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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
FORM 10-QSB




   [X]   Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
      For the fiscal quarter ended March 31, 2003


   [ ]   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 0-21806
_______________________



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.)
 
 
 
235 3 rd Street South, Suite 200
 
 
St. Petersburg, FL
 
33701
(Address of principal
 
(Zip code)
executive offices)
 
 


Registrant's telephone number, including area code: (727) 803-1800
_______________________


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)
CONDENSED BALANCE SHEETS
(in thousands of dollars, except unit amounts)
(unaudited)


 
March 31,
 
December 31,
 
 
2003
 
 
 
2002
 
 
       
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equipment held for operating leases
$
66,759
 
 
$
62,686
 
Less accumulated depreciation
 
(45,331
)
 
 
(44,382
)
   
      
Net equipment
 
21,428
 
 
 
18,304
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
4,736
 
 
 
8,286
 
Restricted cash
 
410
 
 
 
410
 
Accounts receivable, less allowance for doubtful accounts
 
 
 
 
 
 
 
of $460 in 2003 and $425 in 2002
 
993
 
 
 
944
 
Investments in unconsolidated special-purpose entities
 
12,538
 
 
 
12,625
 
Deferred charges, net of accumulated amortization of
 
 
 
 
 
 
 
$403 in 2003 and $368 in 2002
 
347
 
 
 
342
 
Prepaid expenses and other assets
 
286
 
 
 
273
 
   
      
 
 
 
 
 
 
 
 
Total assets
$
40,738
 
 
$
41,184
 
   
      

Liabilities and partners’ capital
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
Accounts payable and accrued expenses
$
373
 
 
$
449
 
Due to affiliates
 
1,473
 
 
 
1,391
 
Lessee deposits and reserve for repairs
 
53
 
 
 
18
 
Notes payable
 
12,000
 
 
 
12,750
 
Total liabilities
 
13,899
 
 
 
14,608
 
 
       
 
 
 
 
 
 
 
 
Commitments and contingencies
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Partners’ capital:
 
 
 
 
 
 
 
Limited partners (7,730,965 limited partnership units in 2003
 
 
 
 
 
 
 
and in 2002)
 
26,839
 
 
 
26,576
 
General Partner
 
--
 
 
 
--
 
 
       
Total partners’ capital
 
26,839
 
 
 
26,576
 
 
       
 
 
 
 
 
 
 
 
Total liabilities and partners’ capital
$
40,738
 
 
$
41,184
 
 
       














See accompanying notes to unaudited condensed financial statements.
 

     

 

PLM EQUIPMENT GROWTH FUND VI
(A Limited Partnership)
CONDENSED STATEMENTS OF OPERATIONS
(in thousands of dollars, except weighted-average unit amounts)
(unaudited)

 
For the Three Months
Ended March 31,
 
 
2003
 
 
 
2002
 
 
       

Revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lease revenue
$
1,994
 
 
$
2,547
 
Interest and other income
 
24
 
 
 
19
 
Gain on disposition of equipment
 
36
 
 
 
18
 
Loss on disposition of equipment
 
(17
)
 
 
(4
)
Total revenues
 
2,037
 
 
 
2,580
 
 
       
 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
1,025
 
 
 
1,030
 
Repairs and maintenance
 
298
 
 
 
311
 
Insurance expenses
 
64
 
 
 
37
 
Management fees to affiliate
 
81
 
 
 
141
 
Interest expense
 
154
 
 
 
249
 
General and administrative expenses to affiliates
 
45
 
 
 
56
 
Other general and administrative expenses
 
278
 
 
 
1,109
 
Loss on impairment of equipment
 
77
 
 
 
--
 
Provision for bad debts
 
36
 
 
 
22
 
 
       
Total expenses
 
2,058
 
 
 
2,955
 
 
       
 
 
 
 
 
 
 
 
Equity in net income (loss) of unconsolidated special-purpose entities
 
284
 
 
 
(95
)
 
 
 
 
 
 
 
Net income (loss)
$
263
 
 
$
(470
)
 
       
 
 
 
 
 
 
 
 
Partners’ share of net income (loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Limited partners
$
263
 
 
$
(470
)
General Partner
 
--
 
 
 
--
 
 
 
 
 
 
 
 
 
Total
$
263
 
 
$
(470
)
 
       
 
 
 
 
 
 
 
 
Limited partners' net income (loss) per weighted-average
 
 
 
 
 
 
 
limited partnership unit
$
0.03
 
 
$
(0.06
)
 
       













See accompanying notes to unaudited condensed financial statements.
 

     

 

PLM EQUIPMENT GROWTH FUND VI
(A Limited Partnership)
CONDENSED STATEMENTS OF CHANGES IN PARTNERS’ CAPITAL
For the period from December 31, 2001 to March 31, 2003
(in thousands of dollars)
(unaudited)

 
Limited
Partners
 
General
Partner
 
 
Total
 
     
 
 
 
 
 
 
 
 
 
 
 
Partners’ capital as of December 31, 2001
$
27,498
 
 
$
--
 
 
$
27,498
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 
(1,096
)
 
 
--
 
 
 
(1,096
)
 
 
 
 
 
 
 
 
 
 
 
 
Canceled purchase of limited partnership units
 
174
 
 
 
--
 
 
 
174
 
   
          
 
 
 
 
 
 
 
 
 
 
 
 
Partners’ capital as of December 31, 2002
 
26,576
 
 
 
--
 
 
 
26,576
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 
263
 
 
 
--
 
 
 
263
 
   
          
 
 
 
 
 
 
 
 
 
 
 
 
Partners’ capital as of March 31, 2003
$
26,839
 
 
$
--
 
 
$
26,839
 
   
          








 


See accompanying notes to unaudited condensed financial statements.
 

     

 

PLM EQUIPMENT GROWTH FUND VI
(A Limited Partnership)
CONDENSED STATEMENTS OF CASH FLOWS
(in thousands of dollars)
(unaudited)
 
For the Three Months
Ended March 31,
 
 
2003
 
 
 
2002
 
 
 
        
Operating activities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)
$
263
 
 
$
(470
)
 
Adjustments to reconcile net income (loss) to net cash
 
 
 
 
 
 
 
 
provided by (used in) operating activities:
 
 
 
 
 
 
 
 
Depreciation and amortization
 
1,025
 
 
 
1,030
 
 
Amortization of debt placement fees
 
31
 
 
 
74
 
 
Net gain on disposition of equipment
 
(19
)
 
 
(14
)
 
Loss on impairment of equipment
 
77
 
 
 
--
 
 
Provision for bad debts
 
36
 
 
 
22
 
 
Equity in net (income) loss from unconsolidated special-purpose
 
 
 
 
 
 
 
 
entities
 
(284
)
 
 
95
 
 
Changes in operating assets and liabilities:
 
 
 
 
 
 
 
 
Accounts receivable, net
 
(70
)
 
 
72
 
 
Prepaid expenses and other assets
 
(13
)
 
 
(25
)
 
Accounts payable and accrued expenses
 
(76
)
 
 
25
 
 
Due to affiliates
 
82
 
 
 
132
 
 
Lessee deposits and reserve for repairs
 
35
 
 
 
(2
)
 
Net cash provided by operating activities
 
1,087
 
 
 
939
 
 
 
        
 
 
 
 
 
 
 
 
 
Investing activities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Payments for the purchase of equipment and capitalized repairs
 
(4,099
)
 
 
--
 
 
Payment of acquisition fees to affiliate
 
(184
)
 
 
--
 
 
Payment of lease negotiation fees to affiliate
 
(41
)
 
 
--
 
 
Distribution from unconsolidated special-purpose entities
 
371
 
 
 
645
 
 
Proceeds from disposition of equipment
 
66
 
 
 
44
 
 
 
        
Net cash (used in) provided by investing activities
 
(3,887
)
 
 
689
 
 
 
        
 
 
 
 
 
 
 
 
 
Financing activities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Payment of notes payable
 
(750
)
 
 
(20,000
)
 
Proceeds from notes payable
 
--
 
 
 
15,000
 
 
Refund from limited partnership units not eligible for purchase
 
--
 
 
 
11
 
 
Net cash used in financing activities
 
(750
)
 
 
(4,989
)
 
 
        
 
 
 
 
 
 
 
 
 
Net decrease in cash and cash equivalents
 
(3,550
)
 
 
(3,361
)
 
Cash and cash equivalents at beginning of period
 
8,286
 
 
 
8,051
 
 
      
    
Cash and cash equivalents at end of period
$
4,736
 
 
$
4,690
 
 
 
        
 
 
 
 
 
 
 
 
 
Supplemental information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non cash cancellation of purchase of limited partnership units
$
--
 
 
$
174
 
 
 
        
Interest paid
$
63
 
 
$
63
 
 
 
        







See accompanying notes to unaudited condensed financial statements.
 

     

 
PLM EQUIPMENT GROWTH FUND VI
(A Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(unaudited)

1.   Opinion of Management

In the opinion of the management of PLM Financial Services, Inc. (FSI or the General Partner), the accompanying unaudited condensed financial statements contain all adjustments necessary, consisting primarily of normal recurring accruals, to present fairly the unaudited condensed financial position of PLM Equipment Growth Fund VI (the Partnership) as of March 31, 2003 and December 31, 2002, the unaudited condensed statements of operations for the three months ended March 31, 2003 and 2002, the unaudited condensed statements of changes in partners’ capital for the period from December 31, 2001 to March 31, 2003, and the unaudited condensed statements of cash flows for the three months ended March 31, 2003 and 2002. Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted from the accompanying condensed 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, 2002, on file at the Securities and Exchange Commission.

Effective with the filing of this quarterly report, the Partnership will file all future quarterly and annual reports as an SB filer as allowed under Regulation S-B until such point that the Partnership no longer qualifies to be an SB filer.

2.   Schedule of Partnership Phases

The Partnership is currently in its investment phase during which the Partnership uses cash generated from operations and proceeds from asset dispositions to purchase additional equipment. The General Partner believes these acquisitions may cause the Partnership to generate additional earnings and cash flow for the Partnership.

The Partnership may reinvest its cash flow, surplus cash and equipment disposition proceeds in additional equipment, consistent with the objectives of the Partnership, until December 31, 2004. The Partnership will terminate on December 31, 2011, unless terminated earlier upon sale of all equipment and by certain other events.

3.   Reclassification

Certain amounts in the 2002 financial statements have been reclassified to conform to the 2003 presentations.

4.   Cash Distributions

Cash distributions are recorded when declared. Cash distributions are generally paid in the same quarter they are declared and may include amounts in excess of net income that are considered a return of capital. No cash distributions were paid to the limited partners during the three months ended March 31, 2003 and 2002.

5.   Transactions with General Partner and Affiliates

The balance due to affiliates as of March 31, 2003 and December 31, 2002, included $0.1 million due to FSI and its affiliates for management fees and $1.4 million and $1.3 million, respectively, due to affiliated unconsolidated special-purpose entities (USPEs).

During the three months ended March 31, 2003 and 2002, the Partnership’s proportional share of ownership in USPEs paid or accrued the following fees to FSI or its affiliates: management fees, $60,000 and $58,000, respectively; and administrative and data processing services, $5,000 and $20,000, respectively.
 

     

 
PLM EQUIPMENT GROWTH FUND VI
(A Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(unaudited)

5.   Transactions with General Partner and Affiliates (continued)

These affiliate expenses reduced the Partnership's proportional share of the equity interest in the income of USPEs.

During the three months ended March 31, 2003, the Partnership purchased a fleet of railcars and paid FSI $0.2 million for acquisition fees and $41,000 for lease negotiation fees. No similar fees were paid during the same period of 2002.

6.   Equipment

Owned equipment held for operating leases is stated at cost. The components of owned equipment were as follows (in thousands of dollars):

 
March 31,
 
December 31,
 
 
              2003
 
 
2002
 
 
       
 
 
 
 
 
 
 
 
Marine containers
$
24,114
 
 
$
24,223
 
Railcars
 
21,209
 
 
 
17,027
 
Aircraft and components
 
16,224
 
 
 
16,224
 
Trailers
 
5,212
 
 
 
5,212
 
   
 
     
 
 
 
 
66,759
 
 
 
62,686
 
Less accumulated depreciation
 
(45,331
)
 
 
(44,382
)
   
  
     
 
 
Net equipment
$
21,428
 
 
$
18,304
 
   
 
     
 
 

As of March 31, 2003, all owned equipment in the Partnership’s portfolio was on lease except for 336 railcars, aircraft components and 14 marine containers with an aggregate net book value of $5.4 million. As of December 31, 2002, all owned equipment in the Partnership's portfolio was on lease except for 15 marine containers and 183 railcars with an aggregate net book value of $0.9 million.

During the three months ended March 31, 2003, the Partnership purchased a fleet of railcars for $4.3 million including acquisition fees.

During the three months ended March 31, 2003, the Partnership disposed of marine containers and railcars, with an aggregate net book value of $0.1 million for proceeds of $0.1 million. During the three months ended March 31, 2002, the Partnership disposed of marine containers and a railcar, with an aggregate net book value of $31,000 for proceeds of $45,000.

Equipment held for operating leases is stated at cost less any reductions to the carrying value as required by Financial Accounting Standards Board (FASB) No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets". In 2003, the Partnership recorded an impairment of $0.1 million to owned aircraft components. During 2003, the Partnership marketed the aircraft components for re-lease or sale and this indicated to the General Partner that an impairment may exist. The General Partner determined the fair value of the aircraft components based on the valuation given by its independent third party aircraft equipment manager that consi dered, among other factors, expected income to be earned from the asset, condition of the aircraft components, estimated sales proceeds and holding costs excluding interest. No reductions were required to the carrying value of the owned equipment during the first quarter of 2002.
 

     

 

PLM EQUIPMENT GROWTH FUND VI
(A Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(unaudited)

7.   Investments in Unconsolidated Special-Purpose Entities

The Partnership owns equipment jointly with affiliated programs. These are single purpose entities that do not have any debt or other financial encumbrances. Ownership interest is based on the Partnership’s contribution towards the cost of the equipment in the USPEs. The Partnership’s proportional share of equity and income (loss) in each entity is not necessarily the same as its ownership interest. The primary reason for this difference has to do with certain fees such as management and acquisition and lease negotiation fees varying among the owners of the USPEs.

The tables below set forth 100% of the assets, liabilities, and equity of the entities in which the Partnership has an interest and the Partnership’s proportional share of equity in each entity as of March 31, 2003 and December 31, 2002 (in thousands of dollars):



 
 
                      Boeing
                            Aero
 
 
 
 
 
                     737-300
                         California
                                 Lion
 
 
As of March 31, 2003
 
                       Trust 1
                           Trust 2
                                  Partnership 3
Total
 

 
 
     

Assets
 
 
 
 
 
 
 
 
 
 
 
 
Equipment less accumulated depreciation
$
11,838
 
$
--
 
$
7,050
 
 
 
 
Receivables
 
1,970
 
 
420
 
 
1,382
 
 
 
 
Finance lease receivable
 
--
 
 
2,330
 
 
--
 
 
 
 
Other assets
 
--
 
 
114
 
 
7
 
 
 
 
 
        
       
Total assets
$
13,808
 
$
2,864
 
$
8,439
 
 
 
 
 
        
       
Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
Accounts payable
$
1
 
$
2
 
$
297
 
 
 
 
Due to affiliates
 
7
 
 
2
 
 
56
 
 
 
 
Lessee deposits and reserve for repairs
 
1,970
 
 
420
 
 
155
 
 
 
 
 
        
       
Total liabilities
 
1,978
 
 
424
 
 
508
 
 
 
 
 
        
       
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity
 
11,830
 
 
2,440
 
 
7,931
 
 
 
 
 
        
       
Total liabilities and equity
$
13,808
 
$
2,864
 
$
8,439
 
 
 
 
 
        
       
 
 
 
 
 
 
 
 
 
 
 
 
 
Partnership’s share of equity
$
7,418
 
$
976
 
$
4,144
 
$
12,538
 
 
        
 
   



 
 
Boeing
Aero
 
 
 
 
 
737-300
California
Lion
 
 
As of December 31, 2002
 
Trust 1
Trust 2
Partnership 3
Total
 

 
 
     

Assets
 
 
 
 
 
 
 
 
 
 
 
 
Equipment less accumulated depreciation
$
12,355
 
$
--
 
$
7,356
 
 
 
 
Receivables
 
1,825
 
 
420
 
 
716
 
 
 
 
Finance lease receivable
 
--
 
 
2,425
 
 
--
 
 
 
 
Other assets
 
3
 
 
137
 
 
10
 
 
 
 
 
        
       
Total assets
$
14,183
 
$
2,982
 
$
8,082
 
 
 
 
 
        
       
Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
Accounts payable
$
--
 
$
1
 
$
548
 
 
 
 
Due to affiliates
 
7
 
 
2
 
 
44
 
 
 
 
Lessee deposits and reserve for repairs
 
1,825
 
 
420
 
 
97
 
 
 
 
 
        
       
Total liabilities
 
1,832
 
 
423
 
 
689
 
 
 
 
 
        
     
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity
 
12,351
 
 
2,559
 
 
7,393
 
 
 
 
 
        
       
Total liabilities and equity
$
14,183
 
$
2,982
 
$
8,082
 
 
 
 
 
        
       
 
 
 
 
 
 
 
 
 
 
 
 
 
Partnership’s share of equity
$
7,733
 
$
1,024
 
$
3,868
 
$
12,625
 
 
        
 
   


   
1    The Partnership owns a 62% interest in the Boeing 737-300 Trust that owns a stage III commercial aircraft.
2  The Partnership owns a 40% interest in the Aero California Trust that owns two stage III commercial aircraft on a direct finance lease.
3    The Partnership owns a 53% interest in the Lion Partnership that owns a product tanker.
 

     

 

PLM EQUIPMENT GROWTH FUND VI
(A Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(unaudited)

7.   Investments in Unconsolidated Special-Purpose Entities (continued)

The tables below set forth 100% of the revenues, direct and indirect expenses and net income (loss) of the entities in which the Partnership has an interest, and the Partnership‘s proportional share of income (loss) in each entity for the three months ended March 31, 2003 and 2002 (in thousands of dollars):

 
 
Boeing
 
Aero
 
 
 
 
 
For the three months ended
 
737-300
 
California
 
Lion
 
 
 
March 31, 2003
 
Trust 1
 
Trust 2
 
Partnership 3
 
Total
 

 
 
 
 
 
 
 
 
 
 

Revenues
$
465
 
$
103
 
$
1,861
 
 
 
 
Less: Direct expenses
 
5
 
 
5
 
 
850
 
 
 
 
         Indirect expenses
 
550
 
 
30
 
 
418
 
 
 
 
 
        
       
Net income (loss)
$
(90
)
$
68
 
$
593
 
 
 
 
 
        
       
 
 
 
 
 
 
 
 
 
 
 
 
 
Partnership’s share of net income (loss)
$
(48
)
$
27
 
$
305
 
$
284
 
 
        
 
  
 

 
 
Boeing
 
Aero
 
 
 
 
 
 
 
For the three months ended
 
737-300
 
California
 
Lion
 
 
 
 
 
March 31, 2002
 
Trust 1
 
Trust 2
 
Partnership 3
 
Other
 
Total
 

 
 
 
 
 
 
 
 
 
 
 
 

Revenues
$
465
 
$
138
 
$
1,560
 
$
--
 
 
 
 
Less: Direct expenses
 
16
 
 
5
 
 
991
 
 
--
 
 
 
 
         Indirect expenses
 
743
 
 
34
 
 
497
 
 
2
 
 
 
 
 
           
       
Net income (loss)
$
(294
)
$
99
 
$
72
 
$
(2
)
 
 
 
 
           
       
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Partnership’s share of
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)
$
(172
)
$
40
 
$
38
 
$
(1
)
$
(95
)
 
           
 
  
 

As of March 31, 2003 and December 31, 2001, all jointly-owned equipment in the Partnership’s USPE portfolio was on lease.






















   
1    The Partnership owns a 62% interest in the Boeing 737-300 Trust that owns a stage III commercial aircraft.
2  The Partnership owns a 40% interest in the Aero California Trust that owns two stage III commercial aircraft on a direct finance lease.
3    The Partnership owns a 53% interest in the Lion Partnership that owns a product tanker.
 

     

 
PLM EQUIPMENT GROWTH FUND VI
(A Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(unaudited)

8.   Operating Segments

The Partnership operates in five primary operating segments: marine vessel leasing, aircraft leasing, railcar leasing, trailer leasing and marine container leasing. Each equipment leasing segment primarily engages in short-term to mid-term operating leases to a variety of customers.

The following tables present a summary of the operating segments (in thousands of dollars):

 
 
Marine
 
 
 
 
 
 
 
Marine
 
 
 
 
 
For the three months ended
 
Vessel
 
Aircraft
 
Railcar
 
Trailer
 
Container
 
 
 
 
 
March 31, 2003
 
Leasing
 
Leasing
 
Leasing
 
Leasing
 
Leasing
 
Other 1
 
Total
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lease revenue
$
--
 
$
346
 
$
669
 
$
217
 
$
762
 
$
--
 
$
1,994
 
 
Interest income and other
 
--
 
 
--
 
 
--
 
 
--
 
 
--
 
 
24
 
 
24
 
 
Gain (loss) on disposition of equipment
 
--
 
 
--
 
 
(17
)
 
--
 
 
36
 
 
--
 
 
19
 
 
 
                     
 
Total revenues
 
--
 
 
346
 
 
652
 
 
217
 
 
798
 
 
24
 
 
2,037
 
 
 
                     
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operations support
 
--
 
 
--
 
 
222
 
 
110
 
 
12
 
 
18
 
 
362
 
 
Depreciation and amortization
 
--
 
 
36
 
 
381
 
 
73
 
 
533
 
 
2
 
 
1,025
 
 
Interest expense
 
--
 
 
--
 
 
--
 
 
--
 
 
--
 
 
154
 
 
154
 
 
Management fees to affiliate
 
--
 
 
9
 
 
37
 
 
8
 
 
27
 
 
--
 
 
81
 
 
General and administrative expenses
 
--
 
 
--
 
 
65
 
 
36
 
 
19
 
 
203
 
 
323
 
 
Loss on impairment of equipment
 
--
 
 
77
 
 
--
 
 
--
 
 
--
 
 
--
 
 
77
 
 
Provision for bad debts
 
--
 
 
--
 
 
36
 
 
--
 
 
--
 
 
--
 
 
36
 
 
Total expenses
 
--
 
 
122
 
 
741
 
 
227
 
 
591
 
 
377
 
 
2,058
 
 
 
                     
 
Equity in net income (loss) of USPEs
 
305
 
 
(21
)
 
--
 
 
--
 
 
--
 
 
--
 
 
284
 
 
 
                     
 
Net income (loss)
$
305
 
$
203
 
$
(89
)
$
(10
)
$
207
 
$
(353
)
$
263
 
 
 
                     
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total assets as of March 31, 2003
$
4,144
 
$
9,013
 
$
8,692
 
$
977
 
$
12,133
 
$
5,779
 
$
40,738
 
 
 
                     
 


 
 
Marine
 
 
 
 
 
 
 
Marine
 
 
 
 
 
For the three months ended
 
Vessel
 
Aircraft
 
Railcar
 
Trailer
 
Container
 
 
 
 
 
March 31, 2002
 
Leasing
 
Leasing
 
Leasing
 
Leasing
 
Leasing
 
Other 2
 
Total
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Lease revenue
$
--
 
$
410
 
$
917
 
$
211
 
$
1,009
 
$
--
 
$
2,547
 
 
Interest income and other
 
--
 
 
--
 
 
--
 
 
--
 
 
--
 
 
19
 
 
19
 
 
Gain (loss) on disposition of equipment
 
--
 
 
--
 
 
(4
)
 
--
 
 
18
 
 
--
 
 
14
 
 
 
                     
 
Total revenues
 
--
 
 
410
 
 
913
 
 
211
 
 
1,027
 
 
19
 
 
2,580
 
 
 
                     
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operations support
 
(5
)
 
21
 
 
167
 
 
138
 
 
11
 
 
16
 
 
348
 
 
Depreciation and amortization
 
--
 
 
47
 
 
236
 
 
73
 
 
651
 
 
23
 
 
1,030
 
 
Interest expense
 
--
 
 
--
 
 
--
 
 
--
 
 
--
 
 
249
 
 
249
 
 
Management fees to affiliate
 
--
 
 
17
 
 
64
 
 
10
 
 
50
 
 
--
 
 
141
 
 
General and administrative expenses
 
--
 
 
(4
)
 
38
 
 
38
 
 
1
 
 
1,092
 
 
1,165
 
 
Provision for bad debts
 
--
 
 
--
 
 
5
 
 
17
 
 
--
 
 
--
 
 
22
 
 
Total expenses
 
(5
)
 
81
 
 
510
 
 
276
 
 
713
 
 
1,380
 
 
2,955
 
 
 
                     
 
Equity in net income (loss) of USPEs
 
37
 
 
(132
)
 
--
 
 
--
 
 
--
 
 
--
 
 
(95
)
 
 
                     
 
Net income (loss)
$
42
 
$
197
 
$
403
 
$
(65
)
$
314
 
$
(1,361
)
$
(470
)
 
 
                     
 





   
1   Includes certain assets not identifiable to a specific segment such as cash, restricted cash, deferred charges and prepaid expenses. Also includes interest income and costs not identifiable to a particular segment, such as interest expense, and certain amortization, general and administrative and operations support expenses.
2 Includes interest income and costs not identifiable to a particular segment, such as interest expense, and certain amortization, general and administrative and operations support expenses.
 

     

 

PLM EQUIPMENT GROWTH FUND VI
(A Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(unaudited)

9. Net Income (Loss) Per Weighted-Average Limited Partnership Unit

Net income (loss) per weighted-average limited partnership unit was computed by dividing net income (loss) attributable to limited partners by the weighted-average number of limited partnership units deemed outstanding during the period. The weighted-average number of limited partnership units deemed outstanding during the three months ended March 31, 2003 and 2002 was 7,730,965 and 7,748,509, respectively.

10.   Debt

The Partnership is a participant in a $10.0 million warehouse facility. The warehouse facility is shared by the Partnership, PLM Equipment Growth Fund V, PLM Equipment Growth & Income Fund VII, Professional Lease Management Income Fund I, LLC and Acquisub LLC, a wholly owned subsidiary of PLM International Inc. (PLMI). The facility provides for financing up to 100% of the cost of the equipment and expires on June 30, 2003. Any borrowings by the Partnership are collateralized by equipment purchased with the proceeds of the loan. Outstanding borrowings by one borrower reduce the amount available to each of the other borrowers under the facility. Individual borrowings may be outstanding for no more than 270 days, with all advances due no later than June 30, 2003. Interest accrues either at the prime rate or LIBOR plus 2.0% at the borrower’s option and is set at the time of an advance of funds. Borrowings by the Partnership are guaranteed by PLMI. The Partnership is not liable for the advances made to other borrowers.

As of March 31, 2003, there were no outstanding borrowings on this facility by the Partnership or any of the other eligible borrowers.

The Partnership made the regularly scheduled principal payment of $0.8 million to the lender of the notes payable during the three months ended March 31, 2003.

11.   Commitments and Contingencies

PLM Transportation Equipment Corp. Inc. (TEC), a wholly owned subsidiary of FSI, arranged for the lease or purchase of a total of 1,050 pressurized tank railcars by (i) partnerships and managed programs in which FSI serves as the general partner or manager and holds an ownership interest (Program Affiliates) or (ii) managed programs in which FSI provides management services but does not hold an ownership interest or third parties (Non-Program Affiliates). These railcars will be delivered between 2002 - 2004. A leasing company affiliated with the manufacturer will acquire approximately 70% of the railcars and lease them to a Non-Program Affiliate. The remaining 30% will either be purchased by other third parties to be managed by PLMI, or by the Program Affiliates. An affiliate of TEC will manage the leased and purchased railcars. Neither TEC nor its affiliate will be liable for these railcars. TEC estimates that the total value of purchased railcars will not exceed $26.0 million with approximately one third of the railcars being purchased in each of 2002, 2003, and 2004. As of March 31, 2003, $5.1 million in railcars had been purchased by Program Affiliates and FSI committed one Program Affiliate, other than the Partnership, to purchase $5.2 million in railcars during the remainder of 2003. Although FSI has neither determined which Program Affiliates will purchase the remaining railcars nor the timing of any purchases, it is possible the Partnership may purchase some of the railcars.

In 2003, FSI entered into three additional commitments to purchase a total of $12.1 million in railcars during 2003. While FSI has neither determined if a Program Affiliates will purchase these railcars nor the timing of any purchases, it is possible the Partnership may purchase some of the railcars.
 

     

 
PLM EQUIPMENT GROWTH FUND VI
(A Limited Partnership)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(unaudited)

11.   Commitments and Contingencies (continued)

   Notes Payable/$30.0 million Term Loan Facility

See Note 10 for discussion of the Partnership’s note payable

Warehouse Credit Facility

See Note 10 for discussion of the Partnership’s warehouse credit facility.

Commitments and contingencies as of March 31, 2003 are as follows (in thousands of dollars):

 
 
 
                Less than
                               1-3
 
                               4-5
                        After 5
Current Obligations
          Total
 
                            1 Year
 
               Years
 
Years
Years
 

    
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commitment to purchase railcars
$
26,880
 
$
18,438
 
$
8,442
 
$
--
$
--
 
Notes payable
 
12,000
 
 
3,000
 
 
6,000
 
 
3,000
 
--
 
Line of credit
 
--
 
 
--
 
 
--
 
 
--
 
--
 
 
              
 
$
38,880
 
$
21,438
 
$
14,442
 
 
3,000
$
--
 
 
              

12.   Recent Accounting Pronouncements

In January 2003, FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities” (FIN 46). This interpretation clarifies existing accounting principles related to the preparation of consolidated financial statements when the owners of an USPE do not have the characteristics of a controlling financial interest or when the equity at risk is not sufficient for the entity to finance its activities without additional subordinated financial support from others. FIN 46 requires the Partnership to evaluate all existing arrangements to identify situations where the Partnership has a “variable interest,” commonly evidenced by a guarantee arrangement or other commitment to provide financial support, in a “variable interest entity,” commonly a thinly capitalized enti ty, and further determine when such variable interest requires the Partnership to consolidate the variable interest entities’ financial statements with its own. The Partnership is required to perform this assessment by September 30, 2003 and consolidate any variable interest entities for which the Partnership will absorb a majority of the entities’ expected losses or receive a majority of the expected residual gains. The Partnership has determined that it is not reasonably possible that it will be required to consolidate or disclose information about a variable interest entity upon the effective date of FIN 46.

13.   Subsequent Event

During April 2003, the Partnership made its regularly scheduled debt payment of $0.8 million to the lenders of the notes payable.

 

     

 
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 March 31, 2003 and 2002

(A)   Owned Equipment Operations

Lease revenues less direct expenses (defined as repairs and maintenance and asset-specific insurance expenses) on owned equipment decreased during the three months ended March 31, 2003, compared to the same period of 2002. Gains or losses from the disposition of equipment, interest and other income, and certain expenses such as management fees to affiliate, depreciation and amortization, loss on impairment of equipment and general and administrative expenses relating to the operating segments (see Note 8 to the unaudited condensed financial statements), are not included in the owned equipment operation discussion because these expenses are indirect in nature and not a result of operations, but the result of owning a portfolio of equipment. The following table presents lease revenues less direct expens es by segment (in thousands of dollars):

 
For the Three Months
 
Ended March 31,
 
2003
 
2002
 
   
Marine containers
$
750
 
 
$
998
 
Railcars
 
447
 
 
 
750
 
Aircraft and components
 
346
 
 
 
389
 
Trailers
 
107
 
 
 
73
 
Marine vessel
 
--
 
 
 
5
 

Marine containers: Marine container lease revenues and direct expenses were $0.8 million and $12,000, respectively, for the three months ended March 31, 2003, compared to $1.0 million and $11,000, respectively, during the same quarter of 2002. The decrease in lease revenues of $0.2 million during the first quarter of 2003 was due to some of the marine containers owned by the Partnership switching from a fixed lease rate to utilization based rate resulting in lower lease revenues.

Railcars: Railcar lease revenues and direct expenses were $0.7 million and $0.2 million, respectively, for the three months ended March 31, 2003, compared to $0.9 million and $0.2 million, respectively, during the same quarter of 2001. A decrease in railcar lease revenues of $0.2 million was due to an increase in the number of off-lease railcars during 2003 compared to 2002. An increase in railcar direct expenses of $0.1 million in the first quarter of 2003 was due to an increase in the repairs and maintenance of $30,000 and an increase in insurance premiums of $24,000 compared to the same period of 2002.

Aircraft and components: Aircraft lease revenues and direct expenses were $0.3 million and $-0-, respectively, for the three months ended March 31, 2003, compared to $0.4 million and $21,000, respectively, during the same period of 2002. A decrease in aircraft and components lease revenues of $0.1 million was due to the aircraft components being off-lease during part of 2003 compared to the same period of 2002 when they were on-lease the entire period.

Trailers:   Trailer lease revenues and direct expenses were $0.2 million and $0.1 million, respectively, for the three months ended March 31, 2003 and 2002. Trailer contribution increased $34,000 due to lower repairs and maintenance costs when compared to the same period of 2002.

(B)   Indirect Expenses Related to Owned Equipment Operations

Total indirect expenses of $1.7 million for the quarter ended March 31, 2003 decreased from $2.6 million for the same period in 2002. Significant variances are explained as follows:

   (i)   A $0.8 million decrease in general and administrative expenses during the three months ended March 31, 2003 was due to a $1.0 million debt prepayment penalty in the first quarter 2002 related to the Partnership’s note payable that did not occur during 2003 offset, in part, by a $0.1 increase in administrative services during 2003;

   (ii)   A $0.1 million decrease in interest expense resulted from lower average borrowings outstanding in the first quarter of 2003 compared to the same period of 2002;

   (iii)   A $0.1 million decrease in management fees was the result of a decrease of $29,000 due to lower lease revenues earned in the three months ended March 31, 2003 compared to the same period of 2002 and a decrease of $31,000 resulting from the decrease in the management fee rate paid by the Partnership;

   (iv)   A $5,000 decrease in depreciation and amortization expenses from 2002 levels reflects the increase of approximately $0.2 million caused by the purchase of a fleet of railcars during the three months ended March 31, 2003 offset by a decrease of $0.2 million caused by the double-declining balance method of depreciation which results in greater depreciation in the first years an asset is owned; and

   (v)   A $0.1 million increase in the loss on impairment of equipment resulted from the Partnership reducing the carrying value of the owned aircraft components to their estimated fair value. No impairment of equipment was required during the first quarter of 2002.

(C)   Net Gain on Disposition of Owned Equipment

The net gain on the disposition of owned equipment for the first quarter of 2003 totaled $19,000, and resulted from the sale of marine containers and railcars, with an aggregate net book value of $0.1 million for proceeds of $0.1 million. The net gain on the disposition of owned equipment for the first quarter of 2002 totaled $14,000, and resulted from the sale of marine containers and a railcar, with an aggregate net book value of $31,000 for proceeds of $45,000.

(D)   Equity in Net Income (Loss) of Unconsolidated Special-Purpose Entities (USPEs)

Equity in net income (loss) of USPEs represents the Partnership's share of the net income or loss generated from the operation of jointly owned assets accounted for under the equity method of accounting. These entities are single purpose and have no debt or other financial encumbrances. The following table presents equity in net income (loss) by equipment type (in thousands of dollars):

 
For the Three Months
 
Ended March 31,
 
2003
 
2002
 
   
Marine vessels
$
305
 
 
$
37
 
Aircraft
 
(21
)
 
 
(132
)
Equity in net income (loss) of USPEs
$
284
 
 
$
(95
)
   
  
 
   

The following USPE discussion by equipment type is based on the Partnership's proportional share of revenues, depreciation expense, direct expenses, and administrative expenses in the USPEs:

Marine vessels:   As of March 31, 2003 and 2002, the Partnership owned an interest in an entity that owned a marine vessel. During the three months ended March 31, 2003, lease revenues of $1.0 million were offset by depreciation expense, direct expenses, and administrative expenses of $0.7 million. During the same period of 2002, lease revenues of $0.8 million were offset by depreciation expense, direct expenses, and administrative expenses of $0.8 million.

Marine vessel lease revenues increased $0.2 million during the three months ended March 31, 2003 due to higher charter rates earned during the first quarter of 2003 compared to the same period of 2002.

Marine vessel direct expenses decreased $0.1 million during the three months ended March 31, 2003 compared to the same period in 2002 due to lower operating expenses.

Aircraft: As of March 31, 2003 and 2002, the Partnership owned an interest in two commercial aircraft on a direct finance lease and an interest in a Boeing 737-300 commercial aircraft. During the first quarter of 2003, revenues of $0.3 million were offset by depreciation expense, direct expenses and administrative expenses of $0.4 million. During the same period of 2002, revenues of $0.3 million were offset by depreciation expense, direct expenses and administrative expenses of $0.5 million.

Aircraft revenues decreased $14,000 due to a lower outstanding principal balance on the finance lease compared to 2002.

Depreciation expense, direct expenses, and administrative expenses decreased $0.1 million during the three months ended March 31, 2003 resulting from the double-declining balance method of depreciation which results in greater depreciation in the first years an asset is owned.

(E)   Net Income (Loss)

As a result of the foregoing, the Partnership's net income for the three months ended March 31, 2003 was $0.3 million, compared to a net loss of $0.5 million during the same period of 2002. 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. Therefore, the Partnership's performance in the first quarter of 2003 is not necessarily indicative of future periods.

(II)   CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires PLM Financial Services, Inc. (FSI or the General Partner) to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On a regular basis, the General Partner reviews these estimates including those related to asset lives and depreciation methods, impairment of long-lived assets, allowance for doubtful accounts, reserves related to legally mandated equipment repairs and contingencies and litigation. These estimates are based on the General Partner's historical experience and on various other assumptions believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. The General Partner believes, however, that the estimates, including those for the above-listed items, are reasonable and that actual results will not vary significantly from the estimated amounts.

The General Partner believes the following critical accounting policies affect the more significant judgments and estimates used in the preparation of the Partnership's financial statements:

Asset lives and depreciation methods: The Partnership’s primary business involves the purchase and subsequent lease of long-lived transportation and related equipment. The General Partner has chosen asset lives that it believes correspond to the economic life of the related asset. The General Partner has chosen a deprecation method that it believes matches the benefit to the Partnership from the asset with the associated costs. These judgments have been made based on the General Partner’s expertise in each equipment segment that the Partnership operates. If the asset life and depreciation method chosen does not reduce the book value of the asset to at least the potential future cash flows from the asset to the Partnership, the Partnership would be required to record an impairment loss. Likew ise, if the net book value of the asset was reduced by an amount greater than the economic value has deteriorated, the Partnership may record a gain on sale upon final disposition of the asset.

Impairment of long-lived assets: Whenever circumstances indicate that an impairment may exist, the General Partner reviews the carrying value of its equipment and investments in USPEs to determine if the carrying value of the assets may not be recoverable, in consideration of the current economic conditions. This requires the General Partner to make estimates related to future cash flows from each asset as well as the determination if the deterioration is temporary or permanent. If these estimates or the related assumptions change in the future, the Partnership may be required to record additional impairment charges.

Allowance for doubtful accounts: The Partnership maintains allowances for doubtful accounts for estimated losses resulting from the inability of the lessees to make the lease payments. These estimates are primarily based on the amount of time that has lapsed since the related payments were due as well as specific knowledge related to the ability of the lessees to make the required payments. If the financial condition of the Partnership’s lessees were to deteriorate, additional allowances could be required that would reduce income. Conversely, if the financial condition of the lessees were to improve or if legal remedies to collect past due amounts were successful, the allowance for doubtful accounts may need to be reduced and income would be increased.

Reserves for repairs: The Partnership accrues for legally required repairs to equipment such as dry docking for marine vessels and engine overhauls to aircraft engines over the period prior to the required repairs. The amount that is reserved for is based on the General Partner’s expertise in each equipment segment, the past history of such costs for that specific piece of equipment and discussions with independent, third party equipment brokers. If the amount reserved for is not adequate to cover the cost of such repairs or if the repairs must be performed earlier than the General Partner estimated, the Partnership would incur additional repair and maintenance or equipment operating expenses.

Contingencies and litigation: The Partnership is subject to legal proceedings involving ordinary and routine claims related to its business. The ultimate legal and financial liability with respect to such matters cannot be estimated with certainty and requires the use of estimates in recording liabilities for potential litigation settlements. Estimates for losses from litigation are disclosed if considered possible and accrued if considered probable after consultation with outside counsel. If estimates of potential losses increase or the related facts and circumstances change in the future, the Partnership may be required to record additional litigation expense.

(III)   FINANCIAL CONDITION -- CAPITAL RESOURCES AND LIQUIDITY

For the three months ended March 31, 2003, the Partnership generated $1.1 million in operating cash to meet its operating obligations, purchase additional equipment, pay debt and interest payments and maintain working capital reserves.

During the three months ended March 31, 2003, the Partnership purchased a fleet of railcars for $4.1 million and paid FSI $0.2 million for acquisition fees and $41,000 for lease negotiation fees. The Partnership also disposed of owned equipment and received aggregate proceeds of $0.1 million.

Accounts receivable increased $49,000 during the three months ended March 31, 2003 due to the timing of cash receipts.

Investments in USPEs decreased $0.1 million during the three months ended March 31, 2003 due to cash distributions of $0.4 million from the USPEs to the Partnership offset, in part, by $0.3 million in income that was recorded by the Partnership for its equity interests in the USPEs.

Accounts payable decreased $0.1 million during the three months ended March 31, 2003 due to the timing of cash payments.

The Partnership made its scheduled principal payment of $0.8 million on the notes payable during the three months ended March 31, 2003. The Partnership is scheduled to make a quarterly debt payment of $0.8 million plus interest to the lenders of the notes payable each quarter. The cash for each payment will come from operations and equipment dispositions.

The Partnership is a participant in a $10.0 million warehouse facility. The warehouse facility is shared by the Partnership, PLM Equipment Growth Fund V, PLM Equipment Growth & Income Fund VII, Professional Lease Management Income Fund I, LLC and Acquisub LLC, a wholly owned subsidiary of PLM International Inc. (PLMI). The facility provides for financing up to 100% of the cost of the equipment and expires on June 30, 2003. Any borrowings by the Partnership are collateralized by equipment purchased with the proceeds of the loan. Outstanding borrowings by one borrower reduce the amount available to each of the other borrowers under the facility. Individual borrowings may be outstanding for no more than 270 days, with all advances due no later than June 30, 2003. Interest accrues either at the prime rate or LIBOR plus 2.0% at the borrower’s option and is set at the time of an advance of funds. Borrowings by the Partnership are guaranteed by PLMI. The Partnership is not liable for the advances made to other borrowers.

As of May 12, 2003, there were no outstanding borrowings on this facility by the Partnership or any of the other eligible borrowers.

PLM Transportation Equipment Corp. Inc. (TEC), a wholly owned subsidiary of FSI, arranged for the lease or purchase of a total of 1,050 pressurized tank railcars by (i) partnerships and managed programs in which FSI serves as the general partner or manager and holds an ownership interest (Program Affiliates) or (ii) managed programs in which FSI provides management services but does not hold an ownership interest or third parties (Non-Program Affiliates). These railcars will be delivered between 2002 - 2004. A leasing company affiliated with the manufacturer will acquire approximately 70% of the railcars and lease them to a Non-Program Affiliate. The remaining 30% will either be purchased by other third parties to be managed by PLMI, or by the Program Affiliates. An affiliate of TEC will manage the leased and purchased railcars. Neither TEC nor its affiliate will be liable for these railcars. TEC estimates that the total value of purchased railcars will not exceed $26.0 million with approximately one third of the railcars being purchased in each of 2002, 2003, and 2004. As of May 12, 2003, $5.1 million in railcars had been purchased by Program Affiliates and FSI committed one Program Affiliate, other than the Partnership, to purchase $5.2 million in railcars during the remainder of 2003. Although FSI has neither determined which Program Affiliates will purchase the remaining railcars nor the timing of any purchases, it is possible the Partnership may purchase some of the railcars.

In 2003, FSI entered into three additional commitments to purchase a total of $12.1 million in railcars during 2003. While FSI has neither determined if a Program Affiliates will purchase these railcars nor the timing of any purchases, it is possible the Partnership may purchase some of the railcars.

Commitments and contingencies as of May 12, 2003 are as follows (in thousands of dollars):

 
 
 
                                 Less than
 
                                1-3
 
                             4-5
                        After 5
 
Current Obligations
             Total
 
                              1 Year
 
                Years
 
Years
 Years
 

    
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commitment to purchase railcars
$
26,880
 
$
18,438
 
$
8,442
 
$
--
$
--
 
Notes payable
 
11,250
 
 
3,000
 
 
6,000
 
 
2,250
 
--
 
Line of credit
 
--
 
 
--
 
 
--
 
 
--
 
--
 
 
              
 
$
38,130
 
$
21,438
 
$
14,442
 
 
2,250
$
--
 
 
              

(IV)   RECENT ACCOUNTING PRONOUNCEMENT

In January 2003, Financial Accounting Standards Board issued Interpretation No. 46, “Consolidation of Variable Interest Entities” (FIN 46). This interpretation clarifies existing accounting principles related to the preparation of consolidated financial statements when the owners of an USPE do not have the characteristics of a controlling financial interest or when the equity at risk is not sufficient for the entity to finance its activities without additional subordinated financial support from others. FIN 46 requires the Partnership to evaluate all existing arrangements to identify situations where the Partnership has a “variable interest,” commonly evidenced by a guarantee arrangement or other commitment to provide financial support, in a “v ariable interest entity,” commonly a thinly capitalized entity, and further determine when such variable interest requires the Partnership to consolidate the variable interest entities’ financial statements with its own. The Partnership is required to perform this assessment by September 30, 2003 and consolidate any variable interest entities for which the Partnership will absorb a majority of the entities’ expected losses or receive a majority of the expected residual gains. The Partnership has determined that it is not reasonably possible that it will be required to consolidate or disclose information about a variable interest entity upon the effective date of FIN 46.

(V)   OUTLOOK FOR THE FUTURE

Several factors may affect the Partnership's operating performance during the remainder of 2003 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.

Other factors affecting the Partnership’s contribution during the remainder of 2003 and beyond include:

(1)   The cost of new marine containers has been at historic lows for the past several years, which has caused downward pressure on per diem lease rates for this type of equipment. In addition, during 2003, a significant number of the Partnership’s marine containers currently on a fixed rate lease will be switching to a lease based on utilization. The General Partner anticipates that this will result in a significant decrease in lease revenues;

(2)   Industry-wide chemical shipments, a good indicator for the demand of the types of railcars owned by the Partnership, were up 4% during the first quarter of 2003 compared to the same period of 2002 although growth in comparable shipments slowed during the month of March 2003. Overall industry-wide railcar utilization has been on a slightly positive trend since the third quarter of 2002. Recovery has been slowed by the uncertainties caused by the war in Iraq and the number of idle railcars owned by shippers in their fleet;

(3)   Marine vessel freight rates are usually dependent upon the overall condition of the international economy. Freight rates earned by the Partnership’s partially owned marine vessel began to decrease during most of 2002. In the fourth quarter of 2002 and into 2003, freight rates for the Partnership’s partially owned marine vessel, which primarily carries clean petroleum products, started to increase due to an increase in oil prices caused by political instability in the Middle East and a shortage of heating oil and gasoline in the United States caused by refinery maintenance and clean product delivery problems out of Venezuela due to politi cal unrest;

(4)   Market demand for new and used aircraft has been severely impacted by the poor financial condition of the airline industry caused by lower passenger travel following the events of September 11, 2001 and the war in Iraq. The General Partner believes that there is a significant oversupply of commercial aircraft available, that has caused a decrease in aircraft fair market values and that this oversupply will continue for some time. The General Partner does not expect these aircraft to return to their pre-September 11, 2001 values. During 2003, severe acute respiratory syndrome (SARS) has had a dramatic effect on passenger travel to countries in Asia . If this trend continues, it is possible that passenger travel will be reduced further.

In the first quarter of 2003, the Partnership’s owned aircraft components came off-lease. The General Partner is currently marketing this equipment for lease or for sale. Due to the poor market condition for equipment of this type, the equipment may be off-lease for a considerable period of time.

The lessee of the Partnership’s owned MD-80 commercial aircraft that is on lease until July 2008 has encountered financial difficulty and may go into bankruptcy. If the airline does go into bankruptcy, the aircraft could be returned to the Partnership prior to its lease expiration date or, alternatively, the Partnership could attempt to renegotiate with the carrier at a significantly lower lease rate. Due to the poor market condition for equipment of this type, if the equipment is returned prior to its lease expiration date, it may either be off-lease for a considerable period of time or re-leased at a substantially lower rate. In an effort to assist the airline to stay out of bankruptcy, the Partnership has agreed to reduce the lease payment due on this aircraft by approximately 5% a month.;

(5)   Utilization of intermodal trailers owned by the Partnership was 54% in the three months ended March 31, 2003 which was approximately the same as the three months ended March 31, 2002. Industry-wide utilization of intermodal trailers was 48% in the three months ended March 31, 2003 compared to 53% in the same period of 2002. As the Partnership’s trailers are smaller than many shippers prefer, the General Partner expects utilization to decline over the next few years;

(6)   The General Partner has seen an increase in its insurance premiums on its equipment portfolio and is finding it more difficult to find an insurance carrier with which to place the coverage. Premiums for aircraft have increased over 50% and for other types of equipment the increases have been over 25%. The increase in insurance premiums caused by the increased rate will be partially mitigated by the reduction in the value of the Partnership’s equipment portfolio caused by the events of September 11, 2001 and other economic factors. The General Partner has also experienced an increase in the deductible required to obtain coverage. This may have a negative impact on the Partnership in the event of an insurance claim; and

(7)   The management fee rate paid by the Partnership was reduced by 25% for the period starting January 1, 2003 and ending June 30, 2005. The General Partner expects audit fees to increase during 2003 due to additional audit and accounting requirements resulting from Sarbanes-Oxley. The General Partner cannot estimate the amount of the increase in this fee at this point. In addition, as a result of the increase in off-lease equipment, the General Partner expects the Partnership will be paying higher remarketing and storage costs during the remainder of 2003.

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. Alternat ively, 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 may reinvest its cash flow, surplus cash, and equipment sale proceeds in additional equipment, consistent with the objectives of the Partnership, until December 31, 2004. The General Partner believes that these acquisitions may cause the Partnership to generate additional earnings and cash flow for the Partnership. Surplus funds, if any, less reasonable reserves, may be distributed to the partners. The Partnership will terminate on December 31, 2011, unless terminated earlier upon sale of all equipment and by certain other events.

The Partnership intends to use cash flow from operations to satisfy its operating requirements, pay loan principal and interest on debt, and pay cash distributions to the partners.

(VI)   FORWARD-LOOKING INFORMATION

Except for the historical information contained herein, this Form 10-QSB 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-QSB should be read as being applicable to all related forward-looking statements wherever they appear in this Form 10-QSB. The Partnership’s actual results could differ materially from those discussed here.

ITEM 3.   CONTROLS AND PROCEDURES

Within the 90-day period prior to the filing of this report, evaluations were carried out under the supervision and with the participation of the General Partner's management, including its President and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-14(c) under the Securities Exchange Act of 1934). Based upon those evaluations, the President and Chief Financial Officer concluded that the design and operation of these disclosure controls and procedures were effective. No significant changes have been made in the Partnership’s in ternal controls or in other factors that could significantly affect these controls subsequent to the date of the evaluations.
 

     

 


PART II -- OTHER INFORMATION


ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

   (a)   Exhibits

None.

   (b)    Reports on Form 8-K

None.






















(This space intentionally left blank)

 

     

 
CONTROL CERTIFICATION



I, James A. Coyne, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of PLM Equipment Growth Fund VI.

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant is made known to us by others, particularly during the period in which this quarterly report is prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and board of Managers:

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.




Date: May 12, 2003   By:   /s/ James A. Coyne   
                                                                                                James A. Coyne
                                                                                                 President

 

     

 
CONTROL CERTIFICATION



I, Richard K Brock, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of PLM Equipment Growth Fund VI.

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant is made known to us by others, particularly during the period in which this quarterly report is prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and board of Managers:

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.




Date: May 12, 2003   By:   /s/ Richard K Brock   
                                                                                                 Richard K Brock
                                                                                                 Chief Financial Officer
                                                                                                 (Principal Financial Officer)

 

     

 



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: May 12, 2003                                                                                         By:   /s/ Richard K Brock   
                                                                                                                             Richard K Brock
                                                                                                                             Chief Financial Officer





CERTIFICATION

The undersigned hereby certifies, in their capacity as an officer of the General Partner of PLM Equipment Growth Fund VI (the Partnership), that the Quarterly Report of the Partnership on Form 10-QSB for the period ended March 31, 2003, fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that the information contained in such report fairly presents, in all material respects, the financial condition of the Partnership at the end of such period and the results of operations of the Partnership for such period.



   PLM EQUIPMENT GROWTH FUND VI

   By:  PLM Financial Services, Inc.
                                                                                                                            General Partner




Date: May 12, 2003                                                                                         By:   /s/ James A. Coyne   
                                                                                                                             James A. Coyne
                                                                                                                             President




Date: May 12, 2003                                                                                        By:   /s/ Richard K Brock   
                                                                                                                            Richard K Brock
                                                                                                                            Chief Financial Officer



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