**UNITED
      STATES****SECURITIES
      AND EXCHANGE COMMISSION****Washington,
      D.C. 20549****___________________****FORM
      10-QSB****[X]
      Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
      Exchange Act of 1934****For
      the fiscal quarter ended March 31, 2005.****[
      ] 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 0-26594****_______________________****PLM
      EQUIPMENT GROWTH & INCOME FUND VII**(Exact
      name of Registrant as specified in its charter)**California
      94-3168838**(State
      or other jurisdiction of (I.R.S. Employerincorporation
      or organization) Identification No.)******200
      Nyala Farms Road****.********Westport,
      CT 06880**(Address
      of principal (Zip code)executive
      offices) .Registrant's
      telephone number, including area code: (203) 341-0555**_______________________**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. YesXNo
      ____Transitional
      Small Business Disclosure Format: YesNoXAggregate
      market value of voting stock:N/A
 
  
  
 **PLM
      EQUIPMENT GROWTH & INCOME FUND VII****(A
      Limited Partnership)****CONDENSED
      BALANCE SHEETS**(in
      thousands of dollars, except unit amounts)
 
 March
      31,
    
    December
      31,2005
    
    2004(unaudited)**Assets**Equipment
      held for operating leases, at cost
    
    $
    66,893
    
    $
    66,960Less
      accumulated depreciation
    
    
    (50,353
    )
    
    (49,421
    )Net
      equipment
    
    
    16,540
    
    
    17,539Cash
      and cash equivalents
    
    
    7,065
    
    
    4,635Restricted
      cash
    
    
    2,003
    
    
    1,998Accounts
      and other receivables, less allowance for doubtfulaccounts
      of $39 in 2005 and $45 in 2004
    
    
    2,281
    
    
    2,358Equity
      investments in affiliated entities
    
    
    14,798
    
    
    15,576Other
      assets, net of accumulated amortization of$266
      in 2005 and $256 in 2004
    
    
    496
    
    
    493Total
      assets
    
    $
    43,183
    
    $
    42,599**Liabilities
      and partners’ capital**Liabilities:Accounts
      payable and accrued expenses
    
    $
    237
    
    $
    250Due
      to affiliates
    
    
    733
    
    
    952Reserve
      for repairs
    
    
    1,322
    
    
    1,888Lessee
      deposits and prepaid revenues
    
    
    362
    
    
    383Notes
      payable
    
    
    4,000
    
    
    4,000Total
      liabilities
    
    
    6,654
    
    
    7,473Commitments
      and contingenciesPartners'
      capital:Limited
      partners (4,981,450 limited partnership units)
    
    
    36,529
    
    
    35,126General
      Partner
    
    
    -
    
    
    -Total
      partners' capital
    
    
    36,529
    
    
    35,126Total
      liabilities and partners’ capital
    
    $
    43,183
    
    $
    42,599
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 See
accompanying notes to unaudited condensed financial statements.
  
  
 **PLM
      EQUIPMENT GROWTH & INCOME FUND VII****(A
      Limited Partnership)****CONDENSED
      STATEMENTS OF INCOME**(in
      thousands of dollars, except weighted-average limited partnership unit
      amounts)
 (unaudited)
 
 For
      the Three MonthsEnded
      March 31,2005
    
    2004**Revenues**Lease
      revenue
    
    $
    4,049
    
    $
    3,478Interest
      and other income
    
    
    36
    
    
    21Gain
      on disposition of equipment
    
    
    34
    
    
    160Total
      revenues
    
    
    4,119
    
    
    3,659**Expenses**Depreciation
      and amortization
    
    
    973
    
    
    1,470Operations
      support
    
    
    959
    
    
    1,123Management
      fees to affiliate
    
    
    161
    
    
    195Interest
      expense
    
    
    78
    
    
    153General
      and administrative expenses to affiliates
    
    
    36
    
    
    94Other
      general and administrative expenses
    
    
    145
    
    
    250Recovery
      of bad debts
    
    
    (9
    )
    
    (91
    )Total
      expenses
    
    
    2,343
    
    
    3,194Equity
      in net (loss) income of equity investments
    
    
    (373
    )
    
    133Net
      income
    
    $
    1,403
    
    $
    598**Partners'
      share of net income**Limited
      partners
    
    $
    1,403
    
    $
    598General
      Partner
    
    
    -
    
    
    -Total
    
    $
    1,403
    
    $
    598Limited
      partners’ net income per weighted-averagelimited
      partnership unit
    
    $
    0.28
    
    $
    0.12
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 See
accompanying notes to unaudited condensed financial statements.
  
  
 
 **PLM
      EQUIPMENT GROWTH & INCOME FUND VII****(A
      Limited Partnership)****CONDENSED
      STATEMENTS OF CHANGES IN PARTNERS' CAPITAL****For
      the Period from December 31, 2004 to March 31,
    2005**(in
      thousands of dollars)
 (unaudited)
 
 Limited
    
    GeneralPartners
    
    Partner
    
    TotalPartners'
      capital as of December 31, 2004
    
    $
    35,126
    
    $
    -
    
    $
    35,126Net
      income
    
    
    1,403
    
    
    -
    
    
    1,403Partners'
      capital as of March 31, 2005
    
    $
    36,529
    
    $
    -
    
    $
    36,529
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 See
accompanying notes to unaudited condensed financial statements.
  
  
 **PLM
      EQUIPMENT GROWTH & INCOME FUND VII****(A
      Limited Partnership)****CONDENSED
      STATEMENTS OF CASH FLOWS**(in
      thousands of dollars)(unaudited)
 
 For
      the Three MonthsEnded
      March 31,2005
    
    2004**Operating
      activities**Net
      income
    
    $
    1,403
    
    $
    598Adjustments
      to reconcile net incometo
      net cash provided by (used in) operating activities:Depreciation
      and amortization
    
    
    973
    
    
    1,470Amortization
      of debt placement costs
    
    
    6
    
    
    6Recovery
      of bad debts
    
    
    (9
    )
    
    (91
    )Gain
      on disposition of equipment
    
    
    (34
    )
    
    (160
    )Equity
      in net loss (income) from equity investments
    
    
    373
    
    
    (133
    )Distributions
      from equity investments
    
    
    405
    
    
    429Changes
      in operating assets and liabilities:Accounts
      and other receivables
    
    
    86
    
    
    111Other
      assets
    
    
    (46
    )
    
    (69
    )Accounts
      payable and accrued expenses
    
    
    (13
    )
    
    1,181Due
      to affiliates
    
    
    (219
    )
    
    (243
    )Reserve
      for repairs
    
    
    (566
    )
    
    87Lessee
      deposits
    
    
    (21
    )
    
    29Net
      cash provided by operating activities
    
    
    2,338
    
    
    3,215**Investing
      activities**Payments
      for purchase of equipment and capitalized repairs
    
    
    --
    
    
    (4,000
    )(Increase)
      decrease in restricted cash
    
    
    (5
    )
    
    60Payments
      of acquisition fees to affiliate
    
    
    --
    
    
    (180
    )Payments
      of lease negotiation fees to affiliate
    
    
    --
    
    
    (40
    )Payments
      on finance lease receivable
    
    
    33
    
    
    --Proceeds
      from disposition of equipment
    
    
    64
    
    
    300Net
      cash provided by (used in) investing activities
    
    
    92
    
    
    (3,860
    )Net
      increase (decrease) in cash and cash equivalents
    
    
    2,430
    
    
    (645
    )Cash
      and cash equivalents at beginning of period
    
    
    4,635
    
    
    8,635Cash
      and cash equivalents at end of period
    
    $
    7,065
    
    $
    7,990
 
 
 
 
 
 
 
 
 
 
 See
accompanying notes to unaudited condensed financial statements.
  
  **PLM
EQUIPMENT GROWTH & INCOME FUND VII**
 **(A
Limited Partnership)**
 **NOTES
TO CONDENSED FINANCIAL STATEMENTS**
 **(unaudited)**
 1.  Basis
of Presentation
 
 The
unaudited financial statements presented herein are prepared in conformity with
generally accepted accounting principles in the United States of America and the
instructions for preparing Form 10-QSB under Rule 310 of Regulation S-B of the
Securities and Exchange Commission. Rule 310 provides that disclosures that
would substantially duplicate those contained in the most recent annual report
may be omitted from interim financial statements. The accompanying unaudited
condensed financial statements have been prepared on that basis and, therefore,
should be read in conjunction with the financial statements and notes presented
in the 2004 Annual Report (Form 10-KSB) of PLM Equipment Growth Fund &
Income VII (the Partnership) on file with the United States Securities and
Exchange Commission. Except as disclosed herein, there have been no material
changes to the information presented in the notes to the 2004 Annual Report in
Form 10-KSB.
 
 In the
opinion of the management of PLM Financial Services, Inc. (FSI or the General
Partner) all adjustments necessary, consisting primarily of normal recurring
accruals, to present fairly the Partnership’s unaudited condensed balance sheets
at March 31, 2005 and December 31, 2004, condensed statements of income for the
three months ended March 31, 2005 and 2004, condensed statements of changes in
partners’ capital for the period from December 31, 2004 to March 31, 2005, and
the condensed statements of cash flows for the three months ended March 31, 2005
and 2004 have been made and are reflected.
 
 2.  Schedule
of Partnership Phases
 
 The
Partnership may not reinvest cash flow generated from operations after January
1, 2005 into additional equipment. The Partnership will terminate on December
31, 2013, unless terminated earlier upon the sale of all of the equipment or by
certain other events. Although the Partnership is scheduled to terminate on
December 31, 2013, the General Partner is managing the Partnership with the
objective of having all owned and partially owned equipment disposed of by
December 31, 2006.
 
 3.  Reclassifications
 
 Certain
amounts previously reported have been reclassified to conform to the 2005
presentation. These reclassifications did not have any effect on total assets,
total liabilities, partners’ capital, or net income.
 
 4.  Transactions
with General Partner and Affiliates
 
 The
balance due to affiliates as of March 31, 2005 included $0.2 million due to FSI
or its affiliates for management fees and $0.6 million due to affiliates in
which the Partnership has an equity investment. The balance due to affiliates as
of December 31, 2004 included $0.2 million due to FSI and its affiliates for
management fees and $0.7 million due to affiliates in which the Partnership has
an equity investment.
 
 During
the three months ended March 31, 2005 and 2004, the Partnership incurred
acquisition, lease negotiation, management fees and data processing and
administrative expenses to FSI or its affiliates. The components of these fees
and expenses incurred to FSI or its affiliates were as follows (in thousands of
dollars):
 
 Owned
      Equipment
    
    Equity
      Investments2005
    
    2004
    
    2005
    
    2004Acquisition
      fees
    
    $
    --
    
    $
    180
    
    $
    --
    
    $
    --Lease
      negotiation fees
    
    
    --
    
    
    40
    
    
    --
    
    
    --Management
      fees
    
    
    161
    
    
    195
    
    
    72
    
    
    27Data
      processing and administrativeexpenses
    
    
    36
    
    
    94
    
    
    43
    
    
    3
 
  
  
 **PLM
EQUIPMENT GROWTH & INCOME FUND VII**
 **(A
Limited Partnership)**
 **NOTES
TO CONDENSED FINANCIAL STATEMENTS**
 **(unaudited)**
 
 4.  Transactions
with General Partner and Affiliates (continued)
 
 During
the three months ended March 31, 2004, the Partnership purchased $4.0 million in
railcars from FSI or its affiliates and paid $0.2 million for acquisition fees
and $40,000 for lease negotiation fees. The Partnership's cost for these
railcars was the lower of FSI's or its affiliates cost or the fair market value
at the time of purchase. No equipment was purchased from FSI or its affiliates
during the three months ended March 31, 2005.
 
 5.  Equipment
 
 The
components of owned equipment were as follows (in thousands of
dollars):
 
 March
      31,
    
    December
      31,2005
    
    2004Marine
      containers
    
    $
    38,334
    
    $
    38,401Marine
      vessels
    
    
    22,212
    
    
    22,212Aircraft
    
    
    5,483
    
    
    5,483Rail
      equipment
    
    
    864
    
    
    86466,893
    
    
    66,960Less
      accumulated depreciation
    
    
    (50,353
    )
    
    (49,421
    )Net
      equipment
    
    $
    16,540
    
    $
    17,539
 
 Equipment
held for operating leases is stated at cost less depreciation and any
impairments to the carrying value.
 
 As of
March 31, 2005, all owned equipment in the Partnership’s portfolio was on lease
except for five railcars with a net book value of $45,000. As of December 31,
2004 all owned equipment was on lease except for six railcars with a net book
value of $39,000.
 
 During
the three months ended March 31, 2004, the Partnership purchased railcars for
$4.2 million including acquisition fees of $0.2 million. No equipment was
purchased during the three months ended March 31, 2005.
 
 During
the three months ended March 31, 2005, the Partnership disposed of marine
containers with a net book value of $30,000 for proceeds of $64,000 which
resulted in a gain of $34,000. During the three months ended March 31, 2004, the
Partnership disposed of marine containers, railcars and a trailer with a net
book value of $0.1 million for proceeds of $0.3 million which resulted in a gain
of $0.2 million.
 
 6.  Equity
Investments in Affiliated Entities
 
 The
Partnership owns equipment jointly with affiliated programs and non-affiliated
entities.
 
 Ownership
interest is based on the Partnership’s contribution towards the cost of the
assets in the equity investments. The Partnership’s proportional share of equity
and income (loss) in each entity is not necessarily the same as its ownership
interest. The primary reason for this is that certain fees such as management
fees, acquisition fees, lease and re-lease fees vary among the owners of the
equity investments. The Partnership’s investment in equity investments includes
acquisition fees, lease negotiation fees, and debt placement fees paid by the
Partnership to the General Partner or its affiliates. The Partnership’s equity
interest in the net income (loss) of equity investments is reflected net of
management fees incurred and the amortization of acquisition fees, lease
negotiation fees and debt placement fees.
  
  **PLM
EQUIPMENT GROWTH & INCOME FUND VII**
 **(A
Limited Partnership)**
 **NOTES
TO CONDENSED FINANCIAL STATEMENTS**
 **(unaudited)**
 
 6.  Equity
Investments in Affiliated Entities (continued)
 
 The
tables below set forth 100% of the lease revenues and interest and other income,
gain on disposition of equipment, depreciation and amortization expense,
interest expense, operations support and indirect expenses, and net income
(loss) of the entities in which the Partnership has an interest, and the
Partnership‘s proportional share of income (loss) in each entity for the three
months ended March 31, 2005 and 2004 (in thousands of dollars):
 
 TWA
    
    TWA
    
    Boeing
    
    PLMFor
      the three months ended
    
    S/N
      49183
    
    MD-82
    
    737-300
    
    WorldwideMarch
      31, 2005
    
    Trust1
    
    Trust2
    
    Trust3
    
    Leasing4
 
 Lease
      revenues and interest and other income
    $
    308
    
    $
    308
    
    $
    390
    
    $
    312Gain
      on disposition of equipment
    
    --
    
    
    --
    
    
    --
    
    
    5Less:
      Depreciation and amortization expense
    
    --
    
    
    314
    
    
    320
    
    
    --Operations
      support
    
    --
    
    
    --
    
    
    6
    
    
    --Indirect
      expenses
    
    19
    
    
    20
    
    
    23
    
    
    308Net
      income (loss)
    $
    289
    
    $
    (26
    )
    $
    41
    
    $
    9Partnership’s
      share of net income (loss)
    $
    144
    
    $
    (16
    )
    $
    14
    
    $
    2
 
 For
      the three months ended
    
    PLM
      Rail
    
    PLM
      CAL I
    
    PLM
      CAL IIMarch
      31, 2005 (continued)
    
    Partners
      LLC5
    
    LLC6
    
    LLC7
    
    CFHS8
    
    Total
 
 Lease
      revenues and interest and other income
    $
    1,897
    
    $
    967
    
    $
    958
    
    $
    571Gain
      on disposition of equipment
    
    244
    
    
    --
    
    
    --
    
    
    --Less:
      Depreciation and amortization expense
    
    931
    
    
    1,235
    
    
    1,234
    
    
    1,380Interest
      (income) expense
    
    (8
    )
    
    490
    
    
    489
    
    
    --Operations
      support
    
    463
    
    
    --
    
    
    --
    
    
    --Indirect
      expenses
    
    202
    
    
    27
    
    
    27
    
    
    24Net
      income (loss)
    $
    553
    
    $
    (785
    )
    $
    (792
    )
    $
    (833
    )Partnership’s
      share of net income (loss)
    $
    187
    
    $
    (202
    )
    $
    (203
    )
    $
    (299
    )
    
    $
    (373
    )
 
 TWA
    
    TWA
    
    BoeingFor
      the three months ended
    
    S/N
      49183
    
    MD-82
    
    737-300March
      31, 2004
    
    Trust1
    
    Trust2
    
    Trust3
    
    Total
 
 Lease
      revenues and interest and other income
    $
    326
    
    $
    326
    
    $
    390Less:
      Depreciation and amortization expense
    
    --
    
    
    314
    
    
    367Operations
      support
    
    --
    
    
    --
    
    
    7Indirect
      expenses
    
    20
    
    
    20
    
    
    41Net
      income (loss)
    $
    306
    
    $
    (8
    )
    $
    (25
    )Partnership’s
      share of net income (loss)
    $
    153
    
    $
    (8
    )
    $
    (12
    )
    
    $
    133
 
 
 
 
 1
    The
      Partnership owns a 50% interest in the TWA S/N 49183 Trust that was formed
      in 1998 that owns a MD-82 stage III commercial
aircraft.
 2   The
Partnership owns a 50% interest in the TWA MD-82 Trust that was formed in 1998
that owns a MD-82 stage III commercial aircraft.
 3
    The
      Partnership owns a 38% interest in the Boeing 737-300 Trust that was
      formed in 1999 that owns a Boeing stage III commercial
      aircraft.
 4
    The
      Partnership owns a 25% interest in PLM Worldwide Leasing Corp. that was
      formed in 1995.
 5
    The
      Partnership owns a 34% interest in PLM Rail Partners, LLC that was formed
      in the third quarter of 2004 that owns various types of
      railcars.
 6
    The
      Partnership owns a 26% interest in the PLM CAL I LLC that was formed in
      the third quarter of 2004 that owns two Boeing 737-500 stage III
      commercial aircraft.
 7
    The
      Partnership owns a 26% interest in the PLM CAL II LLC that was formed in
      the third quarter of 2004 that owns two Boeing 737-500 stage III
      commercial aircraft.
 8
    The
      Partnership owns a 36% interest in CFHS that was formed in the fourth
      quarter of 2004 that owns various types of machinery and
      equipment.
  
  **PLM
EQUIPMENT GROWTH & INCOME FUND VII**
 **(A
Limited Partnership)**
 **NOTES
TO CONDENSED FINANCIAL STATEMENTS**
 **(unaudited)**
 
 6.  Equity
Investments in Affiliated Entities (continued)
 
 As of
March 31, 2005, all jointly-owned assets in the Partnership’s equity investment
portfolio was on lease except for 121 railcars with a net book value of $0.8
million. As of December 31, 2004, all jointly owned assets in the Partnership’s
equity investment portfolio was on lease except for 101 railcars with a net book
value of $0.6 million.
 
 7.  Operating
Segments
 
 The
Partnership operates in six primary operating segments: marine vessel leasing,
aircraft leasing, railcar leasing, trailer leasing, machinery and other
equipment leasing, and marine container leasing. Each equipment leasing segment
engages in short-term to mid-term operating leases to a variety of customers.
There were no intersegment revenues for the three months ended March 31, 2005
and 2004. The following tables present a summary of the operating segments (in
thousands of dollars):
 
 Marine
    
    
    
    
    
    
    
    Machinery
    
    MarineFor
      the three months ended
    
    Vessel
    
    Aircraft
    
    Railcar
    
    Trailer
    
    And
      Other
    
    ContainerMarch
      31, 2005
    
    Leasing
    
    Leasing
    
    Leasing
    
    Leasing
    
    Equipment
    
    Leasing
    
    Other1
    
    Total**Revenues**Lease
      revenue
    
    $
    2,364
    
    $
    97
    
    $
    43
    
    $
    --
    
    $
    --
    
    $
    1,545
    
    $
    --
    
    $
    4,049Interest
      income and other income
    
    
    --
    
    
    3
    
    
    7
    
    
    4
    
    
    --
    
    
    --
    
    
    22
    
    
    36Gain
      on disposition of equipment
    
    
    --
    
    
    --
    
    
    --
    
    
    --
    
    
    --
    
    
    34
    
    
    --
    
    
    34Total
      revenues
    
    
    2,364
    
    
    100
    
    
    50
    
    
    4
    
    
    --
    
    
    1,579
    
    
    22
    
    
    4,119**Expenses**Depreciation
      and amortization
    
    
    310
    
    
    --
    
    
    13
    
    
    --
    
    
    --
    
    
    650
    
    
    --
    
    
    973Operations
      support
    
    
    926
    
    
    2
    
    
    16
    
    
    --
    
    
    --
    
    
    15
    
    
    --
    
    
    959Management
      fees to affiliate
    
    
    89
    
    
    5
    
    
    3
    
    
    6
    
    
    --
    
    
    58
    
    
    --
    
    
    161Interest
      expense
    
    
    --
    
    
    --
    
    
    --
    
    
    --
    
    
    --
    
    
    --
    
    
    78
    
    
    78General
      and administrative expenses
    
    
    26
    
    
    4
    
    
    10
    
    
    --
    
    
    --
    
    
    --
    
    
    141
    
    
    181Recovery
      of bad debts
    
    
    --
    
    
    --
    
    
    (9
    )
    
    --
    
    
    --
    
    
    --
    
    
    --
    
    
    (9
    )Total
      expenses
    
    
    1,351
    
    
    11
    
    
    33
    
    
    6
    
    
    --
    
    
    723
    
    
    219
    
    
    2,343Equity
      in net income (loss) of equityinvestments
    
    
    --
    
    
    (261
    )
    
    187
    
    
    --
    
    
    (299
    )
    
    --
    
    
    --
    
    
    (373
    )Net
      income (loss)
    
    $
    1,013
    
    $
    (172
    )
    $
    204
    
    $
    (2
    )
    $
    (299
    )
    $
    856
    
    $
    (197
    )
    $
    1,403Total
      assets as of March 31, 2005
    
    $
    2,270
    
    $
    6,040
    
    $
    4,481
    
    $
    286
    
    $
    6,706
    
    $
    16,134
    
    $
    7,266
    
    $
    43,183
 
 
 Marine
    
    
    
    
    
    
    
    MarineFor
      the three months ended
    
    Vessel
    
    Aircraft
    
    Railcar
    
    Trailer
    
    ContainerMarch
      31, 2004
    
    Leasing
    
    Leasing
    
    Leasing
    
    Leasing
    
    Leasing
    
    Other2
    
    Total**Revenues**Lease
      revenue
    
    $
    1,230
    
    $
    97
    
    $
    520
    
    $
    146
    
    $
    1,485
    
    $
    --
    
    $
    3,478Interest
      income and other income
    
    
    --
    
    
    7
    
    
    --
    
    
    --
    
    
    --
    
    
    14
    
    
    21Gain
      on disposition of equipment
    
    
    --
    
    
    --
    
    
    130
    
    
    8
    
    
    22
    
    
    --
    
    
    160Total
      revenues
    
    
    1,230
    
    
    104
    
    
    650
    
    
    154
    
    
    1,507
    
    
    14
    
    
    3,659**Expenses**Depreciation
      and amortization
    
    
    310
    
    
    --
    
    
    329
    
    
    52
    
    
    778
    
    
    1
    
    
    1,470Operations
      support
    
    
    907
    
    
    3
    
    
    102
    
    
    92
    
    
    19
    
    
    --
    
    
    1,123Management
      fees to affiliate
    
    
    62
    
    
    8
    
    
    44
    
    
    7
    
    
    74
    
    
    --
    
    
    195Interest
      expense
    
    
    --
    
    
    --
    
    
    --
    
    
    --
    
    
    --
    
    
    153
    
    
    153General
      and administrative expenses
    
    
    30
    
    
    1
    
    
    69
    
    
    19
    
    
    --
    
    
    225
    
    
    344(Recovery
      of) provision for bad debts
    
    
    --
    
    
    (114
    )
    
    24
    
    
    (1
    )
    
    --
    
    
    --
    
    
    (91
    )Total
      expenses
    
    
    1,309
    
    
    (102
    )
    
    568
    
    
    169
    
    
    871
    
    
    379
    
    
    3,194Equity
      in net income of equityinvestments
    
    
    --
    
    
    133
    
    
    --
    
    
    --
    
    
    --
    
    
    --
    
    
    133Net
      (loss) income
    
    $
    (79
    )
    $
    339
    
    $
    82
    
    $
    (15
    )
    $
    636
    
    $
    (365
    )
    $
    598Equipment
      purchases andcapitalized
      repairs
    
    $
    --
    
    $
    --
    
    $
    4,000
    
    $
    --
    
    $
    --
    
    $
    --
    
    $
    4,000Acquisition
      fees to affiliate
    
    $
    --
    
    $
    --
    
    $
    180
    
    $
    --
    
    $
    --
    
    $
    --
    
    $
    180
 
   
 1
    Includes
      certain assets not identifiable to a specific segment such as cash and
      certain other assets. Also includes certain interest income and costs not
      identifiable to a particular segment, such as interest expense, and
      certain general and administrative and operations support
      expenses.
 2
    Includes
      certain interest income and costs not identifiable to a particular
      segment, such as interest expense, and certain amortization, general and
      administrative and operations support
expenses.
  
  **PLM
EQUIPMENT GROWTH & INCOME FUND VII**
 **(A
Limited Partnership)**
 **NOTES
TO CONDENSED FINANCIAL STATEMENTS**
 **(unaudited)**
 
 8.  Net
Income Per Weighted-Average Limited Partnership Unit
 
 Net
income per weighted-average limited partnership unit was computed by dividing
net income attributable to limited partners by the weighted-average number of
limited partnership units deemed outstanding during the period. The
weighted-average number of limited partnership units deemed outstanding during
the three months ended March 31, 2005 and 2004 was 4,981,450.
 
 9.  Accounts
and Other Receivables
 
 Accounts
and other receivables represent balances due from current or former lessees for
unpaid balances incurred from leasing Partnership owned equipment and
uncollected receivables from insurance claims. The components of accounts and
other receivables were as follows (in thousands of dollars):
 
 March
      31,
    
    December
      31,2005
    
    2004Trade
      accounts receivable
    
    $
    1,642
    
    $
    1,579Insurance
      receivables
    
    
    574
    
    
    576Other
      receivable
    
    
    104
    
    
    248Allowance
      for doubtful accounts
    
    
    (39
    )
    
    (45
    )$
    2,281
    
    $
    2,358
 Insurance
receivables of $0.6 million at March 31, 2005 and December 31, 2004 is the
result of two insurance claims submitted by the Partnership for an owned marine
vessel. $0.5 million of the insurance receivable relates to a crack in the
bottom hull of a marine vessel and the remaining balance of $0.1 million relates
to lost revenues and damage resulting from a collision with another vessel.
During March 2005, the General Partner received notification from the insurance
carrier that $0.3 million of the insurance receivable should be paid in the
second quarter of 2005. The balance of the insurance receivable is expected to
be paid within the next nine months.
 
 At March
31, 2005 and December 31, 2004, the balance in other receivable was due from a
former aircraft lessee for past due lease payments and in settlement for
returning aircraft not in accordance with the lease agreement. The other
receivable is scheduled to be fully paid by April 2005. Interest accrues at a
rate of 5% on the outstanding other receivable balance.
 
 10.  Other
Assets
 
 The
components of the other assets, net, were as follows (in thousands of
dollars):
  March
      31,
    
    December
      31,2005
    
    2004Finance
      lease receivable
    
    $
    249
    
    $
    282Prepaid
      expenses
    
    
    183
    
    
    137Lease
      negotiation fees to affiliate, net
    
    
    41
    
    
    45Debt
      placement fees, net
    
    
    18
    
    
    24Other
      assets
    
    
    5
    
    
    5$
    496
    
    $
    493
 
  
  
 **PLM
EQUIPMENT GROWTH & INCOME FUND VII**
 **(A
Limited Partnership)**
 **NOTES
TO CONDENSED FINANCIAL STATEMENTS**
 **(unaudited)**
 
 11.  Debt
 
 The
Partnership is a participant in a $10.0 million warehouse facility. The
warehouse facility is scheduled to expire on May 1, 2006 with all advances due
no later than May 1, 2006. As of March 31, 2005 and December 31, 2004, the
Partnership had no borrowings outstanding under this facility.
 
 12.  Concentrations
of Credit Risk
 
 For the
three months ended March 31, 2005 and 2004, the Partnership’s customers that
accounted for 10% or more of the total revenues for the owned equipment and
jointly owned equipment were Alcoa Steamships Company, Inc. (39% in 2005 and 30%
in 2004), Capital Leasing (21% in 2005 and 15% in 2004) and Cronos Group (15% in
2005 and in 2004).
 
 As of
March 31, 2005 and December 31, 2004, the Partnership’s customers and an
insurance underwriter that accounted for 10% or more of the total accounts
receivable for the owned equipment and jointly owned equipment were Capital
Leasing (21% in 2005 and 24% in 2004), Cronos Group (21% in 2005 and 23% in
2004) and Cambiaso Risso, an insurance underwriter, (18% in 2005 and 20% in
2004).
 
 As of
March 31, 2005 and December 31, 2004, the General Partner believed the
Partnership had no other significant concentrations of credit risk that could
have a material adverse effect on the Partnership.
 
 13.  Commitments
and Contingencies
 
 During
2004, the General Partner signed a legally binding commitment on behalf of the
Partnership to purchase in 2005, 28 newly constructed tank railcars for $2.0
million. The funds to purchase these railcars were placed in escrow accounts
with an unaffiliated third party as escrow agent as of December 31, 2004 and are
included in restricted cash on the accompanying balance sheets. These railcars
are expected to be purchased during the second and third quarters of
2005.
 
 14.  Recent
Accounting Pronouncements
 
 In March
2004, Financial Accounting Standards Board's (FASB's) Emerging Issues Task Force
(EITF) released Issue No. 03-1, “The Meaning of Other-Than-Temporary Impairment
and Its Application to Certain Investments" (EITF 03-1).”  EITF 03-1
provides guidance for determining whether impairment for certain debt and equity
investments is other-than-temporary and the measurement of an impaired loss.
Certain disclosure requirements of EITF 03-1 were adopted in 2003 and the
Partnership has complied with the new disclosure requirements in its
consolidated financial statements. The recognition and measurement requirements
of EITF 03-1 were initially effective for reporting periods beginning after June
15, 2004. In September 2004, the FASB Staff issued FASB Staff Position (FSP)
EITF 03-1-1 that delayed the effective date for certain measurement and
recognition guidance contained in EITF 03-1.  The FSP requires that
entities continue to apply previously existing “other-than-temporary” guidance
until a final consensus is reached. The General Partner does not anticipate that
issuance of a final consensus will materially impact the Partnership’s financial
condition or results of operations.
 
 In
December 2004, FASB issued Statement 153, "Exchanges of Non-monetary Assets"
(Statement 153), an amendment of Accounting Principles Board Opinion No. 29.
Statement 153 is effective for non-monetary asset exchanges occurring in fiscal
periods beginning after June 15, 2005. Statement 153 eliminates the exception to
fair value for exchanges of similar productive assets and replaces it with a
general exception for exchange transactions that do not have commercial
substance - that is, transactions that are not expected to result in significant
changes in the cash flows of the reporting entity.  The General Partner
does not believe that the adoption of Statement 153 will have a significant
effect on its financial statements.
 
 15.  Subsequent
Event
 
 During
April 2005, the General Partner declared a cash distribution of $0.50 per
limited partnership unit to be paid on May 20, 2005 to the record holders as of
that date. The total cash distribution to the limited partners and the General
Partner is $2.5 million and $0.1 million, respectively.
  ITEM
2.  MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
 
 (I)  RESULTS
OF OPERATIONS
 
 Comparison
of the PLM Equipment Growth & Income Fund VII’s (the Partnership’s)
Operating Results for the Three Months Ended March 31, 2005 and
2004
 
 (A)  Owned
Equipment Operations
 
 Lease
revenues less operations support on owned equipment increased during the three
months ended March 31, 2005 compared to the same period of 2004. Gains or losses
from the disposition of equipment, interest and other income, and certain
expenses such as management fees to affiliate, depreciation and amortization,
impairment loss of equipment, general and administrative expenses, and recovery
of bad debts relating to the operating segments (see Note 7 to the unaudited
condensed financial statements), 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 operations support by segment (in thousands
of dollars):
 
 For
      the Three Months
      Ended
      March 31,2005
    
    2004Marine
      containers
    
    $
    1,530
    
    $
    1,466Marine
      vessels
    
    
    1,438
    
    
    323Railcars
    
    
    27
    
    
    418Aircraft
    
    
    95
    
    
    94Trailers
    
    
    --
    
    
    54
 
 Marine
containers:  Lease
revenues and operations support for marine containers were $1.5 million and
$15,000 respectively, for the three months ended March 31, 2005, compared to
$1.5 million and $19,000, respectively, during the same period of 2004. The
increase in lease revenues of $0.1 million during the three months ended March
31, 2005 compared to the same period of 2004 was due to higher lease rates
earned on the Partnership's marine containers and higher utilization. Marine
containers owned by the Partnership will be converting from a fixed term lease
to one based on utilization over the next nine months. This is expected to cause
lease revenues to decline.
 
 Marine
vessels:  Marine
vessel lease revenues and operations support were $2.4 million and $0.9 million,
respectively, for the three months ended March 31, 2005, compared to $1.2
million and $0.9 million, respectively, during the same period of 2004. Lease
revenues increased $1.1 million during the three months ended March 31, 2005
compared to the same period of 2004 due to one of the Partnership's marine
vessel renewing its lease at a higher lease rate.
 
 Railcars:  Railcar
lease revenues and operations support were $43,000 and $16,000, respectively,
for the three months ended March 31, 2005, compared to $0.5 million and $0.1
million, respectively, during the same period of 2004. Railcar lease revenues
decreased $0.5 million and operations support decreased $0.1 million due to the
transfer of most of the Partnership's owned railcar portfolio into an equity
investment during the third quarter of 2004.
 
 Trailers:  Trailer
operating lease revenues and operations support decreased in the first quarter
of 2005 due to all of the Partnership trailers being placed on a direct finance
lease in 2004.
 
 (B)  Indirect
expenses Related to Owned Equipment Operations
 
 Total
indirect expenses of $1.4 million for the three months ended March 31, 2005
decreased from $2.1 million for the same period in 2004. Significant variances
are explained as follows:
 
 (i)  A $0.5
million decrease in depreciation and amortization expenses from 2004 levels
reflecting the decrease of $0.3 million caused by the transfer of most of the
Partnership's owned railcar portfolio into an equity investment in the third
quarter of 2004, a decrease of $0.1 million caused by the double-declining
balance method of depreciation which results in greater depreciation in the
first years an asset is owned and a decrease of $0.1 million caused by the
Partnership's trailer portfolio being placed in a direct finance lease in
2004;
 
 (ii)  General
and administrative expenses decreased $0.2 million during the first quarter of
2005 compared to the same period 2004. A decrease of $0.1 million resulted from
lower costs being charged to the Partnership for certain professional services
associated with the search for potential equipment acquisitions and an decrease
of $0.1 million was due to administrative costs associated with the return of
aircraft and collection of bad debts from lessees incurred in 2004. A similar
event did not occur in 2005;
 
 (iii)  A $0.1
million decrease in interest expense resulted from lower average borrowings
outstanding in the three months ended March 31, 2005 compared to the same period
of 2004; and
 
 (iv)  A $0.1
million decrease in the recovery of bad debts during the three months ended
March 31, 2005 was primarily due to lower collections of receivables that had
been previously reserved for as a bad debt compared to the same period of 2004.
 
 (C)  Gain on
Disposition of Owned Equipment
 
 The gain
on disposition of owned equipment for the first quarter of 2005 totaled $34,000,
and resulted from the disposal of marine containers with a net book value of
$30,000 for proceeds of $64,000. Gain on disposition of owned equipment for the
first quarter of 2004 totaled $0.2 million, and resulted from the disposal of
marine containers, railcars and a trailer with a net book value of $0.1 million
for proceeds of $0.3 million.
 
 (D)  Equity in
Net (Loss) Income of Equity investments
 
 Equity in
net (loss) income of equity investments represents the Partnership's share of
the net loss or income generated from the operation of jointly owned assets
accounted for under the equity method of accounting. The following table
presents equity in net (loss) income by equipment type (in thousands of
dollars):
 
 For
      the Three Months
      Ended
      March 31,2005
    
    2004Railcars
    
    $
    187
    
    $
    --Aircraft
    
    
    (261
    )
    
    133Machinery
      and other equipment
    
    
    (299
    )
    
    --Equity
      in net (loss) income of equity investments
    
    $
    (373
    )
    $
    133
 
 The
following equity investment discussion by equipment type is based on the
Partnership's proportional share of revenues, gain on the disposition of
equipment, depreciation expenses, operations support, interest expenses, and
administrative expenses in the equity investments:
 
 Railcars:
As of March 31, 2005, the Partnership owned an interest in an entity that owned
railcars. These railcars were transferred into this entity on July 1, 2004 from
the Partnership's owned equipment portfolio. During 2005, lease revenues of $0.6
million and the gain on the disposition of equipment of $0.1 million were offset
by depreciation expense, operations support, interest expense and administrative
expenses of $0.5 million. The Partnership had no equity investments that owned
railcars in the same period of 2004.
 
 Aircraft:
As of March 31, 2005, the Partnership owned an interest in three trusts that
each own a commercial aircraft, an interest in two entities each owning two
Boeing 737-500 commercial aircraft that was formed in the third quarter of 2004,
and an interest in an entity owning other aircraft related assets. As of March
31, 2004, the Partnership owned interests in three trusts that each own a
commercial aircraft and an interest in an entity owning other aircraft related
assets. During the three months ended March 31, 2005, lease revenues of $1.0
million were partially offset by depreciation expense, operations support,
interest expense and administrative expenses of $1.3 million. During the same
period of 2004, lease revenues of $0.5 million were partially offset by
depreciation expense, operations support, and administrative expenses of $0.3
million.
 
 Aircraft
revenues increased $0.5 million due to the Partnership's investment into two
entities during the third quarter of 2004 that each own two Boeing 737-500
commercial aircraft.
 
 Depreciation
expense, operations support, interest expense and administrative expenses
increased $1.0 million during the three months ended March 31, 2005 resulting
from an increase in depreciation expense of $0.6 million caused by the
Partnership's investment into two entities each owning two Boeing 737-500
commercial aircraft during the third quarter of 2004 and an increase in
operations support of $0.3 million caused by interest expense from the
non-recourse debt financing the two Boeing 737-500 commercial aircraft in each
of the entities the Partnership invested in during the third quarter of 2004.
Equity investments during the same period of 2004 did not have any debt or
interest expense.
 
 Machinery
and other equipment: As of March 31, 2005, the Partnership owned an interest in
an entity that owned machinery and other equipment that was formed in the fourth
quarter of 2004. During the three months ended March 31, 2005, lease revenues of
$0.2 million were offset by depreciation expense, operations support, and
administrative expenses of $0.5 million. The Partnership had no equity
investments that owned machinery and other equipment in the same period of 2004.
 
 (E)  Net
Income
 
 As a
result of the foregoing, the Partnership had net income of $1.4 million for the
three months ended March 31, 2005, compared to net income of $0.6 million during
the same period of 2004. 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 three
months ended March 31, 2005 is not necessarily indicative of future periods.
 
 (II)  CRITICAL
ACCOUNTING POLICIES AND ESTIMATES
 
 The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires PLM Financial
Services, Inc. (FSI or the General Partner) to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period. On a
regular basis, the General Partner reviews these estimates including those
related to asset lives and depreciation methods, impairment of long-lived
assets, allowance for doubtful accounts, reserves related to legally mandated
equipment repairs ** and
contingencies and litigation. These estimates are based on the General Partner's
historical experience and on various other assumptions believed to be reasonable
under the circumstances. Actual results may differ from these estimates under
different assumptions or conditions. The General Partner believes, however, that
the estimates, including those for the above-listed items, are reasonable and
that actual results will not vary significantly from the estimated
amounts.
 
 The
General Partner believes the following critical accounting policies affect the
more significant judgments and estimates used in the preparation of the
Partnership's financial statements:
 
 Revenue
recognition: Revenues are generally earned by placing equipment under operating
leases. Rental payments are recorded as revenue on a straight-line basis over
the lease term as earned. A portion of the Partnership's marine containers are
leased to operators of utilization-type leasing pools, which include equipment
owned by unaffiliated parties. In such instances, revenues received by the
Partnership consist of a specified percentage of revenues generated by leasing
the pooled equipment to sublessees, after deducting certain direct operating
expenses of the pooled equipment. The remaining Partnership leases for marine
containers are based on a fixed rate. Rents for all other equipment are based on
fixed rates.
 
 The
Partnership has owned trailers that were transferred into a direct finance lease
during 2004. The revenues from the direct finance lease are primarily interest
income and are based on a monthly amortization schedule.
 
 Asset
lives and depreciation methods: The Partnership’s primary business involves the
purchase and subsequent lease of long-lived transportation and related
equipment. The General Partner has chosen asset lives that it believes
correspond to the economic life of the related asset. Depreciation is computed
using the double-declining balance method, taking a full month's depreciation in
the month of acquisition based upon estimated useful lives of 15 years for
railcars, 12 years for all other transportation equipment and 7 years for
machinery and other equipment. The depreciation method changes to straight line
when annual depreciation expense using the straight-line method exceeds that
calculated by the double-declining balance method. The General Partner has
chosen a deprecation method that it believes matches the benefit to the
Partnership from the asset with the associated costs. These judgments have been
made based on the General Partner’s expertise in each equipment segment that the
Partnership operates. If the asset life and depreciation method chosen does not
reduce the book value of the asset to at least the potential future cash flows
from the asset to the Partnership, the Partnership would be required to record
an impairment loss. Likewise, if the net book value of the asset was less than
the fair value, the Partnership may record a gain on sale upon final disposition
of the asset.
 
 Impairment
of long-lived assets: Whenever circumstances indicate that an impairment may
exist such as when cash-flows decrease, there are unexpected maintenance issues
or when economic conditions deteriorate in the market the equipment operates,
the General Partner reviews the carrying value of its equipment and equity
investments to determine if the carrying value of the assets may not be
recoverable due to current economic conditions. This requires the General
Partner to make estimates related to future cash flows from each asset as well
as the determination if the deterioration is temporary or permanent. If these
estimates or the related assumptions change in the future, the Partnership may
be required to record additional impairment charges.
 
 Allowance
for doubtful accounts: The Partnership maintains allowances for doubtful
accounts for estimated losses resulting from the inability of the lessees to
make the lease payments. These estimates are primarily based on the amount of
time that has lapsed since the related payments were due as well as specific
knowledge related to the ability of the lessees to make the required payments.
If the financial condition of the Partnership’s lessees were to deteriorate,
additional allowances could be required that would reduce income. Conversely, if
the financial condition of the lessees were to improve or if legal remedies to
collect past due amounts were successful, the allowance for doubtful accounts
may need to be reduced and income would be increased.
 
 Reserves
for repairs: The Partnership accrues for legally required repairs to equipment
such as dry docking for marine vessels and engine overhauls to aircraft engines
over the period prior to the required repairs. The amount that is reserved is
based on the General Partner’s expertise in each equipment segment, the past
history of such costs for that specific piece of equipment and discussions with
independent, third party equipment brokers. If the amount reserved for is not
adequate to cover the cost of such repairs or if the repairs must be performed
earlier than the General Partner estimated, the Partnership would incur
additional repair and maintenance or equipment operating expenses.
 
 Contingencies
and litigation: The Partnership is subject to legal proceedings involving
ordinary and routine claims related to its business. The ultimate legal and
financial liability with respect to such matters cannot be estimated with
certainty and requires the use of estimates in recording liabilities for
potential litigation settlements. Estimates for losses from litigation are
disclosed if considered possible and accrued if considered probable after
consultation with outside counsel. If estimates of potential losses increase or
the related facts and circumstances change in the future, the Partnership may be
required to record additional litigation expense.
 
 (III)  FINANCIAL
CONDITION -- CAPITAL RESOURCES AND LIQUIDITY
 
 For the
three months ended March 31, 2005, the Partnership generated cash from
operations of $2.3 million to meet its operating obligations, pay debt and
interest, and maintain working capital reserves.
 
 During
the three months ended March 31, 2005, the Partnership disposed of owned
equipment for proceeds of $0.1 million.
 
 Accounts
and other receivable decreased $0.1 million in the three months ended March 31,
2005 caused by the collection of $0.1 million in other receivables.
 
 Equity
investments in affiliated entities decreased $0.8 million during the three
months ended March 31, 2005 due to cash distributions of $0.4 million from the
equity investments to the Partnership and by the loss of $0.4 million that was
recorded by the Partnership for its interests in the equity
investments.
 
 Accounts
payable decreased $13,000 during the three months ended March 31, 2005. A
decrease of $0.1 million was due to the timing of cash payments to vendors which
was partially offset by an increase of $0.1 million due to the accrual of the
interest payment due semi-annually on notes payable.
 
 Due to
affiliates decreased $0.2 million during the three months ended March 31, 2005
due to the payment of engine reserves due to an equity investment. The equity
investment used these funds to repair the engines on an aircraft.
 
 Reserve
for repairs decreased $0.6 million during the three months ended March 31, 2005.
A decrease of $0.7 million was due to the cash payments to the vendor for the
dry docking of one of the Partnership's owned marine vessels being partially
offset by an increase of $0.1 million in accruals for dry dock of the
Partnership's owned marine vessels.
 
 The
Partnership is scheduled to make its annual debt payment of $4.0 million to the
lenders of the notes payable on December 31, 2005. The cash for this payment
will come from operations and proceeds from equipment dispositions.
 
 The
Partnership is a participant in a $10.0 million warehouse credit facility. The
warehouse credit facility is shared by the Partnership, PLM Equipment Growth
Fund VI, MILPI Holdings LLC (MILPI) and it's subsidiaries, and Railcar Investors
II all of which are related parties and controlled by Gary Engle, Chairman of
the Board of the General Partner. The facility provides for financing up to 100%
of the cost of the equipment and expires on May 1, 2006. Borrowings by the
Partnership are collateralized by equipment purchased with the proceeds of the
loan. Outstanding borrowings by one borrower reduce the amount available to each
of the other borrowers under the facility. Individual borrowings may be
outstanding for no more than 360 days, with all advances due no later than May
1, 2006. Interest accrues either at the prime rate or LIBOR plus 2.0% at the
borrower’s option and is set at the time of an advance of funds. Borrowings by
the Partnership are guaranteed by FSI, PLM International, Inc. and MILPI, the
parent companies of the General Partner. The Partnership is not liable for the
advances made to the other borrowers.
 
 As of May
10, 2005, there were no other outstanding borrowings on this facility by the
Partnership. Other borrowers had loans outstanding totaling $9.3
million.
 
 In 2004
the General Partner signed a legally binding commitment on behalf of the
Partnership to purchase 28 newly constructed tank railcars for $2.0 million..
The funds to purchase this commitment were placed in an escrow account with an
unaffiliated third party as escrow agent as of December 31, 2004 and are
included in restricted cash on the accompanying balance sheets. These railcars
are expected to be purchased in the second and third quarter of
2005.
 
 In April
2005, the General Partner declared a cash distribution of $0.50 per limited
partnership unit to be paid on May 20, 2005 to the record holders as of that
date. The total cash distribution to the limited partners and the General
Partner is $2.5 million and $0.1 million, respectively.
 
 Commitments
and contingencies as of March 31, 2005 are as follows (in thousands of
dollars):
 
 Less
      than
    
    1-3Partnership
      Obligations:
    
    Total
    
    1
      Year
    
    YearsNotes
      payable
    
    $
    4,000
    
    $
    4,000
    
    $
    -Commitment
      to purchase railcars
    
    $
    1,998
    
    $
    1,998
    
    $
    -
 
  
  (IV)
RECENT ACCOUNTING PRONOUNCEMENTS
 
 In March
2004, Financial Accounting Standards Board's (FASB's) Emerging Issues Task Force
(EITF) released Issue No. 03-1, “The Meaning of Other-Than-Temporary Impairment
and Its Application to Certain Investments" (EITF 03-1).”  EITF 03-1
provides guidance for determining whether impairment for certain debt and equity
investments is other-than-temporary and the measurement of an impaired loss.
Certain disclosure requirements of EITF 03-1 were adopted in 2003 and the
Partnership has complied with the new disclosure requirements in its
consolidated financial statements. The recognition and measurement requirements
of EITF 03-1 were initially effective for reporting periods beginning after June
15, 2004. In September 2004, the FASB Staff issued FASB Staff Position (FSP)
EITF 03-1-1 that delayed the effective date for certain measurement and
recognition guidance contained in EITF 03-1.  The FSP requires that
entities continue to apply previously existing “other-than-temporary” guidance
until a final consensus is reached. The General Partner does not anticipate that
issuance of a final consensus will materially impact the Partnership’s financial
condition or results of operations.
 
 In
December 2004, FASB issued Statement 153, "Exchanges of Non-monetary Assets"
(Statement 153), an amendment of Accounting Principles Board Opinion No. 29.
Statement 153 is effective for non-monetary asset exchanges occurring in fiscal
periods beginning after June 15, 2005. Statement 153 eliminates the exception to
fair value for exchanges of similar productive assets and replaces it with a
general exception for exchange transactions that do not have commercial
substance - that is, transactions that are not expected to result in significant
changes in the cash flows of the reporting entity.  The General Partner
does not believe that the adoption of Statement 153 will have a significant
effect on its financial statements.
 
 (V)  OUTLOOK
FOR THE FUTURE
 
 The
Partnership's operation of a diversified equipment portfolio in a broad base of
markets is intended to reduce its exposure to volatility in individual equipment
sectors.
 
 The
ability of the Partnership to realize acceptable lease rates on its equipment in
the different equipment markets is contingent upon many factors, such as
specific market conditions and economic activity, technological obsolescence,
and government or other regulations. The unpredictability of these factors makes
it difficult for the General Partner to clearly define trends or influences that
may impact the performance of the Partnership's equipment. The General Partner
continuously monitors both the equipment markets and the performance of the
Partnership's equipment in these markets. The General Partner may make an
evaluation to reduce the Partnership's exposure to those equipment markets in
which it determines that it cannot operate equipment and achieve acceptable
rates of return.
 
 The
Partnership intends to use future cash flow from operations to satisfy its
operating requirements, pay principal and interest on debt and make cash
distributions to the partners.
 
 The
Partnership will not reinvest cash flows generated from operations after January
1, 2005 into additional equipment. The Partnership will terminate on December
31, 2013, unless terminated earlier upon sale of all equipment and by certain
other events. Although the Partnership is scheduled to terminate on December 31,
2013, the General Partner is managing the Partnership with the objective of
having all owned and partially owned equipment disposed of by December 31, 2006.
 
 In April
2005, the General Partner declared a cash distribution of $0.50 per limited
partnership unit to be paid on May 20, 2005 to the record holders as of that
date. The total amount of the cash distribution is $2.6
million.
  
  
 Factors
affecting the Partnership’s operations in the remainder of 2005 and beyond
include:
 
 (1)  Demand
for marine containers is closely tied to worldwide economic conditions.
Utilization of the Partnership's marine containers is expected to be in the 90 -
95% range in 2005 with lease rates increasing slightly.
 
 Approximately
5,900, or 42% of the Partnership's marine containers, are currently on a fixed
lease that will convert to a utilization based lease over the last three
quarters of 2005. As the market for marine containers is softer than the period
during which they were placed on the fixed rate lease and the marine containers
are several years older, lease revenues on these marine containers is expected
to decrease up to 20% when the fixed rate lease expires;
 
 (2)  Economic
recovery in the railcar segment continues to be strong. Overall railcar loadings
are forecast to grow approximately 6% in 2005. Railcar manufacturers now have
full production schedules until the first quarter of 2006 for tank railcars
similar to the tank railcars that the Partnership owns and the tank railcars in
PLM Rail Partners, LLC (Rail Partners) in which the Partnership has an equity
interest.
 
 The
Partnership's railcar fleet is largely used by a broadly defined chemical
sector. Chemical and petroleum railcar loadings are projected to grow at a
substantially higher rate this year than the 3% per year long run average. The
continuation of high steel prices have resulted in increases in the price of a
new tank railcars and lease rates have now increased in response this price
increase. While this improves returns for railcar lessors in the short run,
reduced railcar availability and higher lease costs along with railroad
operating inefficiencies may cause the chemical industry growth to slow and
perhaps cause chemical producers to shift to other forms of transportation.
Also, there are a number of potential new railroad operating requirements and
regulations which, if adopted, could increase the cost of railcar ownership. At
present, the Partnership's tank railcar fleet is highly utilized and appears to
be in a position to remain so for the foreseeable future.
 
 The
General Partner believes that the market for the Partnership's railcars and
those in Rail Partners will remain strong for several years. The General Partner
has engaged an investment banking firm to explore strategic alternatives with
respect to its railcar operations which could include the sale of the
Partnership owned and partially owned railcars;
 
 (3)  Market
demand for new and used aircraft has been severely impacted by the poor
financial condition of the airline industry.
 
 The
General Partner believes that the commercial aviation industry is recovering
from several years of reduced travel; however, the General Partner views the
recovery with caution as major increases in the cost of fuel has added another
factor to further weakening yields. The General Partner believes that
stabilization of fuel prices will be critical for the recovery in the airline
industry to continue.
 
 The
General Partner also believes that there is a significant oversupply of
commercial aircraft available that has caused a decrease in aircraft fair market
values;
 
 (4)  The
Partnership's two owned marine vessels are on fixed-rate leases through the
second quarter of 2005 and January 2006, respectively. Over the last several
months, lease rates earned on similar marine vessels have increased
significantly. The General Partner has negotiated a new lease on the marine
vessel which had a fixed-rate lease expiring during the second quarter 2005 at
current market rates which will result in an increase in quarterly revenues of
approximately $1.0 million;
 
 (5)  The
management fee rate paid by the Partnership will be reduced by 25% for the
period from January 1, 2005 through June 30, 2006;
 
 (6)  The
Partnership is expected to continue to have increased general and administrative
costs as the General Partner liquidates other investments programs that
currently share certain general and administrative expenses;
 
 (7)  While the
Partnership is scheduled to terminate on December 31, 2013, the General Partner
is managing the Partnership with the objective of having all owned and partially
owned equipment disposed of by December 31, 2006; and
 
 (8)  Beginning
in 2005, in order to prevent the Partnership from being considered publicly
traded and to avoid taxation of the Partnership as an association treated as a
corporation under the Internal Revenue Code, the General Partner will limit the
number of limited partnership units to be traded to 2% per year of the total
outstanding units.
 
 Several
other factors may affect the Partnership's operating performance in the year
2005 and beyond, including changes in the markets for the Partnership's
equipment and changes in the regulatory environment in which that equipment
operates.
 
 The
General Partner may elect to sell certain underperforming equipment, equipment
whose continued operation may become prohibitively expensive, or has a greater
strategic value to others. The General Partner intends to re-lease or sell
equipment at prevailing market rates; however, the General Partner cannot
predict these future rates with any certainty at this time and cannot accurately
assess the effect of such activity on future Partnership performance. The
proceeds from the sold or liquidated equipment will be used to fund operations
and make cash distributions to the partners.
 
 Cash
distributions when paid to the limited partners generally consist of both a
return of and a return on capital. Cash distributions do not represent and are
not indicative of yield on investment. Actual yield on investment cannot be
determined with any certainty until conclusion of the Partnership and will be
dependent upon the collection of all future contracted rent, the generation of
renewal and/or re-lease rents and the residual value realized for each asset at
its disposal.
 
 (VI)  FORWARD-LOOKING
INFORMATION
 
 Except
for the historical information contained herein, this Form 10-QSB contains
forward-looking statements that involve risks and uncertainties, such as
statements of the Partnership’s plans, objectives, expectations, and intentions.
The cautionary statements made in this Form 10-QSB should be read as being
applicable to all related forward-looking statements wherever they appear in
this Form 10-QSB. There are a number of important factors that could cause
actual results to differ materially from those expressed in any forward-looking
statements made herein. These factors include, but are not limited to, the
collection of the Partnership’s contracted rents, the realization of residual
proceeds, and future economic conditions.
 
 ITEM
3.  CONTROLS
AND PROCEDURES
 
 Limitations
on the Effectiveness of Controls
 
 The
General Partner’s management, including it’s President and Chief Financial
Officer (CFO), does not expect that our internal controls or disclosure control
will prevent all errors and all fraud. A control system, no matter how well
conceived and operated, can provide only reasonable, not absolute, assurance
that the objectives of the control system are met. Further, the design of a
control system must reflect the fact that there are resource constraints, and
the benefits of controls must be considered relative to their
costs.
 
 Because
of the inherent limitations in all control systems, no evaluation of control can
provide absolute assurance that all control issues and instances of fraud, if
any, within the Partnership have been detected. These inherent limitations
include the realities that judgments in decision-making can be faulty and that
breakdowns can occur because of a simple error or mistake. Additionally,
controls can be circumvented by the individual acts of some persons, collusion
of two or more people, or by management override of the control. The design of
any system of controls also is based partly on certain assumptions about the
likelihood of future events, and there can be no assurance that any design will
succeed in achieving its stated goals under all potential future conditions.
 
 Notwithstanding
the forgoing limitations, we believe that our internal controls and disclosure
control provide reasonable assurances that the objectives of our control system
are met.
 
 Quarterly
Evaluation of the Partnership’s Disclosure Controls and Internal
Controls
 
 (1)  Within
the 90-day period prior to the filing of this report, the General Partner
carried out an evaluation, under the supervision and with the participation of
the General Partner’s management, including it’s President and CFO, of the
effectiveness of the design and operation of the Partnership’s disclosure
controls and procedures pursuant to Rule 13a-14 under the Securities Exchange
Act of 1934 (the “Exchange Act”). Based upon that evaluation, the President and
CFO concluded that the Partnership’s disclosure controls and procedures are
effective in timely alerting them to material information relating to the
Partnership’s required to be included in the Partnership’s exchange act filings.
 
 (2)  There
have been no significant changes in the Partnership’s internal controls or in
other factors which could significantly affect internal controls subsequent to
the date the General Partner carried out its evaluations.
  
  
 **PART
II -- OTHER INFORMATION**
 
 ITEM
4.  SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
 None.
 
 ITEM
5.  OTHER
INFORMATION
 
 None.
 
 ITEM
6.  EXHIBITS
AND REPORTS ON FORM 8-K
 
 (a)  Exhibits
 
 31.1
    Certificate
      of President of the General Partner pursuant to Section 302 of Sarbanes -
      Oxley Act.
 
 31.2
    Certificate
      of Chief Financial Officer of the General Partner pursuant to Section 302
      of Sarbanes - Oxley Act.
 
 32.1
    Certificate
      of President of the General Partner pursuant to Section 906 of Sarbanes -
      Oxley Act.
 
 32.2
    Certificate
      of Chief Financial Officer of the General Partner pursuant to Section 906
      of Sarbanes - Oxley Act.
 
 (b)  Reports
on Form 8-K
 
 None.
  
  
 
 
 
 Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
 
 
 
 PLM
EQUIPMENT GROWTH & INCOME FUND VII
 
 By:  PLM
Financial Services, Inc.
 General
Partner
 
 
 
 Date:  May 10,
2005  By:  /s/
Richard K Brock
 Richard K
Brock
 Chief
Financial Officer