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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, 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 0-20131
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.)
3 North Columbus Blvd., Philadelphia, Pennsylvania 19106
______________________________________________________________________
(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, 1999 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 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 distri-
bution. The Fund manages the equipment, releasing or disposing of equipment 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,
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 which 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) which will afford benefits
to the purchaser similar to those obtained through leases. As a result of
the advantages which 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, 1999, 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, 1999:
Operating Leases:
Purchase Price Percentage of
Type of Equipment of Equipment Total Equipment
Technical Workstations and Terminals $1,613,021 54.70%
PCB Assembly Equipment 775,384 26.29
Tape Storage Systems 97,693 3.31
Printers 38,609 1.31
Other 424,273 14.39
__________ ______
Totals $2,948,980 100.00%
========== ======
Direct Financing Leases:
Purchase Price Percentage of
Type of Equipment of Equipment Total Equipment
Network Communications $3,710,364 61.52%
PCB Assembly Equipment 1,153,915 19.13
Electron Microscopes 964,081 15.99
Mini-systems 108,807 1.80
Printers 93,874 1.56
__________ ______
Totals $6,031,041 100.00%
========== ======
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, 1999:
Operating Leases:
Purchase Price Percentage of
Type of Business of Equipment Total Equipment
Manufacturing/Refining $1,859,105 63.04%
Diversified Financial/Banking/Insurance 508,628 17.25
Computers/Data Processing 298,062 10.11
Telephone/Telecommunications 283,185 9.60
__________ ______
Totals $2,948,980 100.00%
========== ======
Direct Financing Leases:
Purchase Price Percentage of
Type of Business of Equipment Total Equipment
Retailing/Consumer Goods $3,699,167 61.34%
Manufacturing/Refining 2,202,542 36.52
Diversified Financial/Banking/Insurance 129,332 2.14
__________ ______
Totals $6,031,041 100.00%
========== ======
Average Initial Term of Leases (in months): 44
3
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 STOCK AND RELATED SECURITY
HOLDER 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, 1999
Limited Partnership Interests 2,678
General Partnership Interest 1
Item 6. SELECTED FINANCIAL DATA
For the Years Ended December 31,
1999 1998 1997 1996 1995
Total Income $1,844,586 $6,764,079 $4,765,095 $ 4,740,607 $ 6,094,886
Net Income 429,662 245,744 423,226 169,828 597,297
Distributions to Partners 300,000 300,000 300,011 668,800 4,343,818
Net Income per
Equivalent Limited
Partnership Unit 14.42 8.18 14.22 5.49 15.94
Weighted Average Number
of Equivalent Limited
Partnership Units
Outstanding During
the Year 29,502 29,663 29,471 29,822 35,186
December 31,
1999 1998 1997 1996 1995
Total Assets $9,389,226 $9,392,891 $9,845,711 $9,435,898 $10,458,128
Equipment under
Operating Leases and
Equipment Held for
Sale or Lease (Net) 1,756,936 2,744,228 5,186,967 5,973,803 6,252,018
Net Investment in
Direct Financing Leases 5,426,656 3,545,522 126,057 503,093 687,606
Limited Partnership
Units 75,264 75,294 75,294 75,294 79,156
Limited Partners 2,678 2,670 2,665 2,661 2,745
5
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS
Results of Operations
Fidelity Leasing Income Fund VI, L.P. had revenues of $1,844,586,
$6,764,079 and $4,765,095 for the years ended December 31, 1999, 1998 and
1997, respectively. Rental income from the leasing of equipment accounted for
54%, 94% and 93% of total revenues in 1999, 1998 and 1997, respectively.
The decrease in total revenues in 1999 and the increase in total revenues in
1998 was primarily attributable to the fluctuation in rental income. In 1999,
rental income decreased by approximately $2,104,000 because of equipment that
terminated or sold during 1998 and 1999. This decrease was mitigated by
$173,000 of rents generated on equipment purchased during 1999 as well as
rental income generated on 1998 equipment purchases for which a full year of
rent was recognized in 1999 and only a partial year was recognized in 1998.
Additionally, the Fund entered into several transactions in which it collected
the remaining rents owed on certain leases resulting in the recognition of
$3,401,000 of rental income in 1998. This also contributed to the decrease in
rental income in 1999 as well as the increase in rental income in 1998.
Additionally, in 1998, rental income increased by approximately $893,000 due to
purchases of equipment for lease in 1998, as well as rental income realized on
1997 equipment purchases for which a full year of rent was earned in 1998 but
only a partial year was earned in 1997. This increase, however, was reduced by
a decrease of $2,404,000 in rental income caused by equipment that terminated
or sold in 1998. The Fund invested in approximately $3.7 million of direct
financing leases during 1999 compared to $3.8 million in 1998 and $129,000 in
1997. As a result, the Fund recognized earned income on direct financing
leases of $420,461, $140,128 and $37,404 in 1999, 1998 and 1997, respectively,
which reduced the overall decrease in revenues in 1999 and contributed to the
overall increase in revenues in 1998. Furthermore, the Fund recognized a net
gain on sale of equipment of $226,430, $180,509 and $146,387 for the years
ended December 31, 1999, 1998 and 1997, respectively. The variation in this
account mitigated the overall decrease in revenues in 1999 and contributed to
the increase in total revenues in 1998. Interest income increased from 1998
because of higher cash balances available for investment by the Fund in the
first nine months of 1999 which also lowered the overall decrease in revenues
in 1999. In 1998, however, interest income decreased from 1997 because of
lower cash balances available for investment by the Fund which reduced the
overall increase in revenues in 1998.
Expenses were $1,414,924, $6,518,335 and $4,341,869 for the years ended
December 31, 1999, 1998 and 1997, respectively. Depreciation expense comprised
56%, 83% and 78% of total expenses in 1999, 1998 and 1997, respectively.
The fluctuation in expenses in 1999 and 1998 was primarily attributable to the
change in depreciation expense. Depreciation expense decreased in 1999 because
of equipment that terminated or sold during 1998 and 1999. In 1998, the Fund
recorded additional depreciation expense of $3,391,000 on equipment discussed
above for which the Fund entered into several transactions to collect the
remaining rents owed on certain leases. This also accounted for the decrease
in depreciation expense in 1999 and the increase in this account in 1998. In
1998, depreciation expense also increased because of equipment purchased under
operating leases as well as depreciation expense recorded on 1997 equipment
purchases for which a full year of depreciation expense was taken in 1998 but
only a partial year of depreciation expense was recorded in 1997. The fluctu-
ation in write-down of equipment to net realizable value also contributed to
6
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Results of Operations (Continued)
the change in total expenses in both 1999 and 1998. Currently, the Fund's
practice is to review the recoverability of its undepreciated 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. In 1999, 1998 and 1997,
approximately $174,000, $399,000 and $376,000, respectively, was charged to
write-down of equipment to net realizable value which also accounts for a
portion of the decrease in total expenses in 1999 and the increase in total
expenses in 1998. 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. Any future losses are dependent upon unantici-
pated technological developments affecting the types of equipment in the port-
folio in subsequent years. Furthermore, the variation in management fee to
related party also contributed to the decrease in total expenses in 1999 and
the increase in total expenses in 1998. Management fee to related party
changed in proportion to the change in rental income on operating leases.
The Fund also paid lower management fees of 2% of rentals on full pay-out
leases. Many of the leases purchased in 1999 and 1998 were direct financing
leases which meet the requirements of full pay-out leases for the purpose of
calculating management fees.
The Fund's net income was $429,642, $245,744 and $423,226 for the years
ended December 31, 1999, 1998 and 1997, respectively. The earnings per
equivalent limited partnership unit, after earnings allocated to the General
Partner, were $14.42, $8.18 and $14.22 for the years ended December 31, 1999,
1998 and 1997, respectively. The weighted average number of equivalent
limited partnership units outstanding were 29,502, 29,663 and 29,471 for the
years ended December 31, 1999, 1998 and 1997, respectively.
The Fund generated cash from operations, for the purpose of determining
cash available for distribution, of $1,164,825, $5,845,993 and $4,045,851
and distributed 19%, 4% and 6% of these amounts to partners in 1999, 1998 and
1997, respectively and 6%, 1% and 2% of these amounts to partners in January
and February 2000, 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 continued the process of dissolution during 1999. As provided
in the Restated Limited Partnership Agreement, the assets of the Fund shall be
liquidated as promptly as is consistent with obtaining their fair value.
During this time, the Fund continued to purchase equipment for lease with cash
available from operations which was not distributed to partners. During the
years ended December 31, 1998 and 1997, the Fund purchased $3,893,271 and
$3,169,760, respectively, of equipment subject to operating leases. The Fund
also invested in $3,699,167, $3,824,885 and $129,332 of direct financing leases
during the twelve months ended December 31, 1999, 1998 and 1997, respectively.
7
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
Results of Operations (Continued)
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.
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. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
8
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
F.L. Partnership Management, Inc. (FLPMI) is a wholly owned subsidiary
of Resource Leasing, Inc., a wholly owned subsidiary of Resource America, Inc.
(Resource America). The Directors and Executive Officers of FLPMI are:
FREDDIE M. KOTEK, age 44, Chairman of the Board of Directors, President,
and Chief Executive Officer of FLPMI since September 1995 and Senior Vice
President of Resource America since 1995. President of Resource Leasing,
Inc. since September 1995. Executive Vice President of Resource
Properties, Inc. (a wholly owned subsidiary of Resource America) since
1993.
MICHAEL L. STAINES, age 50, Director and Secretary of FLPMI since
September 1995. Director of Resource America since 1989 and Senior Vice
President of Resource America since 1989.
SCOTT F. SCHAEFFER, age 37, Director of FLPMI since September 1995. Vice
Chairman of the Board of Resource America since 1998 and Executive Vice
President of Resource America since 1997. Prior thereto, Senior Vice
President of Resource America since 1995. Vice President-Real Estate of
Resource America and President of Resource Properties, Inc. (a wholly
owned subsidiary of Resource America) since 1992.
Others:
MARIANNE T. SCHUSTER, age 41, Vice President and Controller of FLPMI
since 1984.
KRISTIN L. CHRISTMAN, age 32, Portfolio Manager of FLPMI since December
1995 and Equipment Brokerage Manager since 1993.
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, 1999:
Name of Individual or Capacities in
Number in Group Which Served Compensation
F.L. Partnership
Management, Inc. General Partner $93,235(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) As of December 31, 1999, there was no person or group known to the
Fund that owned more than 5% of the Fund's outstanding securities either
beneficially or of record.
(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 F.L. Partnership Management, Inc.
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
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, 1999, the Fund was charged by the
General Partner $93,235 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
10
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS (Continued)
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, 1999,
the General Partner received $3,000 of cash distributions.
The Fund incurred $212,510 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 1999.
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
(27) Financial Data Schedule
(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: F.L. PARTNERSHIP MANAGEMENT, INC.
Freddie M. Kotek
By: ___________________________
Freddie M. Kotek, Chairman and President
Dated: March 23, 2000
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
Freddie M. Kotek
____________________________ Chairman of the Board of Directors and 3-23-00
Freddie M. Kotek President of F.L. Partnership
Management, Inc.
(Principal Executive Officer)
Michael L. Staines
____________________________ Director of F.L. Partnership 3-23-00
Michael L. Staines Management, Inc
Marianne T. Schuster
____________________________ Vice President and Controller 3-23-00
Marianne T. Schuster of F.L. Partnership Management, Inc.
(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, 1999 and 1998 F-3
Statements of Operations for the years ended
December 31, 1999, 1998 and 1997 F-4
Statements of Partners' Capital for the years ended
December 31, 1999, 1998 and 1997 F-5
Statements of Cash Flows for the years ended
December 31, 1999, 1998 and 1997 F-6
Notes to Financial Statements F-7 - F-12
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, 1999 and 1998, and the related
statements of operations, partners' capital and cash flows for each of the
three years in the period ended December 31, 1999. 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 generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and signif-
icant 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, 1999 and 1998, and the results of
its operations and its cash flows for each of the three years in the period
ended December 31, 1999 in conformity with generally accepted accounting
principles.
Grant Thornton LLP
Philadelphia, Pennsylvania
February 11, 2000
F-2
FIDELITY LEASING INCOME FUND VI, L.P.
BALANCE SHEETS
ASSETS
December 31,
1999 1998
Cash and cash equivalents $1,983,958 $2,892,327
Accounts receivable 185,135 102,663
Due from related parties 36,541 108,151
Equipment under operating leases
(net of accumulated depreciation
of $1,649,475 and $2,254,092,
respectively) 1,299,505 2,138,702
Net investment in direct financing
leases 5,426,656 3,545,522
Equipment held for sale or lease 457,431 605,526
__________ __________
Total assets $9,389,226 $9,392,891
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Lease rents paid in advance $ 92,659 $ 45,211
Accounts payable - equipment - 30,848
Accounts payable and
accrued expenses 40,832 49,720
Due to related parties 25,963 163,466
__________ __________
Total liabilities 159,454 289,245
Partners' capital 9,229,772 9,103,646
__________ __________
Total liabilities and
partners' capital $9,389,226 $9,392,891
========== ==========
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,
1999 1998 1997
Income:
Rentals $ 992,807 $6,324,748 $4,435,249
Earned income on direct
financing leases 420,461 140,128 37,404
Interest 161,923 95,069 132,822
Gain on sale of equipment, net 226,430 180,509 146,387
Other 42,965 23,625 13,233
__________ __________ __________
1,844,586 6,764,079 4,765,095
__________ __________ __________
Expenses:
Depreciation 788,056 5,382,228 3,393,070
Write-down of equipment to
net realizable value 173,537 398,530 375,942
General and administrative 147,586 153,055 111,289
General and administrative to
related party 212,510 257,295 229,091
Management fee to related party 93,235 327,227 232,477
__________ __________ __________
1,414,924 6,518,335 4,341,869
__________ __________ __________
Net income $ 429,662 $ 245,744 $ 423,226
========== ========== ==========
Net income per equivalent
limited partnership unit $ 14.42 $ 8.18 $ 14.22
========== ========== ==========
Weighted average number of
equivalent limited partnership
units outstanding during the year 29,502 29,663 29,471
========== ========== ==========
The accompanying notes are an integral part of these financial statements.
F-4
FIDELITY LEASING INCOME FUND VI, L.P.
STATEMENTS OF PARTNERS' CAPITAL
For the years ended December 31, 1999, 1998 and 1997
General Limited Partners
Partner Units Amount Total
_______ ____________________ _____
Balance, January 1, 1997 $1,750 75,294 $9,032,937 $9,034,687
Cash distributions (3,000) - (297,011) (300,011)
Net income 4,232 - 418,994 423,226
______ ______ __________ __________
Balance, December 31, 1997 2,982 75,294 9,154,920 9,157,902
Cash distributions (3,000) - (297,000) (300,000)
Net income 3,000 - 242,744 245,744
______ ______ __________ __________
Balance, December 31, 1998 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
====== ====== ========== ==========
The accompanying notes are an integral part of these financial statements.
F-5
FIDELITY LEASING INCOME FUND VI, L.P.
STATEMENTS OF CASH FLOWS
For the years ended December 31,
1999 1998 1997
Cash flows from operating activities:
Net income $ 429,662 $ 245,744 $ 423,226
__________ __________ __________
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 788,056 5,382,228 3,393,070
Write-down of equipment to net
realizable value 173,537 398,530 375,942
(Gain) loss on sale of equipment, net (226,430) (180,509) (146,387)
(Increase) decrease in accounts receivable (82,472) 78,109 (146,937)
(Increase) decrease in due from
related parties 71,610 (26,061) 59,250
Increase (decrease) in lease rents paid in
advance 47,448 (66,711) (173,011)
Increase (decrease) in accounts payable
and accrued expenses (8,888) (55,305) (3,691)
Increase (decrease) in due to related parties (137,503) (291,299) 413,582
Increase (decrease) in accounts payable -
equipment (30,848) 14,751 49,718
__________ __________ __________
594,510 5,253,733 3,821,536
__________ __________ __________
Net cash provided by operating activities 1,024,172 5,499,477 4,244,762
__________ __________ __________
Cash flows from investing activities:
Acquisition of equipment - (3,893,271) (3,169,760)
Investment in direct financing leases (3,699,167) (3,824,885) (129,332)
Proceeds from direct financing leases,
net of earned income 1,818,032 405,416 506,368
Proceeds from sale of equipment 252,130 735,765 333,971
__________ __________ __________
Net cash used in investing activities (1,629,005) (6,576,975) (2,458,753)
__________ __________ __________
Cash flows from financing activities:
Distributions (300,000) (300,000) (300,011)
Redemptions of capital (3,536) - -
_________ __________ __________
Net cash used in financing activities (303,536) (300,000) (300,011)
__________ __________ __________
Increase (decrease) in cash and cash
equivalents (908,369) (1,377,498) 1,485,998
Cash and cash equivalents, beginning of year 2,892,327 4,269,825 2,783,827
__________ __________ __________
Cash and cash equivalents, end of year $1,983,958 $2,892,327 $4,269,825
========== ========== ==========
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. The General Partner of the Fund is F.L. Partnership Management, Inc.
("FLPMI") which is a wholly owned subsidiary of Resource Leasing, Inc., a
wholly owned subsidiary of Resource America, Inc. The Fund is managed by the
General Partner. The Fund's limited partnership 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 and disk storage devices, data communications
equipment, computer terminals, technical workstations and networking equip-
ment, as well as other electronic equipment. This equipment 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 which potentially subject the Fund to concentra-
tions of credit risk consist principally of temporary cash investments. The
Fund places its temporary investments in bank repurchase agreements and jumbo
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 Generally Accepted
Accounting Principles, management is required to make estimates and assump-
tions 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 operating and direct
financing leases. 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 equipment 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.
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 equipment cost) is recognized
over the life of the lease using the interest method.
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.
F-8
FIDELITY LEASING INCOME FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Significant Fourth Quarter Adjustments
Currently, the Fund's practice is to review the recoverability of its
undepreciated 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 publica-
tions. Based upon this review, there were no significant fourth quarter
adjustments for the years ended December 31, 1999 and 1998. However, the Fund
recorded an adjustment of approximately $125,000 or $4.24 per equivalent
limited partnership unit to write down its rental equipment in the fourth
quarter of 1997.
3. YEAR 2000 COMPLIANCE
The "Year 2000 Issue" addresses the ability of computer programs to
distinguish between the year 2000 and the year 1900. Computer programs were
written using two digits rather than four digits for the year in a date field.
This could ultimately result in miscalculations or inaccuracies in processing
data.
The Fund's operating system is Year 2000 capable. Additionally, all of
the main software systems used to generate information for the Fund are Year
2000 compliant.
The costs incurred to make the software systems Year 2000 compliant were
not material as of December 31, 1999.
Furthermore, all significant outside suppliers have been contacted to
ensure that their systems are Year 2000 compliant. The Fund has not experi-
enced any problems with outside suppliers regarding Year 2000 compliance
issues.
4. 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
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.
F-9
FIDELITY LEASING INCOME FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
5. EQUIPMENT LEASED
Equipment on lease consists of equipment under operating leases. The
lessees have agreements with the manufacturer to provide maintenance for the
leased equipment. The Fund's operating leases are for initial lease terms of
24 to 60 months.
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, in 1999, 1998 and 1997, approxi-
mately $174,000, $399,000 and $376,000, 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.
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 net investment in direct financing leases as of December 31, 1999
is as follows:
Minimum lease payments to be received $5,570,000
Unguaranteed residuals 617,000
Unearned rental income (628,000)
Unearned residual income (132,000)
__________
$5,427,000
==========
The future approximate minimum rentals to be received on noncancellable
operating and direct financing leases as of December 31 are as follows:
Direct
Operating Financing
2000 $ 651,000 $1,972,000
2001 176,000 1,930,000
2002 167,000 1,227,000
2003 117,000 422,000
2004 - 19,000
__________ __________
$1,111,000 $5,570,000
========== ==========
F-10
FIDELITY LEASING INCOME FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
6. 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:
1999 1998 1997
Management fee $ 93,235 $327,227 $232,477
Reimbursable costs 212,510 257,295 229,091
The Fund maintained its checking and investment accounts in Jefferson
Bank, a subsidiary of JeffBanks, Inc. in which the Chairman of Resource
America, Inc. served as a director. In November 1999, Hudson United Bancorp
acquired JeffBanks, Inc. The Fund maintains its banking relationship with
Hudson United Bancorp. The Chairman of Resource America, Inc. does not hold
a position with Hudson United Bancorp.
Amounts due from related parties at December 31, 1999 and 1998 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, 1999 and 1998 represent
monies due to the General Partner for the fees and costs mentioned above, as
well as, rentals and sales proceeds collected by the Fund on behalf of other
affiliated funds.
F-11
FIDELITY LEASING INCOME FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
7. MAJOR CUSTOMERS
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. For the year ended December 31, 1998, four
customers accounted for approximately 25%, 21%, 20% and 12% of the Fund's
rental income. For the year ended December 31, 1997, three customers generated
approximately 23%, 17% and 12% of the Fund's rental income.
8. CASH DISTRIBUTIONS
Below is a summary of the cash distributions paid to partners during
the years ended December 31:
For the Quarter Ended 1999 1998 1997
March $ 75,000 $ 75,000 $ 75,000
June 75,000 75,000 100,000
September 100,000 75,000 75,000
December 50,000 75,000 50,011
________ ________ ________
$300,000 $300,000 $300,011
======== ======== ========
In addition, the General Partner declared and paid three cash distri-
butions of $25,000 each in January and February 2000 for each of the months
ended October 31, November 30 and December 31, 1999, for an aggregate of
$75,000 to all admitted partners as of October 31, November 30 and December
31, 1999.
F-12