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, 2002
/ / 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.)
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)
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 12
Part I: Financial Information
Item 1: Financial Statements
FIDELITY LEASING INCOME FUND VI, L.P.
BALANCE SHEETS
ASSETS
(Unaudited) (Audited)
March 31, December 31,
2002 2001
______________ _____________
Cash and cash equivalents $2,956,525 $4,177,291
Accounts receivable 298,006 291,958
Due from related parties 118,080 17,397
Net investment in direct financing
leases 3,093,661 4,008,473
Equipment under operating leases
(net of accumulated depreciation
of $552,508 and $513,083, respectively) 340,644 370,035
Equipment held for sale or lease 421,221 431,255
__________ __________
Total assets $7,228,137 $9,296,409
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Lease rents paid in advance $ 42,591 $ 55,888
Accounts payable and
accrued expenses 33,657 19,889
Due to related parties 14,431 25,248
__________ __________
Total liabilities 90,679 101,025
Partners' capital 7,137,458 9,195,384
__________ __________
Total liabilities and
partners' capital $7,228,137 $9,296,409
========== ==========
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, 2002 and 2001
(Unaudited)
2002 2001
________ ________
Income:
Earned income on direct financing
leases $ 79,753 $128,294
Rentals 49,183 96,022
Interest 24,899 20,262
Gain on sale of equipment, net - 43,107
Other 1,618 4,441
________ ________
155,453 292,126
________ ________
Expenses:
Depreciation 39,425 81,378
General and administrative 38,966 30,449
General and administrative to
related party 43,043 33,151
Management fee to related party 21,945 21,176
________ ________
143,379 166,154
________ ________
Net income $ 12,074 $125,972
======== ========
Net income per equivalent
limited partnership unit $ 0.24 $ 4.19
======== ========
Weighted average number of
equivalent limited partnership
units outstanding during the period 26,830 29,750
======== ========
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, 2002
(Unaudited)
General Limited Partners
Partner Units Amount Total
_______ _____ ______ _____
Balance, January 1, 2002 $24,450 75,264 $9,170,934 $9,195,384
Cash distributions (20,700) - (2,049,300) (2,070,000)
Net income 5,700 - 6,374 12,074
_______ ______ __________ __________
Balance, March 31, 2002 $ 9,450 75,264 $7,128,008 $7,137,458
======= ====== ========== ==========
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, 2002 and 2001
(Unaudited)
2002 2001
________ ________
Cash flows from operating activities:
Net income $ 12,074 $ 125,972
__________ __________
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 39,425 81,378
(Gain) loss on sale of equipment, net - (43,107)
(Increase) decrease in accounts
receivable (6,048) (75,026)
(Increase) decrease in due from related
parties (100,683) (177,916)
Increase (decrease) in lease rents paid
in advance (13,297) 25,755
Increase (decrease) in accounts payable
and accrued expenses 13,768 16,294
Increase (decrease) in due to related
parties (10,817) 11,085
__________ __________
(77,652) (161,537)
__________ __________
Net cash used in operating activities (65,578) (35,565)
__________ __________
Cash flows from investing activities:
Proceeds from direct financing leases,
net of earned income 914,812 690,448
Proceeds from sale of equipment - 98,004
__________ __________
Net cash provided by investing activities 914,812 788,452
__________ __________
Cash flows from financing activities:
Distributions (2,070,000) (105,000)
__________ __________
Net cash used in financing activities (2,070,000) (105,000)
__________ __________
Increase (decrease) in cash and
cash equivalents (1,220,766) 647,887
Cash and cash equivalents, beginning
of period 4,177,291 1,982,752
__________ __________
Cash and cash equivalents, end of period $2,956,525 $2,630,639
========== ==========
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, 2002
(Unaudited)
The accompanying unaudited condensed financial statements have been pre-
pared by the Fund in accordance with accounting principles generally accepted
in the United States of America, pursuant to the rules and regulations of the
Securities and Exchange Commission. In the opinion of Management, all ad-
justments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included.
1. EQUIPMENT LEASED
The Fund 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. The Fund's direct financing leases are for
initial lease terms ranging from 7 to 59 months.
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 the estimated residual value, an adjustment is made.
The approximate net investment in direct financing leases as of
March 31, 2002 is as follows (unaudited):
Minimum lease payments to be received $2,450,000
Unguaranteed residuals 812,000
Unearned rental income (127,000)
Unearned residual income (41,000)
__________
$3,094,000
==========
Equipment on lease consists of equipment under operating leases. The
Fund's operating leases are for initial lease terms of 7 to 59 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 so, 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 unde-
preciated cost. Recent and anticipated technological developments af-
fecting the equipment and competitive factors in the marketplace are
considered among other things, as part of this review. 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 upon actual sale of its rental equipment.
6
FIDELITY LEASING INCOME FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
1. EQUIPMENT LEASED (continued)
The future approximate minimum rentals to be received on noncancellable
direct financing and operating leases as of March 31, 2002 are as follows:
Years Ending December 31 Direct Financing Operating
________________________ ________________ _________
2002 $1,563,000 $147,000
2003 814,000 117,000
2004 73,000 -
__________ ________
$2,450,000 $264,000
========== ========
2. RELATED PARTY TRANSACTIONS
The General Partner receives 5% of rental payments on equipment under
operating leases and 2% of rental payments (as opposed to earned income)
on full pay-out leases for administrative and management services per-
formed on behalf of the Fund. Full pay-out leases are noncancellable
leases for which rental payments during the initial term are at least
sufficient to recover the purchase price of the equipment, including
acquisition fees. This management fee is paid monthly only if and when
the Limited Partners have received distributions for the period from
January 1, 1990 through the end of the most recent quarter, equal to a
return for such period at a rate of 12% per year on the aggregate amount
paid for their units.
The General Partner may also receive up to 3% of the proceeds from the
sale of the Fund's equipment for services and activities to be performed
in connection with the disposition of equipment. The payment of this
sales fee is deferred until the Limited Partners have received cash
distributions equal to the purchase price of their units plus a 12%
cumulative compounded priority return. Based on current estimates, it
is not expected that the Fund will be required to pay this sales fee to
the General Partner.
Additionally, the General Partner and its parent company are reimbursed
by the Fund for certain costs of services and materials used by or for
the Fund except those items covered by the above-mentioned fees.
7
FIDELITY LEASING INCOME FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
2. RELATED PARTY TRANSACTIONS (continued)
Following 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, 2002 and 2001 (unaudited):
2002 2001
________ ________
Management fee $21,945 $21,176
Reimbursable costs 43,043 33,151
During the first quarter of 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 relationship with TBI.
Amounts due from related parties at March 31, 2002 and December 31, 2001
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, 2002 and December 31, 2001
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. CASH DISTRIBUTIONS
The General Partner declared and paid cash distributions of $35,000,
$35,000 and $500,000 subsequent to March 31, 2002 for the months ended
January 31, February 28 and March 31, 2002 to all admitted partners as
of January 31, February 28 and March 31, 2002.
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 $155,453 and
$292,126 for the three months ended March 31, 2002 and 2001, respectively.
Earned income on direct financing leases and rental income from the leasing
of equipment accounted for 83% and 77% of total revenues for the first
quarter of 2002 and 2001, respectively. The decrease in total revenues
in 2002 was partially attributable to the decrease in earned income on
direct financing leases. The decrease in this account resulted from the
monthly amortization of unearned income using the interest method. Addi-
tionally, the early termination of certain direct financing leases in the
last six months of 2001 and the first quarter of 2002 also accounted for the
decrease in earned income on direct financing leases during the three months
ended March 31, 2002. The decrease in rental income also contributed to the
overall decrease in revenues during the first quarter of 2002. Rental income
decreased by approximately $47,000 during the three months ended March 31,
2002 because of equipment under operating leases that terminated and was sold
subsequent to March 2001. Furthermore, the decrease in net gain on sale of
equipment accounted for a portion of the total decrease in revenues during the
first quarter of 2002. There was no net gain on sale of equipment recognized
for the three months ended March 31, 2002 compared to $43,107 recognized for
the three months ended March 31, 2001.
Expenses were $143,379 and $166,154 for the three months ended
March 31, 2002 and 2001, respectively. Depreciation expense comprised 27%
and 49% of total expenses during the first quarter of 2002 and 2001, respec-
tively. The decrease in expenses was primarily related to the decrease in
depreciation expense during the first quarter of 2002. Depreciation expense
decreased because of equipment that terminated and was sold subsequent to
March 2001. The increase in general and administrative expense reduced the
overall decrease in expenses in the first quarter of 2002. This account
increased approximately $9,000 because of the increase in various expenses
incurred to administer the Fund on a daily basis. Additionally, general and
administrative expense to related party increased approximately $10,000 during
the first quarter of 2002 because of the increase in expenses incurred by the
General Partner to manage the Fund. The increase in this account also reduced
the amount of the overall decrease in expenses in the first three months of
2002 compared to the same period in 2001.
For the three months ended March 31, 2002 and 2001, the Fund had net
income of $12,074 and $125,972, respectively. The net income per equiva-
lent limited partnership unit, after net income allocated to the General
Partner, was $0.24 and $4.19 based on a weighted average number of
equivalent limited partnership units outstanding of 26,830 and 29,750
for the three months ended March 31, 2002 and 2001, 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 cash from operations of $51,499 and $164,243
for the purpose of determining cash available for distribution during the
quarter ended March 31, 2002 and 2001, respectively. There were no cash
distributions paid to partners during the first quarter of 2002 and 2001
for the three months ended March 31, 2002 and 2001. However, the General
Partner declared and paid cash distributions of $35,000, $35,000 and
$2,000,000 during the first quarter of 2002 for the months ended October 31,
November 30 and December 31, 2001, respectively. Subsequent to March 31,
2002, the General Partner declared and paid two cash distributions of $35,000
each and one cash distribution of $500,000 to partners totaling $570,000
for the first quarter of 2002. Subsequent to March 31, 2001, the General
Partner declared and paid three cash distributions of $35,000 each to part-
ners totaling $105,000 for the first quarter of 2001. The Fund used the cash
available from previous periods that was not distributed to partners to pay
cash distributions for the first quarter of 2002 that exceeded the amount of
cash available from operations for this period. 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 2002. 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 look for
opportunities to purchase equipment under operating leases or invest in
direct financing leases with cash available from operations that was not
distributed to partners in prior periods and for lease terms consistent
with the plan of dissolution.
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.
March 31, 2002
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: None
b) Reports on Form 8-K: None
11
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.
5-14-02 By: /s/ Crit S. DeMent
____________________________
Crit S. DeMent
Chairman of the Board of Directors
and President of LEAF Financial Corporation
(Principal Executive Officer)
5-14-02 By: /s/ Miles Herman
____________________________
Miles Herman
Vice President and Director of
LEAF Financial Corporation
5-14-02 By: /s/ Freddie M. Kotek
____________________________
Freddie M. Kotek
Director of LEAF Financial Corporation
5-14-02 By: /s/ Marianne T. Schuster
____________________________
Marianne T. Schuster
Vice President and Treasurer of
LEAF Financial Corporation
(Principal Financial Officer)
12