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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------
FORM 10-Q
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- ----- ACT OF 1934
For the quarterly period ended June 30, 1996
OR
- ----- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to ________.
Commission File Number 0-12594
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PHOENIX LEASING INCOME FUND VI
- --------------------------------------------------------------------------------
Registrant
California 94-2869603
- ------------------------------- ----------------------------------
State of Jurisdiction I.R.S. Employer Identification No.
2401 Kerner Boulevard, San Rafael, California 94901-5527
- --------------------------------------------------------------------------------
Address of Principal Executive Offices Zip Code
Registrant's telephone number, including area code: (415) 485-4500
--------------
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes __X__ No _____
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Part I. Financial Information
------------------------------
Item 1. Financial Statements
PHOENIX LEASING INCOME FUND VI
BALANCE SHEETS
(Amounts in Thousands Except for Unit Amounts)
(Unaudited)
June 30, December 31,
1996 1995
---- ----
ASSETS
Cash and cash equivalents $ 600 $ 2,708
Accounts receivable (net of allowance for
losses on accounts receivable of $2
and $22 at June 30, 1996 and December 31,
1995, respectively) 28 30
Equipment on operating leases and held for
lease (net of accumulated depreciation of
$634 and $746 at June 30, 1996 and
December 31, 1995, respectively) 2 4
Investment in joint ventures 338 415
Securities, available-for-sale 119 121
Other assets 11 9
------- -------
Total Assets $ 1,098 $ 3,287
======= =======
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Liabilities
Accounts payable and accrued expenses $ 1,328 $ 1,471
------- -------
Total Liabilities 1,328 1,471
------- -------
Partners' Capital (Deficit)
General Partner 411 394
Limited Partners, 320,000 units authorized
and issued, 297,165 units outstanding at
June 30, 1996 and December 31, 1995 (671) 1,461
Unrealized gains (losses) on
available-for-sale securities 30 (39)
------- -------
Total Partners' Capital (Deficit) (230) 1,816
------- -------
Total Liabilities and Partners'
Capital (Deficit) $ 1,098 $ 3,287
======= =======
The accompanying notes are an integral
part of these statements.
Page 3 of 11
PHOENIX LEASING INCOME FUND VI
STATEMENTS OF OPERATIONS
(Amounts in Thousands Except for Per Unit Amounts)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
---- ---- ---- ----
INCOME
Rental income $ 4 $ 208 $ 10 $ 311
Equity in earnings from
joint ventures, net 69 81 121 144
Interest income, notes receivable -- 308 -- 308
Gain on sale of securities 19 -- 19 --
Other income 16 37 26 54
----- ----- ----- -----
Total Income 108 634 176 817
----- ----- ----- -----
EXPENSES
Depreciation 1 2 2 5
Lease related operating expenses -- 1 5 2
Management fees to General Partner 6 99 6 106
Provision for losses on receivables -- (140) -- (140)
General and administrative expenses 23 42 50 72
----- ----- ----- -----
Total Expenses 30 4 63 45
----- ----- ----- -----
NET INCOME $ 78 $ 630 $ 113 $ 772
===== ===== ===== =====
NET INCOME PER LIMITED
PARTNERSHIP UNIT $ .22 $1.81 $ .32 $2.21
===== ===== ===== =====
DISTRIBUTIONS PER LIMITED
PARTNERSHIP UNIT $-- $-- $7.50 $7.50
===== ===== ===== =====
ALLOCATION OF NET INCOME:
General Partner $ 12 $ 94 $ 17 $ 116
Limited Partners 66 536 96 656
----- ----- ----- -----
$ 78 $ 630 $ 113 $ 772
===== ===== ===== =====
The accompanying notes are an integral
part of these statements.
Page 4 of 11
PHOENIX LEASING INCOME FUND VI
STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
(Unaudited)
Six Months Ended
June 30,
1996 1995
---- ----
Operating Activities:
- ---------------------
Net income $ 113 $ 772
Adjustments to reconcile net income to net cash
used by operating activities:
Depreciation 2 5
Gain on sale of equipment (1) (41)
Equity in earnings from joint ventures, net (121) (144)
Provision for losses on accounts receivable -- 7
Provision for losses on notes receivable -- (147)
Gain on sale of securities (19) --
Decrease in accounts receivable 2 3
Decrease in accounts payable and accrued expenses (143) (1,190)
Decrease (increase) in other assets (2) 21
------- -------
Net cash used by operating activities (169) (714)
------- -------
Investing Activities:
- ---------------------
Principal payments, notes receivable -- 1,139
Proceeds from sale of equipment 1 41
Proceeds from sale of securities 89 --
Distributions from joint ventures 198 213
------- -------
Net cash provided by investing activities 288 1,393
------- -------
Financing Activities:
- ---------------------
Distributions to partners (2,227) (2,229)
------- -------
Net cash used by financing activities (2,227) (2,229)
------- -------
Decrease in cash and cash equivalents (2,108) (1,550)
Cash and cash equivalents, beginning of period 2,708 3,892
------- -------
Cash and cash equivalents, end of period $ 600 $ 2,342
======= =======
The accompanying notes are an integral
part of these statements.
Page 5 of 11
PHOENIX LEASING INCOME FUND VI
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note 1. General.
The accompanying unaudited condensed financial statements have been
prepared by the Partnership in accordance with generally accepted accounting
principles, pursuant to the rules and regulations of the Securities and Exchange
Commission. In the opinion of Management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Although management believes that the disclosures are adequate to make
the information presented not misleading, it is suggested that these condensed
financial statements be read in conjunction with the financial statements and
the notes included in the Partnership's Financial Statement, as filed with the
SEC in the latest annual report on Form 10-K.
Note 2. Reclassification.
Reclassification - Certain 1995 amounts have been reclassified to
conform to the 1996 presentation.
Note 3. Income Taxes.
Federal and state income tax regulations provide that taxes on the
income or loss of the Partnership are reportable by the partners in their
individual income tax returns. Accordingly, no provision for such taxes has been
made in the accompanying financial statements.
Note 4. Net Income (Loss) and Distributions per Limited Partnership Unit.
Net income and distributions per limited partnership unit were based on
the limited partner's share of net income and distributions, and the weighted
average number of units outstanding of 297,165 for the six month periods ended
June 30, 1996 and 1995. For purposes of allocating income (loss) and
distributions to each individual limited partner, the Partnership allocates net
income (loss) and distributions based upon each respective limited partner's
ending capital account balance. The use of this method accurately reflects each
limited partner's participation in the partnership including reinvestment
through the Capital Accumulation Plan. As a result the calculation of net income
(loss) and distributions per limited Partnership unit is not indicative of per
unit income (loss) and distributions due to reinvestments through the Capital
Accumulation Plan.
Page 6 of 11
Note 5. Investment in Joint Ventures.
Equipment Joint Ventures
The aggregate combined statements of operations of the equipment joint
ventures is presented below:
COMBINED STATEMENTS OF OPERATIONS
(Amounts in Thousands)
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
---- ---- ---- ----
INCOME
Rental income $ 735 $1,217 $1,407 $2,136
Gain on sale of equipment 295 298 543 875
Other income 41 49 82 111
------ ------ ------ ------
Total income 1,071 1,564 2,032 3,122
------ ------ ------ ------
EXPENSES
Depreciation 84 113 173 460
Lease related operating expenses 420 800 884 1,531
Management fees to General Partner 36 62 68 126
General and administrative expenses 2 4 5 9
------ ------ ------ ------
Total expenses 542 979 1,130 2,126
------ ------ ------ ------
Net income $ 529 $ 585 $ 902 $ 996
====== ====== ====== ======
Financing Joint Ventures
The aggregate combined statements of operations of the financing joint
ventures is presented below:
COMBINED STATEMENTS OF OPERATIONS
(Amounts in Thousands)
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
---- ---- ---- ----
INCOME
Interest income - notes receivable $ 6 $ 21 $ 24 $ 48
Other income 16 62 18 66
---- ---- ---- ----
Total income 22 83 42 114
---- ---- ---- ----
EXPENSES
Management fees to General Partner $ 1 $ 4 $ 1 $ 5
General and administrative expenses 2 5 7 12
---- ---- ---- ----
Total expenses 3 9 8 17
---- ---- ---- ----
Net income $ 19 $ 74 $ 34 $ 97
==== ==== ==== ====
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Foreclosed Cable Systems Joint Ventures
The statements of operations of the foreclosed cable systems joint
ventures is presented below:
STATEMENTS OF OPERATIONS
(Amounts in Thousands)
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
---- ---- ---- ----
INCOME
Subscriber revenue $ -- $ 174 $ 54 $ 343
Gain (adjustments to gain) on
sale of cable system (35) -- 1,205 --
Other income 1 2 10 6
------ ------ ------ ------
Total income (34) 176 1,269 349
------ ------ ------ ------
EXPENSES
Depreciation and amortization -- 38 13 77
Program services -- 43 12 87
Management fees to an affiliate of
the General Partner 1 8 121 15
General and administrative expenses -- 47 46 102
Provision for losses on accounts
receivable -- 2 -- 3
------ ------ ------ ------
Total expenses 1 138 192 284
------ ------ ------ ------
Net income before taxes (35) 38 1,077 65
Income tax benefit -- -- -- --
------ ------ ------ ------
Net income $ (35) $ 38 $1,077 $ 65
====== ====== ====== ======
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PHOENIX LEASING INCOME FUND VI
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Results of Operations
The Partnership reported a decrease in net income of $552,000 and
$659,000 during the three and six months ended June 30, 1996, respectively,
compared to the same periods in 1995. The decrease in net income is primarily
attributable to a decrease in interest income from notes receivable and rental
income.
Total revenues decreased by $526,000 and $641,000 for the three and six
months ended June 30, 1996, respectively, as compared to the same periods in
1995. The decrease for both the three and six months ended June 30, 1996,
compared to the prior year, is attributable to the absence of interest income
from a note receivable, compared to interest income from notes receivable of
$308,000 in 1995. The Partnership recognized interest income from a note
receivable of $308,000 during the three months ended June 30, 1995 as a result
of the Partnership receiving a settlement from its one remaining note receivable
which was impaired. The amount received as the settlement was first applied
towards the outstanding note receivable balance and the remainder was recognized
as interest income.
Due to the settlement received on the one remaining note receivable, the
balance of the general allowance for losses on notes receivable was no longer
necessary. As a result, the remaining balance of $147,000 was recognized as
income which decreased total expenses for both the three and six months ended
June 30, 1995.
The settlement also caused management fees to the General Partner to
increase for the three and six months ended June 30, 1995. Management fees for
the three and six months ended June 30, 1996 decreased by $93,000 and $100,000,
respectively, as compared to the same periods in 1995.
The decline in rental income of $204,000 and $301,000 for the three and
six months ended June 30, 1996, respectively, also contributed to the decline in
total revenues for 1996. The reduction in rental income is attributable to the
decrease in the equipment owned by the Partnership. At June 30, 1996, the
Partnership owned equipment with an aggregate original cost of $837,000 as
compared to $3,097,000 at June 30, 1995. The Partnership is currently in a
liquidation phase. As a result, the equipment portfolio will continue to decline
as the Partnership continues to liquidate its remaining equipment as it comes
off lease.
Rental income for the three and six months ended June 30, 1995 was
higher than usual due to the recognition of prepaid rent that had previously
been recorded as a liability. During the quarter ended June 30, 1995, it was
determined that these payments were no longer a liability and the amount was
subsequently recognized as rental income. No such event has occurred during
1996.
The Partnership reported a gain on sale of securities of $19,000 for the
three and six months ended June 30, 1996. This gain on sale of securities is
attributable to the Partnership selling a portion of its investment in Storage
Technology Corporation common stock, receiving proceeds from the sale of
$89,000.
Joint Ventures
The Partnership has made investments in various equipment and financing
joint ventures along with other affiliated partnerships managed by the General
Partner for the purpose of spreading the risk of investing in certain equipment
leasing and financing transactions. These joint ventures are not currently
making any significant additional investments in new equipment leasing or
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financing transactions. As a result, the earnings and cash flow from such
investments are anticipated to continue to decline as the portfolios are
re-leased at lower rental rates and eventually liquidated. Earnings from joint
ventures decreased by $12,000 and $23,000 during the three and six months ended
June 30, 1996, respectively, compared to the same periods in 1995.
Liquidity and Capital Resources
During the six months ended June 30, 1996, the net cash used by leasing
and financing activities was $169,000, as compared to the net cash provided by
leasing and financing activities of $425,000 during 1995. The decrease in cash
generated for the six months ended June 30, 1996 is due to the absence of
principal payments from notes receivable. During the six months ended June 30,
1995, the Partnership received a settlement from its one remaining outstanding
note receivable.
The distributions from joint ventures continues to be one of the primary
sources of cash generated by the Partnership. Cash distributions from joint
ventures were $198,000 for the six months ended June 30, 1996 and $213,000 for
the six months ended June 30, 1995. The slight decrease in distributions for the
six months ended June 30, 1996, as compared to 1995, is attributable to the
closure of one joint venture during the three months ended June 30, 1995, as
well as, the decrease in rental receipts from several joint ventures. The
decrease in rental receipts is a result of equipment being re-leased at lower
rental rates and equipment being sold.
As of June 30, 1996, the Partnership owned equipment held for lease
with a purchase price of $679,000 and a net book value of $2,000, as compared to
$2,382,000 and $0 at June 30, 1995, respectively. The General Partner is
actively engaged, on behalf of the Partnership, in remarketing and selling the
Partnership's off-lease equipment portfolio.
The Limited Partners received their annual distribution of $2,227,000
and $2,229,000 during the six months ended June 30, 1996 and 1995, respectively.
As a result, the cumulative cash distributions to the Limited Partners are
$75,915,000 and $73,687,000 at June 30, 1996 and 1995, respectively. The General
Partner did not receive distributions during the six months ended June 30, 1996
and 1995.
Distributions are made on an annual basis with a distribution date of
January 15. The distribution made in January of 1996 was at approximately the
same rate as January of 1995. The amount of the distribution to be made in
January of 1997 has not yet been determined.
As the Partnership's asset portfolio continues to decline as a result of
the on-going liquidation of assets, it is expected that the cash generated from
operations will also decline. Cash generated from leasing and financing
operations has been and is anticipated to continue to be sufficient to meet the
Partnership's on-going operational expenses.
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PHOENIX LEASING INCOME FUND VI
June 30, 1996
Part II. Other Information.
------------------
Item 1. Legal Proceedings. Inapplicable.
Item 2. Changes in Securities. Inapplicable
Item 3. Defaults Upon Senior Securities. Inapplicable
Item 4. Submission of Matters to a Vote of Securities Holders. Inapplicable
Item 5. Other Information. Inapplicable
Item 6. Exhibits and Reports on 8-K:
a) Exhibits: None
b) Reports on 8-K: None
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
PHOENIX LEASING INCOME FUND VI
------------------------------
(Registrant)
Date Title Signature
---- ----- ---------
August 13, 1996 Chief Financial Officer, /S/ PARITOSH K. CHOKSI
- --------------- Senior Vice President ----------------------
and Treasurer of (Paritosh K. Choksi)
Phoenix Leasing Incorporated
General Partner
August 13, 1996 Senior Vice President, /S/ BRYANT J. TONG
- --------------- Financial Operations ----------------------
(Principal Accounting Officer) (Bryant J. Tong)
Phoenix Leasing Incorporated
General Partner
August 13, 1996 Partnership Controller /S/ MICHAEL K. ULYATT
- --------------- Phoenix Leasing Incorporated -----------------------
General Partner (Michael K. Ulyatt)