-----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, E+rmpY3iwg+CJ4EqiEDqQ71mDO+b6Txxf4J7q2rzXKh7AInNANF0u4xJShukgjJ6 E46XgHCLJP9sOd1D6pGxSg== 0000914317-96-000288.txt : 19960820 0000914317-96-000288.hdr.sgml : 19960820 ACCESSION NUMBER: 0000914317-96-000288 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960819 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTEGRATED RESOURCES AMERICAN LEASING INVESTORS VII-B CENTRAL INDEX KEY: 0000755114 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-EQUIPMENT RENTAL & LEASING, NEC [7359] IRS NUMBER: 133244533 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-14460 FILM NUMBER: 96617335 BUSINESS ADDRESS: STREET 1: 411 W PUTNAM AVE CITY: GREENWICH STATE: CT ZIP: 06830 BUSINESS PHONE: 2038627000 10-Q/A 1 AMERICAN LEASING INVESTORS VII-B -- 10-Q/A ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q/A [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1996 Commission file number 0-14460 INTEGRATED RESOURCES AMERICAN LEASING INVESTORS VII-B, A California Limited Partnership (Exact name of registrant as specified in its charter) CALIFORNIA 13-3244533 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 411 West Putnam Avenue, Greenwich, CT 06830 (Address of principal executive offices) (203) 862-7000 (Registrant's telephone number, including area code) None (Former name, former address and former fiscal year, if changed since last report) Indicate by check whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [ ] INTEGRATED RESOURCES AMERICAN LEASING INVESTORS VII-B, A CALIFORNIA LIMITED PARTNERSHIP FORM 10-Q - JUNE 30, 1996 INDEX PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS BALANCE SHEETS - June 30, 1996 and December 31, 1995 STATEMENTS OF OPERATIONS - For the three months ended June 30, 1996 and 1995 and the six months ended June 30, 1996 and 1995 STATEMENT OF PARTNERS' EQUITY - For the six months ended June 30, 1996 STATEMENTS OF CASH FLOWS - For the six months ended June 30, 1996 and 1995 NOTES TO FINANCIAL STATEMENTS ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS PART II - OTHER INFORMATION ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K SIGNATURES INTEGRATED RESOURCES AMERICAN LEASING INVESTORS VII-B, A CALIFORNIA LIMITED PARTNERSHIP BALANCE SHEETS
June 30, December 31, 1996 1995 ----------- ----------- ASSETS Leased equipment - net of accumulated depreciation of $10,152,563 and $10,600,903 and allowance for equipment impairment of $1,581,420 and $1,311,299 ......................................................... $ 3,760,838 $ 4,840,261 Cash and cash equivalents ................................................. 367,841 148,205 Accounts receivable ....................................................... 119,211 333,172 Other receivables and prepaid expenses .................................... 1,133 7,199 ----------- ----------- $ 4,249,023 $ 5,328,837 =========== =========== LIABILITIES AND PARTNERS' EQUITY Liabilities Deferred income ........................................................... $ 504,980 $ 1,009,960 Accounts payable and accrued expenses ..................................... 172,875 42,284 Distributions payable ..................................................... 109,964 -- Due to affiliates ......................................................... 2,468 7,842 Notes payable ............................................................. -- 290,216 Accrued interest payable .................................................. -- 9,682 ----------- ----------- Total liabilities ...................................................... 790,287 1,359,984 ----------- ----------- Commitments and contingencies Partners' equity Limited partners' equity (19,099 units issued and outstanding) ....................................................... 3,518,654 4,023,669 General partners' deficit ................................................. (59,918) (54,816) ----------- ----------- Total partners' equity ................................................. 3,458,736 3,968,853 ----------- ----------- $ 4,249,023 $ 5,328,837 =========== ============
See notes to financial statements. INTEGRATED RESOURCES AMERICAN LEASING INVESTORS VII-B, A CALIFORNIA LIMITED PARTNERSHIP STATEMENTS OF OPERATIONS
For the three months ended For the six months ended June 30, June 30, -------------------------- ------------------------ 1996 1995 1996 1995 --------- --------- --------- --------- Rental ............................................ $ 294,873 $ 445,559 $ 625,547 $ 891,118 Other, principally interest ....................... 3,210 1,746 6,596 4,136 --------- --------- --------- --------- 298,083 447,305 632,143 895,254 --------- --------- --------- --------- Costs and expenses Provision for equipment impairment ................ 397,000 -- 397,000 -- Depreciation ...................................... 228,567 282,480 471,019 564,959 General and administrative ........................ 26,474 20,367 47,566 43,680 Fees to affiliates ................................ 5,954 8,911 12,568 17,822 Operating ......................................... 562 337 1,348 951 Interest .......................................... -- 59,979 -- 119,958 --------- --------- --------- --------- 658,557 372,074 929,501 747,370 --------- --------- --------- --------- (360,474) 75,231 (297,358) 147,884 Gain on disposition of equipment ....................... 16,863 3,217 25,496 3,217 --------- --------- --------- --------- Net (loss) income ...................................... $(343,611) $ 78,448 $(271,862) $ 151,101 ========= ========= ========= ========= Net (loss) income attributable to Limited partners .................................. $(340,175) $ 77,664 $(269,143) $ 149,590 General partners .................................. (3,436) 784 (2,719) 1,511 --------- --------- --------- --------- $(343,611) $ 78,448 $(271,862) $ 151,101 ========= ========= ========= ========= Net (loss) income per unit of limited partnership interest (19,099 units outstanding) $ (17.81) $ 4.07 $ (14.09) $ 7.83 ========== ========= ======== =========
See notes to financial statements. INTEGRATED RESOURCES AMERICAN LEASING INVESTORS VII-B, A CALIFORNIA LIMITED PARTNERSHIP STATEMENT OF PARTNERS' EQUITY
Limited General Total Partners' Partners' Partners' Equity Deficit Equity ----------- ----------- ----------- Balance, January 1, 1996 ....................................................... $ 4,023,669 $ (54,816) $ 3,968,853 Net loss for the six months ended June 30, 1996 ....................................................... (269,143) (2,719) (271,862) Distributions to partners for the six months ended June 30, 1996 ($12.35 per limited partnership unit) ..................................... (235,872) (2,383) (238,255) ----------- ----------- ----------- Balance, June 30, 1996 ......................................................... $ 3,518,654 $ (59,918) $ 3,458,736 =========== =========== ===========
See notes to financial statements. INTEGRATED RESOURCES AMERICAN LEASING INVESTORS VII-B, A CALIFORNIA LIMITED PARTNERSHIP STATEMENTS OF CASH FLOWS
For the six months ended June 30, -------------------------------- 1996 1995 --------- --------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS Cash flows from operating activities Net (loss) income ......................................................... $(271,862) $ 151,101 Adjustments to reconcile net income to net cash provided by operating activities Depreciation ....................................................... 471,019 564,959 Provision for equipment impairment ................................. 397,000 -- Amortization of deferred income .................................... (504,980) -- Gain on disposition of equipment ................................... (25,496) (3,217) Changes in assets and liabilities Accounts receivable .................................................... 213,961 (8,785) Other receivables and prepaid expenses ................................. 6,066 175 Accounts payable and accrued expenses .................................. 130,591 (2,637) Due to affiliates ...................................................... (5,374) -- Accrued interest payable ............................................... (9,682) (25,018) --------- --------- Net cash provided by operating activities ....................... 401,243 676,578 --------- --------- Cash flows from investing activities Proceeds from disposition of equipment .................................... 236,900 23,211 Other non-operating payments .............................................. -- (4,800) --------- --------- Net cash provided by investing activities ....................... 236,900 18,411 --------- --------- Cash flows from financing activities Distributions to partners ................................................. (128,291) -- Principal payments on notes payable ....................................... (290,216) (699,198) --------- --------- Net cash used in financing activities ........................... (418,507) (699,198) --------- --------- Net increase (decrease) in cash and cash equivalents ........................... 219,636 (4,209) Cash and cash equivalents, beginning of period ................................. 148,205 148,460 --------- --------- Cash and cash equivalents, end of period ....................................... $ 367,841 $ 144,251 ========= ========= Supplemental disclosure of cash flow information Interest paid ............................................................. $ 9,682 $ 144,976 ========= =========
See notes to financial statements. INTEGRATED RESOURCES AMERICAN LEASING INVESTORS VII-B, A CALIFORNIA LIMITED PARTNERSHIP NOTES TO FINANCIAL STATEMENTS 1 INTERIM FINANCIAL INFORMATION The summarized financial information contained herein is unaudited; however, in the opinion of management, all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of such financial information have been included. The accompanying financial statements, footnotes and discussion should be read in conjunction with the financial statements, related footnotes and discussions contained in the Integrated Resources American Leasing Investors VII-B, a California Limited Partnership (the "Partnership") annual report on Form 10-K for the year ended December 31, 1995. The results of operations for the six months ended June 30, 1996, are not necessarily indicative of the results to be expected for the full year. 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Leased equipment The cost of leased equipment represents the initial cost of the equipment to the Partnership plus miscellaneous acquisition and closing costs, and is carried at the lower of depreciated cost or net realizable value. Depreciation is computed using the straight-line method, over the estimated useful lives of such assets (13 to 15 years for transportation equipment). When equipment is sold or otherwise disposed of, the cost and accumulated depreciation (and any related allowance for equipment impairment) are removed from the accounts and any gain or loss on such sale or disposal is reflected in operations. Normal maintenance and repairs are charged to operations as incurred. The Partnership provides allowances for equipment impairment based upon a quarterly review of all equipment in its portfolio, when management believes that, based upon market analysis, appraisal reports and leases currently in place with respect to specific equipment, the investment in such equipment may not be recoverable. 3 CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES The corporate general partner of the Partnership, ALI Capital Corp. (the "Corporate General Partner"), the managing general partner of the Partnership, ALI Equipment Management Corp. ("Equipment Management") and Integrated Resources Equipment Group, Inc. ("IREG") are wholly owned subsidiaries of Presidio Capital Corp. ("Presidio"). Z Square G Partners II was the associate general partner of the Partnership through February 27, 1995. On February 28, 1995, Presidio Boram Corp., a subsidiary of Presidio, became the associate general partner. Other limited partnerships and similar investment programs have been formed by Equipment Management or its affiliates to acquire equipment and, 3 CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES (continued) accordingly, conflicts of interest may arise between the Partnership and such other limited partnerships. Affiliates of Equipment Management have also engaged in businesses related to the management of equipment and the sale of various types of equipment and may transact business with the Partnership. Subject to the rights of the Limited Partners under the Limited Partnership Agreement, Presidio will control the Partnership through its direct or indirect ownership of all of the shares of Equipment Management, the Corporate General Partner and, as of February 28, 1995, the associate general partner. Presidio is managed by Presidio Management Company, LLC ("Presidio Management"), a company controlled by a director of Presidio. Presidio Management is responsible for the day-to-day management of Presidio and, among other things, has authority to designate directors of Equipment Management, the Corporate General Partner and the associate general partner. In March 1996, Presidio Management assigned its agreement for the day-to-day management of Presidio to Wexford Management LLC ("Wexford"). Presidio is a liquidating company. Although Presidio has no immediate plans to do so, it will ultimately seek to dispose of the interests it acquired from Integrated Resources, Inc. through liquidation; however, there can be no assurance of the timing of such transaction or the effect it may have on the Partnership. In March 1995, Presidio elected new directors for Equipment Management. Wexford Management Corp., formerly Concurrency Management Corp., provides management and administrative services to Presidio, its direct and indirect subsidiaries, as well as to the Partnership. Effective January 1, 1996, Wexford Management Corp. assigned its agreement to provide management and administrative services to Presidio and its subsidiaries to Wexford. During the six months ended June 30, 1996, reimbursable expenses to Wexford by the Partnership amounted to $14,155. The Partnership entered into a management agreement with IREG, pursuant to which IREG would receive 5% of annual gross rental revenues on operating leases; 2% of annual gross rental revenues on full payout leases which contain net lease provisions; and 1% of annual gross rental revenues if services are performed by third parties under the active supervision of IREG, as defined in the Limited Partnership Agreement. For the six months ending June 30, 1996 and 1995, the Partnership incurred expenses of $12,512 and $17,822, respectively, for such management services. During the operating and sale stage of the Partnership, IREG is entitled to a partnership management fee equal to 4% of distributable cash from operations, as defined in the Limited Partnership Agreement, subject to increase after the limited partners have received certain specified minimum returns on their investment. For the six months ended June 30, 1996, the Partnership incurred partnership management fee expense of $56. No such amount was incurred during the six months ended June 30, 1995. The general partners are entitled to 1% of distributable cash from operations and cash from sales and an allocation of 1% of taxable net income or loss of the Partnership. 3 CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES (continued) During the operating and sale stage of the Partnership, IREG may be entitled to receive certain other fees which are subordinated to the receipt by the limited partners of their original invested capital and certain specified minimum returns on their investment. Upon the ultimate liquidation of the Partnership, the general partners may be required to remit to the Partnership certain payments representing capital account deficit restoration based upon a formula provided within the Limited Partnership Agreement. Such restoration amount may be less than the recorded general partners' deficit, which could result in distributions to the limited partners of less than their recorded equity. In April 1995, Equipment Management and certain affiliates entered into an agreement with Fieldstone Private Capital Group, L.P. ("Fieldstone") pursuant to which Fieldstone performs certain management and administrative services relating to the Partnership as well as certain other partnerships in which Equipment Management serves as general partner. Substantially all costs associated with the retention of Fieldstone will be paid by Equipment Management. 4 DISTRIBUTIONS TO PARTNERS Distributions payable to the Limited Partners and General Partners of $108,864 ($5.70 per unit) and $1,100, respectively, at June 30, 1996, were paid in August 1996. 5 EQUIPMENT SALES - 1996 On February 8, 1996 the Partnership entered into an agreement (the "Agreement") with an unaffiliated third party (the "Purchaser") which provides for the sale of 407 dry van piggyback trailers (the "Trailers") upon their return from the lessee. Pursuant to the terms of the Agreement, redelivery of the Trailers commenced on or about January 2, 1996 and will continue through the earlier of the date at which all Trailers have been delivered and December 31, 1996. In addition, the basic term of the lease expired effective December 31, 1995, but each Trailer remains subject to the terms of its lease until the date it is redelivered by lessee in compliance with the return conditions as defined in the lease agreement. At present, the return dates of the Trailers which remain on lease have not been finalized. As of June 30, 1996, 92 Trailers were transferred to and accepted by Purchaser for a purchse price of $2,575 each. The 92 Trailers were sold for sales proceeds aggregating $236,900. At the time of the sale, the net carrying value of the 92 Trailers was $211,404. The 92 Trailers had originally been acquired in January 1986 for an aggregate purchase cost of $1,257,643, inclusive of associated acquisition costs. 6 EQUIPMENT LEASE PREPAYMENT In December 1985, the Partnership, through an equipment trust of which it is the sole beneficiary, acquired a Boeing 727-200 Aircraft (the "Aircraft") and immediately leased the Aircraft back to Piedmont Aviation, Inc. (the "Aircraft Lease"). The Partnership provided a portion of the purchase price by utilizing approximately 40% of the net proceeds from the Partnership's offering of units of limited partnership interest. The balance was provided by the Partnership assuming a loan from an unaffiliated third party lender (the "Lender"). The loan, which was nonrecourse, was anticipated to be self-liquidating by the application of rentals due over the life of the Aircraft Lease. Subsequent to 1985, the operations of Piedmont were merged into USAir Group, Inc. ("USAir"). In early 1995, USAir publicly announced that it anticipated reducing its fleet size and during 1995, planned to retire or dispose of 21 aircraft including its six remaining 727-200 aircraft. During the quarter ended June 30, 1995, USAir indicated that the Aircraft would require a heavy maintenance check under the USAir maintenance program. Rather than perform such heavy maintenance, USAir grounded the Aircraft. In October 1995, the Partnership and USAir entered into an agreement (the "Agreement") that provided for a restructuring of the Aircraft Lease. Pursuant to the terms of the Agreement, USAir agreed to make a payment to the Lender equal to the outstanding principal balance plus interest which accrued through October 30, 1995 in the amount of $1,553,452. This payment fully retired the associated nonrecourse debt and relieved USAir of all future Basic Rent obligations due under the Aircraft Lease. Additionally, pursuant to the terms of the Agreement, USAir commenced a world-wide remarketing effort directed toward the sale of the Aircraft (see Note 7). 7 SUBSEQUENT EVENT On July 16, 1996, the Partnership sold the Aircraft to an unrelated third party for sales proceeds of approximately $2,950,000 less selling expenses of approximately $307,500. Concurrently with the sale, the Partnership and USAir terminated the Aircraft Lease, scheduled to expire January 2, 1997. In addition, the Partnership retained and recognized as income approximately $462,900 representing the outstanding balance of the October 1995 lease prepayment. At the time of sale, such Aircraft had a net carrying value of approximately $3,105,400. ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity and Capital Resources The Partnership declared a cash distribution of $5.70 per unit of limited partnership interest totaling $109,964 for the quarter ended June 30, 1996, which represented cash from sales of $108,150 generated during the current quarter, as well as from cash reserves generated in prior quarters. At June 30, 1996, the Partnership had operating reserves of approximately $203,000 which was comprised of undistributed cash from operations of approximately $108,000, as well as general working capital reserves of $95,485. In December 1985, the Partnership, through an equipment trust of which it is the sole beneficiary, acquired a Boeing 727-200 Aircraft (the "Aircraft") and immediately leased the Aircraft back to Piedmont Aviation, Inc. (the "Aircraft Lease"). The Partnership provided a portion of the purchase price by utilizing approximately 40% of the net proceeds from the Partnership's offering of units of limited partnership interest. The balance was provided by the Partnership assuming a loan from an unaffiliated third party lender (the "Lender"). The loan, which was nonrecourse, was anticipated to be self-liquidating by the application of rentals due over the life of the Aircraft Lease. Subsequent to 1985, the operations of Piedmont were merged into USAir Group, Inc. ("USAir"). In early 1995, USAir publicly announced that it anticipated reducing its fleet size and during 1995, planned to retire or dispose of 21 aircraft including its six remaining 727-200 aircraft. During the quarter ended June 30, 1995, USAir indicated that the Aircraft would require a heavy maintenance check under the USAir maintenance program. Rather than perform such heavy maintenance, USAir grounded the Aircraft. In October 1995, the Partnership and USAir entered into an agreement (the "Agreement") that provided for a restructuring of the Aircraft Lease. Pursuant to the terms of the Agreement, USAir agreed to make a payment to the Lender equal to the outstanding principal balance plus interest which accrued through October 30, 1995 in the amount of $1,553,452. This payment fully retired the associated nonrecourse debt and relieved USAir of all future Basic Rent obligations due under the Aircraft Lease. Additionally, pursuant to the terms of the Agreement, USAir commenced a world-wide remarketing effort directed toward the sale of the Aircraft. On July 16, 1996, the Partnership sold the Aircraft to an unrelated third party for sales proceeds of approximately $2,950,000 less selling expenses of approximately $307,500. Concurrently with the sale, the Partnership and USAir terminated the Aircraft Lease, scheduled to expire January 2, 1997. In addition, the Partnership retained and recognized as income approximately $462,900 representing the outstanding balance of the October 1995 lease prepayment. At the time of sale, such Aircraft had a net carrying value of approximately $3,105,400. Liquidity and Capital Resources (continued) On February 8, 1996 the Partnership entered into an agreement (the "Agreement") with an unaffiliated third party (the "Purchaser") which provides for the sale of 407 dry van piggyback trailers (the "Trailers") upon their return from the lessee. Pursuant to the terms of the Agreement, redelivery of the Trailers commenced on or about January 2, 1996 and will continue through the earlier of the date at which all Trailers have been delivered and December 31, 1996. In addition, the basic term of the lease expired effective December 31, 1995, but each Trailer remains subject to the terms of its lease until the date it is redelivered by lessee in compliance with the return conditions as defined in the lease agreement. At present, the return dates of Trailers which remain on lease have not been finalized. As of June 30, 1996, 92 Trailers have been transferred to and accepted by the Purchaser for a purchase price of $2,575 each. It is the Partnership's intention to maintain reserves (including the general working capital reserve) sufficient to support the Partnership's future obligations. In the future, liquidity and distribution levels may fluctuate based upon (i) the net proceeds from the sale of the Aircraft on July 16, 1996 available for distribution, (ii) closing the sale of the Trailers as mentioned above and (iii) requirements for operating reserves, if any. Upon the sale of the remaining assets, the Partnership will have liquidated all of its equipment portfolio. The Managing General Partner will then prepare a final accounting of the assets and liabilities and commence the dissolution and termination of the Partnership and make a final distribution to partners. At the present time, the level of fees payable to IREG for services rendered to the Partnership and other affiliated equipment leasing partnerships is declining. The effect of this situation cannot be determined at this point. The management agreements between the Partnership and IREG may be terminated by either party to such agreements. In April 1995, the Managing General Partner and certain affiliates entered into an agreement with Fieldstone pursuant to which Fieldstone performs certain management and administrative services relating to the assets of the Partnership as well as certain other partnerships in which the Managing General Partner serves as general partner. Substantially all costs associated with the retention of Fieldstone will be paid by the Managing General Partner. On February 28, 1995, Presidio Boram Corp., a subsidiary of Presidio, became the Associate General Partner, upon the withdrawal of Z Square G Partners II, the former Associate General Partner. Inflation and changing prices have not had any material effect on the Partnership's revenues since its inception, nor does the Partnership anticipate any material effect on its business from these factors. The Partnership had no outstanding material commitments for capital expenditures as of June 30, 1996. Liquidity and Capital Resources (continued) Results of Operations (continued) Net income decreased significantly for the quarter and six months ended June 30, 1996, accounting for net losses, as compared with net income for the prior year's periods, primarily due to a provision for equipment impairment to recognize the decrease in the net carrying value of the Aircraft, as well as the reduction in rental revenues, partially offset by a reduction in depreciation and other expenses. The Partnership's rental revenues decreased for the quarter and six months ended June 30, 1996, as compared to the prior year's periods, primarily due to the restructuring of the USAir lease, effective July 1, 1995, as well as a reduction in rental revenues with respect to the Trailers which are in the process of being returned and sold, as previously discussed. Expenses decreased in the quarter and six months ended June 30, 1996 in comparison to the prior year's periods. There was no interest expense for the quarter and six months ended June 30, 1996 due to the retirement of the nonrecourse loan associated with the Trailers on January 2, 1996. Fees to affiliates decreased due to a decrease in equipment management fees resulting from the decrease in rentals on which such fees are based. Depreciation expense decreased, resulting from the restructuring of the USAir lease, during the quarter ended September 30, 1995. A provision for equipment impairment of $397,000 was recognized during the quarter ended June 30, 1996 to reflect the reduced value of the Aircraft. Administrative expenses increased during the quarter and six months ended June 30, 1996 when compared with the prior year's periods. PART II - OTHER INFORMATION ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: None (b) Reports on Form 8-K: None SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Partnership has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Integrated Resources American Leasing Investors VII-B, a California Limited Partnership By: ALI Equipment Management Corp. Managing General Partner /S/ Douglas J. Lambert ------------------------- Douglas J. Lambert President (Principal Executive and Financial Officer) Date: August 16, 1996 -----END PRIVACY-ENHANCED MESSAGE-----