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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 (Fee Required)
For the year ended December 31, 1995
/ / Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (Fee Required)
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.)
7 E. Skippack Pike, Suite 275, Ambler, Pennsylvania 19002
_________________________________________________________________
(Address of principal executive offices) (Zip Code)
(215) 619-2800
_________________________________________________________________
(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, 1995 is 79,156.
There is no public market for these securities.
The index of Exhibits is located on page 11.
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, primarily computer peripheral equipment, including
printers, tape and disk storage devices, data communications
equipment, computer terminals, data processing and office
equipment, which is leased to third parties on a short-term
basis. The Fund's principal objective is to generate leasing
revenues for distribution. The Fund manages the equipment,
releasing or disposing of equipment as it comes off lease in
order to achieve its principal objective. The Fund will 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 and more experience in
the equipment leasing business than the General Partner. 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.
The computer equipment industry is extremely competitive as
well. Competitive factors include pricing, technological
innovation and methods of financing. Certain manufacturer-
lessors maintain advantages through patent protection, where
applicable, and through product protection by the use of a policy
which combines service and hardware benefits with payment for
such benefits accomplished through a single periodic charge.
2
Item 1. BUSINESS (Continued)
The dominant factor in the marketplace is International
Business Machines Corporation ("IBM"). Because of IBM's
substantial resources and dominant position, revolutionary
changes with respect to pricing, marketing practices,
technological innovation and the availability of new and
attractive financing plans could occur at almost any time.
Significant action in any of these areas by IBM might materially
adversely affect the General Partner's ability to identify and
purchase appropriate equipment. It is the belief of the General
Partner that IBM will continue to make advances in the computer
equipment industry which may result in revolutionary changes with
respect to small, medium and large computer systems.
A brief description of the types of equipment in which the
Fund has invested as of December 31, 1995, 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.
Item 2. PROPERTIES
The following schedules detail the type and aggregate
purchase price of the various types of equipment acquired and
leased by the Fund as of December 31, 1995, along with the
percentage of total equipment represented by each type of
equipment, a breakdown of equipment usage by industrial
classification and the average initial term of leases:
Purchase Price Percentage of
Type of Equipment Acquired of Equipment Total Equipment
Communication Controllers $ 994,579 5.00%
Disk Storage Systems 11,559,715 58.11
Network Communications 479,323 2.40
Printers 1,473,699 7.41
Tape Storage Systems 2,601,096 13.08
Terminals, Work Stations
and Display Stations 2,709,463 13.62
Other 75,596 0.38
___________ ______
Totals $19,893,471 100.00%
=========== ======
3
Breakdown of Equipment Usage
By Industrial Classification
Purchase Price Percentage of
Type of Business of Equipment Total Equipment
Computer/Data Processing $ 855,865 4.30%
Diversified Financial/Insurance 7,820,677 39.31
Manufacturing/Refining 4,593,240 23.09
Retailing/Consumer Goods 5,550,021 27.90
Telephone/Telecommunications 1,073,668 5.40
___________ ______
Totals $19,893,471 100.00%
=========== ======
Average Initial Term of Leases (in months): 34
All of the above equipment is currently leased under
operating leases.
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, 1995
Limited Partnership Interests 2,745
General Partnership Interest 1
Item 6. SELECTED FINANCIAL DATA
For the Years Ended December 31,
1995 1994 1993 1992 1991
Total Income $ 6,094,886 $6,442,059 $9,658,742 $10,026,031 $10,399,150
Net Income 597,297 457,015 1,244,058 89,596 1,414,462
Distributions to
Partners 4,343,818 5,063,003 6,697,405 5,500,267 5,575,363
Net Income per
Equivalent Limited
Partnership Unit 15.94 9.35 21.24 .50 17.34
Weighted Average
Number of Equivalent
Limited Partnership
Units Outstanding
During the Period 35,186 43,506 55,444 68,991 78,358
December 31,
1995 1994 1993 1992 1991
Total Assets $10,458,128 $15,155,942 $20,022,169 $26,104,262 $31,983,398
Equipment under
Operating Leases
and Equipment Held
for Sale or Lease
(Net) 6,252,018 6,251,331 10,669,609 17,390,167 25,469,957
Net Investment in
Direct Financing
Leases 687,606 969,434 1,143,180 - -
Limited Partnership
Units 79,156 80,537 82,626 87,387 88,772
Limited Partners 2,745 2,780 2,828 2,961 2,981
5
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
The Fund had revenues of $6,094,886, $6,442,059 and $9,658,742
for the years ended December 31, 1995, 1994 and 1993, respectively.
Rental income from the leasing of computer peripheral equipment
accounted for 84%, 93% and 84% of total income in 1995, 1994 and 1993,
respectively. The decrease in total revenues in 1995 and 1994 is
primarily related to the decrease in rental income. In 1995, rental
income increased by approximately $1,519,000 because of rental income
generated from equipment purchased in 1995 as well as rental income
realized on 1994 equipment purchases for which a full year of rent was
earned in 1995 and only a partial year was earned in 1994. This in-
crease, however, was offset by a decrease in rentals of approximately
$682,000 due to renewals of leases at lower rates and lease
terminations or sales of equipment. In 1994, rental income increased
by approximately $695,000 due to rentals generated from equipment
purchased in 1994 as well as rental income generated from 1993
equipment purchases for which a full year of rental income was earned
in 1994 and only a partial year was earned in 1993. This increase,
however, was offset by a decrease in rentals of approximately
$2,842,000 because of equipment which came off lease and was re-leased
at lower rental rates or sold. The Fund recognized a net gain on sale
of equipment of $559,213 in 1995 as compared to $-0- in 1994 and
$1,214,662 in 1993 which also accounts for the fluctuation in total
revenues for these years. In 1995 interest income decreased because
of lower cash balances available for investment which also contributed
to the decrease in total revenues from 1994. However, interest income
increased in 1994 because of a rise in interest rates and larger cash
balances available for investment which offset the overall decrease in
total revenues.
Expenses were $5,497,589, $5,985,044 and $8,414,684 for the years
ended December 31, 1995, 1994 and 1993, respectively. Depreciation
and amortization comprised 71%, 84% and 82% of total expenses in 1995,
1994 and 1993, respectively. The decrease in expenses during 1995 and
1994 was directly related to the decrease in depreciation expense
because of equipment which came off lease and was terminated or sold.
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 1995, 1994 and 1993,
approximately $877,000, $242,000 and $622,000, respectively, was
charged to write-down of equipment to net realizable value. 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. The General Partner
believes, after analyzing the current equipment portfolio, that there
are impending gains to be recognized upon the sale of certain of its
equipment in future years. In 1995, general and administrative
expenses to related party increased because of the increase in
administrative expenses incurred to the General Partner which offsets
the decrease in overall expenses. In 1994, general and administrative
6
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Results of Operations (Continued)
to related party decreased because of a reduction in equipment
remarketing expenses incurred to the General Partner which also
accounts for the decrease in total expenses. Additionally, management
fee to related party decreased in proportion to the decrease in rental
income which also contributed to the decrease in total expenses in
1995 and 1994.
The Fund's net income was $597,297, $457,015 and $1,244,058 for
the years ended December 31, 1995, 1994 and 1993, respectively. The
earnings per equivalent limited partnership unit, after earnings
allocated to the General Partner, were $15.94, $9.35 and $21.24 for
the years ended December 31, 1995, 1994 and 1993, respectively. The
weighted average number of equivalent limited partnership units
outstanding were 35,186, 43,506 and 55,444 for 1995, 1994 and 1993,
respectively.
The Fund generated funds from operations, for the purpose of
determining cash available for distribution, of $4,803,454, $5,746,894
and $7,552,648 and distributed 73%, 73% and 77% of these amounts to
partners in 1995, 1994 and 1993, respectively, and 3%, 15% and 11% of
these amounts to partners in January and February 1996, 1995 and 1994,
respectively. For financial statement purposes, the Fund recognizes
cash distributions to partners on a cash basis in the period in which
they are paid. During the fourth quarter of 1995, the General
Partner revised its policy regarding cash distributions so that the
distributions more accurately reflect the net income of the Fund over
the most recent twelve months.
Analysis of Financial Condition
The Fund continues to purchase computer equipment for lease with
cash available from operations which is not distributed to partners.
During the years ended December 31, 1995, 1994 and 1993, the Fund
purchased $5,430,211, $1,983,990 and $4,277,550 respectively, of
equipment.
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 fiscal year.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this Item is submitted as a separate section of
this report commencing on page F-1.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
Not applicable.
7
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Effective September 1, 1995, The Fidelity Mutual Life
Insurance Company (in Rehabilitation) sold Fidelity Leasing
Corporation (FLC), the General Partner of the Fund, to Resource
Leasing, Inc., a wholly owned subsidiary of Resource America,
Inc. The Directors and Executive Officers of FLC are:
FREDDIE M. KOTEK, age 39, Chairman of the Board of Directors,
President and Chief Executive Officer of FLC since September
1995 and Senior Vice President of Resource America, Inc.
since 1995. President of Resource Leasing, Inc. since
September 1995. Executive Vice President of Resource
Properties, Inc. (a wholly owned subsidiary of Resource
America, Inc.) since 1993. First Vice President of Royal
Alliance Associates from 1991 to 1993. Senior Vice
President and Chief Financial Officer of Paine Webber
Properties from 1990 to 1991.
MICHAEL L. STAINES, age 46, Director and Secretary of FLC
since September 1995 and Senior Vice President and Secretary
of Resource America, Inc. since 1989.
SCOTT F. SCHAEFFER, age 33, Director of FLC since September
1995 and Senior Vice President of Resource America, Inc.
since 1995. Vice President-Real Estate of Resource America,
Inc. and President of Resource Properties, Inc. (a wholly
owned subsidiary of Resource America, Inc.) since 1992.
Vice President of the Dover Group, Ltd. (a real estate
investment company) from 1985 to 1992.
MARK A. MAYPER, age 42, Senior Vice President of FLC
overseeing the lease syndication business since 1987.
Others:
STEPHEN P. CASO, age 40, Vice President and Counsel of FLC
since 1992.
MARIANNE T. SCHUSTER, age 37, Vice President and Controller
of FLC since 1984.
KRISTIN L. CHRISTMAN, age 28, Portfolio Manager of FLC
since December 1995 and Equipment Brokerage Manager since
1993.
8
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, 1995:
Name of Individual or Capacities in
Number in Group Which Served Compensation
Fidelity Leasing
Corporation General Partner $298,572(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, 1995, 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 Fidelity Leasing Corporation nor such
directors or officers as a group, owns more than one
percent of the Fund's outstanding securities. The
General Partner owns a general partnership interest
which entitles it to receive 1% of cash distributions
until the Limited Partners have received an amount
equal to the purchase price of their Units plus a 12%
compounded Priority 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, 1995, the Fund was
charged $260,485 of management fees by the General Partner. 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 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
9
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(Continued)
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 also 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, 1995, the
General Partner received $43,433 of cash distributions.
The Fund incurred $346,762 of reimbursable costs to the
General Partner for services and materials provided in connection
with the administration of the Fund during 1995.
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. During 1995, the Fund incurred a sales fee of
$38,087 to the General Partner for services performed in
connection with the disposition of equipment.
10
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a) (1) and (2). The response to this portion of Item 14
is submitted as a separate section of this report
commencing on page F-1.
(a) (3) and (c) Exhibits (numbered in accordance with Item
601 of Regulation S-K)
Exhibit Numbers Description Page Number
3(a) & (4) Amended and Restated Agreement *
of Limited Partnership
(9) not applicable
(10) not applicable
(11) not applicable
(12) not applicable
(13) not applicable
(18) not applicable
(19) not applicable
(22) not applicable
(23) not applicable
(24) not applicable
(25) not applicable
(28) not applicable
* Incorporated by reference.
11
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: FIDELITY LEASING CORPORATION
Freddie M. Kotek
By: __________________________
Freddie M. Kotek, Chairman
and President
Dated March 26, 1996
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 3-26-96
Freddie M. Kotek and President of Fidelity Leasing
Corporation (Principal Executive
Officer)
Michael L. Staines
___________________________ Director of Fidelity Leasing 3-26-96
Michael L. Staines Corporation
Marianne T. Schuster
___________________________ Vice President and Controller 3-26-96
Marianne T. Schuster of Fidelity Leasing Corporation
(Principal Financial Officer)
12
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
Pages
Report of Independent Certified Public Accountants F-2
Balance Sheets as of December 31, 1995 and 1994 F-3
Statements of Operations for the years ended F-4
December 31, 1995, 1994 and 1993
Statements of Partners' Capital for the years F-5
ended December 31, 1995, 1994 and 1993
Statements of Cash Flows for the years ended F-6
December 31, 1995, 1994 and 1993
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, 1995 and 1994, and the related
statements of operations, changes in partners' capital and cash flows for
each of the three years in the period ended December 31, 1995. These
financial statements 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
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Fidelity Leasing
Income Fund VI, L.P. as of December 31, 1995 and 1994, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1995 in conformity with generally accepted accounting principles.
Grant Thornton, LLP
Philadelphia, Pennsylvania
February 2, 1996
F-2
FIDELITY LEASING INCOME FUND VI, L.P.
BALANCE SHEETS
ASSETS
December 31,
1995 1994
Cash and cash equivalents $ 2,920,100 $ 5,509,017
Investment securities held to maturity 499,740 2,235,101
Accounts receivable 33,021 112,131
Interest receivable 13,376 51,877
Due from related parties 52,267 27,051
Equipment under operating leases
(net of accumulated depreciation
of $13,650,877 and $18,360,372,
respectively) 6,242,594 5,001,631
Net investment in direct financing leases 687,606 969,434
Equipment held for sale or lease 9,424 1,249,700
___________ ___________
Total assets $10,458,128 $15,155,942
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Lease rents paid in advance $ 87,814 $ 218,200
Accounts payable - equipment - 518,100
Accounts payable and
accrued expenses 92,163 163,814
Due to related parties 270,678 298,380
___________ ___________
Total liabilities 450,655 1,198,494
Partners' capital 10,007,473 13,957,448
___________ ___________
Total liabilities and
partners' capital $10,458,128 $15,155,942
=========== ===========
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,
1995 1994 1993
Income:
Rentals $5,150,170 $5,987,027 $8,134,288
Earned income on direct
financing leases 78,814 95,212 70,315
Interest 292,400 353,956 231,085
Gain on sale of equipment, net 559,213 - 1,214,622
Other 14,289 5,864 8,432
__________ __________ __________
6,094,886 6,442,059 9,658,742
__________ __________ __________
Expenses:
Depreciation and amortization 3,888,155 4,999,097 6,901,393
Write-down of equipment to net
realizable value 877,215 242,049 621,819
General and administrative 124,972 163,078 182,707
General and administrative
to related party 346,762 232,828 305,208
Management fee to related party 260,485 299,259 403,557
Loss on sale of equipment, net - 48,733 -
__________ __________ __________
5,497,589 5,985,044 8,414,684
__________ __________ __________
Net income $ 597,297 $ 457,015 $1,244,058
========== ========== ==========
Net income per equivalent
limited partnership unit $ 15.94 $ 9.35 $ 21.24
========== ========== ==========
Weighted average number of
equivalent limited partnership
units outstanding during
the year 35,186 43,506 55,444
========== ========== ==========
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, 1995, 1994 and 1993
General Limited Partners
Partner Units Amount Total
_______ __________________ _____
Balance, January 1, 1993 $10,097 87,387 $25,694,174 $25,704,271
Redemptions - (4,761) (1,238,789) (1,238,789)
Cash distributions (66,975) - (6,630,430) (6,697,405)
Net income 66,478 - 1,177,580 1,244,058
_______ ______ ___________ ___________
Balance, December 31, 1993 9,600 82,626 19,002,535 19,012,135
Redemptions - (2,089) (448,699) (448,699)
Cash distributions (50,629) - (5,012,374) (5,063,003)
Net income 50,409 - 406,606 457,015
_______ ______ ___________ ___________
Balance, December 31, 1994 9,380 80,537 13,948,068 13,957,448
Redemptions - (1,381) (203,454) (203,454)
Cash distributions (43,433) - (4,300,385) (4,343,818)
Net income 36,491 - 560,806 597,297
_______ ______ ___________ ___________
Balance, December 31, 1995 $ 2,438 79,156 $10,005,035 $10,007,473
======= ====== =========== ===========
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,
1995 1994 1993
Cash flows from operating activities:
Net income $ 597,297 $ 457,015 $ 1,244,058
__________ __________ ___________
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 3,888,155 4,999,097 6,901,393
Write-down of equipment to net realizable value 877,215 242,049 621,819
Proceeds from direct financing leases,
net of earned income 281,828 173,746 105,093
(Gain) loss on sale of equipment net (559,213) 48,733 (1,214,622)
(Increase) decrease in due from related parties (25,216) 286,254 (313,305)
Increase (decrease) in lease rents paid in
advance (130,386) (132,754) 178,847
Increase (decrease) in accounts payable-
equipment (518,100) 518,100 -
Increase (decrease) in due to related parties (27,702) (173,363) 351,226
Increase (decrease) in other, net 45,960 36,855 234,232
__________ __________ __________
3,832,541 5,998,717 6,864,683
__________ __________ __________
Net cash provided by operating activities 4,429,838 6,455,732 8,108,741
__________ __________ __________
Cash flows from investing activities:
Acquisition of equipment (5,430,211) (1,983,990) (4,277,550)
Investment in direct financing leases - - (1,248,273)
Purchase of investment securities
held to maturity (749,993) (5,429,915) -
Maturity of investment securities
held to maturity 2,485,354 5,176,491 2,404,990
Proceeds from sale of equipment 1,223,367 1,113,889 4,691,018
__________ __________ __________
Net cash provided by (used in)
investing activities (2,471,483) (1,123,525) 1,570,185
__________ __________ __________
Cash flows from financing activities:
Distributions (4,343,818) (5,063,003) (6,697,405)
Redemptions of capital (203,454) (448,699) (1,238,789)
__________ __________ __________
Net cash used in financing activities (4,547,272) (5,511,702) (7,936,194)
__________ __________ __________
Increase (decrease) in cash and cash
equivalents (2,588,917) (179,495) 1,742,732
Cash and cash equivalents, beginning of year 5,509,017 5,688,512 3,945,780
__________ __________ __________
Cash and cash equivalents, end of year $2,920,100 $5,509,017 $5,688,512
========== ========== ==========
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 OPERATIONS
Fidelity Leasing Income Fund VI, L.P. (the "Fund") was formed in
January 1989 with Fidelity Leasing Corporation ("FLC") as the General
Partner. FLC 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 equipment, primarily computer peripheral equipment,
including printers, tape and disk storage devices, data communications
equipment, computer terminals, data processing and office equipment,
which is leased to third parties throughout the United States on a
short-term basis.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Investment Securities Held to Maturity
The Fund adopted Statement of Financial Accounting Standard (SFAS) No.
115, "Accounting for Certain Investments in Debt and Equity Securities"
on January 1, 1994. This new standard requires investments in
securities to be classified in one of three categories: held to
maturity, trading and available for sale. Debt securities that the
Fund has the positive intent and ability to hold to maturity are
classified as held to maturity and are reported at amortized cost. As
the Fund does not engage in security trading, the balance, if any, of
its debt securities and equity securities are classified as available
for sale. Net unrealized gains and losses for securities available for
sale are required to be recognized as a separate component of partners'
capital and excluded from the determination of net income. The Fund's
investment securities consist of commercial paper and certificates of
deposit with maturities of less than thirteen months and cost
approximates market. The Fund adopted this new standard for the year
ended December 31, 1994 with no resulting financial statement impact on
the Fund. Prior to the adoption of SFAS No. 115, investment securities
were carried at cost which approximates market.
Concentration of Credit Risk
Financial instruments which potentially subject the Fund to
concentrations of credit risk consist principally of temporary cash
investments. The Fund places its temporary investments in securities
backed by the United States Government, commercial paper with high
credit quality institutions, bank money market funds and time deposits
and certificates of deposit.
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.
F-7
FIDELITY LEASING INCOME FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Equipment Held for Sale or Lease
Equipment held for sale or lease is carried at its estimated net
realizable value.
Use of Estimates
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and the disclosure of contingent assets and liabilities at the date of
the financial statements and revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Deferred Revenue
Deferred revenue is recognized as rental income on a straight-line
basis over the term of the lease.
Accounting for Leases
The Fund's leasing operations consist primarily of operating leases
whereby 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 six 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 plus deferred revenue
recognized. 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.
The Fund does have some direct financing leases, as well. Under the
direct financing method, income (the excess of the aggregate future
rentals and estimated additional amounts recoverable 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.
F-8
FIDELITY LEASING INCOME FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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.
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 publications. Based upon this review, the Fund recorded an
adjustment of approximately $574,000, $42,000 and $622,000 or $16.31,
$0.97 and $11.22 per equivalent limited partnership unit to write down
its rental equipment in the fourth quarter of 1995, 1994 and 1993,
respectively.
Reclassification
Certain amounts on the 1994 and 1993 financial statements have been
reclassified to conform to the presentation adopted in 1995.
3. ALLOCATION OF PARTNERSHIP INCOME, LOSS AND CASH DISTRIBUTIONS
Cash distributions, if any, are made monthly as follows: 99% to the
Limited Partners and 1% to the General Partner, until the Limited
Partners have received an amount equal to the purchase price of their
Units, plus a 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)
4. EQUIPMENT LEASED
Equipment on lease consists primarily of computer peripheral
equipment under operating leases. The majority of the equipment was
manufactured by IBM. 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 11 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 1995, 1994
and 1993, approximately $877,000, $242,000 and $622,000, respectively
was charged to write down of equipment to net realizable value.
However the General Partner believes, after analyzing the current
equipment portfolio, that there are impending gains to be recognized
upon the sale of certain of its equipment in future years.
During the year ended December 31, 1995, the Fund leased equipment
under the direct financing method in accordance with SFAS No. 13. This
method provides for recognition of income (the excess of the aggregate
future rentals and estimated additional amounts recoverable upon
expiration 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 December 31, 1995
is as follows:
Net minimum lease payments to be received $ 794,322
Less unearned income (106,716)
Add expected future residuals -
__________
$ 687,606
==========
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
1996 $3,068,000 $ 238,000
1997 1,955,000 238,000
1998 243,000 238,000
1999 - 80,000
__________ __________
$5,266,000 $ 794,000
========== ==========
F-10
FIDELITY LEASING INCOME FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
5. RELATED PARTY TRANSACTIONS
The General Partner receives 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 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.
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 charged by the General Partner or its
affiliates during the years ended December 31:
1995 1994 1993
Management fee $260,485 $299,259 $403,557
Reimbursable costs 346,762 232,828 305,208
Sales fee 38,087 34,450 144,565
Amounts due from related parties at December 31, 1995 and 1994
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 the Fund.
Amounts due to related parties at December 31, 1995 and 1994 represent
monies due to the General Partner for the fees and costs mentioned
above, as well as, rentals and sales proceeds collected by the Fund on
behalf of other affiliated funds.
6. MAJOR CUSTOMERS
For the year ended December 31, 1995, one customer accounted for
approximately 17% of the Fund's rental income. For the year ended
December 31, 1994, one customer accounted for approximately 14% of the
Fund's rental income. For the year ended December 31, 1993, one
customer accounted for approximately 16% of the Fund's rental income
and one customer accounted for approximately 10% of the Fund's rental
income.
F-11
FIDELITY LEASING INCOME FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
7. CASH DISTRIBUTIONS
Below is a summary of the cash distributions paid to partners during
the years ended December 31:
For the Quarter Ended 1995 1994 1993
March $1,256,951 $1,287,311 $1,364,357
June 1,242,919 1,260,857 1,855,791
September 1,240,099 1,257,735 2,186,309
December 603,849 1,257,100 1,290,948
__________ __________ __________
$4,343,818 $5,063,003 $6,697,405
========== ========== ==========
In addition, the General Partner declared a cash distribution of
$93,800 in January 1996 and $50,000 in February 1996 for the months
ended November 30 and December 31, 1995 to all admitted partners as of
November 30 and December 31, 1995.
F-12