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 June 30, 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 15
Part I: Financial Information
Item 1: Financial Statements
FIDELITY LEASING INCOME FUND VI, L.P.
BALANCE SHEETS
ASSETS
(Unaudited) (Audited)
June 30, December 31,
2002 2001
______________ _____________
Cash and cash equivalents $3,818,900 $4,177,291
Accounts receivable 210,695 291,958
Due from related parties 2,238 17,397
Net investment in direct financing
leases 1,847,061 4,008,473
Equipment under operating leases
(net of accumulated depreciation
of $575,209 and $513,083, respectively) 297,874 370,035
Equipment held for sale or lease 431,255 431,255
__________ __________
Total assets $6,608,023 $9,296,409
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Lease rents paid in advance $ 42,590 $ 55,888
Accounts payable and
accrued expenses 33,805 19,889
Due to related parties 6,047 25,248
__________ __________
Total liabilities 82,442 101,025
Partners' capital 6,525,581 9,195,384
__________ __________
Total liabilities and
partners' capital $6,608,023 $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
(Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
2002 2001 2002 2001
____ ____ ____ ____
Income:
Earned income on direct
financing leases $ 71,438 $125,109 $151,191 $253,403
Rentals 42,230 71,247 91,413 167,269
Interest 23,515 24,672 48,414 44,934
Gain on sale of equipment,
net - 3,152 - 46,259
Other 1,987 2,801 3,605 7,242
________ ________ ________ ________
139,170 226,981 294,623 519,107
________ ________ ________ ________
Expenses:
Depreciation 32,736 36,735 72,161 118,113
General and administrative 47,881 32,181 86,847 62,630
General and administrative
to related party 36,894 35,289 79,937 68,440
Management fee to related
party 28,536 20,223 50,481 41,399
________ ________ ________ ________
146,047 124,428 289,426 290,582
________ ________ ________ ________
Net income $ (6,877) $102,553 $ 5,197 $228,525
======== ======== ======== ========
Net income per equivalent
limited partnership unit $ (0.26) $ 3.41 $ 0.00 $ 7.60
======== ======== ======== ========
Weighted average number of
equivalent limited partner-
ship units outstanding
during the period 24,643 29,801 25,736 29,776
======== ======== ======== ========
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 six months ended June 30, 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 (26,750) - (2,648,250) (2,675,000)
Net income 5,197 - - 5,197
_______ ______ __________ __________
Balance, June 30, 2002 $ 2,897 75,264 $6,522,684 $6,525,581
======= ====== ========== ==========
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 six months ended June 30, 2002 and 2001
(Unaudited)
2002 2001
__________ __________
Cash flows from operating activities:
Net income $ 5,197 $ 228,525
__________ __________
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 72,161 118,113
(Gain) loss on sale of equipment, net - (46,259)
(Increase) decrease in accounts receivable 81,263 (65,974)
(Increase) decrease in due from
related parties 15,159 (37,493)
Increase (decrease) in lease rents paid
in advance (13,298) 26,424
Increase (decrease) in accounts payable and
accrued expenses 13,916 (17,079)
Increase (decrease) in due to related parties (19,201) (20,567)
__________ __________
150,000 (42,835)
__________ __________
Net cash provided by operating activities 155,197 185,690
__________ __________
Cash flows from investing activities:
Investment in direct financing leases - (652,894)
Proceeds from sale of equipment - 103,353
Proceeds from direct financing leases,
net of earned income 2,161,412 1,398,361
__________ __________
Net cash provided by investing activities 2,161,412 848,820
__________ __________
Cash flows from financing activities:
Distributions (2,675,000) (210,000)
__________ __________
Net cash used in financing activities (2,675,000) (210,000)
__________ __________
Increase (decrease) in cash and
cash equivalents (358,391) 824,510
Cash and cash equivalents, beginning
of period 4,177,291 1,982,752
__________ __________
Cash and cash equivalents, end of period $3,818,900 $2,807,262
========== ==========
The accompanying notes are an integral part of these financial statements.
5
FIDELITY LEASING INCOME FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS
June 30, 2002
(Unaudited)
The accompanying unaudited condensed financial statements have been prepared
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 accor-
dance with Statement of Financial Accounting Standards No. 13. This
method provides for recognition of income (the excess of the aggregate
future rentals and estimated unguaranteed residuals 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 is below the estimated
residual value, an adjustment is made.
The net investment in direct financing leases as of June 30, 2002 is as
follows (unaudited):
Minimum lease payments to be received $1,107,000
Unguaranteed residuals 812,000
Unearned rental income (47,000)
Unearned residual income (25,000)
__________
$1,847,000
==========
The Fund's equipment on lease consists of equipment under operating leases.
The Fund's operating leases are for initial lease terms of 58 to 60 months.
Generally, operating leases will not recover all of the undepreciated cost
and related expenses of its rental equipment during the initial lease terms
and the Fund is prepared to remarket the equipment. Fund policy is to re-
view quarterly the expected economic life of its rental equipment in order
to determine the recoverability of its undepreciated cost. Recent and
anticipated technological developments affecting the equipment and com-
petitive 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
6
FIDELITY LEASING INCOME FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
1. EQUIPMENT LEASED (Continued)
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 future approximate minimum rentals to be received on noncancellable
direct financing and operating leases as of June 30, 2002 are as follows:
Years Ending December 31 Direct Financing Operating
________________________ ________________ _________
2002 $ 556,000 $ 84,000
2003 532,000 117,000
2004 19,000 -
__________ ________
$1,107,000 $201,000
========== ========
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 dis-
tributions equal to the purchase price of their units plus a 12% cumu-
lative 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. Follow-
7
FIDELITY LEASING INCOME FUND VI, L.P.
NOTES TO FINANCIAL STATEMENTS (Continued)
2. RELATED PARTY TRANSACTIONS (Continued)
ing is a summary of fees and costs of services and materials charged by
the General Partner or its parent company during the three and six months
ended June 30, 2002 and 2001 (unaudited):
Three Months Ended Six Months Ended
June 30 June 30
2002 2001 2002 2001
____ ____ ____ ____
Management fee $28,536 $20,223 $50,481 $41,399
Reimbursable costs 36,894 35,289 79,937 68,440
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 June 30, 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 June 30, 2002 and December 31, 2001
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.
3. CASH DISTRIBUTIONS
The General Partner declared and paid a cash distribution of $35,000 in
June 2002 for the month ended April 30, 2002 to all admitted partners
as of April 30, 2002. Additionally, the General Partner declared and paid
cash distributions of $35,000 and $1,000,000 subsequent to June 30, 2002
for the months ended May 31 and June 30, 2002, respectively, to all ad-
mitted partners as of May 31 and June 30, 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 $139,170 and
$226,981 for the three months ended June 30, 2002 and 2001, respectively
and $294,623 and $519,107 for the six months ended June 30, 2002 and 2001,
respectively. Earned income on direct financing leases and rental income
from the leasing of equipment accounted for 82% and 87% of total revenues
for the second quarter of 2002 and 2001, respectively and 82% and 81% of
total revenues for the first six months of 2002 and 2001, respectively.
The decrease in revenues was primarily 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. Additionally, the early termination of certain direct financing
leases in the last six months of 2001 and the first six months of 2002 also
accounted for the decrease in earned income on direct financing leases during
the six months ended June 30, 2002. The decrease in rental income in 2002
also contributed to the decrease in total revenues during the first six months
of 2002. Rental income decreased approximately $76,000 in 2002 because of
equipment that terminated and was sold since June 2001. Furthermore, the
decrease in net gain on sale of equipment contributed to the decrease in
total revenues during the six months ended June 30, 2002. There was no net
gain on sale of equipment recognized during the first six months of 2002
compared to $46,259 recognized for the same period in 2001.
Expenses were $146,047 and $124,428 for the three months ended June 30,
2002 and 2001, respectively and $289,426 and $290,582 for the six months
ended June 30, 2002 and 2001, respectively. Depreciation expense comprised
22% and 30% of total expenses for the second quarter of 2002 and 2001,
respectively and 25% and 41% of total expenses for the six months ended
June 30, 2002 and 2001, respectively. The decrease in expenses during the
six months ended June 30, 2002 was attributable to the net effect of the
decrease in depreciation expense and the increase in general and administra-
tive expense, general and administrative to related party and management fee
to related party. Depreciation expense decreased because of equipment that
terminated and was sold since June 2001. General and administrative expense
increased by approximately $24,000 as a result of the increase in the costs
incurred to operate the Fund on a daily basis. General and administrative
expense to related party increased by approximately $11,000 during the first
six months of 2002 because of the increase in expenses incurred by the General
Partner and its affiliates to manage the Fund. Management fee to related party
increased by approximately $9,000 during the first six months of 2002 because
of rentals collected on the early termination of two direct financing leases
during the second quarter of 2002. Management fee to related party is cal-
culated as a percentage of rental receipts.
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's net income (loss) was ($6,877) and $102,553 for the three months
ended June 30, 2002 and 2001, respectively and $5,197 and $228,525 for the six
months ended June 30, 2002 and 2001, respectively. The earnings (loss) per
equivalent limited partnership unit, after earnings (loss) allocated to the
General Partner, were ($0.26) and $3.41 based on a weighted average number
of equivalent limited partnership units outstanding of 24,643 and 29,801
for the three months ended June 30, 2002 and 2001, respectively. The earn-
ings per equivalent limited partnership unit, after earnings allocated to
the General Partner, were $0.00 and $7.60 based on a weighted average number
of equivalent limited partnership units outstanding of 25,736 and 29,776 for
the six months ended June 30, 2002 and 2001, respectively.
The Fund generated cash from operations of $25,859 and $136,136, for the
purpose of determining cash available for distribution during the quarter end-
ed June 30, 2002 and 2001, respectively. The General Partner declared and
paid one cash distribution of $35,000 during the second quarter of 2002 for
the month of April 2002. Subsequent to June 30, 2002, the General Partner
declared and paid cash distributions of $35,000 and $1,000,000 for the months
ended May 31 and June 30, 2002, respectively. Subsequent to June 30, 2001,
the General Partner declared and paid three cash distributions of $35,000 each
for a total of $105,000 for the three months ended June 30, 2001. For the six
months ended June 30, 2002 and 2001, the Fund generated $77,358 and $300,379,
respectively of cash from operations, for the purpose of determining cash
available for distribution. The General Partner declared cash distributions
totaling $1,640,000 and $210,000 for the six months ended June 30, 2002 and
2001, respectively. The General Partner declared and paid three cash distri-
butions of $35,000 each and one cash distribution of $500,000 during the
first six months of 2002. Subsequent to June 30, 2002, the General Partner
declared and paid one cash distribution of $35,000 and one cash distribution
of $1,000,000 for the first six months of 2002. In addition, the Fund paid
three cash distributions totaling $2,070,000 during the first six months of
2002 for the months of October, November and December 2001. For the six
months ended June 30, 2001, the Fund paid three cash distributions of $35,000
each during the first six months of 2001 and three cash distributions of
$35,000 each subsequent to June 30, 2001. 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 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 will continue to look for opportunities to pur-
chase equipment under operating leases or invest in direct financing leases
with cash available from operations that was not distributed to partners in
10
FIDELITY LEASING INCOME FUND VI, L.P.
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
RESULTS OF OPERATIONS (Continued)
previous periods and for lease terms consistent with the plan of dissolution.
There was no investment in direct financing leases made for the period ended
June 30, 2002. The Fund invested $652,894 in direct financing leases during
the six months ended June 30, 2001.
The cash position of the Fund is reviewed daily and cash is invested
on a short-term basis.
The Fund's cash from operations is expected to continue to be adequate
to cover all operating expenses and contingencies during the next twelve
month period.
11
Part II: Other Information
FIDELITY LEASING INCOME FUND VI, L.P.
June 30, 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:
Exhibit No. Description
----------- -----------
99.1 Certification pursuant to 18 U.S.C.,
Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley
Act of 2002
99.2 Certification pursuant to 18 U.S.C.,
Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley
Act of 2002
b) Reports on Form 8-K: None
12
Exhibit 99.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Fidelity Leasing Income Fund VI,
L.P. (the "Fund") on Form 10-Q for the period ended June 30, 2002 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, Crit S. DeMent, Principal Executive Officer of LEAF Financial Corporation,
certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13 (a)
or 15 (d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of opera-
tions of the Fund.
/s/ Crit S. DeMent
________________________
Crit S. DeMent
Principal Executive Officer
August 13, 2002
13
Exhibit 99.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Fidelity Leasing Income Fund VI,
L.P. (the "Fund") on Form 10-Q for the period ended June 30, 2002 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, Marianne T. Schuster, Principal Financial Officer of LEAF Financial Corpora-
tion, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13 (a)
or 15 (d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of opera-
tions of the Fund.
/s/ Marianne T. Schuster
________________________
Marianne T. Schuster
Principal Financial Officer
August 13, 2002
14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the regis-
trant has duly caused this report to be signed on its behalf by the under-
signed, thereunto duly authorized.
FIDELITY LEASING INCOME FUND VI, L.P.
8-13-02 By: /s/ Crit S. DeMent
____________________________
Crit S. DeMent
Chairman of the Board of Directors
of LEAF Financial Corporation
(Principal Executive Officer)
8-13-02 By: /s/ Miles Herman
____________________________
Miles Herman
President and Director of
LEAF Financial Corporation
8-13-02 By: /s/ Freddie M. Kotek
____________________________
Freddie M. Kotek
Director of LEAF Financial Corporation
8-13-02 By: /s/ Marianne T. Schuster
____________________________
Marianne T. Schuster
Vice President of Accounting of
LEAF Financial Corporation
(Principal Financial Officer)
15