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 March 31, 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 13
Part I: Financial Information
Item 1: Financial Statements
FIDELITY LEASING INCOME FUND VI, L.P.
BALANCE SHEETS
ASSETS
(Unaudited) (Audited)
March 31, December 31,
1999 1998
______________ _____________
Cash and cash equivalents $3,171,132 $2,892,327
Accounts receivable 316,975 102,663
Due from related parties 53,213 108,151
Equipment under operating leases
(net of accumulated depreciation
of $1,790,710 and $2,254,092,
respectively) 1,934,647 2,138,702
Net investment in direct financing
leases 3,416,448 3,545,522
Equipment held for sale or lease 561,326 605,526
__________ __________
Total assets $9,453,741 $9,392,891
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Lease rents paid in advance $ 117,469 $ 45,211
Accounts payable - equipment 30,848 30,848
Accounts payable and
accrued expenses 58,373 49,720
Due to related parties 58,182 163,466
__________ __________
Total liabilities 264,872 289,245
Partners' capital 9,188,869 9,103,646
__________ __________
Total liabilities and
partners' capital $9,453,741 $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
For the three months ended March 31, 1999 and 1998
(Unaudited)
1999 1998
________ ________
Income:
Rentals $255,598 $ 967,737
Earned income on direct financing
leases 68,055 1,922
Interest 31,489 41,413
Gain on sale of equipment, net 151,000 43,803
Other 9,544 1,144
________ __________
515,686 1,056,019
________ __________
Expenses:
Depreciation 199,878 725,687
Write-down of equipment to net
realizable value 48,376 84,829
General and administrative 36,954 55,462
General and administrative to
related party 49,997 55,589
Management fee to related party 16,722 48,624
________ __________
351,927 970,191
________ __________
Net income $163,759 $ 85,828
======== ==========
Net income per equivalent
limited partnership unit $ 5.49 $ 2.87
======== ==========
Weighted average number of
equivalent limited partnership
units outstanding during the period 29,514 29,586
======== ==========
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 three months ended March 31, 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 (750) - (74,250) (75,000)
Net income 1,638 - 162,121 163,759
______ ______ __________ __________
Balance, March 31, 1999 $3,870 75,264 $9,184,999 $9,188,869
====== ====== ========== ==========
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 three months ended March 31, 1999 and 1998
(Unaudited)
1999 1998
________ ________
Cash flows from operating activities:
Net income $ 163,759 $ 85,828
__________ __________
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 199,878 725,687
Write-down of equipment to net
realizable value 48,376 84,829
Gain on sale of equipment, net (151,000) (43,803)
(Increase) decrease in accounts
receivable (214,312) (148,827)
(Increase) decrease in due from related
parties 54,938 (67,471)
Increase (decrease) in lease rents paid
in advance 72,258 (10,929)
Increase (decrease) in accounts payable -
equipment - (16,097)
Increase (decrease) in accounts payable
and accrued expenses 8,653 (7,348)
Increase (decrease) in due to related
parties (105,284) (390,583)
__________ __________
(86,493) 125,458
__________ __________
Net cash provided by operating activities 77,266 211,286
__________ __________
Cash flows from investing activities:
Acquisition of equipment - (2,917,056)
Proceeds from direct financing leases,
net of earned income 129,075 9,927
Proceeds from sale of equipment 151,000 143,030
__________ __________
Net cash provided by (used in)
investing activities 280,075 (2,764,099)
__________ __________
Cash flows from financing activities:
Redemptions of capital (3,536) -
Distributions (75,000) (75,000)
__________ __________
Net cash used in financing activities (78,536) (75,000)
__________ __________
Increase (decrease) in cash and
cash equivalents 278,805 (2,627,813)
Cash and cash equivalents, beginning
of period 2,892,327 4,269,825
__________ __________
Cash and cash equivalents, end of period $3,171,132 $1,642,012
========== ==========
The accompanying notes are an integral part of these financial statements.
5
FIDELITY LEASING INCOME FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS
March 31, 1999
(Unaudited)
The accompanying unaudited condensed financial statements have been pre-
pared by the Fund in accordance with Generally Accepted Accounting Prin-
ciples, pursuant to the rules and regulations of the Securities and Ex-
change Commission. In the opinion of Management, all adjustments (consist-
ing of normal recurring accruals) considered necessary for a fair presen-
tation have been included
1. EQUIPMENT LEASED
Equipment on lease consists of equipment under operating leases. The
lessees have agreements with the manufacturer of the equipment to
provide maintenance for the leased equipment. The Fund's operating
leases are for initial lease terms of 24 to 58 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 unde-
preciated cost. Recent and anticipated technological developments af-
fecting the equipment and competitive factors in the marketplace are con-
sidered 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, $48,376 and $84,829 was charged to
write-down of equipment to net realizable value for the three months
ended March 31, 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 ag-
gregate future rentals and unguaranteed residual 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 esti-
mated 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 at lease expi-
ration is below 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 March 31, 1999 is
as follows:
Minimum lease payments to be received $3,692,000
Unguaranteed residuals 322,000
Unearned rental income (512,000)
Unearned residual income (86,000)
__________
$3,416,000
==========
The future approximate minimum rentals to be received on noncancellable
operating and direct financing leases as of March 31, 1999 are as
follows:
Years Ending December 31 Operating Direct Financing
________________________ _________ ________________
1999 $ 714,000 $ 749,000
2000 647,000 1,027,000
2001 176,000 748,000
2002 167,000 702,000
2003 117,000 452,000
Thereafter - 14,000
__________ __________
$1,821,000 $3,692,000
========== ==========
2. RELATED PARTY TRANSACTIONS
The General Partner receives 5% or 2% of rental payments on 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
7
FIDELITY LEASING INCOME FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
2. RELATED PARTY TRANSACTIONS (continued)
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. Fol-
lowing is a summary of fees and costs of services and materials charged
by the General Partner or its parent company during the three months
ended March 31:
1999 1998
________ ________
Management fee $16,722 $48,624
Reimbursable costs 49,997 55,589
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 March 31, 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 March 31, 1999 and December 31, 1998
represent monies due to the General Partner and/or its parent company
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
Two of the three main software systems utilized to generate informa-
tion for the Fund are still in the testing phase. The third software
system should be Year 2000 capable by July 1999. 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.
8
FIDELITY LEASING INCOME FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
4. CASH DISTRIBUTIONS
The General Partner declared and paid three cash distributions of
$25,000 each subsequent to March 31, 1999 for the months ended
January 31, February 28 and March 31, 1999 to all admitted partners
as of January 31, February 28 and March 31, 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 $515,686 and
$1,056,019 for the three months ended March 31, 1999 and 1998, respectively.
Rental income from the leasing of equipment accounted for 50% and 92% of
total revenues for the first quarter of 1999 and 1998, respectively. The
decrease in total revenues in 1999 is primarily attributable to a decrease
in rental income. During the three months ended March 31, 1999, rental
income decreased by approximately $782,000 because of equipment which came
off lease and was re-leased at lower rental rates or sold. This decrease
was mitigated by an increase in rental income of approximately $70,000
because of rents earned on equipment purchased since the first quarter
of 1998 as well as rents generated from 1998 equipment purchases for which
a full three months of rent was earned in the first quarter of 1999 and
only a portion of the three months was earned in the first quarter of 1998.
The overall decrease in revenues was partially mitigated by the increase in
net gain on sale of equipment. The Fund recorded a net gain on sale of
equipment of $151,000 for the first quarter of 1999 compared to $43,803 for
the first quarter of 1998. Additionally, the Fund invested in direct finan-
cing leases throughout 1998 that generated $68,055 and $1,922 of earned
income on direct financing leases during the three months ended March 31,
1999 and 1998, respectively. The increase in this account also reduced the
amount of the overall decrease in revenues in 1999.
Expenses were $351,927 and $970,191 for the three months ended March 31,
1999 and 1998, respectively. Depreciation expense comprised 57% and 75%
of total expenses during the first quarter of 1999 and 1998, respectively.
The decrease in expenses is primarily related to the decrease in depreciation
expense. Depreciation expense decreased during 1999 because of equipment
which came off lease or terminated and sold since March 1998. Additionally,
the decrease in write-down of equipment to net realizable value in 1999 also
accounts for the overall decrease in expenses in this year. Based upon the
quarterly review of the recoverability of the undepreciated cost of rental
equipment, $48,376 was charged to operations to write down equipment to its
estimated net realizable value during the three months ended March 31, 1999
compared to $84,829 for the three months ended March 31, 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 contributed to
the overall decrease in expenses from 1998. The decrease in management fee
to related party 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 purposes of
calculating management fees. The Fund pays a lower management fee of 2%
on full pay-out leases.
10
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)
For the three months ended March 31, 1999 and 1998, the Fund had net
income of $163,759 and $85,828, respectively. The earnings per equiva-
lent limited partnership unit, after earnings allocated to the General
Partner, were $5.49 and $2.87 based on a weighted average number of
equivalent limited partnership units outstanding of 29,514 and 29,586
for the three months ended March 31, 1999 and 1998, respectively.
The Fund generated cash from operations of $261,013 and $852,541,
for the purpose of determining cash available for distribution during the
quarter ended March 31, 1999 and 1998, respectively. There were no cash
distributions made to partners during the first quarter of 1999 and 1998
for the three months ended March 31, 1999 and 1998. However, $75,000 of
cash distributions were paid during the first quarter of both 1999 and
1998 for the months of October, November and December 1999 and 1998.
Subsequent to March 31, 1999 and 1998, 29% and 9% of the cash available
from operations was paid to partners for the quarter ended March 31, 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 pro-
vided 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. The Fund made no purchases of equipment during
the three months ended March 31, 1999 and purchased $2,917,056 of equip-
ment during the three months ended March 31, 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.
11
Part II: Other Information
FIDELITY LEASING INCOME FUND VI, L.P.
March 31, 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
12
SIGNATURES
Pursuant to the requirements 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.
5-14-99 By: Freddie M. Kotek
_______ ___________________________
Date Freddie M. Kotek
President of
F.L. Partnership Management, Inc.
(Principal Operating Officer)
5-14-99 By: Marianne T. Schuster
_______ ___________________________
Date Marianne T. Schuster
Vice President of
F.L. Partnership Management, Inc.
(Principal Financial Officer)
13