SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
/X/ Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 30, 1997
/ / 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: 0-18497
Fidelity Leasing Income Fund VI, L.P.
_______________________________________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 23-2540929
_______________________________________________________________________________
(State of organization) (I.R.S. Employer Identification No.)
7004 West Butler Pike, Ambler, PA 19002
_______________________________________________________________________________
(Address of principal executive offices) (Zip code)
(215) 619-2800
_______________________________________________________________________________
(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 regis-
trant was required to file such reports), and (2) has been subject to such fil-
ing requirements for the past 90 days.
Yes __X__ No _____
Page 1 of 12
Part I: Financial Information
Item 1: Financial Statements
FIDELITY LEASING INCOME FUND VI, L.P.
BALANCE SHEETS
ASSETS
(Unaudited) (Audited)
September 30, December 31,
1997 1996
______________ _____________
Cash and cash equivalents $3,123,190 $2,783,827
Accounts receivable 171,524 33,835
Due from related parties 61,610 141,340
Equipment under operating leases
(net of accumulated depreciation
of $8,042,723 and $9,529,793,
respectively) 5,561,755 5,968,039
Net investment in direct financing
leases 353,266 503,093
Equipment held for sale or lease 76,873 5,764
__________ __________
Total assets $9,348,218 $9,435,898
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Lease rents paid in advance $ 123,261 $ 284,933
Accounts payable - equipment - 19,788
Accounts payable and
accrued expenses 48,309 55,318
Due to related parties 13,083 41,183
__________ __________
Total liabilities 184,653 401,222
Partners' capital 9,163,565 9,034,676
__________ __________
Total liabilities and
partners' capital $9,348,218 $9,435,898
========== ==========
The accompanying notes are an integral part of these financial statements.
2
FIDELITY LEASING INCOME FUND VI, L.P.
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
1997 1996 1997 1996
____ ____ ____ ____
Income:
Rentals $1,145,277 $ 975,857 $3,427,258 $3,004,341
Earned income on direct
financing leases 8,393 12,837 28,600 41,633
Interest 35,331 30,927 85,314 127,480
Gain on sale of equipment,
net 6,725 - 113,741 409,978
Other 4,765 2,489 11,159 6,223
__________ __________ __________ __________
1,200,491 1,022,110 3,666,072 3,589,655
__________ __________ __________ __________
Expenses:
Depreciation 792,351 766,833 2,626,232 2,220,249
Write-down of equipment
to net realizable value 158,214 95,990 250,885 754,843
General and administrative 22,791 33,408 84,600 108,853
General and administrative
to related party 41,733 65,198 150,535 188,402
Management fee to related
party 58,453 49,983 174,931 153,413
Loss on sale of equipment,
net - 22,086 - -
__________ __________ __________ __________
1,073,542 1,033,498 3,287,183 3,425,760
__________ __________ __________ __________
Net income (loss) $ 126,949 $ (11,388) $ 378,889 $ 163,895
========== ========== ========== ==========
Net income (loss) per equivalent
limited partnership unit $ 4.26 $ (.44) $ 12.74 $ 5.32
========== ========== ========== ==========
Weighted average number of
equivalent limited partnership
units outstanding during
the period 29,476 29,605 29,435 29,927
========== ========== ========== ==========
The accompanying notes are an integral part of these financial statements.
3
FIDELITY LEASING INCOME F UND VI, L.P.
STATEMENT OF PARTNERS' CAPITAL
For the nine months ended September 30, 1997
(Unaudited)
General Limited Partners
Partner Units Amount Total
_______ _____ ______ _____
Balance, January 1, 1997 $1,750 75,294 $9,032,926 $9,034,676
Cash distributions (2,500) - (247,500) (250,000)
Net income 3,789 - 375,100 378,889
_______ ______ ___________ ___________
Balance, September 30, 1997 $3,039 75,294 $9,160,526 $9,163,565
====== ====== ========== ==========
The accompanying notes are an integral part of these financial statements.
4
FIDELITY LEASING INCOME FUND VI, L.P.
STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 1997 and 1996
(Unaudited) 1997 1996
____ ____
Cash flows from operating activities:
Net income $ 378,889 $ 163,895
__________ __________
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 2,626,232 2,220,249
Write-down of equipment to net
realizable value 250,885 754,843
Proceeds from direct financing leases,
net of earned income 149,827 136,798
Gain on sale of equipment, net (113,741) (409,978)
(Increase) decrease in accounts receivable (137,689) (79,886)
(Increase) decrease in interest receivable - (26,238)
(Increase) decrease in due from related
parties 79,730 (240,850)
Increase (decrease) in lease rents paid
in advance (161,672) 97,594
Increase (decrease) in accounts payable and
accrued expenses (7,009) (24,441)
Increase (decrease) in accounts payable -
equipment (19,788) -
Increase (decrease) in due to related parties (28,100) (261,768)
__________ __________
2,638,675 2,166,323
__________ __________
Net cash provided by operating activities 3,017,564 2,330,218
__________ __________
Cash flows from investing activities:
Acquisition of equipment (2,724,686) (3,799,088)
Maturity of investment securities held
to maturity - 499,740
Proceeds from sale of equipment 296,485 707,195
__________ __________
Net cash used in investing activities (2,428,201) (2,592,153)
__________ __________
Cash flows from financing activities:
Redemptions of capital - (473,814)
Distributions (250,000) (518,812)
__________ __________
Net cash used in financing activities (250,000) (992,626)
__________ __________
Increase (decrease) in cash and
cash equivalents 339,363 (1,254,561)
Cash and cash equivalents, beginning
of period 2,783,827 2,920,100
__________ __________
Cash and cash equivalents, end of period $3,123,190 $1,665,539
========== ==========
The accompanying notes are an integral part of these financial statements.
5
FIDELITY LEASING INCOME FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS
September 30, 1997
(Unaudited)
The accompanying unaudited condensed financial statements have been prepared
by the Fund in accordance with Generally Accepted Accounting Principles,
pursuant to the rules and regulations of the Securities and Exchange Commis-
sion. In the opinion of Management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Certain amounts on the 1996 financial statements have been
reclassified to conform to the presentation in 1997.
1. EQUIPMENT LEASED
Equipment on lease consists primarily of computer equipment under operating
leases. The lessees have agreements with the manufacturer to provide main-
tenance for the leased equipment. The Fund's operating leases are for
initial lease terms of 12 to 60 months. Generally, operating leases will
not recover all of the undepreciated cost and related expenses of its
rental equipment during the initial lease terms and the Fund is prepared to
remarket the equipment in future years. Fund policy is to review quarterly
the expected economic life of its rental equipment in order to determine
the recoverability of its undepreciated cost. Recent and anticipated
technological developments affecting computer equipment and competitive
factors in the marketplace are considered among other things, as part of
this review. In accordance with Generally Accepted Accounting Principles,
the Fund writes down its rental equipment to its estimated net realizable
value when the amounts are reasonably estimated and only recognizes gains
upon actual sale of its rental equipment. As a result, $250,885 and
$754,843 was charged to write-down of equipment to net realizable value
for the nine months ended September 30, 1997 and 1996, respectively. Any
future losses are dependent upon unanticipated technological developments
affecting the computer equipment industry in subsequent years.
The Fund also has equipment leased under the direct financing method in
accordance with Statement of Financial Accounting Standards No. 13. This
method provides for recognition of income (the excess of the aggregate
future rentals and estimated additional amounts recoverable upon expira-
tion of the lease over the related equipment cost) over the life of the
lease using the interest method.
The net investment in direct financing leases as of September 30, 1997 is
as follows:
Net minimum lease payments to be received $378,000
Less unearned income 25,000
Add expected future residuals -
________
$353,000
========
6
FIDELITY LEASING INCOME FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS
1. EQUIPMENT LEASED (Continued)
The future approximate minimum rentals to be received on noncancellable
operating and direct financing leases as of September 30, 1997 are as
follows:
Direct
Years Ending December 31 Operating Financing
________________________ _________ _________
1997 $ 926,000 $ 59,000
1998 2,395,000 238,000
1999 1,589,000 81,000
2000 128,000 -
__________ ________
$5,038,000 $378,000
========== ========
2. RELATED PARTY TRANSACTIONS
The General Partner receives 5% or 2% of gross rental payments from equip-
ment under operating leases and full pay-out leases, respectively, for
administrative and management services performed on behalf of the Fund.
Full pay-out leases are noncancellable leases for which rental payments
during the initial term are at least sufficient to recover the purchase
price of the equipment, including acquisition fees. This management fee
is paid monthly only if and when the Limited Partners have received
distributions for the period from January 1, 1990 through the end of the
most recent quarter equal to a return for such period at a rate of 12% per
year on the aggregate amount paid for their units.
The General Partner may also receive up to 3% of the proceeds from the
sale of the Fund's equipment for services and activities to be performed
in connection with the disposition of equipment. The payment of this sales
fee is deferred until the Limited Partners have received cash distributions
equal to the purchase price of their units plus a 12% cumulative compounded
priority return. Based on current estimates, it is not expected that the
Fund will be required to pay this sales fee to the General Partner.
Additionally, the General Partner and its parent company are reimbursed by
the Fund for certain costs of services and materials used by or for the
Fund except those items covered by the above-mentioned fees. Following is
a summary of fees and costs of services and materials charged by the
General Partner or its parent company during the three and nine months
ended September 30, 1997 and 1996:
Three Months Ended Nine Months Ended
September 30 September 30
1997 1996 1997 1996
____ ____ ____ ____
Management fee $58,453 $49,983 $174,931 $153,413
Reimbursable costs 41,733 65,198 150,535 188,402
7
FIDELITY LEASING INCOME FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
2. RELATED PARTY TRANSACTIONS (Continued)
The Fund maintains its checking and investment accounts in Jefferson Bank,
a subsidiary of JeffBank, Inc., in which the Chairman of Resource America,
Inc. serves as a director.
Amounts due from related parties at September 30, 1997 and December 31,
1996 represent monies due the Fund from the General Partner and/or other
affiliated funds for rentals and sales proceeds collected and not yet re-
mitted the Fund.
Amounts due to related parties at September 30, 1997 and December 31, 1996
represent monies due to the General Partner for the fees and costs men-
tioned above, as well as, rentals and sales proceeds collected by the Fund
on behalf of other affiliated funds.
3. CASH DISTRIBUTION:
The General Partner declared and paid a cash distribution of $25,000 in
both October and November 1997 for the months ended August 31 and
September 30, 1997 to all admitted partners as of August 31 and
September 30, 1997.
8
FIDELITY LEASING INCOME FUND VI, L.P.
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Fidelity Leasing Income Fund VI, L.P. had revenues of $1,200,491 and
$1,022,110 for the three months ended September 30, 1997 and 1996,
respectively, and $3,666,072 and $3,589,655 for the nine months ended
September 30, 1997 and 1996, respectively. Rental income from the leasing of
computer equipment accounted for 95% of total revenues for the third quarter of
both 1997 and 1996 and 93% and 84% for the nine months ended September 30, 1997
and 1996, respectively. The increase in total revenues in 1996 is primarily
attributable to an increase in rental income. During the nine months ended
September 30, 1997, rental income increased by approximately $1,212,000 because
of equipment purchases made since September of 1996 as well as rental income
recognized on 1996 equipment purchases for which a full nine months was earned
in 1997 and only a portion of the nine months was earned in 1996. This
increase, however, was reduced by approximately $789,000 because of equipment
which came off lease and was re-leased at lower rental rates or sold. Addi-
tionally, the Fund recognized a net gain on sale of equipment of $113,741 for
the nine months ended September 30, 1997 as compared to $409,978 for the nine
months ended September 30, 1996 which reduced the overall increase in total
revenues in 1997. Furthermore, interest income decreased in 1997 because of
lower cash balances available for investment by the Fund during the first nine
months of 1997 as compared to the same period in 1996.
Expenses were $1,073,542 and $1,033,498 for the three months ended Septem-
ber 30, 1997 and 1996, respectively, and $3,287,183 and $3,425,760 for the nine
months ended September 30, 1997 and 1996, respectively. Depreciation expense
comprised 74% of total expenses for the third quarter of both 1997 and 1996
and 80% and 65% for the nine months ended September 30, 1997 and 1996,
respectively. The decrease in expenses for the nine months ended September 30,
1997 is primarily related to the decrease in write-down of equipment to net
realizable value. Based upon the quarterly review of the recoverability of the
undepreciated cost of rental equipment, $250,885 was charged to write-down of
equipment to net realizable value during the nine months ended September 30,
1997 as compared to $754,843 for the nine months ended September 30, 1996. Any
future losses are dependent upon unanticipated technological developments
affecting the computer equipment industry in subsequent years. However, the
increase in depreciation expense reduced the overall decrease in expenses in
1997. Depreciation expense increased because of equipment purchases made since
September 1996 as well as depreciation expense taken on 1996 equipment
purchases for which a full nine months of depreciation was recorded in 1997 but
only a portion of the nine months was recorded in 1996.
The Fund's net income (loss) was $126,949 and ($11,388) for the three
months ended September 30, 1997 and 1996, respectively, and $378,889 and
$163,895 for the nine months ended September 30, 1997 and 1996, respectively.
The earnings (loss) per equivalent limited partnership unit, after earnings
(loss) allocated to the General Partner, were $4.26 and ($.44) based on a
weighted average number of equivalent limited partnership units outstanding of
29,476 and 29,605 for the three months ended September 30, 1997 and 1996,
respectively. The earnings per equivalent limited partnership unit,
after earnings allocated to the General Partner, were $12.74 and $5.32
based on a weighted average number of equivalent limited partnership units
outstanding of 29,435 and 29,927 for the nine months ended September 30, 1997
and 1996, respectively.
9
FIDELITY LEASING INCOME FUND VI, L.P.
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
RESULTS OF OPERATIONS (Continued)
The Fund generated cash from operations of $1,070,789 and $873,521 for
the purpose of determining cash available for distribution, and distributed
2% and 6% of these amounts during the third quarter of 1997 and 1996,
respectively and 5% and 11% of these amounts in October and November 1997 and
1996, respectively. For the nine months ended September 30, 1997 and 1996, the
Fund generated $3,142,265 and $2,729,009 of cash from operations and
distributed 6% and 14% of these amounts during the first nine months of 1997
and 1996, respectively and 2% and 4% of these amounts in October and November
1997 and 1996, respectively. For financial statement purposes, the Fund
records cash distributions to partners on a cash basis in the period in which
they are paid.
ANALYSIS OF FINANCIAL CONDITION
The Fund will continue to purchase computer equipment with cash available
from operations which is not distributed to partners. The Fund purchased
$2,724,686 and $3,799,088 of equipment during the nine months ended
September 30, 1997 and 1996, respectively.
The cash position of the Fund is reviewed daily and cash is invested on a
short-term basis.
The Fund's cash from operations is expected to continue to be adequate to
cover all operating expenses and contingencies during the next twelve month
period.
10
Part II: Other Information
FIDELITY LEASING INCOME FUND VI, L.P.
September 30, 1997
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 Form 8-K:
a) Exhibits: EX-27
b) Reports on Form 8-K: None
11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the regis-
trant has duly caused this report to be signed on its behalf by the under-
signed, thereunto duly authorized.
FIDELITY LEASING INCOME FUND VI, L.P.
11/13/97 By: Freddie M. Kotek
________ _____________________________
Date Freddie M. Kotek
President of F.L. Partnership Management, Inc.
(Principal Operating Officer)
11/13/97 By: Marianne T. Schuster
________ _____________________________
Date Marianne T. Schuster
Vice President of F.L. Partnership Management, Inc.
(Principal Financial Officer)
12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the regis-
trant has duly caused this report to be signed on its behalf by the under-
signed, thereunto duly authorized.
FIDELITY LEASING INCOME FUND VI, L.P.
_______ _____________________________
Date Freddie M. Kotek
President of F.L. Partnership Management, Inc.
(Principal Operating Officer)
_______ _____________________________
Date Marianne T. Schuster
Vice President of F.L. Partnership Management, Inc.
(Principal Financial Officer)
12
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 3,123,190
<SECURITIES> 0
<RECEIVABLES> 233,134
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,356,324
<PP&E> 13,604,418
<DEPRECIATION> 8,042,723
<TOTAL-ASSETS> 9,348,218
<CURRENT-LIABILITIES> 184,653
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 9,163,565
<TOTAL-LIABILITY-AND-EQUITY> 9,348,218
<SALES> 3,427,258
<TOTAL-REVENUES> 3,666,072
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,287,183
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 378,889
<INCOME-TAX> 0
<INCOME-CONTINUING> 378,889
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 378,889
<EPS-PRIMARY> 12.74
<EPS-DILUTED> 12.74
</TABLE>
