SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
/X/ Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 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 10
Part I: Financial Information
Item 1: Financial Statements
FIDELITY LEASING INCOME FUND II
BALANCE SHEETS
ASSETS
(Unaudited) (Audited)
March 31, December 31,
1995 1994
_____________ ____________
Cash and cash equivalents $288,588 $366,273
Accounts receivable 21,503 8,726
Interest receivable 508 544
Due from related parties 696 4,834
Equipment under operating leases
(net of accumulated depreciation
of $2,559,464 and $3,089,434,
respectively) 131,915 204,180
Equipment held for sale or lease 4,371 5,409
________ ________
Total assets $447,581 $589,966
======== ========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Lease rents paid in advance $ 30,919 $ 38,262
Accounts payable and
accrued expenses 13,338 31,946
Due to related parties 46,890 43,212
________ ________
Total liabilities 91,147 113,420
Partners' capital 356,434 476,546
________ ________
Total liabilities and
partners' capital $447,581 $589,966
======== ========
The accompanying notes are an integral part of these financial statements.
2
FIDELITY LEASING INCOME FUND II
STATEMENTS OF OPERATIONS
For the three months ended March 31, 1995 and 1994
(Unaudited)
1995 1994
________ ________
Income:
Rentals $153,335 $303,559
Interest 4,055 5,286
Gain on sale of equipment, net - 66,997
Other 18,611 398
________ ________
176,001 376,240
________ _______
Expenses:
Depreciation 40,804 190,570
Loss on sale of equipment, net 5,463 -
General and administrative 23,205 36,721
________ ________
69,472 227,291
________ ________
Net income $106,529 $148,949
======== ========
Net income per equivalent
limited partnership unit $ 17.92 $ 15.95
======== ========
Weighted average number of
equivalent limited partnership
units outstanding during the period 5,843 9,108
======== ========
The accompanying notes are an integral part of these financial statements.
3
FIDELITY LEASING INCOME FUND II
STATEMENT OF PARTNERS' CAPITAL
For the three months ended March 31, 1995
(Unaudited)
General Limited Partners
Partner Units Amount Total
_______ _____ ______ _____
Balance, January 1, 1995 $(3,861) 43,471 $480,407 $476,546
Redemptions - (337) (1,641) (1,641)
Cash distributions (2,250) - (222,750) (225,000)
Net income 1,800 - 104,729 106,529
_______ ______ ________ ________
Balance, March 31, 1995 $(4,311) 43,134 $360,745 $356,434
======= ======= ======== ========
The accompanying notes are an integral part of these financial statements.
4
FIDELITY LEASING INCOME FUND II
STATEMENTS OF CASH FLOWS
For the three months ended March 31, 1995 and 1994
(Unaudited)
1995 1994
________ ________
Cash flows from operating activities:
Net income $106,529 $148,949
________ ________
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 40,804 190,570
(Gain) loss on sale of equipment, net 5,463 (66,997)
(Increase) decrease in accounts receivable (12,777) (19,634)
Increase (decrease) in accounts payable
and accrued expenses (18,608) 12,121
Increase (decrease) in other, net 509 43,666
________ ________
15,391 159,726
________ ________
Net cash provided by operating activities 121,920 308,675
________ ________
Cash flows from investing activities:
Acquisition of equipment - (10,801)
Proceeds from sale of equipment 27,036 105,380
________ ________
Net cash provided by investing activities 27,036 94,579
________ ________
Cash flows from financing activities:
Distributions (225,000) (401,726)
Redemptions of capital (1,641) (23,813)
________ ________
Net cash used in financing activities (226,641) (425,539)
________ ________
Decrease in cash and cash equivalents (77,685) (22,285)
Cash and cash equivalents, beginning
of period 366,273 517,062
________ ________
Cash and cash equivalents, end of period $288,588 $494,777
======== ========
The accompanying notes are an integral part of these financial statements.
5
FIDELITY LEASING INCOME FUND II
NOTES TO FINANCIAL STATEMENTS
March 31, 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.
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 48 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 periodically review 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 March 31, 1995 are $39,625 for the year ended
December 31, 1995.
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 months ended March 31:
1995 1994
________ ________
Management fees $9,187 $18,200
Reimbursable costs 1,365 4,143
6
FIDELITY LEASING INCOME FUND II
NOTES TO FINANCIAL STATEMENTS (Continued)
2. RELATED PARTY TRANSACTIONS (Continued)
Amounts due from related parties at March 31, 1995 and 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 re-
mitted the Fund.
Amounts due to related parties at March 31, 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.
3. SUBSEQUENT EVENT
Cash Distribution:
The General Partner declared a cash distribution of $180,000 in May 1995
for the three months ended March 31, 1995, to all admitted partners as of
March 31, 1995.
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 $176,001 and $376,240 for
the three months ended March 31, 1995 and 1994, respectively. Rental income
from the leasing of computer peripheral equipment accounted for 87% and 81% of
total revenues for the first quarter of 1995 and 1994, respectively. The de-
crease in revenues is primarily attributable to a decrease in rental income.
In 1995, rental income decreased by approximately $150,000 because of equipment
which came off lease and was re-leased at lower rental rates or sold. Addi-
tionally, the Fund incurred a net loss on sale of equipment of $5,463 for the
quarter ended March 31, 1995 as compared to a net gain on sale of equipment of
$66,997 for the quarter ended March 31, 1994 which also contributed to the de-
crease in revenues between 1995 and 1994.
Expenses were $69,472 and $227,291 for the three months ended March 31,
1995 and 1994, respectively. Depreciation comprised 59% and 84% of
total expenses during the first quarter of 1995 and 1994, respectively. The
decrease in expenses between 1995 and 1994 is primarily due to a decrease in
depreciation expense because of equipment which came off lease and was sold
since March of 1994. In addition, general and administrative expenses de-
creased during 1995 due to a decrease in management fees proportionate to the
decrease in rental income in 1995.
The Fund's net income was $106,529 and $148,949 for the three months ended
March 31, 1995 and 1994, respectively. The earnings per equivalent limited
partnership unit, after earnings allocated to the General Partner, were $17.92
and $15.95 based on a weighted average number of equivalent limited partner-
ship units outstanding of 5,843 and 9,108 for the quarter ended March 31, 1995
and 1994, respectively.
The Fund generated funds from operations of $152,796 and $272,522, for the
purpose of determining cash available for distribution and distributed $180,000
and $371,489 to partners for the first quarter of 1995 and 1994, respectively.
The distributions for the three months ended March 31, 1995 and 1994 include
$27,204 and $98,967, respectively, of sales proceeds and cash available from
previous quarters which was not distributed.
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.
8
Part II: Other Information
FIDELITY LEASING INCOME FUND II
March 31, 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: None
b) Reports on Form 8-K: None
9
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
5-11-95 By: P. Donald Mooney
_______ ___________________________
Date P. Donald Mooney
President of
Fidelity Leasing Corporation
(Principal Operating Officer)
5-11-95 By: Marianne T. Schuster
_______ ___________________________
Date Marianne T. Schuster
Vice President of
Fidelity Leasing Corporation
(Principal Financial Officer)
10
