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, 1999
/ / 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.)
3 North Columbus Boulevard, Philadelphia, PA 19106
_______________________________________________________________________________
(Address of principal executive offices) (Zip code)
(215) 574-1636
_______________________________________________________________________________
(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,
1999 1998
_____________ ____________
Cash and cash equivalents $4,615,807 $2,892,327
Accounts receivable 103,890 102,663
Due from related parties 44,896 108,151
Equipment under operating leases
(net of accumulated depreciation
of $1,541,357 and $5,029,800,
respectively) 1,497,043 2,138,702
Net investment in direct financing
leases 2,533,820 3,545,522
Equipment held for sale or lease 456,341 605,526
__________ __________
Total assets $9,251,797 $9,392,891
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Lease rents paid in advance $ 93,003 $ 45,211
Accounts payable - equipment - 30,848
Accounts payable and
accrued expenses 48,868 49,720
Due to related parties 10,004 163,466
__________ __________
Total liabilities 151,875 289,245
Partners' capital 9,099,922 9,103,646
__________ __________
Total liabilities and
partners' capital $9,251,797 $9,392,891
========== ==========
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
1999 1998 1999 1998
____ ____ ____ ____
Income:
Rentals $227,275 $1,573,642 $ 760,828 $3,395,884
Earned income on direct
financing leases 88,560 21,711 221,563 37,876
Interest 57,432 12,185 120,129 69,747
Gain on sale of equipment,
net 67,955 28,352 218,955 90,939
Other 19,451 2,842 41,235 14,205
________ __________ __________ __________
460,673 1,638,732 1,362,710 3,608,651
________ __________ __________ __________
Expenses:
Depreciation 183,077 1,300,083 594,675 2,712,800
Write-down of equipment to
net realizable value 29,802 182,825 171,720 393,654
General and administrative 49,926 43,236 125,447 127,518
General and administrative
to related party 44,431 57,372 157,715 179,721
Management fee to related
party 27,863 80,819 63,341 173,283
________ __________ __________ __________
335,099 1,664,335 1,112,898 3,586,976
________ __________ __________ __________
Net income (loss) $125,574 $ (25,603) $ 249,812 $ 21,675
======== ========== ========== ==========
Net income (loss) per equivalent
limited partnership unit $ 4.22 $ (.90) $ 8.39 $ .66
======== ========== ========== ==========
Weighted average number of
equivalent limited partnership
units outstanding during the
period 29,433 29,217 29,475 29,399
======== ========== ========== ==========
The accompanying notes are an integral part of these financial statements.
3
FIDELITY LEASING INCOME FUND VI, L.P.
STATEMENT OF PARTNERS' CAPITAL
For the nine months ended September 30, 1999
(Unaudited)
General Limited Partners
Partner Units Amount Total
_______ _____ ______ _____
Balance, January 1, 1999 $ 2,982 75,294 $9,100,664 $9,103,646
Cash distributions (2,500) - (247,500) (250,000)
Redemption - (30) (3,536) (3,536)
Net income 2,498 - 247,314 249,812
_______ ______ __________ __________
Balance, September 30, 1999 $ 2,980 75,264 $9,096,942 $9,099,922
======= ====== ========== ==========
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, 1999 and 1998
(Unaudited)
1999 1998
____ ____
Cash flows from operating activities:
Net income $ 249,812 $ 21,675
__________ __________
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 594,675 2,712,800
Write-down of equipment to net
realizable value 171,720 393,654
Gain on sale of equipment, net (218,955) (90,939)
(Increase) decrease in accounts receivable (1,227) 49,029
(Increase) decrease in due from related
parties 63,255 44,942
Increase (decrease) in lease rents paid
in advance 47,792 (42,376)
Increase (decrease) in accounts payable and
accrued expenses (852) (25,703)
Increase (decrease) in accounts payable -
equipment (30,848) (16,097)
Increase (decrease) in due to related parties (153,462) (334,452)
__________ __________
472,098 2,690,858
__________ __________
Net cash provided by operating activities 721,910 2,712,533
__________ __________
Cash flows from investing activities:
Acquisition of equipment - (4,789,875)
Investment in direct financing leases - (1,837,211)
Proceeds from sale of equipment 243,405 295,516
Proceeds from direct financing leases,
net of earned income 1,011,701 148,325
__________ __________
Net cash provided by (used in) investing
activities 1,255,106 (6,183,245)
__________ __________
Cash flows from financing activities:
Distributions (250,000) (225,000)
Redemption of capital (3,536) -
__________ __________
Net cash used in financing activities (253,536) (225,000)
__________ __________
Increase (decrease) in cash and cash
equivalents 1,723,480 (3,695,712)
Cash and cash equivalents, beginning
of period 2,892,327 4,269,825
__________ __________
Cash and cash equivalents, end of period $4,615,807 $ 574,113
========== ==========
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, 1999
(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 1998 financial statements have been
reclassified to conform to the presentation in 1999.
1. EQUIPMENT LEASED
Equipment on lease consists of equipment under operating leases. The
lessees have agreements with the manufacturer to provide maintenance for
the leased equipment. The Fund's operating leases are for initial lease
terms of 24 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. 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 the 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, $171,720 and $393,654 was charged to write-
down of equipment to net realizable value for the nine months ended
September 30, 1999 and 1998, respectively. Any future losses are dependent
upon unanticipated technological developments affecting the types of equip-
ment in the portfolio 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, 1999 is
as follows:
Minimum lease payments to be received $2,620,000
Unguaranteed residuals 322,000
Unearned rental income (332,000)
Unearned residual income (76,000)
__________
$2,534,000
==========
6
FIDELITY LEASING INCOME FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
1. EQUIPMENT LEASED (Continued)
The future approximate minimum rentals to be received on noncancellable
operating and direct financing leases as of September 30, 1999 are as
follows:
Direct
Years Ending December 31 Operating Financing
________________________ _________ _________
1999 $ 222,000 $ 211,000
2000 647,000 856,000
2001 176,000 586,000
2002 167,000 525,000
Thereafter 117,000 442,000
__________ __________
$1,329,000 $2,620,000
========== ==========
2. RELATED PARTY TRANSACTIONS
The General Partner receives 5% or 2% of rental payments from equipment
under operating leases and full pay-out leases, respectively, for adminis-
trative 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, 1999 and 1998:
Three Months Ended Nine Months Ended
September 30 September 30
1999 1998 1999 1998
____ ____ ____ ____
Management fee $27,863 $80,819 $ 63,341 $173,283
Reimbursable costs 44,431 57,372 157,715 179,721
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 JeffBanks, Inc., in which the Chairman of Resource America,
Inc. serves as a director.
Amounts due from related parties at September 30, 1999 and December 31,
1998 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 to the Fund.
Amounts due to related parties at September 30, 1999 and December 31, 1998
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. YEAR 2000 COMPLIANCE
All of the main software systems utilized to generate information for the
Fund are now Year 2000 compliant and in the testing phase. The costs
incurred to complete the Year 2000 Compliance project are not expected to
be material to the net income of the Fund.
All suppliers for the Fund continue to complete their Year 2000 Compliance
programs. It is not anticipated that the Fund will incur any significant
losses should any of its outside suppliers fail to meet their Year 2000
Compliance deadlines.
4. CASH DISTRIBUTION
The General Partner declared and paid three cash distributions of $25,000
each subsequent to September 30, 1999 for each of the months ended July 31,
August 31 and September 30, 1999 for an aggregate of $75,000 to all
admitted partners as of July 31, August 31 and September 30, 1999.
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 $460,673 and
$1,638,732 for the three months ended September 30, 1999 and 1998,
respectively, and $1,362,710 and $3,608,651 for the nine months ended
September 30, 1999 and 1998, respectively. Rental income from the leasing of
equipment accounted for 49% and 96% of total revenues for the third quarter of
1999 and 1998, respectively and 56% and 94% of total revenues for the nine
months ended September 30, 1999 and 1998, respectively. The decrease in total
revenues in 1999 was attributable to the decrease in rental income. During the
nine months ended September 30, 1999, rental income decreased by approximately
$2,789,000 because of equipment that came off lease or was re-leased at lower
rental rates or sold. However, this decrease in rental income was mitigated by
an increase in rents of $154,000 because of equipment purchases made since
September of 1998 as well as rental income recognized on 1998 equipment
purchases for which a full nine months was earned in 1999 and only a portion of
the nine months was earned in 1998. The overall decrease in revenues, however,
was partially mitigated by the increase in earned income on direct financing
leases. The Fund invested in direct financing leases throughout 1998 that
generated $221,563 of earned income during the nine months ended September 30,
1999 compared to $37,876 for the same period in 1998. Additionally, the Fund
recognized a net gain on sale of equipment of $218,955 for the nine months
ended September 30, 1999 compared to $90,939 for the nine months ended
September 30, 1998 which also reduced the overall decrease in revenues in 1999.
Furthermore, the interest income earned by the Fund on the short-term invest-
ment of cash increased in 1999 which lowered the amount of the decrease in
total revenues during the nine months ended September 30, 1999, as well. The
Fund had larger cash balances available for investment during 1999 compared to
1998. The Fund also received late charges of approximately $21,000 that are
included in other income for the first nine months of 1999. There were no late
charges received during this same period in 1998. This increase also reduced
the decrease in total revenues in 1999.
Expenses were $355,099 and $1,664,335 for the three months ended September
30, 1999 and 1998, respectively, and $1,112,898 and $3,586,976 for the nine
months ended September 30, 1999 and 1998, respectively. Depreciation expense
comprised 55% and 78% of total expenses for the third quarter of 1999 and 1998,
respectively and 53% and 76% of total expenses for the nine months ended
September 30, 1999 and 1998, respectively. The decrease in expenses for the
nine months ended September 30, 1999 was primarily related to the decrease in
depreciation expense resulting from equipment that came off lease or terminated
and sold since September 1998. Additionally, the decrease in write-down of
equipment to net realizable value contributed to the overall decrease in
expenses in 1999. Based upon the quarterly review of the recoverability of
the undepreciated cost of rental equipment, $171,720 was charged to write-down
of equipment to net realizable value during the nine months ended September 30,
1999 compared to $393,654 for the nine months ended September 30, 1998. Any
future losses are dependent upon unanticipated technological developments
affecting the types of equipment in the portfolio in subsequent years.
Furthermore, management fee to related party decreased in 1999 which also
accounted for the overall decrease in expenses. The decrease in this account
was partially related to the decrease in rental income earned by the Fund on
operating leases. The Fund also paid lower management fees of 2% on full pay-
out leases. Many of the leases purchased in 1998 were direct financing leases
which meet the requirements of full pay-out leases for the purpose of
calculating management fees.
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's net income (loss) was $125,574 and ($25,603) for the three
months ended September 30, 1999 and 1998, respectively, and $249,812 and
$21,675 for the nine months ended September 30, 1999 and 1998, respectively.
The earnings (loss) per equivalent limited partnership unit, after earnings
(loss) allocated to the General Partner, were $4.22 and ($.90) based on a
weighted average number of equivalent limited partnership units outstanding of
29,433 and 29,217 for the three months ended September 30, 1999 and 1998,
respectively. The earnings per equivalent limited partnership unit, after
earnings allocated to the General Partner, were $8.39 and $.66 based on a
weighted average number of equivalent limited partnership units outstanding
of 29,475 and 29,399 for the nine months ended September 30, 1999 and 1998,
respectively.
The Fund generated cash from operations of $270,498 and $1,428,953 for
the purpose of determining cash available for distribution, and distributed
28% and 5% of these amounts subsequent to September 30, 1999 and 1998,
respectively. For the nine months ended September 30, 1999 and 1998, the
Fund generated $797,252 and $3,037,190 of cash from operations and distributed
19% and 5% of these amounts during the first nine months of 1999 and 1998,
respectively and 9% and 2% of these amounts subsequent to September 30, 1999
and 1998, 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 continues the process of dissolution during 1999. As provided in
the Restated Limited Partnership Agreement, the assets of the Fund shall be
liquidated as promptly as is consistent with obtaining their fair value.
During this time, the Fund will continue to purchase equipment for lease with
cash available from operations which is not distributed to partners. There
were no purchases of equipment or investments in direct financing leases made
during the first nine months of 1999. The Fund purchased $4,789,875 of
equipment and invested $1,837,211 in direct financing leases during the nine
months ended September 30, 1998.
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, 1999
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.
11-12-99 By: Freddie M. Kotek
________ _____________________________
Date Freddie M. Kotek
President of F.L. Partnership Management, Inc.
(Principal Operating Officer)
11-12-99 By: Marianne T. Schuster
________ _____________________________
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-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 4,615,807
<SECURITIES> 0
<RECEIVABLES> 148,786
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,764,593
<PP&E> 3,494,741
<DEPRECIATION> 1,541,357
<TOTAL-ASSETS> 9,251,797
<CURRENT-LIABILITIES> 151,875
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 9,099,922
<TOTAL-LIABILITY-AND-EQUITY> 9,251,797
<SALES> 760,828
<TOTAL-REVENUES> 1,362,710
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,112,898
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 249,812
<INCOME-TAX> 0
<INCOME-CONTINUING> 249,812
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 249,812
<EPS-BASIC> 8.39
<EPS-DILUTED> 8.39
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