<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO
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Commission file number 0-14440
IEA INCOME FUND VI,
(A CALIFORNIA LIMITED PARTNERSHIP)
(Exact name of registrant as specified in its charter)
California 94-2942941
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
444 Market Street, 15th Floor, San Francisco, California 94111
(Address of principal executive offices) (Zip Code)
(415) 677-8990
(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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<PAGE> 2
IEA INCOME FUND VI,
(A CALIFORNIA LIMITED PARTNERSHIP)
REPORT ON FORM 10-Q FOR THE QUARTERLY
PERIOD ENDED JUNE 30, 1995
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets - June 30, 1995 (unaudited) and December 31, 1994 2
Statements of Operations for the three and six months ended June 30, 1995 and 1994 (unaudited) 3
Statements of Cash Flows for the six months ended June 30, 1995 and 1994 (unaudited) 4
Notes to Financial Statements (unaudited) 5
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8
PART II - OTHER INFORMATION
Item 6. Exhibit and Reports on Form 8-K 9
</TABLE>
<PAGE> 3
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Presented herein are the Registrant's balance sheets as of
June 30, 1995 and December 31, 1994, statements of operations for the
three and six months ended June 30, 1995 and 1994, and statements of
cash flows for the six months ended June 30, 1995 and 1994.
<PAGE> 4
IEA INCOME FUND VI,
(A CALIFORNIA LIMITED PARTNERSHIP)
BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
----------- ------------
Assets
------
<S> <C> <C>
Current assets:
Cash, includes $331,545 at June 30, 1995 and $259,681
at December 31, 1994 in interest-bearing accounts $ 348,438 $ 269,503
Short-term investments 1,580,075 1,500,000
Net lease receivables due from Leasing Company
(notes 1 and 2) 1,040,509 1,007,199
----------- -----------
Total current assets 2,969,022 2,776,702
----------- -----------
Container rental equipment, at cost 19,127,069 20,201,897
Less accumulated depreciation 10,473,801 10,560,772
----------- -----------
Net container rental equipment 8,653,268 9,641,125
----------- -----------
Net investment in direct financing lease - 16,451
----------- -----------
$11,622,290 $12,434,278
=========== ===========
Partners' Capital
-----------------
Partners' capital (deficit):
General partners $ (8,314) $ (19,414)
Limited partners 11,630,604 12,453,692
----------- -----------
Total partners' capital 11,622,290 12,434,278
----------- -----------
$11,622,290 $12,434,278
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
2
<PAGE> 5
IEA INCOME FUND VI,
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
-------------------- -----------------------
June 30, June 30, June 30, June 30,
1995 1994 1995 1994
-------- -------- ---------- ----------
<S> <C> <C> <C> <C>
Net lease revenue (notes 1 and 3) $853,273 $835,542 $1,704,146 $1,739,329
Other operating expenses:
Depreciation 256,983 283,347 521,015 574,336
Other general and administrative expenses 28,395 26,538 44,350 39,632
-------- -------- ---------- ----------
285,378 309,885 565,365 613,968
-------- -------- ---------- ----------
Earnings from operations 567,895 525,657 1,138,781 1,125,361
Other income:
Interest income 31,215 17,359 58,825 31,562
Net gain on disposal of equipment 63,237 98,797 219,891 156,154
-------- -------- ---------- ----------
94,452 116,156 278,716 187,716
-------- -------- ---------- ----------
Net earnings $662,347 $641,813 $1,417,497 $1,313,077
======== ======== ========== ==========
Allocation of net earnings:
General partners $101,693 $ 86,590 $ 209,276 $ 187,829
Limited partners 560,654 555,223 1,208,221 1,125,248
-------- -------- ---------- ----------
$662,347 $641,813 $1,417,497 $1,313,077
======== ======== ========== ==========
Limited partners' per unit share of net earnings $ 13 $ 13 $ 28 $ 26
======== ======== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE> 6
IEA INCOME FUND VI,
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
------------------------------
June 30, June 30,
1995 1994
------------ ------------
<S> <C> <C>
Net cash provided by operating activities $ 1,837,189 $ 1,733,612
Cash flows provided by investing activities:
Proceeds from disposal of equipment 551,306 649,387
Cash flows used in financing activities:
Distribution to partners (2,229,485) (2,108,973)
------------ ------------
Net increase in cash and cash equivalents 159,010 274,026
Cash and cash equivalents at January 1 1,769,503 2,013,284
------------ ------------
Cash and cash equivalents at June 30 $ 1,928,513 $ 2,287,310
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE> 7
IEA INCOME FUND VI,
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
JUNE 30, 1995 AND DECEMBER 31, 1994
(1) Summary of Significant Accounting Policies
(a) Nature of Operations
IEA Income Fund VI, A California Limited Partnership (the
"Partnership") is a limited partnership organized under the laws of
the State of California on August 1, 1984 for the purpose of owning
and leasing marine cargo containers. The managing general partner
is Cronos Capital Corp. ("CCC"); the associate general partners
include four individuals. CCC, with its affiliate Cronos Containers
Limited (the "Leasing Company"), manages and controls the business
of the Partnership.
(b) Leasing Company and Leasing Agent Agreement
Pursuant to the Limited Partnership Agreement of the Partnership,
all authority to administer the business of the Partnership is
vested in CCC. CCC has entered into a Leasing Agent Agreement
whereby the Leasing Company has the responsibility to manage the
leasing operations of all equipment owned by the Partnership.
Pursuant to the Agreement, the Leasing Company is responsible for
leasing, managing and re-leasing the Partnership's containers to
ocean carriers and has full discretion over which ocean carriers and
suppliers of goods and services it may deal with. The Leasing Agent
Agreement permits the Leasing Company to use the containers owned by
the Partnership, together with other containers owned or managed by
the Leasing Company and its affiliates, as part of a single fleet
operated without regard to ownership. Since the Leasing Agent
Agreement meets the definition of an operating lease in Statement of
Financial Accounting Standards (SFAS) No. 13, it is accounted for as
a lease under which the Partnership is lessor and the Leasing
Company is lessee.
The Leasing Agent Agreement generally provides that the Leasing
Company will make payments to the Partnership based upon rentals
collected from ocean carriers after deducting direct operating
expenses and management fees to CCC. The Leasing Company leases
containers to ocean carriers, generally under operating leases which
are either master leases or term leases (mostly two to five years).
Master leases do not specify the exact number of containers to be
leased or the term that each container will remain on hire but allow
the ocean carrier to pick up and drop off containers at various
locations; rentals are based upon the number of containers used and
the applicable per-diem rate. Accordingly, rentals under master
leases are all variable and contingent upon the number of containers
used. Most containers are leased to ocean carriers under master
leases; leasing agreements with fixed payment terms are not material
to the financial statements. Since there are no material minimum
lease rentals, no disclosure of minimum lease rentals is provided in
these financial statements.
(c) Basis of Accounting
The Partnership utilizes the accrual method of accounting. Revenue is
recognized when earned.
(Continued)
5
<PAGE> 8
IEA INCOME FUND VI,
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
(d) Financial Statement Presentation
These financial statements have been prepared without audit.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting procedures have been omitted. It is suggested that these
financial statements be read in conjunction with the financial
statements and accompanying notes in the Partnership's latest annual
report on Form 10-K.
The interim financial statements presented herewith reflect all
adjustments of a normal recurring nature which are, in the opinion
of management, necessary to a fair statement of the financial
condition and results of operations for the interim periods
presented.
(2) Net Lease Receivables Due from Leasing Company
Net lease receivables due from the Leasing Company are determined by
deducting direct operating payables and accrued expenses, base
management fees payable, reimbursed administrative expenses and
incentive fees payable to CCC and its affiliates from the rental
billings payable by the Leasing Company to the Partnership under
operating leases to ocean carriers for the containers owned by the
Partnership. Net lease receivables at June 30, 1995 and
December 31, 1994 were as follows:
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
---------- ------------
<S> <C> <C>
Lease receivables, net of doubtful accounts
of $357,032 at June 30, 1995 and $294,133 at
December 31, 1994 $1,834,460 $1,838,648
Less:
Direct operating payables and accrued expenses 300,729 259,314
Damage protection reserve 205,101 285,686
Base management fees 139,446 145,923
Reimbursed administrative expenses 14,772 26,708
Incentive fees 133,903 113,818
---------- ----------
$1,040,509 $1,007,199
========== ==========
</TABLE>
(Continued)
6
<PAGE> 9
IEA INCOME FUND VI,
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
(3) Net Lease Revenue
Net lease revenue is determined by deducting direct operating expenses,
management fees and reimbursed administrative expenses to CCC from the
rental revenue billed by the Leasing Company under operating leases to
ocean carriers for the containers owned by the Partnership. Net lease
revenue for the three and six-month periods ended June 30, 1995 and 1994,
were as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
----------------------- -----------------------
June 30, June 30, June 30, June 30,
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Rental revenue $1,456,067 $1,477,812 $2,858,648 $2,947,047
Rental equipment
operating expenses 279,017 308,892 543,996 567,001
Base management fees 94,484 101,415 191,484 198,719
Incentive fees 153,988 153,989 267,805 261,111
Reimbursed administrative expenses 75,305 77,974 151,217 180,887
---------- ---------- ---------- ----------
$ 853,273 $ 835,542 $1,704,146 $1,739,329
========== ========== ========== ==========
</TABLE>
7
<PAGE> 10
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
It is suggested that the following discussion be read in conjunction with the
Registrant's most recent annual report on Form 10-K.
1) Material changes in financial condition between June 30, 1995 and December
31, 1994.
The Registrant's cash balances at June 30, 1995 included sales proceeds
from equipment disposals in the amount of $219,601. The Registrant will
distribute these sales proceeds and $878,404 of cash from operations
during the third quarter of 1995, representing distributions to its
limited partners for the second quarter of 1995.
Net lease receivables due from the Leasing Company increased approximately
3% from December 31, 1994. This increase was attributable to a 28%
decline in the reserve for container repairs covered by the damage
protection plan, a component of net lease receivables. During the first
six months of 1995, this reserve was impacted by the Registrant's
declining fleet size and the number of containers covered under the plan.
Deferred lease revenue from advance billings on container rentals,
contributed to a 16% increase in direct operating payables and accrued
expenses.
2) Material changes in the results of operations between the three and
six-month periods ended June 30, 1995 and the three and six-month periods
ended June 30, 1994.
During the three-month period ended June 30, 1995, the container leasing
market remained consistent with market conditions that existed during the
three-month period ended March 31, 1995. The Registrant continued to
experience the ability to charge higher ancillary revenues, such as
pick-up fees, and reduce incentives offered to ocean carriers. However,
the Registrant remains cautious about any further improvement in market
conditions during the remainder of 1995.
The benefits of the improved market conditions experienced during the
three and six-month periods ended June 30, 1995, as compared to the same
periods in 1994, were partially offset by the effect of the Leasing
Company's efforts to improve the credit quality of its customer portfolio.
In many cases, lessees who maintain a strong credit history may command
favorable lease terms including lower per-diem rental rates. Accordingly,
average per-diem rental rates remained steady as compared to the same
three and six-month periods in 1994, while an increasing proportion of the
lessees within its portfolio shifted to larger, high credit quality
lessees. The Registrant expects to gain long term benefits from the
improvement in the credit quality of its customers, as the allowance for
doubtful accounts and related expenses should decline.
The Registrant's average fleet size and utilization rates for the three
and six-month periods ended June 30, 1995 and 1994 were as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
--------------------- ------------------------
June 30, June 30, June 30, June 30,
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Average Fleet Size (measured in
twenty-foot equivalents (TEU)) 11,067 12,426 11,348 12,565
Average Utilization 88% 87% 90% 86%
</TABLE>
Rental equipment operating expenses, a component of net lease revenue,
declined approximately 10% and 4% during the three and six-month periods
ended June 30, 1995, respectively, as compared to the same periods in the
prior year. The declining fleet size and higher utilization rates were
contributing factors to these declines, as well as to the declines in base
management fees and reimbursed administrative expenses.
8
<PAGE> 11
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 - Financial Data Schedule
(b) There were no reports on Form 8-K during the three-month period
ended June 30, 1995.
9
<PAGE> 12
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.
IEA INCOME FUND VI,
A California Limited Partnership
By Cronos Capital Corp.
The Managing General Partner
By /s/ JOHN KALLAS
---------------------------------------
John Kallas
Vice President, Chief Financial Officer
Principal Accounting Officer
Date: August 10, 1995
10
<PAGE> 13
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEET AT JUNE 30, 1995 (UNAUDITED) AND THE STATEMENT OF OPERATIONS FOR
THE SIX MONTHS ENDED JUNE 30, 1995 (UNAUDITED) AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS INCLUDED AS PART OF ITS QUARTERLY
REPORT ON FORM 10-Q FOR THE PERIOD ENDED JUNE 30, 1995.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 1,928,513
<SECURITIES> 0
<RECEIVABLES> 1,040,509
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,969,022
<PP&E> 19,127,069
<DEPRECIATION> 10,473,801
<TOTAL-ASSETS> 11,622,290
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 11,622,290
<TOTAL-LIABILITY-AND-EQUITY> 11,622,290
<SALES> 0
<TOTAL-REVENUES> 1,982,862
<CGS> 0
<TOTAL-COSTS> 565,365
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,417,497
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
