-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HTWMDdAPemlrrPD56kKapzF4wwcoFAe542Vm1S5dGrYI0F3dsoGvvpZ3WKY8eRVR p8bKY/IjHhaNSBLOk9obxg== 0000754712-98-000002.txt : 19980518 0000754712-98-000002.hdr.sgml : 19980518 ACCESSION NUMBER: 0000754712-98-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980515 SROS: NONE 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: SEC FILE NUMBER: 000-14598 FILM NUMBER: 98623612 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 March 31, 1998. [ ] 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 PLMTRANSPORTATION EQUIPMENT PARTNERS VIIB 1985 INCOME FUND (Exact name of registrant as specified in its charter) California 94-2946245 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One Market, Steuart Street Tower, Suite 800, San Francisco, CA 94105-1301 (Address of principal (Zip Code) executive offices) Registrant's telephone number, including area code: (415) 974-1399 --------------------------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No PLM TRANSPORTATION EQUIPMENT PARTNERS VIIB INCOME FUND BALANCE SHEETS
March 31, December 31, 1998 1997 --------------------------------------- Assets Equipment held for operating leases, at cost $ 288,612 $ 304,133 Less accumulated depreciation (288,538) (304,133) -------------------------------------------- Net equipment 74 -- Cash and cash equivalents 50,510 358,630 Accounts receivable, net of allowance for doubtful accounts of $1,527 in 1998 and $3,965 in 1997 8,209 20,038 Prepaid insurance 305 494 -------------------------------------------- Total assets $ 59,098 $ 379,162 ============================================ Liabilities and capital Liabilities: Accounts payable and accrued expenses $ 5,334 $ 18,311 Due to affiliates -- 4,641 Total liabilities 5,334 22,952 Capital: Beneficiaries or limited partners (22,276 units) 53,764 356,210 Beneficiary or General Partner -- -- -------------------------------------------- Total capital 53,764 356,210 -------------------------------------------- Total liabilities and capital $ 59,098 $ 379,162 ============================================
See accompanying notes to financial statements. PLM TRANSPORTATION EQUIPMENT PARTNERS VIIB 1985 INCOME FUND STATEMENTS OF INCOME For the Three Months Ended March 31,
1998 1997 ------------------------------ Revenues Lease revenue $ 13,458 $ 98,483 Interest and other income 3,310 3,528 Net gain on disposition of equipment 1,366 114,482 -------------------------------------- Total revenues 18,134 216,493 Expenses Depreciation -- 23,510 Management fees to affiliate -- 13,922 Repairs and maintenance 2,173 16,249 Insurance expense 189 1,057 General and administrative expenses to affiliates 4,235 4,364 Other general and administrative expenses 7,792 27,185 Recovery of bad debts (2,439) (106) Total expenses 11,950 86,181 Net income $ 6,184 $ 130,312 ====================================== Allocation of net income Beneficiaries or limited partners $ 3,098 $ 129,009 Beneficiary or General Partner 3,086 1,303 -------------------------------------- Total $ 6,184 $ 130,312 ====================================== Net income per weighted-average unit outstanding (22,276 units) $ 0.14 $ 5.79 ====================================== Cash distributions $ -- $ 97,172 ====================================== Cash distribution per weighted-average unit outstanding $ -- $ 4.32 ====================================== Special cash distributions $ 308,630 $ -- ====================================== Special cash distribution per weighted-average unit outstanding $ 13.72 $ -- ====================================== Total cash distribution per weighted-average unit outstanding $ 13.72 $ 4.32 ======================================
See accompanying notes to financial statements. PLM TRANSPORTATION EQUIPMENT PARTNERS VIIB INCOME FUND STATEMENTS OF CHANGES IN CAPITAL For the period from December 31, 1996 to March 31, 1998
Beneficiaries Beneficiary (formerly (formerly Limited General Partners) Partner) Total ----------------------------------------------------------------- Capital (deficit) as of December 31, 1996 $ 578,736 $ (93,194) $ 485,542 Net income 487,976 100,371 588,347 Cash distributions (96,200) (972) (97,172) Special distributions (614,302) (6,205) (620,507) ------------------------------------------------------------------- Capital as of December 31, 1997 356,210 -- 356,210 Net income 3,098 3,086 6,184 Special distributions (305,544) (3,086) (308,630) ------------------------------------------------------------------- Capital as of March 31, 1998 $ 53,764 $ -- $ 53,764 ===================================================================
See accompanying notes to financial statements. PLM TRANSPORTATION EQUIPMENT PARTNERS VIIB 1985 INCOME FUND STATEMENTS OF CASH FLOWS For the Three Months Ended March 31,
1998 1997 ------------------------------------ Operating activities Net income $ 6,184 $ 130,312 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation -- 23,510 Net gain on disposition of equipment (1,366) (114,482) Changes in operating assets and liabilities: Accounts receivable, net 7,704 8,190 Prepaid insurance 189 686 Accounts payable and accrued expenses (12,977) (3,863) Due to affiliates (4,641) -- Lessee deposits and engine reserves -- 13,385 ----------------------------------------- Net cash (used in) provided by operating activities (4,907) 57,738 ----------------------------------------- Investing activities Proceeds from disposition of equipment 5,417 174,706 Net cash provided by investing activities 5,417 174,706 ----------------------------------------- Financing activities Cash distributions paid to Beneficiaries (formerly limited partners) (305,544) (96,200) Cash distributions paid to Beneficiary (formerly General Partner) (3,086) (972) ----------------------------------------- Net cash used in financing activities (308,630) (97,172) ----------------------------------------- Net (decrease) increase in cash and cash equivalents (308,120) 135,272 Cash and cash equivalents at beginning of period 358,630 269,628 ----------------------------------------- Cash and cash equivalents at end of period $ 50,510 $ 404,900 =========================================
See accompanying notes to financial statements. PLM TRANSPORTATION EQUIPMENT PARTNERS VIIB 1985 INCOME FUND NOTES TO FINANCIAL STATEMENTS March 31, 1998 1. Liquidation of the Partnership With the disposal of the majority of the equipment portfolio, the Partnership's remaining assets were transferred into a liquidating trust on January 1, 1998. The sole Beneficiaries of the liquidating trust are the limited partners and the General Partner. The Trustees, as designated by the General Partner, are three officers of the General Partner. The amounts reflected as assets and liabilities of the Trust have not been adjusted to reflect liquidation values. The equipment portfolio that is actively being marketed for sale by the Trustees continues to be carried at the lower of depreciated cost or fair value less estimated cost of disposal. Although the Trustees estimate that there will be distributions to the Beneficiaries after final disposal of assets and settlement of liabilities, the amounts cannot be determined prior to actual disposal of the equipment. Cash receipts (including proceeds from the sale of assets) in excess of expected obligations and reasonable reserves will be distributed to the Beneficiaries in the liquidating trust from time to time, and not less often than annually. Upon final liquidation, the liquidating trust will be dissolved. For tax purposes, the liquidating trust will continue to be treated as a partnership under Internal Revenue Regulation Section 301.7701-3(b)(1)(i). Partnership tax returns will be filed until all the liquidating trust assets are distributed. The Trustees applied to the Securities and Exchange Commission (SEC) to terminate the Trust's obligation to file future reports on Form 10-Q and Form 10-K. If approved by the SEC, the Trustees will discontinue all future filings of these reports. 2. Opinion of Management In the opinion of the Trustees, the accompanying unaudited financial statements contain all adjustments necessary, consisting primarily of normal recurring accruals, to present fairly the Trust's or Partnership's financial position as of March 31, 1998 and December 31, 1997, the statements of operations and cash flows for the three months ended March 31, 1998 and 1997, and the statements of changes in capital for the period from December 31, 1996 to March 31, 1998. Certain information and note 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 Annual Report on Form 10-K for the year ended December 31, 1997, on file at the Securities and Exchange Commission. 3. Equipment The components of owned equipment are as follows:
March 31, December 31, 1998 1997 ---------------------------------------- Trailers $ 288,612 $ 304,133 Less accumulated depreciation (288,538 ) (304,133 ) -------------------------------------------- Net equipment $ 74 $ -- ============================================
All of the equipment owned by the Trust or Partnership was operating in PLM-affiliated short-term rental facilities as of March 31, 1998 and December 31, 1997. PLM TRANSPORTATION EQUIPMENT PARTNERS VIIB 1985 INCOME FUND NOTES TO FINANCIAL STATEMENTS March 31, 1998 3. Equipment (continued) During the first quarter of 1998, the Trust repossessed a trailer, that had been sold for a gain of $4,051 in 1997, due to a collection problem. During the three months ended March 31, 1998, the Trust sold or disposed of trailers with an aggregate net book value of $0 for proceeds of $5,417. During the three months ended March 31, 1997, the Partnership sold or disposed of railcars, trailers, and marine containers with an aggregate net book value of $60,224 for proceeds of $174,706. 4. Cash Distributions The Trust paid special distributions of $13.72 per weighted-average unit during the first quarter of 1998. The Partnership paid cash distributions of $4.32 per weighted-average unit during the first quarter of 1997. PLM TRANSPORTATION EQUIPMENT PARTNERS VIIC 1985 INCOME FUND (A Limited Partnership) BALANCE SHEETS
March 31, December 31, 1998 1997 -------------------------------------- Assets Equipment held for operating leases, at cost $ 951,998 $ 1,295,164 Less accumulated depreciation (946,948) (1,291,640) ------------------------------------------- Net equipment 5,050 3,524 Cash and cash equivalents 131,076 191,228 Accounts receivable, net of allowance for doubtful accounts of $3,695 in 1998 and $3,227 in 1997 14,841 25,630 Prepaid insurance 559 913 ------------------------------------------- Total assets $ 151,526 $ 221,295 =========================================== Liabilities and partners' capital Liabilities: Accounts payable and accrued expenses $ 4,595 $ 9,928 Due to affiliates 7,026 7,026 Total liabilities 11,621 16,954 Partners' capital: Limited partners (33,727 units) 139,905 204,341 General Partner -- -- ------------------------------------------- Total partners' capital 139,905 204,341 ------------------------------------------- Total liabilities and partners' capital $ 151,526 $ 221,295 ===========================================
See accompanying notes to financial statements. PLM TRANSPORTATION EQUIPMENT PARTNERS VIIC 1985 INCOME FUND (A Limited Partnership) STATEMENTS OF INCOME
For the Three Months Ended March 31, 1998 1997 ---------------------------------- Revenues Lease revenue $ 30,716 $ 72,195 Interest and other income 2,636 4,318 Net gain on disposition of equipment 58,617 40,958 ------------------------------------ Total revenues 91,969 117,471 Expenses Depreciation 109 55,082 Management fees to affiliate 21,079 21,079 Repairs and maintenance 4,609 14,825 Insurance expense 354 1,431 General and administrative expenses to affiliates 9,029 23,305 Other general and administrative expenses 6,723 12,760 Provision for (recovery of) bad debts 468 (21) ------------------------------------ Total expenses 42,371 128,461 Equity in net income of unconsolidated special-purpose entities 27,196 12,956 ------------------------------------ Net income $ 76,794 $ 1,966 ==================================== Partners' share of net income Limited partners $ 75,382 $ 1,946 General Partner 1,412 20 ------------------------------------ Total $ 76,794 $ 1,966 ==================================== Net income per weighted-average limited partnership unit (33,727 units) $ 2.24 $ 0.06 ==================================== Cash distributions $ -- $ 75,660 ==================================== Cash distribution per weighted-average limited partnership unit $ -- $ 2.22 ==================================== Special cash distributions $ 141,230 $ 100,000 ==================================== Special cash distributions per weighted-average limited partnership unit $ 4.15 $ 2.94 ==================================== Total cash distributions per weighted-average limited partnership unit $ 4.15 $ 5.16 ====================================
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, 1996 to March 31, 1998
Limited General Partners Partner Total --------------------------------------------------------------- Partners' capital (deficit) as of December 31, 1996 $ 913,500 $ (140,776) $ 772,724 Net income 193,401 149,893 343,294 Cash distributions (74,903) (757) (75,660) Special distributions (827,657) (8,360) (836,017) -------------------------------------------------------------------- Partners' capital as of December 31, 1997 204,341 -- 204,341 Net income 75,382 1,412 76,794 Special distributions (139,818) (1,412) (141,230) -------------------------------------------------------------------- Partners' capital at March 31, 1998 $ 139,905 $ -- $ 139,905 ====================================================================
See accompanying notes to financial statements. PLM TRANSPORTATION EQUIPMENT PARTNERS VIIC 1985 INCOME FUND (A Limited Partnership) STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 1998 1997 ------------------------------------ Operating activities Net income $ 76,794 $ 1,966 Adjustment to reconcile net income to net cash provided by (used in) operating activities: Depreciation 109 55,082 Net gain on disposition of equipment (58,617 ) (40,958) Equity in net income from unconsolidated special-purpose entity (27,196 ) (12,956) Changes in operating assets and liabilities Accounts receivable, net 13,789 11,215 Prepaid insurance 354 1,006 Accounts payable and accrued expenses (5,333 ) (3,010) ----------------------------------------- Net cash (used in) provided by operating activities (100 ) 12,345 ----------------------------------------- Investing activities Proceeds from disposition of equipment 53,982 51,023 Distributions from unconsolidated special-purpose entity 27,196 39,706 ----------------------------------------- Net cash provided by investing activities 81,178 90,729 ----------------------------------------- Financing activities Cash distributions paid to limited partners (139,818 ) (173,903) Cash distributions paid to General Partner (1,412 ) (1,757) ----------------------------------------- Net cash used in financing activities (141,230 ) (175,660) ----------------------------------------- Net decrease in cash and cash equivalents (60,152 ) (72,586) Cash and cash equivalents at beginning of period 191,228 416,360 ----------------------------------------- Cash and cash equivalents at end of period $ 131,076 $ 343,774 ========================================= Supplemental information Sale proceeds included in accounts receivable $ 3,000 $ -- =========================================
See accompanying notes to financial statements. PLM TRANSPORTATION EQUIPMENT PARTNERS VIIC 1985 INCOME FUND (A Limited Partnership) NOTES TO FINANCIAL STATEMENTS March 31, 1998 1. Liquidation and Special Distributions During the first quarter of 1995, the Partnership completed its 10th year of operations. Since that date, the General Partner has been 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 the partners. During the liquidation phase of the Partnership the equipment will continue to be leased under operating leases until sold. Operating cash flows, to the extent they exceed Partnership expenses, will continue to be distributed on a quarterly basis to partners. The amounts reflected for assets and liabilities of the Partnership have not been adjusted to reflect liquidation values. The equipment portfolio continues to be carried at the lower of depreciated cost or fair value less estimated cost to dispose. Although the General Partner estimates that there will be distributions after liquidation of assets and liabilities, the amounts cannot be accurately determined prior to actual liquidation of the equipment. Any excess proceeds over expected Partnership obligations will be distributed to the Partners throughout the liquidation period. Upon final liquidation, the Partnership will be dissolved. During the three months ended March 31, 1998, and 1997, the Partnership paid special distributions of $4.15 and $2.94 per weighted-average limited partnership unit, respectively. During the three months ended March 31, 1997, the Partnership paid regular cash distributions of $2.22 per weighted-average limited partnership unit. 2. Opinion of Management In the opinion of the management of PLM Financial Services Inc., the General Partner, the accompanying unaudited financial statements contain all adjustments necessary, consisting primarily of normal recurring accruals, to present fairly the Partnership's financial position as of March 31, 1998 and December 31, 1997, the statements of income and cash flows for the three months ended March 31, 1998 and 1997, and the statements of changes in partners' capital for the period from December 31, 1996 to March 31, 1998. Certain information and note 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, 1997, on file at the Securities and Exchange Commission. 3. Equipment The components of owned equipment are as follows:
March 31, December 31, 1998 1997 ----------------------------------------- Trailers $ 951,998 $ 1,295,164 Less accumulated depreciation (946,948) (1,291,640 ) ------------------------------------------- Net equipment $ 5,050 $ 3,524 ===========================================
All of the equipment owned by the Partnership was operating in PLM-affiliated short-term rental facilities as of March 31, 1998 and December 31, 1997. PLM TRANSPORTATION EQUIPMENT PARTNERS VIIC 1985 INCOME FUND (A Limited Partnership) NOTES TO FINANCIAL STATEMENTS March 31, 1998 3. Equipment (continued) During the three months ended March 31, 1998, the Partnership sold or disposed of trailers with a net book value of $0 for proceeds of $56,982. During the three months ended March 31, 1997, the Partnership sold or disposed of trailers with a net book value of $10,065 for proceeds of $51,023. 4. Investment in Unconsolidated Special Purpose Entity The net investment in unconsolidated special-purpose entity consisted of an 80% interest in a commuter aircraft as of March 31, 1998 and December 31, 1997. As of March 31, 1998 and December 31, 1997, the net book value of this investment was $0. Subsequent Event During May of 1998, the General Partner sold the commuter aircraft in which the Partnership owned an 80% interest for proceeds of $391,820. The net book value of this investment was $0. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (I) RESULTS OF OPERATIONS Comparison of the Trust's Operating Results for the Three Months Ended March 31, 1998 and 1997 TEP VIIB: (A) Owned Equipment Operations Lease revenues less direct expenses (defined as repairs and maintenance and asset specific insurance expenses) on owned equipment decreased for the quarter ended March 31, 1998 when compared to the same period of 1997. The following table presents lease revenues less direct expenses by owned equipment type:
For the Three Months Ended March 31, 1998 1997 ----------------------------------- Trailers $ 11,285 $ 76,569 Railcar equipment -- 3,565 Marine containers -- 1,343
Trailers: Trailer lease revenues and direct expenses were $13,458 and $2,173, respectively, for the quarter ended March 31, 1998, compared to $93,461 and $16,892, respectively, during the same period of 1997. The number of trailers has been declining over the past twelve months due to sales and dispositions. The result of this declining fleet has been a decrease in trailer net contribution. Railcar equipment: Railcar lease revenues and direct expenses were zero for quarter ended March 31, 1998, compared to $3,661 and $96, respectively, during the same period of 1997. The decrease in railcar contribution resulted from the sale of all of the remaining railcars during 1997. Marine containers: Marine container lease revenues and direct expenses were zero for the quarter ended March 31, 1998, compared to $1,361 and $18, respectively, during the same period of 1997. The decrease in marine containers contribution resulted from the sale of all of the remaining containers during 1997. (B) Indirect Expenses Related to Owned Equipment Operations Total indirect expenses of $9,777 for the quarter ended March 31, 1998, decreased from $69,175 for the same period in 1997. Significant variances are explained as follows: (a) A $23,510 decrease in depreciation expenses reflecting the disposition of equipment during 1998 and 1997 and the remaining equipment being fully depreciated. (b) A $19,522 decrease in general and administrative expenses was due to decreased accounting costs and administrative costs associated with the short-term rental facilities due to decreased volume of trailers operating in these facilities. (c) A $13,922 decrease in management fees to affiliates due to the transfer of the remaining assets into a liquidating trust. The Trustees are not entitled to a management fee. (d) A $2,333 decrease in bad debt expense primarily reflecting the Partnership's recovery of certain receivable balances previously reserved for as bad debts. (C) Net Gain on Disposition of Equipment For the quarter ended March 31, 1998, the Trust realized a gain of $1,366 on the sale or disposition of trailers. For the quarter ended March 31, 1997, the Partnership realized a gain of $114,482 on the sale or disposition of trailers, railcars and marine containers. (D) Net Income As a result of the foregoing, the net income of $6,184 in the first quarter of 1998 decreased from net income of $130,312 in the first quarter of 1997. The Trust's ability to operate or liquidate assets, secure leases, and re-lease those assets whose leases expire during the duration of the Trust is subject to many factors, and the Trust's performance in the first quarter of 1998 is not necessarily indicative of future periods. In the first quarter of 1998, the Trust distributed $305,544 to the beneficiaries, or $13.72 per weighted-average unit. TEP VIIC: (A) Owned Equipment Operations Lease revenues less direct expenses (defined as repairs and maintenance and asset specific insurance expenses) on owned equipment decreased for the quarter ended March 31, 1998 when compared to the same period of 1997. The following table presents lease revenues less direct expenses by owned equipment type:
For the Three Months Ended March 31, 1998 1997 ----------------------------------- Trailers $ 26,107 $ 55,187 Marine containers -- 1,298
Trailers: Trailer lease revenues and direct expenses were $30,716 and $4,609, respectively, for the quarter ended March 31, 1998, compared to $70,855 and $15,668, respectively during the same period during 1997. The number of trailers owned by the Partnership has been declining over the past twelve months due to sales and dispositions. The result of this declining fleet has been a decrease in trailer net contribution. Marine containers: Marine container lease revenues and direct expenses were zero for the quarter ended March 31, 1998, compared to $1,340 and $42, respectively during the same period during 1997. The decrease in marine containers contribution resulted from the sale of all of the remaining containers during 1997. (B) Indirect Expenses Related to Owned Equipment Operations Total indirect expenses of $37,762 for the quarter ended March 31, 1998, decreased from $112,751 for the same period in 1997. Significiant variances are explained as follows: (a) A $54,973 decrease in depreciation expenses reflecting the disposition of certain assets during 1998 and 1997. (b) A $20,313 decrease in the general and administrative expenses due to decreased accounting costs and administrative costs associated with the short-term rental facilities due to decreased volume of trailers operating in these facilities. (C) Net Gain on Disposition of Equipment For the quarter ended March 31, 1998, the Partnership realized a gain of $58,617 on the sale or disposition of trailers. During the three months ended March 31, 1997, the Partnership realized a gain of $40,958 on the sale or disposition of trailers. (D) Equity in Net Income of Unconsolidated Special-Purpose Entity Equity in net income of unconsolidated special-purpose entity of $27,196 and $12,956 for the quarter ended March 31, 1998 and March 31, 1997, respectively, represents the Partnership's share of income generated from the investment in an entity which owns an aircraft, accounted for under the equity method. As of March 31, 1998 and 1997, the Partnership's investment in unconsolidated special-purpose entity consisted of an 80% interest in an entity which owns a commuter aircraft. (E) Net Income The Partnership's net income increased to $76,794 in the first quarter of 1998 from $1,966 in the first quarter of 1997. The Partnership's ability to operate or liquidate assets, secure leases, and re-lease those assets whose leases expire during the duration of the Partnership is subject to many factors, and the Partnership's performance in the first quarter of 1998 is not necessarily indicative of future periods. In the first quarter of 1998, the Partnership made special distributions of $139,818 to the limited partners, or $4.15 per weighted-average limited partnership unit. (II) ASSET SALES As discussed in Note 1 to each of the accompany financial statements and (V) below, the remaining equipment is actively being marketed for sale. (III) YEAR 2000 COMPLIANCE The Trustees or General Partner are currently addressing the year 2000 computer software issue and creating a timetable for carrying out any program modifications that may be required. It is not anticipated that the cost of those modifications allocable to the Trust or Partnership will be material. (IV) ACCOUNTING PRONOUNCEMENTS In June 1997, the Financial Accounting Standards Board issued two new statements: SFAS No. 130, "Reporting Comprehensive Income," which requires enterprises to report, by major component and in total, all changes in equity from nonowner sources; and SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information," which establishes annual and interim reporting standards for a public company's operating segments and related disclosures about its products, services, geographic areas, and major customers. Both statements are effective for the Trust or Partnership's fiscal year ended December 31, 1998. The effect of adoption of these statements will be limited to the form and content of the Trust's or Partnership's disclosures and will not impact the Trust's or Partnership's results of operations, cash flow, or financial position. (V) FUTURE OUTLOOK With the majority of the equipment portfolio now liquidated, TEP VIIB's remaining assets were transferred into a liquidating trust as of January 1, 1998 (see Note 1) of the accompany financial statements. Any excess proceeds over expected obligations will be distributed to the Beneficiaries in the liquidating trust. For TEP VIIC, the General Partner is actively pursuing the sale of all of the Partnerships' equipment with the intention of winding up the Partnership and distributing all available cash to the Partners. (VI) 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 Partnerships' 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 Partnerships' actual results could differ materially from those discussed here. (This space intentionally left blank.) 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 Date: May 14, 1998 By: /s/ Stephen M. Bess ------------------- Stephen M. Bess Trustee EX-27 2
5 3-MOS DEC-31-1998 MAR-31-1998 50,510 0 9,736 1,527 0 0 288,612 288,538 59,098 0 0 0 0 0 53,764 59,098 0 18,134 0 0 14,389 (2,439) 0 6,184 0 6,184 0 0 0 6,184 0.14 0.14
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