Page 1 of 11
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-QSB
__X__ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1997
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
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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 _____
297,165 Units of Limited Partnership Interest were outstanding as of June 30,
1997.
Transitional small business disclosure format:
Yes _____ No __X__
Page 2 of 11
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,
1997 1996
---- ----
ASSETS
Cash and cash equivalents $ 805 $ 670
Accounts receivable (net of allowance
for losses on accounts receivable of $7
and $8 at June 30, 1997 and December 31,
1996, respectively) 11 7
Equipment on operating leases and held for
lease (net of accumulated depreciation of
$284 and $423 at June 30, 1997 and December
31, 1996, respectively) -- --
Investment in joint ventures 220 276
Securities, available for sale 126 149
Other assets 18 7
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Total Assets $ 1,180 $ 1,109
======= =======
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Liabilities
Accounts payable and accrued expenses $ 136 $ 134
Liquidation fees payable to General Partner 1,108 1,108
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Total Liabilities 1,244 1,242
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Partners' Capital (Deficit)
General Partner 434 421
Limited Partners, 320,000 units
authorized and issued, 297,165 units
outstanding at June 30, 1997 and
December 31, 1996 (536) (615)
Unrealized gains on available-for-sale
securities 38 61
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Total Partners' Capital (Deficit) (64) (133)
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Total Liabilities and Partners'
Capital (Deficit) $ 1,180 $ 1,109
======= =======
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,
1997 1996 1997 1996
---- ---- ---- ----
INCOME
Rental income $ 3 $ 4 $ 8 $ 10
Equity in earnings from joint ventures, net 54 69 84 121
Interest income, notes receivable -- -- 13 --
Gain on sale of securities -- 19 -- 19
Other income 13 16 22 26
---- ---- ---- -----
Total Income 70 108 127 176
---- ---- ---- -----
EXPENSES
Depreciation -- 1 -- 2
Lease related operating expenses -- -- -- 5
Management fees to General Partner 1 6 2 6
General and administrative expenses 18 23 33 50
---- ---- ---- -----
Total Expenses 19 30 35 63
---- ---- ---- -----
NET INCOME $ 51 $ 78 $ 92 $ 113
==== ==== ==== =====
NET INCOME PER LIMITED
PARTNERSHIP UNIT $.14 $.22 $.26 $ .32
==== ==== ==== =====
DISTRIBUTIONS PER LIMITED
PARTNERSHIP UNIT $-- $-- $-- $7.50
==== ==== ==== =====
ALLOCATION OF NET INCOME:
General Partner $ 8 $ 12 $ 14 $ 17
Limited Partners 43 66 78 96
---- ---- ---- -----
$ 51 $ 78 $ 92 $ 113
==== ==== ==== =====
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,
1997 1996
---- ----
Operating Activities:
Net income $ 92 $ 113
Adjustments to reconcile net income to net cash
used by operating activities:
Depreciation -- 2
Gain on sale of equipment (2) (1)
Equity in earnings from joint ventures, net (84) (121)
Gain on sale of securities -- (19)
Decrease (increase) in accounts receivable (4) 2
Increase (decrease) in accounts payable
and accrued expenses 2 (143)
Increase in other assets (11) (2)
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Net cash used by operating activities (7) (169)
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Investing Activities:
Proceeds from sale of equipment 2 1
Proceeds from sale of securities -- 89
Distributions from joint ventures 140 198
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Net cash provided by investing activities 142 288
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Financing Activities:
Distributions to partners -- (2,227)
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Net cash used by financing activities -- (2,227)
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Increase (decrease) in cash and cash equivalents 135 (2,108)
Cash and cash equivalents, beginning of period 670 2,708
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Cash and cash equivalents, end of period $ 805 $ 600
======= ======
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 1997 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, 1997 and 1996. 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 financial information of the equipment joint
ventures is as follows:
June 30, December 31,
1997 1996
---- ----
(Amounts in Thousands)
Assets $ 2,584 $ 2,912
Liabilities 860 786
Partners' Capital 1,724 2,126
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
---- ---- ---- ----
(Amounts in Thousands)
Revenue $ 673 $ 1,071 $ 1,360 $ 2,032
Expenses 374 542 725 1,130
Net Income 299 529 635 902
Financing Joint Ventures
The aggregate combined financial information of the financing joint
ventures is as follows:
June 30, December 31,
1997 1996
---- ----
(Amounts in Thousands)
Assets $ 32 $ 38
Liabilities 11 4
Partners' Capital 21 34
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
---- ---- ---- ----
(Amounts in Thousands)
Revenue $ 6 $ 22 $ 20 $ 42
Expenses 2 3 5 8
Net Income 4 9 15 34
Page 7 of 11
Foreclosed Cable Systems Joint Venture
The financial information of the foreclosed cable systems joint
venture is as follows:
June 30, December 31,
1997 1996
---- ----
(Amounts in Thousands)
Assets $ - $ -
Liabilities - -
Partners' Capital - -
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
---- ---- ---- ----
(Amounts in Thousands)
Revenue $ - $ (34) $ - $ 1,241
Expenses - 1 - 164
Net Income (Loss) - (35) - 1,077
Page 8 of 11
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 net income of $51,000 and $92,000 during the
three and six months ended June 30, 1997, respectively, compared to net income
of $78,000 and $113,000 for the same periods in the prior year. The decrease in
net income during the three and six months ended June 30, 1997, compared to the
same periods in 1996, is attributable to a decline in earnings from joint
ventures and the absence of a gain on sale of securities.
Total revenues decreased by $38,000 and $49,000 during the three and
six months ended June 30, 1997, respectively, when compared to the same periods
in 1996. The decrease in total revenues during the three and six months ended
June 30, 1997 is primarily attributable to a decrease in earnings from joint
ventures, as will be further discussed under "Joint Ventures", as well as the
absence of a gain on sale of securities. 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 was a result of the Partnership selling a portion of
its investment in Storage Technology Corporation common stock, receiving
proceeds from the sale of $89,000.
The decreases in earnings from joint ventures and gain on sale of
securities is partially offset by an increase in interest income from notes
receivable of $13,000 for the six months ended June 30, 1997, compared to the
same period in the prior year. The Partnership received a disbursement of
proceeds during the six months ended June 30, 1997, which were held in escrow
for a note receivable which was paid off in 1995. In 1995, a portion of the
proceeds from the payoff of this notes receivable was placed into escrow to
cover liabilities which may have arisen after the payoff.
Total expenses decreased by $11,000 and $28,000 during the three and
six months ended June 30, 1997, respectively, as compared to the same periods in
1996. The decrease during the three and six months ended June 30, 1997, as
compared to the same periods in 1996, is due to a decline in all expense items
with the decrease in general and administrative expenses contributing the
largest decrease of $5,000 and $17,000 for the three and six months ended June
30, 1997, respectively, as compared to the same periods in the previous year.
General and administrative expenses consist primarily of audit fees, postage,
insurance and printing costs, all of which decreased during the three and six
months ended June 30, 1997, compared to the same periods in 1996.
Because the Partnership is in its liquidation stage, it is not expected
that the Partnership will acquire any additional equipment. As a result, lease
related revenues and expenses are expected to continue to decline as the
portfolio is liquidated and the remaining equipment is re-leased at lower rental
rates. The Partnership will reach the end of its term on December 31, 1997.
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
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 $15,000 and $37,000 during
the three and six months ended June 30, 1997, respectively, compared to the same
periods in 1996. This decrease is due to the closure of several equipment joint
ventures during 1996, and a decline in rental income and gain on sale of
equipment in several other equipment joint ventures.
Page 9 of 11
Liquidity and Capital Resources
During the six months ended June 30, 1997, the net cash used by leasing
and financing activities was $7,000, as compared to the net cash used by leasing
and financing activities of $169,000 during the six months ended June 30, 1996.
The improvement in net cash generated by leasing and financing activities for
the six months ended June 30, 1997, compared to the same period in 1996, is a
result of a decrease in the amount paid to the General Partner for liquidation
fees.
The distributions from joint ventures continues to be one of the
primary sources of cash generated by the Partnership. Cash distributions from
joint ventures decreased by $58,000 for the six months ended June 30, 1997,
compared to the same period in 1996. The decrease experienced during the six
months ended June 30, 1997, compared to 1996, is attributable to one equipment
joint venture experiencing a decline in cash available for distribution as a
result of a reduction in rental income and sales proceeds received, as well as,
the closure of one of the equipment joint ventures.
As of June 30, 1997, the Partnership owned equipment held for lease
with a purchase price of $419,000 and a net book value of $0, as compared to
$679,000 and $2,000 at June 30, 1996, respectively. The General Partner is
actively engaged, on behalf of the Partnership, in remarketing and selling the
Partnership's off-lease equipment portfolio.
The Partnership will reach the end of its term on December 31, 1997, at
which time it will liquidate its remaining assets and make a final distribution
to partners of the excess cash, if any. The Partnership currently does not
anticipate making any future distribution to partners until the termination of
the Partnership, as such no distributions has been made during the six months
ended June 30, 1997. The Limited Partners received their annual distribution of
$2,227,000 during the six months ended June 30, 1996. The cumulative cash
distributions to the Limited Partners is $75,915,000 at June 30, 1997 and 1996.
The General Partner did not receive distributions during the six months ended
June 30, 1996.
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.
Page 10 of 11
PHOENIX LEASING INCOME FUND VI
June 30, 1997
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:
(27) Financial Data Schedule
b) Reports on 8-K: None
Page 11 of 11
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, 1997 Senior Vice President /S/ GARY W. MARTINEZ
- ----------------- and a Director of ----------------------
Phoenix Leasing Incorporated (Gary W. Martinez)
General Partner
August 13, 1997 Chief Financial Officer, /S/ PARITOSH K. CHOKSI
- ----------------- Senior Vice President, ----------------------
Treasurer and a Director of (Paritosh K. Choksi)
Phoenix Leasing Incorporated
General Partner
August 13, 1997 Senior Vice President, /S/ BRYANT J. TONG
- ----------------- Financial Operations of ----------------------
(Principal Accounting Officer) (Bryant J. Tong)
Phoenix Leasing Incorporated
General Partner
August 13, 1997 Partnership Controller of /S/ MICHAEL K. ULYATT
- ----------------- Phoenix Leasing Incorporated ----------------------
General Partner (Michael K. Ulyatt)