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 September 30, 1998
[ ] 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 800, 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 ____
PLM EQUIPMENT GROWTH FUND VI
(A Limited Partnership)
BALANCE SHEETS
(in thousands of dollars, except unit amounts)
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
--------------------------------------
<S> <C> <C>
Assets
Equipment held for operating lease, at cost $ 84,716 $ 71,597
Less accumulated depreciation (41,058 ) (33,895)
--------------------------------------
Net equipment 43,658 37,702
Cash and cash equivalents 12,253 14,204
Restricted cash 710 792
Accounts receivable, less allowance for doubtful accounts
of $2,308 in 1998 and $2,524 in 1997 1,533 2,560
Investments in unconsolidated special-purpose entities 34,511 46,796
Net investment in direct finance lease 70 153
Prepaid expenses and other assets 37 181
Deferred charges, net of accumulated amortization of
$318 in 1998 and $212 in 1997 384 238
Equipment acquisition deposits -- 1,335
--------------------------------------
Total assets $ 93,156 $ 103,961
======================================
Liabilities and partners' capital
Liabilities:
Accounts payable and accrued expenses $ 687 $ 1,296
Due to affiliates 2,843 2,822
Lessee deposits and reserve for repairs 1,096 2,691
Note payable 30,000 30,000
--------------------------------------
Total liabilities 34,626 36,809
--------------------------------------
Partners' capital:
Limited partners (8,206,340 limited partnership units as of
September 30, 1998 and 8,247,264 as of December 31, 1997) 58,530 67,152
General Partner -- --
--------------------------------------
Total partners' capital 58,530 67,152
--------------------------------------
Total liabilities and partners' capital $ 93,156 $ 103,961
======================================
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM EQUIPMENT GROWTH FUND VI
(A Limited Partnership)
STATEMENTS OF OPERATIONS
(in thousands of dollars, except weighted-average unit amounts)
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1998 1997 1998 1997
----------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues
Lease revenue $ 4,816 $ 5,687 $ 13,376 $ 17,070
Interest and other income 181 124 507 370
Net gain (loss) on disposition of equipment 1,325 (103) 6,246 (98)
------------------------------------------------------------------
Total revenues 6,322 5,708 20,129 17,342
------------------------------------------------------------------
Expenses
Depreciation and amortization 3,755 2,529 10,749 7,676
Management fees to affiliate 274 296 754 926
Repairs and maintenance 906 1,085 2,641 2,834
Equipment operating expense 414 996 1,714 2,808
Interest expense 503 686 1,515 1,700
Insurance expense to affiliate -- 34 (127 ) 145
Other insurance expense 42 249 254 622
General and administrative expenses
to affiliates 175 244 619 636
Other general and administrative expenses 186 451 682 1,277
Loss on revaluation of equipment 4,276 -- 4,276 --
Provision for bad debts 104 374 260 429
------------------------------------------------------------------
Total expenses 10,635 6,944 23,337 19,053
------------------------------------------------------------------
Equity in net income (loss) of unconsol-
idated special-purpose entities (795) (111 ) 6,774 (61)
------------------------------------------------------------------
Net income (loss) $ (5,108) $ (1,347 ) $ 3,566 $ (1,772)
==================================================================
Partners' share of net income (loss)
Limited partners $ (5,281) $ (1,564 ) $ 2,960 $ (2,424)
General Partner 173 217 606 652
------------------------------------------------------------------
Total $ (5,108) $ (1,347 ) $ 3,566 $ (1,772)
==================================================================
Net income (loss) per weighted-average
limited partnership unit $ (0.64) $ (0.19 ) $ 0.36 $ (0.29)
==================================================================
Cash distributions $ 3,106 $ 4,340 $ 11,771 $ 13,045
==================================================================
Cash distributions per weighted-average
limited partnership unit $ 0.36 $ 0.50 $ 1.36 $ 1.50
==================================================================
</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, 1996
to September 30, 1998
(in thousands of dollars)
<TABLE>
<CAPTION>
Limited General
Partners Partner Total
----------------------------------------------------------
<S> <C> <C> <C>
Partners' capital as of December 31, 1996 $ 75,790 $ -- $ 75,790
Net income 8,363 869 9,232
Repurchase of limited partnership units (486) -- (486)
Cash distribution (16,515) (869) (17,384)
------------------------------------------------------------
Partners' capital as of December 31, 1997 67,152 -- 67,152
Net income 2,960 606 3,566
Repurchase of limited partnership units (417) -- (417)
Cash distribution (11,165) (606) (11,771)
------------------------------------------------------------
Partners' capital as of September 30, 1998 $ 58,530 $ -- $ 58,530
============================================================
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM EQUIPMENT GROWTH FUND VI
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
(in thousands of dollars)
<TABLE>
<CAPTION>
For the Nine Months
Ended September 30,
1998 1997
---------------------------
<S> <C> <C>
Operating activities
Net income (loss) $ 3,566 $ (1,772 )
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Net (gain) loss on disposition of equipment (6,246) 98
Equity in net (income) loss from unconsolidated
special-purpose entities (6,774) 61
Depreciation and amortization 10,749 7,676
Loss on revaluation of equipment 4,276 --
Changes in operating assets and liabilities:
Restricted cash 82 (131 )
Accounts receivable, net 750 (98 )
Prepaid expenses and other assets 144 159
Accounts payable and accrued expenses (327) (179 )
Due to affiliates 21 500
Lessee deposits and reserve for repairs (177) 746
-----------------
---------------
Net cash provided by operating activities 6,064 7,060
-------------------------------
Investing activities
Payments for equipment purchases and capital improvements (23,836) (11 )
Investment in and equipment purchased and placed in
unconsolidated special-purpose entities (3,778) (10,603 )
Distributions from unconsolidated special-purpose entities 6,158 5,198
Distributions from liquidation of unconsolidated
special-purpose entities 16,679 --
Payments of acquisition fees to affiliate (1,132) --
Payments of lease negotiation fees to affiliate (251) --
Principal payments on direct finance lease 74 59
Proceeds from disposition of equipment 10,259 1,187
-------------------------------
Net cash provided by (used in) investing activities 4,173 (4,170 )
-------------------------------
Financing activities
Proceeds from short-term note payable -- 10,551
Payments of short-term note payable -- (1,837 )
Proceeds from short-term loan from affiliate -- 1,000
Payment of short-term loan from affiliate -- (1,000 )
Cash distribution paid to limited partners (11,165) (12,393 )
Cash distribution paid to General Partner (606) (652 )
Repurchase of limited partnership units (417) (486 )
-------------------------------
Net cash used in financing activities (12,188) (4,817 )
-------------------------------
Net decrease in cash and cash equivalents (1,951) (1,927 )
Cash and cash equivalents at beginning of period 14,204 3,017
---------------
-----------------
Cash and cash equivalents at end of period $ 12,253 $ 1,090
===============================
Supplemental information
Interest paid $ 1,515 $ 1,665
===============================
Supplemental disclosure of noncash investing and financing activities:
Sale proceeds included in accounts receivable $ 5 $ 43
===============================
</TABLE>
See accompanying notes to financial
statements.
<PAGE>
PLM EQUIPMENT GROWTH FUND VI
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
September 30, 1998
1. Opinion of Management
In the opinion of the management of PLM Financial Services, Inc. (FSI or the
General Partner), the accompanying unaudited financial statements contain all
adjustments necessary, consisting primarily of normal recurring accruals, to
present fairly the financial position of PLM Equipment Growth Fund VI (the
Partnership) as of September 30, 1998 and December 31, 1997, the statements of
operations for the three and nine months ended September 30, 1998 and 1997, the
statements of cash flows for the nine months ended September 30, 1998 and 1997,
and the statements of changes in partners' capital for the period from December
31, 1996 to September 30, 1998. Certain information and note 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, 1997, on file with
the Securities and Exchange Commission.
2. Repurchase of Limited Partnership Units
In 1997, the Partnership agreed to repurchase up to 47,000 limited partnership
units in 1998 for an aggregate purchase price of up to a maximum of $0.5
million. During the nine months ended September 30, 1998, the Partnership had
repurchased 40,924 limited partnership units for $0.4 million. The General
Partner may repurchase the additional units in the future.
3. Cash Distributions
Cash distributions are recorded when paid and totaled $3.1 million and $11.8
million for the three and nine months ended September 30, 1998 and $4.3 million
and $13.0 million for the three and nine months ended September 30, 1997. Cash
distributions to limited partners in excess of net income are considered to
represent a return of capital. Cash distributions to the limited partners of
$8.2 million and $12.4 million for the nine months ended September 30, 1998 and
1997, respectively, were deemed to be a return of capital. Cash distributions
related to the results from the third quarter of 1998, of $1.6 million, are to
be paid during the fourth quarter of 1998.
4. Transactions with General Partner and Affiliates
The Partnership's proportional share of the affiliated expenses incurred by the
unconsolidated special-purpose entities (USPEs) during 1998 and 1997 is listed
in the following table (in thousands of dollars):
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1998 1997 1998 1997
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Management fees $ 113 $ 125 $ 365 $ 319
Data processing and administrative
expenses 38 32 113 85
Insurance expense 5 6 6 27
</TABLE>
Transportation Equipment Indemnity Company, Ltd. (TEI), an affiliate of the
General Partner, provided certain marine insurance coverage for the
Partnership's equipment and other insurance brokerage services during 1998 and
1997. TEI did not provide the same level of insurance coverage during 1998 as
had been provided during 1997. These services were provided by an unaffiliated
third party.
During 1998, the Partnership received a $0.1 million loss-of-hire insurance
refund from TEI due to lower claims from the insured Partnership and other
insured affiliated partnerships.
<PAGE>
PLM EQUIPMENT GROWTH FUND VI
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
September 30, 1998
4. Transactions with General Partner and Affiliates (continued)
The Partnership's balance due to affiliates as of September 30, 1998 included
$0.2 million due to FSI and its affiliates for management fees and $2.7 million
due to affiliated USPEs. The balance due to affiliates as of December 31, 1997
included $0.3 million due to FSI and its affiliates for management fees and $2.5
million due to an affiliated USPE.
The Partnership's proportional share of USPE-affiliated management fees of
$49,000 and $0.1 million was payable as of September 30, 1998 and December 31,
1997, respectively.
During the nine months ended September 30, 1998, the Partnership purchased an
MD-82 commercial aircraft at a cost of $13.4 million, a marine vessel for $9.6
million, and a portfolio of aircraft rotable components for $2.2 million, and
paid FSI $1.4 million for acquisition and lease negotiation fees. In addition,
FSI earned $0.2 million in acquisition and lease negotiation fees for the $1.2
million hushkit installed on an aircraft in a USPE and the purchase of $2.4
million in marine containers in another USPE.
5. Equipment
Owned equipment held for operating lease is stated at cost. The components of
owned equipment held for operating leases are as follows (in thousands of
dollars):
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
-------------------------------------
<S> <C> <C>
Marine vessels $ 26,094 $ 16,035
Aircraft and rotable components 21,630 11,919
Rail equipment 15,608 15,657
Trailers 13,586 16,203
Marine containers 7,798 11,783
------------- --------------
84,716 71,597
Less accumulated depreciation (41,058 ) (33,895)
------------- --------------
Net equipment $ 43,658 $ 37,702
============= ==============
</TABLE>
As of September 30, 1998, all of the equipment was on lease or operating in
PLM-affiliated short-term trailer rental facilities, except for 70 marine
containers and 6 railcars. As of December 31, 1997, all of the equipment was on
lease or operating in PLM-affiliated short-term trailer rental facilities,
except for 92 marine containers and a railcar. The net book value of the
off-lease equipment was $0.2 million and $0.4 million as of September 30, 1998
and December 31, 1997, respectively.
During the nine months ended September 30, 1998, the Partnership completed the
purchase of an MD-82 Stage III commercial aircraft for $14.0 million, including
acquisition fees of $0.6 million paid to FSI for the purchase of this equipment.
The Partnership made a deposit of $1.3 million toward this purchase in 1997,
which is included in the December 31, 1997 balance sheet as equipment
acquisition deposit. Additionally, the Partnership purchased a portfolio of
aircraft rotable components for $2.3 million, including acquisition fees of $0.1
million paid to FSI for the purchase of this equipment, and a marine vessel for
$10.1 million, including acquisition fees of $0.4 million that were paid to FSI
for the purchase of this equipment.
During the nine months ended September 30, 1998, the Partnership disposed of or
sold a Boeing 737-200 commercial aircraft, an aircraft engine, marine
containers, trailers, and railcars, with an aggregate net book value of $5.4
million, for $11.7 million which includes $1.4 million of unused engine
reserves.
<PAGE>
PLM EQUIPMENT GROWTH FUND VI
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
September 30, 1998
5. Equipment (continued)
During the nine months ended September 30, 1997, the Partnership disposed of or
sold marine containers and trailers, with an aggregate net book value of $1.3
million, for $1.2 million.
During the nine months ended September 30, 1998, the Partnership reduced the
carrying value of 139 marine containers by $0.2 million and two marine vessels
by $4.1 million to the equipment's estimated realizable value.
6. Investments in Unconsolidated Special-Purpose Entities
The net investments in USPEs include the following jointly-owned equipment and
related assets and liabilities (in thousands of dollars):
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
---------------------------------
<S> <C> <C>
64% interest in a trust owning a 767-200ER commercial aircraft $ 11,492 $ 12,854
53% interest in an entity owning a product tanker 8,470 9,881
30% interest in an entity owning a mobile offshore drilling unit 4,500 5,050
40% interest in a trust owning two commercial aircraft on direct
finance lease 4,435 4,581
24% interest in an entity owning marine containers 2,494 --
50% interest in an entity owning a container feeder vessel 1,466 2,812
20% interest in an entity owning a handymax bulk carrier 1,345 1,513
50% interest in a trust that owned four 737-200A commercial aircraft 309 6,614
17% interest in a trust that owned a commercial aircraft -- 3,491
Net investments $ 34,511 $ 46,796
============= =============
</TABLE>
As of September 30, 1998 and December 31, 1997, the Partnership had an interest
in trusts that own multiple aircraft (the Trusts). One of these Trusts contained
provisions, under certain circumstances, for allocating specific aircraft to the
beneficial owners. During the nine months ended September 30, 1998, the
Partnership increased its investment in a trust owning four commercial aircraft
by funding the installation of a hushkit on an aircraft assigned to the
Partnership in the trust for $1.3 million, including acquisition and lease
negotiation fees of $0.1 million that were paid to FSI. In this Trust, the
Partnership subsequently sold the two commercial aircraft assigned to it with a
net book value of $6.2 million for proceeds of $13.1 million.
During the nine months ended September 30, 1998, the Partnership also purchased
an interest in an entity owning 4,912 marine containers for $2.5 million,
including acquisition and lease negotiation fees of $0.1 million that were paid
to FSI. The remaining interest in this entity was purchased by an affiliated
program.
In September 1998, the Partnership reduced its interest in an entity owning a
container feeder vessel by $1.0 million to its net realizable value.
During January 1998, the Partnership received the remaining liquidating proceeds
of $3.5 million from the sale of its 17% interest in a trust that owned a
commercial aircraft sold in 1997.
<PAGE>
PLM EQUIPMENT GROWTH FUND VI
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
September 30, 1998
7. Debt
The General Partner entered into a short-term, joint $50.0 million credit
facility which is due to expire on November 2, 1998. This facility was amended
on June 1, 1998 to temporarily increase the borrowing capacity of American
Finance Group, Inc. (AFG), a subsidiary of PLM International, Inc., from $50.0
million to $55.0 million until September 1, 1998. On June 8, 1998, this facility
was amended again to temporarily increase AFG's borrowing capacity from $55.0
million to $60.0 million until July 8, 1998. As of September 30, 1998, the
Partnership had no borrowing under the short-term joint $50.0 million credit
facility. Among the other eligible borrowers, AFG had borrowings of $44.2
million, and TEC Acquisub, Inc., an indirect wholly-owned subsidiary of PLM
International, Inc., had borrowings of $0.3 million under the short-term joint,
$50.0 million credit facility as of September 30, 1998. No other eligible
borrower had any outstanding borrowings.
The General Partner believes it will renew the credit facility upon its
expiration with similar terms as those in the current credit facility.
8. Net Income (Loss) Per Weighted-Average Partnership Unit
Net income (loss) per weighted-average Partnership unit was computed by dividing
net income (loss) attributable to limited partners by the weighted-average
number of Partnership units deemed outstanding during the period. The
weighted-average number of Partnership units deemed outstanding during the three
and nine months ended September 30, 1998 was 8,219,887 and 8,206,339,
respectively. The weighted-average number of Partnership units deemed
outstanding during the three and nine months ended September 30, 1997 was
8,260,602 and 8,247,265, respectively.
9. Contingencies
PLM International, Inc., (the Company) and various of its affiliates are named
as defendants in a lawsuit filed as a class action on January 22, 1997 in the
Circuit Court of Mobile County, Mobile, Alabama, Case No. CV-97-251 (the Koch
action). The plaintiffs, who filed the complaint on their own and on behalf of
all class members similarly situated, are six individuals who allegedly invested
in certain California limited partnerships (the Funds) for which the Company's
wholly-owned subsidiary, FSI, acts as the general partner, including the
Partnership, PLM Equipment Growth Funds IV, and V, and PLM Equipment Growth &
Income Fund VII. The complaint asserts eight causes of action against all
defendants, as follows: fraud and deceit, suppression, negligent
misrepresentation and suppression, intentional breach of fiduciary duty,
negligent breach of fiduciary duty, unjust enrichment, conversion, and
conspiracy. Additionally, plaintiffs allege a cause of action against PLM
Securities Corp. for breach of third party beneficiary contracts in violation of
the National Association of Securities Dealers rules of fair practice.
Plaintiffs allege that each defendant owed plaintiffs and the class certain
duties due to their status as fiduciaries, financial advisors, agents, and
control persons. Based on these duties, plaintiffs assert liability against the
defendants for improper sales and marketing practices, mismanagement of the
Funds, and concealing such mismanagement from investors in the Funds.
Plaintiffs seek unspecified compensatory and recissory damages, as well as
punitive damages, and have offered to tender their limited partnership units
back to the defendants.
In March 1997, the defendants removed the Koch action from the state court to
the United States District Court for the Southern District of Alabama, Southern
Division (Civil Action No. 97-0177-BH-C) based on the district court's diversity
jurisdiction, following which plaintiffs filed a motion to remand the action to
the state court. In September 1997, the district court denied plaintiffs' motion
and dismissed without prejudice the individual claims of the California class
representative, reasoning that he had been fraudulently joined as a plaintiff.
In October 1997, defendants filed a motion to compel arbitration of plaintiffs'
claims, based on an agreement to arbitrate contained in the limited partnership
agreement of each Funds, and to stay further proceedings pending the outcome of
such arbitration. Notwithstanding plaintiffs' opposition, the district court
granted the motion in December 1997.
<PAGE>
PLM EQUIPMENT GROWTH FUND VI
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
September 30, 1998
9. Contingencies (continued)
Following various unsuccessful requests that the district court reverse or
otherwise amend its decisions, plaintiffs filed with the U.S. Court of Appeals
for the Eleventh Circuit a notice of appeal from the district court's order
granting defendants' motion to compel arbitration and to stay the proceedings,
and of the district court's order denying plaintiffs' motion to remand and
dismissing the claims of the California plaintiff. This appeal was voluntarily
dismissed by plaintiffs in June 1998 pending settlement of the Koch action, as
discussed below.
On June 5, 1997, the Company and the affiliates who are also defendants in the
Koch action were named as defendants in another purported class action filed in
the San Francisco Superior Court, San Francisco, California, Case No. 987062
(the Romei action). The plaintiff is an investor in PLM Equipment Growth Fund V,
and filed the complaint on her own behalf and on behalf of all class members
similarly situated who invested in certain California limited partnerships for
which FSI acts as the general partner, including the Funds. The complaint
alleges the same facts and the same nine causes of action as in the Koch action,
plus five additional causes of action against all of the defendants, as follows:
violations of California Business and Professions Code Sections 17200, et seq.
for alleged unfair and deceptive practices, constructive fraud, unjust
enrichment, violations of California Corporations Code Section 1507, and a claim
for treble damages under California Civil Code Section 3345.
On July 31, 1997, the defendants filed with the district court for the Northern
District of California (Case No. C-97-2847 WHO) a petition (the petition) under
the Federal Arbitration Act seeking to compel arbitration of plaintiff's claims
and for an order staying the state court proceedings pending the outcome of the
arbitration. In connection with this motion, plaintiff agreed to a stay of the
state court action pending the district court's decision on the petition to
compel arbitration. In October 1997, the district court denied the Company's
petition to compel arbitration and in November 1997, agreed to hear the
Company's motion for reconsideration of this order. The hearing on this motion
has been taken off calendar and the district court has dismissed the petition
pending settlement of the Romei action, as discussed below. The state court
action continues to be stayed pending such resolution. In connection with her
opposition to the petition to compel arbitration, the plaintiff filed an amended
complaint with the state court in August 1997 alleging two new causes of action
for violations of the California Securities Law of 1968 (California Corporations
Code Sections 25400 and 25500) and for violation of California Civil Code
Sections 1709 and 1710. Plaintiff also served certain discovery requests on
defendants. Because of the stay, no response to the amended complaint or to the
discovery is currently required.
In May 1998, all parties to the Koch and Romei actions entered into a memorandum
of understanding (MOU) related to the settlement of those actions. The MOU
contemplates a settlement and release of all claims in exchange for payment of
up to $6.0 million. The final settlement amount will depend on the number of
authorized claims filed by authorized claimants, the amount of the
administrative costs incurred in connection with the settlement, and the amount
of attorneys' fees awarded by the Alabama district court. The Company will pay
up to $0.3 million of the settlement, with the remainder being funded by an
insurance policy. The defendants will continue to deny each of the claims and
contentions and admit no liability in connection with the proposed settlement.
The settlement remains subject to numerous conditions, including but not limited
to (a) agreement and execution by the parties of a settlement agreement, (b)
notice to and certification of the class for settlement purposes and (c)
preliminary and final approval of the settlement by the Alabama district court.
The Company continues to believe that the allegations of the Koch and Romei
actions are completely without merit and intends to continue to defend this
matter vigorously if the settlement is not consummated.
10. Subsequent Event
The General Partner received a commitment letter dated October 29, 1998 from the
lender of the short-term credit facility extending the credit facility to
November 1, 1999. The terms of the credit facility remained substantially the
same as the previous credit facility.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
(I) RESULTS OF OPERATIONS
Comparison of PLM Equipment Growth Fund VI's (the Partnership's) Operating
Results for the Three Months Ended September 30, 1998 and 1997
(A) Owned Equipment Operations
Lease revenues less direct expenses (defined as expenses for repair and
maintenance, equipment operation, and asset-specific insurance) on owned
equipment increased during the three months ended September 30, 1998 when
compared to the same period of 1997. The following table presents lease revenues
less direct expenses by owned equipment type (in thousands of dollars):
<TABLE>
<CAPTION>
For the Three Months
Ended September 30,
1998 1997
------------------------------
<S> <C> <C>
Aircraft, aircraft engines, and components $ 1,035 $ 773
Rail equipment 840 758
Marine vessels 837 615
Trailers 623 733
Marine containers 134 456
</TABLE>
Aircraft, aircraft engines, and components: Aircraft lease revenues and direct
expenses were $1.1 million and $19,000, respectively, for the three months ended
September 30, 1998, compared to $0.8 million and $0.1 million, respectively,
during the same period of 1997. The increase in aircraft contribution was due to
the purchase of an MD-82 Stage III commercial aircraft and a portfolio of
aircraft rotable components during the first quarter of 1998. The increase in
aircraft contribution caused by these purchases was offset, in part, by the sale
of a portfolio of aircraft engines and components during the fourth quarter of
1997.
Rail equipment: Rail equipment lease revenues and direct expenses were $1.0
million and $0.2 million, respectively, for the three months ended September 30,
1998, compared to $1.0 million and $0.3 million, respectively, during the same
period of 1997. The increase in railcar contribution was due to fewer repairs
required during the three months ended September 30, 1998, when compared to the
same period of 1997.
Marine vessels: Marine vessel lease revenues and direct expenses were $1.8
million and $1.0 million, respectively, for the three months ended September 30,
1998, compared to $2.4 million and $1.8 million, respectively, during the same
period of 1997. The increase in marine vessel contribution was due to the
purchase of an additional marine vessel during the second quarter of 1998 that
is operating under a bareboat charter in which the lessee pays a flat lease rate
and also pays for certain operating expenses while on lease. During the same
period of 1997, the Partnership's two marine vessels that were sold during the
fourth quarter of 1997, were operating under a lease arrangement in which the
lessee pays a higher lease rate however, the Partnership pays for all operating
expenses. Overall, the marine vessel purchased in 1998 gave the Partnership a
higher marine vessel contribution during the three months ended September 30,
1998 when compared to the two marine vessels that were sold during the fourth
quarter of 1997.
Trailers: Trailer lease revenues and direct expenses were $0.8 million and $0.2
million, respectively, for the three months ended September 30, 1998, compared
to $0.9 million and $0.2 million, respectively, during the same period of 1997.
The number of trailers owned by the Partnership has been declining over the past
12 months due to sales and dispositions. The result of this declining fleet has
been a decrease in trailer contribution.
Marine containers: Marine container lease revenues and direct expenses were $0.1
million and $2,000, respectively, for the three months ended September 30, 1998,
compared to $0.5 million and $3,000, respectively, during the same quarter of
1997. The number of containers owned by the Partnership has been declining over
the past 12 months due to sales and dispositions. The result of this declining
fleet has been a decrease in container contribution.
(B) Indirect Expenses Related to Owned Equipment Operations
Total indirect expenses of $9.3 million for the quarter ended September 30, 1998
increased from $4.6 million for the same period in 1997. Significant variances
are explained as follows:
(1) A $1.2 million increase in depreciation and amortization expenses from
1997 levels reflects the purchase of certain assets during 1998, which was
offset in part by the sale of certain equipment during 1998 and 1997 and the
double-declining balance method of depreciation which results in greater
depreciation in the first years an asset is owned.
(2) Loss on revaluation of equipment increased $4.3 million during the
three months ended September 30, 1998 and resulted from the Partnership reducing
the carrying value of marine containers and marine vessels to their estimated
net realizable value. There was no revaluation of equipment required during the
same period of 1997.
(3) A $0.2 million decrease in interest expense was due to a lower average
debt balance in the short-term credit facility when compared to the same period
of 1997.
(4) A $0.3 million decrease in the provision for bad debts reflects the
General Partner's evaluation of the collectibility of receivables due from
certain lessees.
(5) A $0.3 million decrease in administrative expenses was due to lower
costs for professional services needed to collect past due receivables due from
certain nonperforming lessees.
(C) Net Gain (Loss) on Disposition of Owned Equipment
The net gain on the disposition of owned equipment for the third quarter of 1998
totaled $1.3 million, and resulted from the sale of an aircraft engine, marine
containers and trailers, with an aggregate net book value of $0.5 million, for
$1.8 million. The net loss on the disposition of equipment for the third quarter
of 1997 totaled $0.1 million, and resulted from the sale of marine containers
and trailers, with an aggregate net book value of $0.4 million, for $0.3
million.
(D) Equity in Net Income (Loss) of Unconsolidated Special-Purpose Entities
(USPEs)
Net income (loss) generated from the operation of jointly-owned assets accounted
for under the equity method is shown in the following table by equipment type
(in thousands of dollars):
<TABLE>
<CAPTION>
For the Three Months
Ended September 30,
1998 1997
--------------------------------
<S> <C> <C>
Aircraft $ 344 $ 109
Mobile offshore drilling unit 63 (2)
Marine containers (19) --
Marine vessels (1,183) (218)
-------------------------------------------------- -------------
Equity in net loss of USPEs $ (795) $ (111)
================================================== =============
</TABLE>
Aircraft: As of September 30, 1998, the Partnership owned an interest in an
entity that owns a Boeing 767 commercial aircraft and an interest in a trust
that owns two commercial aircraft on a direct finance lease. As of September 30,
1997, the Partnership owned an interest in an entity that owns a Boeing 767
commercial aircraft, an interest in a trust that owns two commercial aircraft on
a direct finance lease, and an interest in two trusts that held ten commercial
aircraft. During the third quarter of 1998, lease revenues of $1.0 million were
offset by depreciation and administrative expenses of $0.7 million. During the
same period of 1997, lease revenues of $1.9 million were offset by depreciation
and administrative expenses of $1.8 million. The decrease in lease revenues
during the third quarter of 1998 was due to the sale of the Partnership's
interest in a trust owning four commercial aircraft during the first and second
quarters of 1998 and the sale of the Partnership's interest in another trust
owning six commercial aircraft during the fourth quarter of 1997. Depreciation
and administrative expenses also decreased as a result of these sales.
Mobile offshore drilling unit: As of September 30, 1998 and 1997, the
Partnership owned an interest in an entity owning a mobile offshore drilling
unit. During the third quarter of 1998, revenues of $0.3 million were offset by
depreciation and administrative expenses of $0.2 million. During the same period
of 1997, revenues of $0.3 million were offset by depreciation and administrative
expenses of $0.3 million. The decrease in depreciation and administrative
expenses was primarily due to the double-declining balance method of
depreciation which results in greater depreciation in the first years an asset
is owned.
Marine containers: As of September 30, 1998, the Partnership owned an interest
in an entity that owns marine containers. During the third quarter of 1998,
revenues of $17,000 were offset by depreciation and administrative expenses of
$36,000. The Partnership purchased the interest in this entity during September
1998.
Marine vessels: As of September 30, 1998 and 1997, the Partnership owned an
interest in entities that own three marine vessels. During the third quarter of
1998, revenues of $1.0 million were offset by depreciation and administrative
expenses of $1.3 million and a loss on the revaluation of a marine vessel of
$1.0 million. During the same period of 1997, revenues of $1.1 million were
offset by depreciation and administrative expenses of $1.3 million. The primary
reason for the decrease in revenues was due to a loss of hire settlement
received during 1997. A similar settlement was not required during 1998. Loss on
revaluation of equipment of $1.0 million during the three months ended September
30, 1998 resulted from the Partnership reducing the carrying value of their
interest in an entity owning a marine vessel to its estimated net realizable
value. There was no revaluation of interests required during the same period of
1997.
(E) Net Loss
As a result of the foregoing, the Partnership's net loss for the three months
ended September 30, 1998 was $5.1 million, compared to a net loss of $1.3
million during the same period of 1997. The Partnership's ability to acquire,
operate, and liquidate assets, secure leases, and re-lease those assets whose
leases expire is subject to many factors, and the Partnership's performance in
the third quarter of 1998 is not necessarily indicative of future periods. In
the third quarter of 1998, the Partnership distributed $2.9 million to the
limited partners, or $0.36 per weighted-average limited partnership unit.
Comparison of the Partnership's Operating Results for the Nine Months Ended
September 30, 1998 and 1997
(A) Owned Equipment Operations
Lease revenues less direct expenses (defined as expenses for repair and
maintenance, equipment operation, and asset-specific insurance) on owned
equipment decreased during the nine months ended September 30, 1998, when
compared to the same period of 1997. The following table presents lease revenues
less direct expenses by owned equipment type (in thousands of dollars):
<TABLE>
<CAPTION>
For the Nine Months
Ended September 30,
1998 1997
------------------------------
<S> <C> <C>
Aircraft, aircraft engines, and components $ 2,900 $ 2,558
Rail equipment 2,510 2,405
Trailers 1,858 2,157
Marine vessels 1,105 2,258
Marine containers 569 1,318
</TABLE>
Aircraft, aircraft engines, and components: Aircraft lease revenues and direct
expenses were $3.2 million and $0.3 million, respectively, for the nine months
ended September 30, 1998, compared to $2.7 million and $0.1 million,
respectively, during the same period of 1997. The increase in aircraft
contribution was due to the purchase of an MD-82 Stage III commercial aircraft
and a portfolio of aircraft rotable components during the first quarter of 1998.
The increase in aircraft contribution caused by these purchases was offset, in
part, by the sale of a portfolio of aircraft engines and components during the
fourth quarter of 1997.
Rail equipment: Rail equipment lease revenues and direct expenses were $3.1
million and $0.6 million, respectively, for the nine months ended September 30,
1998 compared to $3.1 million and $0.7 million, respectively, during the same
period of 1997. The increase in railcar contribution was due to lower repairs
required during 1998 when compared to the same period of 1997.
Trailers: Trailer lease revenues and direct expenses were $2.4 million and $0.6
million, respectively, for the nine months ended September 30, 1998, compared to
$2.7 million and $0.6 million, respectively, during the same period of 1997. The
number of trailers owned by the Partnership has been declining over the past 12
months due to sales and dispositions. The result of this declining fleet has
been a decrease in trailer contribution.
Marine vessels: Marine vessel lease revenues and direct expenses were $4.1
million and $3.0 million, respectively, for the nine months ended September 30,
1998, compared to $7.2 million and $4.9 million, respectively, during the same
period of 1997. The decrease in marine vessel contribution was due to the sale
of two marine vessels during the fourth quarter of 1997 which was offset in part
by the purchase of an additional marine vessel during the last month of the
third quarter of 1998 and a $0.1 million loss-of-hire insurance refund received
during 1998 from Transportation Equipment Indemnity Company, Ltd., an affiliate
of the General Partner, due to lower claims from the insured Partnership and
other insured affiliated partnerships.
Marine containers: Marine container lease revenues and direct expenses were $0.6
million and $11,000, respectively, for the nine months ended September 30, 1998,
compared to $1.3 million and $10,000, respectively, during the same quarter of
1997. The number of containers owned by the Partnership has been declining over
the past 12 months due to sales and dispositions. The result of this declining
fleet has been a decrease in container contribution.
(B) Indirect Expenses Related to Owned Equipment Operations
Total indirect expenses of $18.9 million for the nine months ended September 30,
1998 increased from $12.6 million for the same period in 1997. Significant
variances are explained as follows:
(1) A $3.1 million increase in depreciation and amortization expenses from
1997 levels reflects the purchase of certain assets during 1998, which was
offset in part by the sale of certain equipment during 1998 and 1997 and the
double-declining balance method of depreciation which results in greater
depreciation in the first years an asset is owned.
(2) Loss on revaluation of equipment increased $4.3 million during the nine
months ended September 30, 1998 and resulted from the Partnership reducing the
carrying value of marine containers and marine vessels to their estimated net
realizable value. There was no revaluation of equipment required during the same
period of 1997.
(3) A $0.2 million decrease in interest expense was due to a lower average
debt balance in the short-term credit facility when compared to the same period
of 1997.
(4) A $0.2 million decrease in the provision for bad debts reflects the
General Partner's evaluation of the collectibility of receivables due from
certain lessees.
(5) A $0.2 million decrease in management fees was due to lower lease
revenues earned by the Partnership during 1998, when compared to the same period
in 1997.
(6) A $0.6 million decrease in administrative expenses was due to lower
costs for professional services needed to collect past due receivables due from
certain nonperforming lessees.
(C) Net Gain (Loss) on Disposition of Owned Equipment
The net gain on the disposition of owned equipment for the nine months ended
September 30, 1998 totaled $6.2 million, and resulted from the sale of a
commercial aircraft, an aircraft engine, marine containers, trailers, and
railcars, with an aggregate net book value of $5.4 million, for $11.7 million
which included $1.4 million of unused engine reserves. The net loss on the
disposition of equipment for the nine months ended September 30, 1997 totaled
$0.1 million, and resulted from the sale of marine containers and trailers, with
an aggregate net book value of $1.3 million, for $1.2 million.
(D) Equity in Net Income (Loss) of Unconsolidated Special-Purpose Entities
Net income (loss) generated from the operation of jointly-owned assets accounted
for under the equity method is shown in the following table by equipment type
(in thousands of dollars):
<TABLE>
<CAPTION>
For the Nine Months
Ended September 30,
1998 1997
--------------------------------
<S> <C> <C>
Aircraft $ 8,187 $ 559
Mobile offshore drilling unit 171 (132)
Marine containers (19) --
Marine vessels (1,565) (488)
-------------------------------------------------- -------------
Equity in net income (loss) of USPEs $ 6,774 $ (61)
================================================== =============
</TABLE>
Aircraft: As of September 30, 1998, the Partnership owned an interest in an
entity that owns a Boeing 767 commercial aircraft and an interest in a trust
that owns two commercial aircraft on a direct finance lease. As of September 30,
1997, the Partnership owned an interest in an entity that owns a Boeing 767
commercial aircraft, an interest in a trust that owns two commercial aircraft on
a direct finance lease, and an interest in two trusts that held ten commercial
aircraft. During the nine months ended September 30, 1998, lease revenues of
$3.9 million and the gain from the sale of an interest in the trust that held
four commercial aircraft of $6.9 million were offset by depreciation and
administrative expenses of $2.6 million. During the same period of 1997, lease
revenues of $5.7 million were offset by depreciation and administrative expenses
of $5.2 million. The decrease in lease revenues during the nine months ended
September 30, 1998 was due to the sale of the Partnership's interest in a trust
owning four commercial aircraft during 1998 and the sale of the Partnership's
interest in another trust owning six commercial aircraft during the fourth
quarter of 1997. Depreciation and administrative expenses also decreased as a
result of these sales.
Mobile offshore drilling unit: As of September 30, 1998 and 1997, the
Partnership owned an interest in a mobile offshore drilling unit. During the
nine months ended September 30, 1998, revenues of $0.9 million were offset by
depreciation and administrative expenses of $0.7 million. During the same period
of 1997, revenues of $0.8 million were offset by depreciation and administrative
expenses of $0.9 million. The contribution from this equipment increased during
1998, when compared to the same period of 1997, due to a higher lease rate
earned on this equipment and lower depreciation and administrative expenses due
to the double-declining balance method of depreciation which results in greater
depreciation in the first years an asset is owned.
Marine containers: As of September 30, 1998, the Partnership owned an interest
in an entity that owns marine containers. During the nine months ended September
30, 1998, revenues of $17,000 were offset by depreciation and administrative
expenses of $36,000. The Partnership purchased the interest in this entity
during September 1998.
Marine vessels: As of September 30, 1998 and 1997, the Partnership owned an
interest in entities that own three marine vessels. During the nine months ended
September 30, 1998, revenues of $3.4 million were offset by depreciation and
administrative expenses of $4.0 million and a loss on the revaluation of a
marine vessel of $1.0 million. During the same period of 1997, revenues of $1.9
million were offset by depreciation and administrative expenses of $2.4 million.
The primary reason for the increases in revenues and depreciation and
administrative expenses was due to the purchase of an interest in an additional
entity that owns a marine vessel during 1997. Loss on revaluation of equipment
of $1.0 million during the three months ended September 30, 1998 resulted from
the Partnership reducing the carrying value of their interest in an entity
owning a marine vessel to its estimated net realizable value. There was no
revaluation of interests required during the same period of 1997.
(E) Net Income (Loss)
As a result of the foregoing, the Partnership's net income for the nine months
ended September 30, 1998 was $3.6 million, compared to a net loss of $1.8
million during the same period of 1997. The Partnership's ability to acquire,
operate, and liquidate assets, secure leases, and re-lease those assets whose
leases expire is subject to many factors, and the Partnership's performance in
the nine months ended September 30, 1998 is not necessarily indicative of future
periods. In the nine months ended September 30, 1998, the Partnership
distributed $11.2 million to the limited partners, or $1.36 per weighted-average
limited partnership unit.
(II) FINANCIAL CONDITION -- CAPITAL RESOURCES, LIQUIDITY, AND DISTRIBUTIONS
For the nine months ended September 30, 1998, the Partnership generated $12.2
million in operating cash (net cash provided by operating activities, plus
non-liquidating distributions from USPEs) to meet its operating obligations,
maintain working capital reserves, and maintain the current level of
distributions (total for the nine months ended September 30, 1998 of $11.8
million) to the partners. However, based on current operating lease revenues and
near-term trends, the General Partner made the decision to reduce the level of
cash distribution from 10% to 8% for the quarter ended June 30, 1998. Cash
distributions will remain at the reduced rate until operating lease revenues and
near-term trends show improvement.
During the nine months ended September 30, 1998, the Partnership sold owned
equipment for proceeds of $11.7 million. Included in the sale proceeds was $1.4
million of unused engine reserves. The Partnership also sold its interest in a
USPE for $13.1 million and received $3.6 million that was due from the sale of
its interest in a USPE during late 1997.
During the nine months ended September 30, 1998, the Partnership completed the
purchase of an MD-82 Stage III commercial aircraft for $14.1 million, including
acquisition and lease negotiation fees of $0.7 million that were paid to PLM
Financial Services, Inc. (FSI or the General Partner). FSI is a wholly-owned
subsidiary of PLM International, Inc. The Partnership made a deposit of $1.3
million toward this purchase in 1997, which is included in the December 31, 1997
balance sheet as an equipment acquisition deposit.
The Partnership also purchased a portfolio of aircraft rotable components for
$2.3 million, including acquisition and lease negotiation fees of $0.1 million
that were paid to FSI for this equipment and a marine vessel for $10.2 million,
including acquisition and lease negotiation fees of $0.5 million that were paid
to FSI for this equipment. The Partnership purchased an interest in an entity
owning 4,912 marine containers for $2.5 million, including acquisition and lease
negotiation fees of $0.1 million that were paid to FSI. In addition, the
Partnership increased its investment in a trust that owned two commercial
aircraft by funding the installation of a hushkit on an aircraft for $1.3
million including acquisition and lease negotiation fees of $0.1 million that
were paid to FSI, subsequently, the Partnership sold its interest in this trust
during the nine months ended September 30, 1998.
The General Partner entered into a short-term, joint $50.0 million credit
facility. As of November 3, 1998, TEC Acquisub, Inc., an indirect wholly-owned
subsidiary of PLM International, Inc., had borrowings of $0.3 million and
American Finance Group Inc., a subsidiary of PLM International, Inc., had
borrowings of $39.1 million under the short-term joint $50.0 million credit
facility. No other eligible borrower had any outstanding borrowings.
(III) EFFECTS OF YEAR 2000
It is possible that the General Partner's currently installed computer systems,
software products and other business systems, or the Partnership's vendors,
service providers and customers, working either alone or in conjunction with
other software or systems, may not accept input of, store, manipulate and output
dates on or after January 1, 2000 without error or interruption (a problem
commonly known as the "Year 2000" problem). As the Partnership relies
substantially on the General Partner's software systems, applications and
control devices in operating and monitoring significant aspects of its business,
any Year 2000 problem suffered by the General Partner could have a material
adverse effect on the Partnership's business, financial condition and results of
operations.
The General Partner has established a special Year 2000 oversight committee to
review the impact of Year 2000 issues on its software products and other
business systems in order to determine whether such systems will retain
functionality after December 31, 1999. The General Partner (a) is currently
integrating Year 2000 compliant programming code into its existing internally
customized and internally developed transaction processing software systems and
(b) the General Partner's accounting and asset management software systems have
either already been made Year 2000 compliant or Year 2000 compliant upgrades of
such systems are planned to be implemented by the General Partner before the end
of fiscal 1999. Although the General Partner believes that its Year 2000
compliance program can be completed by the beginning of 1999, there can be no
assurance that the compliance program will be completed by that date. To date,
the costs incurred and allocated to the Partnership to become Year 2000
compliant have not been material. Also, the General Partner believes the future
cost allocable to the Partnership to become Year 2000 compliant will not be
material.
Some risks associated with the Year 2000 problem are beyond the ability of the
Partnership to control, including the extent to which third parties can address
the Year 2000 problem. The General Partner has begun to communicate with
vendors, services providers and customers in order to assess the Year 2000
compliance readiness of such parties and the extent to which the Partnership is
vulnerable to any third-party Year 2000 issues. There can be no assurance that
the software systems of such parties will be converted or made Year 2000
compliant in a timely manner. Any failure by the General Partner or such other
parties to make their respective systems Year 2000 compliant could have a
material adverse effect on the business, financial position and results of
operations of the Partnership. The General Partner will make an ongoing effort
to recognize and evaluate potential exposure relating to third-party Year 2000
non-compliance and will develop a contingency plan if the General Partner
determines, or is unable to determine, that third-party non-compliance would
have a material adverse effect on the Partnership's business, financial position
or results of operation.
(IV) ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued two new
statements: SFAS No. 130, "Reporting Comprehensive Income," which requires
enterprises to report, by major component and in total, all changes in equity
from nonowner sources; and SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information," which establishes annual and interim
reporting standards for a public company's operating segments and related
disclosures about its products, services, geographic areas, and major customers.
Both statements are effective for the Partnership's fiscal year ended December
31, 1998, with earlier application permitted. The effect of the adoption of
these statements will be limited to the form and content of the Partnership's
disclosures and will not impact the Partnership's results of operations, cash
flow, or financial position.
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities", which
standardizes the accounting for derivative instruments, including certain
derivative instruments embedded in other contracts, by requiring that an entity
recognize those items as assets or liabilities in the statement of financial
position and measure them at fair value. This statement is effective for all
quarters of fiscal years beginning after June 15, 1999. As of September 30,
1998, the General Partner is reviewing the effect this standard will have on the
Partnership's consolidated financial statements.
(V) OUTLOOK FOR THE FUTURE
Several factors may affect the Partnership's operating performance in 1998 and
beyond, including changes in the markets for the Partnership's equipment and
changes in the regulatory environment in which that equipment operates.
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.
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,
and government or other regulations. 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 continually monitors both the
equipment markets and the performance of the Partnership's equipment in these
markets. The General Partner may decide to reduce the Partnership's exposure to
equipment markets in which it determines it cannot operate equipment to 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 making payments
of expenses and loan principal, maintaining working capital reserves, and making
cash distributions, to acquire additional equipment during the first seven years
of Partnership operations, which concludes December 31, 1999. The General
Partner believes that these acquisitions may cause the Partnership to generate
additional earnings and cash flow for the Partnership.
(VI) FORWARD-LOOKING INFORMATION
Except for the historical information contained herein, this Form 10-Q contains
forward-looking statements that involve risks and uncertainties, such as
statements of the Partnership's plans, objectives, expectations, and intentions.
The cautionary statements made in this Form 10-Q should be read as being
applicable to all related forward-looking statements wherever they appear in
this Form 10-Q. The Partnership's actual results could differ materially from
those discussed here.
(this space intentionally left blank)
<PAGE>
PART II -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Commitment Letter from First Union National Bank dated October
29, 1998 extending the $50.0 million Warehousing Credit
Agreement until November 2, 1998.
(b) Reports on Form 8-K
None.
<PAGE>
<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: November 4, 1998 By: /s/ Richard K Brock
-------------------
Richard K Brock
Vice President and
Corporate Controller
<PAGE>
[First Union Logo and Letterhead:
First Union Capital Markets
One First Union Center
Charlotte, North Carolina 28288-0601]
Via Facsimile and Federal Express
Mr. J. Michael Allgood
PLM International, Inc.
One Market, Steuart Street Tower, Suite 800
San Francisco, CA 94105-1301
October 29, 1998
RE: $50,000,000 Warehouse Facility
Dear Mr. Allgood,
We are pleased to confirm that First Union National Bank has approved of the
$50,000,000 Warehouse Commitment for American Finance Group Inc., TEC Acquisub
and PLM Growth Funds VI, VII and PLM Income Fund I, L.L.C. ("Funds").
The Effective date of the facility is 11/02/98, and Expiry date is 11/01/99.
Please call me at (704) 383 9687 if you have any questions.
Sincerely,
/s/ Russell D. Morrison
- ---------------------------------
Vice President
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 12,963
<SECURITIES> 0
<RECEIVABLES> 3,841
<ALLOWANCES> (2,308)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 84,716
<DEPRECIATION> (41,058)
<TOTAL-ASSETS> 93,156
<CURRENT-LIABILITIES> 0
<BONDS> 30,000
0
0
<COMMON> 0
<OTHER-SE> 58,530
<TOTAL-LIABILITY-AND-EQUITY> 93,156
<SALES> 0
<TOTAL-REVENUES> 20,129
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 21,562
<LOSS-PROVISION> 260
<INTEREST-EXPENSE> 1,515
<INCOME-PRETAX> 3,566
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,566
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,566
<EPS-PRIMARY> 1.36
<EPS-DILUTED> 1.36
</TABLE>
