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 0-14560
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.)
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 Ex-
change 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 42,928.
There is no public market for these securities.
The index of Exhibits is located on page 9.
1
PART I
Item 1. BUSINESS
Fidelity Leasing Income Fund II (the "Fund"), a Pennsylvania limited
partnership, was organized in 1985 and acquired equipment, primarily compu-
ter peripheral equipment, including printers, tape and disk storage
devices, data communications equipment, computer terminals, data processing
and office equipment, which was leased to third parties on a short-term
basis. The Fund's principal objective was to generate leasing revenues for
distribution. The Fund managed equipment, released and disposed of equip-
ment as it came off lease in order to achieve its principal objective.
The Fund did not borrow funds to purchase equipment.
The Fund closed on April 30, 1986 and raised $23,732,121 of proceeds
through the sale of limited partnership units. Equipment of approximately
$34,516,000 was purchased through 1995 with the proceeds raised, and also
with cash distributions which were reinvested by partners and cash from
operations which was not distributed to partners. As of December 31, 1995,
the Fund's equipment portfolio has been liquidated.
The Fund generally acquired equipment subject to a lease. Purchases
of equipment for lease were 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 signifi-
cant quantities of equipment or on an ad hoc basis to meet the needs of a
particular lessee.
The equipment acquired was generally leased under "operating" leases.
Operating leases provided the Fund as lessor, aggregate rental payments in
an amount that is less than the purchase price of the equipment. Operating
leases represent a greater risk but with the potential for increased
returns, depending on the realization of renewal and remarketing results,
as compared to full payout leases. Full payout leases are generally for
longer initial terms whereby the noncancellable rental payments due during
the initial term of the lease are at least sufficient to recover the pur-
chase price of the equipment. Due to technological, competitive, market
and economic factors, the Fund experienced renewals and remarketing of
leases at lower rental rates and residual values than was forecasted at the
inception of the leases.
The Fund's ability to attain its investment objectives was subject to
the factors discussed above. The Fund competed in the equipment leasing
industry with leasing companies, equipment manufacturers and distributors,
and entities similar to the Fund (including similar programs sponsored by
the General Partner), some of which had greater financial resources than
the Fund and more experience in the equipment leasing business than the
General Partner. This competition may have been in the position to offer
equipment to lessees on financial terms more favorable than those which the
Fund could offer. The offer of maintenance contracts, trade-in-privileges
and other services which the Fund could not provide may have resulted in
the Fund leasing its equipment on a less favorable basis than its competi-
tors.
2
Item 1. BUSINESS (Continued)
In addition, competitive factors in the computer equipment industry,
including pricing, technological innovation and methods of financing, could
have adversely affected the Fund in its ability to obtain new leases and
renewals or to sell equipment for its anticipated net realizable values.
The Fund did not have any employees. All persons who worked on the
Fund were employees of the General Partner.
Item 2. PROPERTIES
During 1995, the General Partner liquidated all remaining properties
owned by the Fund.
Item 3. LEGAL PROCEEDINGS
Not applicable.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
3
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY
HOLDER MATTERS
(a) The Fund's limited partnership units were not publicly traded.
There was no market for the Fund's limited partnership units.
(b) Number of Equity Security Holders:
Number of Partners
Title of Class as of December 31, 1995
Limited Partnership Interests 1,888
General Partnership Interest 1
<TABLE>
Item 6. SELECTED FINANCIAL DATA
<CAPTION>
For the Years Ended December 31,
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Total Income $369,870 $1,214,683 $2,138,235 $2,768,074 $3,958,632
Net Income 243,922 552,409 627,016 488,719 1,077,027
Distributions to Partners 718,270 1,590,091 2,483,564 4,474,545 4,913,676
Net Income per
Equivalent Limited
Partnership Unit 9.31 77.26 60.93 27.93 44.24
Weighted Average Number
of Equivalent Limited
Partnership Units
Outstanding During
the Year 5,100 6,967 9,939 16,031 23,326
</TABLE>
<TABLE>
December 31,
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Total Assets $ - $ 589,966 $1,671,832 $3,711,832 $7,860,637
Equipment under
Operating Leases and
Equipment Held for
Sale or Lease (Net) - 209,589 1,048,017 2,842,311 5,227,275
Limited Partnership
Units 42,928 43,471 43,981 44,934 45,475
Limited Partners 1,888 1,897 1,907 1,948 1,962
</TABLE>
4
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
The significant decrease in revenues and expenses in 1995 and 1994 is
primarily due to the dissolution process of the Fund that commenced in 1994
and was completed during the fourth quarter of 1995. Equipment was sold to
the end user at lease expiration or packaged and sold prior to lease
expiration for the present value of the remaining lease payments plus the
forecasted future residual value.
The Fund had revenues of $369,870, $1,214,683 and $2,138,235 for the
years ended December 31, 1995, 1994 and 1993, respectively. Rental income
from the leasing of computer peripheral equipment accounted for 87%, 73%
and 80% of total income in 1995, 1994 and 1993, respectively. The decrease
in revenues in 1995 and 1994 is primarily due to the decrease in rental
income because of renewals of leases at lower rental rates and lease
terminations or sales of equipment during these years. Additionally, the
Fund recognized a net gain on sale of equipment of $13,467, $300,295 and
$385,703 for the years ended December 31, 1995, 1994 and 1993, respec-
tively, which also accounts for the decrease in total revenues for these
years.
Expenses were $125,948, $662,274 and $1,511,219 for the years ended
December 31, 1995, 1994 and 1993, respectively. Depreciation expense
comprised 46%, 79% and 79% of total expenses for the years ended December
31, 1995, 1994 and 1993, respectively. The decrease in expenses during
1995 and 1994 is directly related to the decrease in depreciation expense
because of equipment which came off lease and was terminated or sold.
Additionally, the reduction in management fee to related party, resulting
from the decrease in rental income also contributed to the decrease in
total expenses in 1995 and 1994. Furthermore, the Fund recorded a write-
down of equipment to net realizable value of approximately $-0-, $18,000
and $89,000 during 1995, 1994 and 1993, respectively which also accounts
for the decrease in overall expenses during these years. 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
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 Fund's net income was $243,922, $552,409 and $627,016 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 $9.31, $77.26 and $60.93 for the years ended
December 31, 1995, 1994 and 1993, respectively. The weighted average
number of equivalent limited partnership units outstanding were 5,100,
6,967 and 9,939 for 1995, 1994 and 1993, respectively.
The Fund generated funds from operations of $288,715, $790,651 and
$1,525,757 for the purpose of determining cash available for distribution
and declared distributions of $493,270, $1,413,365 and $2,146,156 to
5
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
Results of Operations (Continued)
partners for the years ended December 31, 1995, 1994 and 1993,
respectively. The distributions for 1995, 1994 and 1993 included $204,555,
$622,714 and $620,399, respectively of sales proceeds and cash available
from previous years which was not distributed. 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's portfolio was liquidated as of December 31, 1995.
The cash position of the Fund was reviewed daily and cash was invested
on a short-term basis.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this Item is submitted as a separate section of the
report commencing on page F-1.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
6
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.
7
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 $19,224(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 1985, 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 5% of cash distribu-
tions until the Limited Partners have received an amount equal to the
purchase price of their Units plus a 12% compounded Priority Return;
thereafter 15%. 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 were no arrangements known to the Fund that would at anytime,
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 $19,224
of management fees by the General Partner.
During the year ended December 31, 1995, the General Partner received
$192,580 of cash distributions.
The Fund incurred $5,169 of reimbursable costs to the General Partner
for services and materials provided in connection with the administra-
tion of the Fund during 1995.
8
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 submit-
ted 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.
9
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 II
A Pennsylvania 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
and President of Fidelity Leasing
Freddie M. Kotek 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)
10
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
Pages
Report of Independent Certified Public Accountants F-2
Balance Sheet as of December 31, 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-10
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 II
We have audited the accompanying balance sheet of Fidelity Leasing
Income Fund II as of December 31, 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 II, L.P. as of December 31, 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.
As described in note A, during 1995 the General Partner completed the
dissolution of Fidelity Leasing Income Fund II.
Grant Thornton, LLP
Philadelphia, Pennsylvania
February 2, 1996
F-2
FIDELITY LEASING INCOME FUND II
BALANCE SHEET
<TABLE>
ASSETS
<CAPTION>
December 31, 1994
<S> <C>
Cash and cash equivalents $366,273
Accounts receivable 8,726
Interest receivable 544
Due from related parties 4,834
Equipment under operating leases
(net of accumulated depreciation
of $3,089,434) 204,180
Equipment held for sale or lease 5,409
________
Total assets $589,966
========
</TABLE>
<TABLE>
LIABILITIES AND PARTNERS' CAPITAL
<CAPTION>
Liabilities:
<S> <C>
Lease rents paid in advance $ 38,262
Accounts payable and
accrued expenses 31,946
Due to related parties 43,212
________
Total liabilities 113,420
Partners' capital 476,546
________
Total liabilities and
partners' capital $589,966
========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
FIDELITY LEASING INCOME FUND II
<TABLE>
STATEMENTS OF OPERATIONS
<CAPTION>
For the years ended December 31,
1995 1994 1993
Income:
<S> <C> <C> <C>
Rentals $321,302 $ 886,679 $1,710,743
Interest 12,033 22,516 25,531
Gain on sale of equipment, net 13,467 300,295 385,703
Other 23,068 5,193 16,258
________ __________ __________
369,870 1,214,683 2,138,235
________ __________ __________
Expenses:
Depreciation 58,260 520,497 1,195,087
Write-down of equipment to
net realizable value - 18,040 89,357
General and administrative 43,295 57,227 94,750
General and administrative to
related party 5,169 13,363 30,833
Management fee to related party 19,224 53,147 101,192
________ __________ __________
125,948 662,274 1,511,219
________ __________ __________
Net income $243,922 $ 552,409 $ 627,016
======== ========== ==========
Net income per equivalent
limited partnership unit $ 9.31 $ 77.26 $ 60.93
======== ========== ==========
Weighted average number of
equivalent limited partnership
units outstanding
during the year 5,100 6,967 9,939
======== ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
FIDELITY LEASING INCOME FUND II
<TABLE>
STATEMENTS OF PARTNERS' CAPITAL
<CAPTION>
For the years ended December 31, 1995, 1994 and 1993
General Limited Partners
Partner Units Amount Total
_______ ____________________ _____
<S> <C> <C> <C> <C>
Balance, January 1, 1993 $ 1,280 44,934 $3,483,965 $3,485,245
Redemptions - (953) (90,656) (90,656)
Cash distributions (24,835) - (2,458,729) (2,483,564)
Net income 21,461 - 605,555 627,016
________ ______ __________ __________
Balance, December 31, 1993 (2,094) 43,981 1,540,135 1,538,041
Redemptions - (510) (23,813) (23,813)
Cash distributions (15,901) - (1,574,190) (1,590,091)
Net income 14,134 - 538,275 552,409
________ ______ __________ __________
Balance, December 31, 1994 (3,861) 43,471 480,407 476,546
Redemptions - (543) (2,198) (2,198)
Cash distributions (192,580) - (525,690) (718,270)
Net income 196,441 - 47,481 243,922
________ ______ __________ __________
Balance, December 31, 1995 $ 0 42,928 $ 0 $ 0
======== ====== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
FIDELITY LEASING INCOME FUND II
<TABLE>
STATEMENTS OF CASH FLOWS
<CAPTION>
For the years ended December 31,
1995 1994 1993
Cash flows from operating activities:
<S> <C> <C> <C>
Net income $243,922 $ 552,409 $ 627,016
________ __________ __________
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 58,260 520,497 1,195,087
Write-down of equipment to net realizable value - 18,040 89,357
Gain on sale of equipment, net (13,467) (300,295) (385,703)
(Increase) decrease in accounts receivable 8,726 48,896 28,082
(Increase) decrease in due from related parties 4,834 43,342 (48,176)
Increase (decrease) in lease rents paid
in advance (38,262) (13,123) (80,719)
Increase (decrease) in accounts payable and
accrued expenses (31,946) (49,031) 947
Increase (decrease) in due to related parties (43,212) 41,783 (11,351)
Increase (decrease) in other, net 544 411 (292)
________ __________ __________
(54,523) 310,520 787,232
________ __________ __________
Net cash provided by operating activities 189,399 862,929 1,414,248
________ __________ __________
Cash flows from investing activities:
Acquisition of equipment - (10,801) -
Proceeds from sale of equipment 164,796 610,987 895,553
________ __________ __________
Net cash provided by investing activities 164,796 600,186 895,553
________ __________ __________
Cash flows from financing activities:
Distributions (718,270) (1,590,091) (2,483,564)
Redemptions of capital (2,198) (23,813) (90,656)
________ __________ __________
Net cash used in financing activities (720,468) (1,613,904) (2,574,220)
________ __________ __________
Decrease in cash and cash equivalents (366,273) (150,789) (264,419)
Cash and cash equivalents, beginning
of year 366,273 517,062 781,481
________ __________ __________
Cash and cash equivalents, end
of year $ 0 $ 366,273 $ 517,062
======== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
FIDELITY LEASING INCOME FUND II
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND DISSOLUTION
Fidelity Leasing Income Fund II (the "Fund") was formed in January 1985 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 was managed by the General Partner. The
Fund's limited partnership interests were not publicly traded. There was no
market for the Fund's limited partnership interests.
During 1995, the General Partner completed the dissolution process of the
Fund. The remaining equipment was sold during the year and all remaining
cash was distributed to partners during 1995.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Concentration of Credit Risk
Financial instruments which potentially subjected the Fund to concentra-
tions of credit risk consisted principally of temporary cash investments.
The Fund placed 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 were
limited due to the dispersion of the Fund's lessees over different
industries and geographies.
Equipment Held for Sale or Lease
Equipment held for sale or lease was 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 disclosures 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.
Accounting for Leases
The Fund's leasing operations consisted only of operating leases. The cost
of the leased equipment was 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 were allocated to equip-
ment when purchased and depreciated as part of equipment cost. Rental
income consisted of monthly periodic rentals due under the terms of the
leases. Generally, during the remaining terms of existing operating
F-7
FIDELITY LEASING INCOME FUND II
NOTES TO FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Accounting for Leases (Continued)
leases, the Fund would not recover all of the undepreciated cost and
related expenses of its rental equipment and was prepared to remarket the
equipment in future years. Upon sale or other disposition of assets, the
cost and accumulated depreciation was removed from the accounts and the
resulting gain or loss, if any, was reflected in income.
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.
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.
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 (except for the period from January 1, 1991 through
September 30, 1995), if any, were made quarterly as follows: 95% to the
Limited Partners and 5% 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, 85% to the Limited Partners and 15% to the General Partner.
During the year ended December 31, 1995, the General Partner received a
distribution of $187,270 representing a portion of the 5% of cash
distributions which the General Partner was entitled to receive in
accordance with the Partnership Agreement for prior periods.
F-8
FIDELITY LEASING INCOME FUND II
NOTES TO FINANCIAL STATEMENTS (Continued)
3. ALLOCATION OF PARTNERSHIP INCOME, LOSS AND CASH DISTRIBUTIONS
(Continued)
Net Losses were allocated 99% to the Limited Partners and 1% to the General
Partner. The General Partner was 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 were 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.
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.
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 $-0-, $18,000 and $89,000, respectively was
charged to write-down of equipment to net realizable value.
5. RELATED PARTY TRANSACTIONS
The General Partner received 6% or 3% 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 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 acquisition fees.
Additionally, the General Partner and its affiliates were 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 years ended December 31:
1995 1994 1993
Management fee $19,224 $53,147 $101,192
Reimbursable costs 5,169 13,363 30,833
Amounts due from related parties at December 31, 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.
F-9
FIDELITY LEASING INCOME FUND II
NOTES TO FINANCIAL STATEMENTS (Continued)
5. RELATED PARTY TRANSACTIONS (Continued)
Amounts due to related parties at December 31, 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. CASH DISTRIBUTIONS
Below is a summary of the quarterly cash distributions made to partners
during the years ended December 31:
<TABLE>
Month of Distribution 1995 1994 1993
<CAPTION>
<S> <C> <C> <C>
February $225,000 $ 401,726 $ 739,134
May 180,000 371,489 536,831
August 126,000 562,876 805,246
November 187,270 254,000 402,353
________ __________ __________
$718,270 $1,590,091 $2,483,564
======== ========== ==========
</TABLE>
F-10
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 321,302
<TOTAL-REVENUES> 369,870
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 125,948
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 243,922
<INCOME-TAX> 0
<INCOME-CONTINUING> 243,922
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 243,922
<EPS-PRIMARY> 9.31
<EPS-DILUTED> 9.31
</TABLE>
