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FORM 10Q
SECURITIES AND EXCHANGE COMMISSION
Washington DC 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
COMMISSION FILE NUMBER 33-99534
TEXTAINER EQUIPMENT INCOME FUND VI, L.P.
(Exact name of Registrant as specified in its charter)
CALIFORNIA 94-3220152
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
650 CALIFORNIA STREET, 16TH FLOOR
SAN FRANCISCO, CALIFORNIA 94108
(Address of Principal Executive Offices) (ZIP Code)
(415) 434-0551
(Registrant's telephone number, including area code)
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 [ ]
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TEXTAINER EQUIPMENT INCOME FUND VI, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
QUARTERLY REPORT ON FORM 10Q FOR THE
QUARTER ENDED JUNE 30, 1996
TABLE OF CONTENTS
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PAGE
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ITEM 1. FINANCIAL STATEMENTS
Balance Sheets - June 30, 1996 (unaudited) and December 31, 1995................................. 3
Statements of Operations for the six months
ended June 30, 1996 (unaudited) and the period from February 1, 1995
(inception) through December 31, 1995............................................................ 4
Statements of Partners' Capital (Deficit) for the six months ended June 30, 1996
(unaudited) and the period from February 1, 1995
(inception) through December 31, 1995............................................................ 5
Statements of Cash Flows for the six months
ended June 30, 1996 (unaudited) and the period from February 1, 1995
(inception) through December 31, 1995............................................................ 6
Notes to Financial Statements (unaudited)........................................................ 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS............................................................................ 12
</TABLE>
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TEXTAINER EQUIPMENT INCOME FUND VI, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
BALANCE SHEETS
June 30, 1996 and December 31, 1995
(Amounts in thousands)
<TABLE>
<CAPTION>
1996 1995
-------- -------
(unaudited)
<S> <C> <C>
ASSETS
Container rental equipment, net of accumulated
depreciation of $1,166 (1995: $429) $ 23,767 21,279
Cash and cash equivalents (note 1) 2,249 77
Cash collateral deposit (note 5) 2,753 2,306
Accounts receivable, net of allowance
for doubtful accounts of $23 (1995: $16) 704 525
Prepaid expenses 40 52
-------- --------
$ 29,513 24,239
======== ========
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Liabilities:
Accounts payable $ 76 65
Accrued liabilities 95 275
Due to affiliates, net (note 3) 3,223 1,081
Equipment purchases payable 132 1,935
Note payable to bank (note 5) 24,780 21,282
-------- --------
Total liabilities 28,306 24,638
-------- --------
Partners' capital (deficit):
General partners $ (451) (399)
Limited partners 1,658 --
-------- --------
Total partners' capital (deficit) 1,207 (399)
-------- --------
Commitments (note 6)
$ 29,513 24,239
======== ========
</TABLE>
See accompanying notes to financial statements
3
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TEXTAINER EQUIPMENT INCOME FUND VI, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
For the six months ended June 30, 1996
and for the period from February 1, 1995 (inception) through December 31, 1995
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
1996 1995
------------- ------------
(unaudited)
<S> <C> <C>
Rental Income $ 1,641 732
------------- ------------
Costs and expenses:
Direct container expenses 229 181
Bad debt expense 2 16
Depreciation 738 429
Professional fees 28 7
Management fees to affiliates (note 3) 115 51
General administrative costs to affiliates (note 3) 151 94
Other general and administrative costs 13 15
------------- ------------
1,276 793
------------- ------------
Income (loss) from operations 365 (61)
------------- ------------
Other income (expense):
Interest expense, net (925) (347)
Gain on sales of containers 8 8
------------- ------------
(917) (339)
------------- ------------
Net loss $ (552) (400)
============= ============
Allocation of net loss (note 3):
General Partners $ (52) (400)
Limited Partners (500) -
------------- ------------
$ (552) (400)
============= ============
Limited partners' per unit share of
net loss $ (10.02) -
============= ============
Weighted average number of limited
partnership units outstanding 49,925 5
============= ============
</TABLE>
See accompanying notes to financial statements
4
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TEXTAINER EQUIPMENT INCOME FUND VI, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
For the six months ended June 30, 1996 (unaudited) and
for the period from February 1, 1995 (inception) through December 31, 1995
(Amounts in thousands)
<TABLE>
<CAPTION>
PARTNERS' CAPITAL (DEFICIT)
--------------------------------------------
GENERAL LIMITED TOTAL
------- ------- ------
<S> <C> <C> <C>
Proceeds from general partners' capital contribution $ 1 -- 1
Net loss (400) -- (400)
------ ------ ------
Balances at December 31, 1995 $ (399) -- (399)
====== ====== ======
Balances at January 1, 1996 $ (399) -- (399)
Proceeds from sale of limited partnership units -- 2,371 2,371
Syndication and offering costs -- (213) (213)
Net loss (52) (500) (552)
------ ------ ------
Balances at June 30, 1996 $ (451) 1,658 1,207
====== ====== ======
</TABLE>
See accompanying notes to financial statements
5
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TEXTAINER EQUIPMENT INCOME FUND VI, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
For the six months ended June 30, 1996 and
for the period from February 1, 1995 (inception) through December 31, 1995
(Amounts in thousands)
<TABLE>
<CAPTION>
1996 1995
------- -------
(unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (552) (400)
Adjustments to reconcile net loss to
net cash provided by (used in) operating activities:
Depreciation 738 429
Increase in allowance for doubtful accounts 7 16
Gain on sales of container rental equipment (8) (8)
Changes in assets and liabilities:
Increase in accounts receivable (174) (541)
Decrease (increase) in prepaid expenses 12 (52)
(Decrease) increase in accounts payable and
accrued liabilities (169) 341
Increase (decrease) in due to affiliates, net 1,629 (1,395)
------- -------
Net cash provided by (used in) operating activities 1,483 (1,610)
------- -------
Cash flows from investing activities:
Proceeds from sales of container rental equipment 44 --
Container purchases (4,976) (19,683)
Cash collateral deposit (447) (2,306)
------- -------
Net cash used in investing activities (5,379) (21,989)
------- -------
Cash flows from financing activities:
General partners' capital contribution -- 1
Proceeds from sales of limited partnership units 2,359 --
Syndication and offering costs (225) --
Borrowings under revolving credit line 3,498 21,282
Borrowings from affiliates 436 2,393
------- -------
Net cash provided by financing activities 6,068 23,676
------- -------
Net increase in cash 2,172 77
Cash and cash equivalents at beginning of period 77 --
------- -------
Cash and cash equivalents at end of period $ 2,249 77
======= =======
Interest paid during the period $ 1,021 133
======= =======
</TABLE>
See accompanying notes to financial statements
6
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TEXTAINER EQUIPMENT INCOME FUND VI, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS -- CONTINUED
For the six months ended June 30, 1996 (unaudited) and the period from
February 1,1995 (inception) through December 31, 1995
(Amounts in thousands)
SUPPLEMENTAL DISCLOSURES:
Supplemental schedule of non-cash investing and financing activities:
The following table summarizes the amounts of equipment purchases, proceeds from
sale of limited partnership units, proceeds from sale of Equipment, and
syndication and offering costs which had not been paid or received by the
Partnership as of June 30, 1996 and December 31, 1995, resulting in differences
in amounts recorded and amounts paid or received by the Partnership, as shown in
the Statements of Cash Flows for the six-month period ended June 30, 1996 and
the period from February 1,1995 (inception) through December 31, 1995.
<TABLE>
<CAPTION>
June 30, Dec. 31,
1996 1995
----------- -----------
<S> <C> <C>
Equipment purchases included in:
Due to affiliates.......................................................... $ 179 109
Equipment purchases payable................................................ 132 1,935
Proceeds from sale of limited partnership units included in:
Accounts receivable........................................................ 12 -
Proceeds from sale of Equipment included in:
Due from affiliates........................................................ 9 28
Syndication and offering costs included in:
Due from affiliates........................................................ 12 -
</TABLE>
The following table summarizes the amounts of equipment purchases, sale of
limited partnership units, proceeds from sale of Equipment, and syndication and
offering costs recorded by the Partnership and the amounts paid or received as
shown in the Statements of Cash Flows for the six-month period ended June 30,
1996 and the period from February 1,1995 (inception) through December 31, 1995.
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Equipment purchases recorded......................................................... 3,243 21,727
Equipment purchases paid............................................................. 4,976 19,683
Proceeds from sale of limited partnership units recorded............................. 2,371 -
Proceeds from sale of limited partnership units received............................. 2,359 -
Proceeds from sale of Equipment recorded............................................. 25 28
Proceeds from sale of Equipment received............................................. 44 -
Syndication and offering costs recorded.............................................. 213 -
Syndication and offering costs paid.................................................. 225 -
</TABLE>
See accompanying notes to financial statements
7
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TEXTAINER EQUIPMENT INCOME FUND VI, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
June 30 , 1996
(Dollar amounts in thousands except for per unit amounts)
(unaudited)
NOTE 1. GENERAL
Textainer Equipment Income Fund VI (the Partnership) is a California
Limited Partnership founded in 1995. The Partnership owns and leases a
fleet of intermodal marine cargo container equipment (the Equipment) to
international shipping lines.
The accompanying interim comparative financial statements have not been
audited by an independent public accountant. However, all adjustments
(which were only normal and recurring adjustments), which are, in the
opinion of management, necessary to fairly present the financial
position of the Partnership as of June 30, 1996 and December 31, 1995,
and the results of its operations, changes in partners' capital, and
cash flows for the six-month period ended June 30, 1996 and eleven-month
period ended December 31, 1995, have been made.
The financial information presented herein should be read in conjunction
with the audited financial statements and the accompanying Notes
included in the Partnership's audited financial statements as of
December 31, 1995.
For purposes of the Statements of Cash Flows, the Partnership considers
all highly liquid debt instruments purchased with an original maturity
of three months or less to be cash equivalents.
Certain reclassifications of prior year amounts have been made in order
to conform with the 1996 financial statement presentation.
NOTE 2. ACQUISITION OF EQUIPMENT
During the six-month period ended June 30, 1996, the Partnership
purchased Equipment with a cost of $3,243.
NOTE 3. TRANSACTIONS WITH AFFILIATES
Textainer Capital Corporation (TCC) is the Managing General Partner, and
Textainer Equipment Management Limited (TEM) and Textainer Limited (TL)
are the Associate General Partners of the Partnership. The Managing
General Partner and Associate General Partners are collectively referred
to as the General Partners. The General Partners manage and control the
affairs of the Partnership. The General Partners also act in this
capacity for other limited partnerships. Textainer Acquisition Services
Limited (TAS) is an affiliate of the General Partners which performs
services relative to the acquisition of Equipment outside the United
States on behalf of the Partnership. TCC, TEM, TL and TAS are
subsidiaries of Textainer Group Holdings Limited (TGH). TCC Securities
Corporation (TSC), a licensed broker and dealer in securities and an
affiliate of the General Partners, is the Managing Sales agent for the
offering of units for sale. The General Partners manage and control the
affairs of the Partnership.
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TEXTAINER EQUIPMENT INCOME FUND VI, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS--CONTINUED
In accordance with the Partnership Agreement, the net earnings or losses
and partnership distributions are generally allocated 90.5% to the
limited partners and 9.5% to the General Partners. Notwithstanding the
above, in accordance with the Partnership Agreement, substantially all
of the net losses for the period from February 1, 1995 (inception)
through December 31, 1995 have been specially allocated to the General
Partners.
As part of the operation of the Partnership, the Partnership is to pay
to the General Partners an incentive management fee, an equipment
management fee and an equipment liquidation fee, as well as reimbursing
the General Partners for certain administrative costs. These fees are
for various services provided in connection with the administration and
management of the Partnership. No incentive management or equipment
liquidation fees were incurred during the first six-month period of
1996, or the period from February 1, 1995 (inception) through December
31, 1995.
The Equipment of the Partnership is managed by TEM. TEM has authority to
acquire, hold, manage, lease, sell and dispose of the Equipment.
Additionally, TEM holds, for the payment of direct operating expenses, a
reserve of cash that has been collected from Equipment leasing
operations; such cash is netted in the amount due to affiliates at June
30, 1996 and December 31, 1995
. Subject to certain reductions, TEM receives a monthly Equipment
management fee equal to 7% of gross revenues attributable to operating
leases and 2% of gross revenues attributable to full payout net leases.
These fees totaled $115 and $51 for the six-month period ended June 30,
1996 and the period from February 1, 1995 (inception) through December
31, 1995, respectively. The Equipment is leased by TEM to third-party
lessees on operating master leases, spot leases and term leases. The
majority are operating leases with limited terms and no purchase
options.
Certain indirect general and administrative costs incurred in performing
administrative services necessary to the operation of the Partnership
are borne by TEM and allocated to the Partnership based on the ratio of
the Partnership's interest in managed Equipment to the total equipment
managed by TEM. Indirect general and administrative costs allocated to
the Partnership were $130 and $77 for the six-month period ended June
30, 1996 and the period from February 1, 1995 (inception) through
December 31, 1995, respectively.
TCC, in its capacity as managing general partner, also incurred general
and administrative costs of $21 and $17 for the six-month period ended
June 30, 1996 and the period from February 1, 1995 (inception) through
December 31, 1995, respectively.
The General Partners or TAS may acquire Equipment in their own name and
hold title on a temporary basis for the purpose of facilitating the
acquisition of such Equipment for the Partnership. The Equipment may
then be resold to the Partnership on an all-cash basis at a price equal
to the actual cost, as defined in the Partnership Agreement.
The Partnership pays a managing sales agent fee to TSC of up to 9% of the
gross proceeds from the sale of limited partnership units, from which TSC
pays commissions to independent participating broker/dealers who
participate in the offering. The amount of the managing sales agent fee
and the broker/dealers' commissions are determined by the volume of units
sold to each investor by the broker/dealers. The General Partners or TSC
will pay, out of their own corporate funds, all other organization,
offering and joint sales costs incurred by the General Partners or TSC.
9
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TEXTAINER EQUIPMENT INCOME FUND VI, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS--CONTINUED
As of June 30, 1996 and December 31, 1995, due to affiliates, net, are
comprised of:
1996 1995
---- ----
Due to TEM............................... $ 307 171
Due to TL................................ 2,856 890
Due to TCC and TSC....................... 60 20
----- -----
$ 3,223 1,081
===== =====
These amounts payable to TEM, TCC and TSC were incurred in the ordinary
course of business between the Partnership and its affiliates and
represent timing differences in the accrual and payment of expenses and
fees described above or the accrual and collection of net rental
revenues by TEM. The amounts payable to TL include $2,829 which was used
to facilitate Equipment purchases and make cash collateral deposits
required under the revolving credit facility (note 5).
It is the policy of the Partnership and the General Partners to charge
interest on intercompany balances which were outstanding for more than
one month to the extent such balances relate to loans for Equipment
purchases. Interest is charged to the Partnership based on the Prime
Rate or London Interbank Offered Rate (LIBOR) plus certain margins based
on TGH's leverage ratio. During the six-month period ended June 30, 1996
and the period from February 1, 1995 (inception) through December 31,
1995, the Partnership incurred $128 and $31, respectively, in interest
charged by the General Partners and their affiliates.
NOTE 4. RENTALS UNDER OPERATING LEASES
The following is a schedule by year of minimum future rentals receivable
on noncancelable operating leases as of June 30, 1996:
Year ended June 30:
1997.................................................. $ 449
1998.................................................. 49
1999.................................................. 31
2000.................................................. 14
--
Total minimum future rentals receivable............... $ 543
===
NOTE 5. REVOLVING CREDIT LINE
The Partnership has a short-term revolving credit facility (the
Facility) with an available limit of $25,000 expiring June 30, 1997,
which is available for Equipment purchases. Until such time as the
Partnership has raised a minimum of $25,000 from the sale of Limited
Partnership interests (the Guarantee Period), TGH and TL (the
Guarantors) have guaranteed the outstanding principal and interest under
the Facility. Balances borrowed under the Facility bear interest at
either the Prime Rate (8.25% at June 30, 1996) plus .25%, or LIBOR plus
1.75%, and are secured by all assets of the Partnership. The Partnership
pays a commitment fee of 1/2% per annum on the unused portion of the
Facility. This fee, as well as the interest on any amounts borrowed, is
payable quarterly in arrears. Should the Facility not be renewed upon
its expiration, it may, at the Partnership's option, be converted to a
four-year term loan, with interest at either the Prime Rate plus 2.25%,
or LIBOR plus 3.25%. The Partnership can borrow an amount up to the sum
of 90% of the net book value of
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TEXTAINER EQUIPMENT INCOME FUND VI, L.P.
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS--CONTINUED
Equipment purchased plus the amount of the cash collateral deposit
maintained during the Guarantee Period. After the guarantee has been
terminated, the Partnership can borrow an amount up to the sum of 60% of
the net book value of Equipment plus the amount of the cash collateral
deposit maintained.
At June 30, 1996, the Partnership had borrowed $24,780 under this
Facility to finance Equipment purchases and maintained restricted cash
collateral deposits of $2,753. The cash collateral is held in a
market-rate (4.40% at June 30, 1996), interest-bearing checking account.
The account is restricted in use and pledged as collateral for the
Facility. Subsequent to June 30, 1996, $1,500 was repaid under this
Facility.
Substantially all of the Partnership's borrowings are currently bearing
interest based on the thirty-day LIBOR rate plus 1.75%. The applicable
thirty-day LIBOR rate as of July 29, 1996 was 5.438%.
NOTE 6. COMMITMENTS
At June 30, 1996, the Partnership has committed to purchase 2 containers
at an approximate total purchase price of $7. These commitments were
made to TAS, which, as the contracting party, has in turn committed to
purchase this Equipment on behalf of the Partnership.
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ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Dollar amounts in thousands except for per unit amounts)
The Financial Statements contain information which will assist in evaluating the
financial condition of the Partnership for the six-month period ended June 30,
1996. Please refer to the Financial Statements and Notes thereto in connection
with the following discussion.
LIQUIDITY AND CAPITAL RESOURCES
The Partnership began its offering of limited partnership interests to the
public on May 10, 1996. The Partnership received its minimum subscription amount
of $1,100 on June 17, 1996 and had received offering proceeds totaling $2,371 as
of June 30, 1996.
The Partnership has a short-term revolving credit facility (the Facility) with
an available limit of $25,000 expiring June 30, 1997, which is available for
Equipment purchases. Until such time as the Partnership has raised a minimum of
$25,000 from the sale of Limited Partnership interests (the Guarantee Period),
TGH and TL (the Guarantors) have guaranteed the outstanding principal and
interest under the Facility. Balances borrowed under the Facility bear interest
at either the Prime Rate plus .25%, or LIBOR plus 1.75%, and are secured by all
assets of the Partnership. The Partnership pays a commitment fee of 1/2% per
annum on the unused portion of the Facility. This fee, as well as the interest
on any amounts borrowed, is payable quarterly in arrears. Should the Facility
not be renewed upon its expiration, it may, at the Partnership's option, be
converted to a four-year term loan, with interest at either the Prime Rate plus
2.25%, or LIBOR plus 3.25%. The Partnership can borrow an amount up to the sum
of 90% of the net book value of Equipment purchased plus the amount of the cash
collateral deposit maintained during the Guarantee Period. After the guarantee
has been terminated, the Partnership can borrow an amount up to the sum of 60%
of the net book value of Equipment plus the amount of the cash collateral
deposit maintained.
On or before termination of its offering of limited partnership interests to the
public, the Partnership intends to use available offering proceeds to repay the
outstanding balance under the Facility. In the event that the Partnership cannot
repay the Facility upon the offering termination, TL or an affiliate will, at
the Partnership's request, repay part of the outstanding balance and, in
exchange, the Partnership will sell a portion of its Equipment to TL or its
affiliate (or to a third party located by TL). The original purchase price of
the Equipment sold will be equal to the amount of the Facility repaid by TL or
its affiliate. The net sales price for this Equipment will be the Partnership's
purchase price for such Equipment reduced by any net revenues (that is,
Equipment's pro-rata share of revenues and expenses, including management fees
and interest) realized by the Partnership with respect to such Equipment. (See
"Risk Factors: Operating Risks" in the Prospectus.)
At June 30, 1996, the Partnership had borrowed $24,780 under this Facility to
finance Equipment purchases and maintained restricted cash collateral deposits
of $2,753. The cash collateral is held in a market-rate (4.40% at June 30,
1996), interest-bearing checking account. The account is restricted in use and
pledged as collateral for the Facility. Subsequent to June 30, 1996, $1,500 was
repaid under this Facility.
Substantially all of the Partnership's borrowings are currently bearing interest
based on the thirty-day LIBOR rate. The applicable thirty-day LIBOR rate as of
July 29, 1996 was 5.438%.
The Partnership's policy is to maintain minimum working capital reserves in an
amount equal to 1% of aggregate offering proceeds during the offering period and
until proceeds received in the offering (less reserves) are invested in
Equipment. Thereafter, working capital reserves may be established at such
levels as the Managing General Partner deems necessary to serve the best
interest of the Partnership, but in no
12
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event less than the lesser of (i) 1% of aggregate offering proceeds, or (ii)
$100. (See "Business of the Partnership: Reserves" in the Prospectus.) The
Partnership invests working capital and cash flow from operations prior to its
distribution to the Partners in short-term, liquid investments. At June 30,
1996, the Partnership's cash of $2,249 was primarily invested in money market
accounts.
For the six-month period ended June 30, 1996, the Partnership had net cash
activities of $1,483. For the period from February 1, 1995 (inception) through
December 31, 1995, net cash used in operating activities totaled $1,610. These
amounts reflect the Partnership's commencement of operations, including the
receipt of rental revenues and payment of expenses as the Equipment fleet grows.
Net cash used in investing activities for the same periods were $5,379 and
$21,989, respectively which reflects the amounts the Partnership has invested in
Equipment during these periods.
While it is expected that net cash from operating activities will continue to
improve during the initial purchase and lease-up phase of the Partnership, such
improvement may be tempered by the fact that the Partnership's principal
lessees, shipping lines, are currently experiencing over-capacity, in part due
to the delivery of new ships. This over-capacity has, in some instances, caused
shipping lines to reduce freight rates, which could affect the profitability of
their business, resulting in the possibility of delays in the remittance of
rental payments, pressure on Equipment rental rates, and, in extreme cases,
bankruptcy of some shipping lines. As discussed more fully below under "Results
of Operations", utilization rates have reflected a lower demand for Equipment,
and this over-capacity could further affect these rates.
At June 30, 1996, the Partnership had committed to purchase 2 containers at an
approximate total price of $7. In the event the Partnership decides not to
purchase the Equipment, one of the General Partners or its affiliates will
retain the Equipment for its own account.
RESULTS OF OPERATIONS
Because the Partnership has only recently been formed, the results of its
operations for the six-month period ended June 30, 1996 and for the period from
February 1, 1995 (inception) through December 31, 1995 are not representative of
the results expected after the discontinuation of the Offering and the
completion of the purchase of the initial portfolio of Equipment. The
Partnership sustained net losses of $552 and $400 during the six-month period
ended June 30, 1996 and the period from February 1, 1995 (inception) through
December 31, 1995, respectively. These financial results include non-cash
depreciation expenses of $738 and $429 for the respective periods.
The Partnership's operations, which consist of rental revenue, Equipment
depreciation, direct operating expenses, management fees, interest, and
reimbursement of administrative expenses were directly related to the size of
the Equipment fleet during the six-month period ended June 30, 1996 and the
period from February 1, 1995 (inception) to December 31, 1995. The following is
a summary of the size of the Equipment fleet (in units) at the end of each
quarter during the period from February 1, 1995 (inception) through June 30,
1996.
June 30, 1995................. 198
September 30, 1995............ 3,995
December 31, 1995............. 6,614
March 31, 1996................ 7,239
June 30, 1996................. 7,596
Rental income and direct operating expenses are also affected by the lease
utilization percentages for the Equipment which were 73% and 57% on average
during the six-month period ended June 30, 1996 and the period from June 1995 to
December 1995; utilization as of June 30, 1996 was 77%. Lease utilization
percentages tend to increase gradually during the initial purchase and lease-up
phase of the Partnership.
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<PAGE> 14
Carefully managed additions of Equipment, and the time required to lease the
Equipment contribute to the lease utilization percentage growth.
The Partnership's results of operations may be affected by other economic
factors. For Textainer's Equipment fleet, utilization rates rose during the
first three quarters of 1995, but began to decrease during the fourth quarter
and continued to decline in the first and second quarters of 1996. The General
Partners believe that this softening in demand has been due, in part, to a
slow-down in activity in the Asia-North America trade route as well as to
seasonal factors. The General Partners have seen recent evidence of some
stabilization in utilization rates for certain Equipment types; however, there
can be no assurance regarding the trend for utilization in the future. Rental
rates have also been restrained by quantity rate discounts granted to the
Partnership's larger Equipment lessees. Additionally, as previously discussed,
shipping lines, which will be the principal lessees of the Equipment, are
currently experiencing over-capacity, which may adversely affect rental payments
and/or rates and utilization.
Although substantially all of the Partnership's income from operations is
derived from assets employed in foreign operations, virtually all of this income
is denominated in United States dollars. The Partnership's customers are
international shipping lines which transport goods on international trade
routes. The domicile of the lessee is not indicative of where the lessee is
transporting the Equipment. The Partnership's business risk in its foreign
operations lies with the creditworthiness of the lessees, and the Partnership's
ability to keep the Equipment under lease, rather than the geographic location
of the Equipment or the domicile of the lessees. The Equipment is generally
operated on the international high seas rather than on the domestic waterways.
The Equipment is subject to the risk of war or other political, economic or
social occurrence where the Equipment is used, which may result in the loss of
Equipment, which, in turn, may have a material impact on the Partnership's
results of operations and financial condition. The General Partners are not
aware of any conditions as of June 30, 1996 which would result in such risk
materializing. Other risks of the Partnership's leasing operations include
competition, the cost of repositioning Equipment after it comes off-lease, the
risk of an uninsured loss, increases in maintenance expenses or other costs of
operating the Equipment, and the effect of world trade and/or general business
and economic cycles on the Partnership's operations. (See "Risk Factors:
Business Risks" in the Prospectus.)
14
<PAGE> 15
SIGNATURES
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.
TEXTAINER EQUIPMENT INCOME FUND VI, L.P.
(A California Limited Partnership)
By Textainer Capital Corporation
The Managing General Partner
By
----------------------------
John R. Rhodes
Executive Vice President
Date: August 12, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of Textainer Capital
Corporation, the Managing General Partner of the Registrant, in the capacities
and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
- ------------------------------ President (Principal Executive August 12, 1996
James E. Hoelter Officer) and Director
- ------------------------------ Executive Vice President, August 12, 1996
John R. Rhodes (Principal Financial and
Accounting Officer)
Secretary and Treasurer
</TABLE>
15
<PAGE> 16
SIGNATURES
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.
TEXTAINER EQUIPMENT INCOME FUND VI, L.P.
(A California Limited Partnership)
By Textainer Capital Corporation
The Managing General Partner
By /s/John R. Rhodes
------------------------------
John R. Rhodes
Executive Vice President
Date: August 12, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of Textainer Capital
Corporation, the Managing General Partner of the Registrant, in the capacities
and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ James E. Hoelter
- ------------------------------ President (Principal Executive August 12, 1996
James E. Hoelter Officer) and Director
/s/ John R. Rhodes
- ------------------------------ Executive Vice President, August 12, 1996
John R. Rhodes (Principal Financial and
Accounting Officer)
Secretary and Treasurer
</TABLE>
16
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 5,002
<SECURITIES> 0
<RECEIVABLES> 727
<ALLOWANCES> 23
<INVENTORY> 0
<CURRENT-ASSETS> 40
<PP&E> 24,933
<DEPRECIATION> 1,166
<TOTAL-ASSETS> 29,513
<CURRENT-LIABILITIES> 28,306
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,207
<TOTAL-LIABILITY-AND-EQUITY> 29,513
<SALES> 0
<TOTAL-REVENUES> 1,641
<CGS> 0
<TOTAL-COSTS> 1,276
<OTHER-EXPENSES> 917
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (552)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (552)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
