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 March 31, 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>
March 31, December 31,
1996 1995
------------------------------------
<S> <C> <C>
Equipment held for operating leases $ 116,402 $ 106,453
Less accumulated depreciation (40,786) (41,382)
------------------------------------
75,616 65,071
Equipment held for sale 2,422 14,607
------------------------------------
Net equipment 78,038 79,678
Cash and cash equivalents 4,343 2,600
Restricted cash 1,298 1,298
Investments in unconsolidated special purpose entities 45,414 32,023
Accounts receivable, net of allowance for doubtful accounts
of $380 in 1996 and $245 in 1995 2,867 3,374
Prepaid expenses and other assets 160 227
Deferred charges, net of accumulated amortization of
$1,111 in 1996 and $1,010 in 1995 479 429
Equipment acquisition deposits -- 2,328
------------------------------------
Total assets $ 132,599 $ 121,957
====================================
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and accrued expenses $ 554 $ 852
Due to affiliates 1,934 3,205
Prepaid deposits and reserve for repairs 2,817 2,470
Short term note payable 11,220 --
Note payable 30,000 30,000
------------------------------------
Total liabilities 46,525 36,527
Partners' capital:
Limited Partners (8,290,017 Depositary Units at March 31,
1996 and 8,318,247 at December 31, 1995) 86,074 85,430
General Partner -- --
------------------------------------
Total partners' capital 86,074 85,430
------------------------------------
Total liabilities and partner's capital $ 132,599 $ 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
ended March 31,
1996 1995
--------------------------------
<S> <C> <C>
Revenue:
Lease revenue $ 5,355 $ 7,854
Interest and other income 229 93
Net gain on disposition of equipment 6,329 8
--------------------------------
Total revenues 11,913 7,955
Expenses:
Depreciation and amortization 2,973 5,460
Management fees to affiliate 293 430
Repairs and maintenance 779 607
Interest expense 524 497
Marine equipment operating expenses 705 825
Insurance expense to affiliate 59 204
Other insurance expense 199 124
General and administrative expenses
to affiliates 269 300
Other general and administrative
expenses 135 160
Provision for bad debts 133 75
--------------------------------
Total expenses 6,069 8,682
--------------------------------
Equity in net loss of unconsolidated
special purpose entities (452) --
------------------------------
Net income (loss) $ 5,392 $ (727)
================================
Partners' share of net income (loss):
Limited Partners $ 5,173 $ (946)
General Partner 219 219
--------------------------------
Total $ 5,392 $ (727)
================================
Net loss per Depositary Unit
(8,290,017 in 1996 and 8,318,247 in 1995) $ 0.62 $ (0.11)
================================
Cash distributions $ 4,374 $ 4,381
================================
Cash distributions per Depositary Unit $ 0.50 $ 0.50
================================
</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 March 31, 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 5,173 219 5,392
Repurchase of Depositary Units (374) -- (374)
Cash distributions (4,155) (219) (4,374)
---------------------------------------------------------
Partners' capital at March 31, 1996 $ 86,074 $ -- $ 86,074
=========================================================
</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 three months
ended March 31,
1996 1995
------------------------------------
<S> <C> <C>
Operating activities:
Net income (loss) $ 5,392 $ (727)
Adjustments to reconcile net income (loss) to
cash provided by operating activities:
Net gain on disposition of equipment (6,329) (8)
Cash distributions from unconsolidated special purpose entities
in excess of loss 849 --
Depreciation and amortization 2,973 5,460
Changes in operating assets and liabilities:
Accounts receivable 507 230
Prepaid expenses and other assets 67 120
Accounts payable and accrued expenses (298) (11)
Due to affiliates (446) 26
Prepaid deposits and reserve for repairs 462 235
------------------------------------
Cash provided by operating activities 3,177 5,325
------------------------------------
Investing activities:
Payments for purchase of equipment (13,699) (11)
Investment in and equipment purchased and placed in
unconsolidated special purpose entities (14,240) --
Payments of acquisition related fees to affiliate (675) --
Payments of lease negotiation fees to affiliate (150) --
Proceeds from disposition of equipment 20,858 285
------------------------------------
Cash (used in) provided by investing activities (7,906) 274
------------------------------------
Financing activities:
Proceeds from short term note payable 11,220 --
Repurchase of depositary units (374) --
Cash distributions paid to General Partner (219) (219)
Cash distributions paid to Limited Partners (4,155) (4,162)
------------------------------------
Cash provided by (used in) financing activities 6,472 (4,381)
------------------------------------
Net increase in cash and cash equivalents 1,743 1,218
Cash and cash equivalents at beginning of period 2,600 6,246
------------------------------------
Cash and cash equivalents at end of period $ 4,343 $ 7,464
====================================
Supplemental information:
Interest paid $ 677 $ 502
====================================
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM EQUIPMENT GROWTH FUND VI
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
March 31, 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 March 31, 1996, the
statements of operations and the statements of cash flows for the three months
ended March 31, 1996 and 1995, and the statements of changes in partners'
capital for the period December 31, 1994 to March 31, 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 has continued in
the first quarter of 1996.
Prior to 1996, the Partnership accounted for operating activities associated
with joint ownership of rental 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 three months ended March 31, 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.
During March 1996, the Partnership 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
March 31, 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>
March 31, December 31,
% Ownership Equipment 1996 1995
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
64% 767-200ER commercial aircraft $ 17,836 $ 18,674
14% Canadian Air Trust 3,671 3,962
40% Canadian Air Trust 10,922 --
45% Mobile offshore drilling unit 6,602 6,633
20% Handymax bulk carrier 2,423 2,376
50% Feeder vessel 3,960 378
----------------------------------
Net investments $ 45,414 $ 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 March
31, 1996, the Partnership repurchased 28,230 Depositary Units for $374,000 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>
March 31, December 31,
1996 1995
-----------------------------------
<S> <C> <C>
Aircraft $ 11,918 $ 11,918
Marine vessels 41,077 25,228
Trailers 18,718 18,675
Aircraft engines and components 12,140 17,992
Marine containers 16,882 16,984
Rail equipment 15,667 15,656
-----------------------------------
116,402 106,453
Less accumulated depreciation (40,786) (41,382)
-----------------------------------
75,616 65,071
Equipment held for sale 2,422 14,607
-----------------------------------
Net equipment $ 78,038 $ 79,678
===================================
</TABLE>
As of March 31, 1996, all of the equipment was on lease or operating in
PLM-affiliated short-term trailer rental facilities, except for two aircraft
engines and 27 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 $2.8
million and $2.5 million at March 31, 1996, and December 31, 1995, respectively.
During March 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.
<PAGE>
PLM EQUIPMENT GROWTH FUND VI
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
March 31, 1996
4. Equipment (continued)
During the three months ended March 31, 1996, 46 marine containers and 1 trailer
with an aggregate net book value of $37,000 were disposed of or sold, and the
Partnership received proceeds of $100,000. 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 three months ended March 31, 1995, 117 marine containers with a
net book value of $168,000, one railcar with a net book value of $17,000, and
seven trailers with a net book value of $92,000 were disposed of or sold and the
Partnership received aggregate proceeds of $285,000.
5. Cash Distributions
Cash distributions are recorded when paid and totaled $4.4 million for the
three months ended March 31, 1996. Cash distributions to Unit holders in excess
of net income are considered to represent a return of capital using the
Generally Accepted Accounting Principles (GAAP) basis. None of the cash
distributions to the Limited Partners for the three months ended March 31, 1996,
were deemed to be a return of capital. Cash distributions to the Limited
Partners of $3.2 million for the three months ended
March 31, 1995, were deemed to be a return of capital. Cash distributions
related to the first quarter results of $2.4 million were paid or are payable
during April and May 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 $25 million credit facility (the
"Committed Bridge Facility") on behalf of the Partnership, PLM Equipment Growth
Fund II, 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,
and TEC Acquisub, Inc. ("TECAI"), an indirect wholly-owned subsidiary of the
General Partner, 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 September 27,
1995 to expire on September 30, 1996. The Committed Bridge Facility also
provides for a $5 million Letter of Credit Facility for the eligible borrowers.
Outstanding borrowings by Fund I, TECAI or PLM Equipment Growth Funds II 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 September 30, 1996. 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 March 31, 1996, the
Partnership had $11,220,000 in outstanding borrowings under the Committed Bridge
Facility, PLM Equipment Growth Fund V had $5,610,000 and TECAI had $7,706,000 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.
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
March 31, 1996 and 1995
(A) Revenues
Total revenues of $11.9 million for the quarter ended March 31, 1996 increased
from $8.0 million for the same period in 1995. This increase in 1996 revenues
was primarily attributable to the Partnership recognizing a large gain on the
sale of equipment offset, in part, by lower lease revenues when compared to
1995.
(1) The Partnership's lease revenue decreased to $5.4 million in the first
quarter of 1996 from $7.9 million when compared to the first quarter of 1995.
The following table presents lease revenues earned by equipment type (in
thousands):
For the three months
ended March 31,
1996 1995
-------------------------------
Aircraft $ 1,155 $ 1,953
Marine vessels 1,572 2,552
Trailers 1,051 1,322
Rail equipment 997 1,044
Marine containers 580 670
Mobile offshore drilling unit -- 313
-------------------------------
$ 5,355 $ 7,854
===============================
Although net income was not affected by the change in accounting for investments
in unconsolidated special purpose entities (see note 2 to financial statements),
lease revenues attributable to unconsolidated special purpose entities totaled
$1.7 million in the first quarter of 1996, which included $1.1 million, $0.3
million, and $0.3 million in aircraft, marine vessels and mobile offshore
drilling unit revenue, respectively, which represented revenues for
jointly-owned assets (refer to the "Equity in net loss of unconsolidated special
purpose entities" section below). The remaining changes in 1996 lease revenues
from owned equipment are explained below:
(a) the decrease of $0.7 million in marine vessel revenues is due to a
number of factors:
(a-1) Revenues decreased $0.9 million during the first quarter
1996 due to the sale of one marine vessel which was operating under a time
charter during the same period of 1995;
(a-2) Revenues increased $0.1 million due to the purchase of two
marine vessels during the first quarter of 1996;
(a-3) Revenues increased $0.1 million during the first quarter
1996 due to higher time charter rates earned by two marine vessels when compared
to the same period of 1995;
(b) a decrease of $0.3 million in trailer revenues is due primarily to
lower utilization earned by the trailers in the PLM affiliated short term rental
yards during the first quarter of 1996, when compared to the same period in
1995, and the sale of 50 trailers which were on lease during 1995;
(c) the decrease of $0.1 million in marine container revenues was due
primarily to fewer containers on lease during the first quarter of 1996, due to
the sale and disposals of containers throughout 1995, when compared to the first
quarter of 1995.
(2) Interest and other income increased $0.1 million during the first quarter
1996 due primarily to higher cash balances available for investments when
compared to the same period of 1995.
(3) Net gain on disposition of equipment during the first quarter of 1996,
was realized on the disposal of 46 marine containers and 1 trailer with an
aggregate net book value of $37,000 for proceeds of $100,000. 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. Net gain on
disposition of equipment during the first quarter of 1995 was realized on the
disposal of 117 marine containers with a net book value of $168,000, one railcar
with a net book value of $17,000, and seven trailers with a net book value of
$92,000 for proceeds of $285,000.
(B) Expenses
Total expenses of $6.1 million for the quarter ended March 31, 1996, decreased
from $8.7 million for the same period in 1995. The decrease in 1996 expenses was
primarily attributable to a reduction in depreciation and marine equipment
operating expense, partially offset by an increase in repairs and maintenance.
Although net income was not affected by the change in accounting for investments
in special purpose entities, expenses attributable to unconsolidated special
purpose entities totaled $2.1 million in the first quarter of 1996, which
included $1.9 million, $0.1 million, and $0.1 million in depreciation and
amortization, management fees and administrative and other expenses,
respectively, which represented expenses for jointly-owned assets (refer to the
"Equity in net loss of unconsolidated special purpose entities" section below).
The remaining changes in 1996 expenses for owned equipment are explained below:
(1) Direct operating expenses (defined as repairs and maintenance, insurance
expenses, and marine equipment operating expenses) remained the same at $1.7
million for the quarter ending 1996 and the same period of 1995, however, there
was a change between the components which make up this expense. The component
changes resulted primarily from the following:
(a) an increase of $0.2 million in repairs and maintenance was the result
of required running repairs of $0.1 million made to the railcars during the
quarter ending 1996, which were not required during the same period of 1995; and
an increase of $0.1 million in marine vessel repairs due to one marine vessel
which was on hire the full first quarter of 1996 compared to being offhire for
20 days during 1995;
(b) the decrease in marine equipment operating expenses of $0.1 million was
the result of a marine vessel which was sold in 1996 which was operating during
the same period of 1995;
(c) there was a small decrease in insurance expenses which was also due to
the sale of a marine vessel during 1996 which was in operation during the same
period of 1995.
(2) Indirect operating expenses (defined as depreciation and amortization
expense, management fees, interest expense, bad debt expense, and general and
administrative expenses) decreased to $4.3 million in the first quarter of 1996,
from $6.9 million during the first quarter of 1995. This change resulted
primarily from:
(a) a decrease in depreciation and amortization expense of $0.6 million
from 1995 levels reflecting the Partnership's double-declining depreciation
method and the sale of a marine vessel during 1996.
(b) a decrease of $64,000 in management fees is the result of lower lease
revenues earned by the Partnership during the three months ended March 31, 1996,
when compared to the same period in 1995;
(c) an increase of $58,000 in bad debt expense over the same period in
1995, is due to an increase in the amount due from certain lessees.
(C) Equity in net loss of unconsolidated special purpose entities
Equity in net loss of unconsolidated special purpose entities represent the net
loss generated from jointly-owned assets accounted for under the equity method
(see note 2 to financial statements).
At March 31 1996 and 1995, the Partnership's interests in jointly owned assets
included an aircraft, two marine vessels, and a mobile offshore drilling unit.
The revenues generated by this equipment increased $0.1 million due to the
change in the lease of the marine vessel from bareboat charter to time charter
and the purchase of a 50% ownership in a marine vessel. Marine operating
expenses also increased $0.1 million due to the change from bareboat charter in
which the lessee pays for operating expenses, to a time charter in which the
Partnership pays for certain operating expenses.
As of March 31 1996, the Partnership had acquired a partial beneficial interest
in two trusts which hold 12 commercial aircraft. Revenues earned by these trusts
of $0.3 million were offset by depreciation expense of $0.7 million.
(D) Net income (loss)
The Partnership's net income of $5.4 million in the first quarter of 1996,
increased from a net loss of $0.7 million in the first quarter of 1995. The
Partnership's ability to acquire, operate, or 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
first quarter of 1996, is not necessarily indicative of future periods. In the
first quarter of 1996, the Partnership distributed $4.2 million to the Limited
Partners, or $0.50 per Limited Partnership 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 three months ended March 31, 1996, the Partnership generated sufficient
operating cash to meet its operating obligations and maintain the current level
of distributions (total for three months ended March 31, 1996 of approximately
$4.4 million) to the partners, but used undistributed available cash from prior
periods of $0.2 million. During the three months ended March 31, 1996, the
General Partner sold equipment for $20.9 million while reinvesting approximately
$27.1 million (including capital improvements and fees).
The General Partner has entered into a joint $25 million credit facility (the
"Committed Bridge Facility") on behalf of the Partnership, PLM Equipment Growth
Fund II, 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,
and TEC Acquisub, Inc. ("TECAI"), an indirect wholly-owned subsidiary of the
General Partner, 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 September 27,
1995, to expire on September 30, 1996. The Committed Bridge Facility also
provides for a $5 million Letter of Credit Facility for the eligible borrowers.
Outstanding borrowings by Fund I, TECAI or PLM Equipment Growth Funds II 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 September 30, 1996. 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 March 31, 1996, the
Partnership had $11,220,000 in outstanding borrowings under the Committed Bridge
Facility, PLM Equipment Growth Fund V had $5,610,000 and TECAI had $7,706,000 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.
The General Partner is in negotiation to renew the Committed Bridge Facility and
believes it will successfully negotiate an extension of the Committed Bridge
Facility prior to expiration on terms, at least as favorable as those in the
current 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: May 14, 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 4,343
<SECURITIES> 0
<RECEIVABLES> 2,867
<ALLOWANCES> 380
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 116,402
<DEPRECIATION> (40,786)
<TOTAL-ASSETS> 132,599
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 86,074
<TOTAL-LIABILITY-AND-EQUITY> 132,599
<SALES> 0
<TOTAL-REVENUES> 11,913
<CGS> 0
<TOTAL-COSTS> 5,545
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 524
<INCOME-PRETAX> 5,392
<INCOME-TAX> 0
<INCOME-CONTINUING> 5,392
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,392
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
