-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EJ2uJUH05rZQuHeiyX9gRUoaEh+RkyatLO7dJTZPyhpG32LoiJAHgAO75IOC+XJQ h3wf6/e2SdBhWQMTlC/j8Q== 0000950149-95-000767.txt : 19951119 0000950149-95-000767.hdr.sgml : 19951119 ACCESSION NUMBER: 0000950149-95-000767 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951113 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: IEA INCOME FUND VI CENTRAL INDEX KEY: 0000774482 STANDARD INDUSTRIAL CLASSIFICATION: WATER TRANSPORTATION [4400] IRS NUMBER: 942942941 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-14440 FILM NUMBER: 95590067 BUSINESS ADDRESS: STREET 1: 444 MARKET ST 15TH FLR CITY: SAN FRANCISCO STATE: CA ZIP: 94111 BUSINESS PHONE: 4156778990 10-Q 1 FORM 10-Q FOR IEA INCOME FUND VI. 1 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 QUARTERLY PERIOD ENDED SEPTEMBER 30, 1995 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 0-14440 IEA INCOME FUND VI, (A CALIFORNIA LIMITED PARTNERSHIP) (Exact name of registrant as specified in its charter) California 94-2942941 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 444 Market Street, 15th Floor, San Francisco, California 94111 (Address of principal executive offices) (Zip Code) (415) 677-8990 (Registrant's telephone number, including area code) 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 . --- --- 2 IEA INCOME FUND VI, (A CALIFORNIA LIMITED PARTNERSHIP) REPORT ON FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1995 TABLE OF CONTENTS
PAGE PART I - FINANCIAL INFORMATION Item 1. Financial Statements Balance Sheets - September 30, 1995 (unaudited) and December 31, 1994 2 Statements of Operations for the three and nine months ended September 30, 1995 and 1994 3 (unaudited) Statements of Cash Flows for the nine months ended September 30, 1995 and 1994 4 (unaudited) Notes to Financial Statements (unaudited) 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of 8 Operations PART II - OTHER INFORMATION Item 6. Exhibit and Reports on Form 8-K 10
3 PART I - FINANCIAL INFORMATION Item 1. Financial Statements Presented herein are the Registrant's balance sheets as of September 30, 1995 and December 31, 1994, statements of operations for the three and nine months ended September 30, 1995 and 1994, and statements of cash flows for the nine months ended September 30, 1995 and 1994. 4 IEA INCOME FUND VI, (A CALIFORNIA LIMITED PARTNERSHIP) BALANCE SHEETS (UNAUDITED)
September 30, December 31, 1995 1994 ------------- ------------ Assets ------ Current assets: Cash, includes $344,741 at September 30, 1995 and $259,681 at December 31, 1994 in interest-bearing accounts $ 345,340 $ 269,503 Short-term investments 1,580,000 1,500,000 Net lease receivables due from Leasing Company (notes 1 and 2) 835,734 1,007,199 ------------ ------------ Total current assets 2,761,074 2,776,702 ------------ ------------ Container rental equipment, at cost 18,703,725 20,201,897 Less accumulated depreciation 10,482,931 10,560,772 ------------ ------------ Net container rental equipment 8,220,794 9,641,125 ------------ ------------ Net investment in direct financing lease -- 16,451 ------------ ------------ $ 10,981,868 $ 12,434,278 ============ ============ Partners' Capital ----------------- Partners' capital (deficit): General partners $ 2,285 $ (19,414) Limited partners 10,979,583 12,453,692 ------------ ------------ Total partners' capital 10,981,868 12,434,278 ------------ ------------ $ 10,981,868 $ 12,434,278 ============ ============
The accompanying notes are an integral part of these statements. 2 5 IEA INCOME FUND VI, (A CALIFORNIA LIMITED PARTNERSHIP) STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended Nine Months Ended -------------------------- -------------------------- September 30, September 30, September 30, September 30, 1995 1994 1995 1994 ------------- ------------ ------------- ------------- Net lease revenue (notes 1 and 3) $ 744,483 $ 694,263 $2,448,629 $2,433,592 Other operating expenses: Depreciation 250,629 275,309 771,644 849,645 Other general and administrative expenses 1,143 19,606 45,493 59,238 ---------- ---------- ---------- ---------- 251,772 294,915 817,137 908,883 ---------- ---------- ---------- ---------- Earnings from operations 492,711 399,348 1,631,492 1,524,709 Other income: Interest income 26,816 22,796 85,641 54,358 Net gain on disposal of equipment 45,179 162,079 265,070 318,233 ---------- ---------- ---------- ---------- 71,995 184,875 350,711 372,591 ---------- ---------- ---------- ---------- Net earnings $ 564,706 $ 584,223 $1,982,203 $1,897,300 ========== ========== ========== ========== Allocation of net earnings: General partners $ 117,722 $ 124,673 $ 326,998 $ 312,502 Limited partners 446,984 459,550 1,655,205 1,584,798 ---------- ---------- ---------- ---------- $ 564,706 $ 584,223 $1,982,203 $1,897,300 ========== ========== ========== ========== Limited partners' per unit share of net earnings $ 10 $ 10 $ 38 $ 36 ========== ========== ========== ==========
The accompanying notes are an integral part of these statements. 3 6 IEA INCOME FUND VI, (A CALIFORNIA LIMITED PARTNERSHIP) STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended --------------------------- September 30, September 30, 1995 1994 ------------ ----------- Net cash provided by operating activities $ 2,723,245 $ 2,438,123 Cash flows provided by investing activities: Proceeds from disposal of equipment 867,205 877,515 Cash flows used in financing activities: Distribution to partners (3,434,613) (3,494,870) ----------- ----------- Net increase (decrease) in cash and cash equivalents 155,837 (179,232) Cash and cash equivalents at January 1 1,769,503 2,013,284 ----------- ----------- Cash and cash equivalents at September 30 $ 1,925,340 $ 1,834,052 =========== ===========
The accompanying notes are an integral part of these statements. 4 7 IEA INCOME FUND VI, (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO UNAUDITED FINANCIAL STATEMENTS SEPTEMBER 30, 1995 AND DECEMBER 31, 1994 (1) Summary of Significant Accounting Policies (a) Nature of Operations IEA Income Fund VI, A California Limited Partnership (the "Partnership") is a limited partnership organized under the laws of the State of California on August 1, 1984 for the purpose of owning and leasing marine cargo containers. The managing general partner is Cronos Capital Corp. ("CCC"); the associate general partners include four individuals. CCC, with its affiliate Cronos Containers Limited (the "Leasing Company"), manages and controls the business of the Partnership. (b) Leasing Company and Leasing Agent Agreement Pursuant to the Limited Partnership Agreement of the Partnership, all authority to administer the business of the Partnership is vested in CCC. CCC has entered into a Leasing Agent Agreement whereby the Leasing Company has the responsibility to manage the leasing operations of all equipment owned by the Partnership. Pursuant to the Agreement, the Leasing Company is responsible for leasing, managing and re-leasing the Partnership's containers to ocean carriers and has full discretion over which ocean carriers and suppliers of goods and services it may deal with. The Leasing Agent Agreement permits the Leasing Company to use the containers owned by the Partnership, together with other containers owned or managed by the Leasing Company and its affiliates, as part of a single fleet operated without regard to ownership. Since the Leasing Agent Agreement meets the definition of an operating lease in Statement of Financial Accounting Standards (SFAS) No. 13, it is accounted for as a lease under which the Partnership is lessor and the Leasing Company is lessee. The Leasing Agent Agreement generally provides that the Leasing Company will make payments to the Partnership based upon rentals collected from ocean carriers after deducting direct operating expenses and management fees to CCC. The Leasing Company leases containers to ocean carriers, generally under operating leases which are either master leases or term leases (mostly two to five years). Master leases do not specify the exact number of containers to be leased or the term that each container will remain on hire but allow the ocean carrier to pick up and drop off containers at various locations; rentals are based upon the number of containers used and the applicable per-diem rate. Accordingly, rentals under master leases are all variable and contingent upon the number of containers used. Most containers are leased to ocean carriers under master leases; leasing agreements with fixed payment terms are not material to the financial statements. Since there are no material minimum lease rentals, no disclosure of minimum lease rentals is provided in these financial statements. (c) Basis of Accounting The Partnership utilizes the accrual method of accounting. Revenue is recognized when earned. (Continued) 5 8 IEA INCOME FUND VI, (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO UNAUDITED FINANCIAL STATEMENTS (d) Financial Statement Presentation These financial statements have been prepared without audit. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting procedures have been omitted. It is suggested that these financial statements be read in conjunction with the financial statements and accompanying notes in the Partnership's latest annual report on Form 10-K. The interim financial statements presented herewith reflect all adjustments of a normal recurring nature which are, in the opinion of management, necessary to a fair statement of the financial condition and results of operations for the interim periods presented. (2) Net Lease Receivables Due from Leasing Company Net lease receivables due from the Leasing Company are determined by deducting direct operating payables and accrued expenses, base management fees payable, reimbursed administrative expenses and incentive fees payable to CCC, the Leasing Company, and its affiliates from the rental billings payable by the Leasing Company to the Partnership under operating leases to ocean carriers for the containers owned by the Partnership. Net lease receivables at September 30, 1995 and December 31, 1994 were as follows:
September 30, December 31, 1995 1994 ------------- ------------ Lease receivables, net of doubtful accounts of $336,372 at September 30, 1995 and $294,133 at December 31, 1994 $1,639,938 $1,838,648 Less: Direct operating payables and accrued expenses 336,065 259,314 Damage protection reserve 172,626 285,686 Base management fees 129,438 145,923 Reimbursed administrative expenses 20,455 26,708 Incentive fees 145,620 113,818 ---------- ---------- $ 835,734 $1,007,199 ========== ==========
6 9 IEA INCOME FUND VI, (A CALIFORNIA LIMITED PARTNERSHIP) NOTES TO UNAUDITED FINANCIAL STATEMENTS (3) Net Lease Revenue Net lease revenue is determined by deducting direct operating expenses, management fees and reimbursed administrative expenses to CCC and the Leasing Company, from the rental revenue billed by the Leasing Company under operating leases to ocean carriers for the containers owned by the Partnership. Net lease revenue for the three and nine-month periods ended September 30, 1995 and 1994, was as follows:
Three Months Ended Nine Months Ended ----------------------------- ----------------------------- September 30, September 30, September 30, September 30, 1995 1994 1995 1994 ------------- ------------ ------------ ------------- Rental revenue $1,351,909 $1,467,580 $4,210,557 $4,414,627 Rental equipment operating expenses 287,969 464,160 831,965 1,031,160 Base management fees 91,148 109,257 282,632 307,976 Incentive fees 145,619 113,817 413,424 374,928 Reimbursed administrative expenses 82,690 86,083 233,907 266,971 ---------- ---------- ---------- ---------- $ 744,483 $ 694,263 $2,448,629 $2,433,592 ========== ========== ========== ==========
7 10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations It is suggested that the following discussion be read in conjunction with the Registrant's most recent annual report on Form 10-K. 1) Material changes in financial condition between September 30, 1995 and December 31, 1994. The Registrant's cash balances at September 30, 1995 included sales proceeds from equipment disposals in the amount of $260,776. The Registrant will distribute these sales proceeds and $878,404 of cash from operations during the fourth quarter of 1995, representing distributions to its limited partners for the third quarter of 1995. Net lease receivables due from the Leasing Company declined 17% from December 31, 1994. Contributing to this decline was a 30% increase in direct operating payables and accrued expenses, arising from an increase in deferred revenue from advance billings to container lessees. During the first nine months of 1995, the reserve for container repairs covered by the damage protection plan was impacted by a reduction in the number of containers covered under the plan, resulting in a 40% decline, partially offsetting the increase in direct operating payables and accrued expenses. 2) Material changes in the results of operations between the three and nine-month periods ended September 30, 1995 and the three and nine-month periods ended September 30, 1994. Net lease revenue for the third quarter of 1995 was $744,483, an increase of 7% over the third quarter of 1994. Gross rental revenue (a component of net lease revenue) for the quarter was $1,351,909, a decline of 8% from the same period last year. For the first nine months of 1995, net lease revenue was $2,448,629 as compared to $2,433,592 for the first nine months of 1994. Gross rental revenue declined 5% to $4,210,557 over the same nine-month period. Gross rental revenue for the third quarter and first nine months of 1995 was primarily affected by the Registrant's diminishing fleet size. During the third quarter of 1995, utilization rates were constant with those experienced in the same quarter in the prior year, while average utilization rates for the nine-month period ending 1995 were higher than the average utilization for the same nine-month period in the prior year. However, competitive pressures within the container leasing market, as well as the Leasing Company's efforts to improve the credit quality of its customer portfolio, combined to create a resistance to higher per-diem rental rates. Accordingly, average per-diem rental rates remained relatively stable when compared to the same periods in the prior year. The Registrant expects to gain long-term benefits from the improvement in the credit quality of this customer portfolio, as the allowance for doubtful accounts and related expenses should decline. The Registrant's average fleet size and utilization rates for the three and nine-month periods ended September 30, 1995 and 1994 were as follows:
Three Months Ended Nine Months Ended ----------------------------- ----------------------------- September 30, September 30, September 30, September 30, 1995 1994 1995 1994 ------------- ------------- ------------- ------------- Average Fleet Size (measured in twenty-foot equivalents (TEU)) 10,780 12,043 11,177 12,391 Average Utilization 87% 87% 89% 87%
8 11 During the third quarter of 1995, the container leasing market began to experience the effects of increasingly competitive market conditions, including, but not limited to, a resistance to higher per-diem rental rates, slightly lower utilization rates resulting from an expanding supply of marine cargo containers within the container industry, and the economic condition of the shipping industry, which has experienced a current trend toward consolidation. Accordingly, the Registrant expects a stable container leasing market during the remainder of 1995 and first half of 1996. Rental equipment operating expenses declined 38% and 19% during the three and nine-month periods ended September 30, 1995, respectively, when compared to the same periods in the prior year. The declining fleet size was a contributing factor to the declines in base management fees and reimbursed administrative expenses. Incentive fees, which are based on the operating performance of the fleet and sales proceeds, are incurred only after the limited partners receive an 8% cumulative, compounded (daily), annual return on their Adjusted Capital Contribution. A rise in container disposals contributed to an increase in these fees of approximately 28% and 10%, respectively, when compared to the same three and nine-month periods in 1994. Approximately 8% and 13% of the Registrant's net earnings for the three and nine-month periods ended September 30, 1995, respectively, were from gain on disposal of equipment, as compared to 28% and 17%, respectively, for the same three and nine-month periods in the prior year. As the Registrant accelerates the disposal of its containers in subsequent periods, net gain on disposal will contribute significantly to the Registrant's net earnings. 9 12 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits
Number Description Method of Filing ------ ----------- ---------------- 27 Financial Data Schedule Filed with this Document
(b) There were no reports on Form 8-K during the three-month period ended September 30, 1995. 10 13 SIGNATURES 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. IEA INCOME FUND VI, A California Limited Partnership By Cronos Capital Corp. The Managing General Partner By /s/ JOHN KALLAS --------------------------------------- John Kallas Vice President, Chief Financial Officer Principal Accounting Officer Date: November 13, 1995 11 14 EXHIBIT INDEX
Exhibit No. Description ------- ----------- 27 Financial Data Schedule
EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE SHEET AT SEPTEMBER 30, 1995 (UNAUDITED) AND THE STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30,1995 (UNAUDITED) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS INCLUDED AS PART OF ITS QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD SEPTEMBER 30, 1995 9-MOS DEC-31-1995 JAN-01-1995 SEP-30-1995 1,925,340 0 835,734 0 0 2,761,074 18,703,725 10,482,931 10,981,868 0 0 0 0 0 10,981,868 10,981,868 0 2,799,340 0 817,137 0 0 0 0 0 0 0 0 0 1,982,203 0 0
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