-----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, PMkBFHRy1XvWLyjFG8+mI2G5ze6BMAprP8J4SegxKWklitfZVAjbmLH0BZ8QYLjh hkZBm7VfDbvfzc0DxbjQWQ== 0000754714-96-000003.txt : 19960812 0000754714-96-000003.hdr.sgml : 19960812 ACCESSION NUMBER: 0000754714-96-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960809 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PLM TRANSPORTATION EQUIPMENT PARTNERS VIIC 1985 INCOME FUND CENTRAL INDEX KEY: 0000754714 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EQUIPMENT RENTAL & LEASING, NEC [7359] IRS NUMBER: 942946248 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-14599 FILM NUMBER: 96607028 BUSINESS ADDRESS: STREET 1: ONE MARKET PLZ STEUART ST TOWER STREET 2: STE 900 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, 1996. [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission file number 0-14599 PLM TRANSPORTATION EQUIPMENT PARTNERS VIIC 1985 INCOME FUND (Exact name of registrant as specified in its charter) California 94-2946248 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One Market, Steuart Street Tower, Suite 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, 1996 1995 --------------------------------------- Equipment held for operating leases, at cost $ 3,751,988 $ 3,972,722 Less accumulated depreciation (3,522,222 ) (3,616,132 ) --------------------------------------- Net equipment 229,766 356,590 Cash and cash equivalents 185,417 293,808 Investment in unconsolidated special purpose entity 46,953 79,116 Accounts receivable, net of allowance for doubtful accounts of $14,107 in 1996 and $19,664 in 1995 106,519 135,320 Prepaid Insurance 1,118 3,128 ======================================= Total assets $ 569,773 $ 867,962 ======================================= LIABILITIES AND PARTNERS' CAPITAL Liabilities: Due to affiliates $ 4,641 $ 4,641 Accounts payable and accrued expenses 18,524 21,292 Prepaid deposits and engine reserves -- 260 --------------------------------------- Total liabilities 23,165 26,193 Partners capital (deficit): Limited Partners (22,276 units) 639,192 931,401 General Partner (92,584 ) (89,632 ) --------------------------------------- Total partners' capital 546,608 841,769 --------------------------------------- Total liabilities and partners' capital $ 569,773 $ 867,962 =======================================
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, 1996 1995 1996 1995 --------------------------------------------------------------------- Revenues: Lease revenue $ 88,840 $ 162,569 $ 194,914 $ 346,232 Interest and other income 2,635 17,853 6,088 23,179 Gain on disposition of equipment 10,304 10,000 29,634 22,830 -------------------------------- ----------------------------- Total revenues 101,779 190,422 230,636 392,241 Expenses: Depreciation 53,112 69,438 107,881 141,294 Management fees to affiliate 13,922 13,922 25,436 27,845 Bad debt expense (24,677 ) (31,882 ) (6,856 ) 12,757 Repairs and maintenance 22,939 29,607 45,201 74,029 General and administrative expenses to affiliates 21,889 31,518 48,436 67,357 Other general and administrative expenses 14,641 15,325 26,983 26,536 -------------------------------- ----------------------------- Total expenses 101,826 127,928 247,081 349,818 Equity in net income of unconsolidated special purpose entity 10,045 -- 19,376 -- -------------------------------- ----------------------------- Net income $ 9,998 $ 62,494 $ 2,931 $ 42,423 ================================ ============================= Partners' share of net income: Limited Partners - 99% $ 9,898 $ 61,869 $ 2,902 $ 41,999 General Partner - 1% 100 625 29 424 -------------------------------- ----------------------------- Total 9,998 $ 62,494 $ 2,931 $ 42,423 ================================ ============================= Net income per Limited Partnership Unit (22,276 units) $ 0.44 $ 2.78 $ 0.13 $ 1.88 ================================ ============================= Cash distributions $ 99,046 $ 99,047 $ 198,092 $ 198,093 ================================ ============================= Cash distribution per Limited Partnership Unit $ 4.40 $ 4.40 $ 8.80 $ 8.80 ================================ ============================= Special cash distributions $ 100,000 $ -- $ 100,000 $ -- ================================ ============================= Special cash distributions per Limited Partnership Unit $ 4.44 -- $ 4.44 $ -- ================================ ============================= Total cash distributions per Limited Partnership Unit $ 8.84 $ 4.40 $ 13.24 $ 8.80$ ================================ ============================= 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, 1994 to June 30, 1996
Limited General Partner Partner Total ------------------------------------------------------------ Partners' capital (deficit) at December 31, 1994 $ 1,294,613 $ (85,963 ) $ 1,208,650 Net income 29,013 293 29,306 Cash distributions (392,225 ) (3,962 ) (396,187 ) ------------------------------------------------------------- Partners' capital (deficit) at December 31, 1995 931,401 (89,632 ) 841,769 Net income 2,902 29 2,931 Quarterly cash distributions (196,111 ) (1,981 ) (198,092 ) Special distributions (99,000 ) (1,000 ) (100,000 ) ------------------------------------------------------------- Partners' capital (deficit) at June 30, 1996 639,192 (92,584 ) 546,608 =============================================================
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, 1996 1995 ------------------------------------ Operating Activities: Net income $ 2,931 $ 42,423 Adjustments to reconcile net income to net cash provided by operating activities: Gain on disposition of equipment (29,634 ) (22,830 ) Depreciation 107,881 141,294 Cash distributions from unconsolidated special purpose entity in excess of income accrued 32,163 -- Changes in operating assets and liabilities: Restricted cash -- (497 ) Accounts receivable, net 28,801 7,091 Prepaid insurance 2,010 1,961 Due to affiliates -- (14,123 ) Accounts payable (2,768 ) (13,544 ) Prepaid deposits and engine reserves (260 ) (807 ) ------------------------------------ Cash provided by operating activities 141,124 140,968 ------------------------------------ Investing activities: Proceeds from disposition of equipment 48,577 63,919 ------------------------------------ Cash provided by investing activities 48,577 63,919 ------------------------------------ Cash flows used in financing activities: Cash distributions paid to General Partner (2,981 ) (1,981 ) Cash distributions paid to Limited Partners (295,111 ) (196,112 ) ------------------------------------ Cash used in financing activities (298,092 ) (198,093 ) Net (decrease) increase in cash and cash equivalents (108,391 ) 6,794 Cash and cash equivalents at beginning of period 293,808 358,864 ------------------------------------ Cash and cash equivalents at end of period $ 185,417 365,658 ====================================
See accompanying notes to financial statements. PLM TRANSPORTATION EQUIPMENT PARTNERS VIIB 1985 INCOME FUND (A Limited Partnership) NOTES TO FINANCIAL STATEMENTS June 30, 1996 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, 1996, the statements of income for the three months ended June 30, 1996 and 1995, the statements of changes in partners' capital for the period from December 31, 1994 to June 30, 1996 and the statements of cash flows for the six months ended June 30, 1996 and 1995. 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, 1995, on file at the Securities and Exchange Commission. 2. Equipment The components of owned equipment are as follows:
June 30, December 31, 1996 1995 -------------------------------------- Equipment held for operating leases: Trailers $ 3,340,319 $ 3,543,334 Marine containers 93,020 110,739 Rail equipment 318,649 318,649 -------------------------------------- 3,751,988 3,972,722 Less accumulated depreciation (3,522,222 ) (3,616,132 ) -------------------------------------- Net equipment $ 229,766 $ 356,590 ======================================
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, 1996. With the exception of one trailer with a carrying value of $6,500, all of the equipment was on lease as of December 31, 1995. During the six months ended June 30, 1996, the Partnership sold or disposed of eight trailers and seven marine containers with an aggregate net book value of $18,943 for proceeds of $48,577. During the six months ended June 30, 1995, the Partnership sold or disposed of seven trailers and six marine containers with an aggregate net book value of $41,089 for proceeds of $63,919. 3. Liquidation and special distributions During the first quarter of 1995, the Partnership completed its 10th year of operations. As originally anticipated by the General Partner, the Partnership will be liquidated in an orderly manner in its 11th and 12th years of operation. The General Partner is actively marketing the remaining equipment portfolio with the intent of maximizing sale proceeds. As sale proceeds are received the General Partner intends to periodicially declare special distributions to distribute the sale proceeds to 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 PLM TRANSPORTATION EQUIPMENT PARTNERS VIIB 1985 INCOME FUND (A Limited Partnership) NOTES TO FINANCIAL STATEMENTS June 30, 1996 3. Liquidation and special distributions (continued) assets and liabilites of Partnership have not been adjusted to reflect liquidation values. The equipment portfolio continues to be carried at the lower of depreciated cost or fair value less cost to dispose. Although the General Partner estimates that there will be distributions after liquidation of assets and liabilities, the amounts cannot be accurately determined prior to actual liquidation of the equipment. Any excess proceeds over expected Partnership obligations will be distributed to the Partners throughout the liquidation period. Upon final liquidation, the Partnership will be dissolved. 4. Investment in Unconsolidated Special Purpose Entity Prior to 1996, the Partnership accounted for operating activities associated with joint ownership of rental equipment as undivided interests, including its proportionate share of each asset with similar wholly-owned assets in its financial statements. Under generally accepted accounting principles, the effects of such activities, if material, should be reported using the equity method of accounting. Therefore, effective January 1, 1996, the Partnership adopted the equity method to account for its investment in such jointly-held assets. The principle differences between the previous accounting method and the equity method relates to the presentation of activities relating to these assets in the statement of operations. Whereas, under equity accounting the Partnership's proportionate share is presented as a single net amount, "equity in net income (loss) of unconsolidated special purpose entities", under the previous method, the Partnership's statement of operations reflected its proportionate share of each individual item of revenue and expense. Accordingly, the effect of adopting the equity method of accounting has no cumulative effect on previously reported partner's capital or on the Partnership's net income (loss) for the period of adoption. Because the effects on previously issued financial statements of applying the equity method of accounting to investments in jointly-owned assets are not considered to be material to such financial statements taken as a whole, previously issued financial statements have not been restated. However, certain items have been reclassified in the previously issued balance sheet to conform to the current period presentation. The "Investment in unconsolidated special purpose entity" includes a 31% interest in a commuter aircraft. PLM TRANSPORTATION EQUIPMENT PARTNERS VIIC 1985 INCOME FUND (A Limited Partnership) BALANCE SHEETS ASSETS
June 30, December 31, 1996 1995 --------------------------------------- Equipment held for operating leases, at cost $ 4,535,450 $ 5,059,215 Less accumulated depreciation (4,188,772 ) (4,536,562 ) --------------------------------------- Net equipment 346,678 522,653 Cash and cash equivalents 262,459 551,094 Investments in unconsolidated special purpose entities 312,261 425,957 Accounts receivable, net of allowance for doubtful accounts of $12,918 in 1996 and $6,649 in 1995 87,741 143,225 Prepaid Insurance 1,510 5,435 ======================================= Total assets $ 1,010,649 $ 1,648,364 ======================================= LIABILITIES AND PARTNERS' CAPITAL Liabilities: Due to affiliates $ 7,026 $ 7,026 Accounts payable and accrued expenses 9,097 15,202 --------------------------------------- Total liabilities 16,123 22,228 Partners capital (deficit): Limited Partners (33,727 units) 1,133,083 1,758,377 General Partner (138,557 ) (132,241 ) --------------------------------------- Total partners' capital 994,526 1,626,136 --------------------------------------- Total liabilities and partners' capital $ 1,010,649 $ 1,648,364 =======================================
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, 1996 1995 1996 1995 --------------------------------------------------------------- Revenues: Lease revenue $ 110,557 $ 268,097 $ 219,749 $ 582,773 Interest and other income 4,359 8,958 10,822 20,232 Gain on disposition of equipment 20,189 27,968 54,634 46,659 ----------------------------- ----------------------------- Total revenues 135,105 305,023 285,205 649,664 Expenses: Depreciation 62,867 128,130 129,371 259,038 Management fees to affiliate 22,525 21,529 37,823 45,809 Repairs and maintenance 23,225 59,813 46,936 102,742 General and administrative expenses to affiliates 29,951 46,213 67,082 101,308 Other general and administrative expenses 17,069 18,124 36,816 22,771 ----------------------------- ----------------------------- Total expenses 155,637 273,809 318,028 531,668 Equity in net income of unconsolidated special purpose entities 33,867 -- 70,844 -- ----------------------------- ----------------------------- Net income $ 13,335 $ 31,214 $ 38,021 $ 117,996 ============================= ============================= Partners' share of net income: Limited Partners - 99% $ 13,202 $ 30,902 $ 37,641 $ 116,816 General Partner - 1% 133 312 380 1,180 ============================= ============================= Total $ 13,335 $ 31,214 $ 38,021 $ 117,996 ============================= ============================= Net income per Limited Partnership Unit (33,727 units) $ 0.39 $ 0.92 $ 1.12 $ 3.46 ============================= ============================= Cash distributions $ 159,314 $ 262,139 $ 319,631 $ 525,096 ============================= ============================= Cash distribution per Limited Partnership Unit $ 4.68 $ 7.69 $ 9.38 $ 15.44 ============================= ============================= Special cash distributions $ 250,000 $ -- $ 350,000 $ 100,000 ============================= ============================= Special cash distributions per Limited Partnership Unit $ 7.34 $ -- $ 10.27 $ 2.94 ============================= ============================= Total Cash Distributions per Limited Partnership Units $ 12.02 $ 7.69 $ 19.65 $ 18.38 ============================= =============================
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, 1994 to June 30, 1996
Limited General Partner Partner Total --------------------------------------------------------------- Partners' capital (deficit) at December 31, 1994 $ 2,622,019 $ (123,518 ) $ 2,498,501 Net income 173,422 1,752 175,174 Cash distributions (1,037,064 ) (10,475 ) (1,047,539 ) --------------------------------------------------------------- Partners' capital (deficit) at December 31, 1995 1,758,377 (132,241 ) 1,626,136 Net income 37,641 380 38,021 Quarterly cash distributions (316,435 ) (3,196 ) (319,631 ) Special distributions (346,500 ) (3,500 ) (350,000 ) --------------------------------------------------------------- Partners' capital (deficit) at June 30, 1996 1,133,083 (138,557 ) 994,526 ===============================================================
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, 1996 1995 ------------------------------------- Operating Activities: Net income $ 38,021 $ 117,996 Adjustment to reconcile net income to net cash provided by operating activities: Gain on disposition of equipment (54,634 ) (46,659 ) Depreciation 129,371 259,038 Cash distributions from unconsolidated special purpose entities in excess of income accrued 113,696 -- Changes in operating assets and liabilities Restricted cash -- (385 ) Accounts receivable, net 55,484 42,146 Prepaid insurance 3,925 4,501 Due to affiliates -- (17,391 ) Accounts payable (6,105 ) 5,437 Prepaid deposits and engine reserves -- 386 ------------------------------------- Cash provided by operating activities 279,758 365,069 ------------------------------------- Investing activities: Proceeds from disposition of equipment 101,238 93,117 ------------------------------------- Cash provided by investing activities 101,238 93,117 ------------------------------------- Cash flows used in financing activities: Cash distributions paid to General Partner (6,696 ) (6,259 ) Cash distributions paid to Limited Partners (662,935 ) (619,647 ) ------------------------------------- Cash used in financing activities (669,631 ) (625,906 ) Net decrease in cash and cash equivalents (288,635 ) (167,720 ) Cash and cash equivalents at beginning of period 551,094 799,068 ------------------------------------- Cash and cash equivalents at end of period $ 262,459 $ 631,348 =====================================
See accompanying notes to financial statements. PLM TRANSPORTATION EQUIPMENT PARTNERS VIIC 1985 INCOME FUND (A Limited Partnership) NOTES TO FINANCIAL STATEMENTS June 30, 1996 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, 1996, the statements of income for the three months ended June 30, 1996 and 1995, the statements of changes in partners' capital for the period from December 31, 1994 to June 30, 1996, and the statements of cash flows for the six months ended June 30, 1996 and 1995. 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, 1995, on file at the Securities and Exchange Commission. 2. Equipment The components of owned equipment are as follows:
June 30, December 31, 1996 1995 ---------------------------------------- Equipment held for operating leases: Trailers $ 4,317,907 $ 4,833,449 Marine containers 217,543 225,766 ---------------------------------------- 4,535,450 5,059,215 Less accumulated depreciation (4,188,772 ) (4,536,562 ) ======================================== Net equipment $ 346,678 $ 522,653 ========================================
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, 1996, and at December 31, 1995. During the six months ended June 30, 1996, the Partnership sold or disposed of four marine containers and 16 trailers with an aggregate net book value of $46,604 for proceeds of $101,238. During the six months ended June 30, 1995, the Partnership sold or disposed of four marine containers and six trailers with an aggregate net book value of $46,458 for proceeds of $93,117. 3. Liquidation and special distributions During the first quarter of 1995, the Partnership completed its 10th year of operations. As originally anticipated by the General Partner, the Partnership will be liquidated in an orderly manner in its 11th and 12th years of operation. The General Partner is actively marketing the remaining equipment portfolio with the intent of maximizing sale proceeds. As sale proceeds are received the General Partner intends to periodicially declare special distributions to distribute the sale proceeds to 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 PLM TRANSPORTATION EQUIPMENT PARTNERS VIIC 1985 INCOME FUND (A Limited Partnership) NOTES TO FINANCIAL STATEMENTS June 30, 1996 3. Liquidation and special distributions (continued) equipment portfolio continues to be carried at the lower of depreciated cost or fair value less cost to dispose. Although the General Partner estimates that there will be distributions after liquidation of assets and liabilities, the amounts cannot be accurately determined prior to actual liquidation of the equipment. Any excess proceeds over expected Partnership obligations will be distributed to the Partners throughout the liquidation period. Upon final liquidation, the Partnership will be dissolved. During the three months ended June 30, 1996, and 1995, the General Partner paid special distributions of $2.94 per Limited Partnership Unit for proceeds from equipment liquidations. The Partnership is not permitted to reinvest proceeds from sales or liquidations of equipment. These proceeds, in excess of operational cash requirements, are periodically paid out to limited partners in the form of special distributions. The sales and liquidations occur because of equipment destructions, the determination by the General Partner that it is the appropriate time to maximize the return on an asset through sale of that asset, and, in some leases, the ability of the lessee to exercise purchase options. 4. Investments in Unconsolidated Special Purpose Entites Prior to 1996, the Partnership accounted for operating activities associated with joint ownership of rental equipment as undivided interests, including its proportionate share of each asset with similar wholly-owned assets in its financial statements. Under generally accepted accounting principles, the effects of such activities, if material, should be reported using the equity method of accounting. Therefore, effective January 1, 1996, the Partnership adopted the equity method to account for its investment in such jointly-held assets. The principle differences between the previous accounting method and the equity method relates to the presentation of activities relating to these assets in the income statement. Whereas, under equity accounting the Partnership's proportionate share is presented as a single net amount, "equity in net income (loss) of unconsolidated special purpose entities", under the previous method, the Partnership's income statement reflected its proportionate share of each individual item of revenue and expense. Accordingly, the effect of adopting the equity method of accounting has no cumulative effect on previously reported partner's capital or on the Partnership's net income (loss) for the period of adoption. Because the effects on previously issued financial statements of applying the equity method of accounting to investments in jointly-owned assets are not considered to be material to such financial statements taken as a whole, previously issued financial statements have not been restated. However, certain items have been reclassified in the previously issued balance sheet to conform to the current period presentation. The "Investments in unconsolidated special purpose entities" includes 31% and 80% interests in two separate commuter aircraft. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (I) Results of Operations Comparison of the Partnerships' Operating Results for the Three Months Ended June 30, 1996 and 1995 TEP VIIB: (A) Owned equipment operations Lease revenues less direct expenses (defined as repairs and maintenance and asset specific insurance expenses) on owned equipment decreased during the second quarter of 1996 when compared to the same quarter of 1995. The following table presents lease revenues less direct expenses by owned equipment type:
For the three months ended June 30, 1996 1995 ------------------------------ Trailers $ 55,587 $ 90,915 Railcar equipment 7,181 8,553 Marine containers 2,540 5,254
Trailers: Trailer lease revenues and direct expenses were $78,770 and $23,183, respectively, for the three months ended June 30, 1996, compared to $125,092 and 34,177, respectively during the same quarter of 1995. The decrease of net contribution was due to lower utlilization of trailers in the short-term rental facilities in the second quarter of 1996 when compared to the same quarter of 1995, and the disposition of trailers; Railcar equipment: Railcar lease revenues and direct expenses were $7,500 and $319, respectively, for the three months ended June 30, 1996, compared to $8,110 and a credit of $443, respectively, during the same quarter of 1995. Although the railcar fleet remained relatively the same size for both quarters, the decrease in railcar contribution resulted as a result of running repairs required on certain railcars in the fleet during 1995 which were not needed during 1996; Marine containers: Marine container lease revenues and direct expenses were $2,570 and $30, respectively, for the three months ended June 30, 1996, compared to $5,320 and $66, respectively, during the same quarter of 1995. The number of marine containers owned by the Partnership has been declining over the past twelve months due to sales and dispositions. The result of this declining fleet has been a decrease in marine container net contribution. (B) Indirect expenses related to owned equipment operations Total indirect expenses of $78,294 for the quarter ended June 30, 1996, decreased from $81,599 for the same quarter in 1995. The variances are explained as follows: (a) a $7,205 increase in bad debt expense due to the General Partner's evaluation of the collectibility of trade receivables from trailer rental yard lessees; (b) a decrease of $6,537 in general and administrative expenses due to lower indirect costs associated with the short-term rental facilites due to decreased volume of trailers operating in the facilites in the second quarter of 1996 as compared to the second quarter of 1995, and lower accounting costs; (c) A $3,973 decrease in depreciation and amortization expenses from 1995 levels reflecting the sale of certain assets during 1996 and 1995. (C) Net gain on disposition of equipment was $10,304 in the second quarter of 1996, from the disposition of one marine trailer and three trailers compared to a gain of $10,000 in the second quarter of 1995, from the disposition of two marine containers and one trailer. (D) Interest and other income Interest and other income decreased $15,218 during the second quarter of 1996 due primarily to income earned from an early lease termination penalty on four railcars in the second quarter of 1995, and lower interest income due to lower cash balances available for investments when compared to the same period of 1995. (E) Equity in net incomeof unconsolidated special purpose entity Equity in net income of unconsolidated special purpose entity represents the net income generated from jointly owned asset accounted for under the equity method (see Note 4 to financial statements).
For the three months ended June 30, 1996 1995 ------------------------------ Aircraft $ 10,045 $ 11,518
Aircraft: The decrease of net contribution was due to higher management fees in the second quarter compared to the same period in 1995. Monthly management fees are calculated as the greater of 10% of the Partnership's Operating Cash Flow, or 1/12 of 1/2% of the Partnership's Capital Contributions as defined in the Limited Partnership Agreement. (F) Net income The Partnership's net income of $9,998 in the second quarter of 1996, decreased from a net income of $62,494 in the second quarter of 1995. 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 1996 is not necessarily indicative of future periods. In the second quarter of 1996, the Partnership distributed $197,056 to the Limited Partners, or $8.84 per Limited Partnership Unit which included a special distribution of $4.44 per unit. TEP VIIC: (A) Owned equipment operations Lease revenues less direct expenses (defined as repairs and maintenance and asset specific insurance expenses) on owned equipment decreased during the second quarter of 1996 when compared to the same quarter of 1995. The following table presents lease revenues less direct expenses by owned equipment type:
For the three months ended June 30, 1996 1995 -------------------------------- Trailers $ 84,541 $ 100,740 Marine containers 1,876 5,824
Trailers: Trailer lease revenues and direct expenses were $108,630 and $24,089, respectively, for the three months ended June 30, 1996, compared to $163,018 and $62,278, respectively during the same quarter of 1995. The decrease in net contribution was due to lower utlilization of trailers in the short-term rental facilities in the second quarter of 1996 when compared to the same quarter of 1995, and the disposition of trailers; Marine containers: Marine container lease revenues and direct expenses were $1,927 and $51, respectively, for the three months ended June 30, 1996, compared to $5,962 and $138, respectively during the same quarter of 1995. The number of marine containers owned by the Partnership has been declining over the past twelve months due to sales and dispositions. The result of this declining fleet has resulted in a decrease in marine container net contribution. (B) Indirect expenses related to owned equipment operations Total indirect expenses of $131,497 for the quarter ended June 30, 1996, decreased from $167,584 for the same period in 1995. The variances are explained as follows: (a) a $15,298 decrease in bad debt expense due to the General Partner's evaluation of the collectibility of trade receivables from trailer rental yard lessees; (b) a decrease in the general and administrative expenses of $12,081 from 1995 levels was due to decreased administrative costs associated with the short-term rental facilities; (c) a $9,704 decrease in depreciation and amortization expenses from 1995 levels reflecting the sale of certain assets during 1996 and 1995. (C) Net gain on disposition of equipment was $20,189 in the second quarter of 1996, from the disposition of seven trailers, compared to a gain of $27,968 in the second quarter of 1995, from the disposition of seven marine containers and one trailer. (D) Interest and other income decreased to $4,359 in the second quarter of 1996 from $8,958 in the second quarter of 1995. This decrease was primarily due to lower interest rate earned on cash investments in the second quarter of 1996. (E) Equity in net income of unconsolidated special purpose entities Equity in net income of unconsolidated special purpose entities represents the net income generated from jointly owned assets accounted for under the equity method (see Note 4 to financial statements).
For the three months ended June 30, 1996 1995 ------------------------------ Aircraft $ 33,867 $ 55,308
Aircraft: The decrease of net contribution was due to lower bad debt expense in the second quarter of 1996 when compared to the same period of 1995. (F) Net Income The Partnership's net income decreased to $13,335 in the second quarter of 1996, from $31,214 in the second quarter of 1995. 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 1996 is not necessarily indicative of future periods. In the second quarter of 1996, the Partnership distributed $405,221 to the Limited Partners, or $12.02 per Limited Partnership Unit which included a special distribution of $7.34 per unit. Comparison of the Partnerships' Operating Results for the Six Months Ended June 30, 1996 and 1995 TEP VIIB: (A) Owned equipment operations Lease revenues less direct expenses (defined as repairs and maintenance and asset specific insurance expenses) on owned equipment decreased during the first six months of 1996 when compared to the same period of 1995. The following table presents lease revenues less direct expenses by owned equipment type:
For the six months ended June 30, 1996 1995 --------------------------------- Trailers $ 126,112 $ 192,596 Railcar equipment 14,636 12,959 Marine containers 7,777 12,268
Trailers: Trailer lease revenues and direct expenses were $172,077 and $45,965, respectively, for the six months ended June 30, 1996, compared to $269,003 and $76,407, respectively, during the same period of 1995. The decrease of net contribution was due to lower utlilization of trailers in the short-term rental facilities in the first six months of 1996 when compared to the same period of 1995, and the disposition of trailers; Railcar equipment: Railcar lease revenues and direct expenses were $15,000 and $364, respectively, for the six months ended June 30, 1996, compared to $16,012 and $3,053, respectively, during the same period of 1995. Although the railcar fleet remained relatively the same size for both quarters, the decrease in railcar contribution resulted as a result of running repairs required on certain railcars in the fleet during 1995 which were not needed during 1996; Marine containers: Marine container lease revenues and direct expenses were $7,837 and $60, respectively, for the six months ended 1996, compared to $12,401 and $133, respectively, during the same period of 1995. The number of marine containers owned by the Partnership has been declining over the past twelve months due to sales and dispositions. The result of this declining fleet has resulted in a decrease in marine container net contribution. (B) Indirect expenses related to owned equipment operations Total indirect expenses of $200,692 for the six months ended June 30, 1996, decreased from $244,938 for the same period in 1995. The variances are explained as follows: (a) a decrease of bad debt expense of $19,613 was due to the General Partner's evaluation of the collectibility of trade receivables from trailer rental yard lessees; (b) a decrease of general and administrative expenses of $13,517 from 1995 levels was due to decreased administrative costs associated with the short-term rental facilities; (c) a $8,707 decrease in depreciation and amortization expenses from 1995 levels reflecting the sale of certain assets during 1996 and 1995; (d) a $2,409 decrease in management fee due to lower levels of operating cash flow during the comparable periods. Monthly management fees are calculated as the greater of 10% of the Partnership's Operating Cash Flow, or 1/12 of 1/2% of the Partnership's Capital Contributions as defined in the Limited Partnership Agreement. (C) For the six months ended June 30, 1996, the Partnership realized a gain of $29,634 on the sale or disposition of seven marine containers and eight trailers, compared to the same period in 1995 where the Partnership realized a gain of $22,830 on the sale or disposition of seven trailers and six marine containers. (D) Interest and other income decreased to $6,088 for the six months ended June 30, 1996 from $23,179 compared to the same period of 1995. This decrease was primarily due to income earned from an early lease termination penalty on four railcars in the second quarter of 1995, and a lower interest income earned due to lower cash balances available for investments when compared to the same period of 1995. (E) Equity in net income of the unconsolidated special purpose entity Equity in net income of unconsolidated special purpose entity represents the net income generated from jointly owned asset accounted for under the equity method (see Note 4 to financial statements).
For the six months ended June 30, 1996 1995 ------------------------------ Aircraft $ 19,376 $ 23,529
Aircraft: The decrease of net contribution was due to higher management fees in the six months ended June 30, 1996, when compared to the same period of 1995. Monthly management fees are calculated as the greater of 10% of the Partnership's Operating Cash Flow, or 1/12 of 1/2% of the Partnership's Capital Contributions as defined in the Limited Partnership Agreement. (F) Net income The Partnership's net income of $2,931 in the six months ended June 30, 1996, decreased from $42,423 in the first six months of 1995. The Partnership's ability to operate or liquidate assets, secure leases, and re-lease those assets whose leases expire during the duration of the Partnership is subject to many factors, and the Partnership's performance in the first six months of 1996 is not necessarily indicative of future periods. For the six months ended June 30, 1996, the Partnership distributed $295,111 to the Limited Partners, or $13.24 per Limited Partnership Unit which included a special distribution of $4.44 per unit. TEP VIIC: (A) Owned equipment operations Lease revenues less direct expenses (defined as repairs and maintenance and asset specific insurance expenses) on owned equipment decreased during the first six months of 1996 when compared to the same period of 1995. The following table presents lease revenues less direct expenses by owned equipment type:
For the six months ended June 30, 1996 1995 --------------------------------- Trailers $ 167,681 $ 261,558 Marine containers 3,114 15,600
Trailers: Trailer lease revenues and direct expenses were $216,522 and $48,841, respectively, for the six months ended 1996, compared to $368,314 and $106,756, respectively during the same quarter of 1995. The decrease in net contribution was due to lower utlilzation of trailers in the short-term rental facilities in the first six months of 1996 when compared to the same period of 1995, and the disposition of trailers; Marine containers: Marine container lease revenues and direct expenses were $3,227 and $114, respectively, for the six months ended 1996, compared to $15,879 and $279, respectively during the same quarter of 1995. The number of marine containers owned by the Partnership has been declining over the past twelve months due to sales and dispositions. The result of this declining fleet has resulted in a decrease in marine container net contribution. (B) Indirect expenses related to owned equipment operations Total indirect expenses of $269,073 for the six months ended June 30, 1996, decreased from $323,363 for the same period in 1995. The variances are explained as follows: (a) a decrease in the general and administrative expenses of $22,439 from 1995 levels was due to decreased administrative costs associated with the short-term rental facilities due to decreased volume of trailers operating in these facilities; (b) a $18,548 decrease in depreciation and amortization expenses from 1995 levels reflecting the sale of certain assets during 1996 and 1995; (c) a $7,986 decrease in managment fee due to lower levels of operating cash flow during the comparable periods. Monthly management fees are calculated as the greater of 10% of the Partnership's Operating Cash Flow, or 1/12 of 1/2% of the Partnership's Capital Contributions as defined in the Limited Partnership Agreement; (d) a $5,317 decrease in bad debt expense due to the General Partner's evaluation of the collectibility of trade receivables from trailer rental yard lessees. (C) For the six months ended June 30, 1996, the Partnership realized a gain of $54,634 on the sale or disposition of 16 trailers and four marine containers, compared to the same period in 1995, where the Partnership realized a gain of $46,659 on the sale or disposition of seven trailers and 11 marine containers. (D) Equity in net income of unconsolidated special purpose entities Equity in net income of unconsolidated special purpose entities represents the net income generated from jointly owned assets accounted for under the equity method (see Note 4 to financial statements).
For the six months ended June 30, 1996 1995 ------------------------------ Aircraft $ 70,844 $ 97,310
Aircraft: The decrease of net contribution was due to lower management fees in the six months ended June 30, 1996, when compared to the same period in 1995. Monthly management fees are calculated as the greater of 10% of the Partnership's Operating Cash Flow, or 1/12 of 1/2% of the Partnership's Capital Contributions as defined in the Limited Partnership Agreement. (E) Interest and other income decreased to $10,822 for the six months ended June 30, 1996 from $5,326 compared to the same period of 1995. This decrease was primarily due to lower interest rate earned on cash investments in the first six months of 1996. (F) Net Income The Partnership's net income decreased to $38,021 for the six months ended June 30, 1996, from $117,996 in the same period in 1995. 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 six months of 1996 is not necessarily indicative of future periods. In the second six months of 1996, the Partnership distributed $662,935 to the Limited Partners, or $19.65 per Limited Partnership Unit which included a special distribution of $10.27 per unit. (II) Asset Sales The General Partner is actively marketing the remaining equipment portfolio with the intent of maximizing sale proceeds. 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 is unpredictable and results from the wear, tear, and general risk of normal operations. As discussed in note 3, the Partnerships have entered the portfolio liquidation phase as of the third quarter of 1995. During the six months ended June 30, 1996, TEP VIIB sold or disposed of eight trailers and seven marine containers for $48,577, and TEP VIIC sold or disposed of 16 trailers and four marine containers for $101,238. As discussed in note 3, the General Partner is actively marketing the remaining equipment portfolio with the intent of maximizing sale proceeds. (III) Market Values In March 1995, the Financial Accounting Standards Board (FASB) issued Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of" (SFAS 121). This standard is effective for years beginning after December 15, 1995. The Partnership adopted SFAS 121 during 1995, the effect of which was not material as the method previously employed by the Partnership was consistent with SFAS 121. In accordance with SFAS 121, the General Partner reviews the carrying value of its equipment portfolio at least annually in relation to expected future market conditions for the purpose of assessing recoverability of the recorded amounts. If projected future lease revenue plus residual values are less than the carrying value of the equipment, a loss on revaluation is recorded. No adjustments to reflect impairment of individual equipment carrying values were required for the three months ended June 30, 1996. As of June 30, 1996, the General Partner estimated the fair market value of each Partnerships' equipment portfolio to be approximately: $1.7 million and $3.0 million for TEP VIIB and TEP VIIC respectively. (IV) Government Regulations The General Partner operates the Partnerships' equipment in accordance with current regulations (see Item 1 (D) Government Regulations). However, the continuing implementation of new or modified regulations by some of the authorities mentioned previously, or others, may adversely affect the Partnerships' ability to continue to own or operate equipment in its portfolio. These on-going changes in the regulatory environment, both in the U.S. and internationally, cannot be predicted with any certainty and thus preclude the General Partner from accurately determining the impact of such changes on Partnership operations, purchases and sales of equipment. (V) Future outlook Pursuant to the original operating plan, the Partnerships entered into their liquidation phase during 1995 and the General Partner is actively pursuing the sale of all of the Partnerships' equipment with the intention of winding up the Partnerships and distributing all available cash to the Partners. (VI) 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 VIIC 1985 INCOME FUND By: PLM Financial Services, Inc. General Partner Date: August 9, 1996 By: /s/ David J. Davis ------------------ David J. Davis Vice President and Corporate Controller EX-27 2
5 6-MOS DEC-31-1996 JUN-30-1996 262,459 0 87,741 12,918 0 0 4,535,450 4,188,772 1,010,649 0 0 0 0 0 994,526 1,010,649 0 285,205 0 318,028 0 0 0 38,021 0 38,021 0 0 0 38,021 0 0
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