P L M G ROWTH INCOME F UND VII To by salazarcannon

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									P L M G ROWTH & INCOME F UND VII

To Our Investors
Dear Investor: Below please find the 2nd quarter 2002 report for PLM Growth & Income Fund VII. Partnership performance information has been abstracted from the Partnership’s Quarterly 10–Q report, as filed with the Securities and Exchange Commission. The full report is availabl e ,f ree of charge, at www.freeedgar.com or the SEC web site. Very truly yours,

Stephen M. Bess President

Balance Sheets
Accrual basis (unaudited) (in thousands, except per unit amounts) June 30,2002 $ 79,960 (46,128) 33,832 7,596 96 1,756 7,529 171 70 $ 51,050 December 31,2001 $ 79,955 (42,910) 37,045 3,129 75 1,764 8,351 229 91 $ 50,684

Assets
Equipment held for operating leases,at cost Less accumulated depreciation Net equipment Cash and cash equivalents Restricted cash Accounts receivable,less allowance for doubtful accounts of $834 in 2002 and $306 in 2001 Investments in unconsolidated special-purpose entities Deferred charges,net of accumulated amortization of $383 in 2002 and $324 in 2001 Prepaid expenses and other assets Total assets

Liabilities and partners’ capital
Liabilities: Accounts payable and accrued expenses Due to affiliates Lessee deposits and reserve for repairs Notes payable Total liabilities Pa rt n e r s’ ca p i t a l : Limited partners (4,981,450 limited partnership units as of June 30,2002 and 5,041,936 as of December 31,2001) General Partner Total partners’capital Total liabilities and partners’capital $ 240 704 1,143 14,000 16,087 $ 959 551 945 14,000 16,455

34,963 — 34,963 $ 51,050

34,229 — 34,229 $ 50,684

PLM Growth & Income Fund VII
Second Quarter 2002 Report
PLM Investment Management, Inc. c/o ACS Securities Services, Inc. 3988 N. Central Expressway Building 5, 6th floor Dallas, TX, 75204

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PL M E QU I P M E N T G ROW T H F U N D V I I

Partnership Information
Distributions and Payment Options
Distributions, to the extent declared,are mailed 45 days after each calendar quarter end, on August 15, and November 15, 2002 and February 15, 2003, for quarter-ending dates of June 30,September 30, and December 3 1 ,2 0 0 2 , respectively. Distribution checks are sent directly to you, unless you requested that they be sent to a custodian,bank,or other financial institution.To change a payment destination, please send a written request to Investor Services at the address below. The change will take effect in the quarter following receipt of your request.

Address Changes
If you have moved, please send both old and new addresses to Investor Services, along with your social security or tax identification number.To change your address, please write to:ACS Securities Services, Inc., 3988 N. Central Expressway, Building 5, 6th floor, D a l l a s ,T X ,7 5 2 0 4 ; or call (800) 626–7549.

Transfers
To change the registration (title) of your investment, please send documents directly to: ACS Securities Services,Inc., 3988 N. Central Expressway, Building 5, 6th floor, D a l l a s ,T X ,7 5 2 0 4, Attention:Harriette Yates. Phone No. (800) 626–7549, option #4. Fax No. (214) 887–7198. To protect your investment,it is advisable to send original certificates by registered mail. To report a lost certificate, please call Investor Services for replacement instructions.

Investment Information
For inquiries about the Partnership or your investment, please write to: ACS Securities Serv i c e s ,I n c . , 3988 N. Central Expressway, Building 5, 6th floor, Dallas,TX,75204; or call (800) 626–7549.

P LM G ROWTH & I NCOME F UND VII

Statements of Income
Accrual basis (unaudited) (in thousands, except per unit amounts) Three Months Ended June 30, 2002 2001 $ 3,759 25 (1) 3,783 1,640 324 422 112 186 257 96 233 283 3,553 $ 12 242 $ 4,128 59 12 4,199 2,015 395 414 54 222 366 111 169 1 3,747 2,408 $ 2,860

Revenues
Lease revenue Interest and other income Net gain (loss) on disposition of equipment Total revenues

Expenses
Depreciation and amortization Repairs and maintenance Equipment operating expenses Insurance expense Management fees to affiliate Interest expense General and administrative expenses to affiliates Other general and administrative expenses Provision for bad debts Total expenses Equity in net income of unconsolidated special-purpose entities Net income

Partners’ share of net income
Limited partners General Partner Total Limited partners net income per weighted-average limited partnership unit $ $ $ 242 — 242 0.05 $ 2,860 — $ 2,860 $ 0.54

Opinion of Management
In the opinion of the management of PLM Financial Services,Inc.(FSI or the General Partner),the accompanying unaudited condensed financial statements contain all adjustments necessary, consisting primarily of normal recurring accruals,to present fairly the unaudited condensed financial position of PLM Growth & Income Fund VII (the Partnership) as of June 30,2002 and December 31,2001, and the unaudited condensed statements of income for the three months ended June 30,2002 and 2001. Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted from the accompanying condensed 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 31,2001,on file at the Securities and Exchange Commission.

Comparison of the Partnership’s Operating Results for the Three Months Ended June 30,2002 and 2001 Owned Equipment Operations
Lease revenues less direct expenses (defined as repairs and maintenance,equipment operating,and asset-specific insurance expenses) on owned equipment decreased during the three months ended June 30,2002 compared to the same period of 2001. Gains or losses from the sale of equipment,interest and other income,and certain expenses such as management fees to affiliate,depreciation and amortization and general and administrative expenses relating to the operating segments,are not included in the owned equipment operation discussion because they are indirect in nature and not a result of operations,but the result of owning a portfolio of equipment. The following table presents lease revenues less direct expenses by segment (in thousands of dollars):

For the three months ended June 30,

2002

2001

M a r i ne c o n t a in e r s Marine vessels Railcars A i rc ra f t Tra i l e r s

$1,495 715 399 270 37

$1,665 818 470 274 55

Marine containers: Lease revenues and direct expenses for marine containers were $1.5 million and $17,000 respectively, for the three months ended June 30,2002,compared to $1.7 million and $19,000, respectively, during the same period of 2001. The decrease in lease revenues of $0.2 million during the second quarter of 2002 compared to the same period of 2001 was due to lower lease rates earned on the Partnership's marine containers. Marine vessels: Marine vessel lease revenues and direct expenses

P LM G ROWTH & I NCOME F UND VII

were $1.3 million and $0.6 million, respectively, for the three months ended June 30,2002,compared to $1.4 million and $0.6 million, respectively, during the same period of 2001. The decrease in lease revenues of $0.1 million during the second quarter of 2002 compared to the same period of 2001 was due to lower lease rates earned on the Partnership's marine vessels. Railcars: Railcar lease revenues and direct expenses were $0.5 million and $0.1 million, respectively, for the three months ended June 30,2002,compared to $0.6 million and $0.1 million, respectively, during the same period of 2001. The decrease in lease revenues of $0.1 million during the second quarter of 2002 compared to 2001 was due to lo wer lease rates earned on the Partnership's railcars. Aircraft: Aircraft lease revenues and direct expenses were $0.3 million and $2,000, respectively, for the three months ended June 30, 2002,compared to $0.3 million and $(2,000), respectively, during the same period of 2001. Trailers: Trailer lease revenues and direct expenses were $0.1 million and $0.1 million, respectively, for the three months ended June 30,2002 and 2001.

the net income generated from the operation of jointly owned assets accounted for under the equity method of accounting. These entities are single purpose and ha ve no debt or other financial encumbrances. The following table presents equity in net income by equipment type (in thousands of dollars):
For the three months ended June 30, 2002 2001

A i rc ra f t $ M a r in e ve s s e l s E qu ity in n e t in co me o f U SP E s $

7 5 12

$ 4 79 1,929 $2,408

Indirect Expenses Related to Owned Equipment Operations
Total indirect expenses of $2.7 million for the three months ended June 30,2002 decreased from $2.9 million for the same period in 2001. Significant variances are explained as follows: • A $0.4 million decrease in depreciation and amortization expenses from 2001 levels reflects the decrease of approximately $0.2 million caused by the double-declin ing balance method of depreciation which results in greater depreciation in the first years an asset is owned and a decrease of $0.2 million resulting from certain assets being fully depreciated during 2001; • A $0.1 million decrease in interest expense was due to a lower average outstanding debt balance in the second quarter of 2002 compared to the same period of 2001; • A $0.3 million increase in the provision for bad debts was based on PLM Financial Services,Inc.(FSI or the General Partner’s) evaluation of the collectability of receivables compared to 2001. The provision for bad debt recorded in the second quarter of 2002 of $0.3 million was primari ly related to one aircraft lessee.

Aircraft: As of June 30,2002 and 2001,the Partnership owned an interest in entities that owned three commercial aircraft. During the three months ended June 30,2002,lease revenues of $0.5 million were offset by depreciation expense,direct expenses,and administrative expenses of $0.5 million. During the same period of 2001,lease revenues of $0.5 million and other income of $0.8 million were offset by depreciation expense,direct expenses,and administrative expenses of $0.8 million. Other income decreased $0.8 million during the three months ended June 30,2002 when compared to the same period of 2001,due to the recognition of an engine reserve liability as income upon termination of the previous lease agreement during 2001. A similar event did not occur during the same period of 2002. The decrease in depreciation expense of $0.2 million was the result of the double declining-balance method of depreciation which results in greater depreciation in the first years an asset is owned and by $0.2 million in lower depreciation expense resulting from one aircraft being fully depreciated during 2001. Marine vessel: As of June 30,2002 and 2001,the Partnership had sold its interest in an entity that owned a marine vessel. During the three months ended June 30,2002,the Partnership's interest in an entity that owned a marine vessel received an insurance settlement of $5,000. During the same period of 2001,lease revenues of $0.2 million and the gain of $2.1 million from the sale of the Partnership’s interest in an entity that owned a marine vessel were offset by depreciation expense,direct expenses,and administrative expenses of $0.4 million. The decrease in marine vessel contribution was due to the sale of the Partnership interest in an entity that owned a marine vessel during 2001.

Net Income
As a result of the foregoing,the Partnership had a net income of $0.2 million for the three months ended June 30,2002,compared to net income of $2.9 million during the same period of 2001. The Partnership's ability to acquire,operate,and liquidate assets,secure leases and re-lease those assets whose leases expire is subject to many factors. Therefore,the Partnership's performance in the second quarter of 2002 is not necessarily indicative of future periods.

Interest and Other Income
Interest and other income decreased $34,000 due to a decrease in the interest rate earned on cash balances.

Equity in Net Income of Unconsolidated Special-Purpose Entities (USPEs)
Equity in net income of USPEs represents the Partnership's share of

Information relating to your Partnership can be found at www.plm.com

PLM INVESTMENT MANAGEMENT, INC.
450 Carillon Parkway, Suite 200 St. Petersburg, FL 33716

August 31, 2002

RE: PLM Equipment Growth Fund VII (“Partnership”)

Dear Investor: This letter is an update on your Partnership investment. As previously reported, the events of September 11, 2001 and the ongoing weakening of the U. S. economy continue to adversely affect the commercial airline industry. The poor financial condition of the airline industry has led to significantly reduced lease rates. One of the Partnership’s lessees has ceased making its lease payment and the General Partner is actively working to resolve this lease default. Remarketing returned aircraft is expected to be difficult. Furthermore, the transportation equipment market as a whole is weak given the current state of the U. S. economy. Railcar loadings have decreased from 2001 levels, intermodal trailer loadings are down by approximately 12% in 2002, the marine container market has been adversely affected by the low utilization of cargo vessels and the marine vessel spot market is also depressed. Despite the fore-mentioned, the Partnership maintains a strong balance sheet and remains cash flow positive. The Partnership is retaining cash to help assure a stable asset base, minimize borrowings and provide flexibility for possible future acquisitions. The General Partner believes the depressed investment market values warrant the evaluation and pursuit of possible investments. Accordingly, as communicated in the past, distributions will be held in abeyance while the General Partner seeks re-investment opportunities with attractive returns.

Investor Relations


								
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