SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
/X/ Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the year ended December 31, 2001
/ / 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 0-20131
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.)
1845 Walnut Street, Suite 1000, Philadelphia, Pennsylvania 19103
______________________________________________________________________
(Address of principal executive offices) (Zip Code)
(215) 574-1636
______________________________________________________________________
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12 (b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
None Not applicable
Securities registered pursuant to Section 12 (g) of the Act:
Limited Partnership Interests
Title of Class
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 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____
The number of outstanding limited partnership units of the Registrant at
December 31, 2001 is 75,264.
There is no public market for these securities.
The index of Exhibits is located on page 12.
1
PART I
Item 1. BUSINESS
Fidelity Leasing Income Fund VI, L.P. (the "Fund"), a Delaware limited
partnership, was organized in 1989 and acquires computer equipment including
printers, tape and disk storage devices, data communications equipment,
computer terminals, technical workstations, networking equipment, as well as
other electronic equipment that is leased to third parties on a short-term
basis. The Fund's principal objective is to generate leasing revenues for
distribution. The Fund manages the equipment, releasing or disposing of equip-
ment as it comes off lease in order to achieve its principal objective. The
Fund does not borrow funds to purchase equipment.
The Fund generally acquires equipment subject to a lease. Purchases of
equipment for lease are typically made through equipment leasing brokers,
under a sale-leaseback arrangement directly from lessees owning equipment or
from the manufacturer either pursuant to a purchase agreement relating to
significant quantities of equipment or on an ad hoc basis to meet the needs
of a particular lessee.
The equipment leasing industry is highly competitive. The Fund
competes with leasing companies, equipment manufacturers and distributors,
and entities similar to the Fund (including similar programs sponsored by the
General Partner), some of which have greater financial resources than the Fund.
Other leasing companies and equipment manufacturers and distributors may be
in a position to offer equipment to prospective lessees on financial terms
which are more favorable than those which the Fund can offer. They may also
be in a position to offer trade-in-privileges, maintenance contracts and other
services that the Fund may not be able to offer. Equipment manufacturers
and distributors may offer to sell equipment on terms and conditions (such as
liberal financing terms and exchange privileges) that will afford benefits
to the purchaser similar to those obtained through leases. As a result of
the advantages that certain of its competitors may have, the Fund may find
it necessary to lease its equipment on a less favorable basis than certain of
its competitors.
A brief description of the types of equipment in which the Fund has
invested as of December 31, 2001, together with information concerning the
users of such equipment is contained in Item 2, following.
The Fund does not have any employees. All persons who work on the Fund
are employees of the General Partner.
2
Item 2. PROPERTIES
The following schedules detail the type, aggregate purchase price and
percentage of the various types of equipment leased by the Fund under the
operating and direct financing lease methods as of December 31, 2001:
Operating Leases:
Purchase Price Percentage of
Type of Equipment of Equipment Total Equipment
PCB Assembly Equipment $775,391 87.80%
Tape Storage Systems 97,693 11.06
Technical Workstations and Terminals 10,034 1.14
________ ______
Totals $883,118 100.00%
======== ======
Direct Financing Leases:
Purchase Price Percentage of
Type of Equipment of Equipment Total Equipment
Network Communications $5,068,752 55.36%
Disk Storage Systems 1,876,371 20.49
PCB Assembly Equipment 1,162,822 12.70
Electron Microscopes 964,081 10.53
Printers 84,546 0.92
__________ ______
Totals $9,156,572 100.00%
========== ======
The following schedules detail the type of business, aggregate purchase
price and percentage of equipment usage by industrial classification for
equipment leased by the Fund under the operating and direct financing methods
as of December 31, 2001:
Operating Leases:
Purchase Price Percentage of
Type of Business of Equipment Total Equipment
Manufacturing/Refining $775,391 87.80%
Diversified Financial/Banking/Insurance 97,693 11.06
Telephone/Telecommunications 10,034 1.14
________ ______
Totals $883,118 100.00%
======== ======
Direct Financing Leases:
Purchase Price Percentage of
Type of Business of Equipment Total Equipment
Retailing/Consumer Goods $5,765,064 62.96%
Manufacturing/Refining 2,212,459 24.16
Computers/Data Processing 1,069,464 11.68
Education 71,516 0.78
Diversified Financial/Banking/Insurance 38,069 0.42
__________ ______
Totals $9,156,572 100.00%
========== ======
3
Item 2. PROPERTIES (Continued)
Average Initial Term of Leases (in months): 37
Item 3. LEGAL PROCEEDINGS
Not applicable.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
4
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
(a) The Fund's limited partnership units are not publicly traded.
There is no market for the Fund's limited partnership units and it
is unlikely that any will develop.
(b) Number of Equity Security Holders:
Number of Partners
Title of Class as of December 31, 2001
Limited Partnership Interests 2,706
General Partnership Interest 1
Item 6. SELECTED FINANCIAL DATA
For the Years Ended December 31,
2001 2000 1999 1998 1997
Total Income $886,390 $1,369,434 $1,844,586 $6,764,079 $4,765,095
Net Income 333,548 412,064 429,662 245,744 423,226
Distributions to Partners 420,000 360,000 300,000 300,000 300,011
Net Income per
Equivalent Limited
Partnership Unit 10.42 13.75 14.42 8.18 14.22
Weighted Average Number
of Equivalent Limited
Partnership Units
Outstanding During
the Year 29,713 29,679 29,502 29,663 29,471
December 31,
2001 2000 1999 1998 1997
Total Assets $9,296,409 $9,381,474 $9,389,226 $9,392,891 $9,845,711
Equipment under
Operating Leases and
Equipment Held for
Sale or Lease (Net) 801,290 1,035,279 1,756,936 2,744,228 5,186,967
Net Investment in
Direct Financing Leases 4,008,473 6,111,432 5,426,656 3,545,522 126,057
Limited Partnership
Units 75,264 75,264 75,264 75,294 75,294
Limited Partners 2,706 2,692 2,678 2,670 2,665
5
Item 7. 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 $886,390,
$1,369,434 and $1,844,586 for the years ended December 31, 2001, 2000 and
1999, respectively. Earned income from direct financing leases and rental
income from the leasing of equipment accounted for 81%, 88% and 77% of total
revenues in 2001, 2000 and 1999, respectively. The decrease in total revenues
in 2001 and 2000 was primarily attributable to the decrease in rental income.
In 2001, rental income decreased by approximately $442,000 because of equipment
that terminated and was sold during both 2001 and 2000. This decrease was
mitigated by $7,000 of rents generated on equipment purchased during 2001.
In 2000, rental income decreased by approximately $297,000 because of equipment
that came off lease or terminated and was sold during both 2000 and 1999.
Additionally, the fluctuation in earned income on direct financing leases also
contributed to the decrease in total revenues in 2001 and mitigated the de-
crease in total revenues in 2000. The decrease in this account in 2001 and the
increase in this account in 2000 resulted from the net effect of the amortiza-
tion of the unearned income using the interest method and the earned income
recognized on new investments in direct financing leases made in 2001, 2000
and 1999. The Fund invested $919,992, $2,669,441 and $3,699,167 in direct
financing leases during the years ended December 31, 2001, 2000 and 1999,
respectively. The variation in interest income also affected the overall
decrease in revenues in 2001 and 2000. Interest income increased in 2001
and decreased in 2000 because of fluctuating cash balances available for
investment by the Fund as a result of the amount of funds invested in direct
financing leases during the years ended December 31, 2001, 2000 and 1999.
Furthermore, the Fund recognized a net gain on sale of equipment of $46,260,
$52,789 and $226,430 for the years ended December 31, 2001, 2000 and 1999,
respectively. The change in this account contributed to the overall decrease
in revenues in 2001 and 2000, as well.
Expenses were $552,842, $957,370 and $1,414,924 for the years ended
December 31, 2001, 2000 and 1999, respectively. Depreciation expense comprised
34%, 60% and 56% of total expenses in 2001, 2000 and 1999, respectively.
The decrease in expenses in 2001 and 2000 was primarily attributable to the
decrease in depreciation expense. Depreciation expense decreased in 2001 and
2000 because of equipment that came off lease or terminated and was sold during
2001 and 2000. The decrease in write-down of equipment to net realizable value
also contributed to the decrease in total expenses in both 2001 and 2000.
Currently, the Fund's practice is to review the recoverability of its undepre-
ciated costs of rental equipment quarterly. The Fund's policy, as part of this
review, is to analyze such factors as releasing of equipment, technological
developments and information provided in third party publications. There was
no charge to write-down of equipment to net realizable value for the year ended
December 31, 2001. In 2000 and 1999, approximately $16,000 and $174,000,
respectively, was charged to write-down of equipment to net realizable value.
In accordance with accounting principles generally accepted in the United
States of America, the Fund writes down its rental equipment to its estimated
net realizable value when the amounts are reasonably estimated and only rec-
ognizes gains, if any, upon actual sale of its rental equipment. Any future
losses are dependent upon unanticipated technological developments affecting
the types of equipment in the portfolio in subsequent years. General and
administrative expense increased during the twelve months ended December 31,
6
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Results of Operations (Continued)
2001 and decreased during the twelve months ended December 31, 2000 because
of the variation in the expenses incurred for the daily operations of the Fund.
General and administrative expense to related party decreased between 2001,
2000 and 1999 as a result of a decrease in expenses charged by the General
Partner or its parent company for services and materials provided to the Fund
during these years.
The Fund's net income was $333,548, $412,064 and $429,662 for the years
ended December 31, 2001, 2000 and 1999, respectively. The earnings per
equivalent limited partnership unit, after earnings allocated to the General
Partner, were $10.42, $13.75 and $14.42 for the years ended December 31, 2001,
2000 and 1999, respectively. The weighted average number of equivalent
limited partnership units outstanding were 29,713, 29,679 and 29,502 for the
years ended December 31, 2001, 2000 and 1999, respectively.
The Fund generated cash from operations, for the purpose of determining
cash available for distribution, of $474,217, $950,373 and $1,164,825 during
the years ended December 31, 2001, 2000 and 1999, respectively. The Fund
distributed $315,000, $285,000 and $225,000 of those amounts during the period
April 1 through December 31, 2001, 2000 and 1999, respectively. During the
first quarter of 2002, 2001 and 2000, the Fund distributed $2,070,000, $105,000
and $75,000 to partners, 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 is currently in the process of dissolution. 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 look for opportunities to purchase
equipment under operating leases or invest in direct financing leases for
lease terms consistent with the plan of dissolution. The Fund purchased
$10,034 of equipment under operating leases during 2001. There was no equip-
ment purchased subject to operating leases in 2000 and 1999. The Fund in-
vested in $919,992, $2,669,441 and $3,699,167 of direct financing leases
during the twelve months ended December 31, 2001, 2000 and 1999, 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.
7
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this Item is submitted as a separate section of this
report commencing on page F-1.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
8
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
In December 2001, the General Partner's Certificate of Incorporation was
amended to change the name of the General Partner of the Fund from F.L.
Partnership Management, Inc. to LEAF Financial Corporation (LEAF). LEAF
Financial Corporation is a wholly owned subsidiary of Resource Leasing, Inc.
which is a wholly owned subsidiary of Resource America, Inc. (Resource
America). The Directors and Executive Officers of LEAF are:
CRIT S. DEMENT, age 49, Chairman of the Board of Directors, President and
Chief Executive Officer of LEAF since November 2001. President of
Fidelity Leasing, Inc. and its successor, the Technology Finance Group
of CitiCapital Vendor Finance from 1996 to 2001. Vice President of
Marketing for Tokai Financial Services from 1987 through 1996.
EDWARD E. COHEN, age 62, Director of LEAF since November 2001. Chairman
of the Board of Resource America since 1990. President of Resource
America since 2000 and Chief Executive Officer and a Director of Resource
America since 1988. Chairman of the Managing Board of Directors of Atlas
Pipeline Partners GP, LLC (a wholly owned subsidiary of Resource America
that is the general partner of a publicly traded limited partnership that
owns and operates natural gas pipelines) since its formation in 1999.
Chairman of the Board of Directors of Brandywine Construction & Manage-
ment, Inc. (a property management company) since 1994. Mr. Cohen is the
father of Jonathan Z. Cohen.
JONATHAN Z. COHEN, age 31, Director of LEAF since November 2001. Execu-
tive Vice President of Resource America since 2001, Senior Vice President
of Resource America from 1999 to 2001. Vice Chairman of the Managing
Board of Atlas Pipeline Partners GP, LLC since its formation in 1999.
Trustee and Secretary of RAIT Investment Trust (a publicly traded real
estate investment trust) since 1997. Mr. Cohen is the son of Edward E.
Cohen.
MILES HERMAN, age 42, Vice President and a Director of LEAF since November
2001. Held various senior operational offices with Fidelity Leasing, Inc.
and its successor from 1998 to 2001. Held several management positions in
sales, marketing and operations at Tokai Financial Services from 1983 to
1998.
FREDDIE M. KOTEK, age 46, Director of LEAF since 1996. Senior Vice
President of Resource America since 1995. President of Resource Leasing,
Inc. since 1995.
MARIANNE T. SCHUSTER, age 43, Vice President of Accounting of LEAF
since 1984.
In February 2002, Crit S. DeMent was elected as Chairman of the Board of
Directors and Chief Executive Officer of LEAF and Miles Herman was elected
as President, Chief Operating Officer and a Director of LEAF.
9
Item 11. EXECUTIVE COMPENSATION
The following table sets forth information relating to the aggregate
compensation earned by the General Partner of the Fund during the year ended
December 31, 2001:
Name of Individual or Capacities in
Number in Group Which Served Compensation
LEAF Financial
Corporation General Partner $82,896(1)
=======
(1) This amount does not include the General Partner's share of
cash distributions made to all partners.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Based upon a review of Schedule 13D as filed with the Securities and
Exchange Commission, the table set forth below outlines the persons or
groups known to the Fund that own more than 5% of the Fund's outstanding
securities either beneficially or of record.
Name of Individual Number of
or Group Units Owned
James S. and Danea T. Riley 7,319.30 (1)
Odd Lot Liquidity Fund, LLC 7,319.30 (2)
Sierra Fund 4, LLC 7,319.30 (3)
(1) Amount represents beneficial ownership interest through
ownership of Odd Lot Liquidity Fund, LLC and Sierra Fund 4, LLC
which own 3,992.74 units and 3,326.56 units, respectively, of the
outstanding limited partnership units of the Fund.
(2) Amount represents direct ownership by Odd Lot Liquidity
Fund, LLC of 3,992.74 units and beneficial ownership of 3,326.56
units by virtue of group membership and affiliate status with
Sierra Fund 4, LLC.
(3) Amount represents direct ownership by Sierra Fund 4, LLC
of 3,326.56 units and beneficial ownership of 3,992.74 units by
virtue of group membership and affiliate status with Odd Lot
Liquidity Fund, LLC.
(b) In 1989, the General Partner contributed $1,000 to the capital of
the Fund but it does not own any of the Fund's outstanding securities.
No individual director or officer of LEAF Financial Corporation
nor such directors or officers as a group, owns more than one percent
of the Fund's outstanding securities. The General Partner owns a
general partnership interest which entitles it to receive 1% of cash
distributions until the Limited Partners have received an amount equal
to the purchase price of their units plus a 12% compounded priority
10
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(Continued)
return; thereafter 10%. The General Partner will also share in net
income equal to the greater of its cash distributions or 1% of net
income or to the extent there are losses, 1% of such losses.
(c) There are no arrangements known to the Fund that would, at any
subsequent date, result in a change in control of the Fund.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the year ended December 31, 2001, the Fund was charged by the
General Partner $82,896 of management fees. The General Partner will
continue to receive 5% or 2% of rental payments on 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
of the lease are at least sufficient to recover the purchase price of the
equipment, including acquisition fees. All of the direct financing leases
in which the Fund has invested meet the criteria for a full pay-out lease and
pay a 2% management fee to the General Partner. 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.
The General Partner receives 1% of cash distributions until the Limited
Partners have received an amount equal to the purchase price of their units
plus a 12% compounded priority return. Thereafter, the General Partner will
receive 10% of cash distributions. During the year ended December 31, 2001,
the General Partner received $4,200 of cash distributions.
The Fund incurred $158,110 of reimbursable costs to the General Partner
and its parent company for services and materials provided in connection with
the administration of the Fund during 2001.
11
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) (1) and (2) The response to this portion of Item 14 is submitted
as a separate section of this report commencing on page F-1.
(a) (3) and (c) Exhibits (numbered in accordance with Item 601 of
Regulation S-K)
Exhibit Numbers Description Page Number
3(a) & (4) Amended and Restated Agreement *
of Limited Partnership
(9) not applicable
(10) not applicable
(11) not applicable
(12) not applicable
(13) not applicable
(18) not applicable
(19) not applicable
(22) not applicable
(23) not applicable
(24) not applicable
(25) not applicable
(28) not applicable
* Incorporated by reference.
12
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
FIDELITY LEASING INCOME FUND VI, L.P.
A Delaware limited partnership
By: LEAF FINANCIAL CORPORATION
/s/ Crit S. DeMent
By: ___________________________
Crit S. DeMent, Chairman
Dated March 27, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934, this
annual report has been signed below by the following persons, on behalf of the
Registrant and in the capacities and on the date indicated:
Signature Title Date
/s/ Crit S. DeMent
____________________________ Chairman of the Board of Directors 3-27-03
Crit S. DeMent of LEAF Financial Corporation
(Principal Executive Officer)
/s/ Miles Herman
____________________________ President and Director of 3-27-03
Miles Herman LEAF Financial Corporation
/s/ Freddie M. Kotek
____________________________ Director of LEAF Financial Corporation 3-27-03
Freddie M. Kotek
/s/ Marianne T. Schuster
____________________________ Vice President of Accounting of 3-27-03
Marianne T. Schuster LEAF Financial Corporation
(Principal Financial Officer)
13
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
Pages
Report of Independent Certified Public Accountants F-2
Balance Sheets as of December 31, 2001 and 2000 F-3
Statements of Operations for the years ended
December 31, 2001, 2000 and 1999 F-4
Statements of Partners' Capital for the years ended
December 31, 2001, 2000 and 1999 F-5
Statements of Cash Flows for the years ended
December 31, 2001, 2000 and 1999 F-6
Notes to Financial Statements F-7 - F-13
All schedules have been omitted because the required information is not
applicable or is included in the Financial Statements or Notes thereto.
F-1
Report of Independent Certified Public Accountants
The Partners
Fidelity Leasing Income Fund VI, L.P.
We have audited the accompanying balance sheets of Fidelity Leasing
Income Fund VI, L.P. as of December 31, 2001 and 2000, and the related
statements of operations, partners' capital and cash flows for each of the
three years in the period ended December 31, 2001. These financial state-
ments are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the finan-
cial statements are free of material misstatement. An audit includes examin-
ing, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting princi-
ples used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Fidelity Leasing
Income Fund VI, L.P. as of December 31, 2001 and 2000, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 2001 in conformity with accounting principles generally accepted
in the United States of America.
Grant Thornton LLP
Philadelphia, Pennsylvania
February 14, 2002
F-2
FIDELITY LEASING INCOME FUND VI, L.P.
BALANCE SHEETS
ASSETS
December 31,
2001 2000
Cash and cash equivalents $4,177,291 $1,982,752
Accounts receivable 291,958 209,878
Due from related parties 17,397 42,133
Net investment in direct financing
leases 4,008,473 6,111,432
Equipment under operating leases
(net of accumulated depreciation
of $513,083 and $1,296,798,
respectively) 370,035 603,611
Equipment held for sale or lease 431,255 431,668
__________ __________
Total assets $9,296,409 $9,381,474
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Lease rents paid in advance $ 55,888 $ 35,179
Accounts payable and
accrued expenses 19,889 36,415
Due to related parties 25,248 28,044
__________ __________
Total liabilities 101,025 99,638
Partners' capital 9,195,384 9,281,836
__________ __________
Total liabilities and
partners' capital $9,296,409 $9,381,474
========== ==========
The accompanying notes are an integral part of these financial statements.
F-3
FIDELITY LEASING INCOME FUND VI, L.P.
STATEMENTS OF OPERATIONS
For the years ended December 31,
2001 2000 1999
Income:
Earned income on direct
financing leases $455,118 $ 504,019 $ 420,461
Rentals 261,002 696,191 992,807
Interest 104,399 80,988 161,923
Gain on sale of equipment, net 46,260 52,789 226,430
Other 19,611 35,447 42,965
________ __________ __________
886,390 1,369,434 1,844,586
________ __________ __________
Expenses:
Depreciation 186,929 575,098 788,056
Write-down of equipment to
net realizable value - 16,000 173,537
General and administrative 124,907 118,804 147,586
General and administrative to
related party 158,110 162,886 212,510
Management fee to related party 82,896 84,582 93,235
________ __________ __________
552,842 957,370 1,414,924
________ __________ __________
Net income $333,548 $ 412,064 $ 429,662
======== ========== ==========
Net income per equivalent
limited partnership unit $ 10.42 $ 13.75 $ 14.42
======== ========== ==========
Weighted average number of
equivalent limited partnership
units outstanding during the year 29,713 29,679 29,502
======== ========== ==========
The accompanying notes are an integral part of these financial statements.
F-4
FIDELITY LEASING INCOME FUND VI, L.P.
STATEMENT OF PARTNERS' CAPITAL
For the years ended December 31, 2001, 2000 and 1999
General Limited Partners
Partner Units Amount Total
_______ ____________________ _____
Balance, January 1, 1999 $ 2,982 75,294 $9,100,664 $9,103,646
Cash distributions (3,000) - (297,000) (300,000)
Redemptions - (30) (3,536) (3,536)
Net income 4,297 - 425,365 429,662
_______ ______ __________ __________
Balance, December 31, 1999 4,279 75,264 9,225,493 9,229,772
Cash distributions (3,600) - (356,400) (360,000)
Net income 4,121 - 407,943 412,064
_______ ______ __________ __________
Balance, December 31, 2000 4,800 75,264 9,277,036 9,281,836
Cash distributions (4,200) - (415,800) (420,000)
Net income 23,850 - 309,698 333,548
_______ ______ __________ __________
Balance, December 31, 2001 $24,450 75,264 $9,170,934 $9,195,384
======= ====== ========== ==========
The accompanying notes are an integral part of this financial statement.
F-5
FIDELITY LEASING INCOME FUND VI, L.P.
STATEMENTS OF CASH FLOWS
For the years ended December 31,
2001 2000 1999
Cash flows from operating activities:
Net income $ 333,548 $ 412,064 $ 429,662
__________ __________ __________
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 186,929 575,098 788,056
Write-down of equipment to net
realizable value - 16,000 173,537
Gain on sale of equipment, net (46,260) (52,789) (226,430)
(Increase) decrease in accounts receivable (82,080) (24,743) (82,472)
(Increase) decrease in due from
related parties 24,736 (5,592) 71,610
Increase (decrease) in lease rents paid in
advance 20,709 (57,480) 47,448
Increase (decrease) in accounts payable
and accrued expenses (16,526) (4,417) (8,888)
Increase (decrease) in due to related parties (2,796) 2,081 (137,503)
Increase (decrease) in accounts payable -
equipment - - (30,848)
__________ __________ __________
84,712 448,158 594,510
__________ __________ __________
Net cash provided by operating activities 418,260 860,222 1,024,172
__________ __________ __________
Cash flows from investing activities:
Acquisition of equipment (10,034) - -
Investment in direct financing leases (919,992) (2,669,441) (3,699,167)
Proceeds from direct financing leases,
net of earned income 3,022,951 1,984,665 1,818,032
Proceeds from sale of equipment 103,354 183,348 252,130
__________ __________ __________
Net cash provided by (used in)
investing activities 2,196,279 (501,428) (1,629,005)
__________ __________ __________
Cash flows from financing activities:
Distributions (420,000) (360,000) (300,000)
Redemptions of capital - - (3,536)
__________ __________ __________
Net cash used in financing activities (420,000) (360,000) (303,536)
__________ __________ __________
Increase (decrease) in cash and
cash equivalents 2,194,539 (1,206) (908,369)
Cash and cash equivalents, beginning of year 1,982,752 1,983,958 2,892,327
__________ __________ __________
Cash and cash equivalents, end of year $4,177,291 $1,982,752 $1,983,958
========== ========== ==========
The accompanying notes are an integral part of these financial statements.
F-6
FIDELITY LEASING INCOME FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND NATURE OF BUSINESS
Fidelity Leasing Income Fund VI, L.P. (the Fund) was formed in January
1989. In December 2001, the General Partner's Certificate of Incorporation
was amended to change the name of the General Partner of the Fund from F.L.
Partnership Management, Inc. to LEAF Financial Corporation (LEAF). LEAF
Financial Corporation is a wholly owned subsidiary of Resource Leasing, Inc.
which is a wholly owned subsidiary of Resource America, Inc. (Resource Amer-
ica). The Fund is managed by the General Partner. The Fund's limited partner-
ship interests are not publicly traded. There is no market for the Fund's
limited partnership interests and it is unlikely that any will develop. The
Fund acquires computer equipment including printers, tape storage devices, data
communications equipment, computer terminals, technical workstations and net-
working equipment, as well as other electronic equipment, that is leased to
third parties throughout the United States on a short-term basis.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Concentration of Credit Risk
Financial instruments that potentially subject the Fund to concentra-
tions of credit risk consist principally of temporary cash investments. The
Fund places its temporary investments in money market savings accounts.
Concentrations of credit risk with respect to accounts receivables are
limited due to the dispersion of the Fund's lessees over different industries
and geographies.
Impairment of Long-Lived Assets
The Fund reviews its assets to determine if it has any long-lived assets
that are carried on the books for an amount that may not be recoverable. If
it is determined that an asset's estimated future cash flows will not be suf-
ficient to recover its carrying amount, an impairment charge will be recorded.
Equipment Held for Sale or Lease
Equipment held for sale or lease is carried at its estimated net real-
izable value.
Use of Estimates
In preparing financial statements in conformity with accounting principles
generally accepted in the United States of America, management is required 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 revenues and expenses during the reporting
period. Actual results could differ from those estimates.
F-7
FIDELITY LEASING INCOME FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Accounting for Leases
The Fund's leasing operations consist of both direct financing
and operating leases. Under the direct financing method of accounting for
leases, income (the excess of the aggregate future rentals and estimated
unguaranteed residuals upon expiration of the lease over the related equip-
ment cost) is recognized over the life of the lease using the interest method.
Under the operating method of accounting for leases, the cost of the
leased equipment is recorded as an asset and depreciated on a straight-line
basis over its estimated useful life, up to seven years. Acquisition fees
associated with lease placements are allocated to equipment when purchased
and depreciated as part of equipment cost. Rental income consists primarily
of monthly periodic rentals due under the terms of the leases. Generally,
during the remaining terms of existing operating leases, the Fund will not
recover all of the undepreciated cost and related expenses of its rental equip-
ment and is prepared to remarket the equipment in future years. Upon sale or
other disposition of assets, the cost and related accumulated depreciation are
removed from the accounts and the resulting gain or loss, if any, is reflected
in income.
Income Taxes
Federal and State income tax regulations provide that taxes on the
income or benefits from losses of the Fund are reportable by the partners in
their individual income tax returns. Accordingly, no provision for such
taxes has been made in the accompanying financial statements.
Statements of Cash Flows
For purposes of the statements of cash flows, the Fund considers all
highly liquid debt instruments purchased with a maturity of three months or
less to be cash equivalents.
Net Income per Equivalent Limited Partnership Unit
Net income per equivalent limited partnership unit is computed by
dividing net income allocated to limited partners by the weighted average
number of equivalent limited partnership units outstanding during the year.
The weighted average number of equivalent units outstanding during the year
is computed based on the weighted average monthly limited partners' capital
account balances, converted into equivalent units at $500 per unit.
3. ALLOCATION OF PARTNERSHIP INCOME, LOSS AND CASH DISTRIBUTIONS
Cash distributions, if any, are made monthly as follows: 99% to the
Limited Partners and 1% to the General Partner, until the Limited Partners
have received an amount equal to the purchase price of their units, plus a
F-8
FIDELITY LEASING INCOME FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
3. ALLOCATION OF PARTNERSHIP INCOME, LOSS AND CASH DISTRIBUTIONS (Continued)
12% compounded priority return (an amount equal to 12% compounded annually on
the portion of the purchase price not previously distributed); thereafter,
90% to the Limited Partners and 10% to the General Partner.
Net Losses are allocated 99% to the Limited Partners and 1% to the
General Partner. The General Partner is allocated Net Income equal to its
cash distributions, but not less than 1% of Net Income, with the balance
allocated to the Limited Partners.
Net Income (Losses) allocated to the Limited Partners are allocated to
individual limited partners based on the ratio of the daily weighted average
partner's net capital account balance (after deducting related commission
expense) to the total daily weighted average of the Limited Partners' net
capital account balances.
4. EQUIPMENT LEASED
The Fund's direct financing leases are for initial lease terms ranging
from 8 to 59 months. 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.
The approximate net investment in direct financing leases as of Decem-
ber 31, 2001 is as follows:
Minimum lease payments to be received $3,449,000
Unguaranteed residuals 812,000
Unearned rental income (196,000)
Unearned residual income (57,000)
__________
$4,008,000
==========
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
3 to 60 months.
In accordance with accounting principles generally accepted in the United
States of America, the Fund writes down its rental equipment to its estimated
net realizable value when the amounts are reasonably estimated and only recog-
nizes gains upon actual sale of its rental equipment. As a result, there was
no charge to write-down of equipment to net realizable value for the year ended
December 31, 2001. In 2000 and 1999, approximately $16,000 and $174,000,
respectively, was charged to write-down of equipment to net realizable value.
Any future losses are dependent upon unanticipated technological developments
affecting the equipment in subsequent years.
F-9
FIDELITY LEASING INCOME FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
4. EQUIPMENT LEASED (Continued)
The future approximate minimum rentals to be received on noncancellable
direct financing and operating leases as of December 31 are as follows:
Direct
Financing Operating
2002 $2,533,000 $189,000
2003 843,000 117,000
2004 73,000 -
__________ ________
$3,449,000 $306,000
========== ========
5. 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 the rental payments due during
the initial term of the lease 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 calendar
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 and its parent company during the years ended December 31:
2001 2000 1999
Management fee $ 82,896 $ 84,582 $ 93,235
Reimbursable costs 158,110 162,886 212,510
During 2001, the Fund transferred its checking and investment accounts
from Hudson United Bank to The Bancorp.com, Inc. (TBI). The son and the spouse
of the Chairman of Resource America, Inc. are the Chairman and Chief Executive
Officer, respectively, of TBI. The Fund maintains a normal banking relation-
ship with TBI.
F-10
FIDELITY LEASING INCOME FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
5. RELATED PARTY TRANSACTIONS (Continued)
Amounts due from related parties at December 31, 2001 and 2000 represent
monies due to 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 December 31, 2001 and 2000 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.
6. MAJOR CUSTOMERS
For the year ended December 31, 2001, three customers accounted for 45%,
22% and 19% of the Fund's rental income. For the year ended December 31, 2000,
five customers accounted for 21%, 18%, 16%, 14% and 13% of the Fund's rental
income. For the year ended December 31, 1999, three customers accounted for
14%, 13% and 10% of the Fund's rental income and two customers accounted for
12% each of the Fund's rental income.
7. CASH DISTRIBUTIONS
Below is a summary of the cash distributions paid to partners during
the years ended December 31:
For the Quarter Ended 2001 2000 1999
March $105,000 $ 75,000 $ 75,000
June 105,000 75,000 75,000
September 105,000 105,000 100,000
December 105,000 105,000 50,000
________ ________ ________
$420,000 $360,000 $300,000
======== ======== ========
In addition, the General Partner declared and paid two cash distri-
butions of $35,000 each and one cash distribution of $2,000,000 in February
2002 for each of the months ended October 31, November 30 and December 31,
2001, for an aggregate of $2,070,000 to all admitted partners as of October 31,
November 30 and December 31, 2001.
F-11
FIDELITY LEASING INCOME FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
8. SUMMARY OF QUARTERLY RESULTS (UNAUDITED)
The following table summarizes the results of operations on a quarterly
basis during 2001 and 2000:
2001
----------------------------------------
Fourth Third Second First
Quarter Quarter Quarter Quarter
------- ------- ------- -------
Income:
Earned income on direct financing
leases $ 94,844 $106,871 $125,109 $128,294
Rentals 49,409 44,325 71,247 96,022
Interest 29,001 30,464 24,672 20,262
Gain on sale of equipment, net - - 3,152 43,107
Other 3,706 8,663 2,801 4,441
________ ________ ________ ________
Total income 176,960 190,323 226,981 292,126
________ ________ ________ ________
Expenses:
Depreciation 36,081 32,735 36,735 81,378
General and administrative 26,415 35,862 32,181 30,449
General and administrative to
related party 46,559 43,111 35,289 33,151
Management fee to related party 21,177 20,320 20,223 21,176
________ ________ ________ ________
Total expenses 130,232 132,028 124,428 166,154
________ ________ ________ ________
Net income $ 46,728 $ 58,295 $102,553 $125,972
======== ======== ======== ========
Net income per equivalent limited
partnership unit $ .89 $ 1.93 $ 3.41 $ 4.19
======== ======== ======== ========
F-12
FIDELITY LEASING INCOME FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
8. SUMMARY OF QUARTERLY RESULTS (UNAUDITED) (Continued)
2000
----------------------------------------
Fourth Third Second First
Quarter Quarter Quarter Quarter
------- ------- ------- -------
Income:
Earned income on direct financing
leases $150,052 $119,550 $126,476 $107,941
Rentals 126,700 182,584 179,115 207,792
Interest 16,251 18,904 18,833 27,000
Gain on sale of equipment, net 3,144 53,644 6,800 -
Other 5,688 10,233 17,585 1,941
________ ________ ________ ________
Total income 301,835 384,915 348,809 344,674
________ ________ ________ ________
Expenses:
Depreciation 109,749 130,823 156,140 178,386
Write-down of equipment to
net realizable value - 16,000 - -
General and administrative 30,970 28,601 18,996 40,237
General and administrative to
related party 52,411 39,279 34,726 36,470
Management fee to related party 21,481 21,636 21,219 20,246
Loss on sale of equipment, net - - - 10,799
________ ________ ________ ________
Total expenses 214,611 236,339 231,081 286,138
________ ________ ________ ________
Net income $ 87,224 $148,576 $117,728 $ 58,536
======== ======== ======== ========
Net income per equivalent limited
partnership unit $ 2.90 $ 4.96 $ 3.94 $ 1.95
======== ======== ======== ========
F-13