exact name of registrant as specified in its charter)
CALIFORNIA 13-3244533
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
411 West Putnam Avenue, Greenwich, CT 06830
(Address of principal executive offices)
(203) 862-7000
(Registrant's telephone number, including area code)
None
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check 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>
INTEGRATED RESOURCES
AMERICAN LEASING INVESTORS VII-B,
A CALIFORNIA LIMITED PARTNERSHIP
FORM 10-Q - SEPTEMBER 30, 1996
INDEX
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
BALANCE SHEETS - September 30, 1996 and December 31, 1995
STATEMENTS OF OPERATIONS - For the three months ended September 30, 1996
and 1995 and the nine months ended September 30, 1996 and 1995
STATEMENT OF PARTNERS' EQUITY - For the nine months ended
September 30, 1996
STATEMENTS OF CASH FLOWS - For the nine months ended
September 30, 1996 and 1995
NOTES TO FINANCIAL STATEMENTS
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
PART II - OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
INTEGRATED RESOURCES
AMERICAN LEASING INVESTORS VII-B,
A CALIFORNIA LIMITED PARTNERSHIP
BALANCE SHEETS
September 30, December 31,
1996 1995
----------- -----------
<S> <C> <C>
ASSETS
Cash and cash equivalents ........................ $ 3,024,136 $ 148,205
Leased equipment - net of accumulated depreciation
of $2,123,922 and $10,600,903 and allowance
for equipment impairment of $277,200
and $1,311,299 ................................ 346,555 4,840,261
Accounts receivable .............................. 148,442 333,172
Other receivables and prepaid expenses ........... 11,500 7,199
----------- -----------
$ 3,530,633 $ 5,328,837
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Liabilities
Distributions payable ............................ $ 2,970,956 $ --
Accounts payable and accrued expenses ............ 24,901 42,284
Due to affiliates ................................ 5,560 7,842
Deferred income .................................. -- 1,009,960
Notes payable .................................... -- 290,216
Accrued interest payable ......................... -- 9,682
----------- -----------
Total liabilities ............................. 3,001,417 1,359,984
----------- -----------
Commitments and contingencies
Partners' equity
Limited partners' equity (19,099 units issued
and outstanding) .............................. 618,428 4,023,669
General partners' deficit ........................ (89,212) (54,816)
----------- -----------
Total partners' equity ........................ 529,216 3,968,853
----------- -----------
$ 3,530,633 $ 5,328,837
=========== ===========
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
INTEGRATED RESOURCES
AMERICAN LEASING INVESTORS VII-B,
A CALIFORNIA LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
For the three months ended For the nine months ended
September 30, September 30,
----------------------------- -----------------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues
Rental ................................................. $ 71,313 $ 204,209 $ 696,860 $ 1,095,327
Other, principally interest ............................ 30,320 2,277 36,916 6,413
----------- ----------- ----------- -----------
101,633 206,486 733,776 1,101,740
----------- ----------- ----------- -----------
Costs and expenses
Depreciation ........................................... 99,249 114,648 570,268 679,607
General and administrative ............................. 14,227 19,859 61,793 63,539
Fees to affiliates ..................................... 3,934 3,322 16,502 21,144
Operating .............................................. 1,500 4,545 2,848 5,496
Provision for equipment impairment ..................... -- 100,000 397,000 100,000
Interest ............................................... -- 42,054 -- 162,012
----------- ----------- ----------- -----------
118,910 284,428 1,048,411 1,031,798
----------- ----------- ----------- -----------
(17,277) (77,942) (314,635) 69,942
Gain on disposition of equipment ............................ 58,713 -- 84,209 3,217
----------- ----------- ----------- -----------
Net income (loss) ........................................... $ 41,436 $ (77,942) $ (230,426) $ 73,159
=========== =========== =========== ===========
Net income (loss) attributable to
Limited partners ....................................... $ 41,022 $ (77,163) $ (228,122) $ 72,427
General partners ....................................... 414 (779) (2,304) 732
----------- ----------- ----------- -----------
$ 41,436 $ (77,942) $ (230,426) $ 73,159
=========== =========== =========== ===========
Net income (loss) per unit of limited partnership
interest (19,099 units outstanding) .................... $ 2.15 $ (4.04) $ (11.94) $ 3.79
=========== =========== =========== ===========
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
INTEGRATED RESOURCES
AMERICAN LEASING INVESTORS VII-B,
A CALIFORNIA LIMITED PARTNERSHIP
STATEMENT OF PARTNERS' EQUITY
Limited General Total
Partners' Partners' Partners'
Equity Deficit Equity
----------- ----------- -----------
<S> <C> <C> <C>
Balance, January 1, 1996 ...................................... $ 4,023,669 $ (54,816) $ 3,968,853
Net loss for the nine months
ended September 30, 1996 ................................. (228,122) (2,304) (230,426)
Distributions to partners for the nine
months ended September 30, 1996
($166.35 per limited partnership unit) ................... (3,177,119) (32,092) (3,209,211)
----------- ----------- -----------
Balance, September 30, 1996 ................................... $ 618,428 $ (89,212) $ 529,216
=========== =========== ===========
</TABLE>
See notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
INTEGRATED RESOURCES
AMERICAN LEASING INVESTORS VII-B,
A CALIFORNIA LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
For the nine months ended
September 30,
--------------------------
1996 1995
----------- -----------
<S> <C> <C>
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS
Cash flows from operating activities
Net (loss) income ........................................... $ (230,426) $ 73,159
Adjustments to reconcile net (loss) income to net
cash (used in) provided by operating activities
Depreciation ......................................... 570,268 679,607
Provision for equipment impairment ................... 397,000 100,000
Amortization of deferred income ...................... (1,009,960) --
Gain on disposition of equipment ..................... (84,209) (3,217)
Changes in assets and liabilities
Accounts receivable ...................................... 184,730 678,124
Other receivables and prepaid expenses ................... (4,301) (4,836)
Accounts payable and accrued expenses .................... (17,383) 3,284
Due to affiliates ........................................ (2,282) --
Accrued interest payable ................................. (9,682) (102,922)
----------- -----------
Net cash (used in) provided by operating activities (206,245) 1,423,199
----------- -----------
Cash flows from investing activities
Proceeds from disposition of equipment ...................... 3,610,647 30,353
Other non-operating payments ................................ -- (5,800)
----------- -----------
Net cash provided by investing activities ......... 3,610,647 24,553
----------- -----------
Cash flows from financing activities
Distributions to partners ................................... (238,255) --
Principal payments on notes payable ......................... (290,216) (1,428,773)
----------- -----------
Net cash used in financing activities ............. (528,471) (1,428,773)
----------- -----------
Net increase in cash and cash equivalents ........................ 2,875,931 18,979
Cash and cash equivalents, beginning of period ................... 148,205 148,460
----------- -----------
Cash and cash equivalents, end of period ......................... $ 3,024,136 $ 167,439
=========== ===========
Supplemental disclosure of cash flow information
Interest paid ............................................... $ 9,682 $ 264,934
=========== ===========
</TABLE>
See notes to financial statements.
<PAGE>
INTEGRATED RESOURCES
AMERICAN LEASING INVESTORS VII-B,
A CALIFORNIA LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
1 INTERIM FINANCIAL INFORMATION
The summarized financial information contained herein is unaudited;
however, in the opinion of management, all adjustments (consisting only
of normal recurring accruals) necessary for a fair presentation of such
financial information have been included. The accompanying financial
statements, footnotes and discussion should be read in conjunction with
the financial statements, related footnotes and discussions contained
in the Integrated Resources American Leasing Investors VII-B, a
California Limited Partnership (the "Partnership") annual report on
Form 10-K for the year ended December 31, 1995. The results of
operations for the nine months ended September 30, 1996, are not
necessarily indicative of the results to be expected for the full year.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Leased equipment
The cost of leased equipment represents the initial cost of the
equipment to the Partnership plus miscellaneous acquisition and closing
costs, and is carried at the lower of depreciated cost or net
realizable value.
Depreciation is computed using the straight-line method, over the
estimated useful lives of such assets (13 to 15 years for
transportation equipment).
When equipment is sold or otherwise disposed of, the cost and
accumulated depreciation (and any related allowance for equipment
impairment) are removed from the accounts and any gain or loss on such
sale or disposal is reflected in operations. Normal maintenance and
repairs are charged to operations as incurred. The Partnership provides
allowances for equipment impairment based upon a quarterly review of
all equipment in its portfolio, when management believes that, based
upon market analysis, appraisal reports and leases currently in place
with respect to specific equipment, the investment in such equipment
may not be recoverable.
3 CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES
The corporate general partner of the Partnership, ALI Capital Corp.
(the "Corporate General Partner"), the managing general partner of the
Partnership, ALI Equipment Management Corp. ("Equipment Management")
and Integrated Resources Equipment Group, Inc. ("IREG") are wholly
owned subsidiaries of Presidio Capital Corp. ("Presidio"). Z Square G
Partners II was the associate general partner of the Partnership
through February 27, 1995. On February 28, 1995, Presidio Boram Corp.,
a subsidiary of Presidio, became the associate general partner. Other
limited partnerships and similar investment programs have been formed
by Equipment Management or its affiliates to acquire equipment and,
<PAGE>
3 CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES (continued)
accordingly, conflicts of interest may arise between the Partnership
and such other limited partnerships. Affiliates of Equipment Management
have also engaged in businesses related to the management of equipment
and the sale of various types of equipment and may transact business
with the Partnership.
Subject to the rights of the Limited Partners under the Limited
Partnership Agreement, Presidio will control the Partnership through
its direct or indirect ownership of all of the shares of Equipment
Management, the Corporate General Partner and, as of February 28, 1995,
the associate general partner. Presidio is managed by Presidio
Management Company, LLC ("Presidio Management"), a company controlled
by a director of Presidio. Presidio is also party to an administrataive
services agreement with Wexford Management LLC ("Wexford") pursuant to
which Wexford is responsible for the day-to-day management of Presidio
and, among other things, has authority to designate directors of
Equipment Management, the Corporate General Partner and the associate
general partner. During the nine months ended September 30, 1996,
reimbursable expenses to Wexford by the Partnership amounted to
$20,630.
Presidio is a liquidating company. Although Presidio has no immediate
plans to do so, it will ultimately seek to dispose of the interests it
acquired from Integrated Resources, Inc. including its interests in
Equipment Management, the Corporate General Partner and IREG through
liquidation; however, there can be no assurance of the timing of such
transaction or the effect it may have on the Partnership.
The Partnership has a management agreement with IREG, pursuant to which
IREG receives 5% of annual gross rental revenues on operating leases;
2% of annual gross rental revenues on full payout leases which contain
net lease provisions; and 1% of annual gross rental revenues if
services are performed by third parties under the active supervision of
IREG, as defined in the Limited Partnership Agreement. For the nine
months ending September 30, 1996 and 1995, the Partnership incurred
expenses of $13,937 and $21,145, respectively, for such management
services.
During the operating and sale stage of the Partnership, IREG is
entitled to a partnership management fee equal to 4% of distributable
cash from operations, as defined in the Limited Partnership Agreement,
subject to increase after the limited partners have received certain
specified minimum returns on their investment. For the nine months
ended September 30, 1996, the Partnership incurred partnership
management fee expense of $2,564. No such amount was incurred during
the nine months ended September 30, 1995.
The general partners are entitled to 1% of distributable cash from
operations and cash from sales and an allocation of 1% of taxable net
income or loss of the Partnership.
<PAGE>
3 CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES (continued)
During the operating and sale stage of the Partnership, IREG may be
entitled to receive certain other fees which are subordinated to the
receipt by the limited partners of their original invested capital and
certain specified minimum returns on their investment.
Upon the ultimate liquidation of the Partnership, the general partners
may be required to remit to the Partnership certain payments
representing capital account deficit restoration based upon a formula
provided within the Limited Partnership Agreement. Such restoration
amount may be less than the recorded general partners' deficit, which
could result in distributions to the limited partners of less than
their recorded equity.
In April 1995, Equipment Management and certain affiliates entered into
an agreement with Fieldstone Private Capital Group, L.P. ("Fieldstone")
pursuant to which Fieldstone performs certain management and
administrative services relating to the Partnership as well as certain
other partnerships in which Equipment Management serves as general
partner. Substantially all costs associated with the retention of
Fieldstone will be paid by Equipment Management.
4 DISTRIBUTIONS TO PARTNERS
Distributions payable to the Limited Partners and General Partners of
$2,941,246 ($154.00 per unit) and $29,710, respectively, at September
30, 1996, were paid in November 1996.
5 EQUIPMENT SALES - 1996
On February 8, 1996, the Partnership entered into an agreement (the
"Agreement") with an unaffiliated third party (the "Purchaser") which
provided for the sale of 407 dry van piggyback trailers (the
"Trailers") upon their return from the lessee pursuant to its lease
with the Partnership (the "Lease"). The purchase price of each Trailer
was to be determined by its redelivery date, decining from $2,575 to
$1,990 per Trailer over the course of the year. Redelivery of the
Trailers commenced on or about January 2, 1996, and was scheduled to
continue through the earlier of the date at which all Trailers had been
redelivered and December 31, 1996. The basic term of the Lease expired
on December 31, 1995, but each Trailer remains subject to the Lease,
with specified per diem rentals payable until such date as it has been
redelivered by the lessee in compliance with the the return conditions
defined in the Lease. At present, the return dates of the Trailers
which remain on lease have not been finalized, and it is likely that a
small number of Trailers may remain subject to the Lease through early
1997.
As of September 30, 1996, 206 Trailers had been transferred to and
accepted by Purchaser, for sales proceeds aggregating $505,250. At the
time of sale the net carrying value of the 206 Trailers was $421,015.
The 206 Trailers had originally been acquired in January 1986 for an
aggregate purchase cost of $2,816,026, inclusive of associated
acquisition costs.
<PAGE>
5 EQUIPMENT SALES - 1996 (continued)
The Agreement had provided for a schedule of purchases based on the
Trailers' redelivery dates in order to effect a sale of the
Partnership's remaining assets by December 31, 1996. The Purchaser had
failed or refused to adhere to this schedule and had otherwise
defaulted in its obligations under the Agreement, citing in part a
declining market for the Trailers. When it became apparent that the
Purchaser was unable or unwilling to cure its defaults, the Partnership
terminated the Agreement, effective November 7, 1996.
The Partnership has subsequentially entered into an agreement in
principle with another unaffiliated third party which calls for such
party to acquire all of the remaining Trailers on a single purchase
date and to assume the Partnership's rights and obligations as lessor
under the Lease. The purchase price for each Trailer is $1,400. From
October 1 to November 13, 1996, the Partnership closed the sale of 201
trailers for aggregate sales proceeds of $332,750. Such equipment had
net carrying values aggregating $324,485 when sold.
On July 16, 1996, the Partnership sold a Boeing 727-200 Aircraft (the
"Aircraft") to an unrelated third party for sales proceeds of
approximately $2,950,000 less selling expenses of approximately
$307,500. Concurrently with the sale, the Partnership and USAir Group,
Inc. ("USAir") terminated the Aircraft lease, scheduled to expire
January 2, 1997. In addition, the Partnership retained and recognized
as income approximately $462,900 representing the outstanding balance
of the October 1995 lease prepayment. At the time of sale, such
Aircraft had a net carrying value of approximately $3,105,400.
6 EQUIPMENT LEASE PREPAYMENT
In December 1985, the Partnership, through an equipment trust of which
it is the sole beneficiary, acquired the Aircraft and immediately
leased the Aircraft back to Piedmont Aviation, Inc. (the "Aircraft
Lease"). The Partnership provided a portion of the purchase price by
utilizing approximately 40% of the net proceeds from the Partnership's
offering of units of limited partnership interest. The balance was
provided by the Partnership assuming a loan from an unaffiliated third
party lender (the "Lender"). The loan, which was nonrecourse, was
anticipated to be self-liquidating by the application of rentals due
over the life of the Aircraft Lease. Subsequent to 1985, the operations
of Piedmont were merged into USAir.
In early 1995, USAir publicly announced that it anticipated reducing
its fleet size and during 1995, planned to retire or dispose of 21
aircraft including its six remaining 727-200 aircraft. During the
quarter ended September 30, 1995, USAir indicated that the Aircraft
would require a heavy maintenance check under the USAir maintenance
program. Rather than perform such heavy maintenance, USAir grounded the
Aircraft.
<PAGE>
6 EQUIPMENT LEASE PREPAYMENT Continued)
In October 1995, the Partnership and USAir entered into an agreement
(the "Agreement") that provided for a restructuring of the Aircraft
Lease. Pursuant to the terms of the Agreement, USAir agreed to make a
payment to the Lender in the amount of $1,553,452, which was equal to
the outstanding principal balance plus interest which accrued through
October 30, 1995. This payment fully retired the associated nonrecourse
debt and relieved USAir of all future Basic Rent obligations due under
the Aircraft Lease. Additionally, pursuant to the terms of the
Agreement, USAir commenced a world-wide remarketing effort directed
toward the sale of the Aircraft (see Note 5).
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
The Partnership declared a cash distribution of $154.00 per unit of
limited partnership interest totaling $2,970,956 for the quarter ended
September 30, 1996, which represented cash from sales of $2,910,765
generated during the current quarter, as well as from cash reserves
generated in prior quarters.
At September 30, 1996, the Partnership had operating reserves of
approximately $182,000 which was comprised of undistributed cash from
operations of approximately $87,100 as well as general working capital
reserves of $95,485.
In December 1985, the Partnership, through an equipment trust of which
it is the sole beneficiary, acquired a Boeing 727-200 Aircraft (the
"Aircraft") and immediately leased the Aircraft back to Piedmont
Aviation, Inc. (the "Aircraft Lease"). The Partnership provided a
portion of the purchase price by utilizing approximately 40% of the net
proceeds from the Partnership's offering of units of limited
partnership interest. The balance was provided by the Partnership
assuming a loan from an unaffiliated third party lender (the "Lender").
The loan, which was nonrecourse, was anticipated to be self-liquidating
by the application of rentals due over the life of the Aircraft Lease.
Subsequent to 1985, the operations of Piedmont were merged into USAir
Group, Inc. ("USAir").
In early 1995, USAir publicly announced that it anticipated reducing
its fleet size and during 1995, planned to retire or dispose of 21
aircraft including its six remaining 727-200 aircraft. During the
quarter ended September 30, 1995, USAir indicated that the Aircraft
would require a heavy maintenance check under the USAir maintenance
program. Rather than perform such heavy maintenance, USAir grounded the
Aircraft.
In October 1995, the Partnership and USAir entered into an agreement
(the "Agreement") that provided for a restructuring of the Aircraft
Lease. Pursuant to the terms of the Agreement, USAir agreed to make a
payment to the Lender in the amount of $1,553,452, which was equal to
the outstanding principal balance plus interest which accrued through
October 30, 1995. This payment fully retired the associated nonrecourse
debt and relieved USAir of all future Basic Rent obligations due under
the Aircraft Lease. Additionally, pursuant to the terms of the
Agreement, USAir commenced a world-wide remarketing effort directed
toward the sale of the Aircraft.
On July 16, 1996, the Partnership sold the Aircraft to an unrelated
third party for sales proceeds of approximately $2,950,000 less selling
expenses of approximately $307,500. Concurrently with the sale, the
Partnership and USAir terminated the Aircraft Lease, scheduled to
expire January 2, 1997. In addition, the Partnership retained and
recognized as income approximately $462,900 representing the
outstanding balance of the October 1995 lease prepayment. At the time
of sale, such Aircraft had a net carrying value of approximately
$3,105,400.
<PAGE>
Liquidity and Capital Resources (continued)
On February 8, 1996, the Partnership entered into an agreement (the
"Agreement") with an unaffiliated third party (the "Purchaser") which
provided for the sale of 407 dry van piggyback trailers (the
"Trailers") upon their return from the lessee pursuant to its lease
with the Partnership (the "Lease"). The purchase price of each Trailer
was to be determined by its redelivery date, decining from $2,575 to
$1,990 per Trailer over the course of the year. Redelivery of the
Trailers commenced on or about January 2, 1996, and was scheduled to
continue through the earlier of the date at which all Trailers had been
redelivered and December 31, 1996. The basic term of the Lease expired
on December 31, 1995, but each Trailer remains subject to the Lease,
with specified per diem rentals payable until such date as it has been
redelivered by the lessee in compliance with the the return conditions
defined in the Lease. At present, the return dates of the Trailers
which remain on lease have not been finalized, and it is likely that a
small number of Trailers may remain subject to the Lease through early
1997.
As of September 30, 1996, 206 Trailers had been transferred to and
accepted by Purchaser, for sales proceeds aggregating $505,250. At the
time of sale the net carrying value of the 206 Trailers was $421,015.
The 206 Trailers had originally been acquired in January 1986 for an
aggregate purchase cost of $2,816,026, inclusive of associated
acquisition costs.
The Agreement had provided for a schedule of purchases based on the
Trailers' redelivery dates in order to effect a sale of the
Partnership's remaining assets by December 31, 1996. The Purchaser had
failed or refused to adhere to this schedule and had otherwise
defaulted in its obligations under the Agreement, citing in part a
declining market for the Trailers. When it became apparent that the
Purchaser was unable or unwilling to cure its defaults, the Partnership
terminated the Agreement, effective November 7, 1996.
The Partnership has subsequentially entered into an agreement in
principle with another unaffiliated third party which calls for such
party to acquire all of the remaining Trailers on a single purchase
date and to assume the Partnership's rights and obligations as lessor
under the Lease. The purchase price for each Trailer is $1,400. From
October 1 to November 13, 1996, the Partnership closed the sale of 201
trailers for aggregate sales proceeds of $332,750. Such equipment had
net carrying values aggregating $324,485 when sold.
The sale of the remaining trailers on November 13, 1996 completes the
liquidation of the Partnership's equipment portfolio. The Managing
General Partner will prepare a final accounting of the assets and
liabilities and commence the dissolution and termination of the
Partnership and make a final distribution to partners.
<PAGE>
Liquidity and Capital Resources (continued)
At the present time, the level of fees payable to IREG for services
rendered to the Partnership and other affiliated equipment leasing
partnerships is declining. The effect of this situation cannot be
determined at this point. The management agreements between the
Partnership and IREG may be terminated by either party to such
agreements.
In April 1995, the Managing General Partner and certain affiliates
entered into an agreement with Fieldstone pursuant to which Fieldstone
performs certain management and administrative services relating to the
assets of the Partnership as well as certain other partnerships in
which the Managing General Partner serves as general partner.
Substantially all costs associated with the retention of Fieldstone
will be paid by the Managing General Partner.
On February 28, 1995, Presidio Boram Corp., a subsidiary of Presidio,
became the Associate General Partner, upon the withdrawal of Z Square G
Partners II, the former Associate General Partner.
Inflation and changing prices have not had any material effect on the
Partnership's revenues since its inception, nor does the Partnership
anticipate any material effect on its business from these factors.
The Partnership had no outstanding material commitments for capital
expenditures as of September 30, 1996.
Results of Operations
The Partnership had net income for the quarter ended September 30, 1996
as compared to a net loss for the comparable prior year ended. Net
income decreased for the nine months ended September 30, 1996,
resulting in a net loss, as compared to the comparable prior year
period.
The Partnership's rental revenues decreased for the quarter and nine
months ended September 30, 1996, as compared to the prior year's
period, primarily due to the restructuring of the USAir lease,
effective July 1, 1995 and sale of the Aircraft on July 16, 1996, as
well as a reduction in rental revenues with respect to the Trailers
which are in the process of being returned and sold, as previously
discussed. Other revenues increased for the quarter and nine months
ended September 30, 1996, as compared to the prior year's periods due
to higher balances available for investment.
Expenses excluding provision for equipment impairment decreased in the
quarter and nine months ended September 30, 1996 in comparison to the
prior year's periods. There was no interest expense for the quarter and
nine months ended September 30, 1996 due to the retirement of the
nonrecourse loan associated with the Trailers on January 2, 1996. Fees
to affiliates decreased due to a decrease in equipment management fees
resulting from the decrease in rentals on which such fees are based.
Depreciation expense decreased, resulting from the restructuring of the
USAir lease during the quarter ended September 30, 1995. A provision
for equipment impairment of $397,000 was recognized during the quarter
ended June 30, 1996 to reflect the reduced value of the Aircraft.
<PAGE>
PART II - OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: None
(b) Reports on Form 8-K: Current report on Form 8-K dated July 16, 1996
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Partnership has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Integrated Resources
American Leasing Investors VII-B,
a California Limited Partnership
By: ALI Equipment Management Corp.
Managing General Partner
/S/ Douglas J. Lambert
--------------------------------------
Douglas J. Lambert
President (Principal Executive and
Financial Officer)
Date: November 12, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary information extracted from the financial
statements of the September 30, 1996 Form 10-Q of Integrated Resources American
Leasing Investors VII-B and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 3,024,136
<SECURITIES> 0
<RECEIVABLES> 159,942
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,184,078
<PP&E> 2,747,677
<DEPRECIATION> 2,123,922
<TOTAL-ASSETS> 3,530,633
<CURRENT-LIABILITIES> 3,001,417
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 529,216
<TOTAL-LIABILITY-AND-EQUITY> 3,530,633
<SALES> 0
<TOTAL-REVENUES> 733,776
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (230,426)
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</TABLE>
