Page 1 of 11
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------
FORM 10-Q
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- ----- ACT OF 1934
For the quarterly period ended September 30, 1996
OR
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 0-12594
-------
PHOENIX LEASING INCOME FUND VI
- --------------------------------------------------------------------------------
Registrant
California 94-2869603
- ----------------------- ----------------------------------
State of Jurisdiction I.R.S. Employer Identification No.
2401 Kerner Boulevard, San Rafael, California 94901-5527
- --------------------------------------------------------------------------------
Address of Principal Executive Offices Zip Code
Registrant's telephone number, including area code: (415) 485-4500
--------------
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___
<PAGE>
Page 2 of 11
Part I. Financial Information
-----------------------------
Item 1. Financial Statements
PHOENIX LEASING INCOME FUND VI
BALANCE SHEETS
(Amounts in Thousands Except for Unit Amounts)
(Unaudited)
September 30, December 31,
1996 1995
---- ----
ASSETS
Cash and cash equivalents $ 627 $ 2,708
Accounts receivable (net of allowance for losses
on accounts receivable of $11 and $22 at
September 30, 1996 0and December 31, 1995,
respectively) 7 30
Equipment on operating leases and held for lease
(net of accumulated depreciation of $635 and
$746 at September 30, 1996 and December 31,
1995, respectively) 1 4
Investment in joint ventures 317 415
Securities, available-for-sale 110 121
Other assets 12 9
------- -------
Total Assets $ 1,074 $ 3,287
======= =======
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Liabilities
Accounts payable and accrued expenses $ 1,289 $ 1,471
------- -------
Total Liabilities 1,289 1,471
------- -------
Partners' Capital (Deficit)
General Partner 414 394
Limited Partners, 320,000 units authorized
and issued, 297,165 units outstanding at
September 30, 1996 and December 31, 1995 (650) 1,461
Unrealized gains (losses) on available-for-sale
securities 21 (39)
------- -------
Total Partners' Capital (Deficit) (215) 1,816
------- -------
Total Liabilities and Partners' Capital (Deficit) $ 1,074 $ 3,287
======= =======
The accompanying notes are an integral
part of these statements.
<PAGE>
Page 3 of 11
PHOENIX LEASING INCOME FUND VI
STATEMENTS OF OPERATIONS
(Amounts in Thousands Except for Per Unit Amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
---- ---- ---- ----
INCOME
Rental income $ 8 $ 34 $ 17 $ 346
Equity in earnings from joint
ventures, net 54 86 176 229
Interest income, notes receivable -- -- -- 308
Gain on sale of securities -- -- 19 --
Other income 8 36 35 90
----- ----- ----- -----
Total Income 70 156 247 973
----- ----- ----- -----
EXPENSES
Depreciation 1 2 3 7
Lease related operating expenses 1 1 5 1
Management fees to General Partner -- 4 6 110
Provision for losses on receivables 19 3 19 (137)
General and administrative expenses 25 20 77 94
----- ----- ----- -----
Total Expenses 46 30 110 75
----- ----- ----- -----
NET INCOME $ 24 $ 126 $ 137 $ 898
===== ===== ===== =====
NET INCOME PER LIMITED
PARTNERSHIP UNIT $ .07 $ .36 $ .39 $2.57
===== ===== ===== =====
DISTRIBUTIONS PER LIMITED
PARTNERSHIP UNIT $ -- $ -- $7.50 $7.50
===== ===== ===== =====
ALLOCATION OF NET INCOME:
General Partner $ 3 $ 19 $ 20 $ 135
Limited Partners 21 107 117 763
----- ----- ----- -----
$ 24 $ 126 $ 137 $ 898
===== ===== ===== =====
The accompanying notes are an integral
part of these statements.
<PAGE>
Page 4 of 11
PHOENIX LEASING INCOME FUND VI
STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
(Unaudited)
Nine Months Ended
September 30,
1996 1995
---- ----
Operating Activities:
Net income $ 137 $ 898
Adjustments to reconcile net income to net cash
used by operating activities:
Depreciation 3 7
Gain on sale of equipment (2) (42)
Equity in earnings from joint ventures, net (176) (229)
Provision for losses on accounts receivable 19 10
Provision for losses on notes receivable -- (147)
Gain on sale of securities (19) --
Decrease in accounts receivable 4 7
Decrease in accounts payable and accrued expenses (182) (1,258)
Decrease (increase) in other assets (3) 30
------- -------
Net cash used by operating activities (219) (724)
------- -------
Investing Activities:
Principal payments, notes receivable -- 1,139
Proceeds from sale of equipment 2 42
Proceeds from sale of securities 90 --
Distributions from joint ventures 274 394
------- -------
Net cash provided by investing activities 366 1,575
------- -------
Financing Activities:
Distributions to partners (2,228) (2,228)
------- -------
Net cash used by financing activities (2,228) (2,228)
------- -------
Decrease in cash and cash equivalents (2,081) (1,377)
Cash and cash equivalents, beginning of period 2,708 3,892
------- -------
Cash and cash equivalents, end of period $ 627 $ 2,515
======= =======
The accompanying notes are an integral
part of these statements.
<PAGE>
Page 5 of 11
PHOENIX LEASING INCOME FUND VI
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note 1. General.
The accompanying unaudited condensed financial statements have been
prepared by the Partnership in accordance with generally accepted accounting
principles, pursuant to the rules and regulations of the Securities and Exchange
Commission. In the opinion of Management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Although management believes that the disclosures are adequate to make
the information presented not misleading, it is suggested that these condensed
financial statements be read in conjunction with the financial statements and
the notes included in the Partnership's Financial Statement, as filed with the
SEC in the latest annual report on Form 10-K.
Note 2. Reclassification.
Reclassification - Certain 1995 amounts have been reclassified to
conform to the 1996 presentation.
Note 3. Income Taxes.
Federal and state income tax regulations provide that taxes on the
income or loss of the Partnership are reportable by the partners in their
individual income tax returns. Accordingly, no provision for such taxes has been
made in the accompanying financial statements.
Note 4. Net Income (Loss) and Distributions per Limited Partnership Unit.
Net income and distributions per limited partnership unit were based on
the limited partner's share of net income and distributions, and the weighted
average number of units outstanding of 297,165 for the nine month periods ended
September 30, 1996 and 1995. For purposes of allocating income (loss) and
distributions to each individual limited partner, the Partnership allocates net
income (loss) and distributions based upon each respective limited partner's
ending capital account balance. The use of this method accurately reflects each
limited partner's participation in the partnership including reinvestment
through the Capital Accumulation Plan. As a result the calculation of net income
(loss) and distributions per limited Partnership unit is not indicative of per
unit income (loss) and distributions due to reinvestments through the Capital
Accumulation Plan.
<PAGE>
Page 6 of 11
Note 5. Investment in Joint Ventures.
Equipment Joint Ventures
The aggregate combined statements of operations of the equipment joint
ventures is presented below:
COMBINED STATEMENTS OF OPERATIONS
(Amounts in Thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
---- ---- ---- ----
INCOME
Rental income $ 631 $1,064 $2,038 $3,200
Gain on sale of equipment 159 397 702 1,273
Other income 32 572 114 683
------ ------ ------ ------
Total income 822 2,033 2,854 5,156
------ ------ ------ ------
EXPENSES
Depreciation 81 629 254 1,089
Lease related operating expenses 283 710 1,167 2,241
Management fees to General Partner 33 94 101 220
General and administrative expenses 3 3 8 13
------ ------ ------ ------
Total expenses 400 1,436 1,530 3,563
------ ------ ------ ------
Net income $ 422 $ 597 $1,324 $1,593
====== ====== ====== ======
Financing Joint Ventures
The aggregate combined statements of operations of the financing joint
ventures is presented below:
COMBINED STATEMENTS OF OPERATIONS
(Amounts in Thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
---- ---- ---- ----
INCOME
Interest income - notes receivable $ 9 $ 14 $ 33 $ 62
Other income 6 7 23 74
---- ---- ---- ----
Total income 15 21 56 136
---- ---- ---- ----
EXPENSES
Management fees to General Partner $ 1 $ 2 $ 2 $ 7
General and administrative expenses 2 3 9 15
---- ---- ---- ----
Total expenses 3 5 11 22
---- ---- ---- ----
Net income $ 12 $ 16 $ 45 $114
==== ==== ==== ====
<PAGE>
Page 7 of 11
Foreclosed Cable Systems Joint Ventures
The statements of operations of the foreclosed cable systems joint
ventures is presented below:
STATEMENTS OF OPERATIONS
(Amounts in Thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
---- ---- ---- ----
INCOME
Subscriber revenue $ -- $ 166 $ 54 $ 509
Gain (adjustments to gain) on
sale of cable system 3 -- 1,205 --
Other income -- 3 10 9
------ ------ ------ ------
Total income 3 169 1,269 518
------ ------ ------ ------
EXPENSES
Depreciation and amortization -- 39 13 115
Program services -- 48 12 135
Management fees to an affiliate of
the General Partner -- 8 121 23
General and administrative expenses -- 42 44 144
Provision for losses on accounts
receivable -- 2 -- 5
------ ------ ------ ------
Total expenses -- 139 190 422
------ ------ ------ ------
Net income $ 3 $ 30 $1,079 $ 96
====== ====== ====== ======
<PAGE>
Page 8 of 11
PHOENIX LEASING INCOME FUND VI
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Results of Operations
The Partnership reported net income of $24,000 and $137,000 during the
three and nine months ended September 30, 1996, respectively, compared to net
income of $126,000 and $898,000 during the three and nine months ended September
30, 1995. The decrease in net income during both periods is primarily
attributable to a decrease in revenues.
Total revenues decreased by $86,000 and $726,000 for the three and nine
months ended September 30, 1996, respectively, as compared to the same periods
in 1995. The decrease for both the three and nine months ended September 30,
1996, compared to the prior year, is attributable to declines in rental income
and earnings from joint ventures. In addition, during the nine months ended
September 30, 1996, the absence of interest income from a note receivable,
compared to interest income from notes receivable of $308,000 in 1995
contributed to the decline in total revenues. The Partnership recognized
interest income from a note receivable of $308,000 during the nine months ended
September 30, 1995 as a result of the Partnership receiving a settlement from
its one remaining note receivable which was impaired. The amount received as the
settlement was first applied towards the outstanding note receivable balance and
the remainder was recognized as interest income.
Due to the settlement received on the one remaining note receivable,
the balance of the general allowance for losses on notes receivable was no
longer necessary. As a result, the remaining balance of $147,000 was recognized
as income which decreased total expenses for both the nine months ended
September 30, 1995. The settlement also caused management fees to the General
Partner to be higher for the nine months ended September 30, 1995.
The decline in rental income of $26,000 and $329,000 for the three and
nine months ended September 30, 1996, respectively, also contributed to the
decline in total revenues for 1996. The reduction in rental income is
attributable to the decrease in the equipment owned by the Partnership. At
September 30, 1996, the Partnership owned equipment with an aggregate original
cost of $836,000 as compared to $2,774,000 at September 30, 1995. The
Partnership is currently in a liquidation phase. As a result, the equipment
portfolio will continue to decline as the Partnership continues to liquidate its
remaining equipment as it comes off lease.
The Partnership reported a gain on sale of securities of $19,000 for
the nine months ended September 30, 1996. This gain on sale of securities is
attributable to the Partnership selling a portion of its investment in Storage
Technology Corporation common stock, receiving proceeds from the sale of
$90,000.
Joint Ventures
The Partnership has made investments in various equipment and financing
joint ventures along with other affiliated partnerships managed by the General
Partner for the purpose of spreading the risk of investing in certain equipment
leasing and financing transactions. These joint ventures are not currently
making any significant additional investments in new equipment leasing or
financing transactions. As a result, the earnings and cash flow from such
investments are anticipated to continue to decline as the portfolios are
re-leased at lower rental rates and the equipment is liquidated. Earnings from
joint ventures decreased by $32,000 and $53,000 during the three and nine months
ended September 30, 1996, respectively, compared to the same periods in 1995.
<PAGE>
Page 9 of 11
Liquidity and Capital Resources
During the nine months ended September 30, 1996, the net cash used by
leasing and financing activities was $219,000, as compared to the net cash
provided by leasing and financing activities of $415,000 during 1995. The
decrease in cash generated for the nine months ended September 30, 1996 is due
to the absence of principal payments from notes receivable. During the nine
months ended September 30, 1995, the Partnership received a settlement from its
one remaining outstanding note receivable.
The distributions from joint ventures continues to be one of the
primary sources of cash generated by the Partnership. Cash distributions from
joint ventures were $274,000 for the nine months ended September 30, 1996 and
$394,000 for the nine months ended September 30, 1995. The slight decrease in
distributions for the nine months ended September 30, 1996, as compared to 1995,
is attributable to the closure of one joint venture during 1995, as well as, the
decrease in rental receipts from several other joint ventures. The decrease in
rental receipts is a result of equipment being re-leased at lower rental rates
and equipment being sold.
As of September 30, 1996, the Partnership owned equipment held for
lease with a purchase price of $685,000 and a net book value of $1,000, as
compared to $2,096,000 and $0 at September 30, 1995, respectively. The General
Partner is actively engaged, on behalf of the Partnership, in remarketing and
selling the Partnership's off-lease equipment portfolio.
The limited partners received their annual distribution of $2,228,000
during both the nine months ended September 30, 1996 and 1995. As a result, the
cumulative cash distributions to the limited partners are $75,915,000 and
$73,687,000 at September 30, 1996 and 1995, respectively. The General Partner
did not receive distributions during the nine months ended September 30, 1996
and 1995.
The Partnership will reach the end of its term on December 31, 1997, at
which time it will liquidate its remaining assets and make a final distribution
to partners of the excess cash, if any. The Partnership currently does not
anticipate making any further distribution to partners until the termination of
the Partnership.
As the Partnership's asset portfolio continues to decline as a result
of the on-going liquidation of assets, it is expected that the cash generated
from operations will also decline. Cash generated from leasing and financing
operations has been and is anticipated to continue to be sufficient to meet the
Partnership's on-going operational expenses.
<PAGE>
Page 10 of 11
PHOENIX LEASING INCOME FUND VI
September 30, 1996
Part II. Other Information.
---------------------------
Item 1. Legal Proceedings. Inapplicable.
Item 2. Changes in Securities. Inapplicable
Item 3. Defaults Upon Senior Securities. Inapplicable
Item 4. Submission of Matters to a Vote of Securities Holders. Inapplicable
Item 5. Other Information. Inapplicable
Item 6. Exhibits and Reports on 8-K:
a) Exhibits:
(27) Financial Data Schedule
b) Reports on 8-K: None
<PAGE>
Page 11 of 11
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
PHOENIX LEASING INCOME FUND VI
------------------------------
(Registrant)
Date Title Signature
---- ----- ---------
November 12, 1996 Chief Financial Officer, /S/ PARITOSH K. CHOKSI
- ----------------- Senior Vice President ----------------------
and Treasurer of (Paritosh K. Choksi)
Phoenix Leasing Incorporated
General Partner
November 12, 1996 Senior Vice President, /S/ BRYANT J. TONG
- ----------------- Financial Operations -----------------------
(Principal Accounting Officer) (Bryant J. Tong)
Phoenix Leasing Incorporated
General Partner
November 12, 1996 Senior Vice President of /S/ GARY W. MARTINEZ
- ----------------- Phoenix Leasing Incorporated -----------------------
General Partner (Gary W. Martinez)
November 12, 1996 Partnership Controller /S/ MICHAEL K. ULYATT
- ----------------- Phoenix Leasing Incorporated -----------------------
General Partner (Michael K. Ulyatt)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 627
<SECURITIES> 110
<RECEIVABLES> 18
<ALLOWANCES> 11
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 636
<DEPRECIATION> 635
<TOTAL-ASSETS> 1,074
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> (215)
<TOTAL-LIABILITY-AND-EQUITY> 1,074
<SALES> 0
<TOTAL-REVENUES> 247
<CGS> 0
<TOTAL-COSTS> 110
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 19
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 137
<INCOME-TAX> 0
<INCOME-CONTINUING> 137
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 137
<EPS-PRIMARY> .39
<EPS-DILUTED> 0
</TABLE>
