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, 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)
June 30, December 31,
1995 1994
_____________ ____________
Cash and cash equivalents $191,315 $366,273
Accounts receivable 25,216 8,726
Interest receivable 29 544
Due from related parties 4,971 4,834
Equipment under operating leases
(net of accumulated depreciation
of $1,569,921 and $3,089,434,
respectively) 29,399 204,180
Equipment held for sale or lease 4,329 5,409
________ ________
Total assets $255,259 $589,966
======== ========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Lease rents paid in advance $ 13,765 $ 38,262
Accounts payable and
accrued expenses 11,205 31,946
Due to related parties 31,921 43,212
________ ________
Total liabilities 56,891 113,420
Partners' capital 198,368 476,546
________ ________
Total liabilities and
partners' capital $255,259 $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 Six Months Ended
June 30 June 30
1995 1994 1995 1994
____ ____ ____ ____
Income:
Rentals $107,266 $219,475 $260,601 $523,034
Interest 3,170 6,020 7,225 11,306
Gain on sale of equipment,
net - 179,254 - 246,251
Other 713 1,851 19,324 2,249
________ ________ ________ ________
111,149 406,600 287,150 782,840
________ ________ ________ ________
Expenses:
Depreciation 17,456 138,503 58,260 329,073
General and administrative 9,524 43,314 22,177 58,158
General and administrative
to related party 1,645 6,402 3,010 10,079
Management fee to related
party 6,422 13,155 15,609 31,355
Loss on sale of equipment, net 53,611 - 59,074 -
________ ________ ________ ________
88,658 201,374 158,130 428,665
________ ________ ________ ________
Net income $ 22,491 $205,226 $129,020 $354,175
======== ======== ======== ========
Net income per equivalent
limited partnership unit $ 3.79 $ 27.42 $ 22.00 $ 45.82
======== ======== ======== ========
Weighted average number of
equivalent limited partnership
units outstanding during
the period 5,609 7,279 5,726 7,526
======== ======== ======== ========
The accompanying notes are an integral part of these financial statements.
3
FIDELITY LEASING INCOME FUND II
STATEMENT OF PARTNERS' CAPITAL
For the six months ended June 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 (4,050) - (400,950) (405,000)
Net income 3,060 - 125,960 129,020
_______ ______ ________ ________
Balance, June 30, 1995 $(4,851) 42,928 $203,219 $198,368
======= ====== ======== ========
The accompanying notes are an integral part of these financial statements.
4
FIDELITY LEASING INCOME FUND II
STATEMENTS OF CASH FLOWS
For the six months ended June 30, 1995 and 1994
(Unaudited)
1995 1994
________ ________
Cash flows from operating activities:
Net income $129,020 $354,175
________ ________
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 58,260 329,073
(Gain) loss on sale of equipment, net 59,074 (246,251)
(Increase) decrease in accounts receivable (16,490) 36,281
(Increase) decrease in interest receivable 515 -
(Increase) decrease in due from related
parties (137) 42,518
Increase (decrease) in lease rents paid
in advance (24,497) (33,427)
Increase (decrease) in accounts payable
and accrued expenses (20,741) (38,578)
Increase (decrease) in due to related parties (11,291) 39,061
________ _______
44,693 128,677
________ _______
Net cash provided by operating activities 173,713 482,852
________ _______
Cash flows from investing activities:
Acquisition of equipment - (10,801)
Proceeds from sale of equipment 58,527 503,779
________ ________
Net cash provided by investing activities 58,527 492,978
________ ________
Cash flows from financing activities:
Distributions (405,000) (773,215)
Redemptions of capital (2,198) (23,813)
________ ________
Net cash used in financing activities (407,198) (797,028)
________ ________
Increase (decrease) in cash and cash
equivalents (174,958) 178,802
Cash and cash equivalents, beginning
of period 366,273 517,062
________ ________
Cash and cash equivalents, end of period $191,315 $695,864
======== ========
The accompanying notes are an integral part of these financial statements.
5
FIDELITY LEASING INCOME FUND II
NOTES TO FINANCIAL STATEMENTS
June 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 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 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 June 30, 1995 are $54,000 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 and six months ended June 30,
1995 and 1994:
Three Months Ended Six Months Ended
June 30 June 30
1995 1994 1995 1994
____ ____ ____ ____
Management fee $6,422 $13,155 $15,609 $31,355
Reimbursable costs 1,645 6,402 3,010 10,079
6
FIDELITY LEASING INCOME FUND II
NOTES TO FINANCIAL STATEMENTS (Continued)
2. RELATED PARTY TRANSACTIONS (Continued)
Amounts due from related parties at June 30, 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 June 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.
3. SUBSEQUENT EVENT
Cash Distribution:
The General Partner declared a cash distribution of $126,000 in August 1995
for the three months ended June 30, 1995, to all admitted partners as of
June 30, 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 $111,149 and $406,600 for
the three months ended June 30, 1995 and 1994, respectively, and $287,150 and
$782,840 for the six months ended June 30, 1995 and 1994, respectively. Rental
income from the leasing of computer peripheral equipment accounted for 97% and
54% of total revenues for the second quarter of 1995 and 1994, respectively and
91% and 67% of total revenues for the first six 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 $59,074 for the six months ended June 30, 1995 as
compared to a net gain on sale of equipment of $246,251 for the six months
ended June 30, 1994 which also accounts for the decrease in total revenues in
1995.
Expenses were $88,658 and $201,374 for the three months ended June 30,
1995 and 1994, respectively, and $158,130 and $428,665 for the six months ended
June 30, 1995 and 1994, respectively. Depreciation expense comprised 20% and
69% of total expenses during the second quarter of 1995 and 1994, respectively,
and 37% and 77% during the first six 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 June 1994. Furthermore, the decrease in equipment expenses
incurred to remarket equipment which are included in general and administrative
expenses also contributed to the decline in overall expenses in 1995. These
decreases in expenses were offset by the increase in the net loss on sale of
equipment as discussed above.
For the three months ended June 30, 1995 and 1994, the Fund had net
income of $22,491 and $205,226, respectively. For the six months ended June
30, 1995 and 1994, the Fund had net income of $129,020 and $354,175,
respectively. The earnings per equivalent limited partnership unit, after
earnings allocated to the General Partner, were $3.79 and $27.42 based on
a weighted average number of equivalent limited partnership units outstand-
ing of 5,609 and 7,279 for the quarter ended June 30, 1995 and 1994, respec-
tively. The earnings per equivalent limited partnership unit, after earnings
allocated to the General Partner, were $22.00 and $45.82 based on a weighted
average number of equivalent limited partnership units outstanding of 5,726
and 7,526 for the six months ended June 30, 1995 and 1994, respectively.
The Fund generated funds from operations of $93,558 and $164,475, for the
purpose of determining cash available for distribution and distributed $126,000
and $562,877 to partners for the second quarter of 1995 and 1994, respectively.
For the six months ended June 30, 1995 and 1994, the Fund generated $246,354
and $436,997 of funds from operations and distributed $306,000 and $934,366,
respectively, to partners. The distributions for the three and six months
ended June 30, 1995 include $32,442 and $59,646, respectively, of cash avail-
able 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
June 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: None
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
8-8-95 By: P. Donald Mooney
______ ___________________________
Date P. Donald Mooney
President of
Fidelity Leasing Corporation
(Principal Operating Officer)
8-8-95 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 191,315
<SECURITIES> 0
<RECEIVABLES> 30,216
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 221,531
<PP&E> 1,603,649
<DEPRECIATION> 1,569,921
<TOTAL-ASSETS> 255,259
<CURRENT-LIABILITIES> 56,891
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 198,368
<TOTAL-LIABILITY-AND-EQUITY> 255,259
<SALES> 260,601
<TOTAL-REVENUES> 287,150
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 158,130
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 129,020
<INCOME-TAX> 0
<INCOME-CONTINUING> 129,020
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 129,020
<EPS-PRIMARY> 22.00
<EPS-DILUTED> 22.00
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