TEXTAINER CAPITAL CORPORATION
650 California Street, 16th Floor
San Francisco, CA 94108
May 12, 2000
Securities and Exchange Commission
Washington, DC 20549
Gentlemen:
Pursuant to the requirements of the Securities Exchange Act of 1934, we are
submitting herewith for filing on behalf of Textainer Equipment Income Fund VI,
L.P. (the "Partnership") the Partnership's Quarterly Report on Form 10-Q for the
First Quarter ended March 31, 2000.
This filing is being effected by direct transmission to the Commission's EDGAR
System.
Sincerely,
Nadine Forsman
Controller
<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington DC 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
Commission file number 0-22337
TEXTAINER EQUIPMENT INCOME FUND VI, L.P.
A California Limited Partnership
(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, CA 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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<TABLE>
<CAPTION>
TEXTAINER EQUIPMENT INCOME FUND VI, L.P.
(a California Limited Partnership)
Quarterly Report on Form 10-Q for the
Quarter Ended March 31, 2000
Table of Contents
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Page
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Item 1. Financial Statements
Balance Sheets - March 31, 2000 (unaudited)
and December 31, 1999............................................................................. 3
Statements of Earnings for the three months
ended March 31, 2000 and 1999 (unaudited)......................................................... 4
Statements of Partners' Capital for the three months
ended March 31, 2000 and 1999 (unaudited)......................................................... 5
Statements of Cash Flows for the three months
ended March 31, 2000 and 1999 (unaudited)......................................................... 6
Notes to Financial Statements (unaudited)......................................................... 8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations......................................................................... 11
</TABLE>
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<TABLE>
<CAPTION>
TEXTAINER EQUIPMENT INCOME FUND VI, L.P.
(a California Limited Partnership)
Balance Sheets
March 31, 2000 and December 31, 1999
(Amounts in thousands)
- ----------------------------------------------------------------------------------------------------------
2000 1999
---------------- ---------------
(unaudited)
<S> <C> <C>
Assets
Container rental equipment, net of accumulated
depreciation of $8,273, (1999: $7,793) (note 4) $ 24,634 $ 25,174
Cash 1,092 729
Accounts receivable, net of allowance
for doubtful accounts of $126, (1999: $122) 1,337 1,254
Due from affiliates, net (note 2) 183 278
Prepaid expenses 3 5
---------------- ---------------
$ 27,249 $ 27,440
================ ===============
Liabilities and Partners' Capital
Liabilities:
Accounts payable $ 146 $ 143
Accrued liabilities 216 203
Accrued recovery costs 81 78
Accrued damage protection plan costs 172 159
Deferred quarterly distributions 30 30
---------------- ---------------
Total liabilities 645 613
---------------- ---------------
Partners' capital:
General partners - -
Limited partners 26,604 26,827
---------------- ---------------
Total partners' capital 26,604 26,827
---------------- ---------------
$ 27,249 $ 27,440
================ ===============
See accompanying notes to financial statements
</TABLE>
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<TABLE>
<CAPTION>
TEXTAINER EQUIPMENT INCOME FUND VI, L.P.
(a California Limited Partnership)
Statements of Earnings
For the three months ended March 31, 2000 and 1999
(Amounts in thousands except for unit and per unit amounts)
(unaudited)
------------------------------------------------------------------------------------------------------
2000 1999
---------------- ----------------
<S> <C> <C>
Rental income $ 1,407 $ 1,297
---------------- ----------------
Costs and expenses:
Direct container expenses 308 425
Bad debt expense 5 28
Depreciation 494 499
Professional fees 20 10
Management fees to affiliates (note 2) 124 122
General and administrative costs to affiliates (note 2) 69 90
Other general and administrative costs 12 12
---------------- ----------------
1,032 1,186
---------------- ----------------
Income from operations 375 111
---------------- ----------------
Other income:
Interest income, net 14 5
Gain on sale of containers 4 4
---------------- ----------------
18 9
---------------- ----------------
Net earnings $ 393 $ 120
================ ================
Allocation of net earnings (note 2):
General partners $ 61 $ 81
Limited partners 332 39
---------------- ----------------
$ 393 $ 120
================ ================
Limited partners' per unit share of
net earnings $ 0.18 $ 0.02
================ ================
Limited partners' per unit share
of distributions $ 0.30 $ 0.40
================ ================
Weighted average number of limited
partnership units outstanding 1,848,397 1,848,397
================ ================
See accompanying notes to financial statements
</TABLE>
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<TABLE>
<CAPTION>
TEXTAINER EQUIPMENT INCOME FUND VI, L.P.
(a California Limited Partnership)
Statements of Partners' Capital
For the three months ended March 31, 2000 and 1999
(Amounts in thousands)
(unaudited)
- ----------------------------------------------------------------------------------------------------------------------------
Partners' Capital
-------------------------------------------------------------
General Limited Total
--------------- --------------- ---------------
<S> <C> <C> <C>
Balances at January 1, 1999 $ - $ 28,607 $ 28,607
Distributions (81) (740) (821)
Net earnings 81 39 120
--------------- --------------- ---------------
Balances at March 31, 1999 $ - $ 27,906 $ 27,906
=============== =============== ===============
Balances at January 1, 2000 $ - $ 26,827 $ 26,827
Distributions (61) (555) (616)
Net earnings 61 332 393
--------------- --------------- ---------------
Balances at March 31, 2000 $ - $ 26,604 $ 26,604
=============== =============== ===============
See accompanying notes to financial statements
</TABLE>
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<TABLE>
<CAPTION>
TEXTAINER EQUIPMENT INCOME FUND VI, L.P.
(a California Limited Partnership)
Statements of Cash Flows
For the three months ended March 31, 2000 and 1999
(Amounts in thousands)
(unaudited)
- ---------------------------------------------------------------------------------------------------------------
2000 1999
---------------- ----------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 393 $ 120
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation 494 499
Increase in allowance for doubtful accounts 4 29
Gain on sale of containers (4) (4)
(Increase) decrease in assets:
Accounts receivable (79) 75
Due from affiliates, net 110 112
Prepaid expenses 2 3
Increase in liabilities:
Accounts payable and accrued liabilities 16 8
Accrued recovery costs 3 5
Accrued damage protection plan costs 13 10
---------------- ----------------
Net cash provided by operating activities 952 857
---------------- ----------------
Cash flows from investing activities:
Proceeds from sale of containers 27 51
---------------- ----------------
Net cash provided by investing activities 27 51
---------------- ----------------
Cash flows from financing activities:
Distributions to partners (616) (821)
---------------- ----------------
Net cash used in financing activities (616) (821)
---------------- ----------------
Net increase in cash 363 87
Cash at beginning of period 729 274
---------------- ----------------
Cash at end of period $ 1,092 $ 361
================ ================
See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TEXTAINER EQUIPMENT INCOME FUND VI, L.P.
(a California Limited Partnership)
Statements Of Cash Flows--Continued
For the three months ended March 31, 2000 and 1999
(Amounts in thousands)
(unaudited)
- --------------------------------------------------------------------------------
Supplemental Disclosures:
Supplemental schedule of non-cash investing and financing activities:
The following table summarizes the amounts of proceeds from sale of containers
and distributions to partners which had not been paid or received by the
Partnership as of March 31, 2000 and 1999, and December 31, 1999 and 1998,
resulting in differences in amounts recorded and amounts of cash disbursed or
received by the Partnership, as shown in the Statements of Cash Flows for the
three-month periods ended March 31, 2000 and 1999.
Mar. 31 Dec. 31 Mar. 31 Dec. 31
2000 1999 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Proceeds from sale of containers included in:
Due from affiliates............................ $36 $21 $39 $41
Distributions to partners included in:
Due to affiliates.............................. 20 20 27 26
Deferred quarterly distributions............... 30 30 41 42
The following table summarizes the amounts of proceeds from sale of containers
and distributions to partners recorded by the Partnership and the amounts paid
or received as shown in the Statements of Cash Flows for the three-month periods
ended March 31, 2000 and 1999.
2000 1999
---- ----
Proceeds from sale of containers recorded................................... $ 42 $ 49
Proceeds from sale of containers received................................... 27 51
Distributions to partners declared.......................................... 616 821
Distributions to partners paid.............................................. 616 821
The Partnership has entered into direct finance leases, resulting in the
transfer of containers from container rental equipment to accounts receivable.
The carrying values of containers transferred during the three months ended
March 31, 2000 was $8. There were no direct finance leases entered into during
the three months ended March 31, 1999.
See accompanying notes to financial statements
</TABLE>
<PAGE>
TEXTAINER EQUIPMENT INCOME FUND VI, L.P.
(a California Limited Partnership)
Notes To Financial Statements
For the three months ended March 31, 2000 and 1999
(Amounts in thousands except for unit and per unit amounts)
(unaudited)
- --------------------------------------------------------------------------------
Note 1. General
Textainer Equipment Income Fund VI, L.P. (the Partnership), a California
limited partnership with a maximum life of 21 years, was formed in 1995.
The Partnership owns a fleet of intermodal marine cargo containers which
are leased 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 March 31, 2000 and December 31, 1999, and the
results of its operations, changes in partners' capital and cash flows for
the three-month periods ended March 31, 2000 and 1999, have been made.
The financial information presented herein should be read in conjunction
with the audited financial statements and other accompanying notes
included in the Partnership's annual audited financial statements as of
December 31, 1999, in the Annual Report filed on Form 10-K.
Certain estimates and assumptions were made by the Partnership's
management that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from those
estimates.
Note 2. Transactions with Affiliates
Textainer Capital Corporation (TCC) is the managing general partner of the
Partnership. 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 also act in this
capacity for other limited partnerships. The General Partners manage and
control the affairs of the Partnership.
In accordance with the Partnership Agreement, sections 3.08 through 3.12,
net earnings or losses and distributions are generally allocated 9.5% to
the General Partners and 90.5% to the Limited Partners. If the allocation
of distributions exceeds the allocation of net earnings and creates a
deficit in a General Partner's capital account, the Partnership Agreement
provides for a special allocation of gross income equal to the amount of
the deficit to be made to the General Partners.
As part of the operation of the Partnership, the Partnership is to pay to
the General Partners an equipment management fee, an incentive management
fee and an equipment liquidation fee. These fees are for various services
provided in connection with the administration and management of the
Partnership. The Partnership incurred $26 and $31 of incentive management
fees during the three-month periods ended March 31, 2000 and 1999,
respectively. No equipment liquidation fees were incurred during these
periods.
The Partnership's containers are managed by TEM. In its role as manager,
TEM has authority to acquire, hold, manage, lease, sell and dispose of the
Partnership's containers. TEM holds, for the payment of direct operating
expenses, a reserve of cash that has been collected from container leasing
operations; such cash is included in the amount due from affiliates, net
at March 31, 2000 and December 31, 1999.
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 $98 and $91 for the three-month periods ended March 31, 2000 and
1999, respectively. The Partnership's container fleet is leased by TEM to
third party lessees on operating master leases, spot leases, term leases
and direct finance leases. The majority of the container fleet is leased
under operating master leases with limited terms and no purchase option.
Certain indirect general and administrative costs such as salaries,
employee benefits, taxes and insurance are incurred in performing
administrative services necessary to the operation of the Partnership.
These costs are incurred and paid by TCC and TEM. General and
administrative costs allocated to the Partnership during the three-month
periods ended March 31, 2000 and 1999 were as follows:
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Salaries $37 $48
Other 32 42
-- --
Total general and
administrative costs $69 $90
== ==
TEM allocates these general and administrative costs based on the ratio of
the Partnership's interest in the managed containers to the total
container fleet managed by TEM during the period. TCC allocates these
costs based on the ratio of the Partnership's containers to the total
container fleet of all limited partnerships managed by TCC. The General
Partners allocated the following general and administrative costs to the
Partnership during the three-month periods ended March 31, 2000 and 1999:
2000 1999
---- ----
TEM $59 $81
TCC 10 9
-- --
Total general and
administrative costs $69 $90
== ==
</TABLE>
The General Partners may acquire containers in their own name and hold
title on a temporary basis for the purpose of facilitating the acquisition
of such containers for the Partnership. The containers 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.
At March 31, 2000 and December 31, 1999, due from affiliates net, is
comprised of:
2000 1999
---- ----
Due from affiliates:
Due from TEM................................... $213 $303
--- ---
Due to affiliates:
Due to TCC..................................... 11 5
Due to TL...................................... 19 20
--- ---
30 25
--- ---
Due from affiliates, net $183 $278
=== ===
These amounts receivable from and payable to affiliates were incurred in
the ordinary course of business between the Partnership and its affiliates
and represent timing differences in the accrual and remittance of expenses
and fees described above and in the accrual and remittance of net rental
revenues and sales proceeds from TEM.
Note 3. Rentals Under Long-Term Operating Leases
The following are the future rent receivables under cancelable long-term
operating leases at March 31, 2000. Although the leases are generally
cancelable with a penalty at the end of each twelve-month period, the
following schedule assumes that the leases will not be terminated.
Year ending March 31:
2001............................................. $685
2002............................................. 107
2003............................................. 67
2004............................................. 15
---
Total future rentals receivable.................. $874
===
Note 4. Container Rental Equipment
New container prices have been declining since 1995, and the cost of new
containers at year-end 1998, during 1999 and the beginning of 2000 was
significantly less than the cost of containers purchased in prior years.
The Partnership evaluated the recoverability of the recorded amount of
container rental equipment for containers to be held for continued use as
well as for containers identified for sale in the ordinary course of
business and determined that reductions to the carrying value of these
containers was not required during the year ended December 31, 1999
or the three-month period ended March 31, 2000.
The Partnership will continue to evaluate the recoverability of recorded
amounts of container rental equipment and cautions that a write-down of
container rental equipment and/or an increase in its depreciation rate may
be required in future periods for some or all or its container rental
equipment.
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
(Amounts in thousands except for unit and per unit amounts)
- --------------------------------------------------------------------------------
The Financial Statements contain information which will assist in evaluating the
financial condition of the Partnership as of and for the three-month periods
ended March 31, 2000 and 1999. Please refer to the Financial Statements and
Notes thereto in connection with the following discussion.
Liquidity and Capital Resources
From May 10, 1996 until April 30, 1997, the Partnership offered limited
partnership interests to the public. The Partnership received its minimum
subscription amount of $1,100 on June 17, 1996, and raised a total of $36,968
from the offering.
From time to time, the Partnership will redeem units from limited partners for a
specified redemption value, which is set by formula. Up to 2% of the
Partnership's outstanding units may be redeemed each year, although the 2% limit
may be exceeded at the Managing General Partner's discretion. All redemptions
are subject to the Managing General Partner's good faith determination that
payment for the redeemed units will not (i) cause the Partnership to be taxed as
a corporation, (ii) impair the capital or operations of the Partnership, or
(iii) impair the ability of the Partnership to pay distributions in accordance
with its distribution policy. Since inception, the Partnership has not redeemed
any units.
The Partnership invests working capital, cash flow from operations prior to its
distribution to the partners and proceeds from container sales that have not
been used to purchase containers in short-term, liquid investments. The
Partnership's cash is affected by cash provided by or used in operating,
investing and financing activities. These activities are discussed in detail
below.
Limited partners are currently receiving monthly distributions in an annualized
amount equal to 6% of their original investment. During the three-month period
ended March 31, 2000, the Partnership declared cash distributions to limited
partners pertaining to the period from December 1999 to February 2000, in the
amount of $555. On a cash basis, all of these distributions were from current
year operating activities. On a GAAP basis, $223 of these distributions was a
return of capital and the balance was from net earnings.
At March 31, 2000, the Partnership had no commitments to purchase containers.
Net cash provided by operating activities for the three-months ended March 31,
2000 and 1999, was $952 and $857, respectively. The increase of $95, or 11%, was
primarily attributable to the increase in net earnings, adjusted for non-cash
transactions, offset by fluctuations in accounts receivable. Net earnings,
adjusted for non-cash transactions, increased primarily due to the increase in
rental income and the decrease in direct container expenses. The reasons for
these fluctuations are discussed in "Results of Operations". The increase in
accounts receivable of $79 during the three-month period ended March 31, 2000
was due to the increase in rental income and an increase in the average
collection period of accounts receivable. The decrease in accounts receivable of
$75 during the equivalent period in 1999 was primarily due to the decline in
rental income and was partially offset by an increase in the average collection
period of accounts receivable.
For the three-months ended March 31, 2000 and 1999, net cash provided by
investing activities (the purchase and sale of containers) was $27 and $51,
respectively. The decrease of $24 was due to the Partnership selling damaged
containers located in low demand locations at a lower average sales price,
primarily as a result of current market conditions, which have adversely
affected the value of used containers. Until conditions improve in these low
demand locations, the Partnership plans to continue to sell damaged containers
there and may sell other containers as well. The Partnership sells containers
when (i) a container reaches the end of its useful life or (ii) an analysis
indicates that the sale is warranted based on existing market conditions and the
container's age, location and condition. Proceeds from container sales will
fluctuate based on the number of containers sold and the actual price received
on the sale. Sales proceeds will affect the rate of reinvestment in containers.
The rate of reinvestment is also affected by cash from operations available for
reinvestment. Subject to the General Partners' discretion, cash from operations
available for reinvestment is generally equal to cash provided by operating
activities less distributions and redemptions paid. Distributions and
redemptions are determined by the General Partners in accordance with the
Partnership Agreement. Consistent with its investment objectives and subject to
its distribution policy, the Partnership intends to continue to reinvest cash
from operations available for reinvestment and all or a significant amount of
the proceeds from container sales in additional containers. Market conditions
have had and may continue to have an adverse effect on the amount of cash
provided by operations that is available for the purchase of additional
containers. Additionally, these market conditions have had an adverse effect on
the average sales price recently realized from container sales. Furthermore, to
the extent new containers are purchased with sales proceeds, they are not likely
to equal the number of containers sold, as new container prices are likely to be
greater than the average sales price of containers sold. These factors have
contributed to a lower than anticipated rate of reinvestment. Market conditions
are discussed more fully under "Results of Operations". A slower rate of
reinvestment will, over time, affect the size of the Partnership's container
fleet.
Results of Operations
The Partnership's income from operations, which consists primarily of rental
income, container depreciation, direct container expenses, management fees, and
reimbursement of administrative expenses was directly related to the size of the
container fleet during the three-month periods ended March 31, 2000 and 1999, as
well as certain other factors as discussed below. The following is a summary of
the container fleet (in units) available for lease during those periods:
2000 1999
---- ----
Beginning container fleet............... 10,642 10,718
Ending container fleet.................. 10,626 10,702
Average container fleet................. 10,634 10,710
As noted above, when containers are sold in the future, sales proceeds are not
likely to be sufficient to replace all of the containers sold, which is likely
to result in a trend towards a smaller average container fleet. Other factors
related to the Partnership's ability to reinvest funds in new containers are
discussed above under "Liquidity and Capital Resources".
Rental income and direct container expenses are also affected by the utilization
of the container fleet, which was 83% and 75% during the three-month periods
ended March 31, 2000 and 1999, respectively. In addition, rental income is
affected by daily rental rates.
The following is a comparative analysis of the results of operations for the
three-month periods ended March 31, 2000 and 1999.
The Partnership's income from operations for the three-month periods ending
March 31, 2000 and 1999 was $375 and $111, respectively, on rental income of
$1,407 and $1,297, respectively. The increase in rental income of $110, or 8%,
from the three-month period ended March 31, 1999 to the comparable period in
2000 was primarily attributable to the increase in container rental income.
Income from container rentals increased $102, or 9%, primarily due to the
increase in the average on-hire utilization of 11%, partially offset by the
decrease in average rental rates of 2%.
The improvement in utilization was due to improvements in demand for leased
containers and in the trade balance, primarily as a result of the improvement in
certain Asian economies and a related increase in exports out of Europe.
Additionally, the container surplus, which existed primarily as a result of the
lower demand in the past several years, has eased as a result of container
lessors selling older containers in low demand locations and as a result of the
improvement in demand discussed above.
However, the trade imbalance between Asia and North America still exists, and as
a consequence, the build-up of containers in North America persists. The
Partnership has been unable to reposition a large number of newer containers to
higher demand locations in Asia, primarily due to lack of available vessel
capacity.
Additionally, the Partnership has continued to sell some containers located in
low demand locations, but primarily only those containers that were damaged.
This trade imbalance continues to cause a decline in the economic value of used
containers and the average sales price on container sales received by the
Partnership has decreased. Other Partnerships managed by the General Partners
have recorded write-downs and losses on certain older containers. Many of these
containers have been located in low demand locations. There have been no such
losses or write-downs recorded by the Partnership primarily due to the young age
of the Partnership's container fleet. Sales by the Partnership in these low
demand locations have been generally limited to damaged containers. However, as
the container fleet ages, the Partnership may incur losses and/or write-downs on
the sale of its older containers located in low demand locations if existing
market conditions continue. Additionally, should the decline in economic value
of continuing to own such containers turn out to be permanent, the Partnership
may be required to increase its depreciation rate or write-down the value for
some or all of its container rental equipment.
The decline in the purchase price of new containers and the container surplus
mentioned above have resulted in the decline in rental rates in recent years.
However, as a result of the improvement in demand and slight increases in the
purchase price of new containers, rental rates have stabilized during the first
quarter of 2000.
The General Partners are cautiously optimistic that rental rates will remain
stable and the current level of utilization will be maintained during 2000 and
may improve if demand for leased containers and the trade balance continue to
improve. However, the General Partners caution that utilization, lease rates and
container sale prices could also decline, adversely affecting the Partnership's
operating results.
The balance of other rental income consists of other lease-related items,
primarily income from charges to lessees for dropping off containers in surplus
locations less credits granted to lessees for leasing containers from surplus
locations (location income), income from charges to lessees for handling and
returning containers (handling income) and income from charges to lessees for a
Damage Protection Plan (DPP). For the three-month period ended March 31, 2000,
the total of these other rental income items was $142, an increase of $8 from
the equivalent period in 1999. The increase was primarily due to an increase in
DPP income of $10, which increased due to an increase in the number of
containers carrying DPP.
Direct container expenses decreased $117, or 28%, from the three-month period
ending March 31, 1999 to the equivalent period in 2000, primarily due to
decreases in storage and repositioning expenses of $69 and $54, respectively.
Storage expense decreased due to the increase in average utilization and a
decrease in the average storage cost per container. Repositioning expense
decreased due to a decrease in the number of containers repositioned and a lower
average repositioning cost per container during the three-month period ended
March 31, 2000 compared to the same period in 1999.
Bad debt expense decreased from $28 for the three-month period ended March
31, 1999 to $5 for the comparable period in 2000 primarily due to a smaller
required increase to the bad debt reserve in 2000.
Depreciation expense decreased $5, or 1%, from the three-month period ended
March 31, 1999 to the comparable period in 2000 due to the decrease in fleet
size.
New container prices have been declining since 1995, and the cost of new
containers at year-end 1998, during 1999 and the beginning of 2000 was
significantly less than the cost of containers purchased in prior years. The
Partnership evaluated the recoverability of the recorded amount of container
rental equipment for containers to be held for continued use as well as for
containers identified for sale in the ordinary course of business and determined
that reductions to the carrying value of these containers was not required
during the year ended December 31, 1999 or the three-month period ended March
31, 2000. The Partnership will continue to evaluate the recoverability of
recorded amounts of container rental equipment and cautions that a write-down of
container rental equipment and/or an increase in its depreciation rate may be
required in future periods for some or all of its container rental equipment.
Management fees to affiliates increased $2, or 2%, from the three-month period
ended March 31, 1999 to the comparable period in 2000, due to the increase in
equipment management fees, offset by the decrease in incentive management fees.
Equipment management fees, which are based on gross revenue, increased due to
the increase in rental income and were approximately 7% of rental income for
both periods. Incentive management fees, which are based on the Partnership's
limited and general partner distributions and partners' capital decreased due to
the decrease in the limited partner distribution percentage from 8% to 6% of
partners' capital in March 1999.
General and administrative costs to affiliates decreased $21, or 23%, from the
three-month period ended March 31, 1999 to the comparable period in 2000. The
decrease was due to a decrease in the allocation of overhead costs from TEM, as
the Partnership represented a smaller portion of the total fleet managed by TEM.
Other income increased $9 from the three-month period ended March 31, 1999 to
the comparable period in 2000 due to the increase in interest income, net.
Net earnings per limited partnership unit increased from $0.02 for the
three-month period ending March 31, 1999 to $0.18 for the same period in 2000,
reflecting the increase in net earnings allocated to limited partners from $39
to $332, respectively. The allocation of net earnings included a special
allocation of gross income to the General Partners in accordance with the
Partnership Agreement.
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 containers. The Partnership's business risk in its foreign
operations lies with the creditworthiness of the lessees, and the Partnership's
ability to keep its containers under lease, rather than the geographic location
of the containers or the domicile of the lessees. The containers are generally
operated on the international high seas rather than on domestic waterways. The
containers are subject to the risk of war or other political, economic or social
occurrence where the containers are used, which may result in the loss of
containers, 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 March 31, 2000, which would result in such a risk
materializing.
Other risks of the Partnership's leasing operations include competition, the
cost of repositioning containers after they come off-lease, the risk of an
uninsured loss, increases in maintenance expenses or other costs of operating
the containers, and the effect of world trade, industry trends and/or general
business and economic cycles on the Partnership's operations. See "Risk Factors"
in the Partnership's Prospectus, as supplemented, for additional information on
risks of the Partnership's business.
Effect of Date Crossing to Year 2000
There has been no material effect on the Partnership's financial condition and
results of operations as a result of problems arising from computer systems'
abilities to process dates beyond January 1, 2000. The General Partners do not
currently expect any such problems to arise within their own computer systems.
The likelihood that a failure in a third party's system would occur and have a
significant adverse effect on the Partnership's operations seems increasingly
remote, but no assurance can be given that, due to unforeseen circumstances,
such an event could not occur. Therefore, the Partnership's contingency plan
remains in place; that is, the General Partners continue to remain capable of
switching temporarily to manual operations in the event of a computer system's
failure. There can be no assurance, however, that switching to manual operations
would prevent all adverse effects of any future year 2000 problem.
Forward Looking Statements
The foregoing includes forward-looking statements and predictions about possible
or future events, results of operations and financial condition. These
statements and predictions may prove to be inaccurate, because of the
assumptions made by the Partnership or the General Partners or the actual
development of future events. No assurance can be given that any of these
forward-looking statements or predictions will ultimately prove to be correct or
even substantially correct. The risks and uncertainties in these forward-looking
statements include, but are not limited to, changes in demand for leased
containers, changes in global business conditions and their effect on world
trade, future modifications in the way in which the Partnership's lessees
conduct their business or of the profitability of their business, increases or
decreases in new container prices or the availability of financing therefor,
alterations in the costs of maintaining and repairing used containers, increases
in competition, changes in the Partnership's ability to maintain insurance for
its containers and its operations, the effects of political conditions on
worldwide shipping and demand for global trade or of other general business and
economic cycles on the Partnership, as well as other risks detailed herein and
from time to time in the Partnership's filings with the Securities and Exchange
Commission. The Partnership does not undertake any obligation to update
forward-looking statements.
<PAGE>
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 _______________________________
Ernest J. Furtado
Senior Vice President
Date: May 12, 2000
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>
________________________ Senior Vice President, May 12, 2000
Ernest J. Furtado (Principal Financial and
Accounting Officer) and
Secretary
________________________ President (Principal Executive May 12, 2000
John A. Maccarone Officer)
</TABLE>
<PAGE>
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/Ernest J. Furtado
_________________________
Ernest J. Furtado
Senior Vice President
Date: May 12, 2000
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/Ernest J. Furtado Senior Vice President, May 12, 2000
___________________________ (Principal Financial and
Ernest J. Furtado Accounting Officer) and
Secretary
/s/John A. Maccarone
___________________________ President (Principal Executive May 12, 2000
John A. Maccarone Officer)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
1st Quarter 2000
</LEGEND>
<CIK> 0001003638
<NAME> Textainer Equipment Income Fund VI, L.P.
<MULTIPLIER> 1,000
<CURRENCY> US Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1
<CASH> 1,092
<SECURITIES> 0
<RECEIVABLES> 1,646
<ALLOWANCES> 126
<INVENTORY> 0
<CURRENT-ASSETS> 3
<PP&E> 32,907
<DEPRECIATION> 8,273
<TOTAL-ASSETS> 27,249
<CURRENT-LIABILITIES> 645
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 26,604
<TOTAL-LIABILITY-AND-EQUITY> 27,249
<SALES> 0
<TOTAL-REVENUES> 1,407
<CGS> 0
<TOTAL-COSTS> 1,032
<OTHER-EXPENSES> (18)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 393
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 393
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
