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 September 30, 1995.
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the transition period from to
Commission file number 0-14598
PLM TRANSPORTATION EQUIPMENT PARTNERS VIIB 1985
INCOME FUND
(Exact name of registrant as specified
in its charter)
California 94-2946245
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Market, Steuart Street Tower,
Suite 900, San Francisco, CA 94105-1301
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code (415) 974-1399
---------------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No uired to file such reports),
and (2) has been subject to such filing requirements for
PLM TRANSPORTATION EQUIPMENT PARTNERS VIIB INCOME FUND
(A Limited Partnership)
BALANCE SHEETS
ASSETS
September 30, December 31,
1995 1994
-----------------------------------------
Equipment held for operating leases, at cost $ 4,892,005 $ 5,228,048
Less accumulated depreciation (4,371,249) (4,449,835)
----------------------------------------
Net equipment 520,756 778,213
Cash and cash equivalents 337,106 358,864
Restricted cash 8,046 7,600
Accounts receivable, net of allowance for doubtful accounts of
$38,406 in 1995 and $1,942 in 1994 112,148 136,481
Prepaid Insurance 302 3,286
========================================
Total assets $ 978,358 $ 1,284,444
========================================
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Due to affiliates $ 6,112 $ 18,764
Accounts payable 17,653 32,478
Prepaid deposits and engine reserves 23,956 24,552
----------------------------------------
Total liabilities 47,721 75,794
Partners capital (deficit):
Limited Partners (22,276 units) 1,019,380 1,294,613
General Partner (88,743) (85,963)
----------------------------------------
Total partners' capital 930,637 1,208,650
----------------------------------------
Total liabilities and partners' capital $ 978,358 $ 1,284,444
========================================
See accompanying notes to financial
statements.
PLM TRANSPORTATION EQUIPMENT PARTNERS VIIB 1985 INCOME FUND
(A Limited Partnership)
STATEMENTS OF OPERATIONS
For the three months For the nine months
ended September 30, ended September 30,
1995 1994 1995 1994
----------------------------------------------------------------------
Revenues:
Lease revenue $ 170,789 $ 203,229 $ 517,021 $ 574,076
Interest and other income 4,863 3,288 28,042 7,882
Gain on disposition of
equipment 6,199 3,970 29,029 10,850
----------------------------------------------------------------------
Total revenues 181,851 210,487 574,092 592,808
Expenses:
Depreciation 68,579 74,059 209,873 225,036
Management fees to affiliate 13,923 13,922 41,768 43,186
Bad debt expense 25,944 1,399 38,701 16,952
Repairs and maintenance 53,357 40,396 129,305 105,375
General and administrative
expenses to affiliates 28,346 33,087 95,703 88,381
Other general and administrative
expenses 14,998 6,927 39,615 47,601
----------------------------------------------------------------------
Total expenses 205,147 169,790 554,965 526,531
----------------------------------------------------------------------
Net income (loss) $ (23,296) $ 40,697 $ 19,127 $ 66,277
======================================================================
Partners' share of net income (loss):
Limited Partners - 99% $ (23,063) $ 40,290 $ 18,936 $ 65,614
General Partner - 1% (233) 407 191 663
----------------------------------------------------------------------
Total $ (23,296) $ 40,697 $ 19,127 $ 66,277
======================================================================
Net income (loss) per Limited
Partnership Unit (22,276 units) $ (1.04) $ 1.81 $ 0.85 $ 2.95
======================================================================
Cash distributions $ 99,047 $ 85,840 $ 297,140 $ 376,374
======================================================================
Cash distribution per
Limited Partnership Unit $ 4.40 $ 3.81 $ 13.21 $ 16.73
======================================================================
See accompanying notes to financial
statements.
PLM TRANSPORTATION EQUIPMENT PARTNERS VIIB INCOME FUND
(A Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the period from December 31, 1993 to September 30, 1995
Limited General
Partner Partner Total
--------------------------------------------------------------
Partners' capital (deficit)
at December 31, 1993 $ 1,677,478 $ (82,096) $ 1,595,382
Net income 87,802 887 88,689
Cash distributions (470,667) (4,754) (475,421)
--------------------------------------------------------------
Partners' capital (deficit)
at December 31, 1994 1,294,613 (85,963) 1,208,650
Net income 18,936 191 19,127
Cash distributions (294,169) (2,971) (297,140)
--------------------------------------------------------------
Partners' capital (deficit)
at September 30, 1995 $ 1,019,380 $ (88,743) $ 930,637
==============================================================
See accompanying notes to financial
statements.
PLM TRANSPORTATION EQUIPMENT PARTNERS VIIB 1985 INCOME FUND
(A Limited Partnership)
STATEMENT OF CASH FLOWS
For the nine months ended
September 30,
1995 1994
-------------------------------------
Operating Activities:
Net income $ 19,127 $ 66,277
Adjustments to reconcile net income
to net cash provided by operating activities:
Gain on disposition of equipment (29,029) (10,850)
Depreciation 209,873 225,036
Changes in operating assets and liabilities:
Restricted cash (446) (93)
Accounts receivable, net 24,333 1,889
Prepaid insurance 2,984 1,940
Due to affiliates (12,652) (3,218)
Accounts payable (14,825) 459
Prepaid deposits and engine reserves (596) 75
-------------------------------------
Net Cash provided by operating activities 198,769 281,515
-------------------------------------
Investing activities:
Capitalized equipment repairs (45) --
Proceeds from disposition of equipment 76,658 54,287
-------------------------------------
Cash provided by investing activities 76,613 54,287
-------------------------------------
Cash flows used in financing activities:
Cash distributions paid to partners (297,140) (376,374)
-------------------------------------
Net decrease in cash and cash equivalents (21,758) (40,572)
Cash and cash equivalents at beginning of period 358,864 386,179
-------------------------------------
Cash and cash equivalents at end of period $ 337,106 $ 345,607
=====================================
See accompanying notes to financial
statements.
PLM TRANSPORTATION EQUIPMENT PARTNERS VIIB 1985 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
September 30, 1995
1. Opinion of Management
In the opinion of the management of PLM Financial Services Inc., the
General Partner, the accompanying unaudited financial statements contain
all adjustments necessary, consisting primarily of normal recurring
accruals, to present fairly the Partnership's financial position as of
September 30, 1995, the statements of operations for the three and nine
months ended September 30, 1995 and 1994, the statements of changes in
partners' capital for the period from December 31, 1993 to September 30,
1995, and the statements of cash flows for the nine months ended September
30, 1995 and 1994. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted from the
accompanying financial statements. For further information, reference
should be made to the financial statements and notes thereto included in
the Partnership's Annual Report on Form 10-K for the year ended December
31, 1994, on file at the Securities and Exchange Commission.
2. Equipment
Equipment held for operating leases is stated at cost. The components of
equipment are as follows:
September 30, December 31,
1995 1994
----------------------------------------
Equipment held for operating leases:
Trailers $ 3,543,334 $ 3,849,499
Aircraft 908,733 908,733
Rail equipment 318,649 318,649
Marine containers 121,289 151,167
-----------------------------------------
4,892,005 5,228,048
Less accumulated depreciation (4,371,249) (4,449,835)
-----------------------------------------
Net equipment $ 520,756 $ 778,213
=========================================
All of the equipment owned by the Partnership was either on lease or operating
in PLM-affiliated short-term rental facilities as of September 30, 1995. At
December 31, 1994, all equipment was on lease except one railcar. The net
book value of the off lease railcar at December 31, 1994, was $16,750.
During the nine months ended September 30, 1995, the Partnership sold or
disposed of eight trailers and 11 marine containers with a net book value
of $47,629 for proceeds of $76,658. During the nine months ended September
30, 1994, the Partnership sold or disposed of five trailers and 20 marine
containers with a net book value of $43,437 for proceeds of $54,287.
The Partnership has entered into its 10th year of operation and the
liquidation phase has begun. Therefore, equipment will be marketed for sale
as current lease terms expire.
PLM TRANSPORTATION EQUIPMENT PARTNERS VIIC 1985 INCOME FUND
(A Limited Partnership)
BALANCE SHEETS
ASSETS
September 30, December 31,
1995 1994
----------------------------------------
Assets:
Equipment held for operating leases, at cost $ 9,174,229 $ 9,697,693
Less accumulated depreciation (8,089,603) (8,156,512)
----------------------------------------
Net equipment 1,084,626 1,541,181
Cash and cash equivalents 560,921 799,068
Restricted cash 17,909 17,359
Accounts receivable, net of allowance for doubtful accounts of
$33,389 in 1995 and $26,568 in 1994 117,663 188,843
Prepaid Insurance 573 4,919
========================================
Total assets $ 1,781,692 $ 2,551,370
========================================
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Due to affiliates $ 7,207 $ 24,418
Accounts Payable 12,742 11,161
Prepaid deposits and engine reserves 17,754 17,290
----------------------------------------
Total liabilities 37,703 52,869
Partners capital (deficit):
Limited Partners (33,727 units) $ 1,875,052 $ 2,622,019
General Partner (131,063) (123,518)
----------------------------------------
Total partners' capital 1,743,989 2,498,501
----------------------------------------
Total liabilities and partners' capital $ 1,781,692 $ 2,551,370
========================================
See accompanying notes to financial
statements.
PLM TRANSPORTATION EQUIPMENT PARTNERS VIIC 1985 INCOME FUND
(A Limited Partnership)
STATEMENTS OF INCOME
For the three months For the nine months
ended September 30, ended September 30,
1995 1994 1995 1994
-------------------------------------------------------------------------
Revenues:
Lease revenue $ 272,726 $ 425,183 $ 855,499 $ 1,209,153
Interest and other income 7,863 7,908 28,095 18,978
Gain on disposition of
equipment 19,988 12,684 66,647 68,031
----------------------------------------------------------------------
Total revenues 300,577 445,775 950,241 1,296,162
Expenses:
Depreciation 127,707 135,425 386,745 419,121
Management fees to affiliate 21,080 26,042 66,889 79,628
Bad debt expense 19,161 7,664 15,887 45,802
Repairs and maintenance 59,874 66,431 165,264 196,192
General and administrative
expenses to affiliates 42,904 60,067 144,212 172,178
Other general and administrative
expenses 15,137 7,556 38,534 53,719
----------------------------------------------------------------------
Total expenses 285,863 303,185 817,531 966,640
----------------------------------------------------------------------
Net income $ 14,714 $ 142,590 $ 132,710 $ 329,522
======================================================================
Partners' share of net income:
Limited Partners - 99% $ 14,567 $ 141,164 $ 131,383 $ 326,227
General Partner - 1% 147 1,426 1,327 3,295
======================================================================
Total $ 14,714 $ 142,590 $ 132,710 $ 329,522
======================================================================
Net income per Limited Partnership
Unit (33,727 units) $ 0.43 $ 4.19 $ 3.90 $ 9.67
======================================================================
Cash distributions $ 161,316 $ 243,479 $ 687,222 $ 731,938
======================================================================
Cash distribution per
Limited Partnership Unit $ 4.74 $ 7.15 $ 20.17 $ 21.48
======================================================================
Special cash distributions $ 100,000 $ N/A $ 200,000 $ 100,000
======================================================================
Special cash distributions per
Limited Partnership Unit $ 2.94 $ N/A $ 5.87 $ 2.94
======================================================================
Total Cash Distributions per
Limited Partnership Units $ 7.68 $ 7.15 $ 26.04 $ 24.42
======================================================================
See accompanying notes to financial
statements.
PLM TRANSPORTATION EQUIPMENT PARTNERS VIIC INCOME FUND
(A Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the period from December 31, 1993 to September 30, 1995
Limited General
Partner Partner Total
----------------------------------------------------------------
Partners' capital (deficit)
at December 31, 1993 $ 3,269,956 $ (116,973) $ 3,152,983
Net income 436,810 4,412 441,222
Cash distributions (1,084,747) (10,957) (1,095,704)
----------------------------------------------------------------
Partners' capital (deficit)
at December 31, 1994 2,622,019 (123,518) 2,498,501
Net income 131,383 1,327 132,710
Cash distributions (878,350) (8,872) (887,222)
----------------------------------------------------------------
Partners' capital (deficit)
at September 30, 1995 $ 1,875,052 $ (131,063) $ 1,743,989
================================================================
See accompanying notes to financial
statements.
PLM TRANSPORTATION EQUIPMENT PARTNERS VIIC 1985 INCOME FUND
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
For the nine months
ended September 30,
1995 1994
--------------------------------------
Operating Activities:
Net income $ 132,710 $ 329,522
Adjustment to reconcile net income
to net cash provided by operating activities:
Gain on disposition of equipment (66,647) (68,031)
Depreciation 386,745 419,121
Changes in operating assets and liabilities
Restricted cash (550) (404)
Accounts receivable, net 71,180 83,327
Prepaid insurance 4,346 4,124
Due to affiliates (17,211) (15,826)
Accounts payable 1,581 (189)
Prepaid deposits and engine reserves 464 (697)
--------------------------------------
Net cash provided by operating activities 512,618 750,947
--------------------------------------
Investing activities:
Capitalized equipment repairs (191) --
Proceeds from disposition of equipment 136,648 131,380
--------------------------------------
Cash flows provided by investing activities 136,457 131,380
--------------------------------------
Cash flows used in financing activities:
Cash distributions paid to partners (887,222) (831,938)
--------------------------------------
Net (decrease) increase in cash and cash equivalents (238,147) 50,389
Cash and cash equivalents at beginning of period 799,068 760,297
--------------------------------------
Cash and cash equivalents at end of period $ 560,921 $ 810,686
======================================
See accompanying notes to financial
statements.
PLM TRANSPORTATION EQUIPMENT PARTNERS VIIC 1985 INCOME FUND
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
September 30, 1995
1. Opinion of Management
In the opinion of the management of PLM Financial Services Inc., the
General Partner, the accompanying unaudited financial statements contain
all adjustments necessary, consisting primarily of normal recurring
accruals, to present fairly the Partnership's financial position as of
September 30, 1995, the statements of income for the three and nine months
ended September 30, 1995 and 1994, the statements of changes in partners'
capital for the period from December 31, 1993 to September 30, 1995, and
the statements of cash flows for the nine months ended September 30, 1995
and 1994. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted from the accompanying
financial statements. For further information, reference should be made to
the financial statements and notes thereto included in the Partnership's
Annual Report on Form 10-K for the year ended December 31, 1994, on file at
the Securities and Exchange Commission.
2. Equipment
Equipment held for operating leases is stated at cost. The components of
equipment are as follows:
September 30, December 31,
1995 1994
-----------------------------------------
Equipment held for operating leases:
Trailers $ 4,913,626 $ 5,362,929
Aircraft 4,009,950 4,009,950
Marine containers 250,653 324,814
-----------------------------------------
9,174,229 9,697,693
Less accumulated depreciation (8,089,603) (8,156,512)
=========================================
Net equipment $ 1,084,626 $ 1,541,181
=========================================
All of the equipment owned by the Partnership is either on lease or operating
in PLM-affiliated short-term rental facilities as of September 30, 1995,
and at December 31, 1994.
During the nine months ended September 30, 1995, the Partnership sold or
disposed of 15 marine containers and 14 trailers with a net book value of
$70,001 for proceeds of $136,648. During the nine months ended September
30, 1994, the Partnership sold or disposed of 18 marine containers and 15
trailers with a net book value of $63,349 for proceeds of $83,380.
Additional proceeds of $48,000 were received in the first quarter of 1994,
for equipment disposed of during the fourth quarter of 1993.
The Partnership has entered into its 10th year of operation and the
liquidation phase has begun. Therefore, equipment will be marketed or sale
as current lease terms expires.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources
(A) Sources
The Partnerships' primary source of liquidity is operating cash flow. Proceeds
realized from the sale or disposal of equipment are generally distributed to the
partners. The Partnerships' sources of capital have included proceeds from their
offering of limited partnership units.
(B) Asset Sales
Equipment sales and dispositions prior to the Partnerships' planned liquidation
phase generally result from either the exercise by lessees of fair market value
purchase options provided for in certain leases, or the payment of stipulated
loss values on equipment lost or disposed of during the time it is subject to
lease agreements. Such disposal of equipment results unpredictably from the
wear, tear, and general risk of normal operations. During the nine months ended
September 30, 1995, TEP VIIB sold or disposed of eight trailers and 11 marine
containers for $76,658, and TEP VIIC sold or disposed of 14 trailers and 15
marine containers for $136,648. The Partnership has entered into its 10th year
of operation and the liquidation phase has begun.
Therefore, equipment will be marketed for sale as current lease terms expire.
(C) Market Values
At least annually, the General Partner prepares an evaluation of the net
realizable value and fair market value of the Partnerships' equipment
portfolios, using, among other sources, independent third-party appraisals,
values reported in trade publications, and comparative values from arms-length
transactions for similar equipment as the basis for its evaluation.
Concurrently, the General Partner evaluates whether the current fair market
value of equipment represents the effects of current market conditions or
permanent impairment of value. Equipment whose carrying value is determined to
be permanently impaired, without possibility of being leased at an acceptable
rate, has its book value adjusted to its estimated net realizable value.
The depressed nature of certain transportation sectors, combined with the impact
of certain regulatory policies, has led to volatility in fair market values for
certain of the Partnerships' equipment. Exacerbating this problem is the
perception in some industry sectors that great uncertainty exists as to when
potential recovery to acceptable performance and residual levels may occur.
Further, the current recovery does not appear to fit any historical pattern.
These uncertain market conditions have caused the General Partner to
continuously monitor the changes in market values for the Partnerships'
equipment, and on occasion, the General Partner has made adjustments to
Partnership equipment book values to reflect this volatility. While there has
continued to be a general decline in certain market values, the fair market
values of the assets still exceed the Partnerships' carrying value. No
adjustments to reflect impairment of equipment carrying value were recorded
during the first nine months of 1995.
Comparison of the Partnerships' Operating Results for the Three Months Ended
September 30, 1995 and 1994
TEP VIIB:
(A) Revenues
Total revenues of $181,851 for the quarter ended September 30, 1995, decreased
from $210,487 for the same period in 1994 due primarily to lower lease revenues,
offset slightly by an increase in other income for the third quarter of 1995
when compared to the same period in 1994.
(1) Lease revenue decreased to $170,789 in the third quarter of 1995, from
$203,229 in the third quarter of 1994.
The following table lists lease revenues by equipment type:
For the three months
ended September 30,
----------------------------------
1995 1994
----------------------------------
Trailers $ 135,929 $ 159,833
Aircraft 24,093 24,770
Marine containers 6,230 7,905
Rail equipment 4,537 10,721
==================================
$ 170,789 $ 203,229
==================================
Significant revenue component changes resulted primarily from:
(a) Trailer revenues decreased $23,904 due to the sale of three trailers
during the fourth quarter of 1994 and eight trailers in 1995, and a decline in
utilization in the PLM-affiliated short-term rental facilities in 1995 compared
to 1994 levels;
(b) Railcar revenues decreased $6,184 due to the re-lease of some railcars
at a lower rate.
(2) Interest and other income increased to $4,863 in the third quarter of 1995
from $3,288 in the third quarter of 1994. This increase was primarily due to
higher interest rate earned on cash investments in the third quarter of 1995.
(3) For the quarter ended September 30, 1995, the Partnership realized a gain of
$6,199 on the sale or disposition of five marine containers and one trailer,
compared to the same period in 1994 where the Partnership realized a gain of
$3,970 on the sale or disposition of two trailers and eight marine containers.
(B) Expenses
Total expenses of $205,147 for the quarter ended September 30, 1995 increased
from $169,790 for the same period in 1994. The increase in 1995 expenses was
primarily attributable to higher bad debt expense, repairs and maintenance, and
general and administrative expenses offset, in part, by decreases in
depreciation expense.
(1) Direct operating expenses (defined as repairs and maintenance expenses)
increased to $53,357 in the third quarter of 1995, from $40,396 in the same
period in 1994. This increase is primarily attributable to higher shop repairs
required on the Partnership railcars.
(2) Indirect operating expenses (defined as depreciation expense, management
fees to affiliates, bad debt expenses, and general and administrative expenses)
increased to $151,790 in the third quarter of 1995, from $129,394 in the third
quarter of 1994. This change resulted primarily from:
(a) an increase of $24,545 in bad debt expense due to the General Partner's
evaluation of collectibility of the current open receivable balances;
(b) an increase of $3,330 in all general and administrative expenses from
1994 levels due to higher accounting costs associated with the Partnership;
(c) a decrease in depreciation expense of $5,480 was due to asset sales or
dispositions during 1994 and 1995.
(C) Net Income (loss)
The Partnership's net loss of $23,296 in the third quarter of 1995, decreased
from a net income of $40,697 in the third quarter of 1994. The Partnership's
ability to operate or liquidate assets, secure leases, and re-lease those assets
whose leases expire during the duration of the Partnership is subject to many
factors, and the Partnership's performance in the third quarter of 1995 is not
necessarily indicative of future periods. In the third quarter of 1995, the
Partnership distributed $98,057 to the Limited Partners, or $4.40 per Limited
Partnership Unit.
TEP VIIC:
(A) Total revenues of $300,577 for the quarter ended September 30, 1995,
decreased from $445,775 for the same period in 1994 due primarily to lower lease
revenues offset, slightly, by a larger gain on the sale of equipment in the
third quarter of 1995 as compared to the same period in 1994.
(1) Lease revenue decreased to $272,726 in the third quarter of 1995 from
$425,183 for the same period in 1994. The following table lists lease revenues
by equipment type.
For the three months
ended September 30,
----------------------------------
1995 1994
----------------------------------
Trailers $ 165,601 $ 289,198
Aircraft 99,605 128,654
Marine containers 7,520 7,331
==================================
$ 272,726 $ 425,183
==================================
Significant revenue component changes resulted primarily from:
(a) Trailer revenue decreased $123,597 due to a decline in utilization in
the PLM-affiliated short-term rental facilities in 1995 compared to 1994 levels,
and the sale of three trailers in the fourth quarter of 1994 and 14 trailers in
1995;
(b) Aircraft revenues decreased $29,049 due to a reduced rental rate for
one lessee.
(2) For the quarter ended September 30, 1995, the Partnership realized a gain of
$19,988 on the sale or disposition of six trailers and four marine containers,
compared to the same period in 1994, where the Partnership realized a gain of
$12,684 on the sale or disposition of 11 trailers and nine marine containers.
(B) Expenses
Total expenses of $285,863 for the quarter ended September 30, 1995
decreased from $303,185 for the same period in 1994. The decrease in 1995
expenses was primarily attributable to decreases in general and administrative
expenses, depreciation expense, and repairs and maintenance expense.
(1) Direct operating expenses (defined as repairs and maintenance expenses)
decreased to $59,874 in the third quarter of 1995, from $66,431 in the same
period of 1994 due to decreases in maintenance for trailers in the
PLM-affiliated short-term rental facilities. In the third quarter of 1994,
repairs were made on former term lease trailers prior to transitioning into the
PLM-affiliated short-term rental facilities.
(2) Indirect operating expenses (defined as depreciation expense, management
fees to affiliates, bad debt expenses, and general and administrative expenses)
decreased to $225,989 in the third quarter of 1995 from $236,754 in the third
quarter of 1994. This change resulted primarily from:
(a) a decrease in general and administrative expenses of $9,582 resulting
from a decrease in indirect costs associated with the operations of the
PLM-affiliated short-term rental facilities;
(b) a decrease of $7,718 in depreciation expense from 1994 levels
reflecting asset sales or dispositions during 1994 and 1995.
(C) Net Income
The Partnership's net income decreased to $14,714 in the third quarter of
1995, from $142,590 in the third quarter of 1994. The Partnership's ability to
operate or liquidate assets, secure leases, and re-lease those assets whose
leases expire during the duration of the Partnership is subject to many factors,
and the Partnership's performance in the third quarter of 1995 is not
necessarily indicative of future periods. In the third quarter of 1995, the
Partnership distributed $258,703 to the Limited Partners, or $7.68 per Limited
Partnership Unit.
Comparison of the Partnerships' Operating Results for the Nine Months Ended
September 30, 1995, and 1994
TEP VIIB:
(A) Revenues
Total revenues of $574,092 for the nine months ended September 30, 1995,
decreased from $592,808 for the same period in 1994 due to lower lease revenues
when compared to the same period in 1994, offset, in part, by an increase in
other income in 1995.
(1) Lease revenue decreased to $517,021 for the nine months ended September 30,
1995, from $574,076 for the same period in 1994.
The following table lists lease revenues by equipment type:
For the nine months
ended September 30,
----------------------------------
1995 1994
----------------------------------
Trailers $ 404,932 $ 456,626
Aircraft 72,909 74,311
Rail equipment 20,549 23,477
Marine containers 18,631 19,662
==================================
$ 517,021 $ 574,076
==================================
Significant revenue component changes resulted primarily from:
(a) Trailer revenue decreased $51,694 due to the sale of three trailers
during the fourth quarter of 1994 and eight trailers in 1995, and a decline in
utilization in the PLM-affiliated short-term rental facilities in 1995 compared
to 1994 levels;
(b) Railcar revenue decreased $2,928 due to the re-lease of some railcars
at a lower rate.
(2) Interest and other income increased to $28,042 in the nine months ended
September 30, 1995 from $7,882 for the same period in 1994. This increase was
primarily due to income earned from an early lease termination penalty on four
railcars in the second quarter of 1995, and a higher interest rate earned on
investments in 1995.
(3) For the nine months ended September 30, 1995, the Partnership realized a
gain of $29,029 on the sale or disposition of eight trailers and 11 marine
containers, compared to the same period in 1994, where the Partnership realized
a gain of $10,850 on the sale or disposition of five trailers and 20 marine
containers.
(B) Expenses
Total expenses of $554,965 for the nine months ended September 30, 1995
increased from $526,531 for the same period in 1994. The increase in 1995
expenses was primarily attributable to increases in repairs and maintenance, and
bad debt expense, offset by decreases in depreciation expense.
(1) Direct operating expenses (defined as repairs and maintenance expenses)
increased to $129,305 in the nine months ended September 30, 1995, from $105,375
in the same period in 1994. This increase was primarily attributable to trailers
coming off term leases and requiring refurbishment prior to transitioning into
the PLM-affiliated short-term rental facilities as compared to the same period
in 1994 when some current rental yard trailers were on net term leases.
(2) Indirect operating expenses (defined as depreciation, management fees to
affiliates, bad debt expenses, and general and administrative expenses)
increased to $425,660 in the nine months ended September 30, 1995 from $421,156
in the same period in 1994.
This change resulted primarily from:
(a) an increase in bad debt expense of $21,749 due to the General Partner's
evaluation of the uncollectibility of certain open receivable balances;
(b) a decrease of $15,163 in depreciation expense from 1994 levels
reflecting asset sales or dispositions during 1994 and 1995.
(C) Net Income
The Partnership's net income decreased to $19,127 in the nine months ended
September 30, 1995, from $66,277 in the same period in 1994. The Partnership's
ability to operate or liquidate assets, secure leases, and re-lease those assets
whose leases expire during the duration of the Partnership is subject to many
factors, and the Partnership's performance in the third quarter of 1995 is not
necessarily indicative of future periods. For the nine months ended September
30, 1995, the Partnership distributed $294,169 to the Limited Partners, or
$13.21 per Limited Partnership Unit.
TEP VIIC:
(A) Revenues
Total revenues of $950,241 for the nine months ended September 30, 1995,
decreased from $1,296,162 for the same period in 1994 due to lower lease
revenues, offset slightly by an increase in interest and other income when
compared to 1994.
(1) Lease revenue decreased to $855,499 for the nine months ended September 30,
1995, from $1,209,153 in the nine months ended September 30, 1994.
The following table presents lease revenues by equipment type:
For the nine months
ended September 30,
--------------------------------------
1995 1994
--------------------------------------
Trailers $ 533,915 $ 800,413
Aircraft 298,185 385,962
Marine containers 23,399 22,778
======================================
$ 855,499 $ 1,209,153
======================================
The significant revenue component changes resulted primarily from:
(a) Trailer revenue decreased $266,498 due to a decline in utilization in
the PLM-affiliated short-term facilities in 1995 compared to 1994 levels, and
the sale of three trailers in the fourth quarter of 1994 and 14 trailers in
1995;
(b) Aircraft revenue decreased $87,777 due to a reduced rental rate for one
lessee.
(2) Interest and other income increased to $28,095 for the nine months ended
September 30, 1995 from $18,978 for the same period in 1994 primarily due to
higher interest rates earned on cash investments for the nine months ended
September 30, 1995.
(3) For the nine months ended September 30, 1995, the Partnership realized a
gain of $66,647 on the sale or disposition of 15 marine containers and 14
trailers, compared to the same period in 1994, where the Partnership realized a
gain of $68,031 from the sale or disposition of 18 marine containers and 15
trailers.
(B) Expenses
Total expenses of $817,531 for the nine months ended September 30, 1995,
decreased from $966,640 for the same period in 1994. The decrease in 1995
expenses was primarily attributable to decreases in general and administrative
expenses, depreciation expenses, repairs and maintenance, bad debt expenses, and
management fees to affiliate.
(1) Direct operating expenses (defined as repairs and maintenance expenses)
decreased to $165,264 in the nine months ended September 30, 1995, from $196,192
in the same period in 1994. This change resulted primarily from decreases in
maintenance costs for trailers in the PLM-affiliated short-term rental
facilities. In the first nine months of 1994, repairs were made on former term
lease trailers prior to transitioning into the short-term rental facilities.
(2) Indirect operating expenses (defined as depreciation expense, management
fees to affiliates, bad debt expenses, and general and administrative expenses)
decreased to $652,267 in the nine months ended September 30, 1995, from $770,448
for the nine months ended September 30, 1994. This change resulted primarily
from:
(a) a decrease of $43,151 in general and administrative expenses resulting
from 1994 levels due to lower indirect costs associated with the operations of
the PLM-affiliated short-term rental facilities;
(b) a decrease of $32,376 in depreciation expense from 1994 levels
reflecting asset sales or dispositions during 1994 and 1995;
(c) a decrease of $29,915 in bad debt expense due to the General Partner's
evaluation that previously establish reserves are no longer required based on
the current open receivable balances and the current customer mix.
(d) a decrease of $12,739 in management fees resulting from lower operating
cash flow primarily associated with lower lease revenues on fixed-term trailers
and a lower aircraft revenue. Management fees are calculated as the greater of
10% of the Partnership's Operating Cash Flow, or 1/12 of 1/2% of the
Partnership's Gross Proceeds as defined in the Limited Partnership Agreement.
(C) Net Income
The Partnership's net income decreased to $132,710 for the nine months
ended September 30, 1995, from $329,522 in the same period in 1994. The
Partnership's ability to operate or liquidate assets, secure leases, and
re-lease those assets whose leases expire during the duration of the Partnership
is subject to many factors, and the Partnership's performance in the third
quarter of 1995 is not necessarily indicative of future periods. For the nine
months ended September 30, 1995, the Partnership distributed $878,350 to the
Limited Partners, or $26.04 per Limited Partners Unit.
Trends
Inflation and changing prices did not materially impact the Partnerships'
revenues or expenses during the reported periods.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None.
(b) Reports on Form 8-K
None.
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PLM TRANSPORTATION EQUIPMENT
PARTNERS VIIB 1985 INCOME FUND
By: PLM Financial Services, Inc.
General Partner
Date: November 10, 1995 By: /s/ David J. Davis
------------------
David J. Davis
Vice President and
Corporate Controller