0000754712-95-000002.txt : 19950811 0000754712-95-000002.hdr.sgml : 19950811 ACCESSION NUMBER: 0000754712-95-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950810 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: PLM TRANSPORTATION EQUIPMENT PARTNERS VIIB 1985 INCOME FUND CENTRAL INDEX KEY: 0000754712 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EQUIPMENT RENTAL & LEASING, NEC [7359] IRS NUMBER: 942946245 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-14598 FILM NUMBER: 95560538 BUSINESS ADDRESS: STREET 1: ONE MARKET PLAZA STE 900 STREET 2: STEUART ST TOWER CITY: SAN FRANCISCO STATE: CA ZIP: 94105-1301 BUSINESS PHONE: 4159741399 10-Q 1 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, 1995. [ ] 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 900, 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 PLM TRANSPORTATION EQUIPMENT PARTNERS VIIB INCOME FUND (A Limited Partnership) BALANCE SHEETS ASSETS
June 30, December 31, 1995 1994 Equipment held for operating leases, at cost $ 4,944,168 $ 5,228,048 Less accumulated depreciation (4,348,338) (4,449,835) Net equipment 595,830 778,213 Cash and cash equivalents 365,658 358,864 Restricted cash 8,097 7,600 Accounts receivable, net of allowance for doubtful accounts of $12,462 in 1995 and $1,942 in 1994 129,390 136,481 Prepaid Insurance 1,325 3,286 Total assets $ 1,100,300 $ 1,284,444 LIABILITIES AND PARTNERS' CAPITAL Liabilities: Due to affiliates $ 4,641 $ 18,764 Accounts payable 18,934 32,478 Prepaid deposits and engine reserves 23,745 24,552 Total liabilities 47,320 75,794 Partners capital (deficit): Limited Partners (22,276 units) 1,140,500 1,294,613 General Partner (87,520) (85,963) Total partners' capital 1,052,980 1,208,650 Total liabilities and partners' capital $ 1,100,300 $ 1,284,444
See accompanying notes to financial statements. PLM TRANSPORTATION EQUIPMENT PARTNERS VIIB 1985 INCOME FUND (A Limited Partnership) STATEMENTS OF INCOME
For the three months For the six months ended June 30, ended June 30, 1995 1994 1995 1994 Revenues: Lease revenue $ 162,569 $ 196,322 $ 346,232 $ 370,847 Interest and other income 17,853 2,506 23,179 4,594 Gain on disposition of equipment 10,000 9,277 22,830 6,880 Total revenues 190,422 208,105 392,241 382,321 Expenses: Depreciation 69,438 74,962 141,294 150,977 Management fees to affiliate 13,922 13,923 27,845 29,264 Bad debt expense (31,882) 2,435 12,757 15,553 Repairs and maintenance 29,607 43,687 74,029 64,979 General and administrative expenses to affiliates 31,518 27,824 67,357 55,294 Other general and administrative expenses 15,325 27,476 26,536 40,674 Total expenses 127,928 190,307 349,818 356,741 Net income $ 62,494 $ 17,798 $ 42,423 $ 25,580 Partners' share of net income: Limited Partners - 99% $ 61,869 $ 17,620 $ 41,999 $ 25,324 General Partner - 1% 625 178 424 256 Total $ 62,494 $ 17,798 $ 42,423 $ 25,580 Net income per Limited Partnership Unit (22,276 units) $ 2.78 $ 0.79 $ 1.88 $ 1.14 Cash distributions $ 99,047 $ 145,267 $ 198,093 $ 290,580 Cash distribution per Limited Partnership Unit $ 4.40 $ 6.46 $ 8.80 $ 12.91
See accompanying notes to financial statements. PLM TRANSPORTATION EQUIPMENT PARTNERS VIIB INCOME FUND (A Limited Partnership) STATEMENTS OF CHANGES IN PARTNERS' CAPITAL For the period from December 31, 1993 to June 30, 1995 (Unaudited)
Limited General Partner Partner Total Partners' capital (deficit) at December 31, 1993 $ 1,677,478 $ (82,096) $ 1,595,382 Net income 87,802 887 88,689 Cash distributions (470,667) (4,754) (475,421) Partners' capital (deficit) at December 31, 1994 1,294,613 (85,963) 1,208,650 Net income 41,999 424 42,423 Cash distributions (196,112) (1,981) (198,093) Partners' capital (deficit) at June 30, 1995 $ 1,140,500 $ (87,520) $ 1,052,980
See accompanying notes to financial statements. PLM TRANSPORTATION EQUIPMENT PARTNERS VIIB 1985 INCOME FUND (A Limited Partnership) STATEMENT OF CASH FLOWS
For the six months ended June 30, 1995 1994 Operating Activities: Net income $ 42,423 $ 25,580 Adjustments to reconcile net income to net cash provided by operating activities: Gain on disposition of equipment (22,830) (6,880) Depreciation 141,294 150,977 Changes in operating assets and liabilities: Restricted cash (497) (70) Accounts receivable, net 7,091 23,094 Prepaid insurance 1,961 3,455 Due to affiliates (14,123) 13,022 Accounts payable (13,544) (16,797) Prepaid deposits and engine reserves (807) (1,124) Net Cash provided by operating activities 140,968 191,257 Cash flows provided by investing activities: Proceeds from disposition of equipment 63,919 35,831 Cash flows used in financing activities: Cash distributions paid to partners (198,093) (290,534) Net increase (decrease) in cash and cash equivalents 6,794 (63,446) Cash and cash equivalents at beginning of period 358,864 386,179 Cash and cash equivalents at end of period $ 365,658 $ 322,733
See accompanying notes to financial statements. PLM TRANSPORTATION EQUIPMENT PARTNERS VIIB 1985 INCOME FUND (A Limited Partnership) NOTES TO FINANCIAL STATEMENTS June 30, 1995 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 June 30, 1995, the statements of income for the three and six months ended June 30, 1995 and 1994, the statements of changes in partners' capital for the period from December 31, 1993 to June 30, 1995, and the statements of cash flows for the six months ended June 30, 1995 and 1994. 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, 1994, on file at the Securities and Exchange Commission. 2. Reclassifications Certain amounts in the 1994 financial statements have been reclassified to conform to the 1995 presentation. 3. Equipment Equipment held for operating leases is stated at cost. The components of equipment are as follows: June 30, December 31, 1995 1994 Equipment held for operating leases: Rail equipment $ 318,649 $ 318,649 Marine containers 135,221 151,167 Aircraft 908,733 908,733 Trailers 3,581,565 3,849,499 4,944,168 5,228,048 Less accumulated depreciation (4,348,338) (4,449,835) Net equipment $ 595,830 $ 778,213 All of the equipment owned by the Partnership was either on lease or operating in PLM-affiliated short-term rental facilities as of June 30, 1995. At December 31, 1994, all equipment was on lease except one railcar. Net book value of equipment off lease at December 31, 1994, was $16,750. During the six months ended June 30, 1995, the Partnership sold or disposed of seven trailers and six marine containers with a net book value of $41,089 for proceeds of $63,919. During the six months ended June 30, 1994, the Partnership sold or disposed of three trailers and 12 marine containers with a net book value of $28,951 for proceeds of $35,831. The Partnership has entered into its 10th year of operation and the liquidation phase has begun. Therefore, equipment will be marketed for sale as current lease terms expire. PLM TRANSPORTATION EQUIPMENT PARTNERS VIIC 1985 INCOME FUND (A Limited Partnership) BALANCE SHEETS ASSETS
June 30, December 31, 1995 1994 Assets: Equipment held for operating leases, at cost $ 9,388,285 $ 9,697,693 Less accumulated depreciation (8,152,600) (8,156,512) Net equipment 1,235,685 1,541,181 Cash and cash equivalents 631,348 799,068 Restricted cash 17,744 17,359 Accounts receivable, net of allowance for doubtful accounts of $18,725 in 1995 and $26,568 in 1994 146,697 188,843 Prepaid Insurance 418 4,919 Total assets $ 2,031,892 $ 2,551,370 LIABILITIES AND PARTNERS' CAPITAL Liabilities: Due to affiliates $ 7,027 $ 24,418 Accounts Payable 16,598 11,161 Prepaid deposits and engine reserves 17,676 17,290 Total liabilities 41,301 52,869 Partners capital (deficit): Limited Partners (33,727 units) $ 2,119,188 $ 2,622,019 General Partner (128,597) (123,518) Total partners' capital 1,990,591 2,498,501 Total liabilities and partners' capital $ 2,031,892 $ 2,551,370
See accompanying notes to financial statements. PLM TRANSPORTATION EQUIPMENT PARTNERS VIIC 1985 INCOME FUND (A Limited Partnership) STATEMENTS OF INCOME
For the three months For the six months ended June 30, ended June 30, 1995 1994 1995 1994 Revenues: Lease revenue $ 268,097 $ 406,676 $ 582,773 $ 783,970 Interest and other income 8,958 7,028 20,232 11,070 Gain on disposition of equipment 27,968 5,572 46,659 55,347 Total revenues 305,023 419,276 649,664 850,387 Expenses: Depreciation 128,130 137,722 259,038 283,696 Management fees to affiliate 21,529 21,129 45,809 53,586 Repairs and maintenance 59,813 71,694 102,742 129,761 General and administrative expenses to affiliates 46,213 57,676 101,308 112,111 Other general and administrative expenses 18,124 54,019 22,771 84,301 Total expenses 273,809 342,240 531,668 663,455 Net income $ 31,214 $ 77,036 $ 117,996 $ 186,932 Partners' share of net income: Limited Partners - 99% $ 30,902 $ 76,266 $ 116,816 $ 185,063 General Partner - 1% 312 770 1,180 1,869 $ 31,214 $ 77,036 $ 117,996 $ 186,932 Total Net income per Limited Partnership Unit (33,727 units) $ 0.92 $ 2.26 $ 3.46 $ 5.49 Cash distributions $ 262,139 $ 243,479 $ 525,906 $ 488,459 Cash distribution per Limited Partnership Unit $ 7.69 $ 7.15 $ 15.44 $ 14.34 Special cash distributions $ N/A $ N/A $ 100,000 $ 100,000 Special cash distributions per Limited Partnership Unit $ N/A $ N/A $ 2.94 $ 2.94 Total Cash Distributions per Limited Partnership Units $ 7.69 $ N/A $ 18.38 $ 17.28
See accompanying notes to financial statements. PLM TRANSPORTATION EQUIPMENT PARTNERS VIIC INCOME FUND (A Limited Partnership) STATEMENTS OF CHANGES IN PARTNERS' CAPITAL For the period from December 31, 1993 to June 30, 1995 (Unaudited)
Limited General Partner Partner Total Partners' capital (deficit) at December 31, 1993 $ 3,269,956 $ (116,973) $ 3,152,983 Net income 436,810 4,412 441,222 Cash distributions (1,084,747) (10,957) (1,095,704) Partners' capital (deficit) at December 31, 1994 2,622,019 (123,518) 2,498,501 Net income 116,816 1,180 117,996 Cash distributions (619,647) (6,259) (625,906) Partners' capital (deficit) at June 30, 1995 $ 2,119,188 $ (128,597) $ 1,990,591
See accompanying notes to financial statements. PLM TRANSPORTATION EQUIPMENT PARTNERS VIIC 1985 INCOME FUND (A Limited Partnership) STATEMENTS OF CASH FLOWS
For the six months ended June 30, 1995 1994 Operating Activities: Net income $ 117,996 $ 186,932 Adjustment to reconcile net income to net cash provided by operating activities: Gain on disposition of equipment (46,659) (55,347) Depreciation 259,038 283,696 Changes in operating assets and liabilities Restricted cash (385) (289) Accounts Receivable Net 42,146 80,529 Prepaid insurance 4,501 5,691 Due to affiliates (17,391) (10,841) Accounts payable 5,437 3,744 Prepaid deposits and engine reserves 386 (879) Net cash provided by operating activities 365,069 493,236 Cash flows provided by investing activities: Proceeds from disposition of equipment 93,117 90,333 Cash flows used in financing activities: Cash distributions paid to partners (625,906) (588,459) Net decrease in cash and cash equivalents (167,720) (4,890) Cash and cash equivalents at beginning of period 799,068 760,297 Cash and cash equivalents at end of period $ 631,348 $ 755,407
See accompanying notes to financial statements. PLM TRANSPORTATION EQUIPMENT PARTNERS VIIC 1985 INCOME FUND (A Limited Partnership) NOTES TO FINANCIAL STATEMENTS June 30, 1995 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 June 30, 1995, the statements of income for the three and six months ended June 30, 1995 and 1994, the statements of changes in partners' capital for the period from December 31, 1993 to June 30, 1995, and the statements of cash flows for the six months ended June 30, 1995 and 1994. 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, 1994, on file at the Securities and Exchange Commission. 2. Reclassification Certain amounts in the 1994 financial statements have been reclassified to conform to the 1995 presentation. 3. Equipment Equipment held for operating leases is stated at cost. The components of equipment are as follows: June 30, December 31, 1995 1994 Equipment held for operating leases: Marine containers $ 274,813 $ 324,814 Aircraft 4,009,950 4,009,950 Trailers 5,103,522 5,362,929 9,388,285 9,697,693 Less accumulated depreciation (8,152,600) (8,156,512) Net equipment $ 1,235,685 $ 1,541,181 All of the equipment owned by the Partnership is either on lease or operating in PLM-affiliated short-term rental facilities as of June 30, 1995, and at December 31, 1994. During the six months ended June 30, 1995, the Partnership sold or disposed of 11 marine containers and seven trailers with a net book value of $46,458 for proceeds of $93,117. During the six months ended June 30, 1994, the Partnership sold or disposed of nine marine containers and four trailers with a net book value of $34,986 for proceeds of $42,333. Additional proceeds of $48,000 were received in the first quarter of 1994, for equipment disposed of during the fourth quarter of 1993. The Partnership has entered into its 10th year of operation and the liquidation phase has begun. Therefore, equipment will be marketed or sale as current lease terms expires. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity and Capital Resources (A) Sources The Partnerships' primary source of liquidity is operating cash flow. Proceeds realized from the sale or disposal of equipment are generally distributed to the partners. The Partnerships' sources of capital have included proceeds from their offering of limited partnership units. (B) Asset Sales Equipment sales and dispositions prior to the Partnerships' planned liquidation phase generally result from either the exercise by lessees of fair market value purchase options provided for in certain leases, or the payment of stipulated loss values on equipment lost or disposed of during the time it is subject to lease agreements. Such disposal of equipment results unpredictably from the wear, tear, and general risk of normal operations. During the six months ended June 30, 1995, TEP VIIB sold or disposed of seven trailers and six marine containers for $63,919, and TEP VIIC sold or disposed of seven trailers and 11 marine containers for $93,117. The Partnership has entered into its 10th year of operation and the liquidation phase has begun. Therefore, equipment will be marketed for sale as current lease terms expire. (C) Market Values At least annually, the General Partner prepares an evaluation of the net realizable value and fair market value of the Partnerships' equipment portfolios, using, among other sources, independent third-party appraisals, values reported in trade publications, and comparative values from arms-length transactions for similar equipment as the basis for its evaluation. Concurrently, the General Partner evaluates whether the current fair market value of equipment represents the effects of current market conditions or permanent impairment of value. Equipment whose carrying value is determined to be permanently impaired, without possibility of being leased at an acceptable rate, has its book value adjusted to its estimated net realizable value. The depressed nature of certain transportation sectors, combined with the impact of certain regulatory policies, has led to volatility in fair market values for certain of the Partnerships' equipment. Exacerbating this problem is the perception in some industry sectors that great uncertainty exists as to when potential recovery to acceptable performance and residual levels may occur. Further, the current recovery does not appear to fit any historical pattern. These uncertain market conditions have caused the General Partner to continuously monitor the changes in market values for the Partnerships' equipment, and on occasion, the General Partner has made adjustments to Partnership equipment book values to reflect this volatility. While there has continued to be a general decline in certain market values, the fair market values of the assets still exceed the Partnerships' carrying value. No adjustments to reflect impairment of equipment carrying value were recorded during the first six months of 1995. Comparison of the Partnerships' Operating Results for the Three Months Ended June 30, 1995 and 1994 TEP VIIB: (A) Revenues Total revenues of $190,422 for the quarter ended June 30, 1995, decreased from $208,105 for the same period in 1994 due primarily to lower lease revenues, offset slightly by an increase in other income for the second quarter of 1995 when compared to the same period in 1994. (1) Lease revenue decreased to $162,569 in the second quarter of 1995, from $196,322 in the second quarter of 1994. The following table lists lease revenues by equipment type: For the three months ended June 30, 1995 1994 Trailers $125,092 $153,326 Aircraft 24,046 24,770 Rail equipment 8,110 12,820 Marine containers 5,321 5,406 -------- -------- $162,569 $196,322 Significant revenue component changes resulted primarily from: (a) Trailer revenues decreased $28,234 due to the sale of five trailers during the third and fourth quarters of 1994 and seven trailers in 1995, and a decline in utilization in short-term rental facilities in 1995 compared to 1994 levels; (b) Railcar revenues decreased $4,710 due to the re-lease of some railcars at a lower rate. (2) Interest and other income increased to $17,853 in the second quarter of 1995 from $2,506 in the second quarter of 1994. This increase was primarily due to income earned from an early lease termination penalty on four railcars in the second quarter of 1995, and a higher interest rate earned on cash investments in the second quarter of 1995. (3) For the quarter ended June 30, 1995, the Partnership realized a gain of $10,000 on the sale or disposition of two marine containers and one trailer, compared to the same period in 1994 where the Partnership realized a gain of $9,277 on the sale or disposition of one trailer and 12 marine containers. (B) Expenses Total expenses of $127,928 for the quarter ended June 30, 1995 decreased from $190,307 for the same period in 1994. The decrease in 1995 expenses was primarily attributable to decreases in bad debt expense, repairs and maintenance, and all general and administrative expenses. (1) Direct operating expenses (defined as repairs and maintenance expenses) decreased to $29,607 in the second quarter of 1995, from $43,687 in the same period in 1994. This decrease is primarily attributable to lower shop repairs required on the Partnership railcars. (2) Indirect operating expenses (defined as depreciation expense, management fees to affiliates, bad debt expenses, and general and administrative expenses) decreased to $98,321 in the second quarter of 1995, from $146,620 in the second quarter of 1994. This change resulted primarily from: (a) a decrease of $34,317 in bad debt expense due to the General Partner's evaluation that previously establish reserves are no longer required based on the current open receivable balances and the current customer mix; (b) a decrease of $8,457 in all general and administrative expenses from 1994 levels due to lower administrative costs associated with the Partnership; (c) a decrease of $5,524 in depreciation expense from 1994 levels reflecting asset sales or dispositions during 1994 and 1995; (C) Net Income The Partnership's net income increased to $62,494 in the second quarter of 1995, from $17,798 in the second quarter of 1994. 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 1995 is not necessarily indicative of future periods. In the second quarter of 1995, the Partnership distributed $98,056 to the Limited Partners, or $4.40 per Limited Partnership Unit. TEP VIIC: (A) Total revenues of $305,023 for the quarter ended June 30, 1995, decreased from $419,276 for the same period in 1994 due to lower lease revenues offset by a larger gain on the sale of equipment in the second quarter of 1995 as compared to the same period in 1994. (1) Lease revenue decreased to $268,097 in the second quarter of 1995 from $406,676 for the same period in 1994. The following table lists lease revenues by equipment type. For the three months ended June 30, 1995 1994 Trailers $163,019 $270,567 Aircraft 99,119 128,654 Marine containers 5,959 7,455 -------- -------- $268,097 $406,676 Significant revenue component changes resulted primarily from: (a) Trailer revenue decreased $107,548 due to utilization in short-term rental facilities in 1995 compared to 1994 levels, and the sale of 14 trailers in the third and fourth quarters of 1994 and seven trailers in 1995; (b) Aircraft revenues decreased $29,535 due to a reduced rental rate for one lessee. (2) For the quarter ended June 30, 1995, the Partnership realized a gain of $27,968 on the sale or disposition of one trailer and seven marine containers, compared to the same period in 1994, where the Partnership realized a gain of $5,572 on the sale or disposition of two trailers and nine marine containers. (B) Expenses Total expenses of $273,809 for the quarter ended June 30, 1995 decreased from $342,240 for the same period in 1994. The decrease in 1995 expenses was primarily attributable to decreases in all general and administrative expenses, repairs and maintenance expense, and depreciation expense. (1) Direct operating expenses (defined as repairs and maintenance expenses) decreased to $59,813 in the second quarter of 1995, from $71,694 in the same period of 1994 due to decreases in maintenance for trailers in the short-term rental facilities. In the second quarter of 1994, repairs were made on former term lease trailers prior to transitioning into the short-term rental facilities. (2) Indirect operating expenses (defined as depreciation expense, management fees to affiliates, bad debt expenses, and general and administrative expenses) decreased to $213,996 in the second quarter of 1995 from $270,546 in the second quarter of 1994. This change resulted primarily from: (a) a decrease in general and administrative expenses of $47,358 resulting from a decrease in administrative costs associated with the Partnership; (b) a decrease of $9,592 in depreciation expense from 1994 levels reflecting asset sales or dispositions during 1994 and 1995. (C) Net Income The Partnership's net income decreased to $31,214 in the second quarter of 1995, from $77,036 in the second quarter of 1994. 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 1995 is not necessarily indicative of future periods. In the second quarter of 1995, the Partnership distributed $259,518 to the Limited Partners, or $7.69 per Limited Partnership Unit. Comparison of the Partnerships' Operating Results for the Six Months Ended June 30, 1995, and 1994 TEP VIIB: (A) Revenues Total revenues of $392,241 for the six months ended June 30, 1995, increased slightly from $382,321 for the same period in 1994 due to an increase in other income in 1995, offset by a decrease in revenues due to lower lease revenues when compared to the same period in 1994. (1) Lease revenue decreased to $346,232 for the six months ended June 30, 1995, from $370,847 for the same period in 1994. The following table lists lease revenues by equipment type: For the six months ended June 30, 1995 1994 Trailers $269,003 $296,793 Aircraft 48,817 49,541 Rail equipment 16,013 12,756 Marine containers 12,399 11,757 -------- -------- $346,232 $370,847 Significant revenue component changes resulted primarily from: (a) Trailer revenue decreased $27,790 due to the sale of five trailers during the third and fourth quarters of 1994 and seven trailers in 1995, and a decline in utilization in short-term rental facilities in 1995 compared to 1994 levels; (b) Railcar revenue increased $3,257 due to the re-lease of railcars which were off-lease during the first quarter of 1994, and a rental credit which was given to a former lessee in the first quarter of 1994. (2) Interest and other income increased to $23,179 in the six months ended June 30, 1995 from $4,594 for the same period in 1994. This increase was primarily due to income earned from an early lease termination penalty on four railcars in the second quarter of 1995, and a higher interest rate earned on investments in 1995. (3) For the six months ended June 30, 1995, the Partnership realized a gain of $22,830 on the sale or disposition of seven trailers and six marine containers, compared to the same period in 1994, where the Partnership realized a gain of $6,880 on the sale or disposition of three trailers and 12 marine containers. (B) Expenses Total expenses of $349,818 for the six months ended June 30, 1995 decreased from $356,741 for the same period in 1994. The decrease in 1995 expenses was primarily attributable to decreases in depreciation, bad debt expense, general and administrative expenses, and repairs and maintenance. (1) Direct operating expenses (defined as repairs and maintenance expenses) increased to $74,029 in the six months ended June 30, 1995, from $64,979 in the same period in 1994. This increase was primarily attributable to trailers coming off term leases and requiring refurbishment prior to transitioning into the short-term rental facilities as compared to the same period in 1994 when some current rental yard trailers were on net term leases. This increase was offset slightly by a decrease in repairs and maintenance costs due to lower shop repairs required on the Partnership's railcars in 1995. (2) Indirect operating expenses (defined as depreciation, management fees to affiliates, bad debt expenses, and general and administrative expenses) decreased to $275,789 in the six months ended June 30, 1995 from $291,762 in the same period in 1994. This change resulted primarily from: (a) a decrease of $9,683 in depreciation expense from 1994 levels reflecting asset sales or dispositions during 1994 and 1995; (b) a decrease in bad debt expense of $2,796 due to the General Partner's evaluation that previously establish reserves are no longer required based on the current open receivable balances and the current customer mix; (c) a decrease of $2,075 in all general and administrative expenses from 1994 levels due to lower administrative costs associated with the Partnership. (C) Net Income The Partnership's net income decreased to $42,423 in the six months ended June 30, 1995, from $25,580 in the same period in 1994. 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 1995 is not necessarily indicative of future periods. For the six months ended June 30, 1995, the Partnership distributed $196,112 to the Limited Partners, or $8.80 per Limited Partnership Unit. TEP VIIC: (A) Revenues Total revenues of $649,664 for the six months ended June 30, 1995, decreased from $850,387 for the same period in 1994 due to lower lease revenues, offset slightly, by an increase in interest and other income when compared to 1994. (1) Lease revenue decreased to $582,773 for the six months ended June 30, 1995, from $783,970 in the six months ended June 30, 1994. The following table presents lease revenues by equipment type: For the six months ended June 30, 1995 1994 Trailers $368,316 $511,215 Aircraft 198,581 257,308 Marine containers 15,876 15,447 -------- -------- $582,773 $783,970 The significant revenue component changes resulted primarily from: (a) Trailer revenue decreased $142,899 due to a decline in utilization in short-term facilities in 1995 compared to 1994 levels, and the sale of 14 trailers in the third and fourth quarters of 1994 and seven trailers in 1995; (b) Aircraft revenue decreased $58,727 due to a reduced rental rate for one lessee. (2) Interest and other income increased to $20,232 for the six months ended June 30, 1995 from $11,070 for the same period in 1994 primarily due to higher interest rates earned on cash investments for the six months ended June 30, 1995. (3) For the six months ended June 30, 1995, the Partnership realized a gain of $46,659 on the sale or disposition of 11 marine containers and seven trailers, compared to the same period in 1994, where the Partnership realized a gain of $55,347 from the sale or disposition of nine marine containers and four trailers. (B) Expenses Total expenses of $531,668 for the six months ended June 30, 1995, decreased from $663,455 for the same period in 1994. The decrease in 1995 expenses was primarily attributable to decreases in all general and administrative expenses, depreciation expenses, management fees to affiliate, and repairs and maintenance. (1) Direct operating expenses (defined as repairs and maintenance expenses) decreased to $102,742 in the six months ended June 30, 1995, from $129,761 in the same period in 1994. This change resulted primarily from decreases in maintenance costs for trailers in the short-term rental facilities. In the first six months of 1994, repairs were made on former term lease trailers prior to transitioning into the short-term rental facilities. (2) Indirect operating expenses (defined as depreciation expense, management fees to affiliates, bad debt expenses, and general and administrative expenses) decreased to $428,926 in the six months ended June 30, 1995, from $533,694 for the six months ended June 30, 1994. This change resulted primarily from: (a) a decrease of $72,333 in general and administrative expenses resulting from 1994 levels due to lower administrative costs associated with the Partnership; (b) a decrease of $24,658 in depreciation expense from 1994 levels reflecting asset sales or dispositions during 1994 and 1995; (c) a decrease of $7,777 in management fees resulting from lower operating cash flow primarily associated with lower lease revenues on fixed-term trailers and a lower container utilization. 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 Gross Proceeds as defined in the Limited Partnership Agreement. (C) Net Income The Partnership's net income decreased to $117,996 for the six months ended June 30, 1995, from $186,932 in the same period in 1994. 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 1995 is not necessarily indicative of future periods. For the six months ended June 30, 1995, the Partnership distributed $619,647 to the Limited Partners, or $18.38 per Limited Partners Unit. Trends Inflation and changing prices did not materially impact the Partnerships' revenues or expenses during the reported periods. PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits None. (b) Reports on Form 8-K None. 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: August 10, 1995 By: /s/ David J. Davis ------------------ David J. Davis Vice President and Corporate Controller EX-27 2
5 6-MOS DEC-31-1995 JUN-30-1995 365,658 0 129,390 12,462 0 0 4,944,168 4,348,338 1,100,300 0 0 0 0 0 1,052,980 1,100,300 0 392,241 0 349,818 0 0 0 42,423 0 42,423 0 0 0 42,423 0 0