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 September 30, 1995
/ / 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: 0-14560
Fidelity Leasing Income Fund II
_______________________________________________________________________________
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2398005
_______________________________________________________________________________
(State of organization) (I.R.S. Employer Identification No.)
250 King of Prussia Road, Radnor, PA 19087
_______________________________________________________________________________
(Address of principal executive offices) (Zip code)
(610) 964-7102
_______________________________________________________________________________
(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 regis-
trant was required to file such reports), and (2) has been subject to such fil-
ing requirements for the past 90 days.
Yes __X__ No _____
Page 1 of 11
Part I: Financial Information
Item 1: Financial Statements
FIDELITY LEASING INCOME FUND II
BALANCE SHEETS
ASSETS
(Unaudited) (Audited)
September 30, December 31,
1995 1994
_____________ ____________
Cash and cash equivalents $180,050 $366,273
Accounts receivable 6,743 8,726
Interest receivable 60 544
Due from related parties - 4,834
Equipment under operating leases
(net of accumulated depreciation
of $596,170 and $3,089,434,
respectively) - 204,180
Equipment held for sale or lease - 5,409
________ ________
Total assets $186,853 $589,966
======== ========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Lease rents paid in advance $ 8,271 $ 38,262
Accounts payable and
accrued expenses 13,555 31,946
Due to related parties 35,231 43,212
________ ________
Total liabilities 57,057 113,420
Partners' capital 129,796 476,546
________ ________
Total liabilities and
partners' capital $186,853 $589,966
======== ========
The accompanying notes are an integral part of these financial statements.
2
FIDELITY LEASING INCOME FUND II
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
1995 1994 1995 1994
____ ____ ____ ____
Income:
Rentals $42,895 $191,715 $303,496 $ 714,749
Interest 2,165 6,519 9,390 17,825
Gain on sale of equipment,
net 29,468 31,212 - 277,463
Other 1,975 210 21,299 2,459
_______ ________ ________ __________
76,503 229,656 334,185 1,012,496
_______ ________ ________ __________
Expenses:
Depreciation - 115,612 58,260 444,685
General and administrative 16,209 (6,207) 38,386 50,945
General and administrative
to related party 306 4,225 3,316 15,310
Management fee to related
party 2,560 11,490 18,169 42,845
Loss on sale of equipment,
net - - 29,606 -
_______ ________ ________ __________
19,075 125,120 147,737 553,785
_______ ________ ________ __________
Net income $57,428 $104,536 $186,448 $ 458,711
======= ======== ======== ==========
Net income per equivalent
limited partnership unit $ 10.72 $ 15.25 $ 32.73 $ 61.66
======= ======== ======== ==========
Weighted average number of
equivalent limited partnership
units outstanding during
the period 5,357 6,687 5,603 7,246
======= ======== ======== ==========
The accompanying notes are an integral part of these financial statements.
3
FIDELITY LEASING INCOME FUND II
STATEMENT OF PARTNERS' CAPITAL
For the nine months ended September 30, 1995
(Unaudited)
General Limited Partners
Partner Units Amount Total
_______ _____ ______ _____
Balance, January 1, 1995 $(3,861) 43,471 $480,407 $476,546
Redemptions - (543) (2,198) (2,198)
Cash distributions (5,310) - (525,690) (531,000)
Net income 3,060 - 183,388 186,448
_______ ______ ________ ________
Balance, September 30, 1995 $(6,111) 42,928 $135,907 $129,796
======= ====== ======== ========
The accompanying notes are an integral part of these financial statements.
4
FIDELITY LEASING INCOME FUND II
STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 1995 and 1994
(Unaudited)
1995 1994
____ ____
Cash flows from operating activities:
Net income $186,448 $ 458,711
________ __________
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 58,260 444,685
(Gain) loss on sale of equipment, net 29,606 (277,463)
(Increase) decrease in accounts receivable 1,983 11,239
(Increase) decrease in due from related
parties 4,834 47,960
Increase (decrease) in lease rents paid
in advance (29,991) (10,228)
Increase (decrease) in accounts payable
and accrued expenses (18,391) (49,195)
Increase (decrease) in due to related parties (7,981) 52,483
Increase (decrease) in other, net 484 (177)
________ __________
38,804 219,304
________ __________
Net cash provided by operating activities 225,252 678,015
________ __________
Cash flows from investing activities:
Acquisition of equipment - (10,801)
Proceeds from sale of equipment 121,723 568,738
________ __________
Net cash provided by investing activities 121,723 557,937
________ __________
Cash flows from financing activities:
Distributions (531,000) (1,336,091)
Redemptions of capital (2,198) (23,813)
________ __________
Net cash used in financing activities (533,198) (1,359,904)
________ __________
Decrease in cash and cash
equivalents (186,223) (123,952)
Cash and cash equivalents, beginning
of period 366,273 517,062
________ __________
Cash and cash equivalents, end of period $180,050 $ 393,110
======== ==========
The accompanying notes are an integral part of these financial statements.
5
FIDELITY LEASING INCOME FUND II
NOTES TO FINANCIAL STATEMENTS
September 30, 1995
(Unaudited)
The accompanying unaudited condensed financial statements have been prepared
by the Fund in accordance with generally accepted accounting principles,
pursuant to the rules and regulations of the Securities and Exchange Commis-
sion. In the opinion of Management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Certain amounts on the 1994 financial statements have been
reclassified to conform to the presentation adopted in 1995.
1. EQUIPMENT LEASED
The remaining equipment on lease consists primarily of computer peripheral
equipment under operating leases. All of the equipment was manufactured by
IBM. The lessees have agreements with the manufacturer to provide main-
tenance for the leased equipment. The Fund's operating leases are for
initial lease terms of 24 to 38 months. 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 pre-
pared to remarket the equipment in future years. Currently, the Fund's
policy is to review 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 computer
equipment and competitive factors in the marketplace are considered among
other things, as part of this review.
The future approximate minimum rentals to be received on noncancellable
operating leases as of September 30, 1995 are $18,000 and $1,500 for the
years ended December 31, 1995 and 1996, respectively.
2. RELATED PARTY TRANSACTIONS
The General Partner receives 6% or 3% of gross rental payments from equip-
ment under operating leases and full pay-out leases, respectively, for
administrative and management services performed on behalf of the Fund.
Full pay-out leases are noncancellable leases with terms in excess of 42
months and for which rental payments during the initial term are at least
sufficient to recover the purchase price of the equipment, including acqui-
sition fees.
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 of services and materials charged by the General
Partner or its affiliates during the three and nine months ended September
30, 1995 and 1994:
Three Months Ended Nine Months Ended
September 30 September 30
1995 1994 1995 1994
____ ____ ____ ____
Management fee $2,560 $11,490 $18,169 $42,845
Reimbursable costs 306 4,225 3,316 15,310
6
FIDELITY LEASING INCOME FUND II
NOTES TO FINANCIAL STATEMENTS (Continued)
2. RELATED PARTY TRANSACTIONS (Continued)
Amounts due from related parties at December 31, 1994 represent monies due
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 September 30, 1995 and December 31, 1994
represent monies due to the General Partner for the fees and costs men-
tioned above, as well as, rentals and sales proceeds collected by the Fund
on behalf of other affiliated funds.
7
FIDELITY LEASING INCOME FUND II
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Fidelity Leasing Income Fund II had revenues of $76,503 and $229,656 for
the three months ended September 30, 1995 and 1994, respectively, and $334,185
and $1,012,496 for the nine months ended September 30, 1995 and 1994, respec-
tively. Rental income from the leasing of computer peripheral equipment
accounted for 56% and 83% of total revenues for the third quarter of 1995 and
1994, respectively and 91% and 71% of total revenues for the first nine months
of 1995 and 1994, respectively. The decrease in total revenues is partially
attributable to a decrease in rental income caused by the liquidation of the
Fund's equipment portfolio during 1994 and 1995. Additionally, the Fund
recorded a net loss on sale of equipment of $29,606 for the nine months ended
September 30, 1995 as compared to a net gain on sale of equipment of $277,463
for the nine months ended September 30, 1994 which also accounts for the
decrease in total revenues in 1995.
Expenses were $19,075 and $125,120 for the three months ended September 30,
1995 and 1994, respectively, and $147,737 and $553,785 for the nine months
ended September 30, 1995 and 1994, respectively. Depreciation expense com-
prised 39% and 80% of total expenses during the first nine months of 1995 and
1994, respectively. The decrease in expenses between 1995 and 1994 is
primarily attributable to a decrease in depreciation expense because of
equipment which came off lease or was sold since September 1994. Additionally,
management fee to related party decreased during the nine months ended
September 30, 1995 as compared to the nine months ended September 30, 1994 in
proportion to the decrease in rental income.
For the three months ended June 30, 1995 and 1994, the Fund had net
income of $57,428 and $104,536, respectively. For the nine months ended
September 30, 1995 and 1994, the Fund had net income of $186,448 and $458,711,
respectively. The earnings per equivalent limited partnership unit, after
earnings allocated to the General Partner, were $10.72 and $15.25 based on
a weighted average number of equivalent limited partnership units outstand-
ing of 5,357 and 6,687 for the quarter ended September 30, 1995 and 1994,
respectively. The earnings per equivalent limited partnership unit, after
earnings allocated to the General Partner, were $32.73 and $61.66 based on a
weighted average number of equivalent limited partnership units outstanding of
5,603 and 7,246 for the nine months ended September 30, 1995 and 1994, respec-
tively.
The Fund generated funds from operations of $27,960 and $188,936, for the
purpose of determining cash available for distribution and distributed $-0-
and $254,000 to partners for the third quarter of 1995 and 1994, respectively.
The General Partner anticipates making the final cash distribution in December
1995 in accordance with the plan of liquidation. For the nine months ended
September 30, 1995 and 1994, the Fund generated $274,314 and $625,933 of funds
from operations and distributed $306,000 and $1,188,366, respectively, to
partners. The distributions for the nine months ended September 30, 1995
include $31,686 of cash available and sale proceeds from previous quarters
which was not distributed.
8
FIDELITY LEASING INCOME FUND II
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Continued)
ANALYSIS OF FINANCIAL CONDITION
The General Partner continues the dissolution process for the Fund with the
intent of fully liquidating the Fund in 1995. Therefore, as leases expire, the
General Partner will seek to sell the equipment at its market value.
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 the remainder of the
liquidation period.
9
Part II: Other Information
FIDELITY LEASING INCOME FUND II
September 30, 1995
Item 1. Legal Proceedings: Inapplicable.
Item 2. Changes in Securities: Inapplicable.
Item 3. Defaults Upon Senior Securities: Inapplicable.
Item 4. Submission of Matters to a Vote of Securities Holders: Inapplicable.
Item 5. Other Information: Inapplicable.
Item 6. Exhibits and Reports on Form 8-K:
a) Exhibits: EX-27
b) Reports on Form 8-K: A report on Form 8-K was filed on October
12, 1995 with the Securities and Exchange Commission reporting
under Item 1.
10
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 II
11-13-95 By: P. Donald Mooney
________ _____________________________
Date P. Donald Mooney
President of
Fidelity Leasing Corporation
(Principal Operating Officer)
11-13-95 By: Marianne T. Schuster
________ _____________________________
Date Marianne T. Schuster
Vice President of
Fidelity Leasing Corporation
(Principal Financial Officer)
11
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 II
_______ _____________________________
Date P. Donald Mooney
President of
Fidelity Leasing Corporation
(Principal Operating Officer)
_______ _____________________________
Date Marianne T. Schuster
Vice President of
Fidelity Leasing Corporation
(Principal Financial Officer)
11
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<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 180,050
<SECURITIES> 0
<RECEIVABLES> 6,803
<ALLOWANCES> 0
<INVENTORY> 0
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<PP&E> 596,170
<DEPRECIATION> 596,170
<TOTAL-ASSETS> 186,853
<CURRENT-LIABILITIES> 57,057
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 129,796
<TOTAL-LIABILITY-AND-EQUITY> 186,853
<SALES> 303,496
<TOTAL-REVENUES> 334,185
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 147,737
<LOSS-PROVISION> 0
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<INCOME-PRETAX> 186,448
<INCOME-TAX> 0
<INCOME-CONTINUING> 186,448
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 186,448
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<EPS-DILUTED> 32.73
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