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, 1996
/ / 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.)
Seven East Skippack 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,
1996 1995
______________ _____________
Cash and cash equivalents $1,665,539 $ 2,920,100
Investment securities held to maturity - 499,740
Accounts receivable 112,907 33,021
Interest receivable 39,614 13,376
Due from related parties 293,117 52,267
Equipment under operating leases
(net of accumulated depreciation
of $9,376,733 and $13,650,877,
respectively) 6,772,573 6,242,594
Net investment in direct financing
leases 550,808 687,606
Equipment held for sale or lease 6,224 9,424
__________ ___________
Total assets $9,440,782 $10,458,128
========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Lease rents paid in advance $ 185,408 $ 87,814
Accounts payable and
accrued expenses 75,972 92,163
Due to related parties 660 270,678
__________ ___________
Total liabilities 262,040 450,655
Partners' capital 9,178,742 10,007,473
__________ ___________
Total liabilities and
partners' capital $9,440,782 $10,458,128
========== ===========
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
1996 1995 1996 1995
____ ____ ____ ____
Income:
Rentals $ 975,857 $1,238,450 $3,004,341 $4,020,545
Earned income on direct
financing leases 12,837 21,407 41,633 62,902
Interest 30,927 59,009 127,480 222,858
Gain on sale of equipment,
net - - 409,978 549,564
Other 2,489 1,102 6,223 13,368
__________ __________ __________ __________
1,022,110 1,319,968 3,589,655 4,869,237
__________ __________ __________ __________
Expenses:
Depreciation and
amortization 766,833 921,745 2,220,249 3,079,485
Write-down of equipment
to net realizable value 95,990 2,183 754,843 303,116
General and administrative 36,158 35,386 117,103 96,205
General and administrative
to related party 62,448 43,419 180,152 171,560
Management fee to related
party 49,983 64,426 153,413 203,933
Loss on sale of equipment,
net 22,086 132,291 - -
__________ __________ __________ __________
1,033,498 1,199,450 3,425,760 3,854,299
__________ __________ __________ __________
Net income (loss) $ (11,388) $ 120,518 $ 163,895 $1,014,938
========== ========== ========== ==========
Net income (loss) per equivalent
limited partnership unit $ (.44) $ 3.27 $ 5.32 $ 27.06
========== ========== ========== ==========
Weighted average number of
equivalent limited partnership
units outstanding during
the period 29,605 34,072 29,927 36,243
========== ========== ========== ==========
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, 1996
(Unaudited)
General Limited Partners
Partner Units Amount Total
_______ _____ ______ _____
Balance, January 1, 1996 $2,438 79,156 $10,005,035 $10,007,473
Redemptions - (3,863) (473,814) (473,814)
Cash distributions (5,188) - (513,624) (518,812)
Net income 4,750 - 159,145 163,895
_______ ______ ___________ ___________
Balance, September 30, 1996 $2,000 75,293 $ 9,176,742 $ 9,178,742
======= ====== =========== ===========
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, 1996 and 1995
(Unaudited) 1996 1995
____ ____
Cash flows from operating activities:
Net income $ 163,895 $1,014,938
__________ __________
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 2,220,249 3,079,485
Write-down of equipment to net
realizable value 754,843 303,116
Proceeds from direct financing leases,
net of earned income 136,798 238,264
Gain on sale of equipment, net (409,978) (549,564)
(Increase) decrease in accounts receivable (79,886) (3,877)
(Increase) decrease in interest receivable (26,238) 46,349
(Increase) decrease in due from related
parties (240,850) 19,603
Increase (decrease) in lease rents paid
in advance 97,594 (114,423)
Increase (decrease) in accounts payable and
accrued expenses (16,191) (80,166)
Increase (decrease) in accounts payable -
equipment - (518,100)
Increase (decrease) in due to related parties (270,018) (34,739)
__________ __________
2,166,323 2,385,948
__________ __________
Net cash provided by operating activities 2,330,218 3,400,886
__________ __________
Cash flows from investing activities:
Acquisition of equipment (3,799,088) (4,137,211)
Purchase of investment securities held
to maturity - (250,253)
Maturity of investment securities held
to maturity 499,740 2,485,354
Proceeds from sale of equipment 707,195 1,182,831
__________ __________
Net cash used in investing activities (2,592,153) (719,279)
__________ __________
Cash flows from financing activities:
Redemptions of capital (473,814) (186,560)
Distributions (518,812) (3,739,971)
__________ __________
Net cash used in financing activities (992,626) (3,926,531)
__________ __________
Decrease in cash and cash equivalents (1,254,561) (1,244,924)
Cash and cash equivalents, beginning
of period 2,920,100 5,509,017
__________ __________
Cash and cash equivalents, end of period $1,665,539 $4,264,093
========== ==========
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, 1996
(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 1995 financial statements have been
reclassified to conform to the presentation in 1996.
1. EQUIPMENT LEASED
Equipment on lease consists primarily of computer peripheral equipment
under operating leases. A majority of the equipment was manufactured by
IBM. 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, $754,843 and
$303,116 was charged to write-down of equipment to net realizable value
for the nine months ended September 30, 1996 and 1995, 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, 1996 is
as follows:
Net minimum lease payments to be received $616,000
Less unearned income 65,000
Add expected future residuals -
________
$551,000
========
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, 1996 are as
follows:
Direct
Years Ending December 31 Operating Financing
________________________ _________ _________
1996 $1,039,000 $ 59,000
1997 3,092,000 238,000
1998 1,364,000 238,000
1999 699,000 81,000
__________ ________
$6,194,000 $616,000
========== ========
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. As a
result, $269,982 of sales fee accrued by the Fund in prior periods was
recognized into income as part of the net gain on sale of equipment during
the nine months ended September 30, 1996.
Additionally, the General Partner and its affiliates 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 affiliates during the three and nine months ended
September 30, 1996 and 1995:
Three Months Ended Nine Months Ended
September 30 September 30
1996 1995 1996 1995
____ ____ ____ ____
Management fee $49,983 $64,426 $153,413 $203,933
Reimbursable costs 62,448 43,419 180,152 171,560
Accrued sales fee - 4,646 - 36,834
7
FIDELITY LEASING INCOME FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
2. RELATED PARTY TRANSACTIONS (Continued)
Amounts due from related parties at September 30, 1996 and December 31,
1995 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, 1996 and December 31, 1995
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. SUBSEQUENT EVENT
Cash Distribution:
The General Partner declared and paid a cash distribution of $50,000 in
both October and November 1996 for the months ended August 31 and
September 30, 1996 to all admitted partners as of August 31 and
September 30, 1996.
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 $1,022,110 and
$1,319,968 for the three months ended September 30, 1996 and 1995,
respectively, and $3,589,655 and $4,869,237 for the nine months ended Sep-
tember 30, 1996 and 1995, respectively. Rental income from the leasing of
computer peripheral equipment accounted for 95% and 94% of total revenues for
the third quarter of 1996 and 1995, respectively, and 84% and 83% for the nine
months ended September 30, 1996 and 1995, respectively. The decrease in total
revenues in 1996 is primarily attributable to a decrease in rental income.
During the nine months ended September 30, 1996, rental income decreased by
approximately $1,790,000 because of equipment which came off lease and was re-
leased at lower rental rates or sold. This decrease, however, was reduced by
approximately $774,000 of rents generated from equipment purchases made since
September of 1995 as well as rental income recognized on 1995 equipment
purchases for which a full nine months was earned in 1996 and only a portion of
the nine months was earned in 1995. Additionally, the Fund recognized a net
gain on sale of equipment of $409,978 for the nine months ended September 30,
1996 as compared to $549,564 for the nine months ended September 30, 1995 which
also accounts for the decrease in total revenues in 1996. Furthermore,
interest income decreased in 1996 because of lower cash balances available for
investment by the Fund during the first nine months of 1996 as compared to
1995.
Expenses were $1,033,498 and $1,199,450 for the three months ended Septem-
ber 30, 1996 and 1995, respectively, and $3,425,760 and $3,854,299 for the nine
months ended September 30, 1996 and 1995, respectively. Depreciation and
amortization comprised 74% and 77% of total expenses for the third quarter of
1996 and 1995, respectively and 65% and 80% for the nine months ended September
30, 1996 and 1995, respectively. The decrease in expenses is primarily related
to the decrease in depreciation expense due to equipment which came off lease
and was terminated or sold. Additionally, management fee to related party
decreased proportionately to the decrease in rental income in 1996 which also
contributed to the decrease in total expenses during the first nine months of
1996 as compared to 1995. The overall decrease in expenses was reduced by an
increase in the write-down of equipment to net realizable value. Based upon
the quarterly review of the recoverability of the undepreciated cost of rental
equipment, $754,843 was charged to write-down of equipment to net realizable
value during the nine months ended September 30, 1996 as compared to $303,116
for the nine months ended September 30, 1995. Any future losses are dependent
upon unanticipated technological developments affecting the computer equipment
industry in subsequent years.
The Fund's net income (loss) was ($11,388) and $120,518 for the three
months ended September 30, 1996 and 1995, respectively, and $163,895 and
$1,014,938 for the nine months ended September 30, 1996 and 1995, respectively.
The earnings (loss) per equivalent limited partnership unit, after earnings
(loss) allocated to the General Partner, were ($.44) and $3.27 based on a
weighted average number of equivalent limited partnership units outstanding of
29,605 and 34,072 for the three months ended September 30, 1996 and 1995,
respectively. The earnings (loss) per equivalent limited partnership unit,
after earnings (loss) allocated to the General Partner, were $5.32 and $27.06
based on a weighted average number of equivalent limited partnership units
outstanding of 29,927 and 36,243 for the nine months ended September 30, 1996
and 1995, 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 funds from operations of $873,521 and $1,176,737 for
the purpose of determining cash available for distribution, and distributed
6% and 35% of these amounts during the third quarter of 1996 and 1995,
respectively and 11% and 43% of these amounts in October and November 1996 and
1995, respectively. For the nine months ended September 30, 1996 and 1995, the
Fund generated $2,729,009 and $3,847,975 of funds from operations and
distributed 14% and 75% of these amounts during the first nine months of 1996
and 1995, respectively and 4% and 13% of these amounts in October and November
1996 and 1995, 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 peripheral equipment with sales
proceeds and cash available from operations which is not distributed to
partners. The Fund purchased $3,799,088 and $4,137,211 of equipment during the
nine months ended September 30, 1996 and 1995, 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, 1996
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.
11-13-96 By: Freddie M. Kotek
________ _____________________________
Date Freddie M. Kotek
President of F.L. Partnership Management, Inc.
(Principal Operating Officer)
11-13-96 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