UNITED STATES
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 fiscal quarter ended June 30, 1996.
[ ] 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 33-40093
-----------------------
PLM EQUIPMENT GROWTH FUND VI
(Exact name of registrant as specified in its charter)
California 94-3135515
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Market, Steuart Street Tower
Suite 900, San Francisco, CA 94105-1301
(Address of principal (Zip code)
executive offices)
Registrant's telephone number, including area code (415) 974-1399
-----------------------
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>
PLM EQUIPMENT GROWTH FUND VI
(A Limited Partnership)
BALANCE SHEETS
(in thousands of dollars)
ASSETS
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
------------------------------------
<S> <C> <C>
Equipment held for operating leases $ 116,063 $ 106,453
Less accumulated depreciation (43,776) (41,382)
------------------------------------
72,287 65,071
Equipment held for sale -- 14,607
------------------------------------
Net equipment 72,287 79,678
Cash and cash equivalents 4,142 2,600
Restricted cash 1,270 1,298
Investments in unconsolidated special purpose entities 43,279 32,023
Accounts receivable, net of allowance for doubtful accounts
of $1,055 in 1996 and $245 in 1995 2,767 3,374
Net Investment in sales-type lease 297 --
Prepaid expenses and other assets 178 227
Deferred charges, net of accumulated amortization of
$1,162 in 1996 and $1,010 in 1995 422 429
Equipment acquisition deposits -- 2,328
------------------------------------
Total assets $ 124,642 $ 121,957
====================================
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and accrued expenses $ 611 $ 852
Due to affiliates 1,575 3,205
Prepaid deposits and reserve for repairs 3,264 2,470
Note payable 39,000 30,000
------------------------------------
Total liabilities 44,450 36,527
Partners' capital:
Limited Partners (8,286,966 Depositary Units at June 30,
1996 and 8,318,247 at December 31, 1995) 80,192 85,430
General Partner -- --
------------------------------------
Total partners' capital 80,192 85,430
------------------------------------
Total liabilities and partner's capital $ 124,642 $ 121,957
====================================
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM EQUIPMENT GROWTH FUND VI
(A Limited Partnership)
STATEMENTS OF OPERATIONS
(in thousands of dollars except per unit amounts)
<TABLE>
<CAPTION>
For the three months For the six months
ended June 30, ended June 30,
1996 1995 1996 1995
---------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues:
Lease revenue $ 6,521 $ 7,927 $ 11,876 $ 15,781
Interest and other income 88 289 317 381
Net gain (loss) on disposition of equipment 211 6 6,540 15
---------------------------------------------------------------
Total revenues 6,820 8,222 18,733 16,177
Expenses:
Depreciation and amortization 3,316 5,408 6,289 10,867
Management fees to affiliate 348 432 641 862
Repairs and maintenance 846 881 1,625 1,489
Interest expense 688 497 1,211 994
Marine equipment operating expenses 1,005 787 1,710 1,612
Insurance expense to affiliate 52 153 112 357
Other insurance expense 198 139 396 263
General and administrative
expenses to affiliates 271 265 517 587
Other general and administrative expenses 216 146 374 284
Provision for bad debts 678 247 812 322
---------------------------------------------------------------
---------------------------------------------------------------
Total expenses 7,618 8,955 13,687 17,637
---------------------------------------------------------------
Equity in net loss of unconsolidated
special purpose entities (630) -- (1,082) --
---------------------------------------------------------------
Net income (loss) $ (1,428) $ (733) $ 3,964 $ (1,460)
===============================================================
Partners' share of net income (loss):
Limited Partners $ (1,646) $ (952) $ 3,527 $ (1,898)
General Partner 218 219 437 438
---------------------------------------------------------------
Total $ (1,428) $ (733) $ 3,964 $ (1,460)
===============================================================
Net income (loss) per Depositary Unit
(8,286,966 Units in 1996 and
8,318,247 in 1995) $ (0.20) $ (0.11) $ 0.43 $ (0.23)
===============================================================
Cash distributions $ 4,365 $ 4,378 $ 8,739 $ 8,759
===============================================================
Cash distributions per Depositary Unit $ 0.50 $ 0.50 $ 1.00 $ 1.00
===============================================================
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM EQUIPMENT GROWTH FUND VI
( A Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL For
the period from December 31, 1994 to June 30, 1996
(in thousands)
<TABLE>
<CAPTION>
Limited General
Partners Partner Total
--------------------------------------------------------
<S> <C> <C> <C>
Partners' capital at December 31, 1994 $ 104,922 $ -- $ 104,922
Net income (loss) (2,850) 876 (1,974)
Cash distributions (16,642) (876) (17,518)
---------------------------------------------------------
Partners' capital at December 31, 1995 85,430 -- 85,430
Net income 3,527 437 3,964
Repurchase of Depositary Units (463) -- (463)
Cash distributions (8,302) (437) (8,739)
---------------------------------------------------------
Partners' capital at June 30, 1996 $ 80,192 $ -- $ 80,192
=========================================================
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM EQUIPMENT GROWTH FUND VI
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
For the six months
ended June 30,
1996 1995
------------------------------------
<S> <C> <C>
Operating activities:
Net income (loss) $ 3,964 $ (1,460)
Adjustments to reconcile net income (loss) to
cash provided by operating activities:
Net gain on disposition of equipment (6,540) (14)
Cash distributions from unconsolidated special purpose entities
in excess of loss 3,795 --
Depreciation and amortization 6,289 10,867
Changes in operating assets and liabilities:
Restricted cash 28 --
Accounts receivable, net 651 (299)
Prepaid expenses and other assets 49 127
Accounts payable and accrued expenses (242) (47)
Due to affiliates (805) (36)
Prepaid deposits and reserve for repairs 908 51
------------------------------------
Cash provided by operating activities 8,097 9,189
------------------------------------
Investing activities:
Payments for purchase of equipment (13,914) (378)
Investment in and equipment purchased and placed in
unconsolidated special purpose entities (15,051) --
Payments of acquisition related fees to affiliate (675) --
Payments of lease negotiation fees to affiliate (152) --
Sales-type lease payments received 20 --
Proceeds from disposition of equipment 23,419 477
------------------------------------
Cash (used in) provided by investing activities (6,353) 99
------------------------------------
Financing activities:
Proceeds from short term note payable 11,220 --
Payments of short-term note payable (2,220) --
Repurchase of depositary units (463) --
Cash distributions paid to General Partner (437) (437)
Cash distributions paid to Limited Partners (8,302) (8,322)
------------------------------------
Cash used in financing activities (202) (8,759)
------------------------------------
Net increase in cash and cash equivalents 1,542 529
Cash and cash equivalents at beginning of period 2,600 6,246
------------------------------------
Cash and cash equivalents at end of period $ 4,142 $ 6,775
====================================
Supplemental information:
Interest paid $ 1,386 $ 1,005
====================================
Supplemental disclosure of noncash investing and financing activities:
Sales proceeds included in accounts receivable $ 44 $ --
====================================
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM EQUIPMENT GROWTH FUND VI
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
June 30, 1996
1. Opinion of Management
In the opinion of the management of PLM Financial Services, Inc., the
General Partner, the accompanying unaudited financial statements contain all
adjustments necessary, consisting primarily of normal recurring accruals, to
present fairly the Partnership's financial position as of June 30, 1996, the
statements of operations for the three and six months ended June 30, 1996 and
1995, the statements of cash flows for the six months ended June 30, 1996 and
1995, and the statements of changes in partners' capital for the period December
31, 1994 to June 30, 1996. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted from the accompanying
financial statements. For further information, reference should be made to the
financial statements and notes thereto included in the Partnership's Annual
Report on Form 10-K for the year ended December 31, 1995, on file at the
Securities and Exchange Commission.
2. Investments in Unconsolidated Special Purpose Entities
During the second half of 1995, the Partnership began to increase the level of
its participation in the ownership of large-ticket transportation assets to be
owned and operated jointly with affiliated programs. This trend continued during
1996.
Prior to 1996, the Partnership accounted for operating activities associated
with joint ownership of transportationl equipment as undivided interests,
including its proportionate share of each asset with similar wholly-owned assets
in its financial statements. Under generally accepted accounting principles, the
effects of such activities, if material, should be reported using the equity
method of accounting. Therefore, effective January 1, 1996, the Partnership
adopted the equity method to account for its investment in such jointly-held
assets.
The principle differences between the previous accounting method and the equity
method relate to the presentation of activities relating to these assets in the
statement of operations. Whereas, under equity accounting the Partnership's
proportionate share is presented as a single net amount, equity in net income
(loss) of unconsolidated special purpose entities, under the previous method,
the Partnership's statement of operations reflected its proportionate share of
each individual item of revenue and expense. Accordingly, the effect of adopting
the equity method of accounting has no cumulative effect on previously reported
partner's capital or on the Partnership's net income (loss) for the period of
adoption. Because the effects on previously issued financial statements of
applying the equity method of accounting to investments in jointly-owned assets
are not considered to be material to such financial statements taken as a whole,
previously issued financial statements have not been restated. However, certain
items have been reclassified in the previously issued balance sheet to conform
to the current period presentation.
During the six months ended June 30, 1996, the Partnership purchased a partial
beneficial interest in a trust of five commercial aircraft for $11.2 million and
incurred acquisition and lease negotiation fees of $0.6 million to PLM
Transportation Equipment Corporation (TEC), an affiliate of the General Partner.
The Partnership also purchased a 50% ownership interest in a marine vessel (the
remaining interest in this marine vessel belongs to an affiliated partnership)
for $4.0 million including acquisition and lease negotiation fees of $0.2
million incurred to TEC for this equipment. The Partnership made a deposit of
$0.4 million toward this purchase which is included in the balance sheet as
investments in unconsolidated special purpose entities at December 31, 1995.
<PAGE>
PLM EQUIPMENT GROWTH FUND VI
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
June 30, 1996
2. Investments in Unconsolidated Special Purpose Entities (continued)
The net investments in unconsolidated special purpose entities include the
following jointly-owned equipment (and related assets and liabilities) (in
thousands):
<TABLE>
<CAPTION>
June 30 December 31,
% Ownership Equipment 1996 1995
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
64% 767-200ER commercial aircraft $ 16,949 $ 18,674
14% Trust that own seven commercial aircraft 3,376 3,962
40% Trust that own five commercial aircraft 10,624 --
45% Mobile offshore drilling unit 6,551 6,633
20% Handymax bulk carrier 2,159 2,376
50% Feeder vessel 3,620 378
---------------------------------
Net investments $ 43,279 $ 32,023
=================================
</TABLE>
3. Repurchase of Depositary Units
At December 31, 1995, the Partnership agreed to repurchase approximately 32,400
Depositary Units for an aggregate purchase price of $0.5 million. As of June 30,
1996, the Partnership has repurchased 31,281 Depositary Units for $463,000 The
General Partner anticipates that the remaining Units will be repurchased during
the next three months.
4. Equipment
Owned equipment held for operating leases is stated at cost. Equipment held
for sale is stated at the lower of the equipment's depreciated cost or net
realizable value and is subject to a pending contract for sale. The components
of equipment are as follows (in thousands):
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
-----------------------------------
<S> <C> <C>
Aircraft $ 11,918 $ 11,918
Marine vessels 41,263 25,228
Trailers 18,325 18,675
Aircraft engines and components 12,141 17,992
Marine containers 16,752 16,984
Rail equipment 15,664 15,656
-----------------------------------
116,063 106,453
Less accumulated depreciation (43,776) (41,382)
-----------------------------------
72,287 65,071
Equipment held for sale -- 14,607
-----------------------------------
Net equipment $ 72,287 $ 79,678
===================================
</TABLE>
As of June 30, 1996, all of the equipment was on lease or operating in
PLM-affiliated short-term trailer rental facilities, except for four railcars.
At December 31, 1995, all of the equipment was on lease or operating in
PLM-affiliated short-term trailer rental facilities, except for two aircraft
engines. The net book value of the equipment off-lease was $50,000 and $2.5
million at June 30, 1996, and December 31, 1995, respectively.
During the six months ended June 30, 1996, the Partnership purchased two marine
vessels for $15.8 million including acquisition and lease negotiation fees of
$0.8 million incurred to TEC for this equipment. The Partnership made a deposit
of $1.5 million toward this purchase at December 31, 1995, which is included in
the balance sheet as equipment acquisition deposits along with accrued fees of
$0.8 million.
PLM EQUIPMENT GROWTH FUND VI
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
June 30, 1996
4. Equipment (continued)
During the six months ended June 30, 1996, 106 marine containers, 54 trailers, 2
aircraft engines and 1 railcar with an aggregate net book value of $2.7 million
were disposed of or sold, and the Partnership received proceeds of $3.0 million.
The Partnership also sold one marine vessel which was held for sale as of
December 31, 1995, with a net book value of $14.6 million at the date of sale
for proceeds of $20.8 million. Included in the gain of $6.3 million from the
sale of the marine vessel, is the unused portion of accrued drydocking of $0.1
million.
During the six months ended June 30, 1995, 167 marine containers, 26
trailers and 1 railcar with an aggregate net book value of $463,000 disposed of
or sold and the Partnership received proceeds of $477,000.
5. Cash Distributions
Cash distributions are recorded when paid and totaled $4.4 million and $8.7
million for the three and six months ended June 30, 1996, respectively. Cash
distributions to Unit holders in excess of net income are considered to
represent a return of capital on a Generally Accepted Accounting Principles
(GAAP) basis. Cash distributions to the Limited Partners of $5.0 million and
$8.3 million for the six months ended June 30, 1996 and 1995, respectively, were
deemed to be a return of capital. Cash distributions related to the second
quarter results of $2.4 million were paid or are payable during July and August
1996, depending on whether the individual unit holder elected to receive a
monthly or quarterly distribution check.
6. Debt
The General Partner has entered into a joint $35 million credit facility (the
"Committed Bridge Facility") on behalf of the Partnership, PLM Equipment Growth
Fund III, PLM Equipment Growth Fund IV, PLM Equipment Growth Fund V, PLM
Equipment Growth & Income Fund VII and Professional Lease Management Income Fund
I ("Fund I"), all affiliated investment programs, TEC Acquisub, Inc. ("TECAI"),
an indirect wholly-owned subsidiary of the General Partner, and American Finance
Group (AFG), a subsidiary of PLM International, Inc., which may be used to
provide interim financing of up to (i) 70% of the aggregate book value or 50% of
the aggregate net fair market value of eligible equipment owned by the
Partnership or Fund I, plus (ii) 50% of unrestricted cash held by the borrower.
The Committed Bridge Facility became available on December 20, 1993, and was
amended and restated on May 31, 1996 to expire on May 23, 1997. The Committed
Bridge Facility also provides for a $5 million Letter of Credit Facility for the
eligible borrowers. Outstanding borrowings by Fund I, TECAI, AFG or PLM
Equipment Growth Funds III through VII reduce the amount available to each other
under the Committed Bridge Facility. Individual borrowings may be outstanding
for no more than 179 days, with all advances due no later than May 23, 1997. The
Committed Bridge Facility prohibits the Partnership from incurring any
additional indebtedness. Interest accrues at either the prime rate or adjusted
LIBOR plus 2.5% at the borrowers option and is set at the time of an advance of
funds. Borrowings by the Partnership are guaranteed by the General Partner. As
of August 9, 1996, the Partnership had $9,000,000 in outstanding borrowings
under the Committed Bridge Facility, and TECAI had $23,911,000 in outstanding
borrowings. None of the other programs had any outstanding borrowings.
Under the terms of the Partnership's senior loan agreement, prior to accessing
the Committed Bridge Facility, the Partnership has to receive a waiver from the
holder of the note payable. During March 1996, the holder of the note payable
issued the required waiver to the Partnership enabling the Partnership to access
the Committed Bridge Facility.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(I) RESULTS OF OPERATIONS
Comparison of the Partnership's Operating Results for the Three Months Ended
June 30, 1996 and 1995
(A) Owned equipment operations
Lease revenues less direct expenses (defined as repairs and maintenance, marine
equipment operating, and asset specific insurance expenses) on owned equipment
decreased during the second quarter of 1996 when compared to the same quarter of
1995. The following table presents revenues less direct expenses by owned
equipment type (in thousands):
<TABLE>
<CAPTION>
For the three months
ended June 30,
1996 1995
----------------------------
<S> <C> <C>
Aircraft and aircraft engines $ 1,099 $ 1,250
Marine vessels 1,295 1,078
Trailers 840 986
Rail equipment 643 852
Marine containers 558 825
</TABLE>
Aircraft: Aircraft lease revenues and direct expenses were $1.2 million and
$57,000, respectively, for the three months ended 1996, compared to $1.3 million
and $50,000, respectively during the same quarter of 1995. The decrease in
aircraft contribution was due to a lower re-lease rate earned on two aircraft
engines during the second quarter of 1996 when compared to the same period of
1995;
Marine vessels: Marine vessel lease revenues and direct expenses were $2.6
million and $1.3 million, respectively, for the three months ended 1996,
compared to $2.5 million and $1.4 million, respectively during the same quarter
of 1995. The increase in marine vessel contribution was due to the purchase of
two marine vessels during the fourth quarter of 1995, which were on-lease for
the entire quarter in 1996 when compared to 1995. The increase was offset, in
part, by the sale of a marine vessel during the first quarter of 1996;
Trailers: Trailer lease revenues and direct expenses were $1.2 million and $0.3
million, respectively, for the three months ended 1996, compared to $1.3 million
and $0.3 million, respectively during the same quarter of 1995. The number of
trailers owned by the Partnership has been declining over the past twelve months
due to sales and dispositions. The result of this declining fleet has resulted
in a decrease in trailer net contribution. In addition, the trailer fleet is
experiencing lower utilization in the PLM affiliated short-term rental yards;
Rail equipment: Rail equipment lease revenues and direct expenses were $1.0
million and $0.4, respectively, for the three months ended 1996, compared to
$1.0 and $0.2, respectively during the same quarter of 1995. Although the
railcar fleet remained relatively the same size for both quarters, the decrease
in railcar contribution resulted from running repairs required on certain of the
railcars in the fleet during 1996 which were not needed during 1995;
Marine containers: Marine container lease revenues and direct expenses were $0.5
million and $3,000, respectively, for the three months ended 1996, compared to
$0.8 million and $7,000, respectively during the same quarter of 1995. The
number of marine containers owned by the Partnership has been declining over the
past twelve months due to sales and dispositions. The result of this declining
fleet has resulted in a decrease in marine container net contribution.
(B) Indirect expenses related to owned equipment operations
Total indirect expenses of $5.5 million were reported for the quarter ended June
30, 1996 and the same period in 1995. The offsetting variances are explained as
follows:
(a) A $0.7 million decrease in depreciation and amortization expenses from 1995
levels reflecting the sale of certain assets during 1996 and 1995, and the
double declining balance method of depreciation. These decreases were offset, in
part, by the purchase of two marine vessels during the first quarter of 1996;
(b) A $0.2 million increase in interest expense due to the increase in long term
debt of $9.0 million when compared to the same period of 1995;
(c) A $0.4 million increase in bad debt expenses due to an increase in the
amount due from certain lessees;
(d) A $0.1 million increase in administrative expenses due to higher
repositioning expenses incurred in relocating certain trailers to the PLM
affiliated short term rental yards, higher postage and consulting fees.
(C) Net gain on disposition of owned equipment
Net gain on disposition of equipment for the second quarter 1996 totaled $0.2
million which resulted from the sale of 2 aircraft engines, 60 marine containers
and 53 trailers with an aggregate net book value of $2.7 million, for proceeds
of $2.9 million. For the second quarter of 1995, the $6,000 net gain on
disposition of equipment resulted from the sale or disposal of 40 marine
containers and 19 trailers with an aggregate net book value of $186,000, for
aggregate proceeds of $192,000.
(D) Interest and other income
Interest and other income decreased $0.2 million during the second quarter of
1996 due primarily to the receipt of a business interruption claim for $0.2
million during 1995.
(E) Equity in net loss of unconsolidated special purpose entities represents a
net loss generated from the operation of jointly-owned assets accounted for
under the equity method (see Note 2 to the financial statements).
<TABLE>
<CAPTION>
For the three months
ended June 30,
1996 1995
----------------------------
<S> <C> <C>
Aircraft $ (482 ) $ (223 )
Marine vessels (97 ) (21 )
Mobile offshore drilling unit (51 ) (75 )
</TABLE>
Aircraft: As of June 30, 1996, the Partnership owned 64% of a Boeing 767
commercial aircraft and had acquired a partial beneficial interest in two trusts
which hold 12 commercial aircraft during the later half of 1995 and the first
quarter of 1996. As of June 30, 1995, the Partnership only owned the 64% of the
Boeing 767 commercial aircraft. During the second quarter of 1996, lease
revenues of $1.7 million were offset by depreciation and administrative expenses
of $2.2 million. During the same period of 1995, lease revenues of $0.8 million
were offset by depreciation and administrative expenses of $1.0 million.
Marine vessel: As of June 30, 1996, the Partnership owned a 20% interest in a
marine vessel and a 50% interest in a another marine vessel which was purchased
during the first quarter of 1996. As of June 30, 1995, the Partnership only
owned the 20% interest in the marine vessel. During the second quarter of 1996,
revenues of $0.5 million were offset by depreciation and administrative expenses
of $0.6 million. During the same period of 1995, revenues of $116,000 were
offset by depreciation and administrative expenses of $137,000.
Mobile offshore drilling unit: As of June 30, 1996 and 1995, the Partnership
owned a 45% interest in a mobile offshore drilling unit. Lease revenues
decreased $48,000 during 1996 due to a lower re-lease rate earned and expenses
decreased $72,000 due to lower depreciation expense.
(F) Net Loss
As a result of the foregoing, the Partnership's net loss of $1.4 million for the
second quarter of 1996, increased from a net loss of $0.7 million during the
same period in 1995. The Partnership's ability to operate and liquidate assets,
secure leases, and re-lease those assets whose leases expire during the duration
of the Partnership is subject to many factors and the Partnership's performance
in the second quarter of 1996 is not necessarily indicative of future periods.
In the second quarter of 1996, the Partnership distributed $4.1 million to the
Unitholders, or $0.50 per Depositary Unit.
Comparison of the Partnership's Operating Results for the Six Months Ended
June 30, 1996 and 1995
(A) Owned equipment operations
Lease revenues less direct expenses (defined as repairs and maintenance, marine
equipment operating, and asset specific insurance expenses) on owned equipment
decreased during the six months ended June 30, 1996 when compared to the same
period of 1995. The following table presents lease revenues less direct expenses
by owned equipment type (in thousands):
<TABLE>
<CAPTION>
For the six months
ended June 30,
1996 1995
----------------------------
<S> <C> <C>
Aircraft and aircraft engines $ 2,173 $ 2,345
Marine vessels 1,807 2,179
Trailers 1,615 2,110
Rail equipment 1,343 1,773
Marine containers 1,135 1,488
</TABLE>
Aircraft: Aircraft lease revenues and direct expenses were $2.3 million and 0.1
million, respectively, for the six months ended 1996, compared to $2.5 and $0.1
million, respectively during the same period of 1995. The decrease in aircraft
contribution was due to a lower re-lease rate earned on two aircraft engines
during the six months ended June 30, 1996 when compared to the same period
during 1995;
Marine vessels: Marine vessel lease revenues and direct expenses were $4.2
million and $2.4 million, respectively, for the six months ended 1996, compared
to $5.0 million and $2.8 million, respectively during the same period of 1995.
The decrease in marine vessel contribution was due to the sale of a marine
vessel during the first quarter of 1996 offset, in part by the purchase of two
marine vessels during the fourth quarter of 1995;
Trailers: Trailer lease revenues and direct expenses were $2.2 million and $0.6
million, respectively, for the six months ended 1996, compared to $2.6 million
and $0.5 million, respectively during the same period of 1995. The number of
trailers owned by the Partnership has been declining over the past twelve months
due to sales and dispositions. The result of this declining fleet has resulted
in a decrease in trailer net contribution. In addition, the trailer fleet is
experiencing lower utilization in the PLM affiliated short-term rental yards;
Rail equipment: Rail equipment lease revenues and direct expenses were $2.0
million and $0.7 million, respectively, for the six months ended 1996, compared
to $2.1 million and $0.3 million, respectively during the same period of 1995.
Although the rail fleet remained relatively the same size for both periods, the
decrease in rail contribution resulted from running repairs required on certain
of the railcars in the fleet during 1996 which were not needed during 1995;
Marine containers: Marine container lease revenues and expenses were $1.1
million and $6,000, respectively, for the six months ended 1996, compared to
$1.5 million and $14,000, respectively during the same period of 1995. The
number of marine containers owned by the Partnership has been declining over the
past twelve months due to sales and dispositions. The result of this declining
fleet has resulted in a decrease in marine container net contribution.
(B) Indirect expenses related to owned equipment operations
Total indirect expenses of $9.8 million for the six months ended June 30, 1996,
decreased from $11.0 million for the same period in 1995. The variances are
explained as follows:
(a) A $1.7 million decrease in depreciation and amortization expenses from 1995
levels reflecting the sale of certain assets during 1996 and 1995, and the
double declining balance method of depreciation. These decreases were offset, in
part, by the purchase of two marine vessels during the first quarter of 1996;
(b) A $0.2 million increase in interest expense due to the net increase in long
term debt of $9.0 million when compared to the same period of 1995;
(c) A $0.5 million increase in bad debt expenses due to an increase in the
amount due from certain lessees;
(d) A $0.2 million decrease in management fees due to lower revenues earned,
when compared to the same period of 1995.
(C) Net gain on disposition of owned equipment
Net gain on disposition of equipment for the six months ended June 30, 1996
totaled $6.5 million which resulted primarily from the sale of one marine vessel
which was held for sale as of December 31, 1995, with a net book value of $14.6
million at the date of sale for proceeds of $20.8 million. Included in the gain
of $6.3 million from the sale of the marine vessel, is the unused portion of
accrued drydocking of $0.1 million. Other equipment sold or disposed of included
106 marine containers, 54 trailers, 2 aircraft engines and 1 railcar with an
aggregate net book value of $2.7 million for proceeds of $3.0 million. Net gain
on disposition of equipment for the six months ended June 30, 1995, totaled
$15,000 which resulted from the sale or disposition of 167 marine containers, 26
trailers and 1 railcar with an aggregate net book value of $463,000 for proceeds
of $477,000.
(D) Interest and other income
Interest and other income decreased $64,000 during the six months ended June 30,
1996 due primarily to the receipt of a business interruption claim for $0.2
million during 1995. This reduction to other income was offset, in part, by an
increase in interest income due to higher cash balances available for
investments when compared to the same period of 1995.
(E) Equity in net loss of unconsolidated special purpose entities represents net
loss generated from the operation of jointly-owned assets accounted for under
the equity method (see Note 2 to the financial statements).
<TABLE>
<CAPTION>
For the six months
ended June 30,
1996 1995
----------------------------
<S> <C> <C>
Aircraft $ (929 ) $ (445 )
Marine vessels (71 ) (44 )
Mobile offshore drilling unit (82 ) (117 )
</TABLE>
Aircraft: As of June 30, 1996, the Partnership owned 64% of a Boeing 767
commercial aircraft and had acquired a partial beneficial interest in two trusts
which hold 12 commercial aircraft during the later half of 1995 and the first
quarter of 1996. As of June 30, 1995, the Partnership only owned the 64% of the
Boeing 767 commercial aircraft. During the six months ended June 30, 1996,
revenues of $2.8 million were offset by depreciation and administrative expenses
of $3.7 million. During the same period of 1995, revenues of $1.6 million were
offset by depreciation and administrative expenses of $2.0 million.
Marine vessel: As of June 30, 1996, the Partnership owned a 20% interest in a
marine vessel and a 50% interest in another marine vessel which was purchased
during the first quarter of 1996. As of June 30, 1995, the Partnership only
owned the 20% interest in the marine vessel. During the six months ended June
30, 1996, revenues of $0.8 million were offset by depreciation and
administrative expenses of $0.9 million. During the same period of 1995,
revenues of $232,000 were offset by depreciation and administrative expenses of
$276,000.
Mobile offshore drilling unit: As of June 30, 1996, the Partnership owned a
45%-interest in a mobile offshore drilling unit. Revenues of $0.5 million earned
during the six months ended June 30, 1996 were offset by depreciation and
administrative expenses of $0.6 million. During the same period of 1995,
revenues of $0.6 million were offset by depreciation and administrative expenses
of $0.7 million. Revenues decreased $84,000 due to a lower release rate earned.
Depreciation expense decreased $125,000 due to the double declining balance
method of depreciation.
(F) Net Income (Loss)
As a result of the foregoing, the Partnership's net income of $4.0 million for
the six months ended June 30, 1996, increased from a net loss of $1.5 million
during the same period in 1995. The Partnership's ability to operate and
liquidate assets, secure leases, and re-lease those assets whose leases expire
during the duration of the Partnership is subject to many factors and the
Partnership's performance in the six months ended June 30, 1996 is not
necessarily indicative of future periods. In the six months ended June 30, 1996,
the Partnership distributed $8.3 million to the Unitholders, or $1.00 per
Depositary Unit.
(II) FINANCIAL CONDITION - CAPITAL RESOURCES, LIQUIDITY, AND DISTRIBUTIONS
The General Partner purchased the Partnership's initial equipment portfolio with
capital raised from its initial equity offering, permanent debt financing of $30
million, and short-term debt of $11.2 million. No further capital contributions
from original partners are permitted under the terms of the Partnership's
Limited Partnership Agreement. The Partnership relies on operating cash flow to
meet its operating obligations, make cash distributions to partners, and
increase the Partnership's equipment portfolio with any remaining available
surplus cash.
For the six months ended June 30, 1996, the Partnership generated sufficient
operating cash to meet its operating obligations and maintain the current level
of distributions (total for six months ended June 30, 1996 of approximately $8.7
million) to the partners, but used undistributed available cash from prior
periods of $0.2 million. During the six months ended June 30, 1996, the General
Partner sold equipment for $23.4 million while reinvesting approximately $32.1
million (including capital improvements and fees).
The General Partner has entered into a joint $35 million credit facility (the
"Committed Bridge Facility") on behalf of the Partnership, PLM Equipment Growth
Fund III, PLM Equipment Growth Fund IV, PLM Equipment Growth Fund V, PLM
Equipment Growth & Income Fund VII and Professional Lease Management Income Fund
I ("Fund I"), all affiliated investment programs, TEC Acquisub, Inc. ("TECAI"),
an indirect wholly-owned subsidiary of the General Partner, and American Finance
Group (AFG), a subsidiary of PLM International, Inc., which may be used to
provide interim financing of up to (i) 70% of the aggregate book value or 50% of
the aggregate net fair market value of eligible equipment owned by the
Partnership or Fund I, plus (ii) 50% of unrestricted cash held by the borrower.
The Committed Bridge Facility became available on December 20, 1993, and was
amended and restated on May 31, 1996, to expire on May 23, 1997. The Committed
Bridge Facility also provides for a $5 million Letter of Credit Facility for the
eligible borrowers. Outstanding borrowings by Fund I, AFG, TECAI or PLM
Equipment Growth Funds III through VII reduce the amount available to each other
under the Committed Bridge Facility. Individual borrowings may be outstanding
for no more than 179 days, with all advances due no later than May 23, 1997. The
Committed Bridge Facility prohibits the Partnership from incurring any
additional indebtedness. Interest accrues at either the prime rate or adjusted
LIBOR plus 2.5% at the borrowers option and is set at the time of an advance of
funds. Borrowings by the Partnership are guaranteed by the General Partner. As
of August 9, 1996, the Partnership had $9,000,000 in outstanding borrowings
under the Committed Bridge Facility, TECAI had $23,911,000 in outstanding
borrowings. None of the other programs had any outstanding borrowings.
Under the terms of the Partnership's senior loan agreement, prior to accessing
the Committed Bridge Facility, the Partnership has to receive a waiver from the
holder of the note payable. During March 1996, the holder of the note payable
issued the required waiver to the Partnership enabling the Partnership to access
the Committed Bridge Facility.
(III) TRENDS
The Partnership's operation of a diversified equipment portfolio in a broad base
of markets is intended to reduce its exposure to volatility in individual
equipment sectors. Throughout 1995, and the first part of 1996, market
conditions, supply and demand equilibrium, and other factors varied in several
markets. In the container and refrigerated over-the-road trailer markets,
oversupply conditions, industry consolidations, and other factors resulted in
falling rates and lower returns. In the dry over-the-road trailer markets,
strong demand and a backlog of new equipment deliveries produced high
utilization and returns. The marine vessel, rail, and mobile offshore drilling
unit markets could be generally categorized by increasing rates as the demand
for equipment is increasing faster than new additions net of retirements.
Finally, demand for narrowbody Stage II aircraft, such as those owned by the
Partnership, has increased as expected savings from newer narrowbody aircraft
have not materialized and deliveries of the newer aircraft have slowed down.
These trends are expected to continue for the near term. These different markets
have had individual effects on the performance of Partnership equipment in some
cases resulting in declining performance, and in others, in improved
performance.
The ability of the Partnership to realize acceptable lease rates on its
equipment in the different equipment markets is contingent on many factors, such
as specific market conditions and economic activity, technological obsolescence,
governmental or other regulations, and others. The unpredictability of some of
these factors, or of their occurrence, makes it difficult for the General
Partner to clearly define trends or influences that may impact the performance
of the Partnership's equipment. The General Partner continuously monitors both
the equipment markets and the performance of the Partnership's equipment in
these markets. The General Partner may make an evaluation to reduce the
Partnership's exposure to equipment markets in which it determines that it
cannot operate equipment and achieve acceptable rates of return. Alternatively,
the General Partner may make a determination to enter equipment markets in which
it perceives opportunities to profit from supply-demand instabilities or other
market imperfections.
The Partnership intends to use excess cash flow, if any, after payment of
expenses, loan principal, and cash distributions to acquire additional equipment
during the first seven years of Partnership operations. The General Partner
believes these acquisitions may cause the Partnership to generate additional
earnings and cash flow for the Partnership.
(this space intentionally left blank)
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None.
(b) Reports on From 8-K
None.
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PLM EQUIPMENT GROWTH FUND VI
By: PLM Financial Services, Inc.
General Partner
Date: August 9, 1996 By: /s/ David J. Davis
------------------
David J. Davis
Vice President and
Corporate Controller
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 4,142
<SECURITIES> 0
<RECEIVABLES> 2,767
<ALLOWANCES> 1,055
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 116,063
<DEPRECIATION> (43,776)
<TOTAL-ASSETS> 124,642
<CURRENT-LIABILITIES> 2,186
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 80,192
<TOTAL-LIABILITY-AND-EQUITY> 124,642
<SALES> 0
<TOTAL-REVENUES> 18,733
<CGS> 0
<TOTAL-COSTS> 11,664
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 812
<INTEREST-EXPENSE> 1,211
<INCOME-PRETAX> 3,964
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,964
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,964
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
