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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 September 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
- --------------------------------------------------------------------------------
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 September
30, 1997.
Transitional small business disclosure format:
Yes _____ No __X__
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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)
September 30, December 31,
1997 1996
------- -------
ASSETS
Cash and cash equivalents $ 834 $ 670
Accounts receivable (net of allowance for
losses on accounts receivable of $3 and
$8 at September 30, 1997 and December 31,
1996, respectively) 2 7
Equipment on operating leases and held for lease
(net of accumulated depreciation of $4 and $423
at September 30, 1997 and December 31, 1996,
respectively) -- --
Investment in joint ventures 106 276
Securities, available for sale 151 149
Other assets 22 7
------- -------
Total Assets $ 1,115 $ 1,109
======= =======
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Liabilities
Accounts payable and accrued expenses $ 114 $ 134
Liquidation fees payable to General Partner 1,108 1,108
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Total Liabilities 1,222 1,242
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Partners' Capital (Deficit)
General Partner 424 421
Limited Partners, 320,000 units authorized and
issued, 297,165 units outstanding at September
30, 1997 and December 31, 1996 (594) (615)
Unrealized gains on available-for-sale securities 63 61
------- -------
Total Partners' Capital (Deficit) (107) (133)
------- -------
Total Liabilities and Partners' Capital (Deficit) $ 1,115 $ 1,109
======= =======
The accompanying notes are an integral part of these statements.
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PHOENIX LEASING INCOME FUND VI
STATEMENTS OF OPERATIONS
(Amounts in Thousands Except for Per Unit Amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
------ ------ ------ ------
INCOME
Rental income $ 23 $ 8 $ 31 $ 17
Equity in earnings (losses) from
joint ventures, net (80) 54 4 176
Interest income, notes receivable -- -- 13 --
Gain on sale of securities -- -- -- 19
Other income 12 8 34 35
------ ------ ------ ------
Total Income (45) 70 82 247
------ ------ ------ ------
EXPENSES
Depreciation -- 1 -- 3
Lease related operating expenses -- 1 -- 5
Management fees to General Partner 2 -- 4 6
Provision for losses on receivables 5 19 5 19
General and administrative expenses 16 25 49 77
------ ------ ------ ------
Total Expenses 23 46 58 110
------ ------ ------ ------
NET INCOME (LOSS) $ (68) $ 24 $ 24 $ 137
====== ====== ====== ======
NET INCOME (LOSS) PER LIMITED
PARTNERSHIP UNIT $ (.19) $ .07 $ .07 $ .39
====== ====== ====== ======
DISTRIBUTIONS PER LIMITED
PARTNERSHIP UNIT $ -- $ -- $ -- $ 7.50
====== ====== ====== ======
ALLOCATION OF NET INCOME (LOSS):
General Partner $ (10) $ 3 $ 4 $ 20
Limited Partners (58) 21 20 117
------ ------ ------ ------
$ (68) $ 24 $ 24 $ 137
====== ====== ====== ======
The accompanying notes are an integral part of these statements.
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PHOENIX LEASING INCOME FUND VI
STATEMENTS OF CASH FLOWS
(Amounts in Thousands)
(Unaudited)
Nine Months Ended
September 30,
1997 1996
------- -------
Operating Activities:
Net income $ 24 $ 137
Adjustments to reconcile net income
to net cash used by operating activities:
Depreciation -- 3
Gain on sale of equipment (2) (2)
Equity in earnings from joint ventures, net (4) (176)
Provision for losses on accounts receivable 5 19
Gain on sale of securities -- (19)
Decrease in accounts receivable -- 4
Decrease in accounts payable and
accrued expenses (20) (182)
Increase in other assets (15) (3)
------- -------
Net cash used by operating activities (12) (219)
------- -------
Investing Activities:
Proceeds from sale of equipment 2 2
Proceeds from sale of securities -- 90
Distributions from joint ventures 174 274
------- -------
Net cash provided by investing activities 176 366
------- -------
Financing Activities:
Distributions to partners -- (2,228)
------- -------
Net cash used by financing activities -- (2,228)
------- -------
Increase (decrease) in cash and cash equivalents 164 (2,081)
Cash and cash equivalents, beginning of period 670 2,708
------- -------
Cash and cash equivalents, end of period $ 834 $ 627
======= =======
The accompanying notes are an integral part of these statements.
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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 1996 amounts have been reclassified to
conform to the 1997 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 (loss) 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 three month
periods ended September 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.
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Note 5. Investment in Joint Ventures.
Equipment Joint Ventures
The aggregate combined financial information of the equipment joint
ventures is as follows:
September 30, December 31,
1997 1996
------- -------
(Amounts in Thousands)
Assets $ 1,377 $ 2,912
Liabilities 557 786
Partners' Capital 820 2,126
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
------- ------- ------- -------
(Amounts in Thousands)
Revenue $ 271 $ 822 $ 1,630 $ 2,854
Expenses 921 400 1,646 1,530
Net Income (Loss) (650) 422 (16) 1,324
Financing Joint Ventures
The aggregate combined financial information of the financing joint
ventures is as follows:
September 30, December 31,
1997 1996
------- -------
(Amounts in Thousands)
Assets $ 37 $ 38
Liabilities 11 4
Partners' Capital 26 34
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
------- ------- ------- -------
(Amounts in Thousands)
Revenue $ 21 $ 15 $ 40 $ 56
Expenses 1 3 5 11
Net Income 20 12 35 45
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Foreclosed Cable Systems Joint Venture
The financial information of the foreclosed cable systems joint
venture is as follows:
September 30, December 31,
1997 1996
------- -------
(Amounts in Thousands)
Assets $ -- $ --
Liabilities -- --
Partners' Capital -- --
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
------- ------- ------- -------
(Amounts in Thousands)
Revenue $ -- $ (3) $ -- $ 1,244
Expenses -- -- -- 165
Net Income (Loss) -- (3) -- 1,079
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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 net loss of $68,000 and net income of $24,000
during the three and nine months ended September 30, 1997, respectively,
compared to net income of $24,000 and $137,000 for the same periods in the prior
year. The decrease in earnings during the three and nine months ended September
30, 1997, compared to the same periods in 1996, is attributable to a decline in
earnings from joint ventures.
Total revenues decreased by $115,000 and $165,000 during the three and
nine months ended September 30, 1997, respectively, when compared to the same
periods in 1996. The decrease in total revenues during the three and nine months
ended September 30, 1997 is primarily attributable to a decrease in earnings
from joint ventures, as will be further discussed under "Joint Ventures".
Additionally, the absence of a gain on sale of securities also contributed to
the decline in total revenues for the nine months ended September 30, 1997,
compared to $19,000 for the same period in the prior year. 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 $90,000.
The decrease in earnings from joint ventures for the three and nine
months ended September 30, 1997 is partially offset by an increase in rental
income of $15,000 and $14,000, respectively, as compared to the same periods in
the previous year.
Interest income from notes receivable of $13,000 for the nine months
ended September 30, 1997 also partially offset the decline in earnings from
joint ventures for the period. The Partnership received a disbursement of
proceeds during the nine months ended September 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 note receivable was placed into escrow to
cover liabilities which may have arisen after the payoff.
Total expenses decreased by $23,000 and $52,000 during the three and
nine months ended September 30, 1997, respectively, as compared to the same
periods in 1996. The decrease during the three and nine months ended September
30, 1997, as compared to the same periods in 1996, is due to a decline in nearly
all expense items with the decrease in general and administrative expenses
contributing one of the largest decreases of $9,000 and $28,000 for the three
and nine months ended September 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 nine months ended September 30, 1997, compared to
the same periods in 1996. Another factor contributing to the decrease in total
expenses is the decline in provision for losses on receivables of $14,000 for
both the three and nine months ended September 30, 1997, compared to the same
periods in the previous year.
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
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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 $134,000 and $172,000 during
the three and nine months ended September 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 one equipment joint venture recording
provisions for additional depreciation and losses on notes receivable.
Liquidity and Capital Resources
During the nine months ended September 30, 1997, the net cash used by
leasing and financing activities was $12,000, as compared to the net cash used
by leasing and financing activities of $219,000 during the nine months ended
September 30, 1996. The improvement in net cash generated by leasing and
financing activities for the nine months ended September 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 $100,000 for the nine months ended September 30,
1997, compared to the same period in 1996. The decrease experienced during the
nine months ended September 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 September 30, 1997, the Partnership owned equipment held for
lease with a purchase price of $25,000 and a net book value of $0, as compared
to $685,000 and $1,000 at September 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 nine months
ended September 30, 1997. The Limited Partners received their annual
distribution of $2,228,000 during the nine months ended September 30, 1996. The
cumulative cash distributions to the Limited Partners is $75,915,000 at
September 30, 1997 and 1996. The General Partner did not receive distributions
during the nine months ended September 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.
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PHOENIX LEASING INCOME FUND VI
September 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
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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
---- ----- ---------
November 12, 1997 Senior Vice President /S/ GARY W. MARTINEZ
- -------------------- and a Director of ----------------------
Phoenix Leasing Incorporated (Gary W. Martinez)
General Partner
November 12, 1997 Chief Financial Officer, /S/ PARITOSH K. CHOKSI
- -------------------- Senior Vice President, ----------------------
Treasurer and a Director of (Paritosh K. Choksi)
Phoenix Leasing Incorporated
General Partner
November 12, 1997 Senior Vice President, /S/ BRYANT J. TONG
- -------------------- Financial Operations of ----------------------
(Principal Accounting Officer) (Bryant J. Tong)
Phoenix Leasing Incorporated
General Partner