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 June 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, Pennsylvania 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
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No _____
Page 1 of 14
Part I: Financial Information
Item 1: Financial Statements
FIDELITY LEASING INCOME FUND VI, L.P.
BALANCE SHEETS
ASSETS
(Unaudited) (Audited)
June 30, December 31,
1999 1998
______________ _____________
Cash and cash equivalents $3,648,824 $2,892,327
Accounts receivable 133,405 102,663
Due from related parties 23,131 108,151
Equipment under operating leases (net
of accumulated depreciation of
$2,004,471 and $2,254,092, respectively) 1,720,887 2,138,702
Net investment in direct financing
leases 3,238,488 3,545,522
Equipment held for sale or lease 469,826 605,526
__________ __________
Total assets $9,234,561 $9,392,891
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Lease rents paid in advance $ 68,339 $ 45,211
Accounts payable - equipment 30,848 30,848
Accounts payable and
accrued expenses 48,742 49,720
Due to related parties 12,284 163,466
__________ __________
Total liabilities 160,213 289,245
Partners' capital 9,074,348 9,103,646
__________ __________
Total liabilities and
partners' capital $9,234,561 $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 Six Months Ended
June 30 June 30
1999 1998 1999 1998
____ ____ ____ ____
Income:
Rentals $277,955 $854,505 $533,553 $1,822,242
Earned income on direct
financing leases 64,948 14,243 133,003 16,165
Interest 31,208 16,149 62,697 57,562
Gain on sale of equipment,
net - 18,784 151,000 62,587
Other 12,240 10,219 21,784 11,363
________ ________ ________ __________
386,351 913,900 902,037 1,969,919
________ ________ ________ __________
Expenses:
Depreciation 211,720 687,030 411,598 1,412,717
Write-down of equipment to
net realizable value 93,542 126,000 141,918 210,829
General and administrative 38,567 28,820 75,521 84,282
General and administrative
to related party 63,287 66,760 113,284 122,349
Management fee to related
party 18,756 43,840 35,478 92,464
________ ________ ________ __________
425,872 952,450 777,799 1,922,641
________ ________ ________ __________
Net income (loss) $(39,521) $(38,550) $124,238 $ 47,278
======== ======== ======== ==========
Net income (loss) per
equivalent limited
partnership unit $ (1.33) $ (1.34) $ 4.16 $ 1.55
======== ======== ======== ==========
Weighted average number of
equivalent limited partner-
ship units outstanding
during the period 29,478 29,395 29,496 29,490
======== ======== ======== ==========
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 six months ended June 30, 1999
(Unaudited)
General Limited Partners
Partner Units Amount Total
_______ _____ ______ _____
Balance, January 1, 1999 $ 2,982 75,294 $9,100,664 $9,103,646
Redemption - (30) (3,536) (3,536)
Cash distributions (1,500) - (148,500) (150,000)
Net income 1,500 - 122,738 124,238
_______ ______ __________ __________
Balance, June 30, 1999 $ 2,982 75,264 $9,071,366 $9,074,348
======= ====== ========== ==========
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 six months ended June 30, 1999 and 1998
(Unaudited)
1999 1998
__________ __________
Cash flows from operating activities:
Net income $ 124,238 $ 47,278
__________ __________
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 411,598 1,412,717
Write-down of equipment to net
realizable value 141,918 210,829
Gain on sale of equipment, net (151,000) (62,587)
(Increase) decrease in accounts receivable (30,742) 75,902
(Increase) decrease in due from
related parties 85,020 (15,119)
Increase (decrease) in lease rents paid
in advance 23,128 5,571
Increase (decrease) in accounts payable -
equipment - (16,097)
Increase (decrease) in accounts payable and
accrued expenses (978) (37,735)
Increase (decrease) in due to related parties (151,182) (404,044)
__________ __________
327,762 1,169,437
__________ __________
Net cash provided by operating activities 452,000 1,216,715
__________ __________
Cash flows from investing activities:
Acquisition of equipment - (4,291,667)
Investment in direct financing leases - (718,038)
Proceeds from sale of equipment 151,000 229,530
Proceeds from direct financing leases,
net of earned income 307,033 51,433
__________ __________
Net cash provided by (used in)
investing activities 458,033 (4,728,742)
__________ __________
Cash flows from financing activities:
Distributions (150,000) (175,000)
Redemption (3,536) -
__________ __________
Net cash used in financing activities (153,536) (175,000)
__________ __________
Increase (decrease) in cash and
cash equivalents 756,497 (3,687,027)
Cash and cash equivalents, beginning
of period 2,892,327 4,269,825
__________ __________
Cash and cash equivalents, end of period $3,648,824 $ 582,798
========== ==========
The accompanying notes are an integral part of these financial statements.
5
FIDELITY LEASING INCOME FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS
June 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 reclas-
sified 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 equip-
ment 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 develop-
ments 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, $141,918 and $210,829 was charged to
write-down of equipment to net realizable value for the six months ended
June 30, 1999 and 1998, respectively. Any future losses are dependent
upon unanticipated technological developments affecting the types of
equipment 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 unguaranteed residuals upon expiration of
the lease over the related equipment cost) over the life of the lease
using the interest method.
Unguaranteed residuals for direct financing leases represent the
estimated amounts recoverable at lease termination from lease extensions
or disposition of the equipment. The Fund reviews these residual values
quarterly. If the equipment's fair market value is below the estimated
residual value, an adjustment is made.
6
FIDELITY LEASING INCOME FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
1. EQUIPMENT LEASED (Continued)
The net investment in direct financing leases as of June 30, 1999 is as
follows:
Minimum lease payments to be received $3,449,000
Unguaranteed residuals 321,000
Unearned rental income (451,000)
Unearned residual income (81,000)
__________
$3,238,000
==========
The future approximate minimum rentals to be received on noncancellable
operating and direct financing leases as of June 30, 1999 are as follows:
Direct
Years Ending December 31 Operating Financing
________________________ _________ __________
1999 $ 471,000 $ 502,000
2000 699,000 1,031,000
2001 227,000 760,000
2002 219,000 696,000
2003 136,000 441,000
Thereafter - 19,000
__________ __________
$1,752,000 $3,449,000
========== ==========
2. RELATED PARTY TRANSACTIONS
The General Partner receives 5% or 2% of gross rental payments from
equipment 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 man-
agement 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.
7
FIDELITY LEASING INCOME FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
2. RELATED PARTY TRANSACTIONS (Continued)
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 dis-
tributions equal to the purchase price of their units plus a 12% cumu-
lative 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. Follow-
ing is a summary of fees and costs of services and materials charged by
the General Partner or its parent company during the three and six months
ended June 30, 1999 and 1998:
Three Months Ended Six Months Ended
June 30 June 30
1999 1998 1999 1998
____ ____ ____ ____
Management fee $18,756 $43,840 $ 35,478 $ 92,464
Reimbursable costs 63,287 66,760 113,284 122,349
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 June 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
remitted to the Fund.
Amounts due to related parties at June 30, 1999 and December 31, 1998
represent monies due to the General Partner for the fees and costs
mentioned 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.
8
FIDELITY LEASING INCOME FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
3. YEAR 2000 COMPLIANCE (Continued)
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 DISTRIBUTIONS
The General Partner declared and paid three cash distributions of
$25,000 each subsequent to June 30, 1999 for the months ended
April 30, May 31 and June 30, 1999 to all admitted partners as of
April 30, May 31 and June 30, 1999.
9
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 $386,351 and
$913,900 for the three months ended June 30, 1999 and 1998, respectively
and $902,037 and $1,969,919 for the six months ended June 30, 1999 and 1998,
respectively. Rental income from the leasing of equipment accounted for 72%
and 94% of total revenues for the second quarter of 1999 and 1998,
respectively and 59% and 93% of total revenues for the six months ended
June 30, 1999 and 1998, respectively. The decrease in total revenues in
1999 was primarily attributable to the decrease in rental income. Rental
income decreased approximately $1,401,000 in 1999 because of equipment that
terminated or sold since June 1998. This decrease, however, was mitigated
by an increase in rental income of approximately $112,000 for the six months
ended June 30, 1999. Rental income increased on account of rents generated
on equipment purchases made since the second quarter of 1998 as well as rents
recognized on 1998 equipment purchases for which a full six months was earned
in 1999 and only a portion of the six months was earned in 1998. The overall
decrease in revenues was partially mitigated by the increase in earned income
on direct financing leases. In 1998, the Fund invested in direct financing
leases that generated $133,003 of earned income during the six months ended
June 30, 1999 compared to $16,165 for the same period in 1998. Additionally,
the Fund recorded a net gain on sale of equipment of $151,000 and $62,587
in the first six months of 1999 and 1998, respectively, which also reduced
the amount of the total decrease in revenues in 1999.
Expenses were $425,872 and $952,450 for the three months ended June 30,
1999 and 1998, respectively and $777,799 and $1,922,641 for the six months
ended June 30, 1999 and 1998, respectively. Depreciation expense comprised
50% and 72% of total expenses for the second quarter of 1999 and 1998,
respectively and 53% and 73% of total expenses for the six months ended
June 30, 1999 and 1998, respectively. The decrease in expenses for the six
months ended June 30, 1999 was primarily attributable to a decrease in
depreciation expense resulting from equipment that came off lease or
terminated and sold since June 1998. Additionally, the decrease in write-
down of equipment to net realizable value also contributed to the overall
decrease in expenses in 1999. Based upon the quarterly review of the re-
coverability of the undepreciated cost of rental equipment, the Fund charged
$141,918 to operations to write down equipment to its estimated net realiz-
able value for the six months ended June 30, 1999 compared to $210,829 for
the same period in 1998. Any future losses are dependent upon unanticipated
technological developments affecting the types of equipment in the portfolio
in subsequent years.
10
FIDELITY LEASING INCOME FUND VI, L.P.
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS (Continued)
Furthermore, management fee to related party decreased in 1999 which also
accounted for the decrease in total expenses from 1998. The decrease in this
account was partially caused by the decrease in rental income from operating
leases. The Fund also invested in direct financing leases during 1998 which
meet the requirements of full pay-out leases for the purpose of calculating
management fees. The Fund pays a lower management fee of 2% on full pay-out
leases.
The Fund's net income (loss) was ($39,521) and ($38,550) for the three
months ended June 30, 1999 and 1998, respectively and $124,238 and $47,278
for the six months ended June 30, 1999 and 1998, respectively. The earnings
(loss) per equivalent limited partnership unit, after earnings (loss) allo-
cated to the General Partner, were ($1.33) and ($1.34) based on a weighted
average number of equivalent limited partnership units outstanding of 29,478
and 29,395 for the three months ended June 30, 1999 and 1998, respectively.
The earnings per equivalent limited partnership unit, after earnings allo-
cated to the General Partner, were $4.16 and $1.55 based on a weighted
average number of equivalent limited partnership units outstanding of 29,496
and 29,490 for the six months ended June 30, 1999 and 1998, respectively.
The Fund generated cash from operations of $265,741 and $755,696, for
the purpose of determining cash available for distribution. For the second
quarter of 1999, 28% of the cash available from operations was distributed
subsequent to June 30, 1999. For the second quarter of 1998, 3% of the
cash available was distributed during the second quarter and 7% of the cash
available was distributed subsequent to June 30, 1998. For the six months
ended June 30, 1999 and 1998, the Fund generated $526,754 and $1,608,237 of
cash from operations and distributed 14% and 6% of these amounts to partners
during the first six months of 1999 and 1998, respectively and 14% and 3% of
these amounts subsequent to June 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.
11
FIDELITY LEASING INCOME FUND VI, L.P.
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
ANALYSIS OF FINANCIAL CONDITION (Continued)
There were no purchases of equipment or investments in direct financing
leases made during the first six months of 1999. The Fund purchased
$4,291,667 of equipment and invested $718,038 in direct financing leases
during the six months ended June 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.
12
Part II: Other Information
FIDELITY LEASING INCOME FUND VI, L.P.
June 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
13
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.
8-13-99 By: Freddie M. Kotek
_______ ___________________________
Date Freddie M. Kotek
President of
F.L. Partnership Management, Inc.
(Principal Operating Officer)
8-13-99 By: Marianne T. Schuster
_______ ___________________________
Date Marianne T. Schuster
Vice President of
F.L. Partnership Management, Inc.
(Principal Financial Officer)
14
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 3,648,824
<SECURITIES> 0
<RECEIVABLES> 156,536
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,805,360
<PP&E> 4,195,184
<DEPRECIATION> 2,004,471
<TOTAL-ASSETS> 9,234,561
<CURRENT-LIABILITIES> 160,213
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 9,074,348
<TOTAL-LIABILITY-AND-EQUITY> 9,234,561
<SALES> 533,553
<TOTAL-REVENUES> 902,037
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 777,799
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 124,238
<INCOME-TAX> 0
<INCOME-CONTINUING> 124,238
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 124,238
<EPS-BASIC> 4.16
<EPS-DILUTED> 4.16
</TABLE>
